The estimated fair value would increase (decrease) if: - Any product is no longer monetized (lower) 3 false 2022 FY --12-31 0001792829 Goodwill is recognized based on expected synergies from combining the operations of the acquirees and of the acquiror, as well as an expected increase in the Company’s market-share due to the penetration of the Company’s products and services in regions where the Company did not operate before. Also, the current tax law allows the deductibility of the acquisition date goodwill and fair value of net assets acquired when a non-substantive action is taken after acquisition by the Company (i.e. when the Company merges or spins off the companies acquired) and therefore the tax and accounting bases of the net assets acquired are the same as of the acquisition date. As a result of purchase price allocation, the Company identified R$ 18,783, customer portfolio (“SESI”), and R$ 64,806, customer portfolio (“De Gouges”) based on customer portfolio receivables expectation around 8% per year. See Note 14. As a result of the purchase price allocation, the Company identified R$ 247,622, a commercial agreement (“Eleva Holding”), which corresponds to the sale of teaching material from "De Gouges" to partner schools of "Eleva Holding" within 10 years, with an estimated sales rate of 10% per year. Refers to new lease agreements which the Company has embedded part of its digital learning solutions. These lease agreements (digital learning) refer to lease terms of 36 months, with rates negotiated in the range of 10.3% p.a to 10.9% p.a. On March 15, 2021, the Company, substantially settled bonds with related parties amounting to R$ 100,000 and R$ 1,488, in principal and interest, respectively as follows: 5th Issuance, 1st series – R$ 101,488. In addition, the Company settled only interest on the following bonds: 5th Issuance, 2nd series – R$ 1,451, 6th Issuance, 2nd series – R$ 3,613 and 7th Issuance, single series – R$ 5,663. This measure is part of a commitment with shareholders as a result of the IPO. On May 31, 2021, the Company partially settled bonds with related parties amounting to R$ 188,000, of principal of the 7th issuance single series. On August 6, 2021, the Company settled the remaining 7th issuance with related parties in the amounts of R$189,564 and R$5,871, as principal and interest. In addition, the Company settled only interest on the following bonds: 5th Issuance, 2nd series – R$ 2,029 and 6th Issuance, 2nd series – R$ 4,758. 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .

OR

☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report

Commission file number: 001-39415

Vasta Platform Limited
(Exact name of Registrant as specified in its charter)

Not applicable
(Translation of Registrant’s name into English)

Cayman Islands
(Jurisdiction of incorporation or organization)

Av. Paulista, 901, 5th Floor
Bela Vista
São Paulo – SP, 01310-100
Brazil
+55 11 3133-7311
(Address of principal executive offices)

Cesar Augusto Silva, Chief Financial Officer
Av. Paulista, 901, 5th Floor
Bela Vista
São Paulo – SP, 01310-100
Brazil
+55 11 3133-7311
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Copies to:
Manuel Garciadiaz
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Phone: (212) 450-4000
Fax: (212) 450-6858

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

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Class A c ommon shares, par value US$0.00005 per share |  | VSTA |  | Nasdaq Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

The number of outstanding shares as of December 31, 202 2 was 18,213,794 Class A common shares and 64,436,093 Class B common shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☐ Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report: ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements: ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b) : ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☐ U.S. GAAP

☒ International Financial Reporting Standards as issued by the International Accounting Standards Board

☐ Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

VASTA PLATFORM LIMITED

TABLE OF CONTENTS

i

E. Dilution | 126
F. Expenses of the Issue | 126
ITEM 10. ADDITIONAL INFORMATION | 126
A. Share Capital | 126
B. Memorandum and Articles of Association | 126
C. Material Contracts | 135
D. Exchange Controls | 135
E. Taxation | 135
F. Dividends and Paying Agents | 138
G. Statement by Experts | 138
H. Documents on Display | 138
I. Subsidiary Information | 138
J. Annual Report to Security Holders | 138
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 138
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 139
A. Debt Securities | 139
B. Warrants and Rights | 139
C. Other Securities | 139
D. American Depositary Shares | 139
PART II | 140
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | 140
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 140
A. Material Modifications to Instruments | 140
B. Material Modifications to Rights | 140
C. Withdrawal or Substitution of Assets | 140
D. Change in Trustees or Paying Agents | 140
E. Use of Proceeds | 140
ITEM 15. CONTROLS AND PROCEDURES | 140
A. Disclosure Controls and Procedures | 140
B. Management’s Annual Report on Internal Control over Financial Reporting | 141
C. Attestation Report of the Registered Public Accounting Firm | 141
D. Changes in Internal Control over Financial Reporting | 141
ITEM 16. RESERVED | 141
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT | 141
ITEM 16B. CODE OF ETHICS | 141
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES | 141
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | 142
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | 142
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT | 143
ITEM 16G. CORPORATE GOVERNANCE | 143
ITEM 16H. MINE SAFETY DISCLOSURE | 149
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 149
PART III | 150
ITEM 17. FINANCIAL STATEMENTS | 150
ITEM 18. FINANCIAL STATEMENTS | 150
ITEM 19. EXHIBITS | 150
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | F-1

ii

Table of Contents
Presentation of Financial and Other Information

Unless otherwise indicated or the context otherwise requires, all references in this annual report to “Vasta” or the “Company”, “we”, “our”, “ours”, “us” or similar terms refer to Vasta Platform Limited, together with its subsidiaries.

The term “Brazil” refers to the Federative Republic of Brazil and the phrase “Brazilian government” refers to the federal government of Brazil. “Brazilian Central Bank” refers to the Brazilian Central Bank (Banco Central do Brasil). References in the annual report to “real”, “reais” or “R$” refer to the Brazilian real, the official currency of Brazil and references to “U.S. dollar”, “U.S. dollars” or “US$” refer to U.S. dollars, the official currency of the United States.

All references to the “Companies Act” are to the Cayman Islands’ Companies Act (As Revised) as the same may be amended from time to time, unless the context otherwise requires.

All references to “IFRS” are to International Financial Reporting Standards, as issued by the International Accounting Standards Board, or the IASB.

Financial Statements

Vasta was incorporated on October 16, 2019, as a Cayman Islands exempted company with limited liability duly registered with the Registrar of Companies of the Cayman Islands.

We maintain our books and records in Brazilian reais, the presentation currency for our financial statements and also the functional currency of our operations in Brazil. We prepare our annual consolidated financial statements in accordance with IFRS, as issued by the IASB. Unless otherwise noted, our financial information presented herein is stated in Brazilian reais, our reporting currency.

- The financial information contained in this annual report is derived from our audited consolidated financial statements as of December 31, 202 2, and 202 1 and for the years ended December 31, 202 2, 202 1 and 2020.

All references herein to “the audited consolidated financial statements” are to the financial statements described above as the case may be, included elsewhere in this annual report.

O ur fiscal year end on December 31. References in this annual report to a fiscal year, such as “fiscal year 202 2”, relate to our fiscal year ended on December 31 of that calendar year.

Corporate Events

Our Incorporation and Corporate Reorganization

We are a Cayman Islands exempted company incorporated with limited liability on October 16, 2019 for purposes of undertaking our initial public offering, or IPO, and, at the time, we were fully owned by Cogna Educação S.A. (“Cogna”).

On October 11, 2018, Saber, a subsidiary of Cogna (formerly known as Kroton Educacional S.A.), our parent company, and a Brazilian publicly-listed company in the Novo Mercado segment of B3 S.A. – Brasil, Bolsa, Balcão, or B3, with no controlling shareholder, acquired control over Somos Educação S.A., or Somos Educação, and together with its subsidiaries, the “Somos Group”, for R$6.3 billion, which we refer to herein as the “Acquisition”. Following the Acquisition, Cogna began managing Somos Group’s K-12 curriculum businesses and since October 2019 Cogna has adopted the Vasta brand for its B2B K-12 business, representing the combination of the K-12 curriculum businesses held by the Predecessors. Upon the Acquisition, the Somos Group, along with Pitágoras, came under the indirect common control of Cogna (and with the completion of the corporate reorganization (as defined below), came und er the direct control of Vasta.

In this annual report, we refer to the reorganization of our K-12 B2B business and the structuring of related subsidiaries (including the Contribution (as defined below)) under Vasta as the “corporate reorganization”.

1

Table of Contents

At the time of our incorporation, Cogna indirectly held a 100% ownership interest in the Somos Group and, together with its wholly owned subsidiary, EDE, a 100% ownership interest in Saber (7.44% held directly, with the other 92.56% held indirectly). Saber directly and indirectly held a 100% ownership interest in Somos Educação, which in turn held the Somos Group’s K-12 curriculum business. Also, Saber held the K-12 business operated as Pitágoras. In addition, before the implementation of the corporate reorganization, Somos Group carried out activities or owned assets or liabilities that were not within the scope of Vasta’s business. Such activities, assets or liabilities were segregated from Somos Group into Cogna prior to the consummation of our initial public offering, through corporate and contractual arrangements which included spin-offs, incorporations, capital reductions, purchase and sale of assets and assignment of liabilities, as well as capitalization of debts among the entities of the Somos Group, Saber, Cogna, EDE and other subsidiaries of Cogna.

On December 17, 2019, following a capital increase approved at Saber’s general shareholders meeting, Cogna increased its equity interest in Saber upon the capitalization into Saber of indebtedness due by Saber to it, in the amount of R$5.5 billion. As of December 17, 2019, Cogna directly held a 63.87% ownership interest in Saber and continued to hold the remaining 36.13% ownership interest indirectly, for a 100.0% direct and indirect ownership interest.

On December 31, 2019, following the spin-off of the Pitágoras K-12 business from Saber and the merger of the related assets and liabilities into Somos Sistemas de Ensino S.A., or Somos Sistemas, Cogna became the direct owner of a 100% ownership interest in Somos Sistemas. As of December 31, 2019, Cogna directly held a 62% ownership interest in Saber and continued to hold the remaining 38% ownership interest indirectly.

Prior to the consummation of our initial public offering, Cogna entered into a contribution agreement with us, by which 100% of the shares issued by Somos Sistemas held by Cogna was contributed into Vasta’s share capital, or the Contribution. The Contribution was accounted for at historical book value, in return for new Class B common shares that were issued by Vasta in a one-to-58 exchange for the shares of Somos Sistemas contributed to us. After the Contribution, Somos Sistemas became wholly owned by Vasta, which, in its turn, continued to be fully controlled by Cogna.

Until the Contribution of Somos Sistemas’ shares to us, we had not commenced operations and had only nominal assets and liabilities and no material contingent liabilities or commitments. Following the Contribution, Saber continued to own and operate, directly or through other subsidiaries, certain K-12 businesses as a subsidiary of Cogna, including the sales of textbooks under the PNLD (Programa Nacional do Livro e do Material Didático), which were separate d from Vasta’s business.

After accounting for the new Class A common shares that were issued and sold by us in our initial public offering, we had a total of 83,011,585 common shares issued and outstanding immediately following our initial public o ffering, 64,436,093 of these shares were Class B common shares beneficially owned by Cogna (which held 97.1% of the combined voting power of our outstanding Class A and Class B common shares), and 18,575,492 of these shares were Class A common shares beneficially owned by investors purchasing in our initial public offering (which held 2.8% of the combined voting power of our outstanding Class A and Class B common shares).

Initial Public Offering

On July 31, 2020, we carried out our initial public offering, consisting of 18,575,492 Class A common shares issued and sold by us. The public offering price was US$19.00 per Class A common share. We received net proceeds of US$333.5 million, after deducting R$19.4 million in underwriting discounts and commissions.

Share Repurchase Program

On August 13, 2021, our board of Directors approved our first share repurchase program, or the Repurchase Program. Under the Repurchase Program, we are entitled to repurchase up to 1,000,000 Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period that began on August 17, 2021, continuing until the earlier of the completion of the repurchase or February 17, 2022, depending upon market conditions. We concluded the Repurchase Program on December 10, 2021, using our existing funds to finance the repurchase, and on December 31, 202 2, we had a balance of R$23.9 million or 1,000,000 Class A common shares in treasury.

Acquisition of Editora De Gouges (Editora Eleva S.A.).

On February 22, 2021, our wholly owned subsidiary, Somos Sistemas, entered into a sale and purchase agreement to acquire, subject to certain conditions precedent, Editora Eleva S.A., or Editora Eleva, a K-12 education platform provider, from Eleva Educação S.A., or Eleva Educação. As consideration for such acquisition, we will pay a purchase price amounting to R$611.5 million, subject to certain price adjustments, in installments over a 5-year period (each installment adjusted by the positive variation of the CDI index). The consummation of the acquisition of Editora Eleva was completed in October 29, 2021.

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Acquisition of Phidelis

On January 14, 2022, we acquired the companies Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. and MVP Consultoria e Sistemas Ltda. (“Phidelis”), when the control over the entity was transferred upon completion of the conditions precedent established on the share purchase agreement.

We will pay a total purchase price in the amount of R$22.0 million, comprised of (i) R$8.9 million in cash, paid on the acquisition date, (ii) R$7.6 million to be paid in annual installments over the course of two years, and (iii) a variable R$5.5 million, with the achievement of performance linked to net revenue of the years 2023 and 2024 to be paid in three annual installments between 2023 and 2026. Both fixed and variable payment to be adjusted by the variation of Extended National Consumer Price Index (“IPCA”) in the period.

Phidelis is a platform of academic and financial management for K-12 schools, providing (i) software licensing and development, and (ii) messaging, retention, enrollment and default management for schools and students. In addition to aggregating a digital solution and bringing in new clients, Phidelis’s team will support the development of Vasta’s digital services platform.

For more information on other acquisitions, see “Item 4. Information on the Company—A. History and Development of the Company—Recent Developments”.

Investment in Educbank

On July 19, 2022, we acquired a minority interest in Educbank Gestão de Pagamentos Educacionais S.A., or Educbank. Our investment, through our subsidiary Somos, totaled R$87.7 million, for a 4 5% interest in Educbank, to be paid in four cash installments according to the growth of students served by Educbank. We will have the right to appoint two members (out of six) to the board of directors of Educbank.

Educbank is the first financial ecosystem dedicated to K-12 schools, intended to expand access to quality education in Brazil, through services’ management and financial support to educational institutions by providing payment guaranty to school tuitions. We believe t his investment will enable us to capture value potential in the following years, by entering the market for K-12 tuitions payment means, which has a Total Payment Volume (“TPV”) of over R$70 billion per year. Educbank’s services complement our digital services platform, which provides access to data, management tools and now working capital management, releasing time for school partners to focus on delivering education.

Financial Information in U.S. Dollars

Solely for the convenience of the reader, we have translated some of the real amounts included in this annual report from Reais into U.S. dollars. You should not construe these translations as representations by us that the amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated. Unless otherwise indicated, we have translated real amounts into U.S. dollars using a rate of R$5.218 to US$1.00, the commercial selling rate for U.S. dollars at December 31, 2022 as reported by the Brazilian Central Bank. See “Item 5. Operating and Financial Review and Prospects—A. Operating Result—Exchange Rates” for more detailed information regarding translation of Reais into U.S. dollars and for historical exchange rates for the Brazilian real.

Special Note Regarding Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted Net (Loss) Profit, Free Cash Flow and Adjusted Cash Conversion Ratio

This annual report presents our Adjusted EBITDA, Adjusted Net (Loss) Profit, Free Cash Flow and Adjusted Cash Conversion Ratio information for the convenience of investors. Adjusted EBITDA, Adjusted Net (Loss) Profit, Free Cash Flow and Adjusted Cash Conversion Ratio are the key performance indicators used by us to measure financial operating performance. Our management believes that these Non-GAAP financial measures provide useful information to investors and shareholders. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, evaluate our underlying historical performance and business strategies and to report our results to the board of directors.

We calculate Adjusted EBITDA as Loss for the year plus/minus: (a) income tax and social contribution; (b) net finance result; (c) depreciation and amortization; (d) share-based compensation expenses, mainly due to the grant of additional shares to Somos’ employees in connection with the change of control of Somos to Cogna (for further information refer to note 2 4 to the audited c onsolidated financial statements); (e) Bonus IPO, which refers to bonus paid to certain executives and employees based on restricted share units and (f) expenses with contractual termination of employees due to organizational restructuring. We understand that such adjustments are relevant and should be considered when calculating our Adjusted EBITDA, which is a practical measure to assess our operational performance that allows us to compare it with other companies that operate in the same segment.

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We calculate Adjusted Net (Loss) Profit as the Loss for the year as presented in our Statement of Profit or Loss and Other Comprehensive Income adjusted by the same Adjusted EBITDA items, further added by (a) Amortization of intangible assets from Business Combination; (b) reversal of tax contingencies incurred prior to the ac quisi tion of Somos-Anglo; and (c) tax effect of 34% generated by the aforementioned adjustments.

We calculate Free Cash Flow as the net cash flows from operating activities as presented in the statement of cash flows of our financial statements less cash flows required for: (i) acquisition of property and equipment; (ii) addition to intangible assets; and (iii) payment for lease liabilities. We consider Free Cash Flow to be a liquidity measure, therefore, we adjust our Free Cash Flow metric with amounts that directly impacted the cash flows in the period in addition to the operating activities. The Free Cash Flow measure provides useful information to management and investors about the amount of cash generated by our operations, deducting for investments in property and equipment to maintain and grow our business.

We calculate Adjusted Cash Conversion Ratio as the Free Cash Flow divided by Adjusted EBITDA for the relevant period.

We understand that, although Adjusted EBITDA, Adjusted Net (Loss) Profit, Free Cash Flow and Adjusted Cash Conversion Ratio are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. Additionally, our calculations of Adjusted EBITDA, Adjusted Net (Loss) Profit, Free Cash Flow and Adjusted Cash Conversion Ratio may be different from the calculation used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies.

For a reconciliation of our non-GAAP financial measures, see “Item 5. Operating and Financial Review and Prospects—A. Operating Result—Reconciliations for Non-GAAP Financial Measures”.

Special Note Regarding ACV Bookings

This annual report presents our ACV Bookings for the convenience of investors. This operating metric is not prepared in accordance with IFRS. ACV Bookings is a non‑accounting managerial metric and represents our partner schools’ commitment to pay for our solutions offerings. We believe it is a meaningful indicator of demand for our solutions. In particular, we believe ACV Bookings is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the 12‑month period between October 1 of one fiscal year through September 30 of the following fiscal year. We generally deliver our educational materials to our schools for their convenience in the last calendar quarter of each year, so that our schools can prepare their classes in advance prior to the start of the following school year in January. As a result, our results of operations for the last quarter of a given fiscal year contain revenue relating to the following school year relating to the content that has been delivered prior to the start of the new fiscal year. Therefore, ACV Bookings conveys information that has predictive value for subsequent months, and which may not be as clearly conveyed or understood by simply analyzing our revenue in our statements of income, especially in view of our recent growth.

We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or “enrolled students”, that will access our content at such partner school in such school year. We calculate ACV Bookings by multiplying the number of enrolled students at each school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related school. Although our contracts with our schools are typically for 4‑year terms, we record one year of revenue under such contracts as ACV Bookings. For example, if a school enters into a 4‑year contract with us to provide one of our Core & EdTech platform solutions (such as learning systems or PAR) to 100 students for a contractual fee of US$100 per student per year, we record US$10,000 as ACV Bookings, not US$40,000. ACV Bookings are calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during each period of a sales cycle may be different from the ACV Bookings for the respective sales cycle. Our reported ACV Bookings are subject to risks associated with, among other things, economic conditions and the markets in which we operate, including risks that our contracts may be canceled or adjusted.

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Market Share and Other Information

This annual report contains data related to economic conditions in the market in which we operate. The information contained in this annual report concerning economic conditions is based on publicly available information from third-party sources that we believe to be reasonable. Market data and certain industry forecast data used in this annual report were obtained from internal reports and studies, where appropriate, as well as estimates, market research, publicly available information (including information available from the United States Securities and Exchange Commission website) and industry publications. We obtained the information included in this annual report relating to the industry in which we operate, as well as the estimates concerning market shares, through internal research, public information and publications on the industry prepared by official public sources, such as the Brazilian Central Bank, the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística), or IBGE, the Brazilian Ministry of Education (Ministério da Educação), or MEC, the Anísio Teixeira National Institute of Educational Studies and Research (Instituto Nacional de Estudos e Pesquisas Educacionais Anísio Teixeira), or INEP, the School Census (Censo Escolar), the NCES, and the Brazilian Economic Institute of Fundação Getúlio Vargas (Instituto Brasileiro de Economia da Fundação Getúlio Vargas), or FGV/IBRE as well as private sources, such as the report by Oliver Wyman that was commissioned by us.

Industry publications, governmental publications and other market sources, including those referred to above, generally state that the information they include has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Except as disclosed in this annual report, none of the publications, reports or other published industry sources referred to in this annual report were commissioned by us or prepared at our request. Except as disclosed in this annual report, we have not sought or obtained the consent of any of these sources to include such market data in this annual report.

Rounding

We have made rounding adjustments to some of the figures included in this annual report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

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Forward-Looking Statements

This annual report on Form 20-F contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this annual report can be identified by the use of forward-looking words such as “anticipate”, “believe”, “could”, “expect”, “should”, “plan”, “intend”, “is designed to”, “may”, “predict”, “continue” “estimate” and “potential”, or the negative of these words, among others.

Forward-looking statements appear in a number of places in this annual report and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified under the section entitled “Risk Factors” in this annual report. These risks and uncertainties include factors relating to:

- fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future;
- further downgrade of Brazil’s credit rating;
- social and political instability, including allegations of corruption against political parties, civil servants and others;
- inflation, appreciation and depreciation of the real against the U.S. dollar;
- general economic, financial, political, demographic and business conditions in Brazil, (including the impact of the current international economic environment) as well as any other countries we may serve in the future and their impact on our business;
- the political climate leading up to and the political climate following the outcome of the 2022 presidential elections in Brazil;
- our ability to implement our business strategy and expand our portfolio of products and services;
- our limited operating history in new business segments on which we have not been focused in the past, such as providing our services to schools in the public sector, including with respect to different rules and regulations that may apply to us;
- our ability to adapt to technological changes in the educational sector;
- the availability of government authorizations on terms and conditions and within periods acceptable to us;
- our ability to continue attracting and retaining new partner schools and students;
- our ability to maintain the academic quality of our programs;
- the availability of qualified personnel and the ability to retain such personnel;
- changes in the financial condition of the students enrolling in our programs in general and in the competitive conditions in the education industry;
- our capitalization and level of indebtedness;
- negative impact of health crises, epidemics or pandemics, such as the COVID-19 pandemic and government measures taken in response thereto;
- the interests of our controlling shareholder;
- changes in government regulations applicable to the education industry in Brazil;

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- government interventionism education industry programs, that affect the economic or tax regime, the collection of tuition fees or the regulatory framework applicable to educational institutions;
- cancellations of contracts within the solutions we characterize as subscription arrangements or limitations on our ability to increase the rates we charge for the services we characterize as subscription arrangements;
- our ability to compete and conduct our business in the future;
- our ability to anticipate changes in the business, changes in regulation or the materialization of existing and potential new risks;
- the success of operating initiatives, including advertising and promotional efforts and new product, service and concept development by us and our competitors;
- changes in consumer demands and preferences and technological advances, and our ability to innovate to respond to such changes;
- changes in labor, distribution and other operating costs;
- our compliance with, and changes to, government laws, regulations and tax matters that currently apply to us;
- the effectiveness of our risk management policies and procedures, including our internal control over financial reporting;
- other factors that may affect our financial condition, liquidity and results of operations; and
- risk factors discussed under “Item 3. Key Information—D. Risk Factors”.

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A. Directors and Senior Management

Not applicable.

B. Advisers

Not applicable.

C. Auditors

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
A. Offer Statistics

Not applicable.

B. Method and Expected Timetable

Not applicable.

ITEM 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Summary of Risk Factors

This section is intended to be a summary of more detailed discussions contained elsewhere in this annual report. The risks described below are not the only ones we face. Our business, results of operations or financial condition could be harmed if any of these risks materializes and, as a result, the trading price of our Class A common shares could decline.

Summary of Risks Factors Relating to Our Business and Industry

- We face significant competition and, if we fail to compete efficiently, we may lose market share and our profitability may be adversely affected. Our existing competitors and potential new competitors may offer similar or better educational solutions or substitutes in comparison to those we offer, and they may have access to more resources, be more prestigious or enjoy a better reputation in the academic community or may charge lower prices, all of which could adversely affect our business and results of operations.
- We depend significantly on IT systems, and we are subject to risks related to technological change. IT systems are essential to our operations and growth as our content is available through an integrated online Content & EdTech P latform and we depend on the uninterrupted function of our online platform to deliver our products and services. Any failure to upgrade our technology, features, content, software systems, security infrastructure, network infrastructure, or other infrastructure associated with our platform could harm our business.

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- We may be subject to penalties under Anti-Corruption Laws. We have in the past engaged in, and continue to maintain, relationships with a number of public entities. Any conduct by our employees or agents with public officials in any manner that fails to comply with our code of conduct, the anti-corruption manual, the Brazilian Anti-Corruption Law, the Federal Administrative Procedural Law, the Administrative Improbity Law and the FCPA could lead to government investigations, judicial and/or administrative proceedings and sanctions that would have an adverse effect on our business, financial condition and results of operations.
- Our operations and results may be negatively impacted by health crises, epidemics or pandemics. Public health outbreaks, epidemics or pandemics, such as the COVID-19 pandemic, could materially adversely impact our business depending on several continuously evolving factors that are difficult to predict and, in many instances, are beyond our control, including, but not limited to, the negative economic impact of the pandemic on general economic activity, the actions taken by governments, businesses and individuals in response to the pandemic, the recovery of economies and demand for our products following the end of the pandemic and our ability to keep our costs consistent with changes in demand for our products and services.
- We have a significant amount of debt and may incur additional debt in the future. We may be required to use a substantial portion of our cash flows to pay the principal and interest on our indebtedness. These payments could reduce the funds available for working capital, capital expenditures and other corporate purposes and could limit our ability to obtain additional financing for working capital or making capital expenditures for expansion plans and other investments, which may in turn limit our ability to implement our business strategy and may adversely affect us.

Summary of Risks Relating to Brazil

- The Brazilian federal government has exercised, and continues to exercise, significant influence over the Brazilian economy, which may negatively affect our business and financial performance. Future governmental policy and regulations may adversely affect our operations and profitability. Moreover, Brazil elected a new president in October 2022, for a four-year term starting in 2023. The president of Brazil has the power to determine policies and issue governmental acts related to the conduct of the Brazilian economy and, consequently, affects the operations and financial performance of companies, including ours. We cannot predict which policies the newly elected president will adopt, much less whether such policies or changes in current policies may have an adverse effect on us or on the Brazilian economy.
- The ongoing economic uncertainty and political instability in Brazil, including as a result of ongoing corruption investigations, may harm us and the price of our Class A common shares. The recent economic and political instability in Brazil caused by a slowdown in GDP growth, and uncertainty as to whether the Brazilian government will enact the necessary economic reforms to improve Brazil’s deteriorating fiscal accounts and economy, has led to a decline in market confidence in the Brazilian economy and a government crisis. Furthermore, since the results of the presidential election have been announced and as of the date of this annual report, certain groups formed by supporters of the defeated candidate (the former president of Brazil, who sought reelection) have been organizing public demonstrations and protests against the electronic ballot boxes and the existence of an alleged conspiracy against their candidate. Any potential threat to the democratic system or the counting of ballots may result in deterioration of the political environment in Brazil, which could have a material adverse effect on our business, financial condition and results of operations, as well as on the price of our securities.
- Exchange rate instability may have adverse effects on the Brazilian economy, our business and the trading price of our Class A common shares. Due to inflationary pressures and adjustments to economic policy, the Brazilian currency has historically experienced volatility against the U.S. dollar and other foreign currencies. Such policies and any reactions to them may harm us by curtailing access to foreign financial markets and prompting further government intervention. A devaluation of the real relative to the U.S. dollar may also, as in the context of the current economic slowdown, decrease consumer spending, increase deflationary pressures and reduce economic growth.
- Inflation and certain measures by the Brazilian government to curb inflation could have an adverse effect on our business and the price of our Class A common shares. In 2022, inflationary pressures escalated in Brazil, including as a result of the ongoing war between Ukraine and Russia, supply chain issues, the continued COVID-19 pandemic (particularly in China) and increases in energy prices. The significant increase in the cost of living led the Brazilian government to introduce tax cuts on selected items, which helped ease pressures in Brazil. Inflation, policies adopted to curb inflationary pressures and uncertainties regarding possible future governmental intervention have contributed to economic uncertainty and heightened volatility in the Brazilian capital markets, which may adversely affect us.

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Summary of Risk Factors Relating to Our Class A Common Shares

- Our parent company, Cogna, owns 100% of our outstanding Class B common shares, which represent 97.3% of the voting power of our issued share capital and 7 8.0% of our total equity ownership. Accordingly, Cogna controls all matters requiring shareholder approval, limiting our ability to influence corporate matters. Moreover, so long as Cogna continues to beneficially own a sufficient number of Class B common shares, even if Cogna beneficially owns significantly less than 50% of our outstanding share capital, Cogna will be able to effectively control our decisions.

- Our status as a controlled company and a foreign private issuer exempts us from certain of the corporate governance standards of the Nasdaq, limiting the protections afforded to investors. Under the Nasdaq rules, a controlled company is exempt from certain Nasdaq corporate governance requirements. In addition, a foreign private issuer may elect to comply with the practice of its home country and not to comply with certain Nasdaq corporate governance requirements. Although we have similar practices, they do not entirely conform to the Nasdaq requirements as we make use of the aforementioned exceptions, which investors will not have the same protections provided to shareholders of companies that are subject to all Nasdaq corporate governance requirements.
- Our dual class capital structure means our shares will not be included in certain indices, and this could affect the market price of our Class A shares. In 2017, FTSE Russell, S&P Dow Jones and MSCI announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices to exclude companies with multiple classes of shares of common stock from being added to such indices. We cannot assure investors that other stock indices will not take a similar approach to FTSE Russell, S&P Dow Jones and MSCI in the future. Exclusion from indices could make our Class A common shares less attractive to investors and, as a result, the market price of our Class A common shares could be adversely affected.
- Our shareholders may face difficulties in protecting their interests because we are a Cayman Islands exempted company. The rights of our shareholders and the fiduciary responsibilities of our directors under the laws of the Cayman Islands are not as clearly defined as under statutes or judicial precedent in existence in jurisdictions in the United States. Therefore, you may have more difficulty protecting your interests than would shareholders of a corporation incorporated in a jurisdiction in the United States, due to the comparatively less formal nature of Cayman Islands law in this area. Accordingly, certain civil liabilities and judgments obtained against us in the United States by our shareholders may not be enforceable against us.

Certain Factors Relating to Our Business and Industry

We face significant competition, the possibility of new competitors and potential substitutes for every product or service we offer and in each geographic region in which we operate. If we fail to compete efficiently, we may lose market share and our profitability may be adversely affected.

We compete with other educational platforms and suppliers of educational content. Our existing competitors and potential new competitors may offer similar or better educational solutions or substitutes in comparison to those we offer. In addition, existing and potential competitors may have access to more resources, be more prestigious or enjoy a better reputation in the academic community or may charge lower prices. To compete effectively we may be required to reduce the prices of our educational products and solutions, increase our operating expenses or look for new market opportunities to retain and/or attract new customers. As a result, our revenue and profitability may decrease. We cannot guarantee that we will be able to compete successfully with our current or future competitors. In addition, we have observed a trend of increasing consolidation in certain segments of the primary and secondary education markets in Brazil. If this trend intensifies (as has occurred in the higher education market in Brazil) we may face increasing competition in the markets in which we operate. If we are unable to maintain our competitive position or otherwise respond to competitive pressures effectively, we may lose our market share, our profits may decrease, and we may be adversely affected.

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We may not be able to update, improve or offer the content and products of our Core & EdTech Platform and Digital Platform efficiently, at an acceptable price and within the necessary timeframes.

Our Core & EdTech platform is intended to offer a complete package of educational solutions to address core curriculum requirements as well as complementary curricula such as English instruction and socio-emotional content, preparing students for entry into the most prestigious universities in Brazil and abroad, and offering a complete solution for personal and academic development. Our Digital Platform also offers our partner schools a suite of back-office services. In order to differentiate ourselves from our competitors, we must constantly update our portfolio of products, services and solutions, including through the adoption of new technologies. We may not be able to adapt and update our products and services or develop new solutions quickly enough to provide our customers, their students and our students the solutions required by changing demands in the markets in which we operate. If we are unable to respond adequately to these demands due to financial restrictions, technological changes or other factors, our capacity to attract and retain customers and students may be adversely affected, damaging our reputation and our business.

We depend significantly on IT systems and are subject to risks related to technological change. Any failure to maintain and support customer facing services, systems, and platforms, including addressing quality issues and executing timely release of new products and enhancements, could negatively impact our revenue and reputatio n.

IT systems are essential to our operations and growth as our content is available through an integrated online Content & EdTech P latform and we depend on the uninterrupted function of our online platform to deliver our products and services. Our IT systems and tools may become obsolete or inadequate for delivering our Content & EdTech P latform, whether due to rapidly evolving network protocols or new developments in network hardware, or we may face difficulty in staying abreast of and adapting to technological changes in the education sector.

We use complex proprietary IT systems and products, which Cogna shares with us, to support our business activities, including customer-facing systems, back-office processing and infrastructure. We also contract with datacenter service providers to host certain aspects of our platform and content. Our operations depend, in part, on the ability of our providers to protect their facilities against damage or interruption caused by natural disasters, power cuts, telecommunications breakdowns, criminal acts and similar events. Peak traffic, natural disasters, acts of terrorism, vandalism or sabotage, facility shutdowns on short notice, or other unforeseen problems relating to our service providers’ facilities, could result in prolonged interruptions in the availability of our platform, which could lead to customer dissatisfaction, damaging our reputation and our business.

Additionally, a failure to upgrade our technology, features, content, software systems, security infrastructure, network infrastructure, or other infrastructure associated with our platform could harm our business. Adverse consequences could include unanticipated disruptions, slower response times, bugs, degradation in levels of customer support, impaired quality of users’ experiences of our educational platform and delays in reporting accurate financial information.

In addition, we face risks associated with unauthorized access to our systems, including by hackers and due to failures of our electronic security measures. These unauthorized entries into our systems can result in the theft of proprietary or sensitive information or cause interruptions in the operation of our systems. During the year s ended December 31, 202 2 and 202 1, we detected certain attempts to breach the security of our IT systems, all of which were unsuccessful. Moreover, we continuously monitor potential vulnerabilities in our IT and data systems and strive to improve security. Current unfinished initiatives in this regard include: (i) a disaster recovery system for our data centers; (ii) implementation of the Secure Development program; and (iii) a continuous monitoring program for our Secure Ambient program.

Moreover, as a result of the COVID-19 pandemic, we have increased the number of employees working remotely and we continue to allow remote work even after the pandemic. This will require us to continue relying on remote-access information technology systems, which increases the risk of unavailability of our systems and infrastructure, disruption of telecommunications services, widespread system failures, and exposes us to increased vulnerability to cyberattacks could adversely affect our ability to conduct our business may be adversely impacted. As a result, we may be forced to incur considerable expenses to protect our systems from electronic security breaches and to mitigate our exposure to technological problems and interruptions. The theft of data from our customers may subject us to significant fines and penalties, adversely affecting our results of operations and damaging our reputation.

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Our revenue depends on sales of educational content, products and services to our customers, and any setback in customer relations could cause us significant harm.

The success of our business depends on maintaining good customer relationship s, developing new relationships and expanding our customer network, which includes private K-12 schools, their students and parents, among others. Any deterioration in customer relations, including due to early cancellation or non-renewal of agreements with our customers, could damage our reputation, adversely affect our ability to grow and significantly harm our business.

Our agreements with partner schools provide for fines and penalties in the event of early termination. However, there can be no assurance that such partner schools will pay such fines in the event of early termination and our customers may seek relief in court proceedings to contest the term of such agreements or the payment of such fines. We could also be forced to seek legal remedies in the event of early termination of our agreements in order to enforce the payment of such fines, though there can be no assurance that we would be successful in connection with any such legal proceedings, and we could incur significant costs attempting to enforce our rights. Such costs, considered in addition to the lost revenue from terminated contracts, could have an adverse effect on our results of operations.

We employ a customer support team to provide educational assistance and training for students and educators at our partner schools to help them maximize the results they obtain from using our Content & EdTech P latform. Our customer support team must carry out frequent site visits in an effort to build positive relationships and strengthen our ties with our partner schools. In addition, our Livro Fácil e-commerce has its own customer service structure, which serves mostly families but is also integrated with the schools’ relationship centers. If we do not provide our customers with efficient and effective support, maintain appropriate customer satisfaction levels or hire personnel in number sufficient to address our customers’ needs, our ability to operate and expand our business could be adversely affected.

Our Content & EdTech Platform and Digital Platform are technologically complex, and potential defects in our platforms or in updates to our platforms can be difficult or even impossible to fix.

Our Content & EdTech Platform and Digital Platform are technically complex products, and, when first introduced to customers or when upgraded through new versions, may contain software or hardware defects that are difficult to be detected and corrected. The existence of defects and delays in correcting them can have adverse effects, such as, cancellation of contracts, delays in the receipt of payment, poor functioning of our platforms and their content, failure to acquire new customers, or misuse of our platforms by third parties.

We test new versions and upgrades to our Content & EdTech Platform and Digital Platform, but we cannot assure that all defects related to platform updates can be identified before, or even after a new version of our platforms are made available. The correction of defects can be time-consuming, expensive and difficult. Errors and security breaches of our products could expose us to product liability claims and damage our reputation, which could have an adverse effect on our business, financial condition and results of operations.

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Our growth may have a negative effect on the successful expansion of our business, on our people management, and on the increase in complexity of our software and platforms.

We are currently experiencing a period of expansion and are facing a number of expansion related issues, such as the acquisition and retention of experienced and talented personnel, cash flow management, corporate culture and internal controls, among others. These issues and the significant amount of time spent on addressing them may result in the diversion of our management’s attention from other business issues and opportunities. In addition, we believe that our corporate culture and values are critical to our success, and we have invested a significant amount of time and resources building them. If we fail to preserve our corporate culture and values, our ability to recruit, retain and develop personnel and to effectively implement our strategic plans may be harmed.

We must constantly update our software and platforms, enhance and improve our billing and transaction and other business systems, and add and train new software designers and engineers, as well as other personnel to help us with the increased use of our platforms and the new solutions and features we regularly introduce. This process is time intensive and expensive and may lead to higher costs in the future. Furthermore, we may need to enter into relationships with various strategic partners, such as online service providers and other third parties necessary to our business. The increased complexity of managing multiple commercial relationships could lead to execution problems that can affect current and future revenue, and operating margins.

We cannot assure you that our current and planned platforms, systems, products, procedures and controls, personnel and third-party relationships will be adequate to support our future operations. In addition, our current expansion has placed a significant strain on management and on our operational and financial resources, and this strain is expected to continue. Our failure to manage growth effectively could harm our business, results of operations and financial condition.

Our business depends on the success of our brands and our ability to attract and retain customers could be adversely affected due to events or conditions that damage our reputation or the image of our brands.

We believe that market awareness of our brands has contributed significantly to the success of our business. Maintaining and enhancing our brands is crucial to our efforts to maintain and grow our customer network. We also depend significantly on the efforts of our sales force and our marketing channels, including online advertising, marketing research tools, social media and word of mouth. Failure to maintain and enhance our brand recognition could have a material adverse effect on our business, operating results and financial condition. We have devoted significant resources to our brand promotion efforts and to training our sales team in recent years, but we cannot assure you that these efforts will be successful. Our ability to attract new customers and retain our existing customers depends on our investments in our brands, on our marketing efforts and the success of our sales team, and the perceived value of our services in comparison with our competitors. If customers fail to distinguish our brands and the content we offer from our competitors, this may lead to decreased sales and revenue, lower margins or a decline in the market share of our brands. If our marketing initiatives are unsuccessful or become less effective, if we are unable to further enhance our brand recognition, if we incur excessive marketing and promotion expenses, or if our brand image is negatively impacted by any negative publicity, or if our customers misuse our brands in a way that results in a poor general perception of our brands, our business and results of operations could be materially and adversely affected.

Our business is subject to seasonal fluctuations, which may cause our operating results to vary from quarter‑to‑quarter and adversely impact our working capital and liquidity throughout the year, adversely affecting our business, financial condition and results of operations.

Our main deliveries of printed and digital materials to our customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year. In addition, we generally bill our customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half.

A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, in order to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.

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Accordingly, due to the timing of sales and delivery of our educational products, services and content, and the timing of university entrance exams, we expect that our revenue and operating results will continue to exhibit quarterly fluctuations. These seasonal fluctuations could result in volatility and adversely affect our liquidity and cash flows. As our business grows, these seasonal fluctuations may become more pronounced. As a result, we believe that sequential quarterly comparisons of our financial results may not provide an accurate assessment of our financial situation.

In addition, our cash flows are affected by our customer conversion rate, which is measured from the moment of first contact with a customer or when a customer enters our target list (that is, when our commercial team identifies contracts nearing termination or when customers raise complaints or dissatisfaction with their service level) until formalizing an agreement, which generally takes three to four months. As part of our sales efforts, we incur significant expenditures, including expenses related to revi sion of credit terms and collaterals with main customers, commercial efforts to maintain frequent and meaningful interactions with certain target customers, including through meetings dedicated to evaluating and testing our platform, promotional events for our target customers, distribution of product samples, guided tours of our business units, and exhibitions at industry fairs. These costs also generate quarterly fluctuations in our cash flows, which could result in annual volatility and have an adverse effect on our liquidity. As our business grows, or if our business were to stop growing or we lost customers, these fluctuations could become more pronounced.

Our working capital needs have increased and may well continue to increase as our business expands. If we do not increase our cash flow generation or gain access to additional capital, either through credit lines or other sources of capital, which may not be available on satisfactory terms or in adequate amounts, our cash and cash equivalents may decrease, which will have a negative impact on our liquidity and capital resources. In addition, if we do not have sufficient working capital, we may not be able to pursue our growth strategy, respond to competitive pressures or fund key strategic initiatives, which could harm our business, financial condition and results of operations.

We could be subject to risks related to inventory management.

We are exposed to significant inventory management risks, which could adversely affect our operating results due to the continued effects of events such as the Russia-Ukraine war and persistence of the COVID-19 pandemic on global supply chains and inflation, such as: (1) rapid changes in product cycles; (2) changes in consumer tastes as a result growth in online learning; (3) changes in consumer demand and consumption patterns; (4) seasonality caused by new school closures as a response to potential virus outbreaks; and (5) launch of new products delayed as a result of school closures. We may not forecast seasonality and product and consumer trends in a manner to accurately manage our inventory needs, and demand for products could change significantly between the time we build our stock of inventory and the time we deliver our products.

In addition, when we start selling new products, we may not be able to establish favorable relationships with new suppliers, develop the right products or accurately forecast demand. The acquisition of certain types of inventories can be time-consuming and may require significant prepayments, which may not be refundable. Finally, we have a broad selection and high volume of inventory of certain products, and we may not be able to sell sufficient quantities of these products, leading to obsolescence losses. Our failure to adequately manage our inventory for any of the reasons mentioned above could adversely affect business and results of operations.

While our businesses are managed and financed independently from our parent company, Cogna, we are party to a cost-sharing agreement for certain administrative expenses, and an increase in the amounts we pay to Cogna might be disproportional to the benefits we receive and could affect our performance. In addition, we share certain logistics-related expenses with Cogna, and the reimbursement to us by Cogna for such shared expenses may not be sufficient to meet our actual costs.

We are party to a cost-sharing agreement with Cogna for certain administrative expenses, such as those related to corporate, legal and accounting activities, which we refer to as overhead expenses. Under this cost-sharing agreement, we are required to pay our proportional share of overhead expenses based on our revenue as a share of the Cogna group’s aggregate revenue. Cogna may incur increased overhead expenses in the course of its operations that cannot be allocated directly in a unique operation within the Cogna group and may not be directly related to our operations, whether due to increased acquisition activities, as part of corporate restructurings, or for operations generally, which would result in an increase in the overhead expenses we would be required to pay under the cost sharing agreement, and a corresponding increase in our general and administrative expenses, without corresponding benefits to our operations, which could have an adverse effect on our results of operations.

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Moreover, we share certain logistics-related expenses with Cogna, and there may be cases in the future in which the reimbursement of such shared expenses that may be paid to us by Cogna may not be sufficient to cover expenses actually incurred by us in respect of logistics services benefitting Cogna, which would cause us to bear a disproportionate share of such expenses, thereby having an adverse effect on our business and results of operations.

Misuse of our brands or other actions carried out by other companies controlled by our parent company, Cogna, may damage our business and our reputation due to certain of our brands being shared with other businesses controlled by Cogna.

Several of our brands are shared between us, Cogna and other companies that are controlled by Cogna, which operate in different markets from ours (such as postsecondary education and the operation of certain other K-12 curriculum business separate from ours), and the misuse of these shared brands or actions taken by such companies could negatively affect our reputation, which could have an adverse effect on our business and results of operations. In November and December 2019, we entered into certain brand sharing agreements with Cogna, but these agreements may not assure uninterrupted and conflict-free use of our brands. If we lose the right to use these brands or become subject to restrictions in the use of our brands, our business and results of operations could be adversely affected. Some of the brands we will use in our business are owned by subsidiaries of Cogna, for which we were granted a license to use pursuant to certain agreements. Nevertheless, such agreements may not ensure uninterrupted use of these brands and do not guarantee that we will not be subject to future conflict related to the use of these brands. Any conflict that arises out of the use of our brands could adversely affect our business and results of operations.

Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business and financial condition and results of operations.

We rely and expect to continue to rely on a combination of trademark, copyright, patent and trade secret protection laws, as well as confidentiality, intellectual property license and assignment agreements with our employees, consultants and third parties with whom we have relationships to protect our intellectual property and proprietary rights. As of the date of this annual report, we did not have issued patents or patent applications pending in or outside Brazil. We are party to approximately 3,000 agreements with third party authors with respect to educational content. We own approximately 525 trademark registrations, including the trademarks and logos of “Vasta”, “Somos Educação”, “Editora Atica”, “Editora Scipione”, “Atual Editora”, “Sistema Anglo de Ensino”, “P AR Plataforma Educacional”, “Sistema Maxi de Ensino”, “English Stars”, “Rede Cristã de Educação”, “Plurall” and “MindMakers”, among others. We also have approximately 40 pending trademark applications in Brazil and four in the United States for trademarks “Vasta”, “Vasta Educação” and “Somos Educação”, and unregistered trademarks that we use to promote our brands. We also have the right to use trademark registrations for “Pitágoras” (owned by a subsidiary of Cogna) and “Saraiva” (owned by Saraiva Gestão de Marcas S.A., a company jointly owned by Cogna and third parties who are not controlled by us nor by Cogna). As of the date of this annual report, we owned approximately 130 registered domain names in Brazil. From time to time, we expect to file additional copyright, trademark and domain names applications in Brazil and abroad. Nevertheless, these applications may not be approved or otherwise provide the full protection we seek. The dismissal of any of our trademark applications may impact our business. Third parties may challenge any copyrights, trademarks and other intellectual property and proprietary rights owned or held by us. Third parties may knowingly or unknowingly infringe, misappropriate or otherwise violate our copyrights, trademarks and other proprietary rights and we may not be able to prevent infringement, misappropriation or other violation without substantial expense to us.

Furthermore, we cannot guarantee that:

- our intellectual property and proprietary rights will provide competitive advantages to us;
- our competitors or others will not design projects based on our intellectual property or proprietary rights;
- our ability to assert our intellectual property or proprietary rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties;
- our intellectual property and proprietary rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak;

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- any of the patents, trademarks, copyrights, trade secrets or other intellectual property or proprietary rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned;
- we will not lose the ability to assert our intellectual property or proprietary rights or to license our intellectual property or proprietary rights to others;
- the texts and illustrations by third parties contained in the literary works that we sell have all been licensed and approved for use by us; or
- we will not be adversely affected in case Cogna is subject to any liabilities related to literary works used in their other business and that are also used by us.

If we pursue litigation to assert our intellectual property or proprietary rights, an adverse decision in any of these legal actions could limit our ability to assert our intellectual property or proprietary rights, limit the value of our intellectual property or proprietary rights or otherwise negatively impact our business, financial condition and results of operations. If the protection of our intellectual property and proprietary rights is inadequate to prevent use or misappropriation by third parties, the value of our brands and other intangible assets may be diminished, competitors may be able to more effectively mimic our service and methods of operations, the perception of our business and service to customers and potential customers may become confused in the marketplace and our ability to attract and retain customers may be adversely affected.

We may in the future be subject to intellectual property claims, which are costly to defend and could harm our business, financial condition and operating results.

Because of the large number of authors that participate in our publications, from time to time, third parties may allege in the future that we or our business infringe, misappropriate or otherwise violate their intellectual property or proprietary rights, including with respect to our publications. We cannot guarantee that we are party to enforceable agreements with all the counterparties that have purportedly assigned copyrights or other intellectual property rights to us, in which case we could be subject to legal proceedings and the payment of significant fines for unauthorized use of intellectual property. In addition, many companies, including various “non-practicing entities” or “patent trolls”, are devoting significant resources to developing or acquiring patents that could potentially affect many aspects of our business. There are numerous patents that broadly claim means and methods of conducting business on the Internet. We have not exhaustively searched patents related to our technology. In addition, the publishing industry has been, and we expect in the future will continue to be, the target of counterfeiting and piracy. We may implement measures in an effort to protect against these potential liabilities that could require us to spend substantial resources. Any costs incurred as a result of liability or asserted liability relating to sales of unauthorized or counterfeit educational materials could harm our business, reputation and financial condition.

Third parties may initiate litigation against us without warning. Others may send us letters or other communications that make allegations without initiating litigation. We may elect not to respond to the communication if we believe it is without merit or we may attempt to resolve disputes out of court by electing to pay royalties or other fees for licenses or out-of-court settlements in unforeseeable amounts. If we are forced to defend ourselves against intellectual property claims, whether they are with or without merit or are determined in our favor, we may face costly litigation, diversion of technical and management personnel, inability to use our current website or inability to market our service or merchandise our products. As a result of a dispute, we may have to develop non infringing technology, including partially or fully revise any publication that infringes intellectual property rights, enter into licensing agreements, adjust our merchandising or marketing activities or take other actions to resolve the claims. These actions, if required, may be unavailable on terms acceptable to us or may be costly or unavailable. If we are unable to obtain sufficient rights or develop non infringing intellectual property or otherwise alter our business practices, as appropriate, on a timely basis, our reputation or our brands, our business and our competitive position may be adversely affected and we may be subject to an injunction or be required to pay or incur substantial damages and/or fees and/or royalties.

Most of our services are provided using proprietary software and our software is mainly developed by our employees, who do not specifically assign to us their copyrights over the software and we are unable to assure that we have adequate agreements with all of our employees to provide for the assignment of software rights. While applicable law establishes that employers shall have full title over rights relating to software developed by their employees, we could be subject to lawsuits by former employees claiming ownership of such software. As a result, we may be required to obtain licenses of such software, incurring costs relating to payments of royalties and/or damages and we may be forced to cease the use of such software. If we are unable to use certain of our proprietary software as a result of any of the foregoing or otherwise, this could have a material adverse effect on our business, financial condition and results of operations.

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In addition, we use open-source software in connection with certain of our products and services. Companies that incorporate open-source software into their products have, from time to time, faced claims challenging the ownership of open-source software and/or compliance with open-source license terms. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open-source software or noncompliance with open-source licensing terms. Some open-source software licenses require users who distribute or use open-source software as part of their software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open-source code on unfavorable terms or at no cost. Any requirement to disclose our proprietary source code or pay damages for breach of contract could have a material adverse effect on our business, financial condition and results of operations.

The quality of the teaching content we deliver to our customers depends to a significant degree on the quality of our publishers and of the content we purchase. Any issues related to obtaining this content or regarding the quality of this content may have an adverse effect on our business.

The educational content and materials we provide are a combination of content developed by our in-house production team and content purchased from certain independent authors and publishers with whom we have contractual relationships. However, we may not be able to maintain our contractual relationships with independent authors or publishers if, for instance, (1) such authors leave us to join our competitors; (2) they no longer accept our contractual conditions, particularly those in relation to copyright; or (3) they choose to publish their content independently. If we are not able to replace such authors or publishers or if we are unable to renew the agreements that we currently have with them on terms that are favorable to us, our business could be adversely affected. In addition, delays in the delivery of content from authors may have an impact on our annual content creation schedule.

A lack of publishers, qualified employees, independent authors or satisfactory purchased content, or any decrease in the quality of the content produced or purchased, whether actual or perceived, or any significant increase in the cost of hiring or retaining qualified personnel or of acquiring content from independent authors or publishers, would have a material adverse effect on our business, financial condition and results of operations.

Additionally, our content production process requires significant coordination between different teams, as well as qualified personnel with appropriate training in order to ensure that we maintain the quality of our educational content and that we are able to successfully implement additional functions and technology delivery. We may not be able to retain, recruit or train qualified employees or obtain educational content that meets our standards, which could have an adverse effect on our business and results of operations.

If our partner schools are unable to maintain educational quality, we may be adversely affected.

Our partner schools and their students are regularly assessed and classified under the terms of applicable educational laws and regulations. If the schools, programs or students from our partner schools receive lower scores from year to year on any of their assessments, including on the Index for Development in Primary and Secondary Education (Índice de Desenvolvimento da Educação Básica), or IDEB, and on the National High School Exam (Exame Nacional do Ensino Médio), or ENEM, or if there is any drop in the acceptance rates of the students from our partner schools into prestigious universities, we may be negatively affected by perceptions of a decline in the educational quality of our Content & EdTech P latform, which could adversely affect our reputation and, as a result, our operating results and financial condition.

We intend to expand our operations to the public school segment in Brazil, which may not be successful and which will expose us to additional risks.

Starting in the first half of 2023, we plan to begin offering our products and services to clients in the public sector, in addition to our existing private school client base. We believe that our broad portfolio of core content solutions, digital platform and complimentary services will allow us to access a public school market in need of the solutions we have developed over the years. Accordingly, we have taken certain steps to (i) create what we believe to be an attractive portfolio of products and services, focused on state secretariats for education; (ii) allocate managerial and financial resources for this new business initiative; and (iii) implement certain business-generating and marketing strategies for the public sector.

However, w e have a limited operating history for the new business in the public school segment, as it has not been an area of focus of our business historically. Different rules and regulations may apply to the contracts we may enter into with federal, state or municipal public schools, which could expose us to risks that we are not ordinarily used to, including with respect to the education strategy adopted at different levels of government and any applicable special purchase regimes, payment retention rights of governmental counterparties and restrictions in the participation in public bidding processes. As a result, we may not develop or continue to grow as expected, we may not generate a sufficient level of revenues in line with our for e casts, and operating a new business unit may distract our management from our core business unit, which could have an adverse effect on our financial condition and results of operations.

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For more information on our plans to expand our business into the public school sector, see “Item 4. Information on the Company—A. History and Development of the Company—Recent Developments—New Business Unit”.

A significant increase in late payment and/or default in the payment of amounts due to us by our customers and a significant increase in attrition rates of students among our customers may adversely affect our revenue and cash flow.

Our customers may face financial difficulties and, in certain cases, insolvency or bankruptcy. A decrease in our customers’ revenues (due to a decline in enrollment as a result of a decrease in disposable income of families enrolled at our partner schools) could have an adverse effect on the ability of our existing and prospective customers to pay our tuition fees and/or trigger an increase in attrition rates. A significant increase in late payment or default by our customers could have a material adverse effect on our revenue and cash flow, thereby affecting our ability to meet our obligations. As of December 31, 202 2, our impairment losses on trade receivables balance was R$69.5 million, an increase of R$2 3.0 million from R$46.5 million on December 31, 202 1. As of December 31, 2021, our impairment losses on trade receivables balance was R$46.5 million, an increase of R$14.4 million from R$32.1 million on December 31, 2020. Our impairment losses on trade receivables as of December 31, 202 2, 202 1 and 20 20 represented 5.5%, 4.9% and 3.2% of our net revenue from sales and services as of each period-end, respectively. An increase in the rate of impairment losses, or other defaults by our customers, could have an adverse effect on our business and financial condition.

In addition, any increase in the student attrition rates among our customers could have an adverse effect on our operating results. A ny significant changes in our projected student attrition rate and/or in failure to re-enroll students may affect our partner schools’ enrollment figures, as well as their ability to recruit and enroll new students, could have a material adverse effect on our projected revenue and operating results.

In addition, part of our revenue has come from the sale of education solutions to municipal governments within several states of Brazil, and such public entities may delay payments or even default in payment. Any such payment delay or default would result in further delays in our receipt of payment, as we would be required to seek a special judicial order (precatórios) under Brazilian law to enforce our rights to receive payment. This special judicial order is a formalization of a payment due by the Brazilian Public Treasury issued as a consequence of a final or un appealable judicial decision. Furthermore, enforcement for the collection of debts due by the Public Treasury are not processed by the attachment of assets owned by the public entities, but by the issuance of a payment order for the inclusion of the debt in the public budget, further delaying the timing of any payment. Late payments or defaults by such public entities could have a material adverse effect on our revenue and cash flow.

If our growth rate decelerates significantly, our future prospects and financial results would be adversely affected, preventing us from achieving profitability.

We believe that our growth depends on a number of factors, including, but not limited to, our ability to:

- increase the number of users of our products and services;
- continue to introduce our products and services to new markets;
- provide high quality support to students and partner schools using our products and services;
- expand our business and increase our market share;
- compete with the products, services, offers, prices and incentives offered by our competitors;
- develop new products, services, offerings and technologies;
- identify and acquire or invest in businesses, products, offerings or technologies that we believe may be able to complement or expand our platform; and
- increase the positive perception of our brands.

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We may not be successful in achieving the above objectives. Any slowdown in the demand from students, partner schools or customers for our products and services caused by changes in customer preferences, failure to maintain our brands, inability to expand our portfolio of products or services, changes in the Brazilian or global economy, taxes, competition or other factors may lead to a decrease in revenue or growth and our financial results and future prospects could be negatively affected. We expect that we will continue to incur significant expenses as a result of our efforts to continue growing, and if we cannot increase our revenue at a faster rate than the increase in our expenses, we will not be able to achieve profitability.

We may be subject to penalties under Law 12,846/2013 or the Brazilian Anti-Corruption Law, the Federal Administrative Procedural Law, the Administrative Improbity Law and the U.S. Foreign Corrupt Practices Act, the FCPA, if our employees engage in any conduct prohibited by these laws.

We have in the past engaged in, and continue to maintain, relationships with a number of public entities, both through contracts and public tenders, including under the PNLD (in which Vasta no longer participates, as this operation is now carried out through another subsidiary of Cogna), through the provision of services and the sale of products, solutions and educational content to public entities (including in connection with the sale of educational content to public entities for the purpose of obtaining licenses and permits required for our operations (such as operating permits, fire inspections and education sector regulatory licenses, among others). Moreover, we intend to expand our business into the public school segment in Brazil and, as a result, we expect to become regular participants in public tenders and government contracts, which could cause increased public scrutiny relating to compliance with bidding processes regulations, such as the bidding law (Lei de Licitações) and the Federal Administrative Procedural Law (Lei de Processo Administrativo Federal), and anti-corruption laws in Brazil and other applicable jurisdictions.

We train our employees to comply with the rules set forth in the code of conduct and anti-corruption manual of Cogna, which set out policies and rules for proper dealings with public officials for purposes of our compliance with the Brazilian Anti-Corruption Law, the Federal Administrative Procedural Law, the Administrative Improbity Law and the FCPA. However, there can be no assurance that all of our employees and agents acting on our behalf who may have contact with public officials will fully comply with our policies, or that our policies will be fully effective in preventing non-compliance with applicable law, which could lead to our failure to comply with the Brazilian Anti-Corruption Law, the Federal Administrative Procedural Law, the Administrative Improbity Law or the FCPA. Any conduct by our employees or agents with public officials in any manner that fails to comply with Cogna’s code of conduct, the anti-corruption manual, the Brazilian Anti-Corruption Law, the Federal Administrative Procedural Law, the Administrative Improbity Law and the FCPA could lead to government investigations, judicial and/or administrative proceedings, fines, penalties, loss of regulatory licenses, disgorgement of profits, loss of tax benefits and damage to our reputation and image, any of which would have an adverse effect on our business, financial condition and results of operations.

Certain students enrolled at our partner schools may not generate meaningful revenue because of the reutilization of printed teaching materials.

In recent years, we have seen a growing increase in the reuse of printed teaching materials by families who use the same printed material for more than one child, even though we update these materials annually, which has an adverse effect on our revenue. We call this phenomenon “sales drop” or “reuse”. Because the reuse of materials results from family behavior combined with the list of materials adopted by our partner schools, we are unable to control or mitigate the sales drop effect. We cannot predict any future sales drop or its potential impact on our revenue and operating results.

The Saraiva brand is owned by Saraiva Gestão de Marcas S.A., a company that is jointly owned by our parent company, Cogna, and third parties that are not part of the Cogna group. Any conflict with these parties could have a negative effect on our business.

We have the right to use the Saraiva brand until December 28, 2040 for some of Vasta’s textbooks and literary works, in the context of our publishing operations. The Saraiva brand accounted for 36%, 25% and 26% of the net revenue from sales and services of our textbook revenues in 20 2 2, 20 2 1 and 20 20, respectively. In terms of net revenue from sales and services, the Saraiva brand accounted for 8.2%, in 2022, 6% in 2021 and 6% in 2020. Saraiva Gestão de Marcas S.A. is jointly owned by Cogna and third parties who are not controlled by us or Cogna. These parties may have interests that conflict with ours, which might lead to disputes that could adversely affect our ability to use the Saraiva brand. We cannot assure that these parties’ interests will align with ours or that our interests would prevail in any dispute regarding the use of the Saraiva brand. This potential conflict of interest could adversely affect the reputation or performance of the Saraiva brand, or our ability to use the Saraiva brand, which could have an adverse effect on our results of operations. In addition, the third party who jointly owns Saraiva Gestão de Marcas S.A., is currently subject to a bankruptcy proceeding in Brazilian courts. We cannot guarantee that there will not be any impact on the Saraiva brand in the course of this proceeding or if this party were subject to liquidation.

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Changes in our or our customers’ current regulatory environment could have an adverse effect on us.

Currently, although we are subject to the requirements of the National Common Curriculum Base (Base Nacional Comum Curricular), or BNCC, we are not directly regulated by the Brazilian Ministry of Education (Ministério da Educação), or MEC, nor are we subject to any governmental regulations imposed by the National Education Council (Conselho Nacional de Educação), or CNE, or by the Board of Primary and Secondary Education (Conselho de Educação Básica), or CEB. We are also subject to certain regulations related to bidding processes in connection with the sale of educational content to public entities, such as the bidding law (Lei de Licitações) and the Federal Administrative Procedural Law (Lei de Processo Administrativo Federal). In addition, we are subject to bidding regulations enacted by SESI, in connection with the sale of educational content to the SESI. If we or our customers become subject to new laws and regulations, we may incur additional costs in order to comply with the new legislation and this may have an adverse impact on our business. In addition, if we are required to comply with additional laws and regulations, there is a risk that we may not do so fully or satisfactorily, and this could result in possible legal or administrative proceedings against us, which could have a material adverse effect on our reputation, our business and results of operations.

We use third party service providers in our logistics services to ship all of our collections of printed teaching materials and a failure by our service providers to perform efficiently would have an adverse effect on our business, financial condition and results of operations.

Our delivery of printed books and other educational content to schools is a seasonal activity, with a cycle that usually begins with the creation and review of content from April to July, the purchase of printing services from August to October, and physical delivery of printed books from November to January. We have expanded our operations rapidly since we first began our activities. As our size increases, so does the size and complexity of our logistics operation.

We generally require a high volume of deliveries in November and December, which requires a significant degree of inventory, supply management and management of our relationship and coordination with printers. Our customers place key value on the timely delivery of printed materials. Consequently, failure to comply with deadlines, inadequate logistics planning, disruption at distribution centers, poor inventory management, and the failure to meet customer expectations, launch new products, or respond to rapidly changing customer preferences, could have an adverse effect on our reputation, increase returns of our materials or cause inventory losses and adversely affect our business, results of operations and financial condition.

Virtually our entire inventory of our printed teaching materials is stored in rented warehouse facilities operated by us and delivered by third party carriers that undertake the distribution of all physical teaching materials. If our logistics service providers do not fulfill their obligations to deliver teaching materials to our customers in a timely manner, or if a significant number of deliveries are incomplete or contain assembly errors, our business, operating results and operations could be adversely affected. In addition, natural disasters, fires, power outages, work stoppages or other unexpected catastrophic events, particularly during the period between August and October, when we expect to receive most of the instructional materials for the school year and we have not yet delivered these materials to our customers, could significantly disrupt our ability to deliver our products and operate our business. If we were to lose a significant portion of our inventory, or if our warehouse facilities or distribution centers suffer any significant damage, we could fail to meet our delivery obligations and our business, financial condition and results of operation s would be adversely affected.

We have a significant amount of debt and may incur additional debt in the future. Our payment obligations under our debt may limit our available resources and the terms of debt instruments may limit our flexibility in operating our business.

As of December 31, 202 2, we had total outstanding bonds and financing of R$842.9 million compared to R$831.2 million as of December 31, 20 2 1, compris ing (i) private debentures issued by Somos Sistemas to Saber and Cogna (as creditors) bearing interest at an average annual rate of CDI plus 1.0% and CDI plus 2.4%, with semi-annual coupon payments and a bullet repayment at maturity in August 202 3 and September 202 5; and (ii) debentures issued by Somos Sistemas to third parties bearing interest at an average annual rate of CDI plus 2.3%, with semi-annual coupon payments and a bullet repayment at maturity in August 2024. See “Item 5. Operating a nd Financial Review a nd Prospects—B. Liquidity and Capital Resources—Indebtedness”. Most of our indebtedness is linked to the CDI. Changes in Brazilian macroeconomic conditions can adversely affect the CDI. Fluctuations in the inflation rate and rate indices can increase the cost of our indebtedness that is linked to the CDI and may have a material adverse effect on our financial position and result of operations. Subject to the limitations under the terms of our existing debt, we may incur additional debt, secure existing or future debt or refinance our debt. In particular, we may need to incur additional debt to fund our activities, and the terms of this financing may not be attractive for us.

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We may be required to use a substantial portion of our cash flows to pay the principal and interest on our indebtedness. These payments will reduce the funds available for working capital, capital expenditures and other corporate purposes and will limit our ability to obtain additional financing for working capital or making capital expenditures for expansion plans and other investments, which may in turn limit our ability to implement our business strategy. Our significant debt may also increase our vulnerability to downturns in our business, in our industry or in the economy as a whole and may limit our flexibility in terms of planning or reacting to changes in our business and in the industry and could prevent us from taking advantage of business opportunities as they arise. We cannot guarantee that our business will generate sufficient cash flow from operations or that future financing will be available in sufficient amounts or on favorable terms to enable us to make timely and necessary payments under the terms of our indebtedness or to fund our activities.

In addition, if we were to default on any of our debt, we could be required to make immediate repayment, other debt facilities may be cross-defaulted or accelerated, and we may be unable to refinance our debt on favorable terms at all, which would have a material adverse effect on our financial position. See “Item 5. Operating a nd Financial Review a nd Prospects—B. Liquidity and Capital Resources—Indebtedness” for a summary of the conditions that could result in an acceleration of our indebtedness.

Our ability to utilize certain tax credits may be limited.

As of December 31, 2022, we had accumulated tax losses carryforwards of R$422.2 million which are available as offsetting credits against future taxable profits compared to R$307.3 million as of December 31, 2021. Our ability to use these accumulated tax losses as offsetting credits depends on our future taxable income, which could have a material adverse effect on our operating results. The Company's historical tax losses is driven mainly by the tax amortization of goodwill and the amortization of intangibles generated by the business combination originated in 2018. In accordance with Brazilian tax regulation, tax losses carryforwards have a limitation for use to a 30% of taxable profit generated in the year and does not expire. According with the Company´s estimate, the realization of deferred tax asset is expected to start in 2026, after the end of amortization of goodwill for tax purposes and intangibles generated by business combination originated in 2018, and is expected to be utilized over an extended period of time. The Company’s income tax and social contribution loss carryforwards are primarily the result of tax amortization of goodwill and the amortization of certain intangibles recognized related to the business combination in 2018. In accordance with Brazilian tax regulation, tax loss carryforwards have a limitation for use of 30% of taxable profit generated in each year and do not expire. The tax benefit is expected to be realized over an estimated 6 year period beginning in 2026. See “Item 5. Operating and Financial Review and Prospects—Critical Accounting Estimates”.

PAR, or “Partnership” (Parceria), is part of our business model, and is focused on long-term agreements through the use of textbooks rather than learning systems. If we are not able to implement this product successfully, our business would be materially adversely affected.

PAR, which is focused on long-term agreements using textbooks, is a product designed to bring the same level of profitability and loyalty as our learning systems. In 2022, 202 1 and 20 20, revenues from PAR Platform contracts accounted for 11.3%, 16.6% and 1 4.6%, respectively, of our total ACV Bookings (subscription business). In order for us to increase PAR’s profitability in line with that of our learning systems, we must increase the number of contracts for textbook sales with schools and families by providing a product offering that is economically attractive to schools and families, seeking to reduce or eliminate the reuse of printed teaching materials. At present, around 88% of PAR Platform contracts remain as adhesion contracts, in which sales are not made directly to partner schools and families, which means the schools and families purchase printed teaching materials through a number of channels, including distributors, bookstores and third-party e-commerce, as well as reuse materials in many cases. In case we are not able to establish a specific stock keeping unit and, therefore, not able to guarantee that our PAR-related materials are exclusively sold directly from our partner schools or from us, we may be exposed to partial revenue loss as a result of the reuse of printed materials sold in previous cycles (secondary market). Currently, our estimated revenue from PAR Platform contracts already considers the average market reuse of printed materials, which assumes students can buy the material through other channels and the historical reuse of printed materials. An increase in the sales of reused printed materials may intensify the negative impacts on our revenues. We estimate that an inability to maintain exclusive control over PAR-related materials represents foregone revenue of approximately R$0.50 for every R$1.00 in PAR-related products expected to be sold, based on the contribution we estimate from Vasta’s publishing operations. Effectively, new sales are reduced due to the reuse of books such that, for each 100 students that adopt PAR-related material, 5 0 students purchase a new book, and 50 students reuse old material. This effect has had, and is expected to continue to have, an adverse effect on our revenue and results of operations. We account for this effect in our estimates and forecasts for PAR-related revenues.

Our results may be negatively affected by the return rates on our textbooks.

To increase the availability of our textbooks for purchase by schools and students, our textbook sales (both through PAR Platform and as spot sales) are carried out through numerous channels, such as bookstores, schools, large retailers, distributors and e-commerce sellers. Each of these distribution channels has a unique return policy, which can result in returns ranging from 10% to 50% of the total purchased amount during a given sales cycle. Our textbook sales are concentrated during the period from November to March. From April to June, the sales channels can return any unsold inventory to us. We are unable to assure that future return rates will be consistent with historical return rates. An increase in the volume of returns in excess of our expectations could have an adverse effect on our results of operation and financial condition.

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We may not be successful in implementing our cross-selling and up-selling strategy with our current base of partner schools.

Part of our growth strategy consists of increasing the number of segments in which we operate in our partner schools, for example by expanding our services and educational solutions for elementary school and kindergarten to schools that only purchase our solutions for high school (up-sell). We also seek to expand the uptake by our partner schools of our supplementary courses, such as English language instruction or solutions for socio-emotional instruction (cross-sell). If we are unable to effectively sell these additional course offerings to our existing partner schools, for instance because of other competitors already entrenched with the school, we may not be able to grow our business at our projected rates, which could have an adverse effect on our business, financial condition and results of operations.

We may be unable to convert spot market book sales into long-term contracts, either through the adoption of our learning systems or PAR Platform solutions, which could have an adverse effect on our future growth.

Traditionally, certain schools with which we have done business choose to buy only selected books from us in the “spot book market”. These schools do not have long term contracts with us, and we are unable to predict how their spot purchases will impact our revenue. Part of our growth strategy is based on converting spot book market sales into long-term contracts by having the relevant school adopt one of our learning systems or PAR. If we are unable to convert spot market sales into long-term contracts, we may not meet our growth targets, which could have an adverse effect on our prospects, our revenue and cash flow.

Part of our strategy is based on entering new markets and implementing new businesses, including solutions through our Digital Platform. We may not be successful in exploiting these opportunities, which may have an adverse effect on our business.

Many of the markets where we plan to operate, such as academic and financial ERP and student acquisition solutions, are new to us and our organizational skills in these markets have not yet been tested. In addition, we may have incorrectly estimated the total size of new markets or our ability to penetrate such markets or engage in new businesses, such as increased offering of solutions through our Digital Platform. In addition, we may face competition from existing participants or new entrants in the market in which our Digital Platform operates, including in the digital school office, digital marketing and family relations services, and our competitors may have greater resources than we do or may offer more attractive products or services. If we are unsuccessful in entering new markets or in implementing new businesses, we may incur costs that we are unable to recoup and our image and reputation may be adversely affected, which could have an adverse effect on our results of operation and financial position.

We may not be able to expand our complementary education portfolio in line with our business strategy.

We currently have educational solutions for English instruction and the teaching of socio-emotional skills, which can be offered during normal school hours or after school. We plan to develop and/or acquire new services and products to expand our portfolio of these complementary education solution. We may not be able to develop products and solutions in an effective way, they may not be accepted by our customers and by the market, or we may not develop the internal capabilities to produce such products and services. Additionally, we may not be able to acquire companies operating such new services and businesses on favorable terms, or we may incur risks of integrating acquired assets. If we are unable to expand our complementary education solution due to any of the foregoing factors, our business, financial condition and results of operations could be adversely affected.

Price increases and changing business conditions for the purchase of paper, a global commodity, may have a significant impact on us due to our reliance on a high volume of printed materials.

Paper prices and postage rates are difficult to predict and control. Paper is a commodity, and its price may be influenced by fluctuations in exchange rates and commodity prices and may be subject to significant volatility. Our third-party printing service providers may adjust their rates to account for any changes in paper prices, and although historically we have been able to obtain favorable pricing as a result of volume discounts, particularly after our significant recent growth, there is no assurance that we will continue to obtain favorable prices in the future. We cannot predict with certainty the magnitude of future price changes for paper, postage and printing and publishing in general, and we may not be able to pass these increases on to our customers, which may have an adverse effect on our business and results of operations, given the importance of paper suppliers to our business. Additionally, we could be materially affected as a result of any contractual or legal issue with our paper suppliers or any delay in the delivery of our printed books and other educational content to partner schools, which could cause schools to delay payments due to us, or lead schools to terminate their contract with us, which would have an adverse effect on our business and results of operations.

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There is no assurance that our partner schools will honor their contractual obligations, or that the number of students actually enrolled at partner schools corresponds to the number of students reported by the schools.

We generally enter into agreements with the schools that subscribe to our content and services, however, partner schools may try to avoid their obligations under their agreements with us, even with an effective contract in place, and we may be subject to additional costs and expenses in an effort to enforce our rights, which would have an adverse effect on our business and financial condition.

In addition, when partner schools enter into agreements with us, they report to us the number of students enrolled at their school who will use our products and services. However, we cannot assure you that the number of students reported by a specific partner school in a specific segment is the actual number of students enrolled, as we do not audit this number, and our expected revenue may be adversely affected by inaccurate reporting, which could have a material adverse effect on us, our reputation and results of operation.

The printing market is heavily concentrated, and increases in rates, changes in business conditions, or any disruptions to the service of our third-party printing service providers could significantly affect us.

Our production of printed learning materials is outsourced to printers with whom we have contracts. We are subject to delays in the graphic production of our material, errors in production or even the bankruptcy of our partner printing companies, which could cause damage to our image with our customers and to our operating results.

In addition, increases in the rates of the third-party printing service providers that produce our printed educational materials could have a negative impact on our results if we are unable to fully pass on these cost increases to our customers. Finally, the printing market is a heavily concentrated one, which may reduce our bargaining power and result in less favorable rates, with an adverse effect on our business.

We depend on our subsidiaries’ financial results, and we may be adversely affected if the performance of our subsidiaries is not positive or if Brazil imposes legal restrictions on, or imposes taxes on, the distribution of dividends by subsidiaries.

We are a pure holding company, and our activities are carried out by our subsidiaries. Our material assets are our direct and indirect equity interests in our subsidiaries. We are, therefore, dependent upon payments, dividends and distributions from our subsidiaries for funds to pay our holding company’s operating and other expenses, to comply with our financial obligations and to potentially pay future cash dividends or distributions, if any, to holders of our Class A common shares. The amount of any dividends or distributions which may be paid to us from time to time will depend on many factors including, for example, such subsidiaries’ results of operations and financial condition; limits on dividends under applicable law; their constitutional documents; documents governing any indebtedness; applicability of tax treaties; and other factors which may be outside our control. Furthermore, exchange rate fluctuation will affect the U.S. dollar value of any distributions our subsidiaries (which are mostly located in Brazil) make with respect to our equity interests in those subsidiaries. See “—Risks Relating to Brazil—Exchange rate instability may have adverse effects on the Brazilian economy, our business and the trading price of our Class A common shares”, and “—The ongoing economic uncertainty and political instability in Brazil, including as a result of ongoing corruption investigations, may harm us and the price of our Class A common shares”. There is no guarantee that the cash flow and profits of our controlled companies will be sufficient for us to comply with our financial obligations and pay dividends or interest on shareholders’ equity to our shareholders, or that the Brazilian federal government will not impose legal restrictions on, or impose taxes on, the distribution of dividends by our subsidiaries.

Any change in the tax treatment of our business or the loss or reduction in tax benefits on the sale of books (including digital books and e-readers) could materially adversely affect us.

We benefit from tax Law No. 10,865/04, as amended by Law No. 11,033/04, which provide that our tax rate on the sale of books is zero in respect of contributions to the social integration program tax (Programa de Integração Social, or PIS) and the social contributions on revenue tax (Contribuição para o Financiamento da Seguridade Social, or COFINS). The sale of books is also exempt by the Brazilian constitution from Brazilian municipal taxes, Brazilian services tax (Imposto Sobre Serviços, or ISS) and from the Brazilian tax on the circulation of goods, interstate and intercity transportation and communication services (Imposto sobre Operações relativas à Circulação de Mercadorias e sobre Prestações de Services de Transporte Interestadual e Intermunicipal e de Comunicação, or ICMS). If the Brazilian federal or state governments or any Brazilian municipality or tax authority decides to change or review the tax treatment of our activities or cancel or reduce the tax benefits applicable to the sale of our products (including digital books and e-readers) and/or challenge such treatment, and we are unable to pass any corresponding cost increase onto our customers, our results of operations could be materially adversely affected. Tax exemptions available to physical books have been extended to digital books based on a decision by the Brazilian Supreme Court issued on March 8, 2017. However, there is no assurance that the Brazilian Supreme Court will not change its position in the future in regard to the taxation of digital books, which could have a material adverse effect on our business and results of operations.

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We may pursue strategic acquisitions or investments. The failure of an acquisition or investment to be completed or to produce the anticipated results, or the inability to fully integrate an acquired company, could harm our business.

We may from time to time, as opportunities arise or economic conditions permit, acquire or invest in complementary companies or businesses as part of our strategy to expand our operations, including through acquisitions or investments that may be material in size and/or of strategic relevance. The success of an acquisition or investment will depend on our ability to make accurate assumptions regarding the valuation, operations, growth potential, integration and other factors related to that business. We cannot assure you that our acquisitions or investments will produce the results that we expect at the time we enter into, or complete a given transaction.

Any acquisition or investment involves a series of risks and challenges that could adversely affect our business, including due to a failure of such acquisition to contribute to our commercial strategy or improve our image. We may be unable to generate the expected returns and synergies on our investments. In addition, the amortization of acquired intangible assets could decrease our net profit and potential dividends. We may face challenges in integrating acquired companies, which may result in the diversion of our capital and our management’s attention from other business issues and opportunities. We may be unable to create and implement uniform and effective controls, procedures and policies, and we may incur increased costs for integrating systems, people, distribution methods or operating procedures. We may also be unable to integrate technologies of acquired businesses or retain key customers, executives and staff of the businesses acquired. In particular, we may face challenges in integrating staff working across different geographies and that may be accustomed to different corporate cultures, which would result in strained relations among existing and new personnel. We could also face challenges in negotiating favorable collective bargaining agreements with unions due to differences in the negotiating procedures used in different regions. Finally, we may pursue acquisitions where we acquire a majority stake in such acquisition, but with significant minority investors, or we may become minority investors in certain operations, wherein our ability to effectively control and manage the business may be limited. If we are unable to manage growth through acquisitions, our business and financial condition could be materially adversely affected.

We may also require approval from Brazil’s Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica), or CADE, or other regulatory authorities, in order to conduct certain acquisitions or investments for education companies exceeding or equivalent to annual gross revenue of R$75 million. CADE may not approve our future acquisitions or may condition approval of our acquisitions on our disposal of certain operations of our targeted acquisitions or could impose other restrictions on the operations and business of the target. Failure to obtain approval from CADE or other regulatory authorities for future acquisitions, or any conditional approvals of future acquisitions, may result in expenses that could adversely affect our results of operations and financial condition.

In addition, in connection with any acquisition, we may face liabilities for contingencies related to, among others, (1) legal and/or administrative proceedings of the acquired company, including civil, regulatory, labor, tax, social security, environmental and intellectual property proceedings, and (2) financial, reputational and technical problems including those related to accounting practices, disclosures in financial statements and internal controls, as well as other regulatory issues. These contingencies may not have been identified prior to the acquisition and may not be sufficiently indemnifiable under the terms of the relevant acquisition agreement, which could have an adverse effect on our business and financial condition. Even if contingencies are indemnifiable under the relevant acquisition agreement, the agreed levels of indemnity may not be sufficient to cover actual contingencies as they materialize.

We may not be able to effectively implement our sales, marketing and advertising programs to attract and retain new customers.

In order to maintain and increase our revenue and margins, we need to continue to retain and attract new customers by means of the sales, marketing and advertising campaigns. A number of factors could adversely impact our ability to successfully implement our marketing campaigns, such as an inability of our sales team to effectively interact with potential clients, or potential clients do not find our products and services sufficient to meet their needs. If we are unable to successfully market our educational products and solutions, whether due to defects in our marketing tools and/or failure to adjust our strategy in order to meet the needs of current and potential customers, our ability to retain and attract new customers may be undermined, which would adversely affect our business and results of operations.

If we are unable to retain or replace our key personnel or are unable to attract, retain and develop other qualified employees, our business, financial situation and operating results may be adversely affected.

Part of our future success depends on the ability and efforts of a number of our key employees who have significant experience in our operations. Many of our key employees have been working for us over an extended period or have been specifically recruited by us on account of their experience and expertise in the sector. The loss of key personnel, including senior executives, members of the executive board, board members, key officers and managers, among others, and our inability to hire professionals with the same level of experience could have a material adverse effect on our business, financial condition and results of operations.

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In addition, in order to successfully compete and increase the number of customers, we need to attract, recruit, retain and develop talented employees generally, who can provide the required expertise across the entire spectrum of our needs for high quality products, services and educational content, including for sales and marketing. A number of our key employees have significant experience in our operations, and we must develop adequate succession plans to maintain continuity amidst the natural uncertainties of the labor force. The market for skilled staff is competitive, and we may not be successful in recruiting or retaining staff or we may not be able to effectively replace key employees who leave. We must also continue to hire additional staff to execute our strategic plans. Our efforts to retain and develop personnel may also result in significant additional expenses that could adversely affect our business and results of operations.

We cannot guarantee that qualified employees will remain in our employment or that we will be able to attract and retain qualified personnel in the future. In particular, we may not be able to achieve the anticipated revenue growth by expanding our sales and marketing teams if we are not able to attract, develop and retain qualified sales and marketing personnel in the future. Any failure to retain or hire key personnel could have a material adverse effect on our business, financial condition and results of operations.

Our management team’s interests may be focused on the short-term market price of our Class A common shares, which may not coincide with investors’ interests.

Our directors and executive officers, among others, may own shares in the company or be beneficiaries of our share-based compensation plans. We approved a restricted share unit plan in connection with our initial public offering. The maximum number shares that can be issued to beneficiaries under our restricted share unit plan may not exceed 3.0% of our share capital at any time.

Due to the issue of Class A common shares to members of our management team, a significant portion of these members’ compensation will be closely tied to our operating results and, more specifically, to the trading price of our Class A common shares, which may lead these individuals to run our business and manage our activities with an emphasis on generating short-term profits. As a result of these factors, our management team’s interests may not coincide with the interests of our other shareholders who have long-term investment objectives. Additionally, we cannot assure that Cogna’s and our management team’s interest will be aligned, or which party’s interest will prevail.

Moreover, our shareholders may experience dilution in their stakes in our capital stock and in the value of their investments if further shares are issued to honor share-based incentive plans for our management and employees.

In the case of further grants of stock options or restricted shares, our shareholders will be subject to further dilution. For additional information about our share option plan or restricted share plan, see “Item 6. Directors, Senior Management a nd Employees—B. Compensation—Share Incentive Plan”.

Failure to prevent or detect a malicious cyber-attack on our systems and databases could result in a misappropriation of confidential information or access to highly sensitive information.

Cyber-attacks are becoming more sophisticated and pervasive. Across our business we hold large volumes of personally identifiable information including that of employees, partner schools, students, parents and legal guardians. Individuals may try to gain unauthorized access to our data in order to misappropriate such information for potentially fraudulent purposes, and our security measures may fail to prevent such unauthorized access. During the year ended December 31, 2022, we detected certain attempts to breach the security of our IT systems, all of which were unsuccessful. Moreover, we continuously monitor potential vulnerabilities in our IT and data systems and strive to improve security. Current unfinished initiatives in this regard include: (i) a disaster recovery system for our data centers; (ii) implementation of the Secure Development program; and (iii) a continuous monitoring program for our Secure Ambient program.

Our board of directors, assisted by our Audit and Risk Committee, as part of its regular review of our risk management practices, performs periodic reviews of cyber-security threats and related controls, including reviews of periodic penetration tests performed by independent third parties. However, we cannot assure that these reviews will successfully prevent against all cyber-attacks. A breach could result in a devastating impact on our reputation, with significant adverse effects on customer confidence and loyalty that could adversely affect our financial condition and the student experience. In addition, if we were unable to prove that our systems are properly designed to detect an intrusion, we could be subject to severe penalties under applicable laws and loss of existing or future business.

Failure to comply with data privacy regulations could result in reputational damage to our brands and adversely affect our business, financial condition and results of operations.

The nature of our business exposes us to risks related to possible shortcomings in data protection. Any perceived or actual unauthorized disclosure of personally identifiable information, whether through breach of our network by an unauthorized party, employee theft, misuse or error or otherwise, could harm our reputation, impair our ability to attract and retain our customers, or subject us to claims or litigation arising from damages suffered by individuals.

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We are subject to the General Personal Data Protection Law (Lei Geral de Proteção de Dados) (as amended), or the LGPD. As a result of any failure to comply with the LGPD or occurrence of cybersecurity incidents, we may be subject to the following penalties: (1) legal notices and the required adoption of corrective measures, (2) fines of up to 2.0% of our company’s or our group’s revenue up to a limit of R$50.0 million per infraction, (3) disclosure of the violation after its occurrence is duly verified and confirmed, and (4) blocking and erasing the personal data involved in the violation.

Failure to comply with the rules for the protection of personally identifiable information, including the LGPD, could potentially lead to legal proceedings or could result in penalties, significant remediation costs, reputational damage, the cancellation of existing contracts and difficulty in competing for future business. In addition, we could incur significant costs in complying with relevant laws and regulations regarding the unauthorized disclosure of personal information, which may be affected by any changes to data privacy legislation at both the federal and state levels.

Material weaknesses in our internal control over financial reporting have been identified, and if we fail to establish and maintain proper and effective internal controls over financial reporting, our results of operations and our ability to operate our business may be harmed.

While part of our business has been operated in the past as part of publicly traded companies in Brazil (Cogna and Somos), our accounting personnel and other resources are not structured in a manner consistent with the requirements applicable to a public company listed in the United States. In connection with the audit of the consolidated financial statements for the year ended December 31, 2022, our external auditors obtained an understanding of the internal controls relevant to their audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of our internal controls in accordance with the provisions of t he Sarbanes-Oxley Act of 2002. During this process, material weaknesses in our internal controls over financial reporting as of December 31, 2022, were identified, which were communicated to management. A material weakness is a deficiency, or combination of controls deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. Material weakness have been identified related to the Company’s control environment, risk assessment, information and communication, and monitoring activities resulting in material weaknesses related to the ineffective design, implementation, and operation of (1) general information technology controls (GITCs) in the areas of user access, program change-management and computational operation over information technology systems and operational supporting systems that support the Company’s financial reporting processes, as well as the completeness and accuracy of reports used by the Company, which resulted in business process controls that are dependent on the affected GITCs also being considered ineffective because they could have been adversely impacted; and (2) failure of management review controls related to reconciliations, the consolidation, the financial statements, including applicability of required disclosures and the review and approval of journal entries.

We are adopting several measures that will improve our internal control over financial reporting, including increasing the depth and experience within our accounting and finance team, designing and implementing improved processes and internal controls. However, we cannot assure you that our efforts will be effective or prevent any future material weakness or significant deficiency in our internal control over financial reporting. For management´s remediation efforts related to identified material weakness see “Item 15. Controls and Procedures—B. Management´s annual report on internal control over financial reporting”.

After our initial public offering, we became subject to the Sarbanes‑Oxley Act, which requires, among other things, that we establish and maintain effective internal controls over financial reporting and disclosure controls and procedures. Under the current rules of the SEC, we are required to perform system and process evaluation and testing of our internal controls over financial reporting to allow management to assess the effectiveness of our internal controls over financial reporting as well as our disclosure controls and procedures starting on December 31, 2021. Further testing in 2022 has revealed additional deficiencies in our internal controls that are deemed to be material weaknesses or significant deficiencies and may render our internal controls over financial reporting ineffective.

We expect to incur additional accounting and auditing expenses and to spend significant management time in complying with these requirements. If we are not able to comply with these requirements in a timely manner, or if we or our management identifies additional material weaknesses or significant deficiencies in our internal controls over financial reporting or in our disclosure controls and procedures, the market price of our Class A common shares may decline and we may be subject to investigations or sanctions by the SEC, the Financial Industry Regulatory Authority, Inc., or FINRA, or other regulatory authorities.

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In addition, these new obligations will also require substantial attention from our senior management and could divert their attention away from the day‑to‑day management of our business. These cost increases and the diversion of management’s attention could materially and adversely affect our business, financial condition and operating results.

We may lose bargaining power with our customers if they organize themselves into negotiating blocs, which could have an adverse effect on our business.

Although the education market in Brazil is extremely fragmented, which reduces the bargaining power of individual schools, groups of schools could organize as blocs or syndicates in an attempt to negotiate lower prices for our services or greater benefits, products and services at the same price. If our schools organized as blocs in an attempt to negotiate lower prices, we would be required to devote additional resources to contract negotiations and could face additional challenges in providing cross-selling or up-selling opportunities to these schools. We could be forced to offer lower prices in connection with any such negotiations or provide bundled services at a discount in an effort to maintain and expand our market share. If we lose bargaining power with our customers, we cannot guarantee that we will be able to sell our products and services at profitable prices, which would adversely affect our business, financial condition and results of operations.

Certain of our revenue depends on intermediaries such as large retailers and other distribution channels, and financial difficulties or poor service by these providers could adversely affect our revenue, reputation and results of operations.

We rely on certain intermediaries, such as large retailers and other distribution channels, to make our educational content and products and services available to parents and students. Consequently, a portion of our revenue depends on the level of service offered by these providers, which could depend on their financial and operational health, and their ability to provide adequate service to end consumers. If any of these intermediaries face solvency problems or are unable to provide services or fail to honor their financial commitments to us, our revenue, reputation and results of operations could be adversely affected.

We cannot assure that we have enforceable written contracts in place with all of our suppliers and other third parties with which we conduct business.

We have many suppliers and maintain business relations with a number of third parties. However, not all of our commercial relationships with third parties are formalized through written contracts. The absence of a written contract formalizing our commercial relationships could have an adverse effect on our business, as we may need the existence of written contracts to, among other things, substantiate our commercial relationship with the third party in court, defend ourselves against any litigation by the third party or enforce our rights against the third party in the event of a dispute. If we are subject to any conflicts with third parties with whom we do not maintain written contracts in force, our business, financial condition and results of operations could be materially adversely affected.

We may face restrictions and penalties under the Consumer Defense Code in the future.

Brazil has a series of strict consumer defense laws, known as the Consumer Defense Code. These laws apply to every company in Brazil that provides products or services to Brazilian consumers. They include protection against misleading and specious advertising, protection against coercive or unfair commercial practices and protection in drafting and interpreting agreements, normally in the form of civil responsibilities and administrative penalties for violations. We may infringe or be accused of infringing the Consumer Defense Code, and incur penalties, and we may be unable to contest such penalties.

Penalties may be imposed by the branches of the Consumer Protection and Defense Foundation (Programa de Proteção e Defesa do Consumidor), or PROCON, or by the National Consumer Department (Secretaria Nacional do Consumidor), or SENACON. Companies can reach agreements for complaints submitted by consumers to PROCON branches by paying an indemnity directly to the consumers or through a mechanism that allows them to adjust their conduct, called a Conduct Adjustment Agreement (Termo de Ajuste de Co n duta), or TAC. Any indemnities or TACs could adversely affect our reputation and financial situation.

The public prosecutor’s office and public defenders in Brazil can also initiate investigations of alleged violations of consumer rights and demand that companies sign a TAC. Companies that fail to comply with TACs face potential enforcement procedures and other penalties such as fines, as provided for in each TAC. The public prosecutor’s office and public defenders in Brazil can also file public civil proceedings against companies that violate consumer rights or the rules of competition, to ensure strict compliance with the consumer defense laws and indemnities for any damage to consumers. In certain cases, we may also face investigations and/or sanctions by CADE, in the event that our commercial practices are accused of affecting competition in the markets where we operate or the consumers in these markets.

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Other methods of entry of students into universities, other than university entrance exams or ENEM, could put our preparatory course business at risk.

Our preparatory courses are focused on preparing students to enter universities by means of specific entrance exams or through ENEM and are powerful lead-generation tools for our go-to-market strategy. These preparatory courses are specifically tailored in an effort to help students achieve success in entrance exams that are focused on specific criteria and aptitudes and are administered according to known methodologies. If universities were to change their admissions criteria to focus primarily on grades achieved in secondary school, demand for our preparatory courses could decline. Likewise, if universities used new or alternative entrance exams based on different content or testing methodologies, our existing preparatory courses may not be adequate in preparing students for any such new alternative entrance exams or alternative testing methodologies, and we may not be successful in adapting our existing courses (either in-person or long distance classes) at the pace needed to respond to such changes in exams or testing methodologies, or at all, which could impact the reputation of our preparatory courses and lead to a decrease in enrollment in our courses. We could also face challenges in adapting our courses in a cost-efficient manner, which could have an adverse impact on our business and results of operations. Any change in admissions practices for which we are unable to successfully adapt our current preparatory courses could cause a decline in enrollment in our courses, force us to lower our prices and/or result in increased costs, and would have a material adverse effect on our business, financial condition and results of operations.

We are susceptible to the illegal or improper use of our Content & EdTech and Digital Platforms, which could expose us to liability and damage our business.

Our Content & EdTech and Digital Platforms are susceptible to unauthorized use, software license violations, copyright violations and unauthorized copying and distribution (whether by students, schools or others), theft, employee fraud and other similar infractions and violations. Such occurrences can harm our business and consequently negatively affect our operating results. We could be required to expend significant resources to police against and combat improper use of our Content & EdTech and Digital Platforms, and still may be unsuccessful in preventing against such occurrences or identifying those responsible for any such misuse. Any failure to adequately protect against any such illegal or improper use of our platforms could expose us to liability or reputational harm and could have a material adverse effect on our business, financial condition and results of operations.

Our operations and results may be negatively impacted by health crises, epidemics or pandemics.

Public health outbreaks, epidemics or pandemics, could materially adversely impact our business. For example, the COVID-19 pandemic adversely affected our business, results of operations and financial condition, particularly in 2021 and 2020. School closures in Brazil impacted the number of schools and students that used our products, and the aggregate effect of other restrictive measures in Brazil resulted in a decrease in production of our learning materials, a temporary closure of our distribution centers (and reduced operations once reopened), and the cessation of operation of certain transportation companies for undetermined periods. The unemployment levels in Brazil increased during the COVID-19 pandemic, resulting in a decrease in incomes which affected enrollment levels at our client schools. As a result, COVID-19 and the measures taken to address the pandemic, had an adverse effect on our business and results of operations. The potential impact of any future health outbreak, epidemic or pandemic, and the measures that may be taken to control such outbreak, cannot be predicted and are beyond our control and it is possible that any such future outbreak could have an adverse effect on our business and results of operations.

Climate change can create transition risks, physical risks and other risks that could adversely affect us.

Climate risk is as a transversal risk that can be an aggravating factor for the types of traditional risks that we manage in the ordinary course of business, including without limitation the risks described in this “Risk Factors” section. Based on the classifications used by Task f orce on Climate-Related Financial Disclosures, we consider that there are two primary sources of climate change related financial risks: physical and transition.

Physical risks resulting from climate change can be event-driven (acute) or long-term shifts (chronic) in climate patterns:

- Acute physical risks include increased severity of extreme weather events, such as drought, hurricanes, or floods;
- Chronic physical risks include changes in precipitation patterns and extreme variability in weather patterns, rising mean temperatures, chronic heat waves or rising sea levels;

Transition risks refer to actions brought on to address mitigation and adaptation requirements related to climate change, and they can fall into various categories such as market, technology and market changes:

- Market risk may manifest through shifts in supply and demand for certain commodities, products, and services, as climate-related risks and opportunities are increasingly considered.
- Technology risk arises from improvements or innovations to support the transition to a lower-carbon, energy efficient economic system that can have a significant impact on companies to the extent that new technology displaces old systems and disrupts some parts of the existing economic system.
- Policy actions generally fall into two categories—those that attempt to constrain actions that contribute to the adverse effects of climate change and those that seek to promote adaptation to climate change. The risk associated with, and the financial impact of policy changes depend on the nature and timing of the policy change.

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Our partner schools may be adv ers ely affected by increased regulatory requirements going forward as a result of the increasing importance of environmental matters, which may indirectly affect our business. This and other changes in regulations in Brazil and international markets may expose us to increased compliance costs, limit our ability to pursue certain business opportunities and provide certain products and services, each of which could adversely affect our business, financial conditi on and results of operations.

Unfavorable decisions in our legal or administrative proceedings may adversely affect us.

We are, and may be in the future, party to legal and administrative proceedings arising from the ordinary course of our business or from nonrecurring corporate, tax or regulatory events, involving our suppliers, students and faculty members, as well as from competition and tax authorities, especially with respect to civil, tax and labor claims. For instance, Somos Educação, which used to operate our K-12 business under the Anglo brand, is currently party to an administrative proceeding with the sellers of the Anglo business due to a dispute with the sellers regarding indemnities for certain contractual contingencies, for which we have classified the risk of losses as probable, possible and remote, in the amount of R$0.6 million that we understand to be their responsibility, and which are disputed by the sellers. However, we cannot assure that our position will prevail, and we could be subject to an adverse outcome in this proceeding, that, considered in the aggregate with other proceedings both known and unknown to us, could have an adverse effect on our financial condition and results of operations. We cannot guarantee that the results of these proceedings will be favorable to us or that we have made sufficient provisions for liabilities that may arise as a result of these or other proceedings. Adverse decisions in material legal proceedings may adversely affect our results of operations, reputation and the price of our Class A common shares. See “Item 8. Financial Information—A. Consolidated S tatements and O ther F inancial I nformation—Legal Proceedings”.

We may not be sufficiently protected by our parent company, Cogna, against potential liabilities arising from past business practices related to Somos Sistemas that could materialize in the future.

In connection with our corporate reorganization, on December 5, 2019, our subsidiary Somos Sistemas entered into an indemnification agreement with Cogna whereby the latter agreed to indemnify us for cash outflows related to contingencies that may arise due to events occurring prior to the corporate reorganization held by Cogna Group, for up to R$1 80.4 million, including for contingencies or lawsuits that may materialize after January 1, 202 0 so long as the events for which such contingency arises occurred prior to January 1, 202 0. However, this indemnity agreement does not prevent our assets being subject to certain legal restrictions, such as the freezing of our bank accounts, which could require additional reimbursements or further legal action to release our assets, and we cannot guarantee that the indemnifying party will take such actions on a timely basis, or at all, which could have an adverse effect on our business and financial condition.

We outsource certain labor, which may create an obligation on our part to pay certain labor and social security obligations.

We outsource certain labor, primarily for cleaning services, building renovations and surveillance, and contract with third party companies who provide the employees for these services. Because we benefit from the services provided by these outsourced workers, we may become liable under Brazilian law to pay certain labor and social security obligations for the benefit of these workers if the service provider companies providing such outsourced labor fail to comply with their labor and social security obligations on behalf of these workers, and we may also be fined by the relevant authorities. We may not have any recourse against the employers of these workers if they fail to meet their labor and social security obligations. We are unable to predict the potential size of any such liability. Any requirement to pay the labor and social obligations related to outsourced workers could have a material adverse effect on our financial condition and results of operations.

We currently sell products and services to government agencies, which subjects us to certain penalties if we do not satisfactorily fulfill our agreements with government agencies or if the agreements are terminated early and we may be subject to liability for prior sales to government agencies in connection with activities undertaken in the past by our affiliates or subsidiaries of our parent company, Cogna.

W e may be held responsible in the future for past business operations that we no longer undertake, such as the sale of teaching material to the federal government under the PNLD. We no longer do business under the PNLD, but we may be subject to certain liabilities, including in connection with applicable anti-corruption laws, for past dealings. While Cogna agreed to indemnify us against certain contingent liabilities, including certain past dealings with government agencies, as part of our corporate reorganization, there can be no assurance that the indemnification agreement with Cogna will fully protect us against potential legal proceedings or government actions, which could have an adverse effect on our business, our reputation, our financial condition and results of operations.

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We have recorded provisions for tax, civil and labor losses for past business practices and acquired businesses that could materialize in the future, which could have an adverse effect on our business and financial condition.

As of December 31, 202 2, in connection with our past business practices and acquired businesses, we have recorded provisions for tax, civil and labor losses on our statement of financial position in an amount of R$651.2 million primarily related to litigation assumed in connection with acquired businesses, including Somos-Anglo, A&R Comércio e Serviços de Informática Ltda. (Pluri Educacional) and MindMakers, among others. While the sellers of such businesses provided contractual indemnities against eventual contingent liabilities associated with these businesses, depending on the eventual outcome of potential claims or proceedings related to these contingencies, the contractual indemnities offered by the sellers, and the amounts we have recorded as provisions on our statement of financial position, may not be sufficient to cover the financial liabilities that we may face in connection with such contingencies, which could have a material adverse effect on our business and financial condition. In addition, on December 5, 2019, our subsidiary Somos Sistemas entered into an indemnification agreement with Cogna, Cogna, whereby the latter agreed to indemnify us for cash outflows related to contingencies that may arise due to events occurring prior to the corporate reorganization process that was held by Cogna Group, for up to R$1 8 0.4 million. However, depending on the final results of eventual legal proceedings and the volume of contingencies up to the date of this annual report, such indemnity may not be sufficient to cover all of our losses, which would have an adverse effect on our financial condition and results of operations. W e cannot assure that our position will prevail, and we could be subject to an adverse outcome in this proceeding, that, considered in the aggregate with other proceedings both known and unknown to us, could have an adverse effect on our financial condition and results of operations. We cannot guarantee that the results of these proceedings will be favorable to us or that the indemnity granted to us by Cogna would be sufficient to cover liabilities that may arise as a result of these or other proceedings. If losses that arise in the future exceed the indemnity granted by Cogna, our business and results of operations will be negatively affected.

We may be held responsible for events that occur on the premises of our customers or at the sites where we offer our preparatory courses, which could adversely affect our business.

We could be held responsible for actions made by students, staff or third parties on the premises of our partner schools or at the sites where we offer our preparatory courses. In the event of accidents, injuries, harassment or other illegal acts or if anyone is harmed on the premises of our partner schools or at the sites where we offer our preparatory courses, we could be involved in legal proceedings claiming that we are directly or indirectly responsible for the relevant harm, whether due to allegations of negligence or lack of adequate supervision. If we are unsuccessful in defending ourselves against any such proceedings, an adverse decision against us could have a material adverse effect on our business and reputation, and on our financial condition and results of operations.

We could be adversely affected if we are unable to renegotiate collective labor agreements with the unions representing our staff, or by strikes or other union action. In addition, we may be adversely affected by negotiations made by the unions that represent our employees if such negotiations are not in line with our business plan and financial condition and we may not be able to pass on our cost increases by means of adjusting the contractual rates we charge our customers, which may affect our operating results.

Salaries and payroll charges account for a significant component of our total expenses (which are allocated to the cost of goods sold and services, general and administrative, and commercial expenses lines on the consolidated statement of profit or loss). Salaries and payroll charges for the year ended December 31, 2022 were R$281.9 million, representing 23.8% of the total expenses of R$1,183.7 million. F or the year ended December 31, 2021, salaries and payroll charges were R$274.6 million, or 27.0%, of our total expenses of R$1,018.7 million. For the year ended 2020, salaries and payroll charges were R$279.5 million, or 28.8%, of our total expenses of R$970.3 million. Our employees are represented by unions with a strong presence in the K-12 education sector and are covered by collective bargaining agreements or similar arrangements that determine how many hours they work, their minimum compensation and salary adjustments (which are generally linked to inflation), vacation time and additional benefits, among other terms. These agreements are renegotiated annually and may be modified to our disadvantage in the course of these negotiations. We might also be adversely affected if we are unable to establish and maintain cooperative relations with the unions representing our staff, or we might face strikes, stoppages or other labor disturbances by our employees.

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Our negotiations with the unions that represent our employees are not always in line with our business plan and such unions may not always consider our current financial condition in when they take certain negotiating positions. Consequently, these unions may pursue terms and conditions under collective bargaining agreements that may be beneficial to our employees but would adversely affect us.

Additionally, we might not be able to pass on cost increases due to the renegotiation of collective bargaining agreements to the fees we charge our customers, and this could have a material adverse effect on our business.

Our educational content might not meet all the requirements of the National Common Curriculum Base, and this could adversely affect our revenue from the sale of educational products and content.

The National Education Plan (Plano Nacional de Educação) passed pursuant to Law No. 13,005/2014 created a National Common Curriculum Base (Base Nacional Comum Curricular or BNCC). The BNCC is a series of guidelines defining a curriculum that specifies the key abilities and knowledge that must be taught as part of primary and secondary education in Brazil, and each institution has discretion to design or adapt its curriculum and teaching projects in line with the BNCC guidelines. The standards set by the BNCC may influence the decisions taken by teaching professionals in private schools. If we are unable to successfully incorporate all the BNCC standards into our educational products and content, our sales of teaching products and solutions could be adversely affected, which could have a material adverse effect on our business, financial condition and results of operations.

We may be adversely affected by legal proceedings involving our parent company, Cogna, or members of its management.

Cogna is party to legal proceedings that could subject it to financial liability. If Cogna fails to pay fines or penalties assessed in any such proceedings when due, its equity interest in subsidiaries, including us, could be seized in satisfaction of such obligations. Any condemnation of other companies controlled by Cogna could also adversely affect the price of our shares. Moreover, management of our operations could be adversely affected if any member of management of Cogna is subjected to imprisonment or restriction on liberty pursuant to any court order, which could have an adverse effect on our business, results of operations and financial condition.

We may not have sufficient insurance to protect ourselves against substantial losses.

We have insurance policies to provide coverage against certain potential risks, such as property damage and personal injury, as well as D&O insurance for our management team. However, we cannot guarantee that our insurance coverage will always be available or will be sufficient to cover possible claims for these risks. In addition, there are certain types of risk that might not be covered by our policies, such as war, acts of nature, force majeure or interruption of certain activities. Moreover, we might be obliged to pay fines and other penalties in the event of delays in product delivery, and such penalties are not covered by our insurance policies. Additionally, we may not be able to renew our current insurance policies under the same terms or at all. Risks not covered by our insurance policies or the inability to renew policies on favorable terms or at all could adversely affect our business and financial condition.

If we are not able to obtain, renew or register our lease agreements on favorable terms, our results of operations may be adversely affected.

According to Brazilian law, a lessee has the right to renew existing leases for subsequent terms equal to the original term of the lease. In order for a lessee to enforce this right, the following criteria must be met (1) the non-residential lease agreement must have a fixed term equal to or greater than five consecutive years, or, in the event there is more than one agreement or amendments thereto regarding the same real estate, the aggregate term in all such agreement and amendments must be greater than five consecutive years, (2) the lessee must have been using the property for the same purpose for a minimum period of three years and (3) the lessee must claim the right of renewal at the most one year and at least six months prior to the end of the term of the lease agreement.

The lease agreements for a few some of our facilities are for periods of less than five years, and therefore are not entitled to renewal rights, and so the lessor might refuse to renew when the lease expires. In addition, a few of our leases have indeterminate terms and are subject to termination at any time by the lessor so long as the lessor provides notice to the lessee at least 30 days from the date the lessor wants the lessee to vacate the property. If we are forced to close any of our educational facilities or must find other properties due to the termination of a lease agreement and our inability to renew the lease, our business and results of operations may be adversely affected.

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The lease agreements for some of the properties we use are not registered with the corresponding property registry. Registering and obtaining a certificate of registration for our lease agreements with the appropriate registries may take longer than expected or may not be successfully completed due to obstacles that are unknown to us and are outside of our control. Registering the lease agreements and obtaining the appropriate certificate of registration is important, especially should the property be transferred to a third party, because the third party who acquires the property will be bound by the lease agreement, provided it was (1) entered into for a specified term, (2) has a duration clause and (3) is registered in and approved by the competent real estate registry office. Should a duly registered leased property be put up for sale, the lessee will have a right of first refusal However, if the lease agreement is not registered, the lessee may not contest an infringement of its right of first refusal. If we do not have a right of first refusal our business may be adversely affected.

We are currently in the process of obtaining or renewing local licenses and permits, including licenses from the fire department, for some of the real estate we use and the businesses we operate. Failure to obtain renewals of these licenses and permits on a timely manner may result in penalties, including closures of some of our educational facilities, which could adversely affect us.

The use of all of our buildings is subject to the successful acquisition of an occupancy permit (Habite-se), or equivalent certificate, issued by the municipality where the property is located, certifying that the building has no deficiencies. In addition, nonresidential properties are required to have a use and operations license and/or permit, issued by the competent municipality, and a fire department inspection certificate and other licenses and registrations necessary for their regular use.

We are currently in the process of obtaining or renewing these licenses for some of the properties we use and the businesses we operate. The absence of such licenses may result in penalties ranging from fines to forced demolition of the areas that were not built-in compliance with applicable codes, or, in the worst scenario, closure of the educational facility lacking the licenses and permits. Failure to register with municipal, state or federal bodies may damage us because we shall not be able to collect charges from our customers due to our inability to issue proper tax receipts.

Any penalties imposed, including the forced closure of any of our units, may result in a material adverse effect on our business. Moreover, in the event of any accident at our educational facilities, the lack of such licenses may result in civil and criminal liability, as well as cause the cancellation of eventual insurance policies for the respective facility and may damage our reputation.

Any liquidation proceedings involving a company of our group may be conducted on a consolidated basis.

In the event of liquidation proceedings involving a company of the Cogna group, Brazilian courts may consider our assets and liabilities to be unified within the scope of such liquidation proceedings as if they belonged to a single company on a consolidated basis (Teoria da Consolidação Substancial), allocating our parent net investments to pay creditors of Cogna or other companies in our group. If this happens, the value of our shares may be adversely affected.

Certain Factors Relating to Brazil

The Brazilian federal government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement as well as Brazil’s political, regulatory, legal and economic conditions could harm us and the price of our Class A common shares.

Political and economic conditions directly affect our business and can result in a material adverse effect on our operations and financial condition. Macroeconomic policies imposed by the government can have significant impacts on Brazilian companies, including ourselves, Rumo, Moove and Compass, as well as market conditions and securities prices in Brazil.

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The Brazilian economy has been characterized by frequent and occasionally extensive intervention by the Brazilian government and unstable economic cycles. The Brazilian government has often changed monetary, taxation, credit, tariff and other policies to influence the course of Brazil’s economy. The Brazilian government’s actions to control inflation have at times involved setting wage and price controls, blocking access to bank accounts, imposing exchange controls and limiting imports into Brazil.

In recent years, there has been significant political turmoil in connection with the impeachment of Dilma Rousseff, the former president (who was removed from office in August 2016), and ongoing investigations of her successor, Michel Temer (who left office in January 2019), as part of the ongoing “Lava Jato” investigations. The potential outcome of these investigations is uncertain, but they have already had an adverse impact on the image and reputation of the implicated companies, and on the general market perception of the Brazilian economy. In March 2021, a Brazilian Federal Supreme Court ruling issued by Justice Edson Fachin annulled the decisions that had convicted former President Luiz Inacio Lula da Silva. As a result of this ruling, President Luiz Inacio Lula da Silva recovered his political rights, ran for office in the 2022 pr esidential elections in Brazil and got elected for a third four-year term starting January 1, 2023.

Since the results of the presidential election were announced, certain groups formed by extreme supporters of the defeated candidate have been organizing public demonstrations and protests against the electronic ballot boxes and the existence of an alleged conspiracy against their candidate. On January 8, 2023, thousands of supporters of former President Jair Bols onaro invaded Brazil’s Congress, presidential offices, and supreme court, among other government buildings in Brasília, Federal District. Any potential threat to the democratic system or ballot counting may result in the deterioration of the political environment and, consequently, affect the confidence of in vestors and the general public.

Our business, financial performance and prospects, as well as the market prices of our shares, may be adversely affected by, among others, the following factors:

- growth or downturn of the Brazilian economy;
- interest rates and monetary policies;
- exchange rates and currency fluctuations;
- inflation;
- liquidity of the domestic capital and lending markets;
- import and export controls;
- exchange controls and restrictions on remittances abroad and payments of dividends;
- modifications to laws and regulations according to political, social and economic interests;
- fiscal policy and changes in tax laws and related interpretations by tax authorities;
- economic, political and social instability, including general strikes and mass demonstrations;
- the regulatory framework governing the educational industry;
- labor and social security regulations;
- energy and water shortages and rationing;
- commodity prices including prices of paper and ink;
- public health, including as a result of epidemics and pandemics, such as the COVID-19 pandemic;
- changes in demographics, in particular declining birth rates, which will result in a decrease in the number of enrolled students in primary and secondary education in the future; and
- other political, diplomatic, social and economic developments in or affecting Brazil; and
- government incentive to invest in public school as we intent to grow through a Business-to-Government (“B2G”) business model.

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Uncertainty over whether the Brazilian federal government will implement reforms or changes in policy or regulation affecting these or other factors in the future may affect economic performance and contribute to economic uncertainty in Brazil, which may have an adverse effect on our activities and consequently our operating results and may also adversely affect the trading price of our Class A common shares. Recent economic and political instability has led to a negative perception of the Brazilian economy and higher volatility in the Brazilian securities markets, which also may adversely affect us and our Class A common shares. See “Item 5. Operating a nd Financial Review a nd Prospects—Brazilian Macroeconomic Environment”.

The ongoing economic uncertainty and political instability in Brazil, including as a result of ongoing corruption investigations, may harm us and the price of our Class A common shares.

Brazil’s political environment has historically influenced, and continues to influence, the performance of the country’s economy. Political crises have affected and continue to affect the confidence of investors and the general public, which have historically resulted in economic deceleration and heightened volatility in the securities offered by companies with significant operations in Brazil.

The recent economic instability in Brazil have contributed to a decline in market confidence in the Brazilian economy. Various ongoing investigations into allegations of money laundering and corruption being conducted by the Office of the Brazilian Federal Prosecutor, including the largest of such investigations, known as “Operação Lava Jato”, have negatively impacted the Brazilian economy and political environment. The potential outcome of these investigations is uncertain, but they have already had an adverse impact on the image and reputation of the implicated companies, and on the general market perception of the Brazilian economy. We cannot predict whether the ongoing investigations will result in further political and economic instability, or if new allegations against government officials and/or executives of private companies will arise in the future. A number of senior politicians, including current and former members of Congress and the Executive Branch, and high-ranking executive officers of major corporations and state-owned companies in Brazil were arrested, convicted of various charges relating to corruption, entered into plea agreements with federal prosecutors and/or have resigned or been removed from their positions as a result of these Lava Jato investigations. These individuals are alleged to have accepted bribes by means of kickbacks on contracts granted by the government to several infrastructure, oil and gas and construction companies. The profits of these kickbacks allegedly financed the political campaigns of political parties, for which funds were unaccounted or not publicly disclosed. These funds were also allegedly directed toward the personal enrichment of certain individuals. The effects of Lava Jato as well as other ongoing corruption-related investigations resulted in an adverse impact on the image and reputation of the companies that have been implicated as well as on the general market perception of the Brazilian economy, political environment and capital markets. We have no control over, and cannot predict, whether such investigations or allegations will lead to further political and economic instability or whether new allegations against government officials will arise in the future.

T he Brazilian federal government has propose d the general terms of fiscal reform to stimulate the economy and reduce the forecasted budget deficit for 202 3 and following years, but it is uncertain whether the Brazilian government will be able to gather the required support in the Brazilian Congress to pass additional specific reforms. We cannot predict which policies the Brazilian federal government may adopt or change or the effect that any such policies might have on our business and on the Brazilian economy. In addition, the Brazilian government continues to incur significant levels of debt to finance measures to combat the COVID-19 pandemic and its effects on unemployment, healthcare, school evasion and other areas, which is expected to increase the Brazilian budget deficit. Furthermore, Brazil elected a new president in October 2022, for a four-year term starting in 2023. The president of Brazil has the power to determine policies and issue governmental acts related to the conduct of the Brazilian economy and, consequently, affects the operations and financial performance of companies, including ours. We cannot predict which policies the Brazilian government will adopt, much less whether such policies or changes in current policies may have an adverse effect on us or on the Brazilian economy. The uncertainties regarding the Brazilian government’s ability to implement its agenda, can contribute to economic instability and increase the volatility of the Brazilian securities market. In addition, since the results of the presidential election have been announced and as of the date of this annual report, certain groups formed by supporters of the defeated candidate (the former president of Brazil, who sought reelection) have been organizing public demonstrations and protests against the electronic ballot boxes and the existence of an alleged conspiracy against their candidate. Any potential threat to the democratic system or the counting of ballots may result in deterioration of the political environment in Brazil, which could have a material adverse effect on our business, financial condition and results of operations, as well as on the price of our securities.

Any such new policies or changes to current policies, including measures to combat future waves of the COVID-19 pandemic, may have a material adverse impact on our business, results of operations, financial condition and prospects. In addition, a ny of the above factors may create additional political uncertainty, which could harm the Brazilian economy and, consequently, our business and the price of our Class A common shares.

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Inflation and certain measures by the Brazilian government to curb inflation have historically harmed the Brazilian economy and Brazilian capital markets, and high levels of inflation in the future would harm our business and the price of our Class A common shares.

In the past, Brazil has experienced extremely high rates of inflation. Inflation and some of the measures taken by the Brazilian government in an attempt to curb inflation have had significant negative effects on the Brazilian economy generally. Inflation, policies adopted to curb inflationary pressures and uncertainties regarding possible future governmental intervention have contributed to economic uncertainty and heightened volatility in the Brazilian capital markets.

According to the National Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo), or IPCA, which is published by the Brazilian Institute for Geography and Statistics (Instituto Brasileiro de Geografia e Estatística), or IBGE, Brazilian inflation rates were 5.8%, 10.1% and 4.5% for the years ended December 31, 20 2 2, 20 2 1 and 20 20, respectively. In 2022, inflationary pressures escalated in Brazil, including as a result of the ongoing war between Ukraine and Russia, supply chain issues, the continued COVID-19 pandemic (particularly in China) and increases in energy prices. The significant increase in the cost of living led the Brazilian government to introduce tax cuts on selected items, which helped ease pressures in Brazil and led the IPCA for the year ended December 31, 2022 to end at a lower level than 2021, although still significantly higher than the 3.5% targeted level for 2022, as set by the Brazilian Central Bank pursuant to the applicable law. Brazil may experience high levels of inflation in the future and inflationary pressures may lead to the Brazilian government’s intervening in the economy and introducing policies that could harm our business and the price of our Class A common shares.

One of the tools used by the Brazilian government to control inflation levels is its monetary policy, specifically in regard to the official Brazilian interest rate. An increase in the interest rate restricts the availability of credit and reduces economic growth, and vice versa. During recent years there has been significant volatility in the official Brazilian interest rate, which ranged from 14.25%, on December 31, 2015, to 2.00% on December 31, 2020, as established by the Monetary Policy Committee (Comitê de Política Monetária do Banco Central do Brasil), or COPOM. Beginning in March 2021, COPOM began increasing Brazil’s official interest rate, reaching 13.75% as of December 31, 2022. As of the date of this annual report, Brazil’s official interest rate was 13.75%. Any change in interest rate, in particular any volatile swings, can adversely affect our growth, indebtedness and financial condition.

Exchange rate instability may have adverse effects on the Brazilian economy, our business and the trading price of our Class A common shares.

The Brazilian currency has been historically volatile and has been devalued frequently over the past three decades. Throughout this period, the Brazilian government has implemented various economic plans and used various exchange rate policies, including sudden devaluations, periodic mini devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual exchange rate markets and a floating exchange rate system. Although long-term depreciation of the real is generally linked to the rate of inflation in Brazil, depreciation of the real occurring over shorter periods of time has resulted in significant variations in the exchange rate between the real, the U.S. dollar and other currencies. In 2014, the real depreciated by 11.8% against the U.S. dollar, while in 2015 it further depreciated by 32%. The real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$3.259 per US$1.00 on December 31, 2016, an appreciation of 16.5% against the rate of R$3.905 per US$1.00 reported on December 31, 2015. In 2017, the real depreciated by 1.5%, with the exchange rate reaching R$3.308 per US$1.00 on December 31, 2017. In 2018, the real depreciated an additional 17.1%, to R$3.875 per US$1.00 on December 31, 2018. The real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$4.031 per US$1.00 on December 31, 2019, which reflected a 4.0% depreciation of the real against the U.S. dollar for the year. The real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$5.580 per US$1.00 on December 31, 2020, which reflected a 28.9% depreciation of the real against the U.S. dollar for the year. D ue to the COVID-19 and the economic and political instability, the real depreciated 47.2% against the U.S. dollar since December 31, 2019 and reached R$5.937 per US$1.00 as of May 14, 2020, its lowest level since the introduction of the currency in 1994. The real/U.S. dollar exchange rate reported by the Central Bank was R$5.581 per U.S.$1.00 on December 31, 2021, which reflected a 7.4% depreciation in the real against the U.S. dollar during 2021. The real/U.S. dollar exchange rate reported by the Central Bank was R$5.218 per U.S.$1.00 on December 31, 2022, which reflected a 6.5% appreciation in the real against the U.S. dollar during 2022. There can be no assurance that the real will not appreciate or further depreciate against the U.S. dollar or other currencies in the future.

A devaluation of the real relative to the U.S. dollar could create inflationary pressures in Brazil and cause the Brazilian government to, among other measures, increase interest rates. Any depreciation of the real may generally restrict access to the international capital markets. It would also reduce the U.S. dollar value of our results of operations. Restrictive macroeconomic policies could reduce the stability of the Brazilian economy and harm our results of operations and profitability. In addition, domestic and international reactions to restrictive economic policies could have a negative impact on the Brazilian economy. These policies and any reactions to them may harm us by curtailing access to foreign financial markets and prompting further government intervention. A devaluation of the real relative to the U.S. dollar may also, as in the context of the current economic slowdown, decrease consumer spending, increase deflationary pressures and reduce economic growth.

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On the other hand, an appreciation of the real relative to the U.S. dollar and other foreign currencies may deteriorate the Brazilian foreign exchange current accounts. Depending on the circumstances, either devaluation or appreciation of the real relative to the U.S. dollar and other foreign currencies could restrict the growth of the Brazilian economy, as well as affecting our business, results of operations and profitability.

Infrastructure and workforce deficiency in Brazil may impact economic growth and have a material adverse effect on us.

Our performance depends on the overall health and growth of the Brazilian economy. Brazilian GDP growth has fluctuated over the past few years, with contractions of 3.5% and 3.3% in 2015 and 2016, respectiv ely, followed by growth of 1.3%, 1.8% and 1.2% in 2017, 2018 and 2019. Brazilian GDP contracted 3.3% in the year ended December 31, 2020 and grew 5.0% in the year ended December 31, 2021. Brazilian GDP grew 2.9% in the year ended December 31, 2022. Growth is limited by COVID-19’s lasting effects in relevant economy sectors, such as services and industry, which have been highly impacted by the lack of government effective measures in health and economy in general, such as the lack of consistent social contributio ns from the Brazilian government. All of such factors are aggravated by infrastructure, including potential energy shortages and deficient transportation, logistics and telecommunication sectors, general strikes, the lack of a qualified labor force, and the lack of private and public investments in these areas, which limit productivity and efficiency. Any of these factors could lead to labor market volatility and generally impact income, purchasing power and consumption levels, which could limit growth and ultimately have a material adverse effect on us.

Developments and the perception of risks in other countries, including other emerging markets, the United States and Europe, may harm the Brazilian economy and the price of our Class A common shares.

The market for securities offered by companies with significant operations in Brazil is influenced by economic and market conditions in Brazil and, to varying degrees, market conditions in other Latin American and emerging markets, as well as the United States, Europe and other countries. To the extent the conditions of the global markets or economy deteriorate, the business of companies with significant operations in Brazil may be harmed. The weakness in the global economy has been marked by, among other adverse factors, lower levels of consumer and corporate confidence, decreased business investment and consumer spending, increased unemployment, reduced income and asset values in many areas, reduction of China’s growth rate, currency volatility and limited availability of credit and access to capital. Developments or economic conditions in other countries may significantly affect the availability of credit to companies with significant operations in Brazil and result in considerable outflows of funds from Brazil, decreasing the amount of foreign investments in Brazil.

Since 2017, there has been an increase in volatility in Brazilian markets due to, among other factors, uncertainties about how monetary policy adjustments in the United States would affect the international financial markets, the increasing risk aversion to emerging market countries, uncertainties regarding Latin American, particularly Brazilian macroeconomic and political conditions, and, beginning in 2020, the impact of the COVID-19 pandemic. These uncertainties adversely affected us and the market value of our securities. There have also been concerns over conflicts, unrest and terrorist threats in the Middle East, Europe and Africa, which have resulted in volatility in oil and other markets. The United States and Russia have been at odds over Eastern Europe, and particularly with respect to the ongoing conflict in Ukraine. An escalation of the tensions between the United States and Russia could adversely affect the global economy. The United States and China have recently been involved in disputes regarding Taiwan, rights to navigation in the South China Sea, alleged human rights abuses in China, as well as in a controversy over trade barriers in China that threatened a trade war between the countries. Sustained tension between the United States and China over these and other matters could significantly undermine the stability of the global economy. It is unclear whether these challenges and uncertainties will be contained or resolved, and what effects they may have on the global political and economic conditions in the long term.

Crises and political instability in other emerging countries, the United States, Europe or other countries could decrease investor demand for securities offered by companies with significant operations in Brazil, such as our Class A common shares. Investor sentiment in one country may cause capital markets in other countries to fluctuate, affecting the value of our Class A common shares, even if indirectly. The economic, political and social instability in the United States, the trade war between the United States and China, crises in Europe and other countries, the consequences of United Kingdom’s exit from the European Union, and global tensions, as well as economic or political crises in Latin America or other emerging markets, including as a result of the COVID-19 pandemic, can significantly affect the perception of the risks inherent in investment in Brazil. In addition, growing economic uncertainty and news of a potentially recessive economy in the United States may also create uncertainty in the Brazilian economy. Moreover, new variants of the virus have emerged against which existing vaccines and acquired immunity may not be effective. Restrictions will likely remain in place, suppressing activity, if the contagion does not subside.

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These developments, as well as potential crises and forms of political instability arising therefrom or any other as of yet unforeseen development, may harm our business and the price of our Class A common shares.

The ongoing war between Ukraine and Russia may have a material adverse effect on our business financia l condition and results of operation s.

The ongoing war between Russia and Ukraine has provoked strong reactions from the United States, the UK, the EU and various other countries around the wor l d, including from the members of the North Atlantic Treaty Organization, or “NATO”. Following Russia’s invasion of Ukraine beginning on February 21, 2022, the United States, the UK, the EU and other countries announced broad economic sanctions against Russia, including financial measures such as freezing Russia’s central bank assets and limiting its ability to access its U.S. dollar reserves. The United States, the EU and the UK have also banned people and businesses from dealing s with the Russian central bank, its finance ministry and its wealth fund. Selected Russian banks have also be en removed from the Swift mess a ging system, which enables the smooth transfer of money across borders. Other sanctions by the UK include major Russian bank s being excluded from the UK financial system, stopping them from accessing sterling and clearing paym en ts, major Russian companies and the state being stopped from raising finance or borrowing money on the UK markets, and the establishment of limits on deposits Russians can make at UK banks. The United States, the EU and the UK adopted personal measures, such as sanctions on individuals with close ties to Mr. Putin, and placed visa restrictions on sever al oligarchs, as well as their family members and close associates, and freezing of assets. While the precise effect of the ongoing war and these sanctions on the Russian and global economies remains uncertain, they have already resulted in significant volatility in financial markets, depreciation of the Russ i an ruble and the Ukrainian hryvnia against the U.S. dollar and other major currencies, as well as in an increase in energy and commodity prices globally. Should the conflict continue to escalate, markets may face continued volatility as well as economic and security consequences, including, but no t limited to, supply shortages of different kinds and further increases in prices of commodities, including piped gas, oil and agricultural goods, among other s.

Given that Russia and Ukraine are among the largest grain exporters in the world, impacts on financial markets, in f lation, interest rates, unemployment and other matters could affect the global economy that has not entirely recovered from the disruption to global supply chains caused by the COVID-19 pandemic. Other potential consequences include, but are not limited to, growth in the number of popular uprisings in the region, increased political discontent, especially in the regions most affected by the conflict or economic sanctions, increase in cyberterrorism activities and attacks, exodus to regions close to the areas of conflict and increase in the number of refugees fleeing across Europe, amon g other unforeseen social and humanitarian effects.

While as of the date of this annual report there have not been any material impact s from the above-mention ed matter s in our consolidated financial statements, consequences arising from the conflict, or any other unforeseen development s, could adversely impact our business and the price of our Class A common shares.

Any further downgrading of Brazil’s credit rating could reduce the trading price of our Class A common shares.

We may be harmed by investors’ perceptions of risks related to Brazil’s sovereign debt credit rating. Rating agencies regularly evaluate Brazil and its sovereign ratings, which are based on a number of factors including macroeconomic trends, fiscal and budgetary conditions, indebtedness metrics and the perspective of changes in any of these factors.

The rating agencies began to review Brazil’s sovereign credit rating in September 2015. Subsequently, the three major rating agencies downgraded Brazil’s investment-grade status:

- Standard & Poor’s initially downgraded Brazil’s credit rating from BBB-negative to BB-positive and subsequently downgraded it again from BB-positive to BB, maintaining its negative outlook, citing a worse credit situation since the first downgrade. On January 11, 2018, Standard & Poor’s further downgraded Brazil’s credit rating from BB to BB-stable, which was reaffirmed on November 30, 2021.
- In December 2015, Moody’s placed Brazil’s Baa3 issue and bond ratings under review for downgrade and subsequently downgraded the issue and bond ratings to below investment grade, at Ba2 with a negative outlook, citing the prospect of a further deterioration in Brazil’s debt indicators, considering the low growth environment and the challenging political scenario. On May 25, 2021, Moody’s maintained Brazil’s credit rating at Ba2-stable.
- Fitch downgraded Brazil’s sovereign credit rating to BB-positive with a negative outlook, citing the rapid expansion of the country’s budget deficit and the worse-than-expected recession. In February 2018, Fitch downgraded Brazil’s sovereign credit rating again to BB-negative, citing, among other factors, fiscal deficits, the increasing burden of public debt and an inability to implement reforms that would structurally improve Brazil’s public finances. On December 14, 2021, Fitch reaffirmed Brazil’s credit rating at BB-negative.

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Brazil’s sovereign credit rating is currently rated below investment grade by the three credit rating agencies. Consequently, the prices of securities offered by companies with significant operations in Brazil have been negatively affected. A prolongation or worsening of the current Brazilian recession and continued political uncertainty, among other factors, could lead to further ratings downgrades. Any further downgrade of Brazil’s sovereign credit ratings could heighten investors’ perception of risk and, as a result, cause the trading price of our Class A common shares to decline.

Certain Factors Relating to Our Class A Common Shares

Our parent compan y, Cogna, own s 100% of our outstanding Class B common shares, which represent 97.3% of the voting power of our issued share capital and 7 8.0% of our total equity ownership, will c ontinue to c ontrol all matters requiring shareholder approval. Cogna’s ownership and voting power limits your ability to influence corporate matters.

As of December 31, 2022, Cogna control s our company, owning 7 8.0% of our issued share capital, through its beneficial ownership of all of our outstanding Class B common shares, and consequently, 97.3% of the combined voting power of our issued share capital. Our Class B common shares are entitled to 10 votes per share and our Class A common shares, which are publicly traded, are entitled to one vote per share. Our Class B common shares are convertible into an equivalent number of Class A common shares and generally convert into Class A common shares upon transfer, subject to limited exceptions. As a result, Cogna will control the outcome of all decisions at our shareholders’ meetings and will be able to elect a majority of the members of our board of directors. Cogna will also be able to direct our actions in areas such as business strategy, financing, distributions, acquisitions and dispositions of assets or businesses. For example, Cogna may cause us to make acquisitions that increase the amount of our indebtedness or outstanding Class A common shares, sell revenue generating assets or inhibit change of control transactions that benefit other shareholders. Cogna’s decisions on these matters may be contrary to your expectations or preferences, and Cogna may take actions that could be contrary to your interests. Cogna will be able to prevent any other shareholders, including you, from blocking these actions. For further information regarding shareholdings in our company, see “Item 7. Major Shareholders a nd Related Party Transactions—A. Major Shareholders”.

So long as Cogna continue to beneficially own a sufficient number of Class B common shares, even if Cogna beneficially owns significantly less than 50% of our outstanding share capital, Cogna will be able to effectively control our decisions. If Cogna sells or transfers any of its Class B common shares, such shares will generally convert automatically into Class A common shares, subject to limited exceptions, such as transfers to affiliates, to trustees for the holder or its affiliates and certain transfers to U.S. tax exempt organizations. The fact that any Class B common shares convert into Class A common shares if Cogna sells or transfers them means that Cogna will in many situations continue to control a majority of the combined voting power of our outstanding share capital, due to the voting rights of any Class B common shares that it retains. However, if our Class B common shares at any time represent less than 10% of the total number of shares in the capital of the company outstanding, the Class B common shares then outstanding will automatically convert into Class A common shares. For a description of the dual class structure, see “Item 10. Additional Information—B. Memorandum and A rticles of A ssociation”.

Our status as a controlled company and a foreign private issuer exempts us from certain of the corporate governance standards of the Nasdaq, limiting the protections afforded to investors.

We are a “controlled company” and a “foreign private issuer” within the meaning of the Nasdaq corporate governance standards. Under the Nasdaq rules, a controlled company is exempt from certain Nasdaq corporate governance requirements. In addition, a foreign private issuer may elect to comply with the practice of its home country and not to comply with certain Nasdaq corporate governance requirements, including the requirements that (i) a majority of the board of directors consists of independent directors, (ii) a nominating and corporate governance committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, (iii) a compensation committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, and (iv) an annual performance evaluation of the nominating and corporate governance and compensation committees be undertaken. Although we have similar practices, they do not entirely conform to the Nasdaq requirements; therefore, we currently use these exemptions and intend to continue using them. Accordingly, you will not have the same protections provided to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

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Our Articles of Association contain anti-takeover provisions that may discourage a third party from acquiring us and adversely affect the rights of holders of our Class A common shares.

Our Articles of Association contain certain provisions that could limit the ability of others to acquire our control, including a provision that grants authority to our board of directors to establish and issue from time to time one or more series of preferred shares without action by our shareholders and to determine, with respect to any series of preferred shares, the terms and rights of that series. These provisions could have the effect of depriving our shareholders of the opportunity to sell their shares at a premium over the prevailing market price by discouraging third parties from seeking to obtain our control in a tender offer or similar transactions.

The price of our Class A common shares may be subject to changes in the price of the shares of Cogna, our parent company.

Cogna is a public company and listed in Brazil on the B3. Accordingly, investors may choose to value our Class A common shares considering the business group as a whole, and not just our business on its own. Consequently, any change in the price of the shares of Cogna, whether due to factors such as business decisions, the macroeconomic situation in Brazil, the publication of financial results, or otherwise, may negatively affect its market value and, therefore, have an adverse effect on the price of our Class A common shares.

If securities or industry analysts do not publish reports, or publish inaccurate or unfavorable reports about our business, the price of our Class A common shares and our trading volume could decline.

The trading market for our Class A common shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If no or too few securities or industry analysts provide coverage of our company, the trading price for our Class A common shares would likely be negatively affected. If one or more of the analysts who cover us downgrade their target price for our Class A common shares or publish inaccurate or unfavorable reports about our business, the price of our Class A common shares would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our Class A common shares could decrease, which might cause the price of our Class A common shares and trading volume to decline.

We may not pay any cash dividends in the foreseeable future.

We may retain our future earnings, if any, for the foreseeable future, to fund the operation of our business and future growth. As a result, capital appreciation in the price of our Class A common shares, if any, will be your only source of gain on an investment in our Class A common shares.

Our dual class capital structure means our shares will not be included in certain indices, and this could affect the market price of our Class A shares.

In 2017, FTSE Russell, S&P Dow Jones and MSCI announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices to exclude companies with multiple classes of shares of common stock from being added to such indices. FTSE Russell announced plans to require new constituents of its indices to have at least five percent of their voting rights in the hands of public stockholders, whereas S&P Dow Jones announced that companies with multiple share classes, such as ours, will not be eligible for inclusion in the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. MSCI also opened public consultations on their treatment of no vote and multi class structures and has temporarily barred new multi class listings from its ACWI Investable Market Index and U.S. Investable Market 2500 Index. We cannot assure you that other stock indices will not take a similar approach to FTSE Russell, S&P Dow Jones and MSCI in the future. Under the announced policies, our dual class capital structure would make us ineligible for inclusion in any of these indices and, as a result, mutual funds, exchange traded funds and other investment vehicles that attempt to passively track these indices will not invest in our stock. Exclusion from indices could make our Class A common shares less attractive to investors and, as a result, the market price of our Class A common shares could be adversely affected.

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The dual class structure of our common stock has the effect of concentrating voting control with cogna; this will limit or preclude your ability to influence corporate matters.

Each Class A common share entitle s its holder to one vote per share, and each Class B common share entitle s its holder to ten votes per share, so long as the total number of the issued and outstanding Class B common shares is at least 10% of the total number of shares outstanding. Due to the ten to one voting ratio between our Class B and Class A common shares, the beneficial owner of our Class B common shares collectively will continue to control the voting power of our common shares and therefore be able to control all matters submitted to our shareholders.

In addition, our Articles of Association provide that at any time when there are Class A common shares in issue, additional Class B common shares may only be issued pursuant to (1) a share split, subdivision of shares or similar transaction or where a dividend or other distribution is paid by the issue of shares or rights to acquire shares or following capitalization of profits, (2) a merger, consolidation, or other business combination involving the issuance of Class B common shares as full or partial consideration, or (3) an issuance of Class A common shares, whereby holders of the Class B common shares are entitled to purchase a number of Class B common shares that would allow them to maintain their proportional ownership interests in Vasta (following an offer by us to each holder of Class B common shares to issue to such holder, upon the same economic terms and at the same price, such number of Class B common shares as would ensure such holder may maintain a proportional ownership interest in Vasta pursuant to our Articles of Association).

Future transfers by holders of Class B common shares will generally result in those shares converting to Class A common shares, subject to limited exceptions, such as certain transfers effected to permitted transferees or for estate planning or charitable purposes. The conversion of Class B common shares to Class A common shares will have the effect, over time, of increasing the relative voting power of those holders of Class B common shares who retain their shares in the long term.

This concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future. For a description of our dual class structure, see “Item 10. Additional Information—B. Memorandum and A rticles of A ssociation—Voting Rights”.

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We are a Cayman Islands exempted company with limited liability. The rights of our shareholders, including with respect to fiduciary duties and corporate opportunities, may be different from the rights of shareholders governed by the laws of U.S. jurisdictions.

We are a Cayman Islands exempted company with limited liability. Our corporate affairs are governed by our Articles of Association and by the laws of the Cayman Islands. The rights of shareholders and the responsibilities of members of our board of directors may be different from the rights of shareholders and responsibilities of directors in companies governed by the laws of U.S. jurisdictions. In particular, as a matter of Cayman Islands law, directors of a Cayman Islands company owe fiduciary duties to the company and separately a duty of care, diligence and skill to the company. Under Cayman Islands law, directors and officers owe the following fiduciary duties: (1) duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole; (2) duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; (3) directors should not properly fetter the exercise of future discretion; (4) duty to exercise powers fairly as between different sections of shareholders; (5) duty to exercise independent judgment; and (6) duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests. Our Articles of Association have varied this last obligation by providing that a director must disclose the nature and extent of his or her interest in any contract or arrangement, and following such disclosure and subject to any separate requirement under applicable law or the listing rules of the Nasdaq, and unless disqualified by the chairman of the relevant meeting, such director may vote in respect of any transaction or arrangement in which he or she is interested and may be counted in the quorum at the meeting. Conversely, under Delaware corporate law, a director has a fiduciary duty to the corporation and its stockholders and the director’s duties prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. For more information, see “Item 16G. Corporate G overnance—Principal Differences between Cayman Islands and U.S. Corporate Law”.

We may need to raise additional capital in the future by issuing securities, use our Class A common shares as acquisition consideration, or may enter into corporate transactions with an effect similar to a merger, which may dilute your interest in our share capital, change the nature of our business, and/or affect the trading price of our Class A common shares.

We may need to raise additional funds to grow our business, including through acquisitions, and implement our growth strategy going forward by engaging in public or private issuances of common shares or securities convertible into, or exchangeable for, our common shares, which may dilute your interest in our share capital or result in a decrease in the market price of our common shares. Any fundraising through the issuance of shares or securities convertible into or exchangeable for shares, the use of our Class A common shares as acquisition consideration, or the participation in corporate transactions with an effect similar to a merger, may dilute your interest in our capital stock, change the nature of our business from the business that you originally invested in (including as a result of merger or acquisition transactions), and/or result in a decrease in the market price of our Class A common shares.

As a foreign private issuer and an “emerging growth company” (as defined in the JOBS Act), we have different disclosure and other requirements from U.S. domestic registrants and non-emerging growth companies. We may take advantage of exemptions from certain corporate governance regulations of the Nasdaq, and this may result in less protection for the holders of our Class A common shares.

As a foreign private issuer and emerging growth company, we may be subject to different disclosure and other requirements than domestic U.S. registrants and non-emerging growth companies. For example, as a foreign private issuer, in the United States, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act, including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, we intend to rely on exemptions from certain U.S. rules which will permit us to follow Cayman Islands legal requirements rather than certain of the requirements that are applicable to U.S. domestic registrants.

We follow Cayman Islands laws and regulations that are applicable to Cayman Islands companies. However, Cayman Islands laws and regulations applicable to Cayman Islands companies do not contain any provisions comparable to the U.S. proxy rules, the U.S. rules relating to the filing of reports on Form 10-Q or 8-K or the U.S. rules relating to liability for insiders who profit from trades made in a short period of time, as referred to above.

Furthermore, foreign private issuers are required to file their annual report on Form 20 F within 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information, although we are subject to Cayman Islands laws and regulations having substantially the same effect as Regulation Fair Disclosure. As a result of the above, even though we are required to furnish reports on Form 6-K disclosing the limited information which we have made or are required to make public pursuant to Cayman Islands law, or are required to distribute to shareholders generally, and that is material to us, you may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. company.

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In addition, according to Section 303A of the Section 5605 of the Nasdaq equity rules listed companies are required, among other things, to have a majority of independent board members, and to have independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign private issuer, however, we are permitted to, and we do, follow home country practice in lieu of the above requirements. For more information, see the section “Item 16G. Corporate governance—Principal Differences between Cayman Islands and U.S. Corporate Law”.

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for emerging growth companies. Under this act, as an emerging growth company, we are not subject to the same disclosure and financial reporting requirements as non-emerging growth companies. For example, as an emerging growth company we are permitted to, and intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. Also, we do not have to comply with future audit rules promulgated by the U.S. Public Company Accounting Oversight Board, or PCAOB (unless the SEC determines otherwise), and our auditors will not need to attest to our internal controls under Section 404(b) of the Sarbanes Oxley Act. We may follow these reporting exemptions until we are no longer an emerging growth company. As a result, our shareholders may not have access to certain information that they deem important. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual revenue of at least US$1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common shares that is held by non-affiliates exceeds US$700.0 million as of the prior June 30, and (2) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three year period. Accordingly, the information about us available to you will not be the same as, and may be more limited than, the information available to shareholders of a non-emerging growth company. We could be an “emerging growth company” for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Class A common shares held by non-affiliates exceeds US$700 million as of any June 30 (the end of our second fiscal quarter) before that time, in which case we would no longer be an “emerging growth company” as of the following December 31 (our fiscal year end). We cannot predict if investors will find our Class A common shares less attractive because we may rely on these exemptions. If some investors find our Class A common shares less attractive as a result, there may be a less active trading market for our Class A common shares and the price of our Class A common shares may be more volatile.

We may lose our foreign private issuer status which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses.

In order to maintain our current status as a foreign private issuer, either (a) more than 50% of our Class A common shares must be either directly or indirectly owned of record by nonresidents of the United States or (b)(1) a majority of our executive officers or directors may not be U.S. citizens or residents, (2) more than 50% of our assets cannot be located in the United States and (3) our business must be administered principally outside the United States. If we lose this status, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the costs we will incur as a foreign private issuer.

Our shareholders may face difficulties in protecting their interests because we are a Cayman Islands exempted company.

Our corporate affairs are governed by our Articles of Association, by the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under the laws of the Cayman Islands are not as clearly defined as under statutes or judicial precedent in existence in jurisdictions in the United States. Therefore, you may have more difficulty protecting your interests than would shareholders of a corporation incorporated in a jurisdiction in the United States, due to the comparatively less formal nature of Cayman Islands law in this area.

While Cayman Islands law allows a dissenting shareholder to express the shareholder’s view that a court sanctioned reorganization of a Cayman Islands company would not provide fair value for the shareholder’s shares, Cayman Islands statutory law does not specifically provide for shareholder appraisal rights in connection with a merger or consolidation of a company that takes place by way of a scheme of arrangement. This may make it more difficult for you to assess the value of any consideration you may receive in such a merger or consolidation or to require that the acquirer gives you additional consideration if you believe the consideration offered is insufficient. However, Cayman Islands statutory law provides a mechanism for a dissenting shareholder in a merger or consolidation that does not take place by way of a scheme of arrangement to apply to the Grand Court for a determination of the fair value of the dissenter’s shares if it is not possible for the company and the dissenter to agree on a fair price within the time limits prescribed.

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Shareholders of Cayman Islands exempted companies have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders. Our directors have discretion under our Articles of Association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Subject to limited exceptions, under Cayman Islands’ law, a minority shareholder may not bring a derivative action against the board of directors. Class actions are not recognized in the Cayman Islands, but groups of shareholders with identical interests may bring representative proceedings, which are similar.

United States civil liabilities and certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. In addition, the majority of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside of the United States. As a result, it may be difficult to effect service of process within the United States upon these persons. It may also be difficult to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors who are not resident in the United States and the substantial majority of whose assets are located outside of the United States.

We have been advised by our Cayman Islands legal counsel, Maples and Calder (Cayman) LLP, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the securities laws of the United States or any State, to the extent that the liabilities imposed by those p rovisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provid ed certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

Judgments of Brazilian courts to enforce our obligations with respect to our Class A common shares may be payable only in reais. The exchange rate in force at the time may not offer non-Brazilian investors full compensation for any claim arising from our obligations.

Most of our assets are located in Brazil. If proceedings are brought in the courts of Brazil seeking to enforce our obligations in respect of our Class A common shares, we may not be required to discharge our obligations in a currency other than the real. Under Brazilian exchange control laws, an obligation in Brazil to pay amounts denominated in a currency other than the real may only be satisfied in Brazilian currency at the exchange rate, as determined by the Brazilian Central Bank, in effect on the date the judgment is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then prevailing exchange rate may not afford non-Brazilian investors with full compensation for any claim arising out of or related to our obligations under the Class A common shares.

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Our Class A common shares may not be a suitable investment for all investors, as investment in our Class A common shares presents risks and the possibility of financial losses.

The investment in our Class A common shares is subject to risks. Investors who wish to invest in our Class A common shares are thus subject to asset losses, including loss of the entire value of their investment, as well as other risks, including those related to our Class A common shares, us, the sector in which we operate, our shareholder structure and the general macroeconomic environment in Brazil, among other risks.

Each potential investor in our Class A common shares must therefore determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

- have sufficient knowledge and experience to make a meaningful evaluation of our Class A common shares, the merits and risks of investing in our Class A common shares and the information contained in this annual report;
- have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in our Class A common shares and the impact our Class A common shares will have on its overall investment portfolio;
- have sufficient financial resources and liquidity to bear all of the risks of an investment in our Class A common shares;
- understand thoroughly the terms of our Class A common shares and be familiar with the behavior of any relevant indices and financial markets; and
- be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

The Cayman Islands Economic Substance Act may affect our operations.

The Cayman Islands has recently enacted the International Tax Co-operation (Economic Substance) Act (As Revised), or the Cayman Economic Substance Act. We are required to comply with the Cayman Economic Substance Act. As we are a Cayman Islands company, compliance obligations include filing annual notifications for us, which need to state whether we are carrying out any relevant activities and, if so, whether we have satisfied economic substance tests to the extent required under the Cayman Economic Substance Act. As it is a relatively new regime, it is anticipated that the Cayman Economic Substance Act will evolve and be subject to further clarification and amendments. We may need to allocate additional resources to keep updated with these developments and may have to make changes to our operations in order to comply with all requirements under the Cayman Economic Substance Act. Failure to satisfy these requirements may subject us to penalties under the Cayman Economic Substance Act.

The Cayman Islands Tax Information Authority shall impose a penalty of CI$10,000 (or US$12,500) on a relevant entity for failing to satisfy the economic substance test or CI$100,000 (or US$125,000) if it is not satisfied in the subsequent financial year after the initial notice of failure. Following failure after two consecutive years the Grand Court of the Cayman Islands may make an order requiring the relevant entity to take specified action to satisfy the economic substance test or ordering it that it is defunct or be struck off.

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ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company

Our History

Our business is the result of several value-added acquisitions and in-house development of solutions throughout the years, and we have a solid track record in the educational market that traces back to the beginning of the century. The solutions presented below were integrated one by one in a thorough process, resulting in what is now a one-stop-partner provider to schools with an unmatchable market offering. Based on our extensive knowledge of private schools given Cogna’s history of own ing schools’ operations, additions to Vasta’s platform have enforced cross-knowledge and improvements to take our solutions to the next level. We set forth below the dates each product originally commenced.

Our roots, through Cogna, trace back to 1966 with the creation of the Grupo Pitágoras, a preparatory course for university admission exams. In the 1990s, Cogna developed the Pitágoras educational platform, a replicable teaching and management model, rolling out its educational strategy across Brazil. Starting in 2010, the Cogna group (formerly known as Kroton) began to make significant investments in the postsecondary education segment, always ahead of transformational trends, starting with the acquisition of IUNI Educational S.A., an institution that offered undergraduate and postgraduate programs and that doubled the group’s activities, providing national scale.

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Two other relevant acquisitions were UNOPAR in 2011, which was the result of a digitalization effort and made the group the leader in the distance learning sector in Brazil, and Anhanguera in 2014, which had both on-campus and distance learning courses and initiated the concept of scale as a value creation mechanism. Recognized as one of the largest and most successful education companies in the world, Cogna brings vast knowledge and industry track record to Vasta’s operations, along with the Pitágoras and Rede Cristã de Ensino learning systems.

Vasta’s history is also based on the unification of several other renowned brands, and dates back to 1914, with the opening of a small, second-hand bookshop in São Paulo with the brand Saraiva, one of the most traditional names in Brazil. In the same decade, Saraiva published its first book, therefore inaugurating the publishing phase of the company. Pioneer in publishing and bookselling markets, Saraiva acquired Editora Atual in 1998, and began selling its products electronically through its website, one of the first e-commerce sites in the country.

The 1970s marked an important landmark in another of our brands, Anglo, with the launch of its workbook, disrupting the delivery of educational content across the country. As a pioneer in the offering of learning systems, Anglo started by offering preparatory course materials and expanded from its already well-recognized high-quality standards in Exact Sciences to a complete content solution to partner schools. In the 2000s, Anglo already had several partner schools throughout the country associating the experience of founding educators to the next generation of educators and market standards. Anglo is one of the longest-standing educational brands in the country and is founded on encouraging the autonomy and empowerment of its students.

In 1986, another educational platform that would comprise our portfolio, Sistema Maxi de Ensino, was born through the expertise of Colégio Maxi, a widely recognized school in Londrina, offering content to elementary and middle schools throughout the country.

Our first Digital Platform solution, Livro Fácil, was founded in 1991. Livro Fácil is an e-commerce for the sale of teaching materials, stationery and literature, among others.

In 2004, Ético educational platform was founded, encompassing a repertoire of integrated solutions through digital and printed content for the complete development of students.

The combination of our individual brands started in 1999, when the Abril Group (the former name of Somos Educação, which is now Vasta) acquired the publishing companies Ática and Scipione, well-established leaders in the Brazilian printed content market and pioneers in the creation of educational content. In 2010, Vasta acquired the Anglo educational platform and Anglo preparatory course for university admission exams, positioning us as the second largest player in Brazil.

One year later, in 2011, we acquired the pH schools and courses, one of the most traditional brands in the state of Rio de Janeiro, which led to the creation of the pH educational platform in 2012. Sistema de Ensino pH leverages over 25 years of expertise from Curso pH, offering structured and elaborated material to partner schools, as well as standardized after-school content to support educators, guide education practices and strengthen learning techniques. In this context, we were already the best positioned player to consolidate the K-12 education market, and other relevant acquisitions succeeded in the following years such as Maxi, in October 2011, making our Company the largest learning systems provider in Brazil.

In 2012, we expanded our scope through “O Líder em Mim”, a pioneering initiative in Brazil designed to promote behavioral change in educators, children and teenagers through the development of socio-emotional skills, helping students take control of their own lives and be a part of social transformation. This program was developed by Franklin Covey Co., in the United States, based on the book “The 7 Habits of Highly Effective People” and adapted for Brazilian children from kindergarten age to ninth grade. O Líder em Mim focuses on using the “7 Habits” system and works on overcoming constrictive paradigms to help students and educators to see situations differently, change their behavior and achieve new and consistent results.

Plurall was the opening wedge into digital content offering, developed in 2013 and rolled out in February 2014, with continuous improvement ever since. Our solution is a practical, organized and innovative platform, which was conceived for mobile phone use and is also available online. Using Plurall, students can access content seen in the classroom, teaching materials, exercise lists, ENEM (Exame Nacional do Ensino Médio) exams and Brazil’s main university entrance exams, instructional videos, frequently asked questions, and can access tutors even during weekends and holidays. For highly skilled students, Plurall also offers tasks with a greater complexity in order to challenge and motivate them, helping develop their full potential. Schools and parents can also access performance reports that show the results of each student, demonstrating strengths, weaknesses, as well as benchmarks with other schools across Brazil. For educators, we developed the Plurall Maestro platform in 2014, which allows educators to create their own activities and exercises and produce new content and exams, resulting in a personalization of teaching strategies. In 2015, Plurall was recognized for the innovation it brings to the education market globally and won the Global Mobile Awards as the best mobile innovation for education and learning.

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Saraiva was added to Vasta’s core content portfolio in June 2015, including Saraiva’s publishing operations and the Ético educational platform. This acquisition reinforced our commitment to be increasingly present in schools, through close ties with educators, students, families and school owners.

The PROFS core solution was created in 2016 as a continuous teacher training program. By developing skills and abilities, educators are able to improve teaching and learning processes while having the opportunity to get to know our platform, therefore increasing adoption of other products.

In 2017, Somos acquired Livro Fácil, which contributes to the success of the PAR Platform solution, as schools can choose to promote this e-commerce among parents and receive commission for material sold through the platform as opposed to buying and reselling with a markup. As well as selling teaching materials, stationery and literature, Livro Fácil functions as a distribution hub that distributes materials produced by us, as well as from other suppliers that are chosen by our partner schools, placing us as a one-stop-partner for schools.

As a relevant addition to our existing core content solutions, PAR Platform was created in 2017 to engage schools through long-term contracts using digital and printed content based on textbooks. This model benefits educators, that are able to preserve their pedagogical preferences, but at the same time enables them to receive the same level of service and support that is provided through our educational platform. Full flexibility to choose from a variety of books increases loyalty and is a first step for a potential educational platform adoption, if desired by the schools.

In 2018, we developed English Stars, an educational platform for English instruction, purchasing content from Macmillan, thereby complementing our complementary content portfolio. English Stars focuses not only on language instruction, but on English as a means of communication, exploring content that goes beyond vocabulary and grammar, such as science, humanities and art.

In October 2018, Cogna announced the acquisition of Somos as an expansion of its K-12 business and B2B business model, integrating a high-quality full-service provider, with a comprehensive portfolio of solutions and brands serving all segments of the private K-12 education market, broadening our knowledge on core and complementary content solutions.

Vasta is a result of the combination of Cogna’s strong operational and financial excellence track record and Somos, the most relevant K-12 player in the country. This new company and its brand helped ensure a new focus on K-12 education activities, as well as the construction of differentiated services and a unique offering as a one-stop partner to schools. Our aim is to disseminate values and goals in the K-12 education segment, including the delivery of high-quality education to children and teenagers through our well-renowned brands, resulting in a relevant presence in the premium market.

On January 7, 2020, we concluded the acquisition of the entire ownership interest of Pluri Educacional A&R Comércio e Serviços de Informática Ltda., or Pluri, for R$26.0 million. Pluri is an entity based in the State of Pernambuco specialized in solutions such as consulting and technologies for education systems. This acquisition is in line with our strategy of focusing on the distribution of our operations to another region. The purchase agreement is subject to certain additional earn-outs, associated with achievements defined in the agreement, such as revenue and profit, that could in crease the purchase price by an additional R$1.7 million over the life of the earn-out period.

On February 13, 2020, we entered into a purchase agreement to purchase the entire ownership interest of Mind Makers Editora Educacional Ltda., or MindMakers, a company that offers computer programming and robotics courses and helps students develop skills relevant to their educational progress, such as coding and product development, as well as entrepreneurial and socio-emotional skills including teamwork, leadership and perseverance. The total purchase price was R$23.6 million, subject to certain adjustments related to future results, of which R$10.0 million was paid in cash upon signing the agreement, with half of the remaining amount paid in 2021 (R$3.1 million, as readjusted) and the other half of the remaining balance payable in 2022. During 2021, the operating result targets were not achieved which resulted in a reduction of the original agreed purchase price. The agreement is also subject to certain additional earn-outs, associated with targets tied to revenue and profit, that could increase the purchase price by an additional R$5.4 million over the life of the earn-out period, which is recorded at fair value.

On November 20, 2020, we concluded the acquisition of Meritt, a cutting-edge Brazilian digital assessment platform. The purchase price was R$3.5 million, of which R$3.2 million was paid in cash and R$0.3 million is to be paid in installments that are currently outstanding and accrue interest based on the CDI rate. The agreement is also subject to certain earn-outs, that could increase the purchase price by an additional R$4.0 million over the life of the earn-out period. Meritt had 153 active clients as of December 31, 2020, an increase of 40% compared to 2019, and finished the year with R$1.5 million of revenues. In addition to aggregating a digital solution to the platform, bringing in new clients, and contributing with its experience in data analysis, Meritt will also provide relevant cost synergies with the streamlining of tests and mock exams for the Vasta brands. Meritt’s experience and methodology will help Vasta make new strides in its investments in online and adaptive testing, gaining new ground in assessment customization, as well as allowing for results comparison between all students enrolled in the platform. This methodology will make it possible to more quickly identify each student’s strengths and areas for improvement, with the goal guaranteeing a continuous evolution of their academic results, both in traditional exams and selection processes.

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On March 2, 2021, we acquired, through our wholly owned subsidiary, Somos Sistemas, 100.0% of the outstanding shares and voting rights of Sociedade Educacional da Lagoa Ltda., or SEL for a purchase price of R$65.0 million. SEL provides technical and pedagogic services to education platforms, including maintenance of such platforms, development and improvement of contents and trainings to professionals. Founded in 1997, SEL as of the date of the acquisition served, direct or indirectly, 441 schools, 272 thousand K-12 students and approximately 503 thousand students in the secondary and continuing education segment.

On May 27, 2021, we acquired through our subsidiary, Somos Sistemas de Ensino S.A. (“Somos Sistemas”) the entity Redação Nota 1000, which provides essay review services as a service platform, through its proprietary software. The Redação Nota 1000’s users may choose their essays reviewed under different approaches as follows: (i) solely by essay-review specialists (manual); (ii) on an automated basis by the company’s software, with a final review by a specialist (semi-automated); or (iii) exclusively on an automated basis by the company’s software. The consideration transferred was R$11.3 million, of which R$4.1 million was paid in cash and the remaining amount of R$7.3 million will be paid in installments with final due date on December 24, 2026 (each installment adjusted by the positive variation of 100% of CDI index). In addition, we recognized a contingent consideration of R$2.6 million subject to certain post-closing price adjustments (achievement of financial targets such as maintenance of contracts, net revenue and average global cost, in addition to non-financial targets such as platform engagement, satisfaction of the customer in the service provided and adequate level of information security, for the years 2022 and 2023.

On August 1, 2021 we acquired through our subsidiary, Somos Sistemas de Ensino S.A. (“Somos Sistemas”) the entity EMME, which provides educational marketing solutions for schools, through license of its “software as a service”. The consideration transferred was R$15.3 million of which R$3.1 million was paid in cash and the remaining amount of R$12.2 million will be paid in installments with final due date on August 16, 2026 (each installment adjusted by the positive variation of inflation- “IPCA” – Extended National Consumer Price Index).

On February 22, 2021, our wholly owned subsidiary, Somos Sistemas, entered into a sale and purchase agreement to acquire, subject to certain conditions precedent, Editora Eleva S.A., or Editora Eleva, a K-12 education platform provider, from Eleva Educação S.A., or Eleva Educação. As consideration for such acquisition, we will pay a purchase price amounting to R$611.5 million, subject to certain price adjustments, in installments over a 5-year period (each installment adjusted by the positive variation of the CDI index).

Additionally, Saber, an affiliate of Cogna, agreed to sell, subject to certain conditions precedent (including, but not limited to, the satisfaction of all conditions precedent for closing of the acquisition of Editora Eleva), up to all of its K-12 schools to Eleva. Following the acquisition of Editora Eleva, Somos Sistemas and Eleva Educação entered into a commercial agreement setting forth the main terms that will guide a long-term partnership with Eleva Educação, including the sales of learning systems materials to approximately 90% of the students of the schools currently owned by Eleva Educação, as well as any greenfield or newly-acquired schools with the same business profile and all schools that are acquired from Saber, during a 10-year period. The commercial agreement also provides for a commercial discount amounting to R$1 6.6 million per year, valid for the first 5 years after the execution of the commercial agreement. The consummation of the acquisition of Editora Eleva was completed on October 29, 2021.

On January 14, 2022, we acquired the companies Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. and MVP Consultoria e Sistemas Ltda. (“Phidelis”), when the control over the entity was transferred upon completion of the conditions precedent established on the share purchase agreement. We will pay a total purchase price in the amount of R$21.9 million, comprised of (i) R$8.9 million in cash, paid on the acquisition date, (ii) R$7.6 million to be paid in annual installments over the course of two years, and (iii) a variable R$5.5 million, with the achievement of performance linked to net revenue of the years 2023 and 2024 to be paid in three annual installments between 2023 and 2026, and adjusted by the positive variation of the IPCA index in the period. Phidelis is a complete platform of academic and financial management for K-12 schools, providing (i) software licensing and development, and (ii) messaging, retention, enrollment and default management for schools and students. In addition to aggregating a digital solution and bringing in new clients, Phidelis’s team will support the development of Vasta’s digital services platform.

On July 19, 2022, we acquired a minority interest in Educbank Gestão de Pagamentos Educacionais S.A., or Educbank. Our investment, through our subsidiary Somos, totaled R$87.7 million, for a 45% interest in Educbank, to be paid in four cash installments according to the growth in number of students served by Educbank. We will have the right to appoint two members (out of six) to the board of directors of Educbank.

Educbank is the first financial ecosystem dedicated to K-12 schools, focused on improving access to high-quality education in Brazil, through internal management service and which provides financial support to educational institutions by providing payment guaranty to school tuitions. We believe this investment will enable us to capture value potential in the following years, by entering the market for K-12 tuitions payment, which has a TPV of over R$70 billion per year. Educbank’s services complement our digital services platform, which provides access to data, management tools and now working capital management, releasing time for school partners to focus on delivering education.

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Our Pre-IPO Corporate Reorganization

Prior to our initial public offering we undertook a corporate reorganization as described under “Presentation of Financial and Other Information—Corporate Events”.

Share Repurchase Program

On August 13, 2021, our board of Directors approved our first share repurchase program, or the Repurchase Program. Under the Repurchase Program, we were entitled to repurchase up to 1,000,000 Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period that began on August 17, 2021, continuing until the earlier of the completion of the repurchase or February 17, 2022, depending upon market conditions. . We concluded the Repurchase Program on December 10, 2021, using our existing funds to finance the repurchase, and on December 31, 2022 and 2021, we had a balance of R$23.9 million or 1,000,000 Class A common shares in treasury.

Recent Developments

New business unit

Starting in the first half of 2023, we plan to begin offering our products and services to clients in the public sector, in addition to our existing private school client base. We believe that our digital platform and broad portfolio of core content solutions and complimentary services will allow us to access a public school market in need of the solutions we have developed over the years. Our objective in pursuing this expansion is to grow our net revenue and financial results and improve our margin.

Although we have maintained continuous engagement with certain public entities, we intend to augment our participation with public sector education services and become an active player in this segment. Accordingly, we have taken certain steps to (i) create what we believe to be an attractive portfolio of products and services, focused on state secretariats for education; (ii) allocate managerial and financial resources for this new business initiative; and (iii) implement certain business-generating and marketing strategies for the public sector. For information on the risks associated with operating a new business unit, see “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—We intend to expand our operations to the public school segment in Brazil, which may not be successful and which will expose us to additional risks”.

As a result of our increasing engagement with the public sector, we expect to become regular participants in public tenders and government contracts, which could cause public scrutiny relating to compliance with bidding processes regulations such as the bidding law (Lei de Licitações) and the Federal Administrative Procedural Law (Lei de Processo Administrativo Federal). Moreover, any conduct by our employees or agents with public officials in any manner that fails to comply with our company’s code of conduct, the anti-corruption manual, the Brazilian Anti-Corruption Law, the Federal Administrative Procedural Law, the Administrative Improbity Law and the FCPA could lead to government investigations, judicial and/or administrative proceedings and sanctions that would have an adverse effect on our business, financial condition and results of operations. See “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—We may be subject to penalties under Law 12,846/2013 or the Brazilian Anti-Corruption Law, the Federal Administrative Procedural Law, the Administrative Improbity Law and the U.S. Foreign Corrupt Practices Act, the FCPA, if our employees engage in any conduct prohibited by these laws” and “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—Changes in our or our customers’ current regulatory environment could have an adverse effect on us”.

Corporate Information

Our principal executive offices are located at Av. Paulista, 901, 5th Floor, Bela Vista, São Paulo – SP, CEP 01310-100, Brazil. Our telephone number at this address is +55-11-3133-7311. Our email address is ri@somoseducacao.com.br.

Investors should contact us for any inquiries through the address, telephone number and email listed above. Our principal website is http://www.vastaedu.com.br. The information contained in, or accessible through, our website is not incorporated into this annual report. You should not consider information contained on our website to be part of this annual report or in deciding whether to invest in our Class A common shares.

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B. Business Overview

Overview

We are one of the leading high-growth education compan ies in Brazil in market-share, powered by technology, providing end-to-end educational printed and digital solutions that cater to all needs of private schools operating in the K-12 educational segment, ultimately benefiting all of our stakeholders, including students, parents, educators, administrators and private school owners. We intend to expand our business to provide products and services to the public school segment in Brazil beginning in the first half of 2023. For more information, see “—A. History and Development of the Company—Recent Developments—New Business Unit”.

We have built a PaaS with two main modules. Our Content & EdTech Platform combines a multi-brand and tech-enabled array of high-quality core and complementary education solutions with printed and digital content through long-term contracts with partner schools. We characterize revenue associated with these arrangements as subscription revenue given the renewable and predictable nature of the revenue associated with these contracts. Our emerging Digital Platform will unify our partner schools’ entire administrative ecosystem, enabling them to aggregate multiple learning strategies, helping them to focus on education, and promoting client and revenue growth to allow them to become more profitable institutions.

Our integrated platform is designed to cater to the needs and preferences of every school. We provide a full suite of products, embedded in an ecosystem, that fulfills most of the school’s needs. This differs from single solution products, which can include hidden expenses and inefficiencies for schools. We are committed to constantly evolving our product and service offerings to provide the most complete end-to-end ecosystem for private K-12 schools, students and parents, educators and administrators, while maintaining the uniqueness of each school.

We believe our experience, high-quality education system and life-long learning solutions have helped us establish market-leading brands that are well-known both locally and nationally. This expertise has enabled continuous growth within the private K-12 market through long-term relationships and we believe it will be translated into a 4.4 times LTV/CAC ratio for the solutions that we characterize as subscription arrangements based on the 202 2 sales cycle (from October 1, 20 2 1 to September 30, 202 2). This is an important metric as it compares the estimated LTV (measured as a function of the gross margin we expect to derive from the additional ACV Bookings related to the contracts with our customers, divided by WACC, plus the customer churn rate, which is the expected turnover rate), divided by the CAC (which consists of sales and marketing costs for the revenue for the solutions we characterize as subscription arrangements). We consider only subscription arrangements in our calculation of our LTV/CAC ratio because such arrangements have recurring, generally predictable revenue, while the revenue that is not based on subscription arrangements may be non-recurring and less predictable in nature. We believe the LTV/CAC ratio is an important metric for measuring how our sales efforts and costs related to acquiring subscription-based customers will provide value to us over time.

As of December 31, 2022, our network of B2B customers consisted of 5,274 partner schools, compared to 4,508 as of December 31, 202 1 and 4,167 schools as of December 31, 2020, representing annual growth rates of 16.9% and 8.2%, respectively. As of December 31, 202 2, we had 1,589 thousand enrolled students compared 1,335 thousand as of December 31, 202 1, and 1,311 tho usand as of December 31, 2020, representing annual growth rates of 19.0% and 1.8%, respectively.

We have structured our business as a PaaS, in which we have built complete and integrated platforms of K-12 products and services capable of promoting digital transformation in schools. The solutions we characterize as subscription arrangements are all those based on long-term partnerships with partner schools. These are service contracts in place for the offering of our learning systems or PAR Platform (contained in our core content segment) and solutions for English instruction and socio-emotional skills (contained in our complementary education solutions segment), among others. We characterize these solutions as subscription arrangements because they provide for recurring revenue and business stability, since they consist of long-term contracts with schools (three-year term on average), whereby schools pay an agreed price per student per year in order to access our solutions (whereby we recognize revenue when the customers gain control to the content ava ilable through our solutions). This business model, supported by technology, allows for fast growth, and given the “asset-light” nature of our business, we also benefit from favorable operating leverage and positive cash conversion.

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Our revenue derived from the solutions we characterize as subscription arrangements is driven by the number of enrolled students in each partner school that adopts our solutions. The net revenue from sales and services for the solutions we characterize as subscription arrangements represented 88.7% of the total net revenue from sales and services in the year ended December 31, 202 2, 84.8% of the total net revenue from sales and services in the year ended December 31, 2021, and 76.2% of the total net revenue from sales and services in the year ended December 31, 2020.

Revenue from solutions other than the ones we characterize as subscription arrangements includes stand-alone textbook sales, university admission preparatory exam courses and sales from our Livro Fácil business, an e-commerce for the sale of educational content (textbooks, school materials, stationery, among others) directly to schools, parents and students. Net revenue from sales and services deriving from these solutions represented 11.3% of the total net revenue of our sales and services for the year ended December 31, 202 2, 15.2% of the total net revenue of our sales and services for the yea r ended December 31, 2021 and 23.8% of the total net revenue from sales and services of Vasta in the year ended December 31, 2020.

We have been operating at a net loss over the last three years, primarily due to higher financial costs, as explained in the “Item 5. Operating and Financial Review and Prospects” section. Following the Somos acquisition, we implemented several strategic initiatives to increase our profitability, which are reflected in the 20.4% CAGR increase in our ACV Bookings f rom 20 19 to 2022. Our strategic initiatives include (1) a new go-to-market approach, leveraged by the restructuring of our commercial team, a higher number of commercial consultants, a new incentive plan which has aligned sales performance in terms of profitability with the Sales department compensation, and the creation of a product expert r ole; (2) the launch of new collections, increased investments in educational content and the establishment of Plurall, our online platform; and (3) streamlining and reducing administrative costs and overheads. However, there can be no assurance that such strategic initiatives will be successful and that we will not record a loss in the near future.

Our Mission

Our mission is to help private K-12 schools to be better and more profitable, supporting their digital transformation. Our goal is based on the premise that every solution and service offered through our multi-brand, technology-enabled platform has been designed to empower every stakeholder (students, parents, educators and administrators of private schools) to reach their full potential in their own way. We believe we are uniquely positioned to help schools in Brazil undergo the process of digital transformation and bring their education skill set to the 21st century.

We promote the unified use of technology in K-12 education in a manner that generates a simple, seamless and transparent experience for schools, offering 360-degree views of student performance with enhanced data and actionable insight for educators, increased collaboration among support staff and significant improvement in production, efficiency and quality for schools.

We provide the following solutions for the empowerment of our stakeholders:

For Students

Our pedagogical approach and educational solutions are designed to equip students with abilities that go beyond learning core and complementary knowledge. We encourage them to think critically and creatively, solve complex problems, make evidence-based decisions, and work collaboratively at their own individualized pace. We believe that providing these educational experiences in a way that is engaging, retainable and proven through research and academic performance leads to a high-quality environment that empowers students to contribute more effectively in the classroom today and in the workplace and society in the future.

For Parents

Parents are primary decision-makers in the academic cycle, and we seek to improve their engagement and involvement, while also increasing student accountability. Through our solutions, parents can access real-time student performance data and have a direct communication channel with educators. We also optimize parents’ time and ease safety concerns by addressing all of their children’s developmental needs, including core education and complementary activities such as languages and socio-emotional skills. These benefits are all delivered in the same place – the school – which is the most trusted environment parents see for their children.

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For Educators

Discovering the pedagogical approach best suited to an individual student can be challenging. Understanding how to target learning, how to overcome disabilities and how to engage with each student effectively through the development of various cognitive processes is our core focus. We strive to provide immediate access to student data, which generates insight and analytics on student progress in order to target growth areas and develop teaching plans aimed at delivering personalized learning.

For Private School Owners and Administrators

Leveraging Cogna’s substantial experience in operating schools, we believe we have gained a differentiated, in-depth understanding of school needs which go beyond best-in-class educational resources to encompass a variety of school management solutions. These include customer relationship management systems, marketplaces for the sale of educational content, digital student acquisition processes and financial and educational management tools. Currently, we offer our Livro Fácil e-commerce for the sale of educational content, but we are working on expanding our offering in this market as we believe a fully integrated platform like we are developing will allow private school owners and administrators to maximize time, access a broader set of information more intelligently, develop new action plans, promote leadership and motivate their teams. As a result, this will allow private school owners to better manage their schools, focusing on improving educational content, solutions and services, while enhancing the school’s reputation and growing revenue.

For Public School Administrators

We believe that our fully integrated platform will allow public school administrators to maximize time, access a broader set of information more intelligently, develop new action plans for improved education outcomes, promote leadership and motivate their teams. Our solutions for this segment will be divided into three main offerings which will include the following features: (i) Core Content: diagnostic evaluation, pedagogical advisory services, and print and digital content; (ii) Opportunity: provision of unified materials aimed at learning recovery, essential skills prioritization (such as Portuguese and mathematics) and preparation for the Basic Education Evaluation System (Sistema de Avaliação da Educação Básica), or SAEB; and (iii) Complementary Solutions: solutions focused on computational thinking, social and emotional intelligence, physical education, foreign languages and financial education.

We believe that the provision of our product and service will allow public school administrators to better manage their schools and prepare their students, focusing on improving educational content, solutions and services, while enhancing the measurable results of education outcomes.

For Society

Our main responsibility to society is to help every student succeed. However, as part of our social responsibility initiatives, we also seek to make education available to all segments of society and we share many of the best practices in education that we acquire through our experience in the private K-12 with public schools and teachers in Brazil for free.

We believe that our reputation, excellent track record in education, brand awareness, personalization, flexibility, customer service, academic outcomes and innovation are attributes valued by all of our stakeholders. We believe we are the only player in the market to integrate a wide array of content formats from different brands in a unified, technology-powered platform that provides students with tutoring support and allows for the continuous tracking of their academic performance during the whole education cycle. Since 1959, publishers in our K-12 business have received 102 awards in the Jabuti Prize, which is widely recognized as the most prestigious literary honor in Brazil. In 20 20, 353 of our partner schools were ranked in the top three in their respective municipalities in the Brazilian National High School Exam (Exame Nacional do Ensino Médio), or ENEM, the main national standardized test for university entrance in Brazil, which reinforces the reputation of the effectiveness of our platform.

Although the science underlying education and learning processes is still in its early stages, we aim at adopting a neuroscience-first approach in evolving our understanding of what directly impacts teaching and learning, which includes acquiring new knowledge and nurturing attention, concentration, memory and motivation. We have been investing intensively in research through our Learning Science Lab and partnering with highly regarded data scientists and progressive tech-driven institutions to continuously strengthen our value proposition. As an example, we have partnered with BrainCo (a company specializing in neurofeedback solutions) and the Brazilian National Scientists for Education network (Rede Nacional de Ciência para Educação), or CpE, to promote our continuous evolution.

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Context

The Brazilian education sector is extremely fragmented. Government investments in primary and secondary education are low, which results in a substantial quality difference between public and private schools as measured by success on the ENEM exam. The ENEM exam is extremely important for students’ future opportunities as it is used as a standardized exam for entry to high-quality postsecondary education in Brazil and seen as a public seal of quality. In this scenario, the private K-12 education market generates high aggregate value for parents who want their children to have greater opportunities to enter a high-quality university. We offer high-quality educational services for those customers, with brands known for their academic excellence and a solid track record in academic exams, with our students gaining access to Brazil’s most renowned universities, as well as top ranked universities in the United States such as Stanford, Harvard, Yale and Columbia.

Once ENEM reports students’ results, each student can enroll in the Unified Selection System (Sistema de Seleção Unificada), or “SISU”, and apply through their platform to public universities, who accept incoming students based on students’ rankings. Since January 2022, we had over 13,000 students from our partner schools approved, or 14% of our total high school senior students.

Through our differentiated B2B and B2B2C solutions, we deliver a better learning experience, engaging students in the classroom and offering a unique platform for continuous learning experience after school. Partner schools can choose among our broad portfolio of core content solutions, opting between traditional learning systems or PAR Platform, our text book-based content solution. This enlarges our addressable market and positions us as a one-stop partner for all private K-12 schools across the country by offering a full stack of solutions through well-known brands with reputation for high quality. Regardless of partner school preferences and necessities, we are able to offer solutions in line with their requirements and reach all types of schools, including through stand-alone textbook sales and recurring content sales through adoption of our learning systems. The chart below shows a summary of product and service consumption preferences among private K-12 schools, highlighting our ability to penetrate the entire market as a consequence of our complete suite of product offerings, including our PAR Platform and printed content solutions.

Methodological Option in the Private Schools
(202 2)

Source: Vasta’s internal database (“Lista de adoção”), covering around 85% of Brazilian students in the private market.

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In addition to core content, our differentiated service offering comes from a combination of various digital and non-digital complementary content, including solutions for language instruction and socio-emotional skills, as well as school management and business solutions. Our platform seeks to offer and deliver content and services to our partner schools, including the engagement and maintenance of the students’ performance through our Digital Platform (Plurall and Plurall Maestro), and the identification of learning gaps and promotion of content improvement, teacher training (advisory and PROFS) and reinforcement for students’ adaptive teaching. We believe that schools that adopt our platform are able to increase academic quality and enhance their operating and financial performance through ancillary services that either are currently available at our platform, such as our e-commerce, academic and financial ERP and student acquisition solutions, including online enrollment platform, digital marketing and scholarship marketplace.

As a result of adopting our systems, we believe that partner schools are able to improve the learning and academic quality for their students, which leads to an improvement in the partner schools’ reputation. In addition, the better reputation helps them to attract more students, in addition to improving their operational and financial results - stimulating the virtuous cycle based on the Content & EdTech solutions and Digital services we provide. Our business model is supported by full alignment in the adoption of our solution by all of our partner schools’ participants in our K-12 business: parents receive the benefit of a high-quality education and actionable data regarding the performance of their children; students enjoy a digital, enhanced, engaging and complete learning experience, with supplementary tools and content that goes beyond the core curriculum; educators can optimize their time, use data reports to address each student’s unique needs and personalize their educational content and administrators benefit from improvements in test grades, which in turn increases their reputation and lead to higher student intake, while saving time and money using our school management solutions.

Our Competitive Strengths

True Partner of Choice for Private K-12 Schools in Brazil

We believe tradition, reputation, experience and innovation are imperative for success in K-12 education. We have been present in the lives of Brazilian students over the last five decades though Cogna, our parent company. As of December 31, 202 2, we served 6,892 schools in the K-12 private market, with almost 2.4 million enrolled students. We believe we are best positioned to cover all of our total addressable market as we cater to each private K-12 school’s unique profile and preferences. We believe our track record in Brazil is unique, as demonstrated by the following:

- One of our leading brands, Anglo, developed and implemented one of the first education subscription arrangement models in Brazil in the 1970s;
- We believe we have one of the largest and most recognized portfolios of K-12 brands in the country, addressing a broad spectrum of private schools;
- We developed and implemented the first socio-emotional curricula in Brazil in 2012, and in 2013 launched the first Brazilian educational platform with online tutoring for one-on-one personalized learning;
- We believe we have one of the largest groups of educators, authors and tutors entirely dedicated to K-12 in Brazil and one of the largest databases of K-12 educational content in Brazilian Portuguese;
- We were the first company to offer a multi-branded educational platform in Brazil and the first company to provide an educational platform based on textbooks (PAR) and supported by Livro Fácil, our e-commerce for the sale of educational content for schools;

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- We believe we are at the forefront in integrating different content formats (text, video, audio, images, quizzes, among others) in a unified platform which can be accessed through a single login and provides access to content from different brands, a complete academic community and academic performance trackers and indicators.
- We are pioneering the incorporation of neuroscience elements into our educational platform and emphasizing science in learning and promoting student success through personalized, retainable and engaging learning; and
- We cater to the entire school ecosystem. Using our extensive knowledge of private schools in Brazil, we focus on delivering all necessary Content & EdTech digital solutions for our customers to support high quality core and complementary content education delivery, capture efficiency gains, cut unnecessary costs and ultimately increase productivity in the front office, the classroom and the home.

By becoming the schools’ partner of choice through our end-to-end offering of core and complementary content and the ramp-up of the solutions we will offer through our Digital Platform, we expect to continue to significantly increase our total addressable market (TAM) while increasing school retention, as the school’s switching costs from an integrated service provider like us become much higher when compared to simply switching from a content supplier. The following chart shows the size and potential growth in TAM from 2018 to 2030 for Core Content and Complementary Solutions, comprising our Content & EdTech Platform (areas shaded in gray) and for school administrative and management solutions, which will be served by our Digital Platform (area shaded in pink).

Private K-12 TAM
in R$billion, 20 22

Source: Oliver Wyman 2018 adjusted by inflation

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Strong Combination of Content and Technology Teams Dedicated to Enhancing Our Value Proposition

We value intellectual agility and structure ourselves in small multidisciplinary groups that are focused on building product functionality. We believe we have the most resourceful division of business intelligence and analytics in content adoption in the Brazilian K-12 market. Our digital team consists of 94 product, technology, digital operations and content specialists. Our product and technology specialists are organized in 12 teams, each being responsible for end-to-end implementation of projects aimed at accomplishing long-term goals.

Our content production is deeply linked to technology, allowing us to update content in a more dynamic way using student and teacher feedback, which is continuously monitored through our platform powered by technology. To improve student engagement, we are an education provider that overlay s content production with what students consume on social media (interactive video, podcasts and quizzes), with a view to aesthetic and artistic quality through a simple and modern language that captures the conceptual rigor essential for educational content. Our partner schools benefit from the unique combination of our Plurall products (Plurall ID, Plurall Maestro and Tutoring, Bookshelf, Assessments, among others), a single platform that enables the delivery of a richer learning experience to both educators and students in an integrated and uniformed matter and combines in our content solutions in a 100% digital interface.

Our data science team employs a science in learning approach by leveraging our streaming data pipeline, allowing for rapid evolution of our solutions and services. Our data analytics educational team is focused on (1) tracking user behavior and creating dashboards to improve student and teacher engagement with Plurall and its many features; (2) allowing educators to take advantage of engagement and learning dashboards to improve student participation in the learning experience both inside and outside the classroom; (3) providing seamless integration of the Plurall platform with external products; and (4) gathering feedback and improving content generation in real time.

We also have a forward-leaning approach to applying neuroscience in education. We have been developing the Learning Science Lab, by partnering with highly regarded scientists in Brazil through Rede Nacional de Ciência para Educação and BrainCo, a startup born out of the Harvard Innovation Lab, to develop neuroscience technology products, and collaborate with scientists from the MIT Media Lab to test the effectiveness of their technology and develop new applications for brainwave technology. We are exclusive distributors of BrainCo technologies in Brazil, including for:

- Use of a 100% digital delivery system, integrated into Plurall and Plurall Maestro, allowing educators to address specific content through tailored best-in-class teaching tools in a fully engaging format, ensuring the students’ integration into the four-dimensional education framework;
- Headbands that measure brain activity through an algorithm developed at NASA which translates brain wave readings into data on states of attention, so educators can track individual students or entire classrooms through a single dashboard. In 2021, w e tested the headbands at 12 schools and with around 377 students. In 2022, we ex panded the program to 1.2 thousand students.

Robust Salesforce, Business Intelligence Team and Customer-centric Mindset Lead to Differentiated Go-to-Market Strategy

Our relentless focus on understanding our customers has led us to assemble a robust salesforce and client support team. Our team is comprised of 145 educational specialists (which include (i) hunters, responsible for prospecting new clients, and (ii) farmers, responsible for up-selling and cross-selling) and 171 customer support experts, who cover all Brazilian states through a differentiated go-to-market strategy where we target customers through multiple channels including online advertising, marketing research tools, on-site visits, social media, among others. Our sales force is fully integrated and is capable of selling our entire portfolio of products and services, allowing for agile, intelligent and efficient actions, placing the needs of the schools at the center of their actions. Our processes are optimized by data coming from our Business Intelligence and Inside Sales teams. We also have what we believe to be the largest business intelligence database and business intelligence team in the market. Our business intelligence team collects data from over 17,500 schools every year in order to have a comprehensive view of the total private K-12 market and to determine exactly what kind of products and services our salesforce should offer to each and every school.

Our sales strategy allows educational specialists and customer support experts to establish themselves as trusted advisors for our partner schools and nurture relationships in order to keep on adding value through higher revenue streams, penetration, retention and awareness.

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We seek to motivate our salesforce through financially aligned incentives based on metrics tracking revenue and revenue retention rate, cross-selling capacity and average length of contracts, and provide ongoing training, shadowing opportunities and sales conferences. Our direct sales channel outreach and preparatory courses awareness contribute to the powerful lead-generation engine that continuously reinforces our go-to-market strategy.

Strong Academic Outcomes and Recognition

The established tradition of our brands in the education sector, some of which have been developed over a period of more than 100 years, and our pioneering efforts in rolling out one of the first education subscription arrangement models in Brazil have contributed to our reputation for excellence. We believe our complete educational platform powered by technology and supported by well-renowned and long-standing brands offers a unique range of options to students, which translated into strong brand awareness and recognition levels, as demonstrated by the following points:

- Anglo is the top-of-mind brand among learning systems considering premium schools’ choices and, alongside pH, is among the top four most preferred brands among school administrators and educators according to Hello Research;
- 90% of premium schools know Pitágoras according to Hello Research; and
- Publishers in our K-12 business have been honored with 102 Jabuti prizes since 1959, a widely recognized award as the most prestigious literary honor in Brazil.
- Since quality perception is key for parents, our combination of a pedagogical system and digital platform delivery is supported by the following metrics: As of December 31, 2020 (most recent data available), we had 35 3 partner schools ranked among the top three schools in their respective municipalities based on their scores in ENEM, of which 17 9 partner schools were ranked as the best school in their municipality.

Finally, the satisfaction of our customers (including students, parents, educators and administrators of private schools operating in the K-12 educational segment) and their positive experience with our platform is evidenced by our high net promoter score, or NPS, among core learning systems and digital learning brands. As of November 25, 2022, we scored 62 and 44 out of 100 possible points for Anglo and pH learning systems, respectively, in a survey carried out by us with our partner schools, and 41 out of 100 possible points for our digital learning platform (Plurall), in a survey carried out by us with school coordinators.

In 202 2, Plurall was the digital platform with the higher traffic share in the private sector: 30%, 15 percentage points above the second player. Plurall has supported our partner schools and their students with digital tools and contents and helped to deepen the learning process and assessments throughout the hybrid education.

In order to enrich the experience of our clients, Vasta also created in the end of 2021 a Customer Experience (CX) unit, comp rising pre-sales, onboarding, post-sales and customer-relationship fronts and tracking the whole journey of our clients. The main purpose of the CX unit is to provide clients with excellent and agile responses to meet their needs, accordingly to their spectrum of products and services.

The Nature of Our Business Model

Business model backed by solid fundamentals: we employ an asset-light business model centered on innovative and personalized content and user experience and focus on creating and maintaining long-standing relationships with partner schools. We are powered by technology and high scale, which allows for consistent high revenue growth. The solutions we characterize as subscription arrangements, encompassing our traditional learning systems, PAR Platform and complementary content solutions, reinforce business stability, with recurring revenue and favorable operating leverage. Net revenue from sales and services derived from the solutions we characterize as subscription arrangements represented 88.7% of total net revenue from sales and services in the year ended December 31, 2022, 84.8% of total net revenue from sales and services in 202 1 and 76.2% of our total net revenue from sales and service in 2020.

End-to-end solutions provide meaningful unit economic gains: as we continue to strengthen our portfolio of full‑service solutions, our potential to deepen relationships with schools increases through cross-sell and up-sell opportunities, generally at low incremental costs to us and to schools. We believe this leads to lifetime value at low customer acquisition cost (insofar as our up-sell and cross‑sell efforts are successful) while simultaneously increasing customer switching costs.

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Self-reinforcing network effects of our virtuous cycle: we have created and have been nurturing an education cycle that entails scale, science in learning, high-quality and retainable learning, differentiated academic outcomes and recognition. Our company is based on information, using a robust team of business intelligence and analytics and source of big data with respect to the K-12 Brazilian industry, which is the start of a virtuous cycle for our partner schools. We help start the cycle by providing important data and key tools for schools to engage their students in a way that is meaningful for each student, providing enhancing learning opportunities, which we believe leads to better academic results and enhanced therefore improves schools’ reputations, which attracts more students to more schools. The cycle is reinforced as more students lead to more big data, which is the start of the cycle we continue to provide the data needed to continue to engage our partner schools’ students.

Experienced and Focused Management, with an Innovation Mindset

Our senior management is recognized in the industry for its experience, reputation, working knowledge and close relationship with our partner schools, and strong track record in terms of the educational business and innovation.

We share the same operational culture as Cogna, and our senior management team has over 100 years of combined experience dedicated to education. As one of the largest education groups in the world, we believe Cogna brings expertise in school operations, a long track record of carrying out mergers and acquisitions and integrating new businesses and technologies, a history of constant evolution and high total shareholder return, effective and transparent communication with shareholders and the market in general, with high levels of corporate governance and a strong drive for innovation.

In recent years, Cogna has successfully completed 20 acquisitions, incorporating R$5.2 billion in net revenue from sales and services (considering the first year of acquired companies’ figures). Particularly, in October 2018, it completed the acquisition of Somos Educação, making a strong move into the K-12 segment in Brazil. Somos Educação also has a unique M&A track record in the Brazilian K-12 industry, completing 11 acquisitions since 2018, in addition to an unerring tradition in the education sector.

In connection with our acquisitions in recent years, we ha ve been successful in delivering improvements in Somos’ go-to-market strategy, extracting synergies from payroll and procurement, completing the integration process in a timely manner, among other accomplishments, and continues, along with us, to execute our vision of being the partner of choice for K-12 private schools in Brazil.

Mission-driven Culture

Our mission is to help private K-12 schools to be better and more profitable, supporting their digital transformation. This mission drives all of our decisions. Our main goals are to continue evolving as the trusted knowledge partner for our customers, enabling them to reach their full potential and achieve groundbreaking milestones in learning.

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Our Growth Strategy

Increase Shift towards Solutions We Characterize as Subscription Arrangements within Our Current Customer Base

We will continue focusing on increasing the percentage of our partner schools (and related stakeholders) adopting the solutions we characterize as subscription arrangements instead of purchasing content without a long-term contract. We believe there is a significant potential to increase the number of total students enrolled in solutions we characterize as subscription arrangements to 2.4 million total students as of December 31, 2022, from 1.6 million as of December 31, 2021, by converting our current base of partner schools adopting core content without a long-term contract into clients of solutions we characterize as subscription arrangements, without considering any up-selling or cross-selling opportunities. In 20 22, we sold products (including textbooks without subscription) to approximately 2.4 million students from private schools, of which 1.6 million were from schools that had a contractual relationship with us, or 66% of potential students from schools that use our products. To December 31, 20 2 2 from December 31, 20 2 1 and to D ecember 31, 202 1 from December 31, 20 2 0, we successfully convert ed 11.1% (7.6% to PAR Platform and 3.5% to learning systems) and 7.5% (6.4% to PAR Platform and 1.1% to learning systems), respectively, of schools without a long-term contract to long-term subscription arrangements.

We believe that platforms as a service are a natural consequence of private K-12 education trends and the fact that we deliver our content through the most complete and diversified models and price points will help us expand our current customer base within the solutions we characterize as subscription arrangements. In the year ended December 31, 2022, net revenue from sales and services derived from solutions we characterize as subscription arrangements represented 88.7% of our total net revenue from sales and services, an increase in total contribution in total net revenue from sales and services when compared to 84.8% and 76.2% of our total net revenue from sales and services of Vasta and the Predecessors in the year ended December 31, 2021 and 2020, respectively.

Increase Penetration of Our Current Services in Existing Capacity with Our Current Partner School Base

We utilize a land-and-expand strategy with our partner schools, beginning with core education and gradually increasing the number of services offered to each partner school from our portfolio of complementary solutions and digital solutions. We focus on deepening relationships with our partner schools by leveraging our salesforce expertise to up-sell and cross-sell other products and services within our wide portfolio of current offers and future product and service developments and acquisitions. Our ultimate goal is to replace our partner schools’ collection of scattered educational vendors with our integrated platform of educational and digital solutions.

- As of December 31, 2022, only 11.1% of our student base used both our core and socio-emotional solutions; and
- As of December 31, 2022, only 4.7% of our student base used both our core and languages solutions.

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We believe there is significant potential to increase the total number of students enrolled in our solutions, considering our current base of partner schools and the fact that one student can be enrolled in more than one solution at the same time. As of December 31, 2022, we had 2.0 million enrollments in our solutions (1.6 million in core content and 0.4 million in complementary solutions), considering each student at each solution as an enrollment. Through cross-selling and up-selling across both our Content & EdTech Platform and Digital Platform, we believe we are able to capture up to 6.0 million new enrollments, totaling a potential of 8.0 million students enrolled in our ecosystem (including core content, socioemotional content, languages, STEAM and other academic content).

Grow Our Base of Partner Schools

Our sales force will continue to pursu e greater market share in regions where we have strong brand awareness and price attractiveness, which has helped us establish a presence in 36% of private K-12 students in Brazil and 12.3% of the TAM for core education estimated for 2022. We intend to reinvest a portion of our operational leverage in profitable marketing activities that are aligned with our objective to continue increasing our base of partner schools through our superior value offering and extensive and integrated offering of products and services.

We intend to expand our reach of partner schools to schools in the public sector. We believe that our digital platform and broad portfolio of core content solutions and complimentary services will allow us to access a public- school market in need of the solutions that we have developed over the years. Our objective in pursuing this expansion is to grow our net revenue from sales and service and Adjusted EBITDA and improve our Adjusted EBITDA margin. Accordingly, we have taken certain steps to (i) create what we believe to be an attractive portfolio of products and services, focused on state secretariats for education; (ii) allocate managerial and financial resources for this new business initiative; and (iii) implement certain business-generating and marketing strategies for the public sector.

Increase the Quantity of Products and Services We Offer

We believe there is significant room to expand our value proposition to our partner schools and their stakeholders by adding new complementary education solution and digital platform to our ecosystem and therefore, also significantly increasing our TAM potential. For instance, STEAM and academics are becoming “must-have” skills given increasing competition in the labor market. In addition, schools have been increasingly adopting management systems so they can focus on what they do best: educating.

We believe we can expand our current product offering, enhance our content and technology platforms and improve students’ learning, educators’ teaching and schools’ management experience by either developing innovative digital content in-house, engaging in strategic partnerships or carrying out mergers and acquisitions of companies and/or products that will contribute additional content or technologies to our portfolio.

In the 2021 commercial cycle, we launched Plurall Store, an extension of our Plurall platform that offers 13 complementary digital solutions in partnership with EdTechs from all over the world. Through Plurall store, schools and their users (students and teachers) have a free trial experimentation phase, after which schools may decide which solution to adopt based on engagement rate s.

In October 2021, we entered in the business-to-business-to-consumer (B2B2C) segment with the launch of:

- Plurall MeuProf, an application that connects students enrolled at our partner schools with affiliated professors for private tutoring, and
- Plurall Adapta, in partnership with Seneca, a UK-based company, for the offering of adaptive learning sessions as a prep aratory tool

The technology embedded in these products w as primarily developed in-house.

Since 2020, we acquired SEL, EMME and Phidelis, in addition to a minor it y interest in Educba n k, which, together with Livro Fácil, will form the base of our digital services strategy, in particular with respect to the delivery of administrative digital solutions. With the expansion of our scope and product and service offerings through our platform, our total addressable market (TAM) could increase even further.

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Our Addressable Market and Opportunity for Growth

According to a 2018 report by Oliver Wyman (as adjusted by inflation until December 31, 2022) that was commissioned by us, the TAM for our Content & EdTech Platform and Digital Platform for private schools in Brazil was R$25.3 billion (or R$31.6 billion, as adjusted by inflation) segregated between: (1) R$6.0 billion for core content (or R$7.9 billion, as adjusted by inflation); (2) R$6.4 billion for complementary education solutions (or R$8.4 billion, as adjusted by inflation); and (3) R$12.9 billion (or R$15.3 billion, as adjusted by inflation) for digital platform. Oliver Wyman expects that our TAM will more than double by 2030, reaching R$54.0 billion, segregated between: (1) R$13.4 billion for core content; (2) R$14.0 billion for complementary education solutions; and (3) R$26.6 billion for digital platform. As of 2022, we estimate we captured approximately 12.3% of the TAM for core content and 1.7% of the TAM for complementary education solutions (which is included in our Content & EdTech Platform segment) and 0.4% of the TAM for our Digital Platform segment, which we believe represents significant growth opportunity.

With 47.4 million students enrolled in private and public schools in 2022 according to Censo Escolar 2022, Brazil’s K-12 education segment is significantly larger when compared to other players around the world; Brazil’s K-12 students account for 23% of the total population, while in the United States, students enrolled in private and public schools account for 16% of the total population (considering an estimate of 53.9 million students attending school in fall 2019), according to NCES. The Brazilian private K-12 market is also large and, despite being larger than the U.S. market, there is a strong potential to increase the penetration of private K-12 education in Brazil when compared to China, Indonesia and India, for instance, as presented in the graph below. Private K-12 education is very valued by Brazilian families given the quality gap between private and public K-12 schools, as discussed in more detail in “—Industry Overview”.

Source: BMI, INEP and UNESCO

We believe our opportunities to capture market growth will continue to expand as we incorporate new solutions into our existing platform. For example, we are currently working on expanding our complementary content offerings to include STEAM-based (Science, Technology, Engineering, Arts and Mathematics) and other academic curriculum, as well as increasing our offerings within our Digital Platform, including academic and financial ERP and student acquisition solutions, such as online enrollment platform, digital marketing and scholarship marketplace. We expect these complementary and digital solutions to become increasingly relevant in the K-12 segment as the current 21st century environment requires new skills from individuals, and schools have increased their rate of adoption of management systems to focus on improving education delivery to students.

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Private K-12 Industry Market Trends

We believe that our addressable market is characterized by the following trends:

Digital Transformation is Reshaping Private K-12 Industry

Technology has enabled improvements in core content, complementary education and digital platform solutions. The internet and digital technology are changing the way people learn. Educational opportunities are no longer confined to the classroom as a result of technology’s potential to transform every person into a life-long learner. Technology has revolutionized learning beyond the simple digitalization of traditional textbooks through means such as gamification, immersion and virtual reality tools. Technology has re-conceptualized the learning experience, making it adaptive and highly personalized. Moreover, technology improvements have supported the development of management systems for schools to manage their costs and expenses and increase their efficiency and profitability, allowing them to focus primarily on educational activities.

Limited Internal Management and Administrative Solutions for Schools

Schools have been looking for new educational and management solutions to enhance school management. According to Censo Escolar 202 2, there were approximately 41,011 private schools in Brazil as of 202 2, which are mainly small-scale units dedicating significant working hours to administrative activities, such as intake, retention, financial management and communication with parents, for which they are currently interacting with multiple and unintegrated providers. This can create inefficiencies that divert a school’s focus from its core educational activities. We believe there is strong demand for an integrated platform like ours that consolidate multiple school management services, as it would lead to more actionable data reports, optimization of administrators’ time allocation and increased efficiency in schools.

Need for Modernized Content Distribution Models

There are two main facets to this trend: (1) the learners’ perspective; and (2) the perspective of other stakeholders relying on traditional content (parents, school and educators).

We believe the modern student is easily distracted, yet hungry to learn and demanding in relation to the type of content and the manner of its delivery. At the same time, most Brazilian schools and families are on the verge of discovering the benefits in the classroom from the combined use of science and technology in education. This data-driven approach can aid in delivering superior and more responsive learning outcomes through products based on personalization and adaptive learning. As a result, immersion and gamification tools, among others, are potential means of addressing modern students’ needs and engaging them more effectively, yielding better academic outcomes.

Many schools, educators and parents continue to rely solely on traditional textbooks for the teaching experience and as more modern learning approaches are not yet widespread throughout Brazil. An educational experience focused solely on textbook usage may prove too rigid for the 21st century student who demands real-time assessment and feedback; therefore, expanded integration with other learning tools is required. We believe we can lead the imminent transition of the underlying learning methods in Brazilian education, by offering assertive content in multiple formats alongside more effective high-impact learning techniques, with support from our constantly evolving neuro-pedagogical and science in learning approaches. Furthermore, integrated technological solutions customarily allow parents and educators to engage and track more closely student development.

New Student Skill Set and Importance of Socio-Emotional Solutions

The increased labor market competitiveness and social demands in the 21st century require a new skill set from individuals. The insertion of new learning fields into old curricula, with focus on softer skills such as creativity and collaboration, has been leading a movement towards a broader learning experience. Schools in the forefront of this movement teach socio-emotional learning and collaboration skills, foster individual participation, autonomy and critical thinking, and include new areas of broad student development such as STEAM-based curriculum (Science, Technology, Engineering, Arts and Mathematics) and language instruction. We are uniquely positioned to capture this market as we already have a full portfolio of solutions that can be offered in the safety and comfort of the school environment, and plan to add even more solutions to our integrated platform.

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Business Model

Our model is based primarily on solutions we characterize as subscription arrangements, aligned with our belief that platforms as a service are a natural consequence of private K-12 education as they deliver complete and diversified models with long-term contracts, with terms of three years in general, and high retention rates with very low churn. This model reinforces our stability, recurring revenue, asset-light profile and scalability, high operating leverage and limited capex requirements. We believe Vasta delivers a hard-to-replicate business model, with a winning proposition for stakeholders.

We believe our business model is comprehensive, differentiated and focused on the needs of our customers, offering operational efficiency and profitability. We are an educational platform powered by technology, and our centralized, intelligent and standardized management processes enable a 360-degree view of student performance and school capabilities, generating efficiency and quality for the school system. All of our back-office support activities are easily scalable and efficiently shared among all our corporate structure. Cogna is known for its focus on growth and student success, constant evolution, leadership, efficiency, innovation, proficiency in the integration of acquisitions and for the quality of its management.

We have a national presence with strong brands and proven academic results that attest to our differentiated quality. Our leading brands include Anglo, pH, PAR, Pitágoras, Maxi, Ético and English Stars, among others. Our portfolio of solutions encompasses various price ranges, so that we can offer viable solutions to all schools, with focus on quality, effectiveness, efficiency and profitability.

Our mission is to help private K-12 schools to be better and more profitable, supporting their digital transformation. In this context, we have decided to serve the private school segment through both B2B2C and B2B business models. Through our Content & EdTech Platform, a multi-brand, tech-enabled platform, with the flexibility and quality required to satisfy customer needs through printed and digital format and made available through a model we characterize as subscription arrangements or direct sales to students or parents, serving as an entry point for subsequent conversion into a model we characterize as subscription arrangements. Through our Digital Platform, we currently offer our Livro Fácil e-commerce, but plan to expand our portfolio to cater to all other school needs aside from education, aiming at increasing efficiency and quality. More over, we intend to expand our business into the public school segment in Brazil. Our mission in this segment will be to assist public schools and administrators to be more efficient, support digital transformation and provide high-quality content conducive to high performance. We plan to serve the public school segment through a Business-to-Government (“B2G”) business model.

Our technology-based approach is capable of accelerated growth and delivering innovative and personalized content and user experience. This allows us to greatly amplify the number of students served through each new contract, in turn providing, through Big Data, a better understanding of the students to our data analytics team and educators, as well as the means to identify their individual needs, compare results, create more engaging academic activities, keep the educators and managers updated on developments and stay connected with families. We use educational science to identify the learning needs of each student, both cognitively and emotionally, providing a full array of resources for their academic and personal development.

As schools are our key customers, we also aim to serve all their other needs aside from academics. These include a number of internal functions key to a school’s operation, such as academic and financial ERP and student acquisition solutions, including online enrollment platform, digital marketing and scholarship marketplace.

Our company is based on information, and we have a robust team of market-business intelligence and data analytics educational professionals, helping us leverage the vast amount of data we produce, which is the start of a virtuous cycle for our partner schools. We learn with our students and offer them continuously improving educational solutions, helping them to expand their learning and improve their own and their school’s academic results. This consequently improves the reputation of the schools and our brands. The reputation we have achieved allows us to reach more partner schools and students, providing returns throughout the cycle for all parties involved. In addition, we plan to develop multiple other products to complement our Digital Platform in the near term, enhancing the support offered to back-office activities of schools and enabling them to focus on their main core activity, therefore making the wheels of our virtuous cycle turn in such a way that benefits schools and students alike.

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K-12 Platform

Our fully integrated K-12 platform aims at providing end-to-end educational and digital solutions to private K-12 schools. In order to be a one-stop-partner to schools, we aim to cater to the entire school ecosystem, not just best-in-class educational content and resources, but also offering solutions that meets schools’ other needs through a complete assortment of solutions through our Digital Platform that help schools enhance performance, grow enrollment, and increase profitability.

Our platform comprises educational solutions to be used by partner schools and their stakeholders and digital services and solutions to cater to the non-educational and administrative processes of each school, through our Content & EdTech Platform and our Digital Platform, as illustrated by the following image:

In 202 2, total net revenue from sales and services from our Content & EdTech Platform and our Digital Platform accounted for 91.3% and 8.7%, respectively, of total net revenue from sales and services, compared to 89.8% and 10.2%, respectively, of total net revenue from sales and services in 202 1, and 91.1% and 8.9%, respectively, o f total net revenue from sales and services in 2020.

Consequently, our fully integrated platform grants access to all educational content available through our tech-enabled platform, made available primarily through a model we characterize as subscription arrangements. We provide end-to-end solutions and digital platform with a comprehensive and interactive approach that enhances students’ participation and performance, as well as capturing data for our data analytics educational team and business i ntelligence department, generating a virtuous cycle with greater content for every additional Student.

Content & EdTech Platform

Our Content & EdTech P latform offers schools a large set of high-quality printed and digital educational content and tech-enabled support solutions. Leveraging on our in-depth understanding of private K-12 education, we have developed a methodological approach that ensures student success through personalized, retainable and engaging learning tools that fit the modern student’s demand both in terms of content-quality and adaptive-learning.

We believe that the quality of the education we provide is fundamental. Our platform was conceived and developed based on solid educational methods, expertise from decades of educational content solutions, and a long history of favorable academic results. We offer a portfolio that is highly capable of providing high-quality education preparing our students for entry into the prestigious universities in Brazil and abroad. We maintain a very considerable database of educational content, allowing us to operate in primary education, middle school and high school, as well as in a preparatory course for admission into the best universities in Brazil and internationally.

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In addition to our focus on quality, our offers are designed to help schools to provide holistic education for students. The increased competitiveness of the labor market and changes observed in the 21st century have created new demands from individuals. The insertion of new learning fields in the old school curricula, with a focus on softer skills such as creativity and collaboration, has been leading a movement towards a broader learning experience. Schools in the forefront of this movement teach socio-emotional learning and collaboration skills, foster individual participation and include new areas of broad student development such as STEAM and language instruction.

Our technological educational platform offers partner schools all the products and services that they need to be successful, including printed and digital content, teacher training, evaluations, adaptive learning, academic intelligence, continuous assessment, academic management tools, as well as solutions for complementary education, such as language instruction, development of socio-emotional abilities and academic programs.

Our core education and digital learning solutions are supported by value-added services to enhance student and teacher learning experiences, enabling dynamism and all-time interactive responsiveness. Our students can access materials at any time and on any electronic device, complete assignments and activities directly on our apps, watch video lessons to review content and check their performance to correct mistakes. We also created an online studying community where students feel comfortable to ask questions directly to our tutors using the app, who are available even on weekends and holidays, and learn from other questions asked by students and posted in the community. Parents are also able to use our apps to analyze the number of exercises completed by their children, check their scores by subject and monitor overall achievement rates, therefore closely following and assisting in the full development of their children. Our content can be delivered either in printed or digital format, and through a new “all included” category, named Learning Book, which combines hardware (Chromebook) and digital content plus the Plurall platform, in an “as a service” format.

In the context of our Content & EdTech Platform, we are positioned as a one-stop-partner powered by technology for Brazilian private K-12 schools. Our partner schools are spread across the entire country and, given our complete array of solutions that meet different types of needs, we allow schools to choose from different academic methodologies and price ranges to better fit teachers’, parents’ and students’ preferences. We offer a variety of core education content and solutions with average annual tuition rates ranging from R$430 for Maxi to R$861 for Anglo, catering to a wide range of customers, as further detailed below.

(1) Based on adoption list. Considers PAR’s net revenue and actual student base (adoptions which effectively converted into new sales).

(2) Ético price, excluding sales to Pluri.

Our base of partner schools is highly diversified, which reduces our dependence on any single customer or concentration of large customers. This factor provides our business model with a resilience and predictability factor as an unlikely churn of a large client would not have a disruptive impact in our business model.

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Products and Services

Core Solutions

Our core content solutions are usually the first decision made by our clients to establish a partnership with us. To offer the best for our partner schools, we provide a complete and integrated portfolio of educational core solutions that cover all segments related to private K-12 education, either as bundled offers or as standalone products. Our bundles include, in particular, content solutions in different methodologies (traditional learning systems, PAR Platform and textbooks), digital learning services and continuous teacher training.

Traditional Learning systems, PAR Platform and Textbooks

Our offerings consist of collections of teaching material for all cycles and segments within K-12 education. These collections include digital and printed textbooks from multiple brands on all subjects for students, teacher handbooks, exercise books, books for the study of multidisciplinary subjects and student evaluations.

We market our educational solutions through long-term agreements we characterize as subscription arrangements, which allow us to have highly predictable and resilient revenue. Partner schools may choose between one of our traditional learning systems (Anglo, pH, Pitágoras, Rede Cristã de Educação, Maxi, Ético, Fibonacci and Mackenzie) or PAR, our textbook-based solution. Our diversified portfolio with multiple brands enables us to reach a large addressable market. Each of our learning systems has its own method, so schools can select the one that best fits their pedagogical project:

- Anglo: with a “Class given, class studied” approach, Anglo always provides access to homework combined with the content taught in class. Anglo is our most relevant brand, with more than 323 thousand students and over 884 schools spread across 26 Brazilian states, with a high concentration in the state of São Paulo. Additionally, approximately 40% of the schools served by Anglo have been in our client base for over 15 years.
- pH: with an in-depth conceptual content approach, pH is one of the most traditional brands in Rio de Janeiro, with a student base of approximately 100 thousand spread across more than 366 schools. pH is present in 23 Brazilian states.
- Pitágoras: focused on developing educators, leaderships and students. Pitágoras is available in 26 Brazilian states, with more than 132 thousand students in over 563 schools, almost two thirds of which are concentrated in the states of Minas Gerais, São Paulo, Rio de Janeiro and Bahia.
- Rede Cristã de Educação: based on Pitágoras’ content and personalized for religious schools, Rede Cristã de Educação is present in 20 Brazilian states with over 23 thousand students, concentrated in the states of Rio de Janeiro, Pernambuco and Minas Gerais.
- Ético: has a contextualized and interdisciplinary approach and reaches approximately 116 thousand students in approximately 589 schools, including Pluri schools that adopt Ético.
- Maxi: has the pedagogical purpose of contributing to students’ holistic development, with an affectional-based pedagogy methodology. Maxi reaches over 190 thousand students in 924 schools distributed all over the country (27 states).
- SESI: SESI (Serviço Social da Indústria) owns a large network of schools in Brazil that adopts a core content exclusively developed for SESI to address its schools’ needs. Vasta provides digital platform and assessment tests to 142 SESI schools spread across 23 states, totaling approximately 80 thousand students.
- Eleva: Eleva was built on three pillars: academic excellence, socio-emotional skills, and citizenship, with the objective of developing students’ abilities at their own pace. Eleva is present in 25 Brazilian states in over 531 schools with over 160 thousand students.
- Mackenzie: Mackenzie is based on the worldview of Christianity and on integrated learning. It also has interactive and meaningful learning and creative methodologies that improve individual and collective learning. Mackenzie is present in 23 Brazilian states, serving 360 schools with nearly 70 thousand students.

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In the case of PAR, schools select their preferred books and materials, offered by our brands Editora Saraiva, Editora Ática, Editora Atual, and Editora Scipione, through a long-term agreement allowing educators to follow their own specific teaching methods. In this context, educators can select from a diverse portfolio of content, mastering the classes as they judge best and therefore enhancing our delivery. With this approach, we accommodate all schools’ choices, which is a unique approach in the educational solutions market, as other players tend to focus on either learning systems or textbooks, and no other player has a solution similar to our multi-brand, book-based solution. We currently serve around 390 thousand students and approximately 950 schools, spread across 27 states.

Additionally, through our publishing business, we also engage in the sale of stand-alone textbooks to schools. More than an important revenue stream, this serves as an entry level for potentially increasing the penetration of recurring partnerships. We believe schools that adopt a specific textbook from our collection of over 10,000 titles are more likely to switch to a model we characterize as subscription arrangements, such as PAR Platform or a traditional educational platform, given the already established relationship. Ultimately, stand-alone textbook sales increase our opportunities to up-sell and cross-sell in schools, especially in schools where stakeholders are initially reluctant to adopt a structured content solution.

Our core content solutions we characterize as subscription arrangements (PAR and traditional learning systems) also provide for ongoing training for educators and the provision of services to partner schools, including, but not limited to, consulting services regarding school management and the organization of events for educators, parents, students and principals of partner schools, as well as a proprietary and differentiated evaluation system for partner schools and their students, available digitally and in print. All these features are provided to our clients who contract our learning systems at no additional cost beyond the contract price for the relevant learning system.

Our evaluation system includes a data-driven pedagogical offering which focuses on practice tests for standardized exams such as ENEM to our partner schools. These tests have a fundamental role in providing data, diagnosing and guiding action plans that could change or reinforce our and the schools’ pedagogical practices. In order to transform this data into important insights, we have a specific department called our Learning Evaluating Area, whose only responsibility is creating, correcting and providing feedback to our partner schools. The goal of these evaluations is to understand the cognition level and abilities of the students as well as to orient the pedagogical plan on multiple segments. In 2021, we launched our new platform of online assessment integrated with Plurall, driven by the acquisition of Meritt (November 2020), enhancing a key feature of our platform and which increases the adherence to our solutions. As a result, w e delivered more than 3.6 million assessment tests, further developing our capacity to use big data to drive our innovation and solutions development. Furthermore, we also offer a continuous education program for educators, teaching coordinators, educational counselors, principals, psychologists, administrative agents, and the administrative support staff. Together with face-to-face training, usually during conferences, seminars and congresses, online learning programs are offered, linked to our parent company, Cogna.

In this annual report, we describe certain early-stage product offerings, and there is no material revenue effect on our revenues for such early-stage products as described in this annual report.

Digital Learning

Our digital learning solution, Plurall, is a tech-enabled platform that assists our partner schools in their digital transformation process and offers our learning systems and PAR Platform partner schools all the support they need in a fully integrated platform. It provides a comprehensive digital learning experience and allows for tailor-made adjustments for each school. Available on the web and as iOS and Android apps, all the features can be accessed anytime and anywhere.

Plurall is a practical, organized and innovative platform offering a complete range of content and services to students, including content seen in the classroom, teaching materials, exercise lists, ENEM exams and tests from Brazil’s main university entrance exams, videos to help in the resolution of tasks, online tutoring and a database of questions and answers from other students. For every class taught, there is associated homework, providing students with a better understanding of the content. For highly skilled students, we also offer tasks with greater complexity in order to challenge and motivate them, helping them to develop their full potential. The solution is highly responsive and makes use of artificial intelligence and machine learning algorithms.

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For parents and guardians, Plurall provides summarized reports with individual performance and serves as a communication channel with the school. The report shows the results of the student, indicating strengths and weaknesses, and comparing benchmarks against other schools across Brazil.

For educators and directors, Plurall generates individual and comparison performance reports, assisting them to address specific difficulties each student is facing, as well as when challenges impact the entire classroom.

Plurall Maestro is the solution offered to educators and coordinators within the Plurall platform. The Plurall Maestro platform develops and sustains digital solutions that help educators in planning and conducting classes, offering resources, data and content that facilitate and support teaching for a specific educational platform. It allows for the creation of individualized content and data generation and evaluation reports to support in-class enhancements. The Plurall Maestro is also linked to the educators’ handbook for each brand in our portfolio and contains training regarding our content and solutions.

Continuous Teacher Training

PROFS is a teacher training program that is designed to improve work in the classroom by means of mentoring so that educators reflect on their methods and are always striving for excellent performance. As the only online training program for educators that provides certification, this solution is also offered in bundled solutions through one of our traditional learning systems or through PAR.

Complementary Education Solutions

We offer a complete and integrated portfolio of complementary education solutions we characterize as subscription arrangements that cover a number of segments related to K-12 education, supporting schools to provide a holistic education to their students.

Socio-Emotional

- O Líder em Mim, a program with content, methodology, teaching material and training to develop leadership, values and 21st century skills. This program is targeted toward students in kindergarten through ninth grade and allows the structuring of the socio-emotional curriculum in partner schools. It has over 14 7 thousand students spread across 25 states, with a higher concentration in São Paulo.

Languages

- English Stars, an English educational platform designed to develop fluency in the English language with high penetration in schools, exploring content that goes beyond vocabulary and grammar, such as science, humanities and art, which can be offered both during school and during extracurricular hours.
- EduAll, a new bilingual program, built to enhance our current solution (English Stars) with a hybrid learning experience with games, digital books, online assessments and digital readers, combined with what we understand to be a renowned quality of teachers and students’ books produced by Macmillan, which agreed to a partnership with us in 2021, to develop this unique, exclusive solution for the Brazilian market that combines the reputation of this recognized brand with our experience in the learning system market. EduAll also allows us to increase presence in a market that we believe will be transitioning towards an increasing number of English hours in school curriculum. Because EduAll is a very flexible program, schools can choose the standard three-hour per week program plus add building blocks to complete up to a 10 hour per week program. The program commence d its distribution in the 2022 commercial cycle, with first sales delivered in the 2023 cycle (October 2022 to September 2023).

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Academic

- Plurall Olímpico, Vasta’s platform of preparatory content for scientific competitions. It offers full support to students, parents and educators engaged in the most prestigious competitions, generating visibility and value to schools as a differentiated service.

STEAM

- MindMakers uses children’s curiosity and energy as fuel to create rational minds with powerful computational thinking skills. MindMakers is designed to teach students how to develop leadership, collaboration and persistence through multidisciplinary problem-solving exercises. MindMakers was acquired by Vasta in 2020 and included in our go-to-market strategy in 2021, serving 341 schools and 95 thousand students in 2022.
- Matific, in partnership with the international online learning company Matific, we provide engaging and entertaining mathematics instruction based on a strong pedagogical background and presented through playful interactions. Matific provides interactive learning environments and adaptable worksheets that go beyond traditional classroom instruction to help develop students’ ability to apply their growing math proficiency in real-life situations. The Matific program allows students to progress at their own pace through a unique sequence of interactive activities that help students develop math proficiency and critical thinking in schools. We offer Matific as complementary content in addition to including it as part of the regular curriculum of certain of our learning systems, such as Anglo and pH.
- Plurall Store. In the 202 2 commercial cycle, we launched Plurall Store as a B2B model. It is a n extension of our Plurall platform, offering 13 complementary digital solutions in partnership with EdTechs from all over the world. Through Plurall store, schools and their users (students and teachers) can have a free trial, experimentation phase after which schools may decide which solution to adopt based on engagement rate s. These digital solutions are not proprietary, thus we operate in a shared-revenue model, through exclusivity agreements.

B2B2C Products

In October 2021, we entered the business-to-business-to-consumer (B2B2C) segment, with the launch of two tutoring products through our Plurall platform. These products are offered exclusively to s tudents enrolled in our partner schools, through a technology base developed fully in-house.

- Plurall MeuProf, an application that connects students enrolled at our partner schools with affiliated professors for private tutoring, and
- Plurall Adapta, in partnership with Seneca, a UK-based company, for the offering of adaptive learning sessions as a preparatory tool

Operation

After partner schools choose a solution, we begin the training processes for school managers and educators, so they get acquainted with all the facilities that our learning systems and digital learning solutions have to offer. We then initiate our relationship with the families and the students, including communication regarding the chosen solution and commercialization of our products and services. Our statistically standardized evaluation systems, digital learning environment and management and qualification tools, among others, are available to all customers.

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Production and distribution of the material supplied to partner schools is carried out in the following stages:

- Development of the matrix of skills and the competencies, and the content linked to each skill;
- In-depth study of essays trends, newest literary works and contextualized news updates for children;
- Creation and editorial production, including digital content, which is carried out exclusively within us;
- Third-party printing, proprietary storage and third-party transportation of printed content;
- Release of passwords and e-training so that all students and educators can access our learning platforms;
- Release of the evaluations according to the academic calendar; and
- Development and communication of all access, engagement and learning reports.

While we do not handle certain of these steps directly, we have the technological expertise to monitor all processes, which is essential for the control of the production stages and for maintaining our standards in terms of quality and competitiveness.

Our authors are educators whose copyright can be acquired permanently or licensed by edition. In the case of licensing, the copyright payment is calculated as a percentage of net sales revenue. We currently have approximately 3,100 authors working under our various brands. We have exclusive publication and distribution of content written by such authors, and as a result, we have a robust base of educational content.

We outsource the printing of our books, using 47 printers and six product handlers, some of which have served us for several decades. Private market books are printed based on sales estimates and stored in our own warehouse. Our products are distributed through our distribution center s in São José dos Campos and Pernambuco. Transportation of printed material is also outsourced. The transportation stage is integrated with the distribution center, and we use a number of reputable transport companies that receive specific training for the transportation of our products.

In addition, the distribution process of teaching materials is highly complex and involves a supply chain with Sustainable Farm Certification, or SFC. Accordingly, we have a corporate department devoted entirely to managing the entire production chain, using forecasting methodology to predict sales volumes and managing printing and transportation, centralizing the essential activities and outsourcing secondary activities.

Digital Platform Services

Our Digital Platform caters to school needs beyond education, with an aim towards increasing quality of service and efficiency, while reducing school churn and increasing new enrollments and family satisfaction. This comprehensive platform unifies the entire school administrative ecosystem and avoids piece-meal products, reducing inefficiencies and enabling schools to focus on education.

Currently, we offer solutions regarding the sale of products and services to families, catering to hundreds of partner schools through our education e-commerce platform, Livro Fácil. We plan to add various other solutions to our Digital Platform such as academic and financial ERP and student acquisition solutions, including online enrollment platform, digital marketing and scholarship marketplace, either by developing such solutions in-house or through partnerships or merger and acquisition opportunities.

Customers

Our e-commerce customers are schools, which have chosen these services in their respective agreements, and families, that have acquired their products and services directly from Livro Fácil. This service helps eliminate printed material logistic issues for schools and facilitates the process for acquiring and receiving printed materials for parents, as Livro Fácil is available through smartphones or computers, eliminating the need to dislocate to physical stores and retailers.

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Products and Services

Livro Fácil is an e-commerce for the sale of educational content for schools including teaching materials, stationery and literature, among others. It also functions as a distribution hub for materials from other suppliers that are chosen by our partner schools, reinforcing our one-stop-partner positioning. It operates across the entire Brazilian territory through an integrated logistics structure with our other solutions.

After entering into the agreement for the chosen educational solution, the school decides whether the educational materials purchased by families should be delivered to the school or directly to the students’ home. Livro Fácil sends vouchers to families to make purchases through the e-commerce and, after the purchase, the products are sent to the chosen destination by our logistics partners. After the families receive the material, Livro Fácil pays the contractual commission to the schools.

By using Livro Fácil, schools can focus on their core activity and not worry about having a retail business and its implications, such as sales, stock management, payment and receivable accounts. Other additional activities that schools are spared when adopting an e-commerce solution are usage of a physical space in the school for the retail activity and the heavy tax bureaucracy associated with reselling goods.

Geographical Presence

Through our asset-light and scalable business model, we believe we have one of the largest school chains in the country, based on our review of publicly available data for private school chains in Brazil. As of December 31, 202 2, we had 5,274 partner schools with 1,589 thousand students, presen ce in all 27 Brazilian states, with a large concentration in high income states São Paulo (30% of our students) and Rio de Janeiro (1 2% of our students), and growth potential in all other regions. We believe our national network is fundamental for us to succeed in our growth strategy.

Culture

We believe that our corporate culture creates value for our partner schools and related stakeholders (including students and parents), employees and investors, as well as competitive advantages for our business. We encourage the following values to be actively cultivated by all of our employees and executives at every level:

- We are leaders who inspire, and we form amazing teams with a huge sense of belonging. We share ideas and know how to listen, accept opinions, praise and criticize constructively.
- We strive for excellence. We are passionate about what we do, we seek high levels of performance and we recognize the merit of each contribution.
- We are constantly searching for disruptive ideas. We love to break boundaries, test new ideas and never shoot down any initiative on takeoff.
- We are autonomous and supportive. We are a collective hands-on team who take the initiative and support each other to go further and further.

We are part and parcel of a safe, respectful and transparent environment, where everyone can be their best version and exercise their full potential. Our culture and innovative mindset are the basis of what drives us to deliver the best and most complete offering to our partner schools and stakeholders, who count on us every day to support one of the most important pillars of our society: the next generation’s education. Our vision is to be the principal driving force of the reinvention of education for the 21st century student.

Technology

Technology has enabled improvements in educational platforms and tools, changing the way people learn. By opening up a new global market opportunity no longer confined to the classroom and representing more than just digitalization of traditional textbooks, technology has brought gamification, immersion and virtual tools into the classroom, re-conceptualizing the learning experience to one that is adaptive and highly personalized.

Throughout the years, we have been able to adapt ourselves, be part of and promote the digital transformation observed in the educational market by adjusting our products and offering concept, as well as our strategy and approach using a high-quality and scalable value proposition, which also allows for tailored-made and differentiated tools.

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Our product-based technological system, Plurall, makes our interaction with students increasingly friendly and intuitive and is able to support all our different brands and their specific pedagogical approaches in an integrated and bespoken manner. Plurall is a powerful source of data as every user interaction on our platforms generates multiple data points. Once they are processed and aggregated, reports become available to our final users (educators, parents and students) and to our digital content production team.

In addition, all of our solutions are based on complex proprietary IT systems and products, and we contract with datacenter service providers to host certain aspects of our platform and content. As of December 31, 2022, we had service agreements with three data center service providers, one on leased premises in São Paulo and two on cloud for the provision of data services located globally.

With in-house development of solutions, we are able to foster constant improvement of the platform and deployment of new products, as well as continuous reduction of the time between identifying a need for adjustment in processes and/or systems and its effective implementation. Our technology and digital transformation team uses best market practices for managing IT services and Scaled Agile Framework, or SAFe, for supporting the current systems and delivering new solutions.

Our employees are organized in autonomous small multidisciplinary teams called squads. Squads are cross-functional, self-organizing teams that aim at tackling a specific business objective ultimately improving productivity and overall delivery. This way of working provides greater agility to solve problems, launch new functionalities, promote continuous improvement and greater testing and integration, which in turn reduces flaws and mistakes. Product, technology, digital operations and content specialists work together on an end-to-end responsibility in a client-focused approach.

We define our squads’ priorities based on the feedback of our engagement teams, who are in direct and constant contact with school administrators, and our support teams, who access our final customers (educators, coordinators and students) to identify complains and improvement suggestions.

SAFe speeds up the prioritization and allocation of resources processes and helps develop systems that are fully aligned with our business strategy. For complex projects, we use bimodal management: parts of the project are executed with agile methodology and others by the waterfall methodology. Progress is reported periodically to management using structured panels and indicators. The greater part of the systems development work is carried out by in-house employees with expert knowledge of the technologies applied and of our business processes, and, on occasion, by third-party specialists.

Our information is stored in physical data centers and in the professional cloud computing of international specialist companies that comply with the main international standards and contribute to the highly scalable nature of our technology. In order to ensure that the solutions produced by the teams reach the production environments with the best possible quality and speed, we started to implement development lines with tools and processes for DevSecOps, where quality, functionality, safety and performance tests will be carried out.

Educational Systems

Within our products, aiming at delivering a fully integrated solution for schools, our partner schools use Plurall’s proprietary platform to support their digital learning experience in our ecosystem. Through multiple interfaces, such as web-based and through an app on the iOS and Android platforms, Plurall offers our stakeholders a complete range of content and services that support our core education solutions.

Plurall had more than 1,700 thousand registered student users by the end of 2022, which allowed teachers to send over 870 million exercise materials and activities to their group of students. As of the date of this report, more than 280 thousand students have demonstrated interest in Plurall’s online tutoring services (Plurall MeuProf) since the launch in October 2021.

Initially, we provide Plurall users with a profile access management, Plurall ID, consisting of a unique identification system which allows tracking of user academic profiles over time. Moreover, we can integrate schools’ systems and Plurall ID to simplify the onboarding process and information update. All the academic structures, like grades, classes, units and groups, can be synchronized, enabling the same identity to be used for Plurall access. Data could also be integrated from Plurall to the school system to compose the final grades and cross performance reports.

Through the use of Plurall, we are able to assemble and analyze data and develop powerful insights for educators, coordinators, parents and students, ensuring constant enhancements in the learning process. Lastly, our digital solution supports the construction and correction of assessments, delivering the results to students and school staff in a more agile and user-friendly manner.

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To deliver better a digital learning experience for our customers, we believe that having only a wide variety of digital content is not enough, so we produce instructional digital content inspired by what students spontaneously consume on social media (videos, interactive content, infographics, quizzes, podcasts, GIFs, etc.), paying special attention to aesthetic and artistic quality, with a simple and modern language, but without losing conceptual rigor which is essential for instructional content. As we are creating our own digital content, which is innovative and specific, we choose to develop internally the Plurall Studio, a virtual and fully cloud-based environment that allow us to innovate in the creation of educational content for students and educators, exploring interactivity and the potential of digital resources in line with the learning objectives of each of our learning systems and PAR.

Our digital platforms experienced significant growth both in user base and volume of usage when the schools closed in Brazil due to the COVID-19 pandemic. This was the result of a structured plan to support our partner schools in implementing fully digital operations. As part of this effort, we implemented new features in Plurall, such as online assessment, virtual science labs, and live digital classes, through a mix of agile internal development and integration with solutions from companies such as Google and CloudLabs.

As a result, Plurall was transformed from a complementary solution to a comprehensive digital platform for complete pedagogical implementation by our partner schools. Consequently, growth in usage has far outpaced the growth in new users. We now have significantly more users of the Plurall platform as compared to the period prior to the school closures prompted by the COVID-19 pandemic, and even more significant has been much more regular use of Plurall than ever before. At the date of this annual report, according to Censo Escolar, 1 in 4 students above the age of 11 years-old enrolled in private Brazilian K-12 schools uses Plurall as its digital learning platform. We also offered a trial version to prospective clients as part of our commercial efforts for the year, and this trial version is converting approximately four times more schools into subscription contracts than our regular go-to-market strategy.

The rate of adoption was particularly notable for K-12 teachers, who generally lag behind their students when it comes to adopting new technologies. With limited alternatives, teachers embraced Plurall as a learning platform, which significantly accelerated the digitalization of the K-12 teacher-student pedagogical relationship.

To support the expansion in users and usage of Plurall, we were required to significantly increase Plurall’s performance, using the support of Amazon Web Services, our principal cloud services provider for Plurall.

The following graphics illustrate certain key metrics related to the expansion of the usage of Plurall in connection with school closures as a result of the COVID-19 pandemic. According to data from SimilarWeb, we have 30% of the K-12 traffic share compared to 15% for our main competitor.

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Visits over Time (202 2)

Source: Company and SimilarWeb. Considers the period between Jan uary 1, 202 2 and December 31, 202 2.

We have a data analytics educational area that uses all data captured by our products in several different pipelines to develop improvements to our platform. Key developments include: (1) engagement: we track the user experience and usage in the ordinary course and create dashboards for our engagement team, who in turn contact the schools and users directly in order to create a better user experience; (2) data products for final users: we deliver data in a dashboard format for educators and educators; (3) feedback for content generation: we use the data channel to create a feedback loop between students and educators that drive content updates.

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The chart below illustrates our spot in this new hybrid learning environment:

Innovation

Innovation is imperative for success in K-12 education both in the creation of educational content for students and educators, as well as in the distribution of such content. We believe the modern student is easily frustrated by traditional learning methods and old-fashioned content delivery. Innovation therefore plays a pivotal role in delivering superior learning outcomes: products based on personalization & adaptive learning, immersion tools and gamification have greater potential to engage students.

Our video classes are very dynamic and scalable, and allow for great user interactivity, with students navigating through different scenarios according to their responses to each question. In order to create an unparalleled adaptive learning platform, our content production is very granular, and broken into content regarding information on each specific topic and on the skills and competences required to complete the assignment. We take great care in combining the theoretical content of each topic with engaging features and a unique user experience.

We are also pioneering the incorporation of neuroscience elements into our educational platform, developing a neuro-pedagogical approach. Neuroscience offers promising insight on scientific knowledge and tools that must be applied to education. We invest intensively in research though our Learning Science Lab, partnering with highly regarded data scientists and forward-leaning tech-driven institutions through the CpE (Ciência pela Educação - the Brazilian National Scientists for Education network).

In that context, we have partnered with BrainCo, a startup incubated in the Harvard Innovation Lab that develops cognitive training technology products in collaboration with scientists from the MIT Media Lab. Specifically, BrainCo has created a headband that detects and quantifies student attention levels in the classroom using electroencephalography sensors. For that solution, NASA has enabled the creation of an algorithm that transforms brain waves into a measurement of student concentration. Since 2020, w e have tested headbands with 12 schools and more than 1.2 thousand students. We have also established a partnership with CpE, bringing together over 175 scientists in the first hub dedicated to bringing scientific evidence to guide pedagogical innovations in Brazil.

Analytics

Since 2018, the analytics area has captured millions of granular data records in different behavioral dimensions. This data was organized and made available for the development of education models so that the operational areas could improve their processes intelligently and effectively. We also carried out initiatives to help intensify our culture of analytics and data-based decision making. A modern data lake cloud was established as a repository for massive amounts of data. By means of this platform, we can provide more sophisticated analyses to a number of our business areas.

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Marketing and Sales

Our differentiated go-to-market strategy is based on a robust salesforce and a client-centric approach, with continuous focus on understanding our customers’ needs and delivering fully integrated solutions. With the support of 171 customer support experts, we target customers through multiple channels including online advertising, marketing research tools, on-site visits, social media, among others.

All of our marketing and sales processes are carried out internally and involve the coordination of several departments and various professional profiles. We work closely with Business Consultants, responsible for the commercial relationship with partner schools, together with Pedagogical Advisors and Product Specialists. Our sales force is fully integrated and is capable of selling our entire portfolio of products and services, allowing for agile, intelligent and efficient actions, placing the needs of the schools at the center of their actions.

Our processes are optimized by data coming from our Business Intelligence and Inside Sales teams. Our Business Intelligence team carries out a market census that covers around 90% of the total number of students in the private K-12 network in Brazil. This census helps us to define our approach when contacting a school, by knowing beforehand which solutions we should aim to target in our sales process.

On another hand, our inside sales team provides that, whenever a potential client demonstrates interest in one of our solutions, an automatic lead is generated, and our inside sales team is able to access existing interactions within our CRM system. Depending on the level of interest demonstrated, our on-site sales team reaches out to the school and performs the sale with a more targeted approach, enabling scalability and low cost of acquisition of new clients.

Each of our Business Consultants is responsible for serving a specific region in Brazil, and they are responsible for engaging with school leaders and identify which educational solution is best suited for each school, within our portfolio of core and complementary content solutions. After that, Pedagogical Advisors discuss with the academic department of each school what is the most appropriate methodology and what academic resources best fit their purposes. Following this, Product Specialists go through the necessary training for educators, to provide for an improved teaching and learning experience. Product Specialists are also responsible for answering any questions regarding the extracurricular products we offer, including language instruction, development of socio-emotional skills and academic programs.

The main stages of the marketing and sales process include:

- Carrying out a market census in the over 17,500 private schools targeted by the commercial team (around 80% of the total number of students in the private K-12 network in Brazil), which occurs between January and February. This census helps to define our approach when contacting a school by knowing beforehand which solutions we should aim to target in our sales process;
- Definition of the action plan and of the commercial portfolios by the marketing and commercial intelligence areas in January;
- Establishment of the variable compensation for the commercial and specialist teams, to ensure these are aligned with our objectives, which also happens in January;
- Creation of marketing and communication materials for the commercial campaign, such as catalogs and product samples, during January;
- Training of sales teams and product specialists in January;
- Development and control of the commercial process from February to December;
- Invoicing, in January to December; and
- Awards and payment of variable compensation for commercial and specialist teams, measured in June of the following year (after preliminary remuneration which occur every four months during the commercial cycle).

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For the most part, our customers sign long-term contracts with us, with terms generally ranging from three to five years. Sales are made on an annual basis to partner schools in an integrated manner, meaning that schools pay a single amount per student and have access to all the products and solutions we offer. Products are usually delivered bimonthly to schools and payment plans may vary from 30 to 60 days after delivery.

The prices are directly charged from the partner schools or families, if the partner school selected our Livro Fácil e-commerce platform. Pricing considers the production costs and the costs related to our support services, which varies according to the profile of each school and its portfolio choices.

A significant lead generator for our Anglo brand is the operation of preparatory courses for university entrance exams, that, given the quality and reputation of the brand, we constantly advertise with a list of alumni that passed the entry exams into the top universities in country.

Specifically in the case of Livro Fácil, our e-commerce platform is marketed by the integrated sales force as an additional service that might be hired by the schools in connection with the adoption of our Content Solutions. Livro Fácil is, therefore, a lead generator of cross-sell revenue that, by generating a commission to schools, can be used to sustain and help pay the adoption of an educational platform or PAR Platform solution.

Customer Service and Support

Aiming at delivering the best after-sales support in order to increase customers’ loyalty and recurring revenue opportunities, a Pedagogical Advisor is assigned for each school once the contract is signed. The Pedagogical Advisor will regularly visit the school (usually four times a year) and will also accompany the school at all local and national events. On average, each Pedagogical Advisor coordinates 32 schools, and in addition to personal interactions, they are also available for weekly or spontaneous calls. Schools also have access to our relationship center and may, at any time, request more information about their products, services, invoices or others. In addition, Livro Fácil has its own customer service structure, serving mostly families, while also being integrated with the schools’ relationship center.

Authors who receive copyright are also under contractual responsibility to answer the various questions that the educators using our products may have and take part in marketing, engagement and capitation events for the partner schools. Our large team of authors means educators will always have someone available to assist them in their work.

In addition, to improve the use of our digital learning solution, we also deliver support focused on Plurall users. Our Engagement team is responsible for assisting our users and creating a better use experience. We segmented our team in two areas, one is responsible for supporting our partner schools by tracking and analyzing the user experience and maintaining close contact with schools to provide a better use of the Plurall ecosystem. Another one is responsible for assisting students, answering questions through the online support module that is available on our digital learning platform.

As a result of our high-quality customer-focused approach, our clients have a very positive experience, as evidenced by our high NPS score among core education and digital learning brands. As of November 25, 2022, we scored 62 and 44 out of 100 possible points for Anglo and pH learning systems, respectively, as rated by our partner schools, and 41 out of 100 possible points for our digital learning platform (Plurall), as rated by school coordinators.

Competition

We compete with publishers, textbook providers, online learning solutions and all other players offering services to private K-12 schools. For partner schools, reputation and content and platform quality are key differentiators. We believe that we are the only one-stop-partner in the private school marketplace able to cater to schools’ entire ecosystem by providing a comprehensive set of solutions for schools in terms of core content and complementary content and digital solutions. Unlike other providers in the market, we are able to cater to a wide range of school needs, from core content to complementary content and, through our Digital Platform, a growing set of administrative and managerial tools for schools, which we expect will only continue to expand as we expand our core and complementary solutions and grow the product offerings of our Digital Platform Services.

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Our large proprietary technology content and support systems improve our intellectual agility and responsiveness both in the development and also enhancement of our solutions. Also, among our main competitive strengths sits the fact that we have a robust salesforce and client-centric mindset with a self-reinforcing network under a mostly model we characterize as subscription arrangements.

Within our Content & EdTech Platform, we compete with traditional publishers, textbook suppliers and other providers of educational curriculum solutions. There is no concentration of market power in the markets in which we operate except the publishing market, which is highly concentrated among a few players including us. We are one of the three largest players in the educational publishing market in Brazil, with a 30% market share of the textbook market in the private sector, according to our internal market intelligence data (annually collected and consolidated based on the textbook syllabus adopted by the schools we have a relationship with).

The learning systems market is highly fragmented, with a large number of players, but only a few of them have nationwide presence or the know-how for the sale of teaching materials and educational methodology as we have.

Through PAR, we are able to target a range of schools that do not want to adopt traditional learning systems, increasing opportunities for up-sell and cross-sell in schools which only purchase stand-alone textbooks. We were the first player offering this type of solution.

For the Digital Platform Services, retailers selling textbooks and stationery, physical bookstores and e-commerce platforms are competitors or alternatives to Livro Fácil. Educational solutions are usually commercialized directly between us and the school or by Livro Fácil, but, in specific cases, stand-alone products might be available in the distribution channels mentioned above.

Seasonality

Our revenue is primarily derived from the sales of our educational solutions and digital platform to partner schools. Each of these activities has its own seasonality, as specified below.

Content & EdTech Platform

Our main deliveries of printed materials and digital materials to our customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenue generally produces higher revenue in the first and fourth quarters of our fiscal year. In addition, we generally bill our customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half.

A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, in order to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.

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Digital Platform Services

Purchases through our Livro Fácil e-commerce platform are very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.

INDUSTRY OVERVIEW

Introduction to the Brazilian Educational System

The general education system in Brazil consists of K-12 and postsecondary education. K-12 comprises preschool, lower secondary, upper secondary and high school education levels, totaling 14 years of education, while postsecondary education consists of undergraduate and graduate degrees, totaling 3 to 8 years of education, a period substantially shorter than the K-12 cycle. In addition to the general education system, Brazil also provides special education for people with disabilities, professional education and education program for young adults (Educação de Jovens e Adultos), or EJA, who were unable to access or complete K-12 education at the appropriate age.

In 2022, 47.4 million students were enrolled in private and public K-12 schools in Brazil. Brazil’s K-12 students represent 23% of the total population, while in the United States this percentage falls below 17% (considering an estimate of 56.6 million students attending school in fall 2019), according to the NCES.’ The chart below sets forth the total number of students enrolled per stage of the education cycle, as well as the duration and age. Also in 202 2, 9.0 million students were enrolled in private schools in Brazil, which makes Brazil the fourth largest market for private schools in the world, after India, China and Indonesia .

Educational Cycle in Brazil
(in millions, except age and years, 202 2)

Source: MEC/INEP

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Market Fundamentals of the Private K-12 Segment in Brazil

The Importance of K-12 Education

K-12 education is compulsory in Brazil, and is provided by both private and public schools, with the majority of students enrolled in public schools. Under Brazilian law, guardians are required to enroll children at the age of six in a primary education facility and the Brazilian Government is required to provide students with public access to primary and secondary education. Despite having access to public K-12 education, families seek to enroll their children in private schools to secure higher quality education. There is a significant difference in student performance for public versus private K-12 education, as measured by performance on standardized exams such as the ENEM.

The ENEM is extremely important for students’ future opportunities as it is required for access to high-quality postsecondary education in Brazil. It is the standardized national test for university admission in Brazil. In 2021, 87% of ENEM applicants were either enrolled in their final year of high school or had already concluded high school. Of the 100 highest ranked schools for performance on the ENEM in 2019, 90 are private. The superior performance of private school students on the ENEM when compared to public school students is an important factor for families when deciding whether to invest in private K-12 education for their children.

The poor quality of public K-12 education is a result of the allocation of scarce Government investments in the segment. Although Brazil’s investment in education in terms of GDP is high when compared to other countries, the majority of funding is directed to postsecondary education, which is evident when comparing public spending per K-12 student to those in postsecondary education. The Brazilian Government invests three times more per public student in postsecondary education than per public student in K-12 education.

Priority in Household Spending

Families believe education is an effective investment to ensure that their children will be able to access high quality postsecondary education institutions and increase their future earning potential. Brazil has one of the widest differences between relative earnings of 25- and 64-year-old adults. T he average wage of an employee that has completed some form of postsecondary education is 2.7 times higher than an employee with only secondary education, a wider wage gap when compared to other OECD countries.

Source: OECD

Resilience of the Private School Segment

As a result of the positive economic growth in Brazil’s economy in the early 2000s, real wages have increased and thousands of families were able to rise to the middle class, which in turn has increased the shift to private schooling due to increased disposable income. According to Tendencias Consultoria, the Brazilian middle class increased by 44.7 million people from 2003 (2003 data by FGV) to 2022, corresponding to 45% of the population compared to 37% in 2003. Additionally, according to Tendencias Consultoria, social classes A and B corresponded to 16% of total population in 2022, an increase of 7% when compared to the 9% obtained in 2003.

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The chart below sets forth growth in private school enrollments compared to reductions in overall K-12 enrollments, demonstrating the migration of students from the public to the private system in Brazil. This trend was partly reversed in 2020 and 2021, which we attribute to the effects of the COVID-19 pandemic in the disposable income of Brazilian families. We believe, however, that this interruption is transitory and that enrollments at private K-12 schools will outgrow that of enrollments at public K-12 schools once the effects of the COVID-19 pandemic have terminated.

Number of Enrollments
(in thousands, except percentages)

Source: MEC/INEP

Private school enrollments have gained share over the past decade and remain stable despite the Brazilian economic crisis in recent years, demonstrating the resilience of the sector. Therefore, with the resumption of economic growth, this segment is expected to have room for growth in coming years and well-positioned players will have the opportunity to capture these gains.

Number of Enrollments in Brazilian Private K-12 Education
(in %)

Source: INEP, IBGE

Despite the migration of students from public to private schools over the last years, when comparing Brazil to other countries in the world, there is still significant runway for increased penetration, since private school penetration in Brazil is lower than in other developing markets.

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Complementary Content and Full-time Education

With recent changes in society and the job market presenting a more competitive scenario and preference for individuals with a holistic education, highlighting the importance of a diverse set of competencies aside from the core and technical curricula, schools have begun to demand more complementary content. Parents have been looking for complementary activities to enroll their children in order to provide them with a complete education and learning experience. These activities include language courses, tutoring, STEAM-based curriculum (Science, Technology, Engineering, Arts and Mathematics) and 21st century skills, such as critical thinking, which provide an important addition to student development and formation and are usually provided outside of regular school hours, either at school or at third party provider locations.

In addition to being sources of knowledge enhancement, complementary content can generate additional revenue to schools. Also, the ability to provide these services in the school is a trend that promotes more convenience for families. Demographic changes such as the entry of women into the labor market and the long working hours led parents to find in schools an integrated center for solutions, offering full time education with complementary content. Therefore, the demand for this kind of solution has been growing in recent years. The number of students enrolled in full-time education in high school increased from 8.9% in 2018 to 13.7% in 2022, according to INEP.

Education, Technology and Digitalization

In light of the current developments in technology in recent years and the need to constantly improve the quality of K-12 education, digitalization is playing a critical role in schools in terms of personalizing learning, supporting educators and increasing school productivity.

Looking at more mature markets, for example the United States and the United Kingdom, digital solutions are already moving towards an integrated offering at some schools, creating personalized learning paths and practices in order to differentiate learning among children in the classroom.

Brazil exhibits favorable prospects for adoption of technological education solutions, considering it is the fourth largest country in terms of internet users in the world, according to a study by the United Nations Conference on Trade and Development, or UNCTAD.

The K-12 segment has been moving towards increased digitalization. In 2020, the first hybrid ENEM edition took place, and the exam was administered live and in digital format. According to the MEC, the migration to digital assessments will occur gradually until 2026, when the ENEM will be assessed entirely in digital format.

In order to bring the most value to students and educators, providers of educational content have been incorporating higher quality technology, pedagogical solutions, teacher development programs and other value-added services.

Professionalization of Schools

There are 4 1,011 private schools in Brazil, of which approximately 9 0% have less than 500 students. These small-scale units dedicate significant working hours to administrative activities, such as intake, retention, financial management and communication with parents. This can be an inefficient use of resources that diverts the school’s focus away from its core educational activities and also represents lots of hidden costs to the school.

Due to this challenging scenario, the digitalization progress can be an important tool of professionalization in schools. The value of digitalization is extensive, covering solutions ranging from curriculum products to back-office tools focused on efficiency. These result in productivity gains for schools and allow them to save time and costs through systems that help them reduce their back-office size and that provide integration with other systems, reducing the number of manual entries. Another key tool for more effective school management is big data intelligence, which creates actionable insights to aid in business tasks such as forecasting, student recruitment, drop-out alerts, among others.

This movement to make back-office processes more efficient has led providers to begin migrating towards one-stop-shop solutions, primarily as a result of the lack of integration between providers, which complicates data analysis and visualization, leads to duplicative manual entry across multiple systems and generates errors and mismatched information, introducing risk. Moreover, logging into and navigating through different system is time consuming and adds complexity.

Therefore, schools have taken some measures to become more efficient. Such measures include: (1) increasing purchases from a single vendor and centralizing data and data visualization; (2) the use of CRM (enrollment management) as a recruiting tool; (3) migration towards cloud computing for quick and easy updates; and (4) reduction of customized offerings, which create issues when providers carry out software updates, and are generally more expensive.

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Products and Services Addressing Schools’ Needs

Addressing the Needs of a Highly Fragmented and Heterogeneous Market

The Brazilian market presents a large number of schools with different scales and focusing on very diverse profiles. Currently there is no meaningful consolidation in the Brazilian private K-12 segment, with 41,011 private schools in Brazil, of which approximately 90% have less than 500 students. In addition to being highly fragmented, the Brazilian private school market is also heterogeneous, with schools following a wide variety of pedagogical approaches and teaching methods.

Numbe r of Students per School
(in %)

Source: INEP

A verage Monthly Tuition
(in R$)

Source: Based on Vasta’s 2021 internal survey

These schools lack the time, capacity and resources to develop their own content and pedagogical solutions and often require complementary education solutions to provide holistic education to students. In addition to content and pedagogical solutions, these schools also need tools and technology to help with school administration, so they can focus on their primary activity, which is education, as well as reduce costs and improve efficiency levels.

Core Content Solutions

Core content solutions encompass educational content for schools and students, digital learning environment and continued learning and development for educators.

Schools and educators are the primary decision makers when determining which option to be used in terms of: (1) content (textbooks, learning systems or hybrid options); (2) format and functionalities (digital and print, among others); (3) brand or provider; and (4) the channel that will be adopted for sales to parents (whether directly through the school, through e-commerce, or by other means).

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Core content comprises the mandatory K-12 curriculum and schools have adopted three different options to deliver content to students based on their pedagogical approach: (1) stand-alone textbooks, encompassing content which are purchased by parents at bookstores or other marketplaces and are usually adopted by schools that prefer to develop their own curricula, lesson plans and classroom activities to ensure flexibility in pedagogical curricula and in-depth learning for all grades; (2) learning systems, which comprise content in different formats across all grades for schools that are looking for structured content and associated services, such as lesson plans, pedagogical and marketing support, and other support services. These materials are adopted and purchased by schools from an education company and sold to parents with a mark-up by the schools; or (3) a hybrid approach, combining the use of textbooks and learning systems for schools seeking to use their own lesson plan and pedagogical approach for selected grades (adopting books) while adopting learning systems for the remaining grades.

Methodological Option in the Private Schools
(20 2 2)

Source: Vasta’s internal database (“Lista de adoção”), covering around 85% of Brazilian students in private market.

Digital learning platforms encompass solutions and support for schools, educators, parents and students. Schools and educators are able to tailor learning activities combining feedback provided by students, levels of classroom engagement and examination results. Parents can access real-time student performance metrics and work together with the school to help their children improve academic results. Students are provided with online digital content that may also be downloaded, together with tutoring support during and outside regular school hours.

We believe digital learning platforms represent a clear opportunity to deliver high-quality education at a lower cost to parents since it enables scale gains to education providers both inside and outside the classroom. Companies are investing in adaptive learning platforms to provide students with content tailored to their individual needs and 24-hour connectivity. With the use of technology, education expands beyond the classroom, allowing students to access more engaging content in different forms and through various sources.

Resources for continued learning and development for educators, which enhance the learning experience for educators and their students, include a wide variety of areas, such as classroom teaching skills, student engagement methods, testing strategies and introduction of new technologies, among others.

According to a report by Oliver Wyman from 2018 (as adjusted by inflation until December 31, 2022) that was commissioned by us, the services we provide through our core solutions have a total addressable market of R$7.9 billion per year as of 2022.

We believe we are uniquely positioned in the sector, since we are able to offer all kinds of choices, regardless of the chosen methodology. Partner schools may choose between one of our traditional learning systems or PAR’s educational platform, our book-based content solution. Our core content solutions include content in different formats and a wide range of services such as digital learning, pedagogical support, continuous teacher training and others. Despite the fact that stand-alone textbooks are not part of our core strategy, they are important as a first step to start a relationship with a school, which can eventually subscribe to PAR Platform or one of our learning systems in the future. Therefore, through this range of services, we are able to fully serve the entire educational market.

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Complementary Content Solutions

There is a diverse set of complementary education solutions available for students that include language courses, tutoring, robotics, socio-emotional and other 21st century skills that have gained relevance in the field of education over the last years. The rising demand was driven by the increasing parental focus on ensuring that their children are “21st century ready” for the employment market and acceptance into high quality postsecondary education institutions. The main criteria parents seek are socio-emotional health, global awareness, digital skills and critical thinking.

In order to improve and educate better citizens, education in schools has been updated year after year. In this process, socio-emotional education has become an important vertical in which students learn to reflect and effectively apply necessary knowledge, attitudes and skills throughout school and future life.

Demand for complementary education has also been increasing, primarily driven by parents’ long working hours and social changes such as the increase in participation of women in the workforce. Other aspects that support these structural changes are related to logistics (more limited mobility) and security challenges. In this way, schools have become integrated centers of solutions.

Complementary education is also becoming increasingly relevant for schools because: (1) they contribute to a holistic education to students; (2) they can increase student retention; and (3) they provide additional revenue streams to schools.

Digitalization is turning STEAM into an essential subject for future workforce preparation. According to Innovation and Science Australia, 92% of future jobs will need digital skills. Since 1990, there has been a 79% increase in the number of jobs related to STEM, according to Pew Research Center. Consequently, countries are adopting STEAM subjects in the mandatory curricula.

According to a report by Oliver Wyman from 2018 (as adjusted by inflation until December 31, 2022) that was commissioned by us, the services we provide through our complementary solutions have a total addressable market of R$8.4 billion per year as of 2022.

Our current platform offers language courses, socio-emotional content and academic programs, and we are constantly looking to incorporate new solutions into our existing platform. We are currently working on expanding our complementary offerings to include STEAM.

School Management Services

The school management services market in Brazil is currently very fragmented, with schools adopting different operating systems to support all their needs including financial and academic ERP and student acquisition solutions, including online enrollment platform, digital marketing and scholarship marketplace. These services aim to increase school efficiency by leveraging back-office functions, allowing school management to be able to focus primarily on educational activities, increasing the quality of education.

This market is increasingly relevant as technology is further developed and as schools seek alternatives to manage their costs and increase their efficiency. The advancement of digitization can be an important tool of professionalization in schools. Looking at more mature markets, for example, United States, we can see that there is already a migration towards an integrated offering of digital services at some schools.

We believe our Digital Platform is built to cater to all other school needs or management services aside from education, offering unified management and increasing efficiency and quality of services. Currently, we offer Livro Fácil, the largest education-related e-commerce in Brazil, selling educational content and stationery items, while also functioning as a hub for distributing materials from other suppliers that are chosen by our partner schools, reinforcing our one-stop-partner positioning. In addition, we are also developing a number of other solutions for our Digital Platform through a full stack of digital services, including academic and financial ERP and student acquisition solutions, such as online enrollment platform, digital marketing and scholarship marketplace.

According to a report by Oliver Wyman from 2018 (as adjusted by inflation until December 31, 2022) that was commissioned by us, the services we provide through our Digital Platform have a total addressable market of R$15.3 billion per year as of 2022.

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Platform as a Service: Total Private K-12 Addressable Market

To address the challenges faced by the private K-12 segment in Brazil and in light of market fundamentals, we believe we are well positioned to cater all school needs through our “platform as a service” approach. The solutions available today are still fragmented, with different tools being offered by different providers, which end up generating some challenges for schools. The possibility of adopting an integrated provider will allow schools to generate significant gains in terms of cost reduction, time optimization and focus of school managers and educators and a seamless and user-friendly experience for families. In addition, they create significant barriers to new entrants. Moreover, the adoption of digital functionalities is still in an incipient stage and subject to major transformations. We are positioned to deliver key digital functionalities for education and school management through our integrated platform as a service approach, providing state-of-the-art end-to-end solutions.

We believe we have built one of the most complete and integrated platforms of K-12 products and services capable of promoting the digital transformation in schools through our Content & EdTech Platform and our Digital Platform. Our Content & EdTech Platform is mainly focused on the core and complementary education with a multi-brand tech enabled platform that delivers high quality content according to each student profile, while our Digital Platform is designed to provide school management services through an integrated approach.

As a result, we believe we are uniquely positioned to capture the full spectrum of products and services of the private K-12 market in Brazil, amounting to a n estimated total addressable market of R$31.6 billion per year as of 2022.

Private K-12 TAM
(in R$ billion, 20 22)

Source: Oliver Wyman 2018 adjusted by inflation

We believe we are well positioned to deliver key digital functionalities for education and school management through our integrated platform as a service approach, providing state-of-the-art end-to-end solutions.

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Our integrated Platform as a Service

REGULATORY OVERVIEW

The Brazilian constitution establishes education as a right of all citizens, the provision of which is a duty of the state and the family. Accordingly, the government is required to provide all Brazilian citizens with access to free primary education that requires compulsory attendance. Private investment in education is permitted so long as entities providing regulated education services comply with the applicable rules and requirements.

The Brazilian education system is organized as a cooperation regime among federal, state and municipal governments. The federal government is responsible for organizing and coordinating the federal education system in order to guarantee equal opportunity and quality of education throughout Brazil. Brazilian states and the Brazilian Federal District are required to focus on primary and secondary education (which are similar to the final years of elementary school, junior high and high school), while municipalities are responsible for providing preschool and primary education (which are similar to kindergarten and the first years of elementary school), and each is responsible for establishing and implementing the relevant rules and regulations for each educational stage the subject of its focus, including monitoring and evaluation, and the issuance of all relevant authorizations, recognitions and qualifications required for each such educational stage.

Law No. 9,394/1996, or the National Education Guidelines Law (Lei de Diretrizes e Bases da Educação Nacional), or LDB, establishes the guidelines for the provision of education services in Brazil and sets forth the federal government’s duty to: (1) coordinate the national education system; (2) prepare the National Education Plan (Plano Nacional de Educação), or PNE; (3) provide financial assistance to the states, the Federal District and municipalities; and (4) define, in cooperation with other federal entities, the responsibilities and guidelines for primary and secondary education.

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In addition, the federal government, through Law No. 13,005 of June 25, 2014, implemented the PNE, with a duration of ten years from the date of its publication. The National Education Plan established objectives for Brazilian education. For primary and secondary education, which encompasses kindergarten, elementary school and high school, the objectives are: (1) the universalization of preschool education, with a target to enroll at least 50% of all children up to three years of age in schools by 2024; (2) the universalization of primary education, with a target to enroll at least 95% of children between the ages of six and 14 in schools by 2024; (3) the universalization of secondary education, with a target to enroll at least 85% of adolescents between the ages of 15 and 17 in schools by 2024; (4) to ensure that all children learn the Brazilian Portuguese alphabet by the third year of primary education; (5) to make available full-time education in at least 50% of public schools; (6) to improve the quality of primary education as evaluated by the IDEB; (7) to ensure that all students are literate by the time they are 15 years-old; (8) to make available to 25% of primary and secondary education to young adults and adults; and (9) to increase enrollment in professional studies to three times the current enrollment rate. Accordingly, each of the federal, state and municipal governments was required to prepare a ten-year education plan and establish policies, guidelines and objectives applicable to the segment of the Brazilian education system over which it is responsible. In addition, these objectives act as guidelines for the private education sector.

Primary and Secondary Education

Primary and secondary education in Brazil is equivalent to K-12 education in the United States, and consists of preschool, elementary school, junior high and high school, which are regulated by the LDB, the National Education Plan and by directives established by the CNE.

The LDB regulates mandatory subjects, the minimum number of teaching hours and school days, the minimum classroom attendance and grade advancement. States, municipalities and educational institutions can pass rules and regulations according to specific regional and local requirements, such as differences in curricula and calendar, grade advancement and issuance of academic documentation for primary and secondary education students.

The National Education Plan establishes ten-year targets for all the levels and stages of education, mandating that states and municipalities create and establish similar plans compatible with such national targets. It is incumbent upon the Primary and Secondary Education Secretariat (Secretaria de Educação Básica), or SEB, of the MEC, to monitor compliance with the PNE by states and municipalities. This supervision includes guidance and rules for evaluating the stages of primary and secondary education.

Under the federal constitution and the LDB, access to primary and secondary education is a right of all children from the ages of four to seventeen. Following amendments to Law No. 11,274 on February 6, 2006, the duration of primary and secondary education was extended from a period of eight years to a period of nine years. Among the purposes of primary education are: (1) development of the capacity to learn, including basic abilities in reading, writing and arithmetic; (2) comprehension of the natural and social environment, the political system, technology, arts and social values; (3) development of the capacity to acquire new knowledge and abilities and the formation of attitudes and values; and (4) strengthening family ties, social cohesion and mutual tolerance. Assessment of primary education is coordinated by the state legislation of each individual state, on a case-by-case basis.

Secondary education is designed to fulfill the government’s duty to progressively complete the formation of the citizen, seeking universalization of scope and coverage. Secondary education is conducted for a period of not less than three years and seeks: (1) the consolidation and deepening of the knowledge acquired in primary education; (2) the basic preparation of the person being educated for work and to be able to adapt within the labor market or pursue further education; (3) the improvement of the student as a person, including ethical formation and the development of intellectual autonomy and critical thinking; and (4) the comprehension of the scientific and technological bases of the productive processes, relating theory to practice in each discipline. Assessment of secondary education is conducted on a national scale and coordinated by the MEC.

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Regulatory Bodies

The main regulatory bodies of the Brazilian education system are:

- Ministry of Education (Ministério da Educação);

- Anísio Teixeira National Institute of Educational Studies and Research (Instituto Nacional de Estudos e Pesquisas Educacionais Anísio Teixeira);
- National Education Council (Conselho Nacional de Educação);
- Board of Primary and Secondary Education (Conselho de Educação Básica);
- Higher Education Board (Câmara de Educação Superior);
- State and Municipal Secretaries (Secretarias Estaduais de Educação and Secretarias Municipais de Educação, respectively); and
- State and Municipal Councils of Education (Conselhos Estaduais de Educação and Conselhos Municipais de Educação, respectively).

The MEC is the federal government agency responsible for education in Brazil. It formulates and evaluates Brazilian national education policy, ensuring the quality of education and compliance with education regulations. The INEP is a collegiate federal entity responsible for evaluating educational institutions and student performance, as well as conducting research in order to provide a reliable database for public use.

The MEC is assisted by the CNE, which is the entity with decision-making and deliberative powers to ensure the improvement of national education. The CNE is comprised of the CEB, which is the collegiate responsible for the regulation of elementary and high school, and the CES, which is the collegiate responsible for the postsecondary education system. CEB and CES are each composed of 12 members appointed by the President of Brazil.

States and municipalities are responsible for regulating preschool, elementary and high school education, respecting the macro directives from the CNE. State Secretaries of Education (Secretarias Estaduais de Educação) are assisted by the State Councils of Education (Conselhos Estaduais de Educação) and are the main regulatory bodies for the for primary and secondary school education. The Municipal Secretaries of Education (Secretarias Municipais de Educação) are assisted by the Municipal Councils of Education (Conselhos Municipais de Educação) and are the main regulatory bodies of preschool education.

The LDB grants power to states and municipalities to authorize, accredit and supervise primary and secondary education institutions. This is achieved through each governmental entity’s respective Department of Education.

Regulations Applicable to Our Activities

There is not a specific regulation for the exercise of sale of educational content, either digital or printed content, as regarding the need to obtain government approval for the development of such activities. Therefore, we are not directly regulated by MEC or any other regulatory agency with regard to those activities.

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However, our Core & EdTech P latform and related educational materials seek to comply with the LDB, and the directives established by the BNCC. In addition, our school Anglo São Paulo and partner schools are providers of primary and secondary education, regulated by the Municipal and State Secretaries of Education, under the supervision of MEC, and must comply with applicable regulations. Recently, the BNCC, was launched in Brazil and, therefore, we are required to incorporate all the BNCC standards into our educational products and content. The BNCC contemplates a set of guidelines that provides a curriculum itinerary specifying the core skills and knowledge that must be developed as part of primary and secondary education in Brazil and each school has the autonomy to elaborate or adapt their curricula and pedagogical projects according to such guidelines.

The BNCC guidelines were established following overall poor student performance levels achieved while the predecessor education guidelines were in effect. Several indicators suggest that the predecessor guidelines were failing in many ways, leading the MEC to initiate discussions relating to a new method based upon a comparison between Brazil and other countries’ results, which formed the basis for developing the BNCC. Simply put, the LDB and the BNCC establish what subject matters shall be developed during each level of education (preschool, elementary school and high school).

As provided by the LDB and the BNCC, preschool education should enable children to live in society, to play, to participate, to explore, to express themselves, and to know themselves. Primary education, in turn, shall offer the following subject matters: (1) Brazilian Portuguese; (2) Arts; (3) Mathematics; (4) Geography; (5) History; (6) Religious Studies; (7) English; (8) Science and (9) Physical Education. Also, according to the current BNCC, secondary education shall offer curriculum covering the following subjects (1) Brazilian Portuguese; (2) Arts; (3) Mathematics; (4) Geography; (5) History; (6) Physics; (7); Chemistry; (8) Biology; (9) English, (10) Physical Education, (11) Sociology; and (12) Philosophy. As our partner schools have autonomy to establish their pedagogical projects, there are no other guidelines relevant to the materials provided.

Relevant government agencies, such as the MEC and CNE, are still discussing amendments to the BNCC, which are also being debated by society at large in the public discourse. While following the BNCC is yet to be required of every school in the country, there are opportunities to provide core and complementary content solutions to improve and adapt to the new status quo in the Brazilian education market.

In terms of the sales of books and e-books, we benefit from the provisions of article 150, item VI, paragraph “d” of the Brazilian Federal Constitution, which establishes that the Federal Government, the States and the Municipalities cannot levy taxes, such as the Tax on Industrialized Products (IPI) and Goods and Services Tax (ICMS) on the sale of books, newspapers, periodicals or the paper intended for the printing thereof. Although constitutional immunity applies to taxes, it does not apply to social contributions, such as the Social Integration Program (PIS) and the Contribution to Social Security Financing (COFINS). In the light of this, the Federal Government, by means of Law No. 11,033, dated December 21, 2004, reduced the rates of PIS and COFINS tax on revenue resulting from the sale of books in Brazil to zero, effective December 2004. The aim of this reduction in the tax burden was to stimulate the production chain and marketing of books in Brazil. For the purpose of this reduction the definition of a book is as contained in Law No. 10,753, dated October 30, 2003.

Furthermore, there is not a specific regulation for preparatory courses for university admission exams and for their textbook material. Therefore, we do not need to obtain governmental authorization to implement these activities and does not need to observe BNCC guidelines for the development of related textbooks.

In addition, the provision of services and sale of goods to municipalities and other public entities are subject to specific rules on public bidding procedures. Pursuant to Brazilian Federal Constitution, public authorities must initiate a public bidding procedure before hiring any services, purchases or sales. Such public biddings aim to provide the most advantageous conditions to public purchasers. These procedures are established by Federal Law No. 8,666/93 and cannot be overridden by state and local laws.

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As general rule, public bidding procedures are mandatory and can only be exempted under certain specific circumstances (that is, only if considered unfeasible or if waived) in which cases, specific administrative procedure are required in connection with such exemptions. Failure to follow the procedures required for waiver or unfeasibility could subject the relevant public authorities and contracted parties to negative consequences, which include (1) annulment of the agreement; (2) prohibition to contract with the public authorities for a certain period of time; (3) mandatory reimbursement to the Public Treasury for any overcharge with respect to the relevant service or good; and (4) civil and administrative penalties for the losses and/or damages born by the public authorities.

Additionally, rules applicable to contracts with public authorities differ from those applicable to private agreements. Public authorities can unilaterally amend or terminate the agreements, and are also entitled to access all administrative, accounting, technical, economic, and financial information of the private entities contracting with them for purpose monitoring the relevant contract.

The provision of services and sale of goods to entities within the “S System” (“Sistema S”, which includes SESI and SENAI) are subject to certain rules and principles that are similar to those applicable to public entities. However, entities within the S System are private entities that provide social services (“parastatal” entities), are not part of the government nor included in its structure and, as a result, are not subject to the provisions set forth under Federal Law No. 8,666/93. However, given that such parastatal entities are funded by the collection of specific federal taxes, they must observe the administrative principles on the execution of contracts. Consequently, SESI must observe its own rules of proceedings for tenders and contracts. Possible sanctions for default in contracts executed with parastatal entities include early termination, fines and prohibition to contract that specific entity. In addition to that, SESI and the other parastatal entities are subject to the internal and external control from the Federal Controller General (Controladoria Geral da União) and the Federal Court of Auditors (Tribunal de Contas da União), respectively.

C. Organizational Structure

We are a Cayman Islands exempted company incorporated with limited liability on October 16, 2019 for purposes of effectuating our initial public offering. Prior to our initial public offering we undertook a corporate reorganization as described under “Presentation of Financial and Other Information—Corporate Events”.

On January 14, 2022, we acquired the companies Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. (“Phidelis”) and MVP Consultoria e Sistemas Ltda.(“MVP”), when the control over th ese entities was transferred upon all conditions established on the share purchase agreement and the liquidation was completed.

Moreover, pursuant to o ur corporate reorganization plan, the subsidiaries Mind Makers Editora Educacional (“Mind Makers”), Nota 1000 Serviços Educacionais Ltda (“Redação Nota 1000”) and Meritt Informação Educacional Ltda. (“Meritt”), had their operat ional activities, assets and liabilities, merged into Somos Sistemas, the main company of the group, on April 1, 2022. As a result, Mind Makers, Redação Nota 10 00 and Me rit t ceased to exist as separate legal entities.

The diagram below depicts our organizational structure as of the date of this annual report:

(1) Other shareholders wh ose shares are in the free float (including shares in treasury).

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For more details about our organizational structure please see “Presentation of Financial and Other Information—Organizational Structure” and refer to note 1.2 – Corporate restructuring and business combinations, note 5 – Business Combinations and note 29 – Subsequent events, to our audited consolidated financial statements.

D. Property, Plant and Equipment

Intellectual Property

In order to maintain our intellectual property rights, including our rights in connection with our products and services, we rely on confidentiality agreements with employees and third parties and other types of statutory arrangements, in addition to a combination of laws, copyrights and software. In addition, we license technology from third parties and have licenses for all the software utilized in our activities.

We are party to approximately 3,000 agreements with third party authors with respect to educational content. We own approximately 525 trademark registrations, including the trademarks and logos of “Somos Educação”, “Editora Atica”, “Editora Scipione”, “Atual Editora”, “Sistema Anglo de Ensino”, “P AR Plataforma Educacional”, “Sistema Maxi de Ensino”, “English Stars”, “Rede Cristã de Educação” and “MindMakers”, among others. We also have approximately 30 pending trademark applications in Brazil and three in the United States for trademarks “Vasta”, “Vasta Educação” and “Somos Educação”, and unregistered trademarks that we use to promote our brands. We also have the right to use trademark registrations for “Pitágoras” (owned by a subsidiary of Cogna), and “Saraiva” (owned by Saraiva Gestão de Marcas S.A., a company jointly owned by Cogna and third parties who are not controlled by us nor Cogna). As of the date of this annual report, we owned approximately 130 registered domain names in Brazil

Our main trademarks already registered or in the process of registration in our name include the following: trademarks and logos of “Vasta”, “Somos Educação”, “Somos Science in Learning”, “Ético”, “Editora Atica”, “Sistema Maxi de Ensino”, “Plurall”, “Livro Fácil”, “Sistema pH de Ensino”, “Editora Scipione”, “Sistema Anglo de Ensino”, “PROFS”, “PAR Plataforma Educacional”, “Biblioteca PAR”, “Editora Atual”, “English Stars”, “Rede Cristã de Educação” and “MindMakers”, among others.

Properties

We occupy 14 properties for our operations. Our registered office and our central administrative unit (corporate office) is at Av. Paulista, 901, 5th Floor, Bela Vista, São Paulo – SP, CEP 01310-100, Brazil.

Most of our units are located in properties leased from third parties, for which we have long-term lease agreements with fixed monthly rental rates. In a few instances, rental rates are tied to a percentage of revenue with a pre-established minimum value. For the year ended December 31, 202 2, 202 1 and 20 20, we incurred expenses of R$18.3 million, R$17.8 million and R$14.3 million, respectively, on the rental of property and condominium charges. It is our belief that our current facilities are appropriate for our needs and that we will be able to renew our lease agreements and obtain additional space, if necessary, on commercially reasonable terms to meet future needs.

We have equity stakes in nine companies: Somos Sistemas, Colégio Anglo São Paulo, Livro Fácil, A&R Comércio e Serviços de Informática Ltda. (Pluri Educacional), Sociedade Educacional da Lagoa Ltda. (SEL), EMME – Produções de Materiais em Multimídia (EMME), Editora de Gouges, Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. and MVP Consultoria e Sistemas Ltda.

Additionally, our subsidiary Somos Sistemas has entered into commercial lease agreements with certain subsidiaries of Cogna. For more information, see “Item 7. Major Shareholders a nd Related Party Transactions—B. Related party transactions—Lease and Sublease Agreements”.

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ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations should be read in conjunction with our audited c onsolidated f inancial s tatements and the notes thereto. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in “Forward-Looking Statements” and “Item 3. Key Information—D. Risk F actors”.

1. Operating R esults

Key Business Metrics

We review the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. The key metrics presented below correspond, as applicable for comparison, to our results for the year ended December 31, 2022, 202 1 and 2020.

Enrolled Students

The number of enrolled students is the primary operational metric our management reviews. It represents the total number of students at our partner schools served by our platform during a given school year. Although our primary customers are the partner schools we attract to our customer base, our revenues are determined by the number of enrolled students that access our content in these partner schools.

We typically have significant visibility of the number of students we will serve by the end of November, before the next school year starts. However, since we allow our partner schools to make small adjustments to their estimates to account for late admissions and dropouts, this number may fluctuate slightly through May, though it typically does not change from June to September.

The following tables set forth the number of enrolled students at our partner schools as of the dates indicated.

|  | As of December 31, |
Number of enrolled students |  | 2022 |  |  | 2021 |  |  | 2020 |
|  | (in thousands) |
Total Vasta |  | 1,589 |  |  | 1,335 |  |  | 1,311 |
Core content |  | 1,589 |  |  | 1,335 |  |  | 1,311 |
Complementary education solutions |  | 400 |  |  | 308 |  |  | 213 |

ACV Bookings

This annual report presents our ACV Bookings for the convenience of investors. This operating metric is not prepared in accordance with IFRS. ACV Bookings is a non‑accounting managerial metric and represents our partner schools’ commitment to pay for our offerings. We believe it is a meaningful indicator of demand for our platform. In particular, we believe ACV Bookings is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the twelve-month period from October 1 of one fiscal year through September 30 of the following fiscal year. We generally deliver our educational materials to schools in the last calendar quarter of each year, so that schools can prepare their classes in advance prior to the beginning of the school year in January. Consequently, as we recognize revenue when the customers obtain control over the materials, our results of operations for the last quarter of a given fiscal year contain revenues related to the content that will be used by schools on the following school year and that was delivered prior to the beginning of the new fiscal year. Therefore, ACV Bookings convey information that has predictive value for subsequent months, and which may not be as clearly conveyed or understood by simply analyzing our statement of profit or loss, especially in our current scenario of high growth.

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We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or “enrolled students”, that will access our content at such partner school in such school year. We calculate ACV Bookings by multiplying the number of enrolled students at each school by the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with each school. Although our contracts with our schools are typically for a four‑year term, we record only one year of revenue when calculating ACV Bookings and disregard the other three years of revenue for the purposes of the calculation of ACV Bookings. For example, if a school enters into a four‑year contract to provide one of our Content & EdTech Platform solutions (such as learning systems or PAR) to 100 students for a contractual fee of US$100 per student per year, we record US$10,000 as ACV Bookings, and not the total contract value of US$40,000.

On March 23, 2023, we announced (through a press release furnished on Form 6-K) the result of ACV Bookings for the 2023 sales cycle (from October 2022 to September 2023), which reached R$1.2 billion based on contracted amounts as of such date. This volume represents growth of 20% over the revenue from subscription arrangements registered in the 2022 sales cycle. The number of enrolled students for deriving results of ACV Bookings for the 2023 sales cycle is 1,557 thousand.

On February 10, 2022, we announced (through a press release furnished on Form 6-K) the result of ACV Bookings for the 2022 sales cycle (from October 2021 to September 2022), which reached R$1.0 billion based on contracted amounts as of such date. This volume represents growth of 35% over the revenue from subscription arrangements registered in the 2021 sales cycle. The number of enrolled students for deriving results of ACV Bookings for the 2022 sales cycle is 1,540 thousand. On March 31, 2021, we announced (through a press release furnished on Form 6-K) the result of ACV Bookings for the 2021 sales cycle (from October 2020 to September 2021), which reached R$853 million based on contracted amounts as of such date. This volume represents growth of 23% over the amount registered in the 2020 sales cycle. The number of enrolled students deriving results of ACV Bookings for the 2021 sales cycle is 1,500 thousand. On September 30, 2021, we reached R$740.7 million in ACV B ookings for the 2021 sales cycle, a 7% increase compared to the 2020 sales cycle. The number of enrolled students and average ticket per student per year for deriving results of ACV Bookings for the 2021 sales cycle were 1,335 thousand and R$554.80, respectively. Both the ACV Bookings and the average ticket are calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period.

The ACV Bookings is calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during the period between October 2022 and September 2023 may be different from the ACV Bookings for the 2023 sales cycle. The COVID-19 pandemic had an adverse effect on our ACV Bookings for the 2020 and 2021 sales cycles (from October 2019 to September 2020 and from October 2020 to September 2021, respectively), but the actual revenue derived from solutions we characterize as subscription arrangements, recognized in the year 2022, and that we expect to be recognized in the year 2023, have not and will not be adversely affected by effects such as declining enrollment at our partner schools as observed during the pandemic period, particularly in respect of childhood education. See “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—Our operations and results may be negatively impacted by health crises, epidemics or pandemics” and “—D. Trend Information”.

| As of and For Year Ended December 31, |
--- | --- | ---
| 2022(1) |  |  | 202 2(2) |  |  | 2021(3) |  |  | 2020(4) |
| US$ (1) |  |  | R$ (except number of partner schools and enrolled students) |
Number of partner schools | n/a |  |  | 5,351 |  |  | 4,508 |  |  | 4,167 |
Number of enrolled students (in thousands) | n/a |  |  | 1,589 |  |  | 1,335 |  |  | 1,311 |
Core content | n/a |  |  | 1,589 |  |  | 1,335 |  |  | 1,311 |
Complementary education solutions | n/a |  |  | 400 |  |  | 308 |  |  | 213 |
Average ticket per student per year | US$124 |  |  | R$644.4 |  |  | R$602.0 |  |  | R$546.1 |
ACV Bookings (in millions)(5) | US$192 |  |  | R$1,000 |  |  | R$853 |  |  | R$716 |

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(1) | For convenience purposes only, amounts in reais as of December 31, 202 2 have been translated to U.S. dollars u sing an exchange rate of R$5.218 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 202 2 as reported by the Brazilian Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates.
(2) | For the 2022 school year (which we define for purposes of ACV Bookings as the period starting on October 1, 2021 and ending on September 30, 2022).
(3) | For the 2021 school year (which we define for purposes of ACV Bookings as the period starting on October 1, 2020 and ending on September 30, 2021).
(4) | For the 2020 school year (which we define for purposes of ACV Bookings as the period starting on October 1, 2019 and ending on September 30, 2020).
(5) | We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or “enrolled students”, that will access our content at such partner school in such school year. ACV Bookings is a non‑accounting managerial operating metric and is not prepared in accordance with IFRS. For more information about ACV Bookings, see “Presentation of Financial and Other Information—Special Note Regarding ACV Bookings”.

Share of Revenue of the Solutions we Characterize as Subscription Arrangements as a Percentage of Total Net Revenue From Sales and Services

We measure the share of revenue of the solutions we characterize as subscription arrangements as a percentage of our total net revenue from sales and services by adding the combined revenue derived from learning systems or PAR Platform (contained in our core content segment and which are reflected in our breakdown of net revenue from sales and services as sales of textbooks) and complementary solutions (contained in our complementary education solutions segment) and dividing such combined amount by the total net revenue from sales and services in a specific year. We believe that higher share of revenue of the solutions we characterize as subscription arrangements as a percentage of our total net revenue from sales and services reflects the loyalty of our partner schools to our platform, as these solutions are based on long-term contracts with higher lifetime value and retention rate. We are constantly monitoring and improving our percentage of total revenue from solutions we characterize as subscription arrangements in order to enhance our relationship with partner schools and improve the predictability of our revenue.

The following table sets forth the share of revenue of the solutions we characterize as subscription arrangements as a percentage of our total net revenue from sales and services for the periods presented.

| For Year Ended December 31,
--- | ---
| 2022 |  |  | 2021 |  |  | 2020
Share of revenue of the solutions we characterize as subscription arrangements as a percentage of our total net reven ue from sales and services (1) | 88.7% |  |  | 84.8% |  |  | 76.2%

(1) | Calculated by dividing the total net revenue from sales and services from solutions we characterize as subscription arrangements (such as learning systems, PAR Platform and complementary solutions) to the net revenue from sales and services in a specific year.

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Revenue Retention Rate for the Solutions We Characterize as Subscription Arrangements

We measure our revenue retention rate for the solutions we characterize as subscription arrangements based on the net revenue (which includes revenues from PAR, which are included in our breakdown of net revenues from sales and services as sales of textbooks) from sales and services generated by the partner schools that remained in our base in a specific year compared to the net revenue from sales and services generated by the total partner schools in our base in the previous year. In other words, the retention rate considers the revenue from schools that remained with us from one year to another, excluding the revenue from those schools that did not renew or cancelled their partnership with us. As a result, in 2022, we report below the revenue retention rate based on the partner schools that remained in our customer base from 2 02 1 to 20 2 2. For comparison purposes, we do not consider any growth in enrolled students in our partner schools, price increases, cross-sell or upsell opportunities. We believe this is an important indicator of the favorable relationships we have with our clients, which we believe translates into stable, recurring revenue streams.

The following table sets forth our revenue retention rate for the solutions we characterize as subscription arrangements for the periods presented.

| For Year Ended December 31, |
--- | --- | ---
| 2 022 |  |  | 2021 |  |  | 2020 |
Revenue retention rate(1) | 90.7% |  |  | 92.1% |  |  | 92.2% |

(1) Calculated by comparing the difference between the net revenue from sales and services generated by our existing partner schools in a specific year and that generated on the previous year. For comparison purposes, we do not take into account any growth in enrolled students in our partner schools, price increases, cross-sell or upsell opportunities.

Reconciliations for Non‑GAAP Financial Measures

The following tables set forth reconciliations of Adjusted EBITDA, the Loss for year, to the Adjusted Net (Loss) Profit, Free Cash Flow and Adjusted Cash Conversion Ratio for the years ended December 31, 202 2, 202 1 and 20 20. For further information on why our management chooses to use these non-GAAP financial measures, and on the limits of using these non-GAAP financial measures, please see “Presentation of Financial and Other Information—Special Note Regarding Non-GAAP Financial Measures— Adjusted EBITDA, Adjusted Net (Loss) Profit, Free Cash Flow and Adjusted Cash Conversion Ratio”.

Reconciliation of Our Loss for the Year to Adjusted EBITDA

| For the Year Ended December 31, |
--- | --- | ---
| 2022 |  |  | 2022 |  |  | 2021 |  |  | 2020 |
| US$ millions(1) |  |  | R$ millions |
Loss for the year | (10.5 | ) |  | (54.6 | ) |  | (118.8 | ) |  | (45.6 | )
(+) Income tax and social contribution | (9.8 | ) |  | (51.1 | ) |  | (37.1 | ) |  | (25.4 | )
(+/-) Net finance result | 34.8 |  |  | 181.8 |  |  | 84.6 |  |  | 98.4 |
(+) Depreciation and amortization | 51.5 |  |  | 268.7 |  |  | 211.2 |  |  | 174.1 |
(+) Layoffs related to internal restructuring (2) | 0.6 |  |  | 3.3 |  |  | 15.7 |  |  | - |
(+) Share-based compensation plan (3) | 5.2 |  |  | 27.4 |  |  | 26.7 |  |  | 13.3 |
(+) IPO Bonus (4) | - |  |  | - |  |  | - |  |  | 50.6 |
Adjusted EBITDA | 71.9 |  |  | 375.5 |  |  | 182.3 |  |  | 265.4 |

(1) | For convenience purposes only, amounts in reais for the year ended December 31, 2022 have been translated to U.S. dollars using an exchange rate of R$5.218 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 202 2 as reported by the Brazilian Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates.
(2) | Expenses incurred exclusively with layoffs related to internal restructuring processes leading to a permanent headcount reduction.
(3) | Share-based compensation expenses incurred in the years ended December 31, 202 2, 202 1 and 20 20.
(4) | Refers to restricted share units’ expenses to be paid to certain employees and executives based on IPO performance (Bonus IPO).

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Reconciliation of Our Loss for the Year to the Adjusted Net (Loss) Profit

| For the Year Ended December 31, |
--- | --- | ---
| 2022 |  |  | 2022 |  |  | 2021 |  |  | 2020 |
| US$ million s(1) |  |  | R$ millions |
Loss for the year | (10.5 | ) |  | (54,6 | ) |  | (118.8 | ) |  | (45.6 | )
(+) Layoff related to internal restructuring (2) | 0.6 |  |  | 3.3 |  |  | 15.7 |  |  | - |
(+) Share-based compensation plan(3) | 5.2 |  |  | 27.4 |  |  | 6.7 |  |  | 13.4 |
(+) IPO Bonus (4) | - |  |  | - |  |  | - |  |  | 50.6 |
(+) Amortization of intangible assets from acquisitions (5) | 29.8 |  |  | 155.5 |  |  | 122.5 |  |  | 113.0 |
(-) Income tax contingencies reversal (6) | (5.7 | ) |  | (29.7 | ) |  | - |  |  | - |
(-) Tax effects (7) | (12.1 | ) |  | (63.3 | ) |  | (56.1 | ) |  | (60.2 | )
Adjusted Net (Loss) Profit | 7.4 |  |  | 38.6 |  |  | (9.9 | ) |  | 71.1 |

(1) | For convenience purposes only, amounts in reais for the year ended December 31, 2022 have been translated to U.S. dollars u sing an exchange rate of R$5.218 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 202 2 as reported by the Brazilian Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates.
(2) | Expenses incurred exclusively with layoffs related to internal restructuring processes leading to a permanent headcount reduction.
(3) | Share-based compensation expenses incurred in the years.
(4) | Refers to restricted share units’ expenses to be paid to certain employees and executives based on IPO performance (Bonus IPO).
(5) | Amortization of customer portfolio and trademarks that were added to our intangible assets following business combinations.
(6) | Reversal of tax contingencies incurred prior to the acquisition of Somos-Anglo, impacting corporate tax and finance results.
(7) | Tax impact (34%) generated by the aforementioned adjustments.

Reconciliation of Free Cash Flow to Net Cash Flows from (applied in) Operating Activities for the Year

| For the Year Ended December 31, |
--- | --- | ---
| 2022 |  |  | 2022 |  |  | 202 1 |  |  | 2020 |
| US$ millions(1) |  |  | R$ millions |
Net cash flows from (applied in) operating activities | 33.1 |  |  | 172.9 |  |  | (21.6 | ) |  | 215.5 |
(-) Acquisition of property and equipment | (11.7 | ) |  | (61.1 | ) |  | (20.9 | ) |  | (1.6 | )
(-) Addition of intangible assets | (17.0 | ) |  | (88.7 | ) |  | (55.9 | ) |  | (42.8 | )
(-) Lease liabilities paid | (5.2 | ) |  | (27.0 | ) |  | (22.0 | ) |  | (12.8 | )
Free Cash Flow | (0.8 | ) |  | (3.9 | ) |  | (120.4 | ) |  | (158.2 | )

(1) | For convenience purposes only, amounts in reais for the year ended December 31, 2022 have been translated to U.S. dollars using an exchange rate of R$5.218 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2022 as reported by the Brazilian Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates.

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Calculation of Adjusted Cash Conversion Ratio for the Year

| For Year Ended December 31, |
| 2022 |  |  | 2021 |  |  | 2020 |
| R$ millions |
Free Cash Flow | (3.8 | ) |  | (120.4 | ) |  | 158.2 |
( / ) Adjusted EBITDA | 375.5 |  |  | 182.3 |  |  | 265.4 |
Adjusted Cash Conversion Ratio | (1.0 | )% |  | (66.0 | )% |  | 59.5 | %

Factors Affecting Our Results of Operations

We believe that our results of operations and financial performance are and will continue to be driven by the following trends and factors, including those described under “—D. Trend Information”.

Brazilian Macroeconomic Environment

All of our operations are located in Brazil. As a result, our revenues and profitability are affected by political, regulatory, legal and economic developments in Brazil and the effect that these factors have on the availability of credit, disposable income, employment rates and average wages in Brazil. Our operations, and the industry in general, may be affected by changes in economic conditions.

Brazil is the largest economy in Latin America, as measured by gross domestic product, or GDP. The following table shows data for real GDP, inflation and interest rates in Brazil and the U.S. dollar/real exchange rate at the dates and for the periods indicated.

| For the Year Ended December 31, |
--- | --- | ---
| 2022 |  |  | 2021 |  |  | 2020 |
Real growth (contraction) in gross domestic product | 2.9% |  |  | 4.6% |  |  | (4.1)% |
Inflation (IGP-M)(1) | 5.5% |  |  | 17.8% |  |  | 23.1% |
Inflation (IPCA)(2) | 5.8% |  |  | 10.1% |  |  | 4.5% |
Long-term interest rates—TJLP (average)(3) | 6.8% |  |  | 4.8% |  |  | 4.5% |
CDI interest rate(4) | 12.4% |  |  | 4.5% |  |  | 2.7% |
Period-end exchange rate—reais per US$1.00 | R$ 5.218 |  |  | R$ 5.581 |  |  | R$ 5.197 |
Average exchange rate—reais per US$1.00(5) | R$ 5.165 |  |  | R$ 5.396 |  |  | R$ 5.284 |
Appreciation (depreciation) of the real vs. US$ in the period(6) | 6.5% |  |  | 7.4% |  |  | (22.6)% |
Unemployment rate(7) | 7.9% |  |  | 11.1% |  |  | 13.5% |

Source: FGV, IBGE, Central Bank and B3.

(1) Inflation (IGP-M) is the general market price index measured by the FGV.

(2) Inflation (IPCA) is a broad consumer price index measured by the IBGE.

(3) TJLP is the Brazilian long-term interest rate (average of monthly rates for the period).

(4) The CDI (certificado de depósito interbancário) interest rate is an average of interbank overnight rates in Brazil, average during the corresponding period.

(5) Average of the exchange rate on each business day of the year.

(6) Comparing the US$ closing selling exchange rate as reported by the Central Bank at the end of the period’s last day with the day immediately prior to the first day of the period discussed.

(7) Average unemployment rate for year as measured by the IBGE.

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In 2022, inflationary pressures escalated in Brazil, including as a result of the ongoing war between Ukraine and Russia, supply chain issues, the continued COVID-19 pandemic (particularly in China) and increases in energy prices. The significant increase in the cost of living led the Brazilian government to introduce tax cuts on selected items, which helped ease pressures in Brazil and led the IPCA for the year ended December 31, 2022 to end at 5.8%, a lower level than 2021, although still significantly higher than the 3.5% targeted level for 2022, as set by the Brazilian Central Bank pursuant to the applicable law. Inflation directly affects our current operating costs and expenses, adjusted by reference to indexes that reflect the inflation rate such as the IGP-M or IPCA, primarily due to annual adjustments to salaries, which are generally linked to inflation and account for a significant part of our total costs. See “Item 3. Key Information—D. Risk Factors—We could be adversely affected if we are unable to renegotiate collective labor agreements with the unions representing our staff, or by strikes or other union action. In addition, we may be adversely affected by negotiations made by the unions that represent our employees if such negotiations are not in line with our business plan and financial condition and we may not be able to pass on our cost increases by means of adjusting the contractual rates we charge our customers, which may affect our operating results”.

Our financial performance is also marginally tied to fluctuations in interest rates, such as the CDI rate, because such fluctuations affect the value of our financial investments.

Exchange Rates

The Brazilian foreign exchange system allows the purchase and sale of foreign currency and the international transfer of reais by any person or legal entity, regardless of the amount, subject to certain regulatory procedures.

The real depreciated against the U.S. dollar from mid-2011 to early 2016. In particular, during 2015, due to the poor economic conditions in Brazil, including as a result of political instability, the real depreciated at a rate that was much higher than in previous years. Overall, in 2015, the real depreciated 47.0%, reaching R$3.9048 per US$1.00 on December 31, 2015. In 2016, the real fluctuated significantly, primarily as a result of Brazil’s political instability, appreciating 16.5% to R$3.2591 per US$1.00 on December 31, 2016. In 2017, the real depreciated 1.5% against the U.S. dollar, ending the year at an exchange rate of R$3.308 per US$1.00. The real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$3.8748 per US$1.00 on December 31, 2018, which reflected a 17.1% depreciation in the real against the U.S. dollar during 2018, primarily as a result of lower interest rates in Brazil, which reduced the volume of foreign currency deposited in Brazil in the “carry trade”, as well as uncertainty regarding the results of the Brazilian presidential elections held in October 2018. On December 31, 2019 and 2020, the period-end real/U.S. dollar exchange rate was R$4.031 and R$5.197, respectively, per US$1.00, which represented depreciation of 4.0% and 28.9%, respectively, during the corresponding years. On December 31, 2021, the period-end real/U.S. dollar exchange rate was $5.581, which represented a depreciation of 7.4% during 2021. There can be no assurance that the real will not depreciate or appreciate further against the U.S. dollar. On December 31, 2022, the period-end real/U.S. dollar exchange rate was $5.218, which represented an appreciation of 6.5% during 2021. There can be no assurance that the real will not depreciate or appreciate further against the U.S. dollar.

The Brazilian Central Bank has intervened occasionally in the foreign exchange market to attempt to control instability in foreign exchange rates. We cannot predict whether the Brazilian Central Bank or the Brazilian government will continue to allow the real to float freely or will intervene in the exchange rate market by re-implementing a currency band system or otherwise. The real may depreciate or appreciate substantially against the U.S. dollar in the future. Furthermore, Brazilian law provides that, whenever there is a serious imbalance in Brazil’s balance of payments or there are serious reasons to foresee a serious imbalance, temporary restrictions may be imposed on remittances of foreign capital abroad. We cannot assure you that the Brazilian government will not place restrictions on remittances of foreign capital abroad in the future.

The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rates for the purchase of U.S. dollars expressed in Brazilian reais per U.S. dollar. The average rate is calculated by using the average of reported exchange rates by the Brazilian Central Bank on each day during a monthly period and on the last day of each month during an annual period. As of April 20, 202 3, the exchange rate for the selling real/dollar exchange rate was R$5.0494.91 to US$1.00, as reported by the Brazilian Central Bank. The real/dollar exchange rate fluctuates and, therefore, the selling rate at April 20, 202 3 may not be indicative of future exchange rates.

Year |  | Period-End |  |  | Average(1) |  |  | Low |  |  | High |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
2019 |  | 4.031 |  |  | 3.946 |  |  | 3.652 |  |  | 4.260 |
2020 |  | 5.197 |  |  | 5.158 |  |  | 4.021 |  |  | 5.937 |
2021 |  | 5.581 |  |  | 5.396 |  |  | 4.921 |  |  | 5.840 |
2022 |  | 5.218 |  |  | 5.165 |  |  | 4.618 |  |  | 5.704 |

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Month |  | Period-End |  |  | Average(2) |  |  | Low |  |  | High |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
October 2022 |  | 5.257 |  |  | 5.250 |  |  | 5.141 |  |  | 5.345 |
November 2022 |  | 5.294 |  |  | 5.275 |  |  | 5.036 |  |  | 5.466 |
December 2022 |  | 5.218 |  |  | 5.242 |  |  | 5.145 |  |  | 5.341 |
January 2023 |  | 5.099 |  |  | 5.201 |  |  | 5.077 |  |  | 5.446 |
February 2023 |  | 5.208 |  |  | 5.172 |  |  | 4.990 |  |  | 5.253 |
March 2023 |  | 5.080 |  |  | 5.211 |  |  | 5.080 |  |  | 5.298 |
April 2023 (through April 20, 2023) |  | 5.049 |  |  | 5.012 |  |  | 4.909 |  |  | 5.083 |

Source: Brazilian Central Bank.

(1) Represents the average of the exchange rates on the closing of each business day during the year.

(2) Represents the average of the exchange rates on the closing of each business day during the month.

Business Segments

Beginning with the acquisition of Livro Fácil on December 31, 2017, we report our results of operations under two segments: (1) our Content & EdTech Platform, which derives its results from core and complementary educational content solutions through digital and printed content, including textbooks, learning systems and other complimentary educational services; and (2) our Digital Platform Services, which aims to unify the school administrative ecosystem, enabling private schools to aggregate multiple learning strategies and help them to focus on education, by using our physical and the Livro Fácil digital e-commerce platform and other digital services.

In 2022, total net revenue from sales and services from our Content & EdTech Platform and our Digital Platform Services accounted for 91.3% and 8.7%, respectively, of our net revenue from sales and services, compared to 89.8% and 10.2%, respectively, of our net revenue from sales and services in 2021, and 91.1% and 8.9%, respectively, of total net revenue from sales and services in 2020.

Components of Our Results of Operations

The following is a summary of the principal line items comprising our statement of profit or loss.

Net Revenue from Sales and Services

In our Content & EdTech Platform segment, our revenues are generated through the sale of textbooks (“publishing”, when sold on a stand-alone basis, or PAR, when bundled as an educational platform), learning systems and complementary education solutions in printed and digital formats mainly through term contracts with a minimum term of one year (characterized by us as subscription arrangements), as well as tuition from our preparatory course for university admission exams. Although the minimum contract term is one year, it is common to maintain these contracts for several years through long-term partnerships with our partner schools. In our Digital Platform Services, we derive revenue from the sale of products directly to students and parents through our Livro Fácil e-commerce platform, acquired in 2017. Since we obtain control of the goods sold before they are transferred to our customers, the revenue is recognized in the amount of consideration to which we expect to be entitled in exchange for the specified goods transferred. Pursuant to the terms of the contracts with some customers, they are required to provide the Company with an estimate of the number of students that will access the content in the next school year (which typically starts in February of the following year), allowing the Company to start the delivery of its products. Since the contracts allow product returns (generally for a period of four months from the delivery date) up to a certain limit, the Company recognizes revenue for the amount that is expected to be received based on past experience, assuming that the other conditions fo r revenue recognition are met. Therefore, the amount of revenue recognized is adjusted for expected returns, which are estimated based on historical data on a portfolio basis.

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Our revenues are subject to seasonality due to the nature of our operations in relation to the academic calendar. Our main deliveries – for which the revenue is recognized when the customers obtain control over the materials – are distributed to our customers in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March). In addition, our deliveries in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenues in general in our fourth quarter compared with the preceding quarters in each year. Consequently, when considered in the aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year.

Cost of goods sold and services

Cost of goods sold, and services relates mainly to the costs associated with publishing and printing the educational materials sold to our partner schools. These costs are mainly composed of the cost of paper used as raw material for the production of such materials, printing costs, employee-related costs and copyright fees paid for the use of educational content produced by third-party authors.

General and Administrative Expenses

Operating expenses are divided into three major categories as follows:

- general and administrative expenses, which mainly include expenses related to administrative personnel, warehouse infrastructure, technology;
- commercial expenses, which mainly include expenses related to sales and marketing; and
- impairment losses on trade receivables, which we estimate using a provision matrix on a monthly basis. This matrix is prepared by analyzing the receivables established each month (in the 12-month period) and the related composition per default range and by calculating the performance of recoveries. In this methodology, for each default range an estimated loss likelihood percentage is established, which considers current and prospective information on macroeconomic factors that affect the customers’ ability to settle the amounts owned to us, except when our client is on bankruptcy. In this case, we do not expect to recover any receivables in the future, therefore, the asset is offset.

A significant part of our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, in order to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.

Finance Result

Our finance result includes finance income and finance costs.

Our finance income includes mainly interest earned on our balances of cash and cash equivalents, which accrue interest at rates of approximately 10 3% of CDI, on which we pay PIS/COFINS taxes of 4.65%. Finance costs are comprised mainly of interest expense on bonds and financing, interest on obligations with suppliers and interest on provisions for risk of tax, civil and labor losses.

Income Tax and Social Contribution

Income tax and social contribution are composed mainly of current and corporate income tax (imposto sobre renda de pessoa jurídica, or IRPJ) and social contribution on net income (contribuição social sobre lucro líquido, or CSLL), calculated based on pre-tax profit and following the nominal statutory rates of 25% and 9%, respectively, adjusted by non-taxable/non-deductible items provided for by law.

Deferred income tax and social contribution are calculated on income tax and social contribution losses and other temporary differences in relation to the balances of assets and liabilities in the financial statements. Deferred tax assets or liabilities are calculated on tax loss carryforwards and other temporary differences, mainly related to provisions for bonuses, provision s for losses with obsolete inventories, impairment losses on trade receivables and trademarks and contractual portfolio amortization.

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Loss for the Year

We have been operating at a net loss over the last three years, primarily due to higher financial costs, as explained in the “—Results of Operations” section. We use d part of the proceeds from our initial public offering to repay a portion of our outstanding indebtedness, which help ed us deleverage and consequently result in an improve ment in our net margin. Additionally, following the Somos acquisition, we implemented several strategic initiatives to improve our results, which are reflected in the 2 0% increase in our ACV Bookings for the year 202 3. Our strategic initiatives include (1) a new go-to-market approach, leveraged by the restructuring of our commercial team, a higher number of commercial consultants, a new incentive plan which has aligned sales performance in terms of profitability with the Sales department’s compensation, and the creation of a product expert role; (2) the launch of new collections, increased investments in educational content and the establishment of Plurall, our online platform; and (3) streamlining and reducing administrative costs and overheads. However, there can be no assurance that such strategic initiatives will be successful and that we will not record a loss in the near future.

Results of Operations

Comparison between Our results of Operations for the Year Ended December 31, 2022 and O ur results of Operations for the Year Ended December 31, 2021

| For the Year Ended December 31, |
--- | --- | ---
| 2022 |  |  | 2021 |
| R$ millions |
Statement of profit or loss: |  |  |  |  |
Net revenue from sales and services | 1,264.3 |  |  | 947.4 |
Net revenue from sales | 1,229.8 |  |  | 914.3 |
Net revenue from services | 34.4 |  |  | 33.1 |
Cost of goods sold and services | (473.1 | ) |  | (396.8 | )
Gross profit | 791.1 |  |  | 550.6 |
General and administrative expenses(1) | (711.6 | ) |  | (627.4 | )
Share of loss equity-accounted investees | (4.5 | ) |  |  |
Other operating income | 1.0 |  |  | 5.5 |
(Loss) Profit before finance result and taxes | 76.0 |  |  | (71.3 | )
Finance income | 88.6 |  |  | 35.6 |
Finance costs | (270.3 | ) |  | (120.2 | )
Finance result | (181.7 | ) |  | (84.5 | )
Loss before income tax and social contribution | (105.7 | ) |  | (155.8 | )
Income tax and social contribution | 51.1 |  |  | 37.1 |
Loss for the year | (54.6 | ) |  | (118.7 | )

(1) Contains the sum of general and administrative expenses, commercial expenses and impairment losses on trade receivables.

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Net revenue from sales and services

Net revenue from sales and services for the year ended December 31, 2022 amounted to R$1,264.3 million, an increase of R$316.9 million, or 33%, compared to net revenue from sales and services of R$947.4 million for the year ended December 31, 2021, primarily due to (i) a 36%, or R$304 million, increase in Content & Edtech Platform in net revenue from subscription products, mainly driven by the volume increase in K-12 learning systems, complementary solutions, and textbook subscription products, and (ii) a 13%, or R$12.2 million, increase in Digital Service in the net revenue in the sale of products for Business to Consumer (“B2C”), due to the return of students to classes following the containment of the spread of COVID-19.

Cost of goods sold and services

Cost of goods sold and services for the year ended December 31, 2022 amounted to R$473.1 million, an increase of R$76.3 million, or 19%, in relation to costs of goods sold and services of R$396.8 million for the year ended December 31, 2021.

In Content & Edtech Platform, the increase is mainly due to higher volume of products sold in 2022 compared to 2021. As a percentage of net revenue, our cost of goods sold for Content & Edtech Platform amounted to 32% for the year ended December 31, 2022, compared to 39% for the year ended December 31, 2021. The increase in cost of goods sold was lower than the increase in net revenue from sales and services due to higher growth in our premium brands such as Anglo, Eleva and Makenzie subject to higher gross margin.

In Digital Service, the increase is also attributed to higher sales volume in 2022 compared to 2021. As a percentage of net revenue, our cost of goods sold for Digital Service amounted to 90% in the year ended December 31, 2022, compared to 72% for the year ended December 31, 2021. The increase is mainly attributed to an increase in provision s for losses with obsolete inventories.

As a percentage of net revenue from sales and services, our cost of goods sold and services amounted to 37% for the year ended December 31, 2022, compared to 42% for the year ended December 31, 2021.

Gross profit

For the reasons described above, gross profit for the year ended December 31, 2022 amounted to R$791.1 million, a n increase of R$240.5 million, or 44%, from gross profit of R$550.6 million for the year ended December 31, 2021.

General and administrative expenses, commercial expenses and impairment losses on trade receivables

General and administrative expenses, commercial expenses and impairment losses on trade receivables for the year ended December 31, 2022 amounted to R$7 11.6 million, an increase of R$8 4.2 million, or 1 3%, from general and administrative expenses, commercial expenses and impairment losses on trade receivables of R$627.4 million for the year ended December 31, 2021.

In Content & Edtech Platform, the general and administrative expenses were R$445.3 million in the year ended December 31, 2022, an increase of R$31.6 million, or 8%, compared to the general and administrative expenses of R$413.7 million for the year ended December 31, 2021, mainly driven by increasing inflation in the period. The commercial expenses amounted to R$183.1 million in the year ended December 31, 2022, an increase of R$35.4 million, or 24%, compared to the commercial expenses of R$147.7 million for the year ended December 31, 2021. This increase resulted from the suspension of restrictive measures taken during the COVID-19 pandemic, which resulted in an increase in business travel and participation in industry events. Impairment losses on trade receivables amounted to R$45.8 million, an increase of R$13.2 million, or 40%, compared to the impairment losses on trade receivables of R$32.7 million for the year ended December 31, 2021, motivated by the provisioning of 100% of accounts receivable from a large retail company undergoing judicial recovery in the amount of R$15.0 million.

In Digital Service, the general and administrative expenses amounted to R$26.3 million, an increase of R$9.8 million, or 59%, compared to the general and administrative expenses of R$16.5 million for the year ended December 31, 2021 due to higher expenses with consulting and advisory services. The commercial expenses were R$10.9 million, resulting in a decrease of R$5.8 million, or 35%, compared to the commercial expenses of R$16.7 million for the year ended December 31, 2021 due to increased efforts in advertising and publicity expenses occurred in 2021. The impairment losses on trade receivables amounted to R$0.1 million, a decrease of R$0.3 million, or 75%, compared to the impairment losses on trade receivables of R$0.4 million for the year ended December 31, 2021.

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Share of (loss) profit of equity-accounted investees

On July 19, 2022, we acquired a 45% minority shareholding of Educbank Gestão de Pagamentos Educacionais S.A., or Educbank, which registered a decrease in the amount of R$4.5 million invested in the year ended December 31, 2022 attributable to the performance of our equity-accounted investee in it´s early stage of operation.

(Loss) Profit before finance result and taxes

For the reasons described above, p rofit before finance result and taxes for the year ended December 31, 2022 amounted to R$76.1 million, a n increase of R$147.4 million compared to the loss before finance result and taxes of R$71.3 million for the year ended December 31, 2021.

Finance result

Finance result for the year ended December 31, 2022 amounted to an expense of R$181.8 million, compared to an expense of R$84.5 million recognized as finance result for the year ended December 31, 2021, representing a n increase of R$97.3 million in our finance expense net result.

The finance income for the year ended December 31, 2022 amounted to R$88.6 million, an increase of R$5 3.0 million, or 148%, compared to the finance income of R$35.6 million for the year ended December 31, 2021. This increase was primarily attributable to higher interest on financial investments and marketable securities, driven mainly by higher interest rate s indexed at the CDI.

Finance expenses for the year ended December 31, 2022 amounted to R$270.3 million, an increase of R$150.2 million, or 125%, compared to the finance expense of R$120.1 million for the year ended December 31, 2021. This increase was primarily attributable to higher interest rates applicable to bonds and financing, accounts payable relating to business combinations and provisions for tax, civil and labor losses.

Loss before income tax and social contribution

For the reasons described above, loss before income tax and social contribution for the year ended December 31, 2022 amounted to R$105.7 million, a de crease of R$50.1 million compared to a loss of R$155.8 million for the year ended December 31, 2021.

Income tax and social contribution

Income tax and social contribution for the year ended December 31, 2022 amounted to a benefit in the amount of R$51.1 million, an increase of R$14.0 million compared to the benefit in the amount of R$37.1 million for the year ended December 31, 2021. This was mainly due to lower loss es before income tax and social contribution for the year of R$105.7 million the year ended December 31, 2022, compared to losses before income tax and social contribution of R$155.8 million in the year ended December 31, 2021. The variation of R$17.1 million in the income tax and social contribution, at nominal rates, was mainly offset by (i) the reversal of certain tax contingencies IRPJ and CSLL in the total amount of R$23.7 million, and (ii) the increase of R$6.3 million in impairment write-off on tax loss carryforward (R$2.3 million in the year ended December 31, 2022, compared to R$8.6 million in the year ended December 31, 2021), relating to Vasta Plataform legal entity and our subsidiary Livraria Livro Fácil Ltda.

Loss for the year

For the reasons described above, l oss for the year ended December 31, 2022 amounted to R$54.6 million, a de crease of R$64.1 million compared to the net loss of R$118.7 million for the year ended December 31, 2021.

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Comparison between Our results of Operations for the Year Ended December 31, 2021 and Our results of Operations for the Year Ended December 31, 2020

| For the Year Ended December 31, |
--- | --- | ---
| 2021 |  |  | 20 20 |
| R$ millions |
Statement of profit or loss: |  |  |  |  |
Net revenue from sales and services | 947.4 |  |  | 997.6 |
Net revenue from sales | 914.3 |  |  | 967.4 |
Net revenue from services | 33.1 |  |  | 30.3 |
Cost of goods sold and services | (396.8 | ) |  | (378.0 | )
Gross profit | 550.6 |  |  | 619.6 |
General and administrative expenses(1) | (627.4 | ) |  | (596.5 | )
Other operating income | 5.5 |  |  | 4.3 |
(Loss) Profit before finance result and taxes | (71.3 | ) |  | 27.4 |
Finance income | 35.6 |  |  | 21.0 |
Finance costs | (120.2 | ) |  | (119.4 | )
Finance result | (84.5 | ) |  | (98.4 | )
Loss before income tax and social contribution | (155.8 | ) |  | (71.1 | )
Income tax and social contribution | 37.1 |  |  | 25.4 |
Loss for the year | (118.7 | ) |  | (45.6 | )

(1) Contains the sum of general and administrative expenses, commercial expenses and impairment losses on trade receivables.

Net revenue from sales and services

Net revenue from sales and services for the year ended D ecember 31, 2021 amounted to R$947.4 million, a decrease of R$50.2 million, or 5%, compared to net revenue from sales and services of R$997.6 million for the year ended December 31, 2020, primarily due to a 7% decline in Content & Edtech Platform (R$57.7 million) in net revenue from non-subscription products due to ongoing challenges in textbook market dynamics and our strategy of migrating customers to the subscription revenue model, partly offset by a 2% increas e in Digital Service (R$7.5 million) in the net revenue of products in the sale of products for B2C, due to the return of in-person classes in private schools

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Cost of goods sold and services

Cost of goods sold and services for the year ended December 31, 2021 amounted to R$396.8 million, an increase of R$18.8 million, or 5%, in relation to costs of goods sold and services of R$378.0 million for the year ended December 31, 2020. The increase is mainly attributed to the Content & Edtech Platform due to higher production cost s added to the costs arising due to consolidation of new subsidiaries acquired which have different profit margins of Somos Sistemas, in the amount of R$5.1 million, partially offset in the Digital Service segment which had no inventory adjustments as per in the 2020 fiscal year, which brought the total profit ma rgin to a better scenario of R$6.9 million in the year 2021 compared to year 2020.

As a percentage of net revenue from sales and services, our cost of goods sold and services amounted to 42% for the year ended December 31, 2021, compared to 38% for the year ended December 31, 2020.

Gross profit

For the reasons described above, gross profit for the year ended December 31, 2021 amounted to R$550.6 million, a decrease of R$69.0 million, or 11%, from gross profit of R$619.6 million for the year ended December 31, 2020.

General and administrative expenses, Commercial expenses and Impairment losses on trade receivables

General and administrative expenses, commercial expenses and impairment losses on trade receivables for the year ended December 31, 2021 amounted to R$627.4 million, an increase of R$30.9 million, or 5%, from general and administrative expenses, commercial expenses and impairment losses on trade receivables of R$596.5 million for the year ended December 31, 2020. The increase was mainly attributable to the Content & Edtech Platform’s higher depreciation and amortization (in the amount of R$37 million) due to higher investments and development of the projects related to the Plurall platf orm and projects related to the learning system, as well as higher impairment losses on accounts receivable in the amount of R$7.7 million due to the macroeconomic environment deterioration amid the impact of COVID-19 effects, which resulted in the temporary closing of K-12 schools. These were partially offset by lower advertising and publicity expenses and consulting and advisory services.

(Loss) Profit before finance result and taxes

For the reasons described above, loss before finance result and taxes for the year ended December 31, 2021 amounted to R$71.3 million, a decrease of R$98.6 million compared to the profit before finance result and taxes of R$27.4 million for the year ended December 31, 2020.

Finance result

Finance result for the year ended December 31, 2021 amounted to an expense of R$84.5 million, compared to an expense of R$98.4 million recognized as finance result for the year ended December 31, 2020, representing a decrease of R$13.8 million in our finance result. The f inance income for the year ended December 31, 2021 amounted to R$35.6 million, an increase of R$14.6 million, or 70%, compared to the finance income of R$21.0 million for the year ended December 31, 2020. This increase was primarily attributable to interest on financial investments and marketable securities driven mainly by higher interest rate indexed at CDI (certificado de depósito interbancário).

Loss before income tax and social contribution

For the reasons described above, loss before income tax and social contribution for the year ended December 31, 2021 amounted to R$155.8 million, a decrease of R$84.8 million compared to the loss of R$71.1 million for the year ended December 31, 2020.

Income tax and social contribution

Income tax and social contribution for the year ended December 31, 2021 was a benefit of R$37.1 million, an increase of R$11.6 million compared to income tax and social contribution benefit of R$25.4 million for the year ended December 31, 2020. This was mainly due to higher loss before income tax and social contribution for the year (i.e., R$155.8 million loss in 2021 compa red to R$71.1 million loss in 2020), which generates a variance of R$28.8 million in the income tax and social contribution calculated at nominal rates. This was partially offset by permanent additions in the amount of R$7.3 million in 2021 related to commercial rewards and R$8.7 million related to impairment write-off on trade tax loss carryforward of the subsidiary Livraria Livro Fácil Ltda in 2021.

Loss for the year

For the reasons described above, l oss for the year ended D ecember 31, 2021 amounted to R$118.7 million, a n increase of R$73.1 million compared to the net loss of R$45.6 million for the year ended December 31, 2020.

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B. Liquidity and Capital Resources

Statement of Cash Flows

|  | For Year Ended December 31, |
|  | 2022 |  |  | 2022 |  |  | 2021 |  |  | 2020 |
|  | US$ millions(1) |  |  | R$millions |
Statement of Cash Flows |  |  |  |  |  |
Net cash from (applied in) operating activities |  | 33.5 |  |  | 174.8 |  |  | (21.6 | ) |  | 215.5 |
Net cash (applied in) from investing activities |  | (75.7 | ) |  | (394.9 | ) |  | 88.5 |  |  | (541.8 | )
Net cash (applied in) from financing activities |  | (8.4 | ) |  | (44.0 | ) |  | (68.1 | ) |  | 594.2 |
Net (decrease) increase in cash and cash equivalents |  | (50.6 | ) |  | (264.1 | ) |  | (1.2 | ) |  | 267.9 |

(1) | For convenience purposes only, amounts in reais for the year ended December 31, 20 22 have been translated to U.S. dollars using an exchange rate of R$5.218 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 202 2 as reported by the Brazilian Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates.

Operating Activities

For t he year ended December 31, 2022, our net cash from operating activities amounted to R$174.8 million, a n increase of R$196.4 million, compared to net cash applied in operating activities of R$21.6 million for the year ended December 31, 2021.

In 2022, our net cash flows from operating activities (i) increased R$50.1 million due to a loss before income tax and social contribution of R$105.7 million for the year ended December 31, 2022 compared to a loss before income tax and social contribution of R$155.8 million in the year ended December 31, 2021; (ii) increased R$224.2 million due to adjustments of R$583.9 million in non-cash expenses for the year ended December 31, 2022 compared to adjustments of R$359.7 million for the year ended December 31, 2021 mainly due to a R$57.6 million increase in depreciation and amortization, R$65.3 milion increase in interest on bonds and financing and R$57.6 million increase in interest on accounts payable for business combination and R$19.6 million increase in interest on suppliers, all three impacted by higher interest rate indexed at CDI (certificado de depósito interbancário); (iii) increased R$8.4 million mainly due to cash used in operating assets and liabilities of R$190.9 million for the year ended December 31, 2022 compared to cash used to cover changes in operating assets and liabilities of R$182.5 million for the year ended December 31, 2021. Higher cash used is mainly attributable to a R$163.9 million increase in trade receivables due to higher concentration and higher sales in the last quarter of 2022 in comparison to the last quarter of 2021 partially offset by a R$137.4 million increase in suppliers due to higher concentration of purchases in the last quarter of 2022 in comparison to the last quarter of 2021. (iv) increased R$73.6 million due to cash used in the payments of interest on bonds and financing, interest on business combination, interest lease liabilities paid, income tax and social contribution paid, and payment of provision for tax, civil and labor losses in the total amount of R$116.5 million for the year ended December 31, 2022 compared to cash payment of R$42.9 million for the year ended December 31, 2021. This increase was primarily attributable to higher interest rate indexed at CDI (certificado de depósito interbancário).

For the year ended December 31, 2021, our net cash flows applied in operating activities amounted to R$2 1.6 million, a decrease of R$23 7.1 million, compared to net cash flows from operating activities of R$21 5.5 million for the year ended December 31, 2020. In 2021, our net cash flows used by operating activities were affected by (i) a loss before income tax and social contribution of R$155.8 million in the period compared to R$71.0 million in 2020, representing a decrease of R$84.8 million; (ii) adjusted by R$359.7 million in non-cash expenses compared to R$313.6 million in 2020 which partially offset the impact above by the amount of R$46.1 million; (iii) cash used to cover changes in operating assets and liabilities of R$182.5 million compared to positive change in our operating assets and liabilities of R$49.9 million in 2020 and thus a decrease of R$232.5 million (mainly attributable to a decrease of R$94.2 million in liabilities from related parties in 2021 compared to an increase of R$117.3 million in liabilities from related parties in 2020 combined with a decrease of R$16.1 million in p ayments to suppliers compared to increase in the amount of R$42.6 million in 2020 due to supplier’s postponement and partially offset by a decrease of R$25.4 million in trade receivables due to better collec tion in comparison with 2020).

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Investing Activities

For the year ended December 31, 2022, our net cash applied in investing activities amounted to R$394.9 million, a decrease of R$483.4 million compared to net cash from investing activities of R$88.5 million for the year ended December 31, 2021. This decrease was mainly attributable to the net purchase of investments in marketable securities in the amount of R$162.6 million, compared to a net sale of marketable securities of R$351.5 million in 2021, which represented a decrease of R$514.1 million. This was partially offset by an increase owing to business combination due to the cash paid for the acquisition of subsidiaries in the amount of R$81.0 million, for the year ended December 31, 2022 compared to cash paid for the acquisition of subsidiaries in the amount of R$186.2 million for the year ended December 31, 2021, which represented a decrease of R$105.2 million. Moreover, the increase in cash used in investing activities was also attributable to higher payments on acquisition of property, plant and equipment, and intangible assets, which amounted to R$151.7 million in 2022, compared to payment of R$76.8 million in 2021, representing an increase of R$74.9 million.

For the year ended December 31, 2021, our net cash flows from investing activities amounted to R$88.5 million, an increase of R$630.3 million compared to net cash flows applied in investing activities of R$541.8 million for the year ended December 31, 2020. This increase was mainly attributable to realization of investments in marketable securities of R$351.5 million partially offset by cash paid for the ‎acquisition of property and equipment and intangible assets of R$76.7 million, and payments related to business combination in the amount of R$186.2 million.

Financing Activities

For the year ended December 31, 2022, our net cash applied i n financing activities amounted to R$4 4.0 million, a decrease of R$2 4.1 million, compared to net cash applied in financing activities of R$68.1 million for the year ended December 31, 2021 mainly driven by the acquisition of treasury shares in the amount of R$23.9 million that occurred in the year ended December 31, 2021 that did not recur in 2022. Additionally, installments payments relating to business combination s amounted to R$11.4 million in the year ended December 31, 2022, compared to R$19.1 million in the year ended December 31, 2021, which was partially offset by the payment of lease liabilities in the aggregate amount of R$27.0 million in the year ended December 31, 2022, compared to R$21.9 million in the year ended December 31, 2021.

For the year ended December 31, 2021, our net cash flows used in financing activities amounted to R$68.1 million, a decrease of R$662.3 million, compared to net cash flows generated by financing activities of R$594.2 million for the year ended December 31, 2020. In 2021, our net cash flows used in financing activities were affected by payments of loans with related parties of R$20.9 million, payment of lease liabilities of R$21.9 million, acquisition of treasury shares of R$23.9 million and payment of bond with related parties of R$477.7 million partially offset by issuance of public bonds net of issu ance costs of R$497.0 million.

Liquidity

Our main sources of liquidity derive from (1) cash, cash equivalents and marketable securities, (2) cash provided by our operations, (3) financing, and (4) issuance of bonds. We believe that these sources are sufficient to satisfy our current funding requirements, which include, but are not limited to, working capital and capital expenditures, among others.

Our main financial liabilities refer to financing with financial institutions (including through the issuance of bonds), indebtedness with related parties, business combination accounts payable and suppliers (including reverse factoring). During the year ended December 31, 202 2, our level of indebtedness with related parties remained stable pursuant to certain loans as described below under “—Indebtedness” and “Item 7. Major Shareholders and Related Party Transactions—B. Related party transactions—Loan Agreements”.

We continuously monitor our cash balance and the indebtedness level and implement measures to allow access to the capital markets, when necessary. We also endeavor to assure we remain within existing credit limits. Our management also continuously monitors projected and actual cash flows and the combination of the maturity profiles of the financial assets, liabilities and takes into consideration our debt financing plans, covenant compliance, internal liquidity targets and, if applicable, regulatory requirements.

Our surplus cash generated is managed on a group basis. The group’s treasury invests surplus cash in short-term deposits, choosing instruments with appropriate maturities or sufficient liquidity to provide us with appropriate funds allowing us to continue as a going concern.

As of December 31, 202 2, we had working capital (total current assets less total current liabilities) of R$648.9 million (compared to working capital of R$5 21.9 million and R$503.9 million as of December 31, 2021 and 2020, respectively).

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Indebtedness

As of December 31, 2022, our total outstanding indebtedness was R$84 3.0 million, of which R$529.5 million were private bonds and R$313.5 million were bonds with third parties.

On August 6, 2021, our subsidiary Somos Sistemas de Ensino S.A. issued R$500 million in simple debentures not convertible into shares, subject to an interest comprising 100% of DI Interest Deposit rate (CDI), plus spread of 2.30% per year. The debentures will serve the purpose of reinforcing our capital structure and extending the debt maturity profile, which currently presents an average maturity of 35 months.

On September 28, 2019, Cogna approved the capitalization of the 4th issuance and 5th issuance of private debentures originally issued by Saber in the amount of R$1.5 billion. On November 19, 2019, all rights and obligations related to debentures originally issued by Saber with third parties were transferred to Cogna, under the condition that the Company would assume the obligations in respect of R$1.5 billion of the outstanding amounts of all such debentures in connection with the corporate reorganization.

The following table summarizes the principal terms of these debentures:

Subscriber |  | Issuance/ Series |  | Issuance Date |  | Maturity |  | Applicable Index |  | Interest Spread on top of Applicable Index |  | Outstanding balance as of December 31, 2022 (1) |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  |  |  |  |  |  |  |  |  |  |  | R$ in millions |
Related party |  | 5th / Series 2 |  | August 15, 2018 |  | August 15, 2023 |  | CDI |  | 1.00% p.a. |  | 53.8 |
Related party |  | 9 th/ Series 2 |  | September 28, 2022 |  | September 28, 2025 |  | CDI |  | 2.40% p.a. |  | 259.7 |
Third party |  | 1 st/ Single |  | August 06, 2021 |  | August 05, 2024 |  | CDI |  | 2.30% p.a. |  | 529.5 |
|  |  |  |  |  |  |  |  |  | Total |  | 843.0 |

(1) Outstanding amounts include interest payable.

The bond with related party subjects us to certain restrictive covenants. Failure to comply with such restrictive covenants could result in the acceleration of the relevant debentures. The occurrence of the following conditions could result in acceleration of the debentures: (1) the acceleration of the other debentures originally issued by Saber; (2) the grant by us of any liens on our assets or capital stock; (3) a change in control by Cogna of Saber’s subsidiaries, subject to certain exceptions. Additionally, we have agreed until the maturity of the private debentures that: (1) we will allocate at least 50% of the use of proceeds from any liquidity event to repay such debentures; (2) we will not obtain any new loans unless the proceeds of such loan are directed to repay our debentures with Cogna; and (3) we will not pledge shares and/or dividends. We complied with all debt commitments in the period applicable on December 31, 2022 and 2021.

The bond with third part ies requires the maintenance of certain financial indicators “covenants” which are annually calculated based on Somos Sistemas c onsolidated financial statements. The period of covenants compliance comprises 12 months immediately prior to the end of each year, the first year of analysis being December 31, 2021, and based on the ratio between adjusted net debt by adjusted consolidated EBITDA. The net debt adjusted EBITDA ratio should be less or equal: 4.25 in 2021, 4.00 in 2022, 3.75 in 2023 and 3.50 in 2024. This ratio cannot be breached for two consecutive periods or three alternate periods.

On December 31, 2022, our net debt to Adjusted EBITDA ratio reached the result of 2.74, within the conditions established in the aforementioned financial contractual clauses. On December 31, 2021, our net debt to Adjusted EBITDA ratio reached the result of 4.47%, exceeding the ratio, but yet within the clauses established.

Additionally, as of December 31, 202 2, we had lease liabilities in the amount of R$140.6 million.

Capital Expenditures

T he capital expenditures refers to investments made to improve our fixed assets, such as buildings, equipment, software and land. In the year ended December 31, 2022, our capital expenditures totaled R$14 9.9 million substantially composed by intangibles, IT equipment and digital complementary education, compared to R$76.7 million for the year ended December 31, 202 1, which was composed also by intangibles, IT equipment and digital complementary education.

We expect to meet our capital expenditure needs for the foreseeable future from our operating cash flow, our existing cash and cash equivalents. Our future capital requirements will depend on several factors, including our growth rate, the expansion of our research and development efforts, employee headcount, marketing and sales activities, the introduction of new features to our existing products and the continued mar ket acceptance of our products.

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C. Research and Development, Pate nts and Licenses, Etc.

See “Item 4. Information on the Company—D. Property, P lant and E quipment—Intellectual Property”.

D.Trend Information

The following discussion is based largely upon our current expectation s about future events and trends affecting our business. Actual results for our industry and our performance could differ substantially. For further information related to our forward-looking statements, see “Forward-Looking Statement s”, and for a description of certain factors that could affect our industry in the future and our own future performance, see “Item 3. Key Information – 3D. Risk Factors”.

Impact of COVID-19 on Our Business

Our business has been significantly impacted by the COVID-19 pandemic and governmental responses to it, particularly during the years ended December 31, 2020 and 2021. However, our revenues from subscription solutions, recognized in 2022 and expected to be recognized in 2023, have not and will not be adversely affected by the effects of the COVID-19 pandemic, such as declining enrollment at our partner schools as observed during the pandemic period, particularly in respect of childhood education. See also “Item 3. Key Information—3D. Risk Factors—Certain Factors Relating to Our Business and Industry—Our operations and results may be negatively impacted by health crises, epidemics or pandemics.

Other Trends Affecting Our Business

The following list sets forth, in our view, the most important trends, uncertainties and events that are reasonably likely to continue to have a material effect on our revenues, income from continuing operations, profitability, liquidity and capital resources, or that may cause reported financial information to be not necessarily indicative of future operating results or financial condition:

- general economic, political, social and business conditions in Brazil, including the impact of the current international economic environment (including any impact resulting from the ongoing war between Russia and Ukraine) and the macroeconomic conditions in Brazil, and the policies of the Brazilian government;

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- fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future;
- social and political instability, including allegations of corruption against political parties, civil servants and others;
- inflation, appreciation and depreciation of the real against the U.S. dollar, which has experienced significant volatility since the beginning of the COVID-19 pandemic;
- our ability to implement our business strategy and expand our portfolio of products and services;
- our ability to adapt to technological changes in the educational sector;
- the availability of government authorizations on terms and conditions and within periods acceptable to us;
- our ability to continue attracting and retaining new partner schools and students;
- our ability to maintain the academic quality of our programs;
- the availability of qualified personnel and the ability to retain such personnel;
- changes in government regulations applicable to the education industry in Brazil;
- negative impact of health crises, epidemics or pandemics, such as the COVID-19 pandemic;
- government interventionism in education industry programs that affect the economic or tax regime, the collection of tuition fees or the regulatory framework applicable to educational institutions; and
- cancellations of contracts within the solutions we characterize as subscription arrangements or limitations on our ability to increase the rates we charge for the services we characterize as subscription arrangements.

For more information, see “Item 5. Operating a nd Financial Review a nd Prospects—A. Operating Results—Principal Factors Affecting Our Results of Operations” and “Item 3. Key Information—D. Risk Factors”.

E.Critical Accounting Estimates

Our financial statements are prepared in accordance with IFRS as issued by the IASB. In preparing our consolidated financial statements, we make assumptions, judgements and estimates that can have a significant impact on amounts reported in our consolidated financial statements. We base our assumptions, judgements and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We regularly reevaluate our assumptions, judgments and estimates. For a discussion on use of estimat es and judgement see note 3 to our audited consolidated financial statements.

JOBS Act

We are an emerging growth company under the JOBS Act. The JOBS Act provides that an emerging growth company can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company”, whichever is earlier.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.Directors and Senior Management

We are managed by our board of directors and by our senior management, pursuant to our memorandum and articles of association and the Cayman Islands Companies Act (As Revised).

Board of Directors

As of the date of this annual report, our board of directors was composed of seven members. Each director holds office for the term, if any, fixed by the shareholder resolution that appointed him, or, if no term is fixed on the appointment of the director, until the earlier of his or her removal or vacation of office as a director in accordance with the Articles of Association. Directors appointed by the board of directors hold office until the next annual general meeting. Our directors do not have a retirement age requirement under our Articles of Association. The current members of the board of directors were appointed to serve until the earlier of their removal or vacation of office as a director in accordance with the Articles of Association.

The following table presents the names of the current members of our board of directors.

Name |  | Age |  | Position
--- | --- | --- | --- | ---
Rodrigo Calvo Galindo |  | 4 7 |  | Chairman
Mário Ghio Junior |  | 5 4 |  | Director
Roberto Valério Neto |  | 4 7 |  | Director
Frederico da Villa Cunha |  | 50 |  | Director
Andrés Cardó Soria |  | 6 2 |  | Independent Director*
Ann Marie Williams |  | 5 6 |  | Independent Director*
Estela Maris Vieira de Souza |  | 5 9 |  | Independent Director*

* Member of our Audit Committee.

The following is a brief summary of the business experience of our directors. Unless otherwise indicated, the current business addresses for our directors is Av. Paulista, 901, 5th Floor, Bela Vista, São Paulo – SP, CEP 01310-100, Brazil.

Rodrigo Calvo Galindo is the Chairman of our board of directors. Mr. Galindo is the forme r Chief Executive Officer of Cogna. He has served in the management of various educational institutions over the last 2 9 years. He was Administrative Associate Dean at the University of Cuiabá and was responsible for the accreditation and establishment of postsecondary education institutions in the states of Bahia, Mato Grosso, Amapá, Acre and Rondônia. He was Chief Executive Officer of Grupo Educacional IUNI, with over 50,000 postsecondary students and campuses in six Brazilian states. He was Chief Operating Officer and Chief Postsecondary Education Officer at Cogna Educação, formerly known as Kroton. Mr. Galindo holds a bachelor’s degree in Law and a Master’s degree in Education from Pontifícia Universidade Católica de São Paulo (PUC-SP). He published the dissertation “Public Assessment Policies: critical analysis of the model and perspective of representative associations” and co-authored the book “Public Assessment Policies”. He has been honored by IR Magazine for “Best investor relations performance by a CEO” (2012, 2013, 2014, 2015 and 2017), by Institutional Investor for “Best CEO” (2012, 2013, 2014, 2015, 2016 and 2017), by Istoé Dinheiro for “Entrepreneur of the Year” (2016), by Valor Econômico for “Best Company” (2014) and “Best Executive in the Education Industry” (2014, 2015, 2016 and 2017), and by Bravo Business Awards for “Dynamic CEO of the Year” (2015).

Mário Ghio Junior is a member of our board of directors. Mr. Ghio Junior will be stepping down as Chief Executive Officer and Invest ment Relations Officer, at the end of April 2023, but will remain as a member of our board of directors. He is a Board member of several companies and non-governmental organizations, or NGOs dedicated to improving education in the public sector. He was Chief Executive Officer of Abril Educação (currently Somos Educação), has served as Director of Educational Support at Estácio, Director of educational platforms of the Santillana Group, General Director of the COC System, General Director of CPV Vestibulares and Chemistry Teacher of Anglo Vestibulares. He holds bachelor’s degrees in Chemical Engineering from Poli-USP and in Business Administration from Universidade Anhembi-Morumbi/SP, as well as an Executive MBA from INSPER.

Frederico da Villa Cunha is a member of our board of directors. Mr. Frederico also currently serves as CFO of Cogna and joined the company in 2020. Mr. Frederico has a degree in business administration from the Pontifical Catholic University of Rio de Janeiro and in accounting from the University of the City of Rio de Janeiro, participated in the executive leadership program at Duke University, he started his professional career at PwC Auditores Independente where he worked for 13 years in the areas of external auditing, corporate planning, mergers, acquisitions and advising on capital market operations, previously worked for 12 years at BR Malls Participações acting as controller and for the past 7 years he served as chief financial and investor relations officer.

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Roberto Valério Neto is a member of our board of directors. Mr. Valério also currently serves as Chie f Executive Officer of Cogna. Mr. Valério joined Cogna following the merger with Anhanguera in July 2014. He worked for three years at Anhanguera Educacional, holding the positions of Chief Executive Officer and Executive Officer for Operations and Marketing. Previously, he worked for 11 years in the DIRECTV Group, with the SKY and DIRECTV brands. He holds a bachelor’s degree in Business Administration and a graduate degree in Business Administration with emphasis in Strategy, Finance and Entrepreneurship from the Fundação Getúlio Vargas (FGV), and graduate degree in Marketing and Customer Experience from Columbia University.

Andrés Cardó Soria is an independent member of our board of directors and a member of our audit committee. Since 2018, Mr. Cardó is the Head of Prismapar in Spain, Senior Advisor of Corporate Vision and President of his own consulting firm, Andrés Cardó & Asociados, SLL. Mr. Cardó is and has also been in the past member of the board of directors of several companies in the UK, Peru, Spain, Argentina, Chile, Colombia, Costa Rica, Mexico, USA, Brazil and Bolivia. He has already served as an economics professor in Trener Academy, several consulting firms, Controller for Foreign Direct Investments in Petróleos del Perú, Lima-Perú, Controller and Responsible for Board of Directors Special Affairs in Grupo Hilados Peinados, Lima-Perú, Con t roller Latam in Grupo Santillana, in Madrid, Spain, and Managing Director at Editorial Santillana in Bolivia. He later became Vice President for the Prisa Group in Bolivia, Managing Director at the Santillana Group, Managing Director at Editora Moderna from 2001 to 2010, Country Manager in Prisa Brazil and held other positions in the Prisa Group such as Chief Corporate Development, Marketing and Revenue Officer, Chief Operating Officer and International Managing Director, as well as Chief Executive Officer of Prisa Radio from 2015 to 2018. Mr. Cardó holds a Humanities Diploma from Pontificia Universidad Católica del Perú, a Finances Diploma – Programa de Alta Dirección from ESAN, a bachelor’s degree in Economic Science from Pontificia Universidad Católica del Perú and an MBA from IESE in Spain.

Ann Marie Williams is an independent member of our board of directors and a member of our audit committee. Mrs. Williams is the chief operating officer at Creditas since 2016 and is also member of the board of Tiaxa since September 2012. She worked for more than three years as a member of the advisory group at Aliança Empreendedora, as well as partner at Redpoint Eventures for more than a year. She was the chief integration officer at Spring Mobile Solutions (April 2009 – February 2010), chief executive officer at Okto (June 2000 – March 2009) and consultant for government relations at Motorola (May 1998 – June 1999). Mrs. Williams holds a bachelor’s degree in linguistics from Stanford University and a Master in Business and Administration with emphasis in entrepreneurship from The University of Texas at Austin.

Estela Maris Vieira de Souza is an independent member of our board of directors and a member of our audit committee. Ms. Vieira de Souza a full member of the audit committee of Track & Field, Localiza and Agência Brasileira Gestora de Fundos Garantidores e Garantias – ABGF. She is also a full member of the board of directors and audit committee of Infracommerce and full member of the Lojas Renner fiscal council. She was a full member of the Transportadora Sulbrasileira de Gás and PwC Brazil Board. Ms. Vieira de Souza holds a bachelor’s degree in Business Administration and Accounting Sciences, an MBA in Marketing in Services, a Master (Msc) in Accounting and Controllership, an MBA in Digital Business, and is a board member certified by the Instituto Brasileiro de Governança Corporativa (IBGC). Ms. Vieira de Souza started her career at PricewaterhouseCoopers (PwC) in August 1987, and from 2000 to 2018 she was audit partner. In January 2019 she elected to take early retirement from PwC. Over a period of 15 years, she was the lead PwC Brazil partner responsible for delivering professional services to the Technology, Communication, Entertainment and Media sector and she represented the region at the PwC Network level in her area of expertise.

Executive Officers

Our executive officers are responsible for the management and representation of our company. We have a strong centralized management team led by Már io Ghio Junior, our CEO, with 34 years of experience in the education industry. Many of the members of our management team have worked together as a team for many years. Our executive officers were appointed by our board of directors for an indefinite term.

The following table lists our current executive officers:

Name |  | Age |  | Position
--- | --- | --- | --- | ---
Mário Ghio Junior(1) |  | 54 |  | Chief Executive Officer and Invest ment Relations Officer
Cesar Augusto Silva |  | 4 7 |  | Chief Financial Officer
Guilherme Alves Mélega(1) |  | 4 8 |  | Chief Operating Officer

(1) | Mr.Ghio Junior will be stepping down as Chief Executive Officer and Investment Relations Officer effective April 30, 2023, when Mr. Guilherme Alves Mélega will become our Chief Executive, Investment Relations and Operating Officer.

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The following is a brief summary of the business experience of our executive officers who are not also members of our board of directors. Unless otherwise indicated, the current business addresses for our executive officers is Av. Paulista, 901, 5th Floor, Bela Vista, São Paulo – SP, CEP 01310-100, Brazil.

Mário Ghio Junior – see “—Board of Directors”.

Cesar Augusto Silva is our Chief Financi al Officer. Mr. Cesar Augusto Silva is an economist and accountant with a master’s in business administration, and has more than 25 years’ experience in financial management and controllership. Mr. Silva has been working at the Cogna Group as Controllership Director since 2016, having actively participated in Vasta’s IPO process with Nasdaq. Prior to joining the Cogna Group, Mr. Silva started his career at auditing firms and has worked at companies such as JSL Logística, T-Systems Brasil, and T-Systems Spain.

Guilherme Alves Mélega is our Chief Operating Officer. Following Mr. Mário Ghio Junior’s retirement from his roles as Chief Executive Officer and Investment Relations Officer on April 30, 2023, Mr. Guilherme Alves Mélega will become our Chief Executive Officer, Investment Relations Officer and Chief Operating Officer. With a degree in economics from the Fundação Armando Alves Penteado in São Paulo, Mr. Mélega also holds a master’s degree in Business Administration from the Simon Graduate School of Business, University of Rochester, in New York. He previously served as Investor Relations Officer and Financial and Administrative Vice President in Somos Educação, Financial Director, Corporate Controller and Investor Relations Officer in Braskem, Senior Manager of Financial Planning and Budgeting in Whirlpool, Treasury Coordinator in Rhodia and financial analyst in Ambev.

Directors’ and Officers’ Insurance

As of December 31, 202 2, we contracted civil liability insurance coverage for acts carried out by our directors and executive officers in the course of their duties.

Share Ownership

The shares and any outstanding beneficially owned by our directors and officers and/or entities affiliated with these individuals are disclosed in the section entitled “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders”.

Our Relationship with Our Directors, Executive Officer and Members of Senior Management

There are no family relationships between any of our directors, executive officers and members of our senior management.

B.Compensation

Compensation of Directors and Officers

Under Cayman Islands law, we are not required to disclose compensation paid to our senior management on an individual basis and we have not otherwise publicly disclosed this information elsewhere.

Our executive officers, directors and management receive fixed and variable compensation. They also receive benefits in line with market practice in Brazil. The fixed component of their compensation is set on market terms and adjusted annually.

The variable component consists of cash bonuses and awards of shares (or the cash equivalent). Cash bonuses are paid to executive officers and members of our management based on previously agreed targets for the business. Shares (or the cash equivalent) are awarded under our share options long‑term incentive program, as discussed below.

For the year ended December 31, 202 2, 202 1 and 20 20, the aggregate compensation expense for the members of the board of directors and our executive officers for services in all capacities was R$20.4 million, R$16.0 million and R$28.7 million, respectively, which includes both benefits paid in kind and compensation.

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We estimate that the aggregate compensation for Vasta directors and officers for 202 3 will be R$25.2 million.

Share Incentive Plan

On July 23, 2020 we approved our new stock option share plan, or the “RSU plan”. The purpose of RSU plan is to enhance the engagement of eligible persons in the creation of value and profitability of the Company by providing such eligible persons with an opportunity to obtain restricted share units and thus provide an improved incentive for eligible persons to make significant and extraordinary contributions to the long-term performance and growth of the Company. See below the RSU plan by share units:

Vasta Share Units Plans

Vasta Plans |  | December 31, 2020 |  | Share units canceled |  | Share units granted |  | Share units vested |  | December 31, 2021 |  | Share units canceled |  | Share units granted |  | Share units vested |  | December 31, 2022
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Long term investment – Vasta to Vasta and Cogna(a) |  | 932,604 |  | (202,430) |  | 450,123 |  | (99,625) |  | 1,080,672 |  | (178,115) |  | 265,766 |  | (367,527) |  | 800,796
Total |  | 932,604 |  | (202,430) |  | 450,123 |  | (99,625) |  | 1,080,672 |  | (178,115) |  | 265,766 |  | (367,527) |  | 800,796

(a) | LTCP – We compensate part of our employees and management. This plan will grant up to 3% of the Company’s class A share units. We will grant the limit of five tranches approved by the Company’s Board of Directors. The fair value of share units is measured at market value quoted on the grant date, the plan presents vesting period corresponding to 5 years added by expected volatility of 30%, and it will be settled with Company shares, all taxes and contributions being paid by the Company without additional costs to employees and management.

During 202 2, the Company granted shares in connection with its LTCPs, as follows:

- November 2022 Plan – granted on November 1, 2022, totaling 8,000 shares at R$26.06 per share (or US$5.06 per unit translated at the grant date exchange of R$5.15 per US$) weighted by percentage of expected volatility of 30% and 60 months as vesting period. The amount of compensation based on share units that affected the Share-based compensation plan is R$1.0 thousand, and the corresponding labor charges in the amount of R$2.0 thousand (owing to provision adjustments to account for share and U.S. dollar prices) impacted labor liability and consolidated statement of profit and loss.
- September 2022 Plan – granted on September 19, 2022, totaling 78,573 shares at R$28.64 per share (or US$5.47 per unit translated at the grant date exchange of R$5.24 per US$) weighted by percentage of expected volatility of 30% and 60 months as vesting period. The amount of compensation based on share units that affected the Share-based compensation plan is R$50.0 thousand, and the corresponding labor charges in the amount of R$10.0 thousand impacted labor liability and consolidated statement of profit and loss (owing to provision adjustments to account for share and U.S. dollar prices).
- September 2022 Plan – granted on September 13, 2022, totaling 40,000 shares at R$27.97 per share (or US$5.40 per unit translated at the grant date exchange of R$5.18 per US$) weighted by percentage of expected volatility of 30% and 60 months as vesting period. The amount of compensation based on share units that affected the Share-based compensation plan is R$120.0 thousand, and the corresponding labor charges in the amount of R$20.0 thousand impacted labor liability and consolidated statement of profit and loss (owing to provision adjustments to account for share and U.S. dollar prices).
- August 2022 Plan – granted on August 1, 2022, totaling 6,000 shares at R$27.09 per share (or US$5.25 per unit translated at the grant date exchange of R$5.16 per US$) weighted by percentage of expected volatility of 30% and 60 months as vesting period. The amount of compensation based on share units that affected the Share-based compensation plan is R$20.0 thousand, and the corresponding labor charges in the amount of R$4.0 thousand impacted labor liability and consolidated statement of profit and loss (owing to provision adjustments to account for share and U.S. dollar prices).
- May 2022 Plan – granted on May 2, 2022, totaling 8,000 shares at R$26.59 per share (or US$5.29 per unit translated at the grant date exchange of R$5.03 per US$) weighted by percentage of expected volatility of 30% and 60 months as vesting period. The amount of compensation based on share units that affected the Share-based compensation plan is R$40.0 thousand, and the corresponding labor charges in the amount of R$8.0 thousand impacted labor liability and consolidated statement of profit and loss (owing to provision adjustments to account for share and U.S. dollar prices).

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- May 2022 Plan – granted on May 2, 2022, totaling 99,193 shares at R$26.59 per share (or US$5.29 per unit translated at the grant date exchange of R$5.03 per US$). The amount of compensation based on share units that affected the Share-based compensation plan is R$2,63 0.0 thousand, and the corresponding labor charges in the amount of R$830.0 thousand impacted labor liability and consolidated statement of profit and loss.
- February 2022 Plan – granted on February 14, 2022, totaling 7,000 shares at R$31.32 per unit (or US$6.01 per unit translated at the grant date exchange rate of R$5.21 per US$) weighted by percentage of expected volatility of 30% and 60 months as vesting period. The amount of compensation based on share units that affected the Share-based compensation plan is R$60.0 thousand, and the corresponding labor charges in the amount of R$6.0 thousand impacted labor liability and consolidated statement of profit and loss (owing to provision adjustments to account for share and U.S. dollar prices).
- December 2021 Plan – granted on December 1, 2021, totaling 19,000 shares at R$12.80 per share (or US$5.62 per unit translated at the grant date exchange of R$2.28 per US$) weighted by percentage of expected volatility of 30% and 60 months as vesting period. The amount of compensation based on share units that affected the Share-based compensation plan is R$90.0 thousand, and the corresponding labor charges in the amount of R$38.0 thousand impacted labor liability and consolidated statement of profit and loss.

Employment Agreements

We have entered into employment agreements with our executive officers and directors. The employment agreements provide for the compensation that our executive officers are entitled to receive, including certain equity grants, and contain termination notice periods of 36 months. We will have title to the intellectual property rights developed in connection with the executive officer’s employment, if any. There is a standard 12-24 month non-compete period following the end of employment in our agreement for all executive officers and directors who are eligible to participate in the restricted share plan.

C.Board Practices

Committees of the Board of Directors

Our board of directors has one standing committee: the Audit Committee. As allowed by the laws of the Cayman Islands, we do not have a nomination and corporate governance committee or remuneration committee nor do we have any current intention to establish either.

Audit Committee

Our audit committee was established on March 2, 2020 and currently consist s of Andrés Cardó Soria, Estela Maris Vieira de Souza and Ann Williams. Our audit committee a ssist s our board of directors in overseeing our accounting and financial reporting processes and the audits of our financial statements. In addition, the audit committee will be directly responsible for the appointment, compensation, retention and oversight of the work of our independent registered public accounting firm. The audit committee will consist exclusively of members of our supervisory board who are financially literate, Andrés Cardó and Ann Williams are each considered an “audit committee financial expert” as defined by the SEC. Our board of directors has determined that Andrés Cardó Soria and Ann Williams satisfy the “independence” requirements set forth in Rule 10A-3 under the Exchange Act.

The audit committee will be governed by a charter that complies with the Nasdaq rules. T he audit committee is responsible for, among other things:

- the appointment, compensation, retention and oversight of any auditor or accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services;
- pre-approving the audit services and non-audit services to be provided by our independent auditor before the auditor is engaged to render such services;
- reviewing and discussing with the independent auditor its responsibilities under generally accepted auditing standards, the planned scope and timing of the independent auditor’s annual audit plan(s) and significant findings from the audit;

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- obtaining and reviewing a report from the independent auditor describing all relationships between the independent auditor and us consistent with the applicable PCAOB requirements regarding the independent auditor’s communications with the audit committee concerning independence;
- confirming and evaluating the rotation of the audit partners on the audit engagement team as required by law;
- reviewing with management and the independent auditor, in separate meetings whenever the a udit c ommittee deems appropriate, any analyses or other written communications prepared by the Management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative IFRS methods on the financial statements; and our other critical accounting policies and practices;
- reviewing, in conjunction with our Chief Executive Officer and Chief Financial Officer, our disclosure controls and procedures and internal control over financial reporting;
- establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and
- approving or ratifying any related party transaction in accordance with our related person transaction policy.

The audit committee will meet as often as it determines is appropriate to carry out its responsibilities, but in any event will meet at least four times per year.

Board Diversity Matrix

Board Diversity Matrix (as of December 31, 202 2)
Country of Principal Executive Offices: | Brazil
Foreign Private Issuer: | Yes (the Cayman Islands)
Disclosure Prohibited under Home Country Law: | No
Total Number of Directors: | 7
| Female | Male | Non-Binary | Did Not Disclose Gender
Part I: Gender Identity |
Directors | 2 | 5 | 0 | 0
Part II: Demographic Background |
Underrepresented Individual in Home Country Jurisdiction | 0
LGBTQ+ | 1
Did not Disclose Demographic Background | 0

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D.Employees

As of December 31, 202 2, we had 1,926 employees, distributed among the following areas:

Function |  | Number of Staff |  |  | % of the Total |
--- | --- | --- | --- | --- | --- | ---
Customer Relations |  | 294 |  |  | 15% |
Content Production |  | 323 |  |  | 1 8% |
Educational Technology |  | 287 |  |  | 1 5% |
Operations |  | 242 |  |  | 1 3% |
Pedagogical |  | 404 |  |  | 21% |
Administrative Support |  | 376 |  |  | 20% |
Total |  | 1,926 |  |  | 100% |

Our employees are represented by several unions: Book Editors’ Union of São Paulo (Sindicato dos Empregados em Editoras de Livros de São Paulo); Public Cultural Book Editors’ Union of the Municipality of Rio de Janeiro (Sindicato dos Empregados de Editoras de Livros Públicos Culturais do Município do Rio de Janeiro); Business Union of João Pessoa (Sindicato do Comércio de João Pessoa); The Federation of Workers in Enterprises for the Diffusion of Arts and Culture of the State of Paraná (FTEDCA PR - Federação dos Trabalhadores em Empresas de Difusão Cultural e Artística no Estado do Paraná); Union for Retail and Small-Store Sales of Fortaleza (Sindicato do Comércio Varejista e Lojista de Fortaleza); Union of Workers in Public and Private Enterprises for Information Technology, the Internet, and Similar Businesses for the State of Rio de Janeiro (SINDPDRJ - Sindicato dos Trabalhadores em Empresas e Serviços Públicos e Privados, de Informática e Internet, e similares do Estado do Rio de Janeiro); Union for School Administrative Assistants for São Paulo (Sindicato dos auxiliares de administração escolar de São Paulo); Union for Workers in Data Processing and Similar Technologies for the State of Minas Gerais (SINDPD - Sindicato dos trabalhadores em Processamento de Dados e Tecnologia e Similares do Estado de Minas Gerais); and The Teachers Union of São Paulo (Sindicato dos Professores de São Paulo).

To date, there have been no strikes or other events resulting in a stoppage of work by our employees.

The following is a summary of the main roles of our employees according to their functional areas.

Customer Relations

Our customer relations employees have the mission of attracting and retaining partner schools, assuring them the best educational solutions available on the market. The purpose of such efforts is to understand our customers’ needs and provide solutions in a consultative manner and to tailor our portfolio in a way that supports the construction of an educational and technological project adequate to new classroom trends. We seek to establish long term relationships and continuously monitor school conditions in order to provide feedback and dynamically develop products and services.

Content Production

The content production area continuously monitors major educational trends and aims at offering the most innovative content in the teaching-learning process in the world. We rely on several renowned authors that integrate our content for a complete digital platform, ensuring that big data is used for the benefit of the student’s learning.

Educational Technology

Our educational technology employees have as their primary objective the improvement of the digital learning experience for schools, students and educators. This area is responsible for developing, producing our digital platforms and managing the data tools measuring engagement in our digital platforms. We have a robust team of highly capable professionals that work in tandem with some of the most advanced science and research teams in the world, including the Harvard Innovation Lab and the MIT Media Lab.

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Operations

Our operations employees play an essential role in our activities, assuring excellence in planning, production and logistics, through an efficient management of resources and processes.

Pedagogical

With our comprehensive Core & EdTech P latform, the development of students is complete, and goes beyond traditional curriculum subjects. We can comprehensively monitor students’ performance and support them in developing cognitive and socio-emotional capacities, including psychological balance to achieve high results on exams. With technology as the basis of the model, students, educators and parents are connected with the purpose of deepening studies, simplifying and enhancing routines so that all parties have a clear analytic understanding of the students’ strengths and needs. Employees that serve as part of our pedagogical staff are recognized and evaluated annually by the students themselves, which enables more assertiveness and continuous improvement of our models and classroom performance.

Administrative Support

With respect to our administrative support employees, we use management supporting structures and intelligence that, through constant investment in technology and data science, aim at simplifying processes and bringing the best solutions to the business.

E.Share Ownership

The shares and any outstanding beneficially owned by our directors and officers and/or entities affiliated with these individuals are disclosed in “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders”.

F.Disclosure of a registrant’s action to recover erroneously awarded compensation.

Not applicable.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.Major S hareholders

The following table and accompanying footnotes present information relating to the beneficial ownership of our Class A common shares and Class B common shares as of December 31, 202 2.

The number of common shares beneficially owned by each entity, person, executive officer or director is determined in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days through the exercise of any option, warrant or other right. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all common shares held by that person.

The percentages of beneficial ownership in the table below are calculated as of December 31, 202 2 on the basis of 1 8,213,794 Class A common shares and 64,436,09 3 Class B common shares. In addition to the shares detailed below, we ha d a total of 1 8,213,794 Class A common shares outstanding that are publicly traded as of December 31, 202 2.

Unless otherwise indicated below, the address for each beneficial owner is c/o Cogna Educação, Av. Paulista, 901, 5th Floor, Bela Vista, São Paulo, São Paulo, CEP: 01310-100.

| Shares Beneficially Owned |  |  | % of Total Voting Power
Class A |  |  | Class B |  |
Shares |  |  | % |  |  | Shares |  |  | % |  |
5% Shareholders |  |  |  |  |  |  |  |  |  |  |  |  |
Cogna | – |  |  | – |  |  | 64,436,093 |  |  | 100.0% |  |  | 97.3%
Other Shareholders |  |  |  |  |  |  |  |  |  |  |  |  |
Other Shareholders | 1 7,725,223 |  |  | 9 7.3% |  |  | – |  |  | – |  |  | 2.7%
Executive Officers and Directors |  |  |  |  |  |  |  |  |  |  |  |  |
Rodrigo Calvo Galindo | * |  |  | * |  |  | – |  |  | – |  |  | *
Mário Ghio Junior | * |  |  | * |  |  | – |  |  | – |  |  | *
Guilherme Alves Mélega | * |  |  | * |  |  | – |  |  | – |  |  | *
Cesar Augusto Silva | * |  |  | * |  |  | – |  |  | – |  |  | *
Andrés Cardó Soria | – |  |  | – |  |  | – |  |  | – |  |  | –
Roberto Valério Neto | – |  |  | – |  |  | – |  |  | – |  |  | –
Ann Marie Williams | – |  |  | – |  |  | – |  |  | – |  |  | –
Estela Maris Vieira de Souza | – |  |  | – |  |  | – |  |  | – |  |  | –
F rederico da Villa Cunha | – |  |  | – |  |  | – |  |  | – |  |  | –
All directors and executive officers as a group (25 persons)* | 488,571 |  |  | 2.7% |  |  | – |  |  | – |  |  | *
Total | 1 8,213,794 |  |  | 100.0% |  |  | 64,436,093 |  |  | 100.0% |  |  | 100.0%

* Represents beneficial ownership of less than 1% of our issued and outstanding common shares.

(1) | Percentage of total voting power represents voting power with respect to all of our Class A common shares and Class B common shares, as a single class. Holders of our Class B common shares are entitled to 10 votes per share, whereas holders of our Class A common shares are entitled to one vote per share. For more information about the voting rights of our Class A common shares and Class B common shares, see “Item 10. Additional Information—B. Memorandum and A rticles of A ssociation”.

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The holders of our Class A common shares and Class B common shares have identical rights, except that Cogna, as the sole holder of Class B common shares: (1) is entitled to 10 votes per share, whereas holders of our Class A common shares are entitled to one vote per share; (2) has certain conversion rights; and (3) is entitled to maintain a proportional ownership interest by purchasing additional Class B common shares in the event that additional Class A common shares are issued. For more information see “Item 10. Additional Information—B. Memorandum and A rticles of A ssociation—Preemptive or Similar Rights” and “—Conversion”. Each Class B common share is convertible into one Class A common share.

B.Related Party Transactions

Private Debentures

On September 28, 2019, Cogna approved the capitalization of the 4th issuance and 5th issuance of private debentures originally issued by Saber i n the amount of R$1.5 billion. On November 19, 2019, all rights and obligations related to debentures originally issued by Saber with third parties were transferred to Cogna, under the condition that we would assume the obligations in respect of R$1.5 billion of the outstanding amount of all such debentures in connection with the corporate reorganization. On December 31, 2019, in connection with our corporate reorganization, we incurred additional debt in the amount of R$1.5 billion upon the contribution to Vasta by Cogna of outstanding private debentures originally issued by Saber and owed to Cogna, pursuant to which we agreed until the maturity of such private debentures that: (1) we will allocate at least 50% of the use of proceeds from any liquidity event to repay such debentures; (2) we will not obtain any new loans unless the proceeds of any such loan are directed to repay our debentures with Cogna; and (3) we will not p ledge shares and/or dividends. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness” and “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—We have a significant amount of debt and may incur additional debt in the future. Our payment obligations under our debt may limit our available resources and the terms of debt instruments may limit our flexibility in operating our business”.

On August 4, 2020, we repaid certain bonds owed to related parties in the amount of R$852.1 million. Of this amount, R$305.4 million referred to 6 th Issuance - serie s 1; R$432.2 million to 7th Issuance – single series and R$113.9 million to 8 th Issuance – s ingle series.

During 2021, we repaid certain bonds owed to related parties in the total amount of R$502.2 million. Of this amount, R$100.0 million referred to the principal of the 5 th Issuance – series 1; R$377.5 million referred to the principal of the 7 th Issuance – single series, and R$24.8 million referred to the interest payment on the following series: (i) 5 th Issuance – series 1, (ii) 7 th Issuance – single series, (iii) 5 th Issuance – series 2 and (iv) 6 th Issuance – series 2.

On August 15, 2022, the Company partially settled bonds to related parties amounting to R$254,885 of principal amount, issued under the 5 th series (R$50,885) and 6 th series (R$204,000). On September 28, 2022, the Company issued R$250 million in simple, non-convertible debentures, bearing interest at 100% of the CDI, plus 2.40%, per annum. The debentures aim to support the Company’s capital structure and extend our debt-maturity profile, whose average term is currently at 37 months.

Indemnification Agreements

In connection with our corporate reorganization, on December 5, 2019, our subsidiary Somos Sistemas entered into an indemnification agreement with our parent company, Cogna, or the Cogna-Somos Indemnity Agreement, whereby the latter agreed to indemnify us for cash outflows related to contingencies that may arise due to events occurring prior to the corporate reorganization process that is being held by Cogna Group, for up to R$15 3.7 million, including for contingencies or lawsuits that may materialize after January 1, 202 0 so long as the events for which such contingency arises occurred prior to January 1, 2020. See “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—We may not be sufficiently protected by our parent company against potential liabilities arising from past business practices related to Somos Sistemas that could materialize in the future”.

Cost Sharing Agreement

In connection with our corporate reorganization, on January 21, 2020, certain of our subsidiaries entered into a cost sharing agreement with Cogna and certain subsidiaries of Cogna, whereby they have agreed the terms and conditions for the sharing of back office, IT, administrative- and logistic-related expenses, among others, incurred by or for them. The criteria for determining our subsidiaries’ share of expenses will vary based on the type of ex pense shared. See “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—While our businesses are managed and financed independently from our parent company, Cogna, we are party to a cost-sharing agreement for certain administrative expenses, and an increase in the amounts we pay to Cogna might be disproportional to the benefits we receive and could affect our performance. In addition, we share certain logistics-related expenses with Cogna, and the reimbursement to us by Cogna for such shared expenses may not be sufficient to meet our actual costs”.

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Commercial and Copyright License Agreements

On June 13, 2022, our subsidiary Somos Sistemas and the following subsidiaries of Cogna: (i) Editora Ática S.A., (ii) Editora Scipione S.A., (iii) Maxiprint Editora Ltda. and (iv) Saraiva Educação S.A., entered into a commercial agreement whereby Somos Sistemas agreed to provide and/or license our products and services to such companies. Somos Sistemas will receive consideration based on 40% of the companies’ EBITDA resulting from the distribution of Somos’ products and services to public entities.

On June 13, 2002, our subsidiary Somos Sistemas and Editora Ática S.A., or Editora Ática, a subsidiary of Cogna, entered into a copyright sublicense agreement whereby Somos Sistemas agreed to grant a license for commercial exploitation and use of copyrights related to the “O Líder em Mim” socio-emotional program. This sublicense copyright license agreement is valid until August 30, 2026, and Editora Ática will remunerate Somos Sistemas based on 40% of Editora Ática’s EBITDA resulting from the distribution of the “O Líder em Mim” program to public entities.

See “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business and financial condition and results of operations”.

Trademark Assignment and License Agreements

On November 6, 2019, our subsidiary Somos Sistemas entered into a trademark license agreement (as amended on January 28, 2020) with one of the subsidiaries of Cogna for which Somos Sistemas has been granted at no cost the use rights related to the trademark “Pitágoras”. This agreement is valid for a period of 20 years, automatically and successively renewed for the same period.

On December 4, 2019, our subsidiary Somos Sistemas entered into eight trademark assignment agreements with subsidiaries of Cogna, or the Assignors, whereby certain trademarks, such as “Somos Educação”, “Editora Atica”, “Editora Scipione”, “Atual Editora”, “P AR Plataforma Educacional”, “Sistema Maxi de Ensino”, “English Stars” and “Rede Cristã de Educação”, have been assigned and transferred by the Assignors to Somos Sistemas in accordance with the conditions set forth under the agreements.

On December 6, 2019, Somos Sistemas also entered into two trademark license agreement (as amended on January 28, 2020) by which the use rights related to certain trademarks have been granted at no cost to certain subsidiaries of Cogna. These agreements are valid for a period of 20 years, automatically and successively renewed for the same period.

Moreover, on December 6, 2019, Editora Ática S.A., or Editora Ática, a subsidiary of Cogna, entered into a sublicense trademark license agreement with Saraiva Educação S.A., a subsidiary of Cogna, whereby Editora Ática is authorized to use the trademark “Saraiva” at no cost. This sublicense trademark license agreement is valid for a period of 20 years, automatically and successively renewed for the same period.

See “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—Failure to protect or enforce our intellectual property and other proprietary rights could adversely affect our business and financial condition and results of operations”.

Shared Warehouses and Logistics Activities Agreement

We share certain costs related to the use of warehouses and other logistics activities with Cogna and certain other related party entities. In general, all our and Cogna and certain other related party entities’ printed teaching materials are stored in rented warehouse facilities operated by us and delivered by third party carriers. The rent and operation expenses related to the use of such warehouses are apportioned to each business based on the square meters occupied by each of the products of the respective companies that use these warehouses. See “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—While our businesses are managed and financed independently from Cogna, we are party to a cost-sharing agreement for certain administrative expenses, and an increase in the amounts we pay to Cogna might be disproportional to the benefits we receive and could affect our performance. In addition, we share certain logistics-related expenses with Cogna, and the reimbursement to us by Cogna for such shared expenses may not be sufficient to meet our actual costs”.

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On January 2, 2020, we entered into an agreement whereby we are responsible for the costs related to the use and operation of these warehouses, and Cogna and the other related party entities who continue to use the warehouse will compensate us accordingly.

Lease and Sublease Agreements

On December 5, 2019, our subsidiary Somos Sistemas entered into a commercial lease agreement with a subsidiary of Cogna, Editora Scip i one S.A., for use of a proper ty in the State of Pernambuco. Under this agreement, Somos Sistemas will make monthly payments of R$35 thousand, annually adjusted by the IGP-M rate, for a term of 60 months from the date that the agreement was entered into. This lease agreement contains terms and provisions typical of commercial lease agreements in Brazil and is governed by Law No. 8,245/91, or the Brazilian Lease Law.

On December 5, 2019, our subsidiary Somos Sistemas and a subsidiary of Cogna, Saber, entered into a commercial sublease agreement with a subsidiary of Cogna, Editora e Distribuidora Educacional S.A., for use of a property in the city of São Paulo, State of São Paulo. Under this agreement, Somos Sistemas will make monthly payments equivalent to 25.0% of the monthly payments and fees due in connection with the underlying lease (representing a total aggregate amount of R$430 thousand in rental fees, IPTU taxes and condominium fees). This lease matures on June 30, 2026 and contains terms and provisions typical of commercial sublease agreements in Brazil and is governed by the Brazilian Lease Law.

On December 5, 2019, certain companies of our group, Editora Ática, SGE Comércio de Material Didático Ltda., or EGE, Somos Idiomas S.A., or Somos Idiomas, Saravia Educação S.A., or Saraiva, Livraria Livro Fácil Ltda., or Livro Fácil, and EDE, entered into a commercial sublease agreement with our subsidiary, Somos Sistemas, for use of a property in the city of São José dos Campos, State of São Paulo. Under this agreement, (1) Editora Ática, will make monthly payments equivalent to 39.84% of the monthly payments and fees due in connection with the underlying lease (representing a total aggregate amount of R$827 thousand in rental fees and R$576 thousand in IPTU taxes); (2) Somos Idiomas, will make monthly payments equivalent to 0.27% of the monthly payments and fees due in connection with the underlying lease (representing a total aggregate amount of R$53 thousand in rental fees and R$4 thousand in IPTU taxes); (3) Saraiva, will make monthly payments equivalent to 10.31% of the monthly payments and fees due in connection with the underlying lease (representing a total aggregate amount of R$207 thousand in rental fees and R$149 thousand in IPTU taxes); (4) Livro Fácil, will make monthly payments equivalent to 7.42% of the monthly payments and fees due in connection with the underlying lease (representing a total aggregate amount of R$1,160 thousand in rental fees and R$107 thousand in IPTU taxes). This lease matures on September 30, 2025 and contains terms and provisions typical of commercial sublease agreements in Brazil and is governed by the Brazilian Lease Law.

Bank Credit Note (Cédula de Crédito Bancário)

On November 21, 2018, MindMakers, which became our subsidiary in February 2020, entered into a bank credit note (cédula de crédito bancário) in favor of Banco de Desenvolvimento de Minas Gerais S.A. – BDMG, for an aggregate amount of R$1.7 million with a maturity date of November 15, 2026. The payment of principal will be made in 72 installments, beginning on December 15, 2020, a nd ending on November 15, 2026. Interest will accrue at the long-term interest rate (taxa de juros de longo prazo – TJLP), plus 5% per annum, and will be paid on a monthly basis along with payments of principal. A personal lien to secure this bank credit note was granted by certain individuals, including Mr. Mario Ghio Junior, our chief executive officer and a member of our board of directors.

Loan Agreements

As of December 31, 202 2, there w ere no loan agreements with Cogna Educação S.A. or its subsidiaries.

Director and Officer Indemnification agreements

We have enter ed into indemnification agreements with each of our directors and officers. Pursuant to these agreements, we have agreed to indemnify and hold harmless each director and officer to the full extent permitted by applicable law in the event of any claim made against him or her in any proceeding due to the fact that he or she is or was a director or officer of our company or served at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. In addition, we have agreed to cover all expenses actually and reasonably incurred by each director and officer in connection with any such proceeding, with certain limited exceptions. The indemnification extends to the beneficiary’s services as a director or officer prior to the date of the indemnification agreement as well as afterward. It continue s after the beneficiary ceases to be a director or officer.

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Employment agreements

Certain of our executive officers have entered into employment agreements, certain of which provide for notice of termination periods and include restrictive covenants. None of our directors have entered into service agreements. See “Item 6. Directors, Senior Management and Employees—B. Compensation—Employment Agreements”.

C.Interests of Experts and C ounsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A.Consolidated Statements and Other Financial Information

Financial Statements

See “Item 18. Financial Statements”, which contains our audited financial statements prepared in accordance with IFRS.

Dividends and Dividend Policy

We have not adopted a dividend policy with respect to future distributions of dividends. The amount of any distributions will depend on many factors such as our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our board of directors and, where applicable, our shareholders.

As a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of Brazil (including imposing legal restrictions on dividend distribution by subsidiaries), agreements of our subsidiaries or covenants under future indebtedness that we or they may incur. Our ability to pay dividends is therefore directly related to positive and distributable net results from our Brazilian subsidiaries. See “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—We depend on our subsidiaries’ financial results, and we may be adversely affected if the performance of our subsidiaries is not positive or if Brazil imposes legal restrictions on, or imposes taxes on, the distribution of dividends by subsidiaries”.

The terms of our existing indebtedness do not restrict our ability to pay dividends. See “Item 5. Operating a nd Financial Review a nd Prospects—B. Liquidity and Capital Resources—Indebtedness”.

Certain Cayman Islands and Brazilian Legal Requirements Related to Dividends

Under the Companies Act and our Articles of Association, a Cayman Islands company may pay a dividend out of either its profit or share premium account, but a dividend may not be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. According to our Articles of Association, dividends can be declared and paid out of funds lawfully available to us, which include the share premium account. Dividends, if any, would be paid in proportion to the number of common shares a shareholder holds. For further information, see “Item 10. Additional Information—E. Taxation—Cayman Islands Tax Considerations”.

Legal Proceedings

In the normal course of our business, from time to time we are involved in litigation. Depending on the nature and magnitude of the lawsuit filed against us, the process may be protracted, leading to the expenditure of time and operational resources until it is resolved. In connection with certain of our acquisitions, the sellers of certain acquired businesses have agreed to indemnify us with respect to certain contingencies that may arise in connection with such acquisitions. However, there can be no assurance that such indemnities will be sufficient to cover all losses associated with such contingencies. See “Item 3. Key Information—D. Risk Factors—Certain Factors Relating to Our Business and Industry—We have recorded provisions for contingencies for past business practices and acquired businesses that could materialize in the future, which could have an adverse effect on our business and financial condition”.

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We are subject to a variety of legal and administrative proceedings, including but not limited to civil, labor related and tax lawsuits. We include provisions for these proceedings in our financial statements when (1) it is probable that resources will be required to settle the obligation, and (2) a reliable estimate can be made as to the amount of the obligation. The assessment by our management of the likelihood of loss includes an analysis made by external counsel on the evidence available, legislation, recent court decisions and case law and their relevance in terms of the Brazilian legal system. Provisions for losses regarded as probable are estimated and adjusted in each reporting period.

As of December 31, 202 2, we had a provision for risks of tax, labor and civil losses of R$6 51.2 million, for which either the loss was considered probable through accounting estimate or recognized through previous business combination and recorded in our financial statements. However, notwithstanding the provision, proceedings are unpredictable and subject to significant uncertainties. Therefore, if one or more cases result in a judgment against us, in any period, for amounts that exceed management’s expectations, the impact on our results of operations or financial condition for that period may be significant. A summary of our main legal and administrative proceedings is given below.

Civil Matters

As of December 31, 202 2, we were party to certain judicial and administrative proceedings of a civil nature for which we recorded a provision of R$1.2 million. The civil claims to which we are a party generally relate to consumer claims, including those related to product defects and failures to deliver products, among others. We believe these proceedings are unlikely to have a material adverse impact, individually, or in the aggregate, on our results of operations or financial condition.

Somos Educação, which used to operate our K-12 business under the Anglo brand, is currently party to an administrative proceeding with the sellers of the Anglo business due to a dispute with the sellers regarding indemnities for certain contractual contingencies, for which we have classified the risk of losses as probable, possible and remote, in the aggregate amount of R$1 7.7 million that we understand to be their responsibility, and which are disputed by the sellers. At the time of the business combination an indemnification asset was recorded. The book value of the asset at December 31, 202 2 is R$1 80.4 million. However, we cannot assure that our position will prevail.

Labor Related Matters

As of December 31, 202 2, we were party to certain labor-related judicial and administrative proceedings for which we recorded a provision of R$27.6 million. In general, the labor claims to which we are a party were filed by former employees or third-party employees seeking our joint and/or subsidiary liability for the acts of our suppliers and service providers. The principal claims involved in these labor suits relate to overtime, severance pay, equal pay, and indemnities based on Brazilian labor laws. A term of commitment was entered into between us and the Labor Prosecution Office, whereby we agreed to restrict additional work hours, subject to the payment of a fine and applicable penalties.

Tax and Social Security Matters

As of December 31, 202 2, we were involved in certain judicial and administrative tax and social security proceedings for which we recorded a provision of R$623.1 million. As of December 31, 202 2, we had judicial deposits in an aggregate amount of R$2.1 million. There can be no assurance that these proceedings would not have a significant effect on our financial position or profitability if all decided adversely to the company.

B.Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant change since the date of our audited consolidated financial statements included in this annual report.

ITEM 9. THE OFFER AND LISTING

A.Offering and Listing Details

On July 31, 20 20, we completed our initial public offering. Our common shares have been listed on the Nasdaq Global Select Market since July 31, 20 20 under the symbol “V STA”.

B.Plan of Distribution

Not applicable.

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C.Markets

For a description of our publicly traded common shares, see “—A. Offering and listing details”.

D.Selling Shareholders

Not applicable.

E.Dilution

Not applicable.

F.Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A.Share Capital

Not applicable.

B.Memorandum and Articles of Association

General

Vasta Platform Limited was incorporated on October 16, 2019, as a Cayman Islands exempted company with limited liability duly registered with the Cayman Islands Registrar of Companies. Our corporate purposes are unrestricted, and we have the authority to carry out any object not prohibited by any law as provided by Section 7(4) of Companies Act (As Revised) of the Cayman Islands, or the Companies Act.

Our affairs are governed principally by: (1) Memorandum and Articles of Association; (2) the Companies Act; and (3) the common law of the Cayman Islands. As provided in our Memorandum and Articles of Association, subject to Cayman Islands law, we have full capacity to carry on or undertake any business or activity, do any act or enter into any transaction, and, for such purposes, full rights, powers and privileges. Our registered office is c/o Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman, KY1‑1104, Cayman Islands.

Our shareholders adopted the Memorandum and Articles of Association included as Exhibit 3.1 to the Amendment No. 1 to our registration statement on Form F-1 (File no. 333- 239686), filed with the SEC on July 23, 2020.

Our Memorandum and Articles of Association authorize the issuance of share capital of up to 1,000,000,000 shares of a nominal or par value of US$0.00005 each, which at the date of this annual report comprise 500,000,000 Class A common shares and 250,000,000 Class B common (which may be converted into Class A common shares in the manner contemplated in our Articles of Association), and 250,000,000 shares of such class or classes (howsoever designated) and having the rights that our board of directors may determine.

The following is a summary of the material provisions of our authorized share capital and our Memorandum and Articles of Association.

Share Capital

The Memorandum and Articles of Association authorize two classes of common shares: Class A common shares, which are entitled to one vote per share, and Class B common shares, which are entitled to 10 votes per share and to maintain a proportional ownership interest in the event that additional Class A common shares are issued. Any holder of Class B common shares may convert his or her shares at any time into Class A common shares on a share‑for‑share basis. The rights of the two classes of common shares are otherwise identical, except as described below. The implementation of this dual class structure was required by Cogna, our principal shareholder, as a condition of undertaking an initial public offering of our common shares. See “—Anti‑Takeover Provisions in our Articles of Association—Two Classes of Shares”.

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As of December 31, 202 2, Vasta’s total authorized share capital was US$50,000, divided into 1,000,000,000 shares with par value of US$0.00005 each, of which:

- 500,000,000 shares are designated as Class A common shares; and
- 250,000,000 shares are designated as Class B common shares.

The remaining authorized but unissued shares are presently undesignated and may be issued by our board of directors as common shares of any class or as shares with preferred, deferred or other special rights or restrictions.

Treasury Stock

As of December 31, 202 2, Vasta had 1,000,000 shares in treasury.

Issuance of Shares

Except as expressly provided in Vasta’s Articles of Association, Vasta’s board of directors has general and unconditional authority to allot, grant options over, offer or otherwise deal with or dispose of any unissued shares in the company’s capital without the approval of our shareholders (whether forming part of the original or any increased share capital), either at a premium or at par, with or without preferred, deferred or other special rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise and to such persons, on such terms and conditions, and at such times as the directors may decide, but so that no share shall be issued at a discount, except in accordance with the provisions of the Companies Act. In accordance with its Articles of Association, Vasta shall not issue bearer shares.

Vasta’s Articles of Association provide that at any time that there are Class A common shares in issue, additional Class B common shares may only be issued pursuant to (1) a share split, subdivision of shares or similar transaction or where a dividend or other distribution is paid by the issue of shares or rights to acquire shares or following capitalization of profits, (2) a merger, consolidation, or other business combination involving the issuance of Class B common shares as full or partial consideration, or (3) an issuance of Class A common shares, whereby holders of the Class B common shares are entitled to purchase a number of Class B common shares that would allow them to maintain their proportional ownership interests in Vasta (following an offer by Vasta to each holder of Class B common shares to issue to such holder, upon the same economic terms and at the same price, such number of Class B common shares as would ensure such holder may maintain a proportional ownership interest in Vasta pursuant to Vasta’s Articles of Association). In light of: (a) the above provisions; (b) the fact that future transfers by holders of Class B common shares will generally result in those shares converting to Class A common shares, subject to limited exceptions as provided in the Articles of Association; and (c) the ten‑to‑one voting ratio between our Class B common shares and Class A common shares, means that holders of our Class B common shares will in many situations continue to maintain control of all matters requiring shareholder approval. This concentration of ownership and voting power will limit or preclude your ability to influence corporate matters for the foreseeable future. For more information see “—Preemptive or Similar Rights”.

Vasta’s Articles of Association also provide that the issuance of non‑voting common shares requires the affirmative vote of a majority of the of then‑outstanding Class A common shares.

Fiscal Year

Vasta’s fiscal year begins on January 1 of each year and ends on December 31 of the same year.

Voting Rights

The holders of the Class A common shares and Class B common shares have identical rights, except that (1) the holder of Class B common shares is entitled to 10 votes per share, whereas holders of Class A common shares are entitled to one vote per share, (2) Class B common shares have certain conversion rights and (3) the holder of Class B common shares is entitled to maintain a proportional ownership interest in the event that additional Class A common shares are issued. For more information see “—Preemptive or Similar Rights” and “—Conversion”. The holders of Class A common shares and Class B common shares vote together as a single class on all matters (including the election of directors) submitted to a vote of shareholders, except as provided below and as otherwise required by law.

Vasta’s Articles of Association provide as follows regarding the respective rights of holders of Class A common shares and Class B common shares:

(1)Class consents from the holders of Class A common shares or Class B common shares, as applicable, shall be required for any variation to the rights attached to their respective class of shares, however, the Directors may treat any two or more classes of shares as forming one class if they consider that all such classes would be affected in the same way by the proposal;

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(2)the rights conferred on holders of Class A common shares shall not be deemed to be varied by the creation or issue of further Class B common shares and vice versa; and

(3)the rights attaching to the Class A common shares and the Class B common shares shall not be deemed to be varied by the creation or issue of shares with preferred or other rights, including, without limitation, shares with enhanced or weighted voting rights.

As set forth in the Articles of Association, the holders of Class A common shares and Class B common shares, respectively, do not have the right to vote separately if the number of authorized shares of such class is increased or decreased. Rather, the number of authorized Class A common shares and Class B common shares may be increased or decreased (but not below the number of shares of such class then outstanding) by the affirmative vote of the holders of a majority of the voting power of the issued and outstanding Class A common shares and Class B common shares, voting together in a general meeting.

Preemptive or Similar Rights

The Class A common shares and Class B common shares are not entitled to preemptive rights upon transfer and are not subject to conversion (except as described below under “—Conversion”), redemption or sinking fund provisions.

The Class B common shares are entitled to maintain a proportional ownership interest in the event that additional Class A common shares are issued. As such, except for certain exceptions, if Vasta issues Class A common shares, it must first make an offer to each holder of Class B common shares to issue to such holder on the same economic terms such number of Class B common shares as would ensure such holder may maintain a proportional ownership interest in Vasta. This right to maintain a proportional ownership interest may be waived by a majority of the holders of Class B common shares.

Conversion

The outstanding Class B common shares are convertible at any time as follows: (1) at the option of the holder, a Class B common share may be converted at any time into one Class A common share or (2) upon the election of the holders of a majority of the then outstanding Class B common shares, all outstanding Class B common shares may be converted into a like number of Class A common shares. In addition, each Class B common share will convert automatically into one Class A common share upon any transfer, whether or not for value, except for certain transfers described in the Articles of Association, including transfers to affiliates, transfers to and between Cogna, transfers to subsidiaries of Cogna, transfers to trusts solely for the benefit of Cogna or its affiliates, and partnerships, corporations and other entities exclusively owned by Cogna or its affiliates and certain transfers to organizations that are exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. Furthermore, each Class B common share will convert automatically into one Class A common share and no Class B common shares will be issued thereafter if, at any time, the total number of the issued and outstanding Class B common shares is less than 10% of the total number of shares outstanding.

No class of Vasta’s common shares may be subdivided or combined unless the other class of common shares is concurrently subdivided or combined in the same proportion and in the same manner.

Equal Status

Except as expressly provided in Vasta’s Articles of Association, Class A common shares and Class B common shares have the same rights and privileges and rank equally, share proportionally and are identical in all respects as to all matters. In the event of any merger, consolidation, scheme, arrangement or other business combination requiring the approval of our shareholders entitled to vote thereon (whether or not Vasta is the surviving entity), the holders of Class A common shares shall have the right to receive, or the right to elect to receive, the same form of consideration as the holders of Class B common shares, and the holders of Class A common shares shall have the right to receive, or the right to elect to receive, at least the same amount of consideration on a per share basis as the holders of Class B common shares. In the event of any (1) tender or exchange offer to acquire any Class A common shares or Class B common shares by any third‑party pursuant to an agreement to which Vasta is a party, or (2) any tender or exchange offer by Vasta to acquire any Class A common shares or Class B common shares, the holders of Class A common shares shall have the right to receive, or the right to elect to receive, the same form of consideration as the holders of Class B common shares, and the holders of Class A common shares shall have the right to receive, or the right to elect to receive, at least the same amount of consideration on a per share basis as the holders of Class B common shares.

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Record Dates

For the purpose of determining shareholders entitled to notice of, or to vote at any general meeting of shareholders or any adjournment thereof, or shareholders entitled to receive dividend or other distribution payments, or in order to make a determination of shareholders for any other purpose, Vasta’s board of directors may set a record date which shall not exceed forty (40) clear days prior to the date where the determination will be made.

General Meetings of Shareholders

As a condition of admission to a shareholders’ meeting, a shareholder must be duly registered as a shareholder of Vasta at the applicable record date for that meeting and, in order to vote, all calls or installments then payable by such shareholder to Vasta in respect of the shares that such shareholder holds must have been paid.

Subject to any special rights or restrictions as to voting then attached to any shares, at any general meeting every shareholder who is present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative not being himself or herself a shareholder entitled to vote) shall have one vote per Class A common share and 10 votes per Class B common share.

As a Cayman Islands exempted company, Vasta is not obliged by the Companies Act to call annual general meetings; however, the Articles of Association provide that in each year the company will hold an annual general meeting of shareholders, at a time determined by the board of directors. For the annual general meeting of shareholders, the agenda will include, among other things, the presentation of the annual accounts and the report of the directors. In addition, the agenda for an annual general meeting of shareholders will only include such items as have been included therein by the board of directors.

Also, Vasta may, but is not required to (unless required by the laws of the Cayman Islands), hold other extraordinary general meetings during the year. General meetings of shareholders are generally expected to take place in São Paulo, Brazil, but may be held elsewhere if the directors so decide.

The Companies Act provides shareholders a limited right to request a general meeting and does not provide shareholders with any right to put any proposal before a general meeting in default of a company’s Articles of Association. However, these rights may be provided in a company’s Articles of Association. Vasta’s Articles of Association provide that upon the requisition of one or more shareholders representing not less than one‑third of the voting rights entitled to vote at general meetings, the board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. The Articles of Association provide no other right to put any proposals before annual general meetings or extraordinary general meetings.

Subject to regulatory requirements, the annual general meeting and any extraordinary general meetings must be called by not less than ten (10) clear days’ notice prior to the relevant shareholders meeting and convened by a notice, as discussed below. Alternatively, upon the prior consent of all holders entitled to receive notice, with regards to the annual general meeting, and the holders of 95% in par value of the shares entitled to attend and vote at an extraordinary general meeting, that meeting may be convened by a shorter notice and in a manner deemed appropriate by those holders.

Vasta will give notice of each general meeting of shareholders by publication on its website and in any other manner that it may be required to follow in order to comply with Cayman Islands law, Nasdaq and SEC requirements. The holders of registered shares may be given notice of a shareholders’ meeting by means of letters sent to the addresses of those shareholders as registered in our shareholders’ register, or, subject to certain statutory requirements, by electronic means.

Holders whose shares are registered in the name of DTC or its nominee, which we expect will be the case for all holders of Class A common shares, will not be a shareholder or member of the company and must rely on the procedures of DTC regarding notice of shareholders’ meetings and the exercise of rights of a holder of the Class A common shares.

A quorum for a general meeting consists of any one or more persons holding or representing by proxy not less than one‑third of the aggregate voting power of all shares in issue and entitled to vote upon the business to be transacted.

A resolution put to a vote at a general meeting shall be decided on a poll. An ordinary resolution to be passed by the shareholders at a general meeting requires the affirmative vote of a simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote, present in person or by proxy and voting at the meeting. A special resolution requires the affirmative vote on a poll of no less than two‑thirds of the votes cast by the shareholders entitled to vote who are present in person or by proxy at a general meeting. Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by all of our shareholders, as permitted by the Companies Act and our Articles of Association.

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Pursuant to Vasta’s Articles of Association, general meetings of shareholders are to be chaired by the chairman of our board of directors or in his absence the vice‑chairman of the board of directors. If both the chairman and vice‑chairman of our board of directors are absent, the directors present at the meeting shall appoint one of them to be chairman of the general meeting. If neither the chairman nor another director is present at the general meeting within 15 minutes after the time appointed for holding the meeting, the shareholders present in person or by proxy and entitled to vote may elect any one of the shareholders to be chairman. The order of business at each meeting shall be determined by the chairman of the meeting, and he or she shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on our affairs, restrictions on entry to such meeting after the time prescribed for the commencement thereof, and the opening and closing of the polls.

Liquidation Rights

If Vasta is voluntarily wound up, the liquidator, after taking into account and giving effect to the rights of preferred and secured creditors and to any agreement between Vasta and any creditors that the claims of such creditors shall be subordinated or otherwise deferred to the claims of any other creditors and to any contractual rights of set-off or netting of claims between Vasta and any person or persons (including without limitation any bilateral or any multi-lateral set-off or netting arrangements between the company and any person or persons) and subject to any agreement between Vasta and any person or persons to waive or limit the same, shall apply Vasta’s property in satisfaction of its liabilities pari passu and subject thereto shall distribute the property amongst the shareholders according to their rights and interests in Vasta.

Changes to Capital

Pursuant to the Articles of Association, Vasta may from time to time by ordinary resolution:

- increase its share capital by such sum, to be divided into shares of such amount, as the resolution shall prescribe;
- consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares;
- convert all or any of its paid-up shares into stock and reconvert that stock into paid up shares of any denomination;
- subdivide its existing shares or any of them into shares of a smaller amount, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; or
- cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.

Vasta’s shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by us for an order confirming such reduction, reduce its share capital or any capital redemption reserve in any manner permitted by law.

In addition, subject to the provisions of the Companies Act and our Articles of Association, Vasta may:

- issue shares on terms that they are to be redeemed or are liable to be redeemed;
- purchase its own shares (including any redeemable shares); and
- make a payment in respect of the redemption or purchase of its own shares in any manner authorized by the Companies Act, including out of its own capital.

Transfer of Shares

Subject to any applicable restrictions set forth in the Articles of Association, any shareholder of Vasta may transfer all or any of his or her common shares by an instrument of transfer in the usual or common form or in the form prescribed by the Nasdaq or any other form approved by our board of directors.

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The Class A common shares are traded on the Nasdaq in book-entry form and may be transferred in accordance with Vasta’s Articles of Association and the Nasdaq’s rules and regulations.

However, Vasta’s board of directors may, in its absolute discretion, decline to register any transfer of any common share which is either not fully paid up to a person of whom it does not approve or is issued under any share incentive scheme for employees which contains a transfer restriction that is still applicable to such common share. The board of directors may also decline to register any transfer of any common share unless:

- a fee of such maximum sum as the Nasdaq may determine to be payable or such lesser sum as the board of directors may from time to time require is paid to Vasta in respect thereof;
- the instrument of transfer is lodged with Vasta, accompanied by the certificate (if any) for the common shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;
- the instrument of transfer is in respect of only one class of shares;
- the instrument of transfer is properly stamped, if required;
- the common shares transferred are free of any lien in favor of Vasta; and
- in the case of a transfer to joint holders, the transfer is not to more than four joint holders.

If the directors refuse to register a transfer they are required, within two months after the date on which the instrument of transfer was lodged, to send to the transferee notice of such refusal.

Share Repurchase

The Companies Act and the Articles of Association permit Vasta to purchase its own shares, subject to certain restrictions. The board of directors may only exercise this power on behalf of Vasta, subject to the Companies Act, the Articles of Association and to any applicable requirements imposed from time to time by the SEC, the Nasdaq, or by any recognized stock exchange on which our securities are listed.

On August 13, 2021, our board of Directors approved our first share repurchase program, or the Repurchase Program. Under the Repurchase Program, we are entitled to repurchase up to 1,000,000 Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period that began on August 17, 2021, continuing until the earlier of the completion of the repurchase or February 17, 2022, depending upon market conditions. We concluded the Repurchase Program on December 10, 2021, using our existing funds to finance the repurchase, and on December 31, 202 2, we had a balance of R$23.9 million or 1,000,000 shares held as treasury shares.

Our Board of Directors also authorized management to appoint Morgan Stanley & Co LLC as our agent to purchase s ecurities on its behalf in the open market. It is our intention such purchases benefit from the safe harbor provided by Rule 10b-18, promulgated by the SEC under the Exchange Act. Accordingly, we shall not take, nor permit any person or entity under its control to take, any action that could jeopardize the availability of Rule 10b-18 for purchases of our common shares under the program.

Dividends and Capitalization of Profits

We have not adopted a dividend policy with respect to payments of any future dividends by Vasta. Subject to the Companies Act, Vasta’s shareholders may, by resolution passed by a simple majority of the voting rights entitled to vote at a general meeting, declare dividends (including interim dividends) to be paid to shareholders but no dividend shall be declared in excess of the amount recommended by the board of directors. The board of directors may also declare dividends. Dividends may be declared and paid out of funds lawfully available to Vasta. Except as otherwise provided by the rights attached to shares and the Articles of Association of Vasta, all dividends shall be paid in proportion to the number of Class A common shares or Class B common shares a shareholder holds at the date the dividend is declared (or such other date as may be set as a record date); but, (1) if any share is issued on terms providing that it shall rank for dividend as from a particular date, that share shall rank for dividend accordingly, and (2) where we have shares in issue which are not fully paid up (as to par value) we may pay dividends in proportion to the amounts paid up on each share.

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The holders of Class A common shares and Class B common shares shall be entitled to share equally in any dividends that may be declared in respect of Vasta’s common shares from time to time. In the event that a dividend is paid in the form of Class A common shares or Class B common shares, or rights to acquire Class A common shares or Class B common shares, (1) the holders of Class A common shares shall receive Class A common shares, or rights to acquire Class A common shares, as the case may be; and (2) the holders of Class B common shares shall receive Class B common shares, or rights to acquire Class B common shares, as the case may be.

Appointment, Disqualification and Removal of Directors

Vasta is managed by its board of directors. The Articles of Association provide that, unless otherwise determined by a special resolution of shareholders, the board of directors will be composed of four (4) to eleven (11) directors, with the number being determined by a majority of the directors then in office. There are no provisions relating to retirement of directors upon reaching any age limit. The Articles of Association also provide that, while Vasta’s shares are admitted to trading on the Nasdaq, the board of directors must always comply with the residency and citizenship requirements of the U.S. securities laws applicable to foreign private issuers.

The Articles of Association provide that directors shall be elected by an ordinary resolution of our shareholders, which requires the affirmative vote of a simple majority of the votes cast on the resolution by the shareholders entitled to vote who are present, in person or by proxy, at the meeting. Each director shall be appointed and elected for such term as the resolution appointing him or her may determine or until his or her death, resignation or removal.

Any vacancies on the board of directors that arise other than upon the removal of a director by resolution passed at a general meeting can be filled by the remaining directors (notwithstanding that they may constitute less than a quorum). Any such appointment shall be as an interim director to fill such vacancy until the next annual general meeting of shareholders.

Additions to the existing board (within the limits set pursuant to the Articles of Association) may be made by ordinary resolution of the shareholders.

Our audit committee was established on March 2, 2020. See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Committees of the Board of Directors”.

Grounds for Removing a Director

A director may be removed with or without cause by ordinary resolution. The notice of general meeting must contain a statement of the intention to remove the director and must be served on the director not less than ten calendar days before the meeting. The director is entitled to attend the meeting and be heard on the motion for his removal.

The office of a director will be vacated automatically if he or she (1) becomes prohibited by law from being a director, (2) becomes bankrupt or makes an arrangement or composition with his creditors, (3) dies or is, in the opinion of all his co-directors, incapable by reason of mental disorder of discharging his duties as director, (4) resigns his office by notice to us or (5) has for more than six months been absent without permission of the directors from meetings of the board of directors held during that period, and the remaining directors resolve that his or her office be vacated.

Proceedings of the Board of Directors

The Articles of Association provide that Vasta’s business is to be managed and conducted by the board of directors. The quorum necessary for the board meeting shall be a simple majority of the directors then in office (subject to there being a minimum of two directors present) and business at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a casting vote.

Subject to the provisions of the Articles of Association, the board of directors may regulate its proceedings as they determine is appropriate. Board meetings shall be held at least once every calendar quarter and shall take place either in São Paulo, Brazil or at such other place as the directors may determine.

Subject to the provisions of the Articles of Association, to any directions given by ordinary resolution of the shareholders and the listing rules of the Nasdaq, the board of directors may from time to time at its discretion exercise all powers of Vasta, including, subject to the Companies Act, the power to issue debentures, bonds and other securities of the company, whether outright or as collateral security for any debt, liability or obligation of our company or of any third party.

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Inspection of Books and Records

Holders of Vasta shares will have no general right under Cayman Islands law to inspect or obtain copies of the list of our shareholders or our corporate records. However, the board of directors may determine from time to time whether and to what extent Vasta’s accounting records and books shall be open to inspection by shareholders who are not members of the board of directors. Notwithstanding the above, the Articles of Association provide shareholders with the right to receive annual financial statements. Such right to receive annual financial statements may be satisfied by publishing the same on the company’s website or filing such annual reports as we are required to file with the SEC.

Register of Shareholders

The Class A common shares are held through DTC, and DTC or Cede & Co., as nominee for DTC, will be recorded in the shareholders’ register as the holder of our Class A common shares.

Under Cayman Islands law, Vasta must keep a register of shareholders that includes:

- the names and addresses of the shareholders, a statement of the shares held by each member, and of the amount paid or agreed to be considered as paid, on the shares of each member;

- whether voting rights attach to the shares in issue;

- the date on which the name of any person was entered on the register as a member; and
- the date on which any person ceased to be a member.

Under Cayman Islands law, the register of shareholders of Vasta is prima facie evidence of the matters set out therein (i.e., the register of shareholders will raise a presumption of fact on the matters referred to above unless rebutted) and a shareholder registered in the register of shareholders is deemed as a matter of Cayman Islands law to have prima facie legal title to the shares as set against his or her name in the register of shareholders. Once the register of shareholders has been updated, the shareholders recorded in the register of shareholders should be deemed to have legal title to the shares set against their name.

However, there are certain limited circumstances where an application may be made to a Cayman Islands court for a determination on whether the register of members reflects the correct legal position. Further, the Cayman Islands court has the power to order that the register of members maintained by a company should be rectified where it considers that the register of members does not reflect the correct legal position. If an application for an order for rectification of the register of members were made in respect of our ordinary shares, then the validity of such shares may be subject to re-examination by a Cayman Islands court.

Exempted Company

Vasta is an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except for the exemptions and privileges listed below:

- an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies;
- an exempted company’s register of shareholders is not open to inspection;
- an exempted company does not have to hold an annual general meeting;
- an exempted company may issue shares with no par value;
- an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);
- an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
- an exempted company may register as a limited duration company; and
- an exempted company may register as a segregated portfolio company.

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“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

Vasta is subject to reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. Except as otherwise disclosed in this annual report, Vasta currently intends to comply with the Nasdaq rules in lieu of following home country practice.

Anti-Takeover Provisions in Our Articles of Association

Some provisions of the Articles of Association may discourage, delay or prevent a change in control of Vasta or management that shareholders may consider favorable. In particular, the capital structure of Vasta concentrates ownership of voting rights in the hands of Cogna. These provisions, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of Vasta to first negotiate with the board of directors. However, these provisions could also have the effect of discouraging others from attempting hostile takeovers and, consequently, they may also inhibit temporary fluctuations in the market price of the Class A common shares that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in the management of Vasta. It is possible that these provisions could make it more difficult to accomplish transactions that shareholders may otherwise deem to be in their best interests.

Two Classes of Common Shares

The Class B common shares of Vasta are entitled to 10 votes per share, while the Class A common shares are entitled to one vote per share. Since it owns of all of the Class B common shares of Vasta, Cogna currently has the ability to elect all directors and to determine the outcome of most matters submitted for a vote of shareholders. This concentrated voting control could discourage others from initiating any potential merger, takeover, or other change of control transaction that other shareholders may view as beneficial.

So long as Cogna has the ability to determine the outcome of most matters submitted to a vote of shareholders as well as the overall management and direction of Vasta, third parties may be deterred in their willingness to make an unsolicited merger, takeover, or other change of control proposal, or to engage in a proxy contest for the election of directors. As a result, the fact that Vasta has two classes of common shares may have the effect of depriving you as a holder of Class A common shares of an opportunity to sell your Class A common shares at a premium over prevailing market prices and make it more difficult to replace the directors and management of Vasta.

Preferred Shares

Vasta’s board of directors is given wide powers to issue one or more classes or series of shares with preferred rights. Such preferences may include, for example, dividend rights, conversion rights, redemption privileges, enhanced voting powers and liquidation preferences.

Despite the anti-takeover provisions described above, under Cayman Islands law, Vasta’s board of directors may only exercise the rights and powers granted to them under the Articles of Association, for what they believe in good faith to be in the best interests of Vasta.

Protection of Non-Controlling Shareholders

The Grand Court of the Cayman Islands may, on the application of shareholders holding not less than one fifth of the shares of Vasta in issue, appoint an inspector to examine our affairs and report thereon in a manner as the Grand Court shall direct.

Subject to the provisions of the Companies Act, any shareholder may petition the Grand Court of the Cayman Islands which may make a winding up order, if the court is of the opinion that this winding up is just and equitable.

Notwithstanding the U.S. securities laws and regulations that are applicable to Vasta, general corporate claims against Vasta by its shareholders must, as a general rule, be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by Vasta’s Articles of Association.

The Cayman Islands courts ordinarily would be expected to follow English case law precedents, which permit a minority shareholder to commence a representative action against Vasta, or derivative actions in Vasta’s name, to challenge (1) an act which is ultra vires or illegal, (2) an act which constitutes a fraud against the minority and the wrongdoers themselves control Vasta, and (3) an irregularity in the passing of a resolution that requires a qualified (or special) majority.

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C.Material Contracts

See “Item 7. Major Shareholders and Related Party Transactions—B. Related party transactions”. Except as otherwise disclosed in this annual report on Form 20-F (including the Exhibits), we are not currently, and have not been in the last two years, party to any material contract, other than contracts entered into in the ordinary course of business.

D.Exchange Controls

The Cayman Islands currently has no exchange control restrictions.

E.Taxation

The following summary contains a description of material Cayman Islands and U.S. federal income tax consequences of the acquisition, ownership and disposition of our Class A common shares. It does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase the Class A common shares, is not applicable to all categories of investors, some of which may be subject to special rules, and does not address all of the Cayman Islands and U.S. federal income tax considerations applicable to any particular holder. The summary is based upon the tax laws of the Cayman Islands and the United States and regulations thereunder as of the date hereof, which are subject to change.

Prospective purchasers of our Class A common shares should consult their own tax advisors about the particular Cayman Islands and U.S. federal, state, local and other tax consequences to them of the acquisition, ownership and disposition of our Class A common shares.

Cayman Islands Tax Considerations

The Cayman Islands laws currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty or withholding tax applicable to us or to any holder of Class A common shares. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands. The Cayman Islands is not party to any double tax treaties which are applicable to any payments made by or to our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

As a Cayman Islands exempted company with limited liability, we are entitled, upon application, to receive an undertaking as to tax concessions pursuant to Section 6 of the Tax Concessions Law (2018 Revision). This undertaking would provide that, for a period of 20 years from the date of issue of the undertaking, no law thereafter enacted in the Cayman Islands imposing any taxes to be levied on profits, income, gains or appreciation will apply to us or our operations.

Payments of dividends and capital in respect of our Class A common shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Class A common shares, nor will gains derived from the disposal of our Class A common shares be subject to Cayman Islands income or corporation tax.

There is no income tax treaty or convention currently in effect between the United States and the Cayman Islands.

Material U.S. Federal Income Tax Considerations for U.S. Holders

The following summary describes the U.S. federal income tax consequences of the acquisition, ownership and disposition of our Class A common shares, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a particular person’s decision to acquire such securities.

This summary applies only to U.S. Holders (as defined below) that hold our Class A common shares as capital assets for tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including alternative minimum tax consequences, the potential application of the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), known as the Medicare contribution tax, and tax consequences applicable to U.S. Holders subject to special rules, such as:

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- certain financial institutions;
- insurance companies;
- real estate investment trusts or regulated investment companies;
- dealers or traders in securities that use a mark-to-market method of tax accounting;
- persons holding Class A common shares as part of a hedging transaction, straddle, wash sale, conversion transaction or other integrated transaction, or persons entering into a constructive sale with respect to the Class A common shares;
- persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
- tax-exempt entities, including an “individual retirement account” or “Roth IRA”;
- entities classified as partnerships for U.S. federal income tax purposes;
- persons that own or are deemed to own ten percent or more of our stock, by vote or value;
- persons who acquired our Class A common shares pursuant to the exercise of an employee stock option or otherwise as compensation; or
- persons holding our Class A common shares in connection with a trade or business conducted outside of the United States.

If an entity or arrangement that is classified as a partnership for U.S. federal income tax purposes holds our Class A common shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding our Class A common shares and partners in such partnerships should consult their tax advisors as to the particular U.S. federal income tax consequences of holding and disposing of the Class A common shares.

This discussion is based on the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury regulations, all as of the date hereof, any of which is subject to change or differing interpretations, possibly with retroactive effect.

A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of our Class A common shares and is:

- an individual that is a citizen or resident of the United States;
- a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or
- an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

U.S. Holders should consult their tax advisors concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of our Class A common shares in their particular circumstances.

Except where noted, this discussion assumes that we are not, and will not become, a passive foreign investment company (a “PFIC”), as described below.

Taxation of Distributions

As discussed above under “Dividends and Dividend Policy”, we may not pay dividends. In the event that we do pay dividends, and subject to the discussion below under “—Passive Foreign Investment Company Rules”, distributions paid on our Class A common shares, other than certain pro rata distributions of common shares, will be treated as dividends for U.S. federal income tax purposes to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. Subject to applicable limitations, dividends paid to certain non-corporate U.S. Holders may be eligible for taxation as “qualified dividend income” and therefore may be taxable at rates applicable to long-term capital gains, so long as our Class A common shares are listed and traded on the Nasdaq or are readily tradable on another established securities market in the United States. U.S. Holders should consult their tax advisors regarding the availability of the reduced tax rate on dividends in their particular circumstances.

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The amount of any dividend will generally be treated as foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code. Dividends will be included in a U.S. Holder’s income on the date of the U.S. Holder’s receipt of the dividend.

Sale or Other Disposition of Class A Common Shares

Subject to the discussion below under “—Passive Foreign Investment Company Rules”, for U.S. federal income tax purposes, gain or loss realized on the sale or other disposition of our Class A common shares will be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder held the Class A common shares for more than one year. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the Class A common shares disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. The deductibility of capital losses is subject to various limitations.

Passive Foreign Investment Company Rules

A non-U.S. corporation will be a PFIC for any taxable year in which either (1) 75% or more of its gross income consists of “passive income”, or (2) 50% or more of the average quarterly value of its assets consist of assets that produce, or are held for the production of, “passive income”. For this purpose, subject to certain exceptions, passive income includes interest, dividends, rents and gains from transactions in commodities. A non-U.S. corporation will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or indirectly, more than 25% (by value) of the stock.

We believe we were not a PFIC for our 2022 taxable year. However, because PFIC status depends on the composition of a company’s income and assets and the market value of its assets from time to time, there can be no assurance that we will not be a PFIC for any taxable year. If we were a PFIC for any year during which a U.S. Holder holds our Class A common shares, we generally would continue to be treated as a PFIC with respect to that U.S. Holder for all succeeding years during which the U.S. Holder holds the Class A common shares, even if we ceased to meet the threshold requirements for PFIC status.

If we were a PFIC for any taxable year during which a U.S. Holder held our Class A common shares (assuming such U.S. Holder has not made a timely election described below), gain recognized by a U.S. Holder on a sale or other disposition (including certain pledges) of the Class A common shares would be allocated ratably over the U.S. Holder’s holding period for the Class A common shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the tax on such amount. Further, to the extent that any distribution received by a U.S. Holder on its Class A common shares exceeds 125% of the average of the annual distributions on the Class A common shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, that distribution would be subject to taxation in the same manner as gain, described immediately above. If we are a PFIC in any year, certain elections may be available that would result in alternative tax treatments (such as mark-to-market treatment) of owning and disposing of the Class A common shares. U.S. Holders should consult their tax advisors to determine whether any of these elections would be available and, if so, what the consequences of the alternative treatments would be in their particular circumstances.

In addition, if we were a PFIC or, with respect to a particular U.S. Holder, were treated as a PFIC for the taxable year in which we paid a dividend or for the prior taxable year, the preferential dividend rates discussed above with respect to dividends paid to certain non-corporate U.S. Holders would not apply.

If a U.S. Holder owns Class A common shares during any year in which we are a PFIC, the holder generally must file an annual report containing such information as the U.S. Treasury may require on IRS Form 8621 (or any successor form) with respect to us, generally with the holder’s federal income tax return for that year.

U.S. Holders should consult their tax advisors concerning our potential PFIC status and the potential application of the PFIC rules.

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Information Reporting and Backup Withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (1) the U.S. Holder is a corporation or other exempt recipient or (2) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the IRS. U.S. Holders should consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Information with Respect to Foreign Financial Assets

Certain U.S. Holders may be required to report information on their U.S. federal income tax returns relating to an interest in our Class A common shares, subject to certain exceptions (including an exception for Class A common shares held in accounts maintained by certain U.S. financial institutions). U.S. Holders should consult their tax advisors regarding the effect, if any, of this requirement on their ownership and disposition of the Class A common shares.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information filed with the SEC at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

I. Subsidiary Information

Not applicable.

J. Annual Report to Security Holders

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosure about Market Risk

We are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and foreign currency fluctuations.

Information relating to quantitative and qualitative disclosures about these market risks is described below.

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Interest Rate Risk

Interest rate risk represents the chance that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Our exposure to this risk relates primarily to our investments with floating interest rates, as well as our main financial liabilities, which refer to financing with financial institutions (including through the issuance of bonds), indebtedness with related parties and suppliers (including reverse factoring). We are primarily exposed to fluctuations in CDI interest rates on financial investments and financial liabilities.

The following table presents our sensitivity analysis over our financial instruments, in which we calculated the base rate, which is the expected impact for one year from the date, given the index rate and the current scenario for the CDI interest rate and IPCA inflation rate. We also disclose hypothetical scenarios for increases of 25% and 50% in the interest rate in one year from the reporting date and their potential impact on our financial assets and liabilities as of December 31, 2022.

| Index - % per year |  | Balance as of December 31, 202 2 |  | Base Scenario |  | Scenario I |  | Scenario II |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
| (R$ thousands, except percentages) |
Financial Investments | 103.40% of CDI |  | 39,212 |  | 4,874 |  | 6,093 |  | 7,311 |
Marketable Securities | 103.39% CDI |  | 380,514 |  | 47,298 |  | 59,122 |  | 70,947 |
Accounts Payable for Business Combination | 100.0% of CDI |  | (625,277) |  | (77,722) |  | (97,152) |  | (116,583) |
Lease Liabilities | CDI + 1.28% |  | (140,563) |  | (17,472) |  | (21,840) |  | (26,208) |
Bonds and Financing | CDI + 1.66% |  | (842,996) |  | (104,784) |  | (130,981) |  | (157,177) |
Net Exposure |  |  | (1,18 9,110) |  | (1 47,806) |  | (1 84,758) |  | (2 21,710) |

Foreign Exchange Risk

Our results of operations are not subject to significant fluctuations resulting from the effects of the volatility of any exchange rate.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

Not applicable.

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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Defaults

No matters to report.

Arrears and Delinquencies

No matters to report.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

A. Material Modifications to Instruments

Not applicable.

B. Material Modifications to Rights

Not applicable.

C. Withdrawal or Substitution of Assets

Not applicable.

D. Change in Trustees or Paying Agents

Not applicable.

E. Use of Proceeds

On July 23, 2020, the registration statement on Form F-1 (File No 333-239686) relating to our initial public offering of our common shares was declared effective by the SEC. On July 23, 2020, we commenced our initial public offering. On August 4, 2020, we closed our initial public offering, pursuant to which we issued and sold 18,575,492 Class A common shares. Goldman Sachs & Co. LLC, BofA Securities, Inc., Morgan Stanley & Co. LLC and Itau BBA USA Securities, Inc., acted as the representatives of the underwriters in our initial public offering. The 18,575,492 registered common shares were sold to the public at a price of US$19.00 per common share, for an aggregate price of US$353.0 million. We paid approximately US$19.4 million in underwriting discounts and commissions.

ITEM 15. CONTROLS AND PROCEDURES

A. Disclosure Controls and Procedures

We have evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of December 31, 2022. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were ineffective as of December 31, 2022, due to the material weaknesses mentioned in “Item 3. Key Information—D. Risk Factors”, to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

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B. Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control system was designed to provide reasonable assurance as to the integrity and reliability of the published financial statements. All internal control systems, no matter how well designed, may have inherent limitations and can provide reasonable assurance that the objectives of the control system are met.

Our internal control over financial reporting includes those policies and procedures that:

- Pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors; and
- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.

Management evaluated the effectiveness of internal control over financial reporting under the supervision of our chief executive officer and chief financial officer or CFO as of December 31, 2022 based on the criteria set out in the Committee of Sponsoring Organizations of the Treadway Commission framework, or the COSO framework, and concluded that, as of December 31, 2022, our internal controls were ineffective due to the material weaknesses discussed in “Item 3. Key Information—D. Risk Factors—Material weaknesses in our internal control over financial reporting have been identified, and if we fail to establish and maintain proper and effective internal controls over financial reporting, our results of operations and our ability to operate our business may be harmed”.

C. Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for emerging growth companies.

D. Changes in Internal Control over Financial Reporting

Other than the material weaknesses mentioned in “Item 3. Key Information—D. Risk Factors”, there have been no changes in our internal control over financial reporting during the period covered by this annual report that have materially affected or reasonably likely to materially affect our internal control over financial reporting.

ITEM 16. RESERVED
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

The audit committee, which consists of Andrés Cardó Soria and Ann Williams, assists our board of directors in overseeing our accounting and financial reporting processes and the audits of our financial statements.

ITEM 16B. CODE OF ETHICS

On June 22, 2020, our board of directors adopted a code of ethics that applies to all of our employees, officers and directors. An English translation of the Code of Ethics was included as Exhibit 14.1 to our registration statement on Form F-1 (File no. 333-239686), filed with the SEC on July 23, 2020. Since its effective date on June 22, 2020, we have not waived compliance with or amended the Code of Ethics.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit and Non-Audit Fees

The following table sets forth the fees billed to us by our independent registered public accounting firm during the years ended December 31, 2022 and 2021. Our independent registered public accounting firm was KPMG Auditores Independentes Ltda. for the years ended December 31, 2022 and 2021.

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| 2022 |  | 2021
--- | --- | --- | ---
| (in R$ million) |  | (in R$ million)
Audit (1) | 2.0 |  | 1.7
Total | 2.0 |  | 1.7

(1) Audit:

Activities carried out in 2022: Audit of Vasta’s consolidated financial statements for the year ended December 31, 2022; Interim reviews of Vasta’s financial statements in 2022.

Activities carried out in 2021: Audit of Vasta’s consolidated financial statements for the year ended December 31, 2021; Interim reviews of Vasta’s financial statements in 2021.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Under the listed company audit committee rules of Nasdaq and the SEC, we must comply with Exchange Act Rule 10A-3, which requires that we establish an audit committee composed of members of the board of directors that meets specified requirements. The composition of our audit committee complies with the requirements of Nasdaq rules.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

On August 13, 2021, our board of Directors approved our first share repurchase program, or the Repurchase Program. Under the Repurchase Program, we were entitled to repurchase up to 1,000,000 Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period that began on August 17, 2021, continuing until the earlier of the completion of the repurchase or February 17, 2022, depending upon market conditions. We purchased an aggregate of 1,000,000 Class A common shares for a total of approximately US$4.3 million under the Repurchase Program.

The table below sets forth the amounts and average prices of the securities repurchased pursuant to the Repurchase Program:

2021/2022 |  | Total Number of Shares Purchased |  | Average Price Paid per Share (US$) |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |  | Maximum Value of Shares that May Yet Be Purchased Under the Plans or Programs |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
August, 2021 |  | 137,060 |  | 5.78 |  | 137,060 |  | 862,940 |
September, 2021 |  | 272,930 |  | 5.15 |  | 272,930 |  | 590,010 |
October, 2021 |  | 258,175 |  | 4.29 |  | 258,175 |  | 331,835 |
November, 2021 |  | 281,722 |  | 2.89 |  | 281,722 |  | 50,113 |
December, 2021 |  | 50,113 |  | 2.58 |  | 50,113 |  | – |
Total |  | 1,000,000 |  | n/a |  | 1,000,000 |  | n/a |

(1) The column includes all the shares repurchased as a part of the Repurchase Program announced on August 13, 2021, as further described above.

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ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

Foreign Private Issuer Status

Nasdaq listing rules include certain accommodations in the corporate governance requirements that allow foreign private issuers, such as us, to follow “home country” corporate governance practices in lieu of the otherwise applicable corporate governance standards of Nasdaq. The application of such exceptions requires that we disclose each noncompliance with Nasdaq listing rules that we do not follow and describe the Cayman Islands corporate governance practices we do follow in lieu of the relevant Nasdaq corporate governance standard. As a foreign private issuer, we currently rely, and will continue to rely, on the foreign private issuer exemption with respect to the following rules:

- Nasdaq Rule 5605(b), which requires that independent directors comprise a majority of a company’s board of directors. As allowed by the laws of the Cayman Islands, independent directors do not comprise a majority of our board of directors;
- Nasdaq Rule 5605(e)(1), which requires that a company have a nominations committee comprised solely of “independent directors” as defined by Nasdaq. As allowed by the laws of the Cayman Islands, we do not have a nominations committee nor do we have any current intention to establish one;
- Nasdaq Rule 5605(d) & (e), which require that compensation for our executive officers and selection of our director nominees be determined by a majority of independent directors. As allowed by the laws of the Cayman Islands, we do not have a nomination and corporate governance committee or remuneration committee nor do we have any current intention to establish either; and
- Nasdaq Rule 5635, which requires that a listed issuer obtain shareholder approval prior to an issuance of securities in connection with: (i) the acquisition of the stock or assets of another company; (ii) equity-based compensation of officers, directors, employees or consultants; (iii) a change of control; and (iv) transactions other than public offerings. Pursuant to the laws of the Cayman Islands and our Articles of Association, we are not required to obtain any such approval.

Cayman Islands law does not impose a requirement that the board consist of a majority of independent directors or that such independent directors meet regularly without other members present nor does Cayman Islands law impose specific requirements on the establishment of a compensation committee or nominating committee or nominating process.

Principal Differences between Cayman Islands and U.S. Corporate Law

The Companies Act was modelled originally after similar laws in England and Wales but does not follow subsequent statutory enactments in England and Wales. In addition, the Companies Act differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to Vasta and the laws applicable to companies incorporated in the United States and their shareholders.

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Mergers and Similar Arrangements

The Companies Act permits mergers or consolidations between two Cayman Islands companies, or between a Cayman Islands company and a company incorporated in another jurisdiction (provided that is facilitated by the laws of that other jurisdiction).

Where the merger or consolidation is between two Cayman Islands companies, the directors of each company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution (usually a majority of 66 2/3 % in value) of the shareholders of each company; and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. No shareholder resolution is required for a merger between a parent company (i.e., a company that owns at least 90% of the issued shares of each class in a subsidiary company) and its subsidiary company. The consent of each holder of a fixed or floating security interest of a constituent company must be obtained, unless the court waives such requirement. If the Cayman Islands Registrar of Companies is satisfied that the requirements of the Companies Act (which includes certain other formalities) have been complied with, the Registrar of Companies will register the plan of merger or consolidation.

Where the merger or consolidation involves a foreign company, the procedure is similar, save that with respect to the foreign company, the director of the Cayman Islands company is required to make a declaration to the effect that, having made due enquiry, he is of the opinion that the requirements set out below have been met: (i) that the merger or consolidation is permitted or not prohibited by the constitutional documents of the foreign company and by the laws of the jurisdiction in which the foreign company is incorporated, and that those laws and any requirements of those constitutional documents have been or will be complied with; (ii) that no petition or other similar proceeding has been filed and remains outstanding or order made or resolution adopted to wind up or liquidate the company in any foreign jurisdictions, (iii) that no receiver, trustee, administrator or similar person has been appointed in any jurisdiction and is acting in respect of the foreign company, its affairs or property or any part thereof; (iv) that no scheme, order, compromise or similar arrangement has been entered into or made in any jurisdiction whereby the rights of creditors of the foreign company are and continue to be suspended or restricted.

Moreover, Cayman Islands law also has separate statutory provisions that facilitate the reconstruction or amalgamation of companies, in certain circumstances, schemes of arrangement will generally be more suited for complex mergers or other transactions involving widely held companies, commonly referred to in the Cayman Islands as a “scheme of arrangement” which may be tantamount to a merger. In the event that a merger was sought pursuant to a scheme of arrangement (the procedure of which are more rigorous and take longer to complete than the procedures typically required to consummate a merger in the United States), the arrangement in question must be approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings summoned for that purpose.

The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder would have the right to express to the court the view that the transaction should not be approved, the court can be expected to approve the arrangement if it satisfies itself that:

- Vasta is not proposing to act illegally or beyond the scope of its corporate authority and the statutory provisions as to majority vote have been complied with;
- the shareholders have been fairly represented at the meeting in question;
- the arrangement is such as a businessman would reasonably approve; and
- the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act or that would amount to a “fraud on the minority”.

If a scheme of arrangement or takeover offer (as described below) is approved, any dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of United States corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

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Squeeze-out Provisions

When a takeover offer is made and accepted by holders of 90.0% of the shares to whom the offer is made within four months, the offeror may, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection may be made to the Grand Court of the Cayman Islands but is unlikely to succeed unless there is evidence of fraud, bad faith, collusion or inequitable treatment of the shareholders.

Further, transactions similar to a merger, reconstruction and/or an amalgamation may in some circumstances be achieved through other means to these statutory provisions, such as a share capital exchange, asset acquisition or control, through contractual arrangements, of an operating business.

Shareholders’ Suits

Maples and Calder (Cayman) LLP, our Cayman Islands counsel is not aware of any reported class action having been brought in a Cayman Islands court. Derivative actions have been brought in the Cayman Islands courts, and the Cayman Islands courts have confirmed the availability for such actions. In most cases, we will be the proper plaintiff in any claim based on a breach of duty owed to us, and a claim against (for example) our officers or directors usually may not be brought by a shareholder.

However, based on English authorities, which would in all likelihood be of persuasive authority and be applied by a court in the Cayman Islands, exceptions to the foregoing principle apply in circumstances in which:

- a company is acting or proposing to act illegally or beyond the scope of its authority;
- the act complained of, although not beyond the scope of the authority, could be effected if duly authorized by more than the number of votes which have actually been obtained; and
- those who control the company are perpetrating a “fraud on the minority”.

A shareholder may have a direct right of action against us where the individual rights of that shareholder have been infringed or are about to be infringed.

Corporate Governance

Cayman Islands law restricts transactions between a company and its directors unless there are provisions in the Articles of Association which provide a mechanism to alleviate possible conflicts of interest. Additionally, Cayman Islands law imposes on directors’ duties of care and skill and fiduciary duties to the companies which they serve. Under Vasta’s Articles of Association, a director must disclose the nature and extent of his interest in any contract or arrangement, and following such disclosure and subject to any separate requirement under applicable law or the listing rules of the Nasdaq, and unless disqualified by the chairman of the relevant meeting, the interested director may vote in respect of any transaction or arrangement in which he or she is interested. The interested director shall be counted in the quorum at such meeting and the resolution may be passed by a majority of the directors present at the meeting.

Subject to the foregoing and our Articles of Association, our directors may exercise all the powers of Vasta to vote compensation to themselves or any member of their body in the absence of an independent quorum. Our Articles of Association provide that, in the event a Compensation Committee is established, it shall be made up of such number of independent directors as is required from time to time by the Nasdaq rules (or as otherwise may be required by law). We currently have no intention to establish a Compensation Committee.

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As a foreign private issuer, we are permitted to follow home country practice in lieu of certain Nasdaq corporate governance rules, subject to certain requirements. We currently rely, and will continue to rely, on the foreign private issuer exemption with respect to the following rules:

- Nasdaq Rule 5605(b), which requires that independent directors comprise a majority of a company’s board of directors. As allowed by the laws of the Cayman Islands, independent directors do not comprise a majority of our board of directors;
- Nasdaq Rule 5605(e)(1), which requires that a company have a nomination committee comprised solely of “independent directors” as defined by Nasdaq. As allowed by the laws of the Cayman Islands, we do not have a nomination committee, nor do we have any current intention to establish one;
- Nasdaq Rule 5605(d) & (e), which require that compensation for our executive officers and selection of our director nominees be determined by a majority of independent directors. As allowed by the laws of the Cayman Islands, we do not have a nomination and corporate governance committee or remuneration committee nor do we have any current intention to establish either; and
- Nasdaq Rule 5635, which requires that a listed issuer obtain shareholder approval prior to an issuance of securities in connection with: (i) the acquisition of the stock or assets of another company; (ii) equity-based compensation of officers, directors, employees or consultants; (iii) a change of control; and (iv) transactions other than public offerings. Pursuant to the laws of the Cayman Islands and our Articles of Association, we are not required to obtain any such approval.

Borrowing Powers

Vasta’s directors may exercise all the powers of Vasta to borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of Vasta or of any third party. Such powers may be varied by a special resolution of shareholders (requiring a two‑thirds majority vote).

Indemnification of Directors and Executive Officers and Limitation of Liability

The Companies Act does not limit the extent to which a company’s articles of association may provide for indemnification of directors and officers, except to the extent that it may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Vasta’s Articles of Association provide that we shall indemnify and hold harmless our directors and officers against all actions, proceedings, costs, charges, expenses, losses, damages, liabilities, judgments, fines, settlements and other amounts incurred or sustained by such directors or officers, other than by reason of such person’s dishonesty, willful default or fraud, in or about the conduct of our company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil, criminal or other proceedings concerning Vasta or our affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.

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Insofar as indemnification for liabilities arising under the Securities Act may be permitted to Vasta’s directors, officers or persons controlling us under the foregoing provisions, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Directors’ Fiduciary Duties

As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company. Accordingly, directors and officers owe the following fiduciary duties (1) duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole; (2) duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; (3) directors should not properly fetter the exercise of future discretion; (4) duty to exercise powers fairly as between different sections of shareholders; (5) duty to exercise independent judgment; and (6) duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests. However, this obligation may be varied by the company’s articles of association, which may permit a director to vote on a matter in which he has a personal interest provided that he has disclosed that nature of his interest to the board of directors. With respect to the duty of directors to avoid conflicts of interest, Vasta’s Articles of Association vary from the applicable provisions of Cayman Islands law mentioned above by providing that a director must disclose the nature and extent of his or her interest in any contract or arrangement, and following such disclosure and subject to any separate requirement under applicable law or the listing rules of the Nasdaq, and unless disqualified by the chairman of the relevant meeting, such director may vote in respect of any transaction or arrangement in which he or she is interested and may be counted in the quorum at the meeting.

A director of a Cayman Islands company also owes to the company duties to exercise independent judgment in carrying out his functions and to exercise reasonable skill, care and diligence, which has both objective and subjective elements. Recent Cayman Islands case law confirmed that directors must exercise the care, skill and diligence that would be exercised by a reasonably diligent person having the general knowledge, skill and experience reasonably to be expected of a person acting as a director. Additionally, a director must exercise the knowledge, skill and experience which he or she actually possesses.

A general notice may be given to the board of directors to the effect that (1) the director is a member or officer of a specified company or firm and is to be regarded as interested in any contract or arrangement which may after the date of the notice be made with that company or firm; or (2) he or she is to be regarded as interested in any contract or arrangement which may after the date of the notice to the board of directors be made with a specified person who is connected with him or her, will be deemed sufficient declaration of interest. This notice shall specify the nature of the interest in question. Following the disclosure being made pursuant to Vasta’s Articles of Association and subject to any separate requirement under applicable law or the listing rules of the Nasdaq, and unless disqualified by the chairman of the relevant meeting, a director may vote in respect of any transaction or arrangement in which he or she is interested and may be counted in the quorum at the meeting.

In comparison, under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself or herself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

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Shareholder Proposals

Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. The Delaware General Corporation Law does not provide shareholders an express right to put any proposal before the annual meeting of shareholders, but Delaware corporations generally afford shareholders an opportunity to make proposals and nominations provided that they comply with the notice provisions in the certificate of incorporation or bylaws. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

The Companies Act provides shareholders with only limited rights to requisition a general meeting and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Vasta’s Articles of Association provide that upon the requisition of one or more shareholders representing not less than one-third of the voting rights entitled to vote at general meetings, the board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. The Articles of Association provide no other right to put any proposals before annual general meetings or extraordinary general meetings.

Cumulative Voting

Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. As permitted under Cayman Islands law, Vasta’s Articles of Association do not provide for cumulative voting. As a result, the shareholders of Vasta are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

Removal of Directors

The office of a director shall be vacated automatically if, among other things, he or she (1) becomes prohibited by law from being a director, (2) becomes bankrupt or makes an arrangement or composition with his creditors, (3) dies or is, in the opinion of all his co-directors, incapable by reason of mental disorder of discharging his duties as director (4) resigns his office by notice to us or (5) has for more than six months been absent without permission of the directors from meetings of the board of directors held during that period, and the remaining directors resolve that his/her office be vacated.

Transaction with Interested Shareholders

The Delaware General Corporation Law provides that; unless the corporation has specifically elected not to be governed by this statute, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that this person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting shares or who or which is an affiliate or associate of the corporation and owned 15% or more of the corporation’s outstanding voting shares within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which the shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

Cayman Islands law has no comparable statute. As a result, Vasta cannot avail itself of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that the board of directors owe duties to ensure that these transactions are entered into bona fide in the best interests of the company and for a proper corporate purpose and, as noted above, a transaction may be subject to challenge if it has the effect of constituting a fraud on the minority shareholders.

148

Table of Contents

Dissolution; Winding Up

Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. If the dissolution is initiated by the board of directors, it may be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company resolves by ordinary resolution that it be wound up because it is unable to pay its debts as they fall due. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.

Under the Companies Act, Vasta may be dissolved, liquidated or wound up by a special resolution of shareholders (requiring a two-thirds majority vote). Vasta’s Articles of Association also give its board of directors the authority to petition the Cayman Islands Court to wind up Vasta.

Variation of Rights of Shares

Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of that class, unless the certificate of incorporation provides otherwise. Under Vasta’s Articles of Association, if the share capital is divided into more than one class of shares, the rights attached to any class may only be varied with the written consent of the holders of two-thirds of the shares of that class or the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class.

Also, except with respect to share capital (as described above), alterations to Vasta’s Articles of Association may only be made by special resolution of shareholders (requiring a two-thirds majority vote).

Amendment of Governing Documents

Under the Delaware General Corporation Law, a corporation’s certificate of incorporation may be amended only if adopted and declared advisable by the board of directors and approved by a majority of the outstanding shares entitled to vote, and the bylaws may be amended with the approval of a majority of the outstanding shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board of directors. Under Cayman Islands law, Vasta’s Articles of Association generally (and save for certain amendments to share capital described in this section) may only be amended by special resolution of shareholders (requiring a two-thirds majority vote).

Rights of Non-Resident or Foreign Shareholders

There are no limitations imposed by Vasta’s Articles of Association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on Vasta’s shares. In addition, there are no provisions in the Articles of Association governing the ownership threshold above which shareholder ownership must be disclosed.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

149

PART III
ITEM 17. FINANCIAL STATEMENTS

We have responded to Item 18 in lieu of this item.

ITEM 18. FINANCIAL STATEMENTS

Financial Statements are filed as part of this annual report, see pages F-1 to F-63 to this annual report.

ITEM 19. EXHIBITS

The following documents are filed as part of this annual report:

Exhibit No. | Exhibit
2.1* | Description of Securities registered under Section 12 of the Exchange Act.
3.1** | Memorandum and Articles of Association of Vasta (incorporated herein by reference to Exhibit 3.1 to the Amendment No. 1 to our registration statement on Form F-1 (File No. 333-239686), filed with the SEC on July 23, 2 020).
10.1** | Form of indemnification agreement (incorporated herein by reference to Exhibit 10.1 to our registration statement on Form F-1 (File No. 333-239686), filed with the SEC on July 6, 2020).
12.1* | Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer.
12.2* | Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer.
13.1* | Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer.
13.2* | Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer.
14.1** | English translation of the Code of Ethics of Vasta (incorporated herein by reference to Exhibit 14.1 to our registration statement on Form F-1 (File no. 333-239686), filed with the SEC on July 6, 2020).
21.1* | List of subsidiaries.
23.1* | Consent of KPMG Auditores Independentes.
101.INS* | Inline XBRL Instance Document
101.SCH* | Inline XBRL Taxonomy Extension Schema Document
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Previously filed.

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Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

April 25, 2023

| Vasta Platform Limited
| By: | /s/ Mário Ghio Junior
|  | Name: Mário Ghio Junior
|  | Title: CEO

| By: | /s/ Cesar Augusto Silva
|  | Name: Cesar Augusto Silva
|  | Title: CFO

151

Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
​

#### Audited Consolidated Financial Statements as of December 31, 202 2, 202 1 and for three years then ended |  | #### Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 1124) |  | F-3
Consolidated Statements of Financial Position as of December 31, 2022 and 2021 |  | F-4
Consolidated Statements of Profit or Loss and Other Comprehensive Loss for the Years ended December 31, 2022, 2021 and 2020 |  | F-6
Consolidated Statements of Changes in Equity for the Years ended December 31, 2022, 2021 and 2020 |  | F-7
Consolidated Statements of Cash Flows for the Years ended December 31, 2022, 2021 and 2020 |  | F-8
Notes to the Consolidated Financial Statements as of December 31, 2022 |  | F-9

F-1

VASTA Platform Limited

Consolidated Financial Statements as of December 31, 2022, 2021 and 2020 and for the three year period then ended

F-2

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Vasta Platform Limited

Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Vasta Platform Limited (the Company) as of December 31, 2022 and 2021, the related consolidated statements of profit or loss and other comprehensive loss, changes in equity, and cash flows for each of the years in the three year period ended December 31, 2022 and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three year period ended December 31, 2022, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2016.

/s/KPMG Auditores Independentes Ltda.

São Paulo - Brazil

April 25, 2023

F-3

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Consolidated Statement of Financial Position as of December 31, 202 2 and 202 1

In thousands of R$, unless otherwise stated

Assets |  | Note |  | December 31, 2022 |  |  | December 31, 2021 |
Current assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | 8 |  | 45,765 |  |  | 309,893 |
Marketable securities |  | 9 |  | 380,514 |  |  | 166,349 |
Trade receivables |  | 10 |  | 649,135 |  |  | 505,514 |
Inventories |  | 11 |  | 266,450 |  |  | 242,363 |
Taxes recoverable |  |  |  | 19,120 |  |  | 24,564 |
Income tax and social contribution recoverable |  |  |  | 17,746 |  |  | 8,771 |
Prepayments |  |  |  | 56,645 |  |  | 40,069 |
Other receivables |  |  |  | 972 |  |  | 2,105 |
Related parties – other receivables |  | 21 |  | 1,759 |  |  | 501 |
Total current assets |  |  |  | 1,438,106 |  |  | 1,300,129 |
Non-current assets |  |  |  |  |  |  |  |
Judicial deposits and escrow accounts |  | 22.b |  | 194,859 |  |  | 178,824 |
Deferred income tax and social contribution |  | 23 |  | 170,851 |  |  | 130,405 |
Equity accounted investees |  | 12 |  | 83,139 |  |  | - |
Other investments and interests in entities |  |  |  | 8,272 |  |  | - |
Property, plant and equipment |  | 13 |  | 197,688 |  |  | 185,682 |
Intangible assets and goodwill |  | 14 |  | 5,427,676 |  |  | 5,538,367 |
Total non-current assets |  |  |  | 6,082,485 |  |  | 6,033,278 |
Total Assets |  |  |  | 7,520,591 |  |  | 7,333,407 |

The footnotes to these Consolidated Financial Statements are an integral part of the Financial Statements

F-4

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Consolidated Statement of Financial Position as of December 31, 202 2 and 202 1

In thousands of R$, unless otherwise stated

Liabilities |  | Note |  | December 31, 2022 |  |  | December 31, 2021 |
Current liabilities |  |  |  |  |  |  |  |
Bonds and financing |  | 15 |  | 93,779 |  |  | 281,491 |
Lease liabilities |  | 17 |  | 23,151 |  |  | 26,636 |
Suppliers |  | 16 |  | 250,647 |  |  | 167,168 |
Reverse factoring |  | 16 |  | 155,469 |  |  | 97,619 |
Income tax and social contribution payable |  | 24 |  | 5,564 |  |  | 16,666 |
Salaries and social contributions |  | 20 |  | 100,057 |  |  | 62,829 |
Contractual obligations and deferred income |  | 18 |  | 57,852 |  |  | 46,037 |
Accounts payable for business combination and acquisition of associates |  | 19 |  | 73,007 |  |  | 20,502 |
Other liabilities |  |  |  | 29,630 |  |  | 20,033 |
Other liabilities - related parties |  | 21 |  | 54 |  |  | 39,271 |
Total current liabilities |  |  |  | 789,210 |  |  | 778,252 |
Non-current liabilities |  |  |  |  |  |  |  |
Bonds and financing |  | 15 |  | 749,217 |  |  | 549,735 |
Lease liabilities |  | 17 |  | 117,412 |  |  | 133,906 |
Accounts payable for business combination and acquisition of associates |  | 19 |  | 552,270 |  |  | 511,811 |
Provision for tax, civil and labor losses |  | 22.a |  | 651,252 |  |  | 646,850 |
Contractual obligations and deferred income |  | 18 |  | - |  |  | 128 |
Other liabilities |  |  |  | 31,551 |  |  | 47,516 |
Total non-current liabilities |  |  |  | 2,101,702 |  |  | 1,889,946 |
Shareholder's Equity |  |  |  |  |  |  |  |
Share capital |  | 24a |  | 4,820,815 |  |  | 4,820,815 |
Capital reserve |  | 24c |  | 80,531 |  |  | 61,488 |
Treasury shares |  | 24d |  | (23,880 | ) |  | (23,880 | )
Accumulated losses |  |  |  | (247,787 | ) |  | (193,214 | )
Total Shareholder's Equity |  |  |  | 4,629,679 |  |  | 4,665,209 |
Total Liabilities and Shareholder's Equity |  |  |  | 7,520,591 |  |  | 7,333,407 |

The footnotes to these Consolidated Financial Statements are an integral part of the Financial Statements

F-5

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Consolidated Statement of Profit or Loss and Other Comprehensive Loss for the years ended December 31, 202 2, 202 1 and 20 20

In thousands of R$, except for Loss per share

| Note |  | December 31, 2022 |  |  | December 31, 2021 |  |  | December 31, 2020 |
Net revenue from sales and services | 25 |  | 1,264,280 |  |  | 947,419 |  |  | 997,628 |
Sales |  |  | 1,229,827 |  |  | 914,266 |  |  | 967,374 |
Services |  |  | 34,453 |  |  | 33,153 |  |  | 30,254 |
Cost of goods sold and services | 26 |  | (473,135 | ) |  | (396,829 | ) |  | (378,003 | )
Gross profit |  |  | 791,145 |  |  | 550,590 |  |  | 619,625 |
Operating income (expenses) |  |  |  |  |  |  |  |  |  |
General and administrative expenses | 26 |  | (471,626 | ) |  | (430,279 | ) |  | (406,352 | )
Commercial expenses | 26 |  | (194,043 | ) |  | (164,439 | ) |  | (165,169 | )
Other operating income | 26 |  | 1,020 |  |  | 5,554 |  |  | 4,283 |
Impairment losses on trade receivables | 26 |  | (45,904 | ) |  | (32,726 | ) |  | (25,015 | )
Share of loss equity-accounted investees | 12 |  | (4,512 | ) |  |  | - |  |  |
Profit (loss) before finance result and taxes |  |  | 76,080 |  |  | (71,300 | ) |  | 27,372 |
Finance result |  |  |  |  |  |  |  |  |  |
Finance income | 27 |  | 88,557 |  |  | 35,640 |  |  | 20,984 |
Finance costs | 27 |  | (270,324 | ) |  | (120,183 | ) |  | (119,409 | )
|  |  | (181,767 | ) |  | (84,543 | ) |  | (98,425 | )
Loss before income tax and social contribution |  |  | (105,687 | ) |  | (155,843 | ) |  | (71,053 | )
Income tax and social contribution |  |  | 51,114 |  |  | 37,089 |  |  | 25,404 |
Current | 23 |  | 10,668 |  |  | (11,297 | ) |  | 7,874 |
Deferred | 23 |  | 40,446 |  |  | 48,386 |  |  | 17,530 |
Loss for the year |  |  | (54,573 | ) |  | (118,754 | ) |  | (45,649 | )
Other comprehensive income for the year |  |  | - |  |  | - |  |  | - |
Total comprehensive loss for the year |  |  | (54,573 | ) |  | (118,754 | ) |  | (45,649 | )
Loss per share |  |  |  |  |  |  |  |  |  |
Basic | 24b |  | (0.65 | ) |  | (1.44 | ) |  | (0.55 | )
Diluted | 24b |  | (0.65 | ) |  | (1.44 | ) |  | (0.55 | )

The footnotes to these Consolidated Financial Statements are an integral part of the Financial Statements

F-6

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Consolidated Statements of Changes in Equity for the years ended December 31, 202 2, 202 1 and 20 20

In thousands of R$, unless otherwise stated

|  |  |  | Share Capital |  |  | Capital Reserve |  |  |  |  |  |  |  |  |  |
| Parent Company's Net Investment |  |  | Share Capital |  |  | Share issuance costs |  |  | Share-based compensation reserve (granted) |  |  | Share-based compensation reserve (vested) |  |  | Treasury shares (Note 23 d) |  |  | Accumulated losses |  |  | Total Shareholders' Equity/ Net Investment |
Balance at January 1, 2020 | 3,100,083 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 3,100,083 |
Share-based payment contributions | - |  |  | - |  |  | - |  |  | - |  |  | 686 |  |  | - |  |  | - |  |  | 686 |
Net investments | (6,335 | ) |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (6,335 | )
Changes in parent company's investment, net | (3,093,748 | ) |  | 3,123,245 |  |  | - |  |  | - |  |  | (686 | ) |  | - |  |  | (28,811 | ) |  | - |
Capital contribution | - |  |  | 2,426 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 2,426 |
Comprehensive loss for the year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss for the year | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (45,649 | ) |  | (45,649) |
Total comprehensive loss for the year | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (45,649 | ) |  | (45,649 | )
Issuance of common shares at initial public offering (Note 1.2) | - |  |  | 1,836,317 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 1,836,317 |
Share based compensation granted and issued (Note 23) | - |  |  | - |  |  | - |  |  | 38,962 |  |  |  |  |  | - |  |  | - |  |  | 38,962 |
Share issuance costs, net of taxes | - |  |  | - |  |  | (141,173 | ) |  | - |  |  | - |  |  | - |  |  | - |  |  | (141,173 | )
Total shareholders' contribution and distributions to shareholders | - |  |  | 1,836,317 |  |  | (141,173 | ) |  | - |  |  |  |  |  | - |  |  | - |  |  | 1,734,106 |
Balance as of December 31, 2020 | - |  |  | 4,961,988 |  |  | (141,173 | ) |  | 38,962 |  |  |  |  |  | - |  |  | (74,460 | ) |  | 4,785,317 |
Comprehensive loss for the year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss for the year | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (118,754 | ) |  | (118,754 | )
Total comprehensive loss for the year | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (118,754 | ) |  | (118,754 | )
Share based compensation granted and issued (Note 23 items b and c) | - |  |  | - |  |  | - |  |  | 22,526 |  |  | - |  |  | - |  |  | - |  |  | 22,526 |
Share based compensation vested (Note 23a items i,ii and iii) | - |  |  | - |  |  | - |  |  | (31,043 | ) |  | 31,043 |  |  | - |  |  | - |  |  | - |
Acquisition of shares (Note 23d) | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (23,880 | ) |  | - |  |  | (23,880 | )
Balance as of December 31, 2021 | - |  |  | 4,961,988 |  |  | (141,173 | ) |  | 30,445 |  |  | 31,043 |  |  | (23,880 | ) |  | (193,214 | ) |  | 4,665,209 |
Comprehensive loss for the year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss for the year | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (54,573 | ) |  | (54,573 | )
Total comprehensive loss for the year | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (54,573 | ) |  | (54,573 | )
Share based compensations granted and issued | - |  |  | - |  |  | - |  |  | 19,043 |  |  | - |  |  | - |  |  | - |  |  | 19,043 |
Share based compensations vested (note 24) | - |  |  | - |  |  | - |  |  | (3,243 | ) |  | 3,243 |  |  | - |  |  | - |  |  | - |
Balance at December 31,2022 | - |  |  | 4,961,988 |  |  | (141,173 | ) |  | 46,245 |  |  | 34,286 |  |  | (23,880 | ) |  | (247,787 | ) |  | 4,629,679 |

The footnotes to these Consolidated Financial Statements are an integral part of the Financial Statements

F-7

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 202 2, 202 1 and 20 20

In thousands of R$ unless otherwise stated

|  |  | For the year ended December 31, |
| Notes |  | 2022 |  |  | 2021 |  |  | 2020 |
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |  |  |  |  |  |  |  |
Loss before income tax and social contribution |  |  | (105,687 | ) |  | (155,843 | ) |  | (71,053 | )
Adjustments for: |  |  |  |  |  |  |  |  |  |
Depreciation and amortization | 13 and 14 |  | 268,714 |  |  | 211,156 |  |  | 174,088 |
Share of loss profit of equity-accounted investees | 12 |  | 4,512 |  |  | - |  |  | - |
Impairment losses on trade receivables | 10 |  | 45,904 |  |  | 32,726 |  |  | 25,015 |
Reversal for tax, civil and labor risks, net |  |  | (15,099 | ) |  | (1,986 | ) |  | (2,092 | )
Interest on provision for tax, civil and labor losses |  |  | 42,063 |  |  | 34,300 |  |  | 13,297 |
Provision for obsolete inventories | 11 |  | 40,924 |  |  | 22,117 |  |  | 4,057 |
Interest on bonds and financing | 15 |  | 108,896 |  |  | 43,549 |  |  | 52,935 |
Interest on loans from related parties |  |  | - |  |  | - |  |  | 2,922 |
Contractual obligations and right to returned goods |  |  | 11,312 |  |  | (1,159 | ) |  | 1,454 |
Interest on accounts payable for business combination and acquisition of associates | 27 |  | 65,725 |  |  | 8,158 |  |  | 1,568 |
Imputed interest on suppliers | 27 |  | 19,810 |  |  | 157 |  |  | 2,945 |
Share-based payment expense |  |  | 19,043 |  |  | 22,526 |  |  | 39,648 |
Interest on lease liabilities | 17 |  | 13,143 |  |  | 14,984 |  |  | 15,091 |
Interest on marketable securities | 26 |  | (54,954 | ) |  | (26,719 | ) |  | (16,907 | )
Other finance costs, net |  |  | 3,441 |  |  | - |  |  | - |
Cancellations of right-of-use contracts |  |  | 616 |  |  | (195 | ) |  | - |
Residual value of disposals of property and equipment and intangible assets | 13 and 14 |  | 13,960 |  |  | 124 |  |  | (454 | )
|  |  | 482,323 |  |  | 203,895 |  |  | 242,514 |
Changes in |  |  |  |  |  |  |  |  |  |
Trade receivables |  |  | (189,329 | ) |  | (25,408 | ) |  | (123,412 | )
Inventories |  |  | (65,011 | ) |  | (14,038 | ) |  | (20,812 | )
Prepayments |  |  | (16,576 | ) |  | (12,511 | ) |  | (4,060 | )
Taxes recoverable |  |  | (16,566 | ) |  | (4,914 | ) |  | 24,573 |
Judicial deposits and escrow accounts |  |  | (16,035 | ) |  | (6,076 | ) |  | 184 |
Other receivables |  |  | 1,133 |  |  | (1,789 | ) |  | 4,516 |
Related parties – other receivables |  |  | (1,258 | ) |  | - |  |  | - |
Suppliers |  |  | 121,519 |  |  | (16,124 | ) |  | 42,620 |
Salaries and social charges |  |  | 37,166 |  |  | (9,890 | ) |  | (6,693 | )
Tax payable |  |  | (4,039 | ) |  | 5,711 |  |  | 13,629 |
Contractual obligations and deferred income |  |  | 375 |  |  | (2,659 | ) |  | (2,163 | )
Other liabilities |  |  | (3,084 | ) |  | (671 | ) |  | 4,295 |
Other liabilities - related parties |  |  | (39,218 | ) |  | (94,155 | ) |  | 117,299 |
Cash from operating activities |  |  | 291,400 |  |  | 21,371 |  |  | 292,490 |
Payment of interest on leases |  |  | (14,941 | ) |  | (14,692 | ) |  | (14,675 | )
Payment of interest on bonds and financing |  |  | (92,500 | ) |  | (24,922 | ) |  | (49,404 | )
Payment of interest on business combinations |  |  | (603 | ) |  | (1,571 | ) |  | - |
Income tax and social contribution paid |  |  | (7,153 | ) |  | (1,167 | ) |  | (5,234 | )
Payment of provision for tax, civil and labor losses |  |  | (1,363 | ) |  | (627 | ) |  | (7,716 | )
Net cash from (applied in) operating activities |  |  | 174,840 |  |  | (21,608 | ) |  | 215,461 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |  |  |  |  |  |  |  |
Acquisition of property and equipment | 13 |  | (61,143 | ) |  | (20,910 | ) |  | (1,642 | )
Additions of intangible assets | 14 |  | (90,588 | ) |  | (55,878 | ) |  | (42,793 | )
Acquisition of subsidiaries net of cash acquired |  |  | (80,559 | ) |  | (186,218 | ) |  | (23,147 | )
Proceeds from investment in marketable securities |  |  | 1,637,898 |  |  | 2,641,308 |  |  | 1,212,876 |
Purchase of investment in marketable securities |  |  | (1,800,550 | ) |  | (2,289,836 | ) |  | (1,687,071 | )
Net cash (applied in) from investing activities |  |  | (394,942 | ) |  | 88,466 |  |  | (541,777 | )
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |  |  |  |  |  |  |  |
Capital contribution |  |  | - |  |  | - |  |  | 2,426 |
Suppliers - related parties |  |  | - |  |  | (1,450 | ) |  | (207,174 | )
Loans from related parties |  |  | - |  |  | - |  |  | 65,600 |
Payments of loans from related parties | 19 |  | (254,885 | ) |  | (20,884 | ) |  | (76,830 | )
Lease liabilities paid |  |  | (27,003 | ) |  | (21,998 | ) |  | (12,835 | )
Acquisition of treasury shares |  |  | - |  |  | (23,880 | ) |  | - |
Parent Company's Net Investment |  |  | - |  |  | - |  |  | (6,335 | )
Issuance of common shares in initial public offering |  |  | - |  |  | - |  |  | 1,836,317 |
Transaction costs in initial public offering |  |  | - |  |  | - |  |  | (154,849 | )
Payments of bonds and financing | 14 |  | (759 | ) |  | (477,741 | ) |  | (852,135 | )
Issuance of securities with related parties | 15 |  | 250,000 |  |  | - |  |  | - |
Issuance of bonds net off issuance costs |  |  | - |  |  | 497,000 |  |  | - |
Payments of accounts payable for business combination and acquisition of associates |  |  | (11,379 | ) |  | (19,168 | ) |  | - |
Net cash (applied in) from financing activities |  |  | (44,026 | ) |  | (68,121 | ) |  | 594,185 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |  |  | (264,128 | ) |  | (1,263 | ) |  | 267,869 |
Cash and cash equivalents at beginning of period | 8 |  | 309,893 |  |  | 311,156 |  |  | 43,287 |
Cash and cash equivalents at end of period | 8 |  | 45,765 |  |  | 309,893 |  |  | 311,156 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |  |  | (264,128 | ) |  | (1,263 | ) |  | 267,869 |

The footnotes to these Consolidated Financial Statements are an integral part of the Financial Statements

F-8

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 2022

Notes to the Consolidated Financial Statements as of December 31, 202 2

(Amounts in thousands of R$, unless otherwise indicated)

1. The Company and Basis of Presentation

1.1 The Company

Vasta Platform Ltd., together with its subsidiaries (the Company) is a publicly held company incorporated in the Cayman Islands on October 16, 2019, with headquarters in the city of São Paulo, Brazil. The Company is a technology-powered education content providing end-to-end educational and digital solutions that cater to all needs of private schools operating in the K-12 educational segment. Vasta’s fiscal year begins on January 1 of each year and ends on December 31 of the same year.

The Company has built a “Platform as a Service”, solution or PaaS, with two main modules: Content & EdTech Platform and Digital Services. The Company’s Content & EdTech Platform combines a multi-brand and tech-enabled array with digital and printed content through long-term contracts with partner schools.

Since July 31, 2020, VASTA Platform Ltd. has been a publicly-held company registered with SEC (“The US Securities and Exchange Commission) and its shares are traded on Nasdaq Global Select Market under ticker symbol “VSTA”.

1.2 Corporate restructuring and business combinations

U ntil July 23, 2020, VASTA Platform, was not a separate legal entity. The Business, (referred herein when the company presented its financial statements combined with other entities), comprised combined carved-out historical balances of certain assets, liabilities and results of operations related to the delivery of educational content for private sector basic and secondary education (“K-12 curriculum”) previously carried out by the legal entity Cogna Educação S.A. and its subsidiaries (hereinafter referred to as “Cogna” or “Parent Entity”, or in combination with its subsidiaries, “Cogna Group”).

On January 1, 2020, the business activities were restructured in the legal entity Somos Sistemas de Ensino S.A (“Somos Sistemas”). On January 7, 2020, the Company concluded the acquisition of the entire ownership interest in Pluri. On February 13, 2020, the Company concluded the acquisition of the entire ownership interest in Mind Makers.

On July 23, 2020, prior to the completion of the Initial Public Offering – IPO, the ‘Board of Directors’ Meeting approved the Contribution Agreement which Cogna (Vasta’s Parent Company) contributed with 100% of the shares issued by Somos Sistemas held by Cogna to Vasta Platform’s share capital. After the contribution, Somos Sistemas became wholly owned by Vasta’s Parent Company, which, in turn, continued to be controlled by Cogna. In addition, Cogna contributed with shareholders capital in the amount of R$ 2,426 in cash on July 23, 2020.

F-9

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

On March 2, 2021, the Company acquired an ownership interest in Sociedade Educacional da Lagoa Ltda.(“SEL”) through its wholly owned subsidiary Somos Sistemas de Ensino S.A. See Note 5.

On May 27, 2021, the Company acquired an ownership interest in Nota 1000 Serviços Educacionais S.A (“Redação Nota 1000”) through its wholly owned subsidiary Somos Sistemas de Ensino S.A. See Note 5.

On August 1, 2021, the Company acquired an ownership interest in EMME – Produções de Materiais em Multimídia (“EMME”) through its wholly owned subsidiary Somos Sistemas de Ensino S.A. See Note 5.

On October 29, 2021, the Company acquired an equity interest in Editora De Gouges SA – Learning System Eleva - (“De Gouges”) through its wholly-owned subsidiary Somos Sistemas de Ensino S.A. See Note 5.

On January 14, 202 2, the Company acquired an equity interest in Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. and MVP Consultoria e Sistemas Ltda – through its wholly-owned subsidiary Somos Sistemas de Ensino S.A. See Note 5.

On July 19, 2022, the Company acquired a non-controlling interest (45%) in Educbank Gestão de Pagamentos Educacionais S.A. (“Educbank”). The consideration paid was R$ 87,651, of which R$ 63,814 was paid in cash and the remaining amount of R$ 23,837 to be paid in four cash installments according to the growth of students served by Educbank.

On July 19, 2022, the Company acquired a non-controlling interest (10%) in Flex Flix Limited (“Flex Flix”). The consideration paid was R$ 8,271, paid in cash. The amount paid to acquire a stake in this company was recorded in “other investments and interests in entities”.

The Consolidated Financial Statements comprise the following entities, which are all fully owned by the Company:

Company |  | Interest
|  | December 31, 2022 |  |  | December 31, 2021
Somos Sistemas de Ensino S.A ("Somos Sistemas") |  | 100% |  |  | 100%
Livraria Livro Fácil Ltda. ("Livro Fácil") |  | 100% |  |  | 100%
A & R Comercio e Serviços de Informática Ltda. (“Pluri”) |  | 100% |  |  | 100%
Mind Makers Editora Educacional (“Mind Makers”) (i) |  | - |  |  | 100%
Colégio Anglo São Paulo |  | 100% |  |  | 100%
Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. (“Phidelis”) |  | 100% |  |  | -
MVP Consultoria e Sistemas Ltda. (“MVP”) |  | 100% |  |  | -
Meritt Informação Educacional Ltda (“Meritt”) (i) |  | - |  |  | 100%
Sociedade Educacional da Lagoa Ltda (“SEL”) |  | 100% |  |  | 100%
Nota 1000 Serviços Educacionais Ltda ("Redação Nota 1000") (i) |  | - |  |  | 100%
EMME – Produções de Materiais em Multimídia Ltda (“EMME”). | 100% |  |  | 100%
Editora De Gouges S.A ("De Gouges") (i) |  | - |  |  | 100%

(i) | Entities that were merged during the fiscal year ended December 31,2022

F-10

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

2. Basis of preparation and presentation of Consolidated Financial Statements

The Consolidated Financial Statements of Vasta Platform, the reporting entity, have been prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretations as issued by the International Accounting Standards Board (“IASB”).

The Consolidated Financial Statements as of December 31, 202 2, were approved by the Executive Board on April 25, 20 23.

a. Consolidation

The Company consolidates all entities over which it has control, that is, when it is exposed or is entitled to variable returns from its involvement with the investee and has the ability to direct the relevant activities of the investee. The subsidiaries included in the consolidation are described in the following note.

Subsidiaries are fully consolidated from the date on which control is transferred to the Company Consolidation is interrupted from the date on which the Company ceases to have control.

Transactions, balances and unrealized gains on transactions between Company companies are eliminated.

The accounting policies of the new subsidiaries are changed, when necessary, to ensure consistency with the policies adopted by the Company.

Below is a list of the companies controlled by the Company for the years ended December 31, 202 2, and 202 1:

Company |  | Interest
|  | December 31, 2022 |  |  | December 31, 2021
Somos Sistemas de Ensino S.A. ("Somos Sistemas") |  | 100% |  |  | 100%
Livraria Livro Fácil Ltda. ("Livro Fácil") |  | 100% |  |  | 100%
A & R Comercio e Serviços de Informática Ltda. (“Pluri”) |  | 100% |  |  | 100%
Mind Makers Editora Educacional (“Mind Makers”) |  | - |  |  | 100%
Colégio Anglo São Paulo |  | 100% |  |  | 100%
Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. (“Phidelis”) |  | 100% |  |  | -
MVP Consultoria e Sistemas Ltda. (“MVP”) |  | 100% |  |  | -
Meritt Informação Educacional Ltda (“Meritt”) |  | - |  |  | 100%
Sociedade Educacional da Lagoa Ltda (“SEL”) |  | 100% |  |  | 100%
Nota 1000 Serviços Educacionais Ltda ("Redação Nota 1000") (i) |  | - |  |  | 100%
EMME – Produções de Materiais em Multimídia Ltda (“EMME”). | 100% |  |  | 100%
Editora De Gouges S.A ("De Gouges") |  | - |  |  | 100%

F-11

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

b. Associates

Associates are those entities in which the Group, has significant influence, but does not control or jointly control, over the financial and operating policies.

Investments in associates are accounted for using the equity method. Such investments are initially recognized at cost, which includes transaction costs. After initial recognition, the consolidated financial statements include the Group's share of the profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence ceases.

c. Operating segment

The information by operating segment is presented in a manner consistent with the internal report provided to the Executive Board, which is the Chief Operating Decision Maker (CODM) in addition to being responsible for allocating resources, evaluating performance and making strategic decisions in the Company.

The Executive Board considers the business to be segregated into Content EdTech and Digital Service.

d. Cash Generating Units – (“CGU”)

For purposes of assessing impairment, these assets are grouped into the lowest levels for which there are separately identifiable cash flows (Cash Generating Units - CGU). For the purposes of this test, the goodwill is allocated to the Cash Generating Units, segregated into Content EdTech and Digital Service.

e. Functional and Presentation Currency

The Consolidated Financial Statements are presented in thousands of Brazilian Reais (“R$”), which is the Company's functional currency. All financial information presented in R$ has been rounded to the nearest thousand, except as otherwise indicated.

f. Measurement basis

The Consolidated Financial Statements were prepared based on historical cost, except for certain assets and liabilities that are measured at fair value, as explained in the accounting policies below.

3. Use of estimates and judgements

In preparing the Consolidated Financial Statements, Management has made judgements and estimates that affect the application of Company´ accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Those estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable and relevant under the circumstances. Revisions to estimates are recognized prospectively.

3.1 Judgements

| a. | Determination of the lease period

The Company has lease contracts where it acts as lessee, and it is related to warehousing, equipment and computers used to learning systems and education solutions. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be exercised (or not terminated). For leases of warehouses, equipment or even computer used in education solutions, the following factors are normally the most relevant:

• | If there are significant penalties for termination (or not to extend), the Company is reasonably certain to extend (or not terminate) the lease.
• | If there are any leasehold improvements with significant residual balances, the Company is reasonably certain to extend (or not terminate) the lease.
• | Also, the Company considers other factors including past practices related to the use of specific categories of assets (leased or owned assets) as well as the historical length of the leases and the costs and business disruptions required to replace the leased asset. See Note 1 7.

F-12

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

3.2 Assumptions and estimation uncertainties

| a. | Deferred Income tax and social contribution

The liability method is used to account for deferred income tax and social contribution in respect of temporary differences between the carrying amount of assets and liabilities and the related tax bases. The amount of deferred tax assets is reviewed at the end of each reporting period and reduced for the amount that is no longer probable to be realized through future taxable income. The estimates of the availability of future taxable income against which deductible temporary differences and tax losses may be used to reduce income taxes expenses, therefore, deferred tax assets are subject to significant judgement. Additionally, future taxable income may be higher or lower than the estimates considered in determining the deferred tax assets. See Note 23.

| b. | Provision for risks of tax, civil and labor losses

The Company is a party to judicial and administrative proceedings. We accounts for provisions for all judicial proceedings whose likelihood of loss is probable. The assessment of the likelihood of a loss and the estimate of probable disbursements by the Company, in connection of such losses, include the evaluation of available evidence as well the opinion of internal and external legal advisors. See Note 2 2.

| c. | Impairment losses on trade receivables

The expected credit losses (“ECL”) for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s historical collection information, existing market conditions, as well as forward looking estimates at the end of each reporting period. Note 10.

| d. | Provision for inventory obsolescence

The Company adopts as a criteria for the provision of inventory losses estimating the percentage of loss based on the historical production index, which considers the production aging data by type of product. The Company considers the editorial renewal calendar of its products to determine the number of periods in which the products may become obsolescent. In addition, the Company assesses whether inventories are overvalued, that is, whether the selling price is lower than the average cost of production. See note 11.

| e. | Impairment of Goodwill

The Company annually tests goodwill for impairment based on the recoverable amounts of Cash Generating Units (CGUs), determined based on estimated value-in-use calculations. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for a foreseeable future, and it do not include restructuring activities to which the Company has not yet committed or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the Discounted Cash Flow (DCF) model as well as to expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill recognized by the Company. The key assumptions used to determine the recoverable amount of the different CGUs are disclosed and further explained in Note 13.

| f. | Rights to Returned Goods and Refund Liabilities

Pursuant to the terms of the contracts with some customers, they are required to provide the Company with an estimate of the number of students that will access the content in the next school year (which typically starts in February of the following year), allowing the Company to start the delivery of its products. Since the contracts allows product returns (generally for period of four months from delivery date) up to a certain limit, the Company recognizes revenue for the amount that is expected to be received based on past experience, assuming that the other conditions for revenue recognition are met. Therefore, the amount of revenue recognized is adjusted for expected returns, which are estimated based on historical data on a portfolio basis. In these circumstances a refund liability and a right to recover returned goods asset are recognized. See Note 1 8.

The right to recover returned goods asset is measured at the former carrying amount of the inventory less any expected costs to recover goods. The refund liability is included in Contractual Obligations and Deferred Income and the right to recover returned goods is included in Inventories. The Company reviews its estimate of expected returns at each reporting date and updates the amounts of the asset and liability accordingly. See Note 1 1.

F-13

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

| g. | Fair value measurements and valuation processes

In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• | Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• | Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
• | Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Where Level 1 inputs are not available, if needed, the Company engages third party qualified appraisers to perform the valuation using Level 2 and / or Level 3 inputs. The Company’s management establishes the appropriate valuation techniques and inputs to the model, working closely with the qualified external advisors when they are engaged in such activities.

The valuations of identifiable assets and contingent liabilities in business combinations could be particularly sensitive to changes in one or more unobservable inputs considered in the valuation process. Further information on the assumptions used in the valuation p rocess of such items is provided in Note 7.

Fair value measurement assumptions are also used for determination of expenses with Share-based Compensation, which are disclosed in Note 2 4.

| h. | Purchase Price Allocation – Business combination

During the process of allocating the acquisition price in a business combination, management records the fair value of the consideration transferred (including contingent consideration) and the fair value of the assets acquired and liabilities assumed.

The valuation techniques used for measuring the fair value of material assets acquired were as follows:

- | Property, plant and equipment uses Market comparison technique and cost technique: The valuation model considers market prices for similar items when they are available, and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence;
- | Intangible assets use Relief-from-royalty method and multi-period excess earnings method: The relief-from-royalty method considers the discounted estimated royalty payments that are expected to be avoided as a result of the patents being owned. The multi-period excess earnings method considers the present value of net cash flows expected to be generated by the customer relationships, by excluding any cash flows related to contributory assets;
- | Inventories uses Market comparison technique: The fair value is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

F-14

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

4. Significant accounting policies and new and not yet effective accounting standards

4.1 New and not yet effective accounting standards

A number of new standards, amendments and interpretations were effective for annual periods beginning after January 1, 2022, none of which had a material impact. Below are presented the new and not yet effective standards:

• | Insurance contracts (IFRS 17)
• | Income tax Deferred (Amendments to IAS12)
• | Classification of liabilities as current or non-current (Amendments to IAS1)
• | Disclosure of accounting Policies (Amendments to IAS1 and IFRS Practice Statement 2)

The new and not yet effective accounting standards, when adopted, are not expected to have a material impact on these consolidated financial statements.

4.2 Significant accounting policies

The significant accounting policies applied in the preparation of the Consolidated Financial Statements are presented below. These policies have been consistently applied in the periods presented herein.

a.Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, bank deposits and highly liquid short-term investments and have maturities of three months or less from the date of purchase and that are readily convertible into a known amount of cash and are subject to immaterial risk of change in value.

b.Financial Assets and Liabilities

i Classification

Financial Assets’ classification depends on the entity’s business model for managing them and if their contractual cash flows represent solely payments of principal and interest. Based on this assessment Financial Assets are classified as measured: at amortized cost, at FVTOCI (fair value through other comprehensive income); or at FVTPL (fair value through profit or loss).

A business model to manage financial assets refers to the way the Company manages its financial assets to generate cash flows, determining if the cash flows will occur through the collection of contractual cash flows at maturity date, through the sale of the financial asset, or both. The information considered in the business model evaluation includes the following:

• | The policies and goals established for the portfolio of financial assets and feasibility of these policies. They include whether management’s strategy focuses on obtaining contractual interest income, maintaining a certain interest rate profile, matching the duration of financial assets with the duration of related liabilities or expected cash outflows, or the realization of cash flows through the sale of assets.
• | how the performance of the portfolio is evaluated and reported to the Company’s Management.
• | risks that affect the performance of the business model (and the financial assets held in that business model) and the manner in which those risks are managed.

F-15

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

• | how business managers are compensated - for example, if the compensation is based on the fair value of managed assets or on the contractual cash flows obtained; and
• | the volume and timing of sales of financial assets in prior periods, the reasons for such sales and future sales expectations.

For assessing whether contractual cash flows represent solely payments of principal and interest, “principal” is defined as the fair value of the financial asset upon initial recognition. “Interest” is defined as a consideration for the amount of cash at the time and for the credit risk associated with outstanding principal amount during a certain period and for other risks and base costs of loans (for example, liquidity risk and administrative costs), as well as for the profit margin.

The Company considers the contractual terms of the instruments to evaluate whether the contractual cash flows are only payments of principal and interest. This includes evaluating whether the financial asset contains a contractual term that could change the timing or amount of the contractual cash flows so that it would not meet this condition. In making this evaluation, the Company considers the following:

• | contingent events that change the amount or timing of cash flows.
• | terms that may adjust the contractual rate, including variable rates.
• | the prepayment and the extension of the term; and
• | the terms that limit the access of the Company to cash flows from specific assets (for example, based on the performance of an asset).

Due to their nature, as of December 31, 202 2 and 202 1 the Company’s financial assets are classified as “measured at amortized cost”, except for the Marketable securities and other investments and interests in entities, which are classified as “measured at fair value through profit or loss”.

Financial assets are not reclassified after initial recognition, unless the Company changes the business model for the management of financial assets, in which case all financial assets affected are reclassified on the first day of the reporting period subsequent to the change in the business model.

Financial liabilities are classified as measured as amortized cost or at FVTPL. A financial liability is classified as measured at fair value through profit or loss if it is classified as held for trading, if it is a derivative or assigned as such upon initial recognition.

Due to their nature, as of December 31, 202 2 and 202 1 the Company’s financial liabilities are classified as “measured at amortized cost”.

ii. Initial Recognition and Subsequent Measurement

Trade receivables are initially recognized on the date they were originated. All other financial assets and liabilities are initially recognized when the Company becomes a party to the instrument’s contractual provisions.

A financial asset (unless it is trade receivable without a significant financing component) or a financial liability is initially measured at fair value, plus, for an item not measured at FVTPL (fair value through profit or loss), transaction costs which are directly attributable to its acquisition or issuance. A trade receivable without a significant financing component is initially measured at its transaction price. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in statements of profit or loss.

Financial assets are derecognized when the rights to receive the cash flows expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

F-16

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Gains or losses arising from changes in the fair value of the "Financial assets at fair value through profit or loss", as well as interest income accrued over “Assets measured at amortized cost”, are presented in statements of profit or loss under "Finance income" in the period in which they arise.

The Company derecognizes a financial liability when its contractual obligations are discharged or canceled or expired. The Company also derecognizes a financial liability when the terms are modified, and the cash flows of the modified liability are substantially different.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in statements of profit or loss.

iii. Offsetting of financial assets and liabilities

Financial assets and liabilities are offset, and the net amount presented in the Consolidated Statement of Financial Position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle them a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

iv. Impairment of financial assets

The Company assesses on a prospective basis the expected credit loss (“ECL”) associated with its financial asset instruments carried at amortized cost, with accruals and reversals recorded in the Statement of Profit or Loss . ECLs are based on the difference between the contractual cash flows due in accordance with the contractual terms and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate.

The methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Company applied the simplified approach and calculated impairment losses based on lifetime expected credit losses as from their initial recognition, as described in Note 10.c.

c.Inventories

Inventories are stated at cost or net realizable value, whichever is lower. The method of valuation of inventories is the average cost. The cost of finished goods and work in progress comprises project costs, raw materials, publishing costs (e.g., direct labor, other direct costs and the related direct production costs).

Editorial costs incurred during the development phase of a new product are presented within inventories as “work in progress”, as materials are substantially revised annually. After the conclusion of its production and allocation in the line of "finished products", the sales of the product begins and any subsequent costs incurred are recognized in profit or loss as "cost of goods sold and services ", according to the accrual period on which the services are provided.

The Company recognizes a provision for losses on finished products and low-handling raw materials, which are periodically analyzed and evaluated in terms of the expected realization of these inventories.

If losses are not expected, the provision is reversed. Management periodically assesses whether obsolete inventories need to be destroyed.

The Company also recognizes the right of return on its inventories. See Note 3.2 f

d.Property, Plant and Equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes the cost of acquisition.

F-17

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with these costs will flow to the Company, and they can be measured reliably. The carrying amount of the replaced items or parts is derecognized. All other repairs and maintenance are charged to statement of Profit or Loss during the financial period in which they are incurred.

Depreciation of assets is calculated using the straight-line method to reduce their cost to their residual values over their estimated useful lives, as follows:

| Years
Property, buildings and leasehold improvements | 5-20
IT equipment | 3-10
Furniture, equipment and fittings | 3-10
Right of use assets | 3-15

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. The Company did not identify changes in the useful life at December 31, 202 2 and 202 1.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in statement of Profit or Loss when control of the asset is transferred. See Note 1 3.

e.Business Combination

Acquisitions of businesses are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. Acquisition-related costs are expensed as incurred and included in general and administrative expenses.

At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognized at their fair value at the acquisition date.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognized in statement of profit or loss.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date. See Note 5.

f.Intangible Assets and Goodwill

The Company’s intangible assets are mostly comprised of software, trademarks, customer portfolio, platform content production, trade agreement, copyrights and goodwill. Those items are further described below:

1. Goodwill

F-18

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Goodwill arising on the acquisition of subsidiaries is measured as set out in Note 1 4.

b. Software

Computer software licenses purchased are capitalized based on the costs incurred to acquire and bring to use the specific software or to develop new functionalities to existing ones. Directly attributable costs that are capitalized as part of the software product / project include the software / project development employee costs and an appropriate portion of significant direct expenses.

Other development costs and subsequent expenditures that do not meet these capitalization criteria (e.g. maintenance and on-going operations) are recognized as an expense as incurred. Development costs previously recorded as an expense are not recognized as an asset in a subsequent period.

Software recognized as assets is amortized using straight-line method over its estimated useful lives, not greater than 5 years. The Company did not identify changes in the useful life at December 31, 202 2 and 202 1.

c. Trademarks

Separately acquired trademarks are initially stated at historical cost. Trademarks acquired in a business combination are recognized at fair value at the acquisition date. Subsequently, trademarks are amortized to the end of their useful lives.

Amortization is calculated using the straight-line method to allocate the cost of trademarks over their estimated useful lives of 20 to 30 years . The Company did not identify changes in the useful life at December 31, 20 22 and 202 1.

d. Customer portfolio

Customer portfolios acquired in a business combination are recognized at fair value at the acquisition date. The contractual customer relationship has an estimated finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method over the expected life of the customer relationship (from 12 to 13 years). The Company did not identify changes in the useful life at December 31, 202 2 and 202 1.

e. Platform content production

Development expenditure with platform content is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortization and any accumulated impairment losses. Amortization is calculated on the straight-line method over their estimated useful lives of 3 years. The Company did not identify changes in the useful life at December 31, 202 2 and 202 1.

g.Copyrights

The Company accounts for different copyright agreements as follows:

i. | Copyrights are paid to the authors of the content included in the textbooks produced by the Company and are calculated based on agreed upon percentages of revenue or cash inflows related to the books sold, as defined in each contract. Payments are made on a monthly, quarterly, semi-annually, annually or hybrid basis. For these contracts the authors maintain the legal title of the copyrights. These copyrights are charged to the statement of profit or loss and other comprehensive income on an accrual basis when the products are sold.
ii. | In some instances where the authors maintain the legal title of the copyrights, contracts require the prepayment of part or even the full down payment of forecasted sales before the authors start the production of the content. In such cases, copyrights are recognized as a “Prepayments” in the Consolidated Statement of Financial Position and charged to statements of Profit or Loss when the books are sold based on the related sales forecast. The Company reviews regularly the forecast sales to determine if an impairment is required.
iii. | When the Company purchases permanently the legal title of the copyright from the authors, the amounts are capitalized in “Intangible Assets and Goodwill” as “Other intangible assets” and are amortized on the straight-line method over their estimated useful lives, which are not greater than 3 years, which is the content renewal estimated timeline.

F-19

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

The Company did not identify changes in the useful life as of December 31, 202 2 and 202 1.

h.Impairment of non-financial assets

Assets that are subject to depreciation or amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized when the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use.

Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested annually for impairment. Goodwill impairment tests are undertaken annually or more frequently if events or changes in circumstances indicate potential impairment, at the end of each fiscal year.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable and independent cash inflows (Cash-generating units – CGU’s). For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs (or groups of CGUs) that is expected to benefit from the synergies of the combination.

Non-financial assets, other than goodwill, that have been adjusted following impairment are subsequently reviewed for possible reversal of the impairment at each reporting date. The impairment of goodwill recognized in statement of profit or loss is not reversed. See Note 5.

i.Bonds and Financing

The Bonds and financing are recognized initially at fair value, net of transaction costs incurred, and are subsequently carried at amortized cost. Any difference between the proceeds (net of transaction costs) and the total amount payable is recognized in consolidated profit and loss over the period of the bonds and financing using the effective interest rate method.

Following initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest rate method. The Bonds and financing are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Both general and specific borrowing costs directly related to the acquisition, construction or production of a qualifying asset that requires a substantial period of time to be prepared for its intended use or sale, are capitalized as part of the cost of that asset when it is probable that future economic benefits associated with the item will flow to the Company and the costs can be measured reliably. The other borrowing costs are recognized as finance costs in the period in which they are incurred. See Note 1 5.

j.Suppliers (including Reverse Factoring)

Suppliers are obligations to pay for goods or services that have been acquired in the ordinary course of business. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method.

Some of the Company’s domestic suppliers sell their products with extended payment terms and may subsequently transfer their receivables due by the Company to financial institutions without right of recourse, in a transaction characterized as “Reverse Factoring”. The Company charged interest over the payment term at a rate that is commensurate with its own credit risk being subsequently recorded as finance cost using the effective interest rate method. The operation does not affect the deadlines, prices and conditions previously agreed. The suppliers specifically related to Reverse Factoring are segregated in the Note 1 6. In addition, the effects of Reverse Factoring on Cash Flows are recognized in “Cash flow from operating activities”.

F-20

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

k.Leases

1. Right-of-use assets

The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life or the lease term, as most of the Company’ leases are related to property leases.

ii. Lease liabilities

At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. The accounting amount of the lease liabilities is remeasured if there is a change in the term of the lease, a change in fixed lease payments or a change in valuation to purchase the right-of-use asset.

iii. Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases of properties (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease.

iv. Determining the lease term of contracts with renewal options

The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if reasonably certain to be exercised.

The Company has the option, under some of its leases to lease the assets for additional terms. The Company applies judgment in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy).

F-21

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

l. Provision for tax, civil and labor losses

The provisions for risks related to lawsuits and administrative proceedings involving tax, civil and labor matters are recognized when (i) the Company has a present legal or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) the amount can be reliably estimated.

The likelihood of loss of judicial/administrative proceedings in which the Company appears as a defendant is assessed by Management on the financial statement dates.

Provisions are recorded in an amount the Company believes it is adequate to cover probable losses, being determined by the expected future cash flows to settle the obligation that reflects current risks specific to the liability. The increase in the provision due to the time elapsed is recognized as interest expense. Penalties assessed on these proceedings are recognized in general and administrative expenses when incurred. See Note 2 2.

m.Current and Deferred income tax and social contribution

Taxes comprise current and deferred Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL), calculated on pre-tax profit basis.

IRPJ and CSLL are calculated based on the nominal statutory rates of 25% and 9%, respectively, adjusted by non-taxable/nondeductible items provided for by law. Deferred income tax and social contribution are calculated on income tax and social contribution losses and other temporary differences in relation to the balances of assets and liabilities in the Statement of Financial Position. The deferred income tax and social contribution assets are fully accounted for, except when it is not probable that assets will be recovered by future taxable income.

Current and deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when current and deferred tax assets and liabilities are related to the tax levied by the same tax authority on the taxable entity where there is an intention to settle the balances on a net basis. See Note 2 3.

n.Employee Benefits

The Company has the following employee benefits:

1. Short-term employee benefits

Obligations for short-term employee benefits are recognized as personnel expenses as the related service is rendered. The liability is recognized at the amount expected to be paid, if the Company has a legal or constructive obligation to pay this amount as a result of prior service rendered by the employee, and the obligation can be reliably estimated.

The Company also provides its commercial team with commissions calculated considering existing sales and revenue targets that are periodically reviewed. These amounts are accrued in “Salaries and Social contributions” on a monthly basis based on the achievements of such goals, with payments generally being made twice a year. Since commissions are paid based on the annual sales of each contract, the Company elected to use the practical expedient to expense the costs as incurred.

b. Pension Contributions

The Company offered a defined contribution plan to its employees and once the contributions have been made, the Company has no additional payment obligation, and the costs are therefore recognized in the month in which the contribution is incurred (i.e employees have rendered services entitling them to the right to receive those benefits), which is consistent with recognition of payroll expenses in statement of Profit or Loss.

c. Share-based Payments

The Company compensates part of its Management and some employees through share-based compensation by plans involving Restricted Share Units or “RSU”. The RSU plans are based on Company shares, through a fixed share price (market price) determined on the grant date which the Company has the obligation of delivering shares without cash settled payment. The Share based payment is divided in the following:

F-22

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

(i) | L ong Term Investment – “ILP” – Refers to RSU plans for which some Company management and employees are eligible. In those plans the Company will deliver a fixed number of shares at a fixed share price measured at the Plan’s inception. The Company recognizes the expense and inherent labor taxes related to the RSU plan in profit and loss. In addition, the effects of the constructive obligation are recognized in statement of financial position under the share-based compensation reserve in equity and the corresponding taxes under “Salaries and Contributions”. See Note 2 4.

d. Termination benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or whenever an employee accepts voluntary resignation in exchange for these benefits. The Company recognizes termination benefits at the earlier of the following dates: (i) when the Company can no longer withdraw the offer of those benefits; and (ii) when the entity recognizes costs for a restructuring and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

o.Shareholders’ Equity

Until July 23, 2020 the Company presented its financial statement based on the combined carve-out, where the capital reserves were not presented, and all effects were recorded in Parent Company’s Net Investment. As a consequence of the restructuring completed on July 23, 2020, the Company presented its consolidated financial statements considering a new basis of preparation where the share capital, capital reserve and accumulated losses were disclosed.

Since July 1, 2020, amounts previously recorded in Parent Company’s net investment in Equity have been recorded as net income and portions were reclassified to share capital and capital reserve.

ii. Share Capital

On December 31, 202 2 and 2021, the Company’s share capital was R$ 4,820,815, divided into 82,649,887 shares of which 64,436,093 are Class B shares held by Cogna Group and 18,213,794 are Class A common shares held by others.

iii. Capital reserve

The breakdown of capital reserves is arising from share-based payment in the amount of R$ 80,531 on December 31, 2022, and R$61,488 on December 31,2021. S ee Note 2 4.

iv. Treasury shares

On December 31, 202 2 and 2021, the Company holds shares in treasury in the amount of R$ 23,880, corresponding to 1,000,000 shares, see Note 2 4.

p.Revenue Recognition

The Company generates most of its revenue from the sale of textbooks (“publishing” when sold as standalone products or “PAR” when bundled as an educational platform) and learning systems in printed and digital formats to private schools through short-term transactions or term contracts with an average period from three to five years.

F-23

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Contents in printed and digital formats related to these textbooks and learnings systems are mostly the same, with minor supplements presented in digital format only. Therefore, revenue from educational contents is recognized when the Company delivers the content in printed and digital format.

The Company also sells its products directly to students and parents through its e-commerce platform. Since the Company obtains control of the goods sold before they are transferred to its customers, the Company assessed the principal versus agent relationship and determined that it is a principal in the transaction. Therefore, revenue is recognized in a gross amount of consideration to which the Company is entitled in exchange for the specified goods transferred.

Pursuant to the terms of the contracts with some customers, they are required to provide the Company with an estimate of the number of students that will access the content in the next school year (which typically starts in February of the following year), allowing the Company to start the delivery of its products. Since the contracts allow product returns (generally for period of four months from the delivery date) up to a certain limit, the Company recognizes revenue for the amount that is expected to be received based on past experience, assuming that the other conditions for revenue recognition are met. Therefore, the amount of revenue recognized is adjusted for expected returns, which are estimated based on historical data on a portfolio basis. In these circumstances a contractual obligation and a right to recover returned goods asset are recognized.

The right to recover returned goods asset is measured at the former carrying amount of the inventory less any expected costs to recover the goods. The refund liability on the return received is included in Contractual Obligations and Deferred Income and the right to recover returned goods is included in Inventories. The Company reviews its estimate of expected returns at each reporting date and updates the amounts of the asset and liability accordingly.

The Company also provides other types of complementary educational solutions, preparatory courses for university admission exams, digital services and other services to private schools, such as: teacher training, educators and parenting support, extracurricular educational content and other services related to the management of private schools. Each complementary educational service, digital service and others are deemed to be separate performance obligations. Thus, revenue is recognized over time when the services are rendered (i.e. output method) to the customer. The Company believes this is an appropriate measure of progress toward satisfaction of performance obligations as it is the most accurate measure of the consideration to which the Company expects to be entitled in exchange for the services. These services may be sold on a standalone basis or bundled within publishing and learning system contracts and when bundled, each performance obligation is recognized separately. Service revenue is presented net of the corresponding discounts, returns and taxes. See Note 2 5.

q.Taxes on Revenues

The Company and its associates benefit from tax Law No. 10,865/04, as amended by Law No. 11,033/04, which provides that our tax rate on the sale of books is zero in respect of contributions to the social integration program tax (Programa de Integração Social, or PIS) and the social contributions on revenue tax (Contribuição para o Financiamento da Seguridade Social, or COFINS). The sale of books is also exempt by the Brazilian constitution from Brazilian municipal taxes, Brazilian services tax (Imposto Sobre Serviços, or ISS) and from the Brazilian tax on the circulation of goods, interstate and intercity transportation and communication services (Imposto sobre Operações relativas à Circulação de Mercadorias e sobre Prestações de Services de Transporte Interestadual e Intermunicipal e de Comunicação, or ICMS). Tax exemption available to physical books have been extended to digital books based on a decision by the Brazilian Supreme Court rendered on March 8, 2017.

The services revenues are subject to PIS and COFINS under the non-cumulative tax regime (with a nominal statutory rate of 9.25%), as well as municipality service taxes (Impostos sobre Serviços, or ISS) for which a statutory rate of 5% is applicable.

r.Fair Value Measurement

Fair value is the price that would be received upon the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date, on the primary market or, in the absence thereof, on the most advantageous market to which the Business has access on such date. The fair value of a liability reflects its risk of non-performance, which includes, among others, the Company’s own credit risk.

F-24

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

If there is no price quoted on an active market, the Company uses valuation techniques that maximize the use of relevant observable data and minimize the use of unobservable data. The chosen valuation technique incorporates all the factors market participants would consider when pricing a transaction. If an asset or a liability measured at fair value has a purchase and a selling price, the Company measures the assets based on purchase prices and liabilities based on selling prices. A market is considered as active if the transactions for the asset or liability take place with enough frequency and volume to provide pricing information on an ongoing basis.

The best evidence of the fair value of a financial instrument upon initial recognition is usually the transaction price - i.e., the fair value of the consideration given or received. If the Company determines that the fair value upon initial recognition differs from the transaction price and the fair value is not evidenced by either a price quoted on an active market for an identical asset or liability or based on a valuation technique for which any non-observable data are judged to be insignificant in relation to measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value upon initial recognition and the transaction price. This difference is subsequently recognized in Profit or Loss on an appropriate basis over the life of the instrument, or until such time when its valuation is fully supported by observable market data or the transaction is closed, whichever comes first.

To provide an indication of the reliability of the inputs used in determining fair value, the Company has classified its financial instruments according to the judgements and estimates of the observable data as much as possible. The fair value hierarchy is based on the degree to which the fair value used in the valuation techniques is observable, as follows:

• | Level 1: The fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
• | Level 2: The fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
• | Level 3: The fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

5 Business Combinations

The Company concluded some acquisitions to improve its portfolio of educational solutions as presented below:

• | January 14, 2022–Phidelis Tecnologia Desenvolvimento de Sistemas Ltda.
• | January 14, 2022 – MVP Consultoria e Sistemas Ltda.

The Company’ business combinations are described below:

Business Combinations during 2022

MVP Consultoria e Sistemas Ltda. and Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. (“Phidelis”)

On January 14, 2022, the Company acquired though its subsidiary, Somos Sistemas de Ensino S.A. (“Somos Sistemas”), the entities Phidelis Tecnologia Desenvolvimento de Sistemas and MVP Consultoria e Sistemas Ltda. (“Phidelis”). Phidelis is a complete academic and financial management platform for elementary and high schools, providing (i) licensing and software development and (ii) messaging, retention, enrollment and standard management for schools and students. In addition to adding a digital solution and bringing in new customers, Phidelis' team will support the development of the Company's digital services platform. The Company will pay a total purchase price in the amount of R$21,966, comprised of (i) R$8,854 in cash, paid on the acquisition date, (ii) R$7,638 to be paid in annual installments over the course of two years, and (iii) a variable of R$5,474, with the achievement of performance linked to net revenue of the years 2023 and 2024 to be paid in three annual installments between 2023 and 2026. Both fixed and variable payment to be adjusted by the variation of Extended National Consumer Price Index (“IPCA”) in the period.

F-25

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

The following table presents the net identifiable assets acquired and liabilities assumed for each business combination in 2022:

|  | Phidelis |  |  | MVP |  |  | Total |
Current assets |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | 162 |  |  | 217 |  |  | 379 |
Trade receivables |  | 65 |  |  | 131 |  |  | 196 |
Taxes recoverable |  | 1 |  |  | 4 |  |  | 5 |
Total current assets |  | 228 |  |  | 352 |  |  | 580 |
Non-current assets |  |  |  |  |  |  |  |  |
Property, plant and equipment |  | - |  |  | 72 |  |  | 72 |
Intangible assets - Customer Portfolio |  | 1,521 |  |  | 2,313 |  |  | 3,834 |
Intangible assets - Software |  | 523 |  |  | 2,702 |  |  | 3,225 |
Total non-current assets |  | 2,044 |  |  | 5,087 |  |  | 7,131 |
Total Assets |  | 2,272 |  |  | 5,439 |  |  | 7,711 |
Current liabilities |  |  |  |  |  |  |  |  |
Salaries and social contributions |  | 58 |  |  | 4 |  |  | 62 |
Taxes payable |  | - |  |  | 10 |  |  | 10 |
Income tax and social contribution payable |  | - |  |  | 80 |  |  | 80 |
Other liabilities |  | - |  |  | 12 |  |  | 12 |
Total current liabilities |  | 58 |  |  | 106 |  |  | 164 |
Non-current liabilities |  |  |  |  |  |  |  |  |
Provision for tax, civil and labor losses |  | - |  |  | 2,504 |  |  | 2,504 |
Total non-current liabilities |  | - |  |  | 2,504 |  |  | 2,504 |
Total liabilities |  | 58 |  |  | 2,610 |  |  | 2,668 |
Net identifiable assets at fair value (A) |  | 2,214 |  |  | 2,829 |  |  | 5,043 |
Total Consideration transferred (B) |  | 3,600 |  |  | 18,366 |  |  | 21,966 |
Goodwill (B – A) (i) |  | 1,386 |  |  | 15,537 |  |  | 16,923 |

(i)Goodwill is recognized based on expected synergies from combining the operations of the acquirees and of the Company, as well as an expected increase in the Company’s market-share due to the penetration of the Company’s products and services in regions where the Company did not operate before. At the time of the acquisition, future tax deductibility is probable as certain actions, necessary to integrate the businesses from a tax perspective, are intended by management and considered feasible from a legal perspective.

From the date of acquisition to December 31, 2022, Phidelis contributed to a net revenue from sales and services in the amount of R$5,157, and net profit for the year in the amount of R$ 780. If the acquisition had occurred on January 1, 2022, Management estimates that net revenue from sales and services would have been R$ 1,264,287 and net loss for the year would have been R$ (54,572).

Business Combinations during 2021

Sociedade Educacional da Lagoa Ltda. (“SEL”)

On March 2, 2021, the Company acquired through its subsidiary, Somos Sistemas de Ensino S.A. (“Somos Sistemas”), the entity Sociedade Educacional da Lagoa Ltda. (“SEL”). SEL provides technical and pedagogical services to education platforms, including the maintenance of such platforms, development and improvement of contents and training of professionals. The consideration paid was R$ 65,000, of which R$ 38,124 was paid in cash and the remaining amount of R$ 26,876 is subject to certain post-closing price adjustments (conditioned to the minimum amount of R$ 39,400 total contract revenue for the next two years, 2023 and 2024, with the client "SESI", and if the minimum amount is not reached, the installment due will be discounted in the percentage of reduction of the minimum value of each contract). The consideration will be divided in installments over a 4-year period (each installment adjusted by the positive variation of 100% of CDI).

F-26

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Nota 1000 Serviços Educacionais S.A. (“Redação Nota 1000”)

On May 27, 2021, the Company acquired through its subsidiary, Somos Sistemas de Ensino S.A. (“Somos Sistemas”) the entity Redação Nota 1000, which provides essay review services as a service platform, through its proprietary software. The Redação Nota 1000’s users may choose their essays reviewed under different approaches as follows: (i) solely by essay-review specialists (manual); (ii) on an automated basis by the company’s software, with a final review by a specialist (semi-automated); or (iii) exclusively on an automated basis by the company’s software. The consideration transferred was R$ 11,387, of which R$ 4,093 was paid in cash and the remaining amount of R$ 7,294 will be paid in installments with final due date on December 24, 2026 (each installment adjusted by the positive variation of 100% of CDI index). In addition, the Company recognized a contingent consideration of R$ 2,650 subjects to certain post-closing price adjustments (achievement of financial targets such as maintenance of contracts, net revenue and average global cost, in addition to non-financial targets such as platform engagement, satisfaction of the customer in the service provided and adequate level of information security, for the years 2022 and 2023). During 2022, the Company concluded the acquisition accounting and adjusted during the measurement period, intangible assets and goodwill in the amount of R$ 1,098.

EMME – Produções de Materiais em Multimídia (“EMME”)

On August 1, 2021 the Company acquired through its subsidiary, Somos Sistemas de Ensino S.A. (“Somos Sistemas”) the entity EMME, which provides educational marketing solutions for schools, through license of its “software as a service”. The consideration transferred was R$ 15,317 of which R$ 3,063 was paid in cash and the remaining amount of R$ 12,253 will be paid in installments with final due date on August 16, 2026 (each installment adjusted by the positive variation of inflation- “IPCA” – Extended National Consumer Price Index). During 2022, the Company concluded the acquisition accounting and adjusted, during the measurement period, intangible assets and goodwill, in the amount of R$ 1,055.

Editora De Gouges S.A. (“De Gouges”)

On October 29, 2021 the Company acquired through its subsidiary, Somos Sistemas de Ensino S.A. (“Somos Sistemas”) the entity De Gouges, which provides learning system (K-12) and solutions on the educational platform. The consideration transferred was R$ 611,554 of which R$ 160,000 was paid in cash and the remaining amount of R$ 451,554 to be paid in installments with final due date on October 29, 2026 (each installment adjusted by the positive variation of 100% of CDI index).

The acquisition agreement for De Gouges provided an obligation on the subsidiary, Somos Sistemas de Ensino S.A. under the Commercial Agreement. (“Somos Sistemas”), to grant an amount of R$62,234 in discounts on the sale price of teaching materials to Eleva Holding’s partner schools (the selling shareholder), within a period of up to 5 years limited to the amount of R$16,600 years. For this operation, the Company recorded a liability generated in the business combination (Provision for trade discount) and which should be realized according to its use in the coming years.

Net identifiable assets acquired, and liabilities assumed involved in the Business Combinations and Consideration transferred

The acquisitions were accounted for using the acquisition method of accounting, i.e., the consideration transferred, and the net identifiable assets acquired, and liabilities assumed were measured at fair value, while goodwill is measured as the excess of consideration paid over those items.

The following table presents the net identifiable assets acquired and liabilities assumed for each business combination in 2021:

F-27

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

| SEL |  |  | Redação Nota 1000 |  |  | EMME |  |  | De Gouges |  |  | Total |
Current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | 1,461 |  |  | 525 |  |  | 637 |  |  | 16,439 |  |  | 19,062 |
Trade receivables (vi) | - |  |  | 1,327 |  |  | 1,082 |  |  | 18,190 |  |  | 20,599 |
Inventories (iv) | - |  |  | - |  |  | - |  |  | 4,534 |  |  | 4,534 |
Prepayments | - |  |  | - |  |  | 14 |  |  | 83 |  |  | 97 |
Taxes recoverable | - |  |  | - |  |  | 9 |  |  | 1,947 |  |  | 1,956 |
Other receivables | 180 |  |  | - |  |  | - |  |  | 12 |  |  | 192 |
Total current assets | 1,641 |  |  | 1,852 |  |  | 1,742 |  |  | 41,205 |  |  | 46,440 |
Non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property, plant and equipment | 611 |  |  | - |  |  | 128 |  |  | 1,272 |  |  | 2,011 |
Other intangible assets | - |  |  | 1,099 |  |  | 1 |  |  | 38 |  |  | 1,138 |
Intangible assets - Customer Portfolio (ii) | 18,783 |  |  | - |  |  | - |  |  | 64,806 |  |  | 83,589 |
Intangible assets - Trade agreement (iii) | - |  |  | - |  |  | - |  |  | 247,622 |  |  | 247,622 |
Intangible assets - Software (v) | 1,296 |  |  | 5,692 |  |  | 4,048 |  |  | - |  |  | 11,036 |
Total non-current assets | 20,690 |  |  | 6,791 |  |  | 4,177 |  |  | 313,738 |  |  | 345,396 |
Total Assets | 22,331 |  |  | 8,643 |  |  | 5,919 |  |  | 354,943 |  |  | 391,836 |
Current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |
Suppliers | - |  |  | 180 |  |  | 13 |  |  | 1,107 |  |  | 1,300 |
Salaries and social contributions | 1 |  |  | 124 |  |  | 600 |  |  | 2,871 |  |  | 3,596 |
Taxes payable | 17 |  |  | 207 |  |  | 102 |  |  | - |  |  | 326 |
Income tax and social contribution payable | 33 |  |  | - |  |  | - |  |  | 5,232 |  |  | 5,265 |
Provision for trade discount | - |  |  | - |  |  | - |  |  | 15,000 |  |  | 15,000 |
Other liabilities | - |  |  | 1,673 |  |  | 2 |  |  | 25 |  |  | 1,700 |
Total current liabilities | 51 |  |  | 2,184 |  |  | 717 |  |  | 24,235 |  |  | 27,187 |
Non-current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provision for tax, civil and labor losses | - |  |  | - |  |  | - |  |  | 1,231 |  |  | 1,231 |
Provision for trade discount | - |  |  | - |  |  | - |  |  | 47,234 |  |  | 47,234 |
Total non-current liabilities | - |  |  | - |  |  | - |  |  | 48,465 |  |  | 48,465 |
Total liabilities | 51 |  |  | 2,184 |  |  | 717 |  |  | 72,700 |  |  | 75,652 |
Net identifiable assets at fair value (A) | 22,280 |  |  | 6,459 |  |  | 5,202 |  |  | 282,243 |  |  | 316,184 |
Total Consideration transferred (B) | 65,000 |  |  | 11,387 |  |  | 15,317 |  |  | 611,554 |  |  | 703,258 |
Goodwill (B – A) (i) | 42,720 |  |  | 4,928 |  |  | 10,115 |  |  | 329,311 |  |  | 387,074 |

(i) Goodwill is recognized based on expected synergies from combining the operations of the acquirees and of the acquiror, as well as an expected increase in the Company’s market-share due to the penetration of the Company’s products and services in regions where the Company did not operate before. Also, the current tax law allows the deductibility of the acquisition date goodwill and fair value of net assets acquired when a non-substantive action is taken after acquisition by the Company (i.e. when the Company merges or spins off the companies acquired) and therefore the tax and accounting bases of the net assets acquired are the same as of the acquisition date.

(ii) As a result of purchase price allocation, the Company identified R$ 18,783, customer portfolio (“SESI”), and R$ 64,806, customer portfolio (“De Gouges”) based on customer portfolio receivables expectation around 8% per year. See Note 14.

F-28

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

(iii) As a result of the purchase price allocation, the Company identified R$ 247,622, a commercial agreement (“Eleva Holding”), which corresponds to the sale of teaching material from "De Gouges" to partner schools of "Eleva Holding" within 10 years, with an estimated sales rate of 10% per year.

(iv) As a result of the purchase price allocation, the Company identified R$ 4,534 in inventories (“De Gouges”), based on the expectation of sales of this inventory at around 33% per year.

(v) As a result of purchase price allocation, the Company identified R$ 11,036, Educational Software applied in the “SESI” learning system, Writing Correction Software for Education System “Redação Nota 1000” and software that produces digital marketing material solutions for schools “EMME”, all of them based on relief from royalties’ criteria (RIR) and each acquisition with its corresponding rate of net revenue by investment. See Note 14.

(vi) Accounts receivable from customers comprise gross contractual amounts due of R$24,344, of which R$3,746 were uncollectible on the acquisition date. See Note 10e.

6 Financial Risk Management

The Company has a risk management policy for regular monitoring and managing the nature and overall position of financial risks and to assess its financial results and impacts on its cash flows. Counterparty credit limits are also reviewed periodically or whenever the Company identifies significant changes in financial risk.

The economic and financial risks reflect the behavior of macroeconomic variables such as interest rates as well as other characteristics of the financial instruments maintained by the Company. These risks are managed through control and monitoring policies, specific strategies, and limits.

1. Financial risk factors

The Company’s activities expose it to certain financial risks mainly related to market risk, credit risk and liquidity risk. Management and the Group’s Board of Directors monitor such risks in line with their capital management policy objectives.

This Note presents information on the Company’s exposure to each of the risks above, the objectives of the Company, measurement policies, and the Company’s risk and capital management process.

The Company has no derivative transactions.

1. Market risk – cash flow interest rate risk

This risk arises from the possibility that the Company incurs losses because of interest rate fluctuations that increase finance costs related to financing and bonds raised in the market and obligations for acquisitions from third parties payable in installments. The Company continuously monitors market interest rates in order to assess the need to contract financial instruments to hedge against volatility of these rates. Additionally, financial assets also indexed to CDI and IPCA (broad consumer price index) partially mitigate any interest rate exposures. Interest rates contracted are as follows:

| December 31, 2022 |  |  | December 31, 2021 |  |  | Interest rate
Bonds |  |  |  |  |  |  |
Private Bonds – 6 th Issuance – series 2 | 53,688 |  |  | 104,844 |  |  | CDI + 1.00% p.a.
Private Bonds – 6 th Issuance – series 2 | - |  |  | 210,920 |  |  | CDI + 1.70% p.a.
Private Bonds – 9 th Issuance – series 2 | 259,843 |  |  | - |  |  | CDI + 2.40% p.a.
Bonds – 1st Issuance - single | 529,465 |  |  | 514,574 |  |  | CDI + 2.30% p.a.
Financing and Lease Liabilities - Mind Makers | - |  |  | 888 |  |  | TJPLP + 5% p.a.
Financing and Lease Liabilities | 140,563 |  |  | 160,542 |  |  | IPCA
Accounts Payable for Business Combination and acquisition of associates | 625,277 |  |  | 532,313 |  |  | 100% CDI
| 1,608,836 |  |  | 1,524,081 |  |  |

F-29

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

b. Credit risk

Credit risk arises from the potential default of a counterparty on an agreement or financial instrument, resulting in financial loss. The Company is exposed to credit risk in its operating activities (mainly in connection with trade receivables, see N ote 10 and financial activities that include reverse factoring deposits with banks and other financial institutions and other financial i nstruments contracted.

The Company mitigates its exposure to credit risks associated with financial instruments, deposits in banks and short-term investments by investing in prime financial institutions and in accordance with limits previously set in the Company’s policy. See Notes 8 and 9.

To mitigate risks associated with trade receivables, the Company adopts a sales policy and an analysis of the financial and equity condition of its counterparties. The sales policy is directly associated with the level of credit risk the Company is willing to accept in the normal course of its business.

The diversification of its receivable’s portfolio, the selectivity of its customers, as well as the monitoring of sales financing terms and individual position limits are procedures adopted to minimize defaults or losses in the realization of trade receivables. Thus, the Company does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

Furthermore, the Company reviews the recoverable amount of its trade receivables at the end of each reporting period to ensure that adequate credit losses are recorded (Note 10).

c. Liquidity risk

In order to cover possible liquidity deficiencies or mismatches between cash and cash equivalents and short-term debt and financial obligations, the Company continues to operate with reverse factoring as long as this credit line is offered by banks and accepted by Company suppliers.

This is the risk of the Company not having enough funds and or bank credit limits to meet its short-term financial commitments, due to mismatching terms in expected receipts and payments.

The Company continuously monitors its cash balance and indebtedness level and implemented measures to allow access to the capital markets, when necessary. It also endeavors to assure they remain within existing credit limits. Management also continuously monitors projected and actual cash flows and the combination of the maturity profiles of the financial assets, liabilities and takes into consideration its debt financing plans, covenant compliance, internal liquidity targets and, if applicable, regulatory requirements.

Cash surplus generated by the Company is handled in short-term deposits being those investments composed by enough liquidity thus providing to the Company the appropriate commitment with the going concern presumption.

On September 28, 2022 the Company’s subsidiary Somos Sistemas de Ensino S.A issued R$ 250,000 in private bonds, not convertible. The bonds are aimed to reinforce the Company’s capital structure, and lengthen the debt maturity profile, whose average term currently is 37 months from the issuance. On August 6, 2021 the Company’s subsidiary Somos Sistemas de Ensino S.A issued R$ 500,000 in simple debentures, not convertible. The debentures are aimed to reinforce the Company’s capital structure as well as extending the debt maturity profile, see Note 1 5.

F-30

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

The table below presents the maturity of the Company’s financial liabilities.

Financial liabilities by maturity ranges

December 31, 2022 |  | Less than one year |  |  | Between one and two years |  |  | Over two years |  |  | Total |
Bonds and financing (Note 15) |  | 93,779 |  |  | 499,217 |  |  | 250,000 |  |  | 842,996 |
Lease Liabilities (Note 17) |  | 23,151 |  |  | 22,921 |  |  | 94,491 |  |  | 140,563 |
Accounts Payable for business combination and acquisition of associates (Note 19) |  | 73,007 |  |  | 389,186 |  |  | 163,084 |  |  | 625,277 |
Suppliers (Note 16) |  | 250,647 |  |  | - |  |  | - |  |  | 250,647 |
Reverse Factoring (Note 16) |  | 155,469 |  |  | - |  |  | - |  |  | 155,469 |
Other liabilities - related parties (Note 21) |  | 54 |  |  | - |  |  | - |  |  | 54 |
|  | 596,107 |  |  | 911,324 |  |  | 507,575 |  |  | 2,015,006 |

Financial liabilities by maturity ranges

The table below reflects the estimated interest rate based on CDI for 12 months (12.43% p.a) extracted from BACEN (Brazilian Central Bank) on December 31,202 2. Amounts payable refer to principal and interest based on undiscounted contractual amounts and, therefore, do not reflect the financial position presented as of December 31, 202 2:

December 31, 2022 |  | Less than one year |  |  | Between one and two years |  |  | Over two years |  |  | Total |
Bonds and financing |  | 105,436 |  |  | 561,270 |  |  | 281,075 |  |  | 947,781 |
Lease Liabilities |  | 26,029 |  |  | 25,770 |  |  | 106,236 |  |  | 158,035 |
Accounts Payable for business combination and acquisition of associates |  | 82,082 |  |  | 437,562 |  |  | 183,355 |  |  | 702,999 |
Suppliers |  | 281,802 |  |  | - |  |  | - |  |  | 281,802 |
Reverse Factoring |  | 174,794 |  |  | - |  |  | - |  |  | 174,794 |
Other liabilities - related parties |  | 61 |  |  | - |  |  | - |  |  | 61 |
|  | 670,204 |  |  | 1,024,602 |  |  | 570,666 |  |  | 2,265,472 |

Capital management

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure of the Company, management can make, or may propose to the shareholders when their approval is required, adjustments to the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce, for example, debt.

The Company monitors capital based on the gearing ratio. This ratio corresponds to the net debt expressed as a percentage of total capitalization. Net debt comprises financial liabilities less cash and cash equivalents. Total capitalization is calculated as shareholders’ equity as shown in the consolidated balance sheet plus net debt.

The Company’s main capital management objectives are to safeguard its ability to continue as a going concern, optimize returns, allow consistency of operations to other stakeholders, and maintain an optimal capital structure reducing financial costs and maximizing the returns. In addition, the Company monitors financial leverage adequacy, and mitigates risks that may affect the availability of capital for Company development.

F-31

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

| December 31, 2022 |  |  | December 31, 2021 |
Net debt (i) | 1,969,241 |  |  | 1,518,247 |
Total shareholders' equity | 4,629,679 |  |  | 4,665,209 |
Total capitalization (ii) | 2,660,438 |  |  | 3,146,963 |
Gearing ratio - % - (iii) | 74 | % |  | 48 | %

| (i) | Net debt comprises financial liabilities (note 7) net of cash and cash equivalents.
| (ii) | Refers to the difference between Shareholders’ Equity and Net debt.
| (iii) | The Gearing Ratio is calculated based on Net Debt/Total Capitalization.

Sensitivity analysis

The following table presents the sensitivity analysis of potential losses from financial instruments, according to Management’s assessment of relevant market risks presented above.

A probable scenario (Base scenario) over a 12-month horizon was used, with a projected rate of 12.43% p.a. as per DI Interest Deposit rate (“CDI”) reference rates disclosed by B3 S.A. (Brazilian stock exchange). Two further scenarios are presented, stressing, respectively, a 25% deterioration in scenario I and 50% deterioration in scenario II, of the projected rates.

|  | Index - % per year |  | Balance as of December 31, 2022 |  |  | Base scenario |  |  | Scenario I |  |  | Scenario II |
Financial Investments |  | 103.40% of CDI |  | 39,212 |  |  | 4,874 |  |  | 6,093 |  |  | 7,311 |
Marketable Securities |  | 103.39% CDI |  | 380,514 |  |  | 47,298 |  |  | 59,122 |  |  | 70,947 |
|  |  |  | 419,726 |  |  | 52,172 |  |  | 65,215 |  |  | 78,258 |
Accounts Payable for Business Combination and acquisition of associates |  | 100% of CDI |  | (625,277 | ) |  | (77,722 | ) |  | (97,152 | ) |  | (116,583 | )
Lease liabilities |  | CDI + 1.28% |  | (140,563 | ) |  | (17,472 | ) |  | (21,840 | ) |  | (26,208 | )
Bonds and financing |  | CDI + 1.66% |  | (842,996 | ) |  | (104,784 | ) |  | (130,981 | ) |  | (157,177 | )
|  |  |  | (1,608,836 | ) |  | (199,978 | ) |  | (249,973 | ) |  | (299,968 | )
Net exposure |  |  |  | (1,189,110 | ) |  | (147,806 | ) |  | (184,758 | ) |  | (221,710 | )
Interest rate -% p.a |  | - |  | - |  |  | 12.43 | % |  | 15.54 | % |  | 18.65 | %
Stressing scenarios |  | - |  | - |  |  | - |  |  | 25 | % |  | 50 | %

F-32

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

7 Financial Instruments by Category

The Company holds the following financial instruments:

| Hierarchy |  | December 31, 2022 |  | December 31, 2021
Assets - Amortized cost |  |  |  |  |
Cash and cash equivalents |  |  | 45,765 |  | 309,893
Marketable securities |  |  | - |  | 166,349
Trade receivables |  |  | 649,135 |  | 505,514
Other receivables |  |  | 972 |  | 2,105
Related parties – other receivables |  |  | 1,759 |  | 501
|  |  | 697,631 |  | 984,362
Assets - Fair value through profit or loss |  |  |  |  |
Marketable securities | 1 |  | 380,514 |  | -
Other investments and interests in entities |  |  | 8,272 |  | -
|  |  | 388,786 |  | -
Liabilities - Amortized cost |  |  |  |  |
Bonds and financing |  |  | 842,996 |  | 831,226
Lease liabilities |  |  | 140,563 |  | 160,542
Reverse factoring |  |  | 155,469 |  | 97,619
Suppliers |  |  | 250,647 |  | 167,168
Accounts payable for business combination and acquisition of associates |  |  | 569,360 |  | 497,187
Accounts payable for business combination and acquisition of associates (i) | 3 |  | 55,917 |  | 35,126
Other liabilities - related parties |  |  | 54 |  | 39,271
|  |  | 2,015,006 |  | 1,828,139

i) | Refers to a portion of the liability remeasured based on economic activity of the acquired entity (post-closing price adjustments).

F-33

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Valuation techniques and significant unobservable inputs

The following table shows the valuation techniques used in measuring level 3 fair values, as well as the significant unobservable inputs used:

Entities |  | Valuation technique |  | Significant unobservable inputs |  | Inter-relationship between key unobservable inputs and fair value measurement
Phidelis |  | Discounted cash flows: The valuation model considers the present value of the net cash flows expected to be generated by the operation (net revenue). |  | 1. The achievement of financial targets are linked to net revenue of the years 2023 and 2024. 2.Revenue: we consider for the revenue projection the continuity of old contracts and new contracts with average annual revenue growth of 21.1%. |  | The estimated fair value would increase (decrease) if: - Any product is no longer monetized (lower) - The risk-adjusted discount rates were lower (higher)
SEL |  | Discounted cash flows: The valuation model considers the present value of the net cash flows expected to be generated by the operation (net revenue). |  | 1. Renewal, in writing, to the year 2023 and 2024, of the Structured Teaching Program Contract; or 2. Entering a new contract, in writing, with SESI effective for the year 2024, with or without the need for bidding, so that the Buyer continues to provide in the year of 2024 services to SESI, according to the specific scope to be defined by SESI (“Renovation Structured Teaching Program 2024”). |  | The estimated fair value would increase (decrease) if: - No contract renewal (lower)
Redação Nota 1000 |  | Discounted cash flows: The valuation model considers the present value of the net cash flows expected to be generated by the operation (net revenue). |  | 1. Net Revenue Target 2023: R$3,952 2. (i) 2023 Net Revenue equal to or greater than R$3,952 so = 100%, (ii) 2023 Net Revenue equal to or greater than R$2,799 and less than R$3,952 so 70%, (iii) 2023 Net Revenue equal to or greater than R$ 2,659 and less than R$2,799 so 60%, (iv) 2023 Net Revenue equal to or greater than R$2,379 and less than R$2,659 so, 40%, and (v) Net Revenue less than R$2,379 so 0%. |  | Not applicable.
Educbank |  | Discounted cash flows: The valuation model considers the present value of the net cash flows expected to be generated by the operation (students enrolled). |  | 1. Reaching 25,000 new students effectively hired, as determined after issuing bank slips, in relation to the Company's services 2. Reaching 37,000 new students effectively hired, as determined after issuing bank slips, in relation to the Company's services. |  | The estimated fair value would increase (decrease) if: - Not applicable.

The Company has not disclosed the fair values of your financial instruments, because their carrying amounts approximates fair value.

F-34

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

8 Cash and cash equivalents

1. Composition

The balance of this account comprises the following amounts:

| December 31, 2022 |  |  | December 31, 2021 |
Cash | 7 |  |  | 100 |
Bank account | 6,546 |  |  | 17,772 |
Financial investments (i) | 39,212 |  |  | 292,021 |
| 45,765 |  |  | 309,893 |

(i) | The Company invests in short-term fixed income investment funds with daily liquidity and no material risk of change in value. Financial investments presented an average gross yield of 103% of the annual CDI rate on December 31, 2022 (105.2% on December 31, 202 1). All investments are highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and correspond to the cash obligations for the period.

9 Marketable securities

a. Composition

| Credit Risk |  | December 31, 2022 |  |  | December 31, 2021 |  |
Financial bills (LF) | AAA |  | - |  |  | 1,640 |  |
Financial treasury bills (LFT) | AAA |  | - |  |  | 164,709 |  |
Private investment fund | AAA |  | 31,842 |  |  | - |  |
Private investment fund | AA |  | 348,672 |  |  | - |  |
|  |  | 380,514 |  |  | 166,349 |  |

The average gross yield of securities is based on 104% CDI on December 31, 202 2 (101% CDI on December 31, 202 1).

F-35

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

10 Trade receivables

The balance of this account comprises the following amounts:

a.Composition

| December 31, 2022 |  |  | December 31, 2021 |
Trade receivables | 711,439 |  |  | 505,190 |
Related Parties (Note 21) | 7,177 |  |  | 46,824 |
( - ) Impairment losses on trade receivables | (69,481 | ) |  | (46,500 | )
| 649,135 |  |  | 505,514 |

b.Maturities of trade receivables

| December 31, 2022 |  |  | December 31, 2021 |
Not yet due | 563,005 |  |  | 417,233 |
Past due |  |  |  |  |
Up to 30 days | 19,435 |  |  | 9,657 |
From 31 to 60 days | 22,637 |  |  | 10,331 |
From 61 to 90 days | 12,193 |  |  | 7,366 |
From 91 to 180 days | 42,169 |  |  | 21,154 |
From 181 to 360 days | 31,357 |  |  | 23,852 |
Over 360 days | 20,643 |  |  | 15,597 |
Total past due | 148,434 |  |  | 87,957 |
Related parties (note 21) | 7,177 |  |  | 46,824 |
Impairment losses on trade receivables | (69,481 | ) |  | (46,500 | )
| 649,135 |  |  | 505,514 |

The gross carrying amount of trade receivables is written off when the Company has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof. Collection efforts continue to be made, even for the receivables that have been written off, and amounts recoverable are recognized directly in Consolidated Statement of Profit or Loss and Other Comprehensive Income upon collection.

c.Impairment losses on trade receivables

The Company measures impairment losses on trade receivables at an amount equal to lifetime expected credit losses (“ECL”) estimated using a monthly provision matrix. This matrix is prepared by analyzing the receivables established each month (in the 12-month period) and the related composition per default range and by calculating the recovery performance. In this methodology, for each default range an estimated loss likelihood percentage is established, which considers current and prospective information on macroeconomic factors that affect the customers’ ability to settle the receivables.

The Company also recognizes impairment losses on trade receivables at 100% for customers that filed for judicial recovery or bankruptcy, based on historical experience, which indicates that these receivables are generally not recoverable.

The credit risk and expected credit losses associated with amounts due from related parties is not significant.

The following table details the risk profile of trade receivables based on the Company’s provision matrix as of December 31, 202 2 and as of December 31, 202 1.

d. Expected credit losses aging

F-36

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

|  |  | December 31, 2022 |  |  |  |  |  | December 31, 2021 |
| Expected credit loss rate (%) |  | Lifetime ECL (R$) |  |  | Expected credit loss rate (%) |  |  | Lifetime ECL (R$) |
Not yet due | 1.52% |  | 8,970 |  |  | 0.30% |  |  | 1,263 |
Past due |  |  |  |  |  |  |  |  |  |
Up to 30 days | 9.53% |  | 2,072 |  |  | 12.67% |  |  | 1,219 |
From 31 to 60 days | 14.09% |  | 2,728 |  |  | 17.01% |  |  | 1,769 |
From 61 to 90 days | 19.87% |  | 2,335 |  |  | 23.75% |  |  | 1,764 |
From 91 to 180 days | 29.66% |  | 10,096 |  |  | 35.71% |  |  | 7,608 |
From 181 to 360 days | 48.35% |  | 12,465 |  |  | 72.90% |  |  | 17,399 |
Over 360 days | 76.40% |  | 15,434 |  |  | 99.23% |  |  | 15,478 |
Total past due |  |  | 54,100 |  |  |  |  |  | 46,500 |
Customers in judicial recovery (i) | 100% |  | 15,381 |  |  | 100% |  |  | - |
(-) Impairment losses on trade receivables |  |  | 69,481 |  |  |  |  |  | 46,500 |

(i) | On December 31, 2022 the Company’s Management recorded R$15 million in provision for expected credit loss relating to the entirely of Vasta’s receivable for products in inventory of a large retail company in judicial recovery. The Company did not identify customers in judicial recovery as of December 31, 2021.

The following table shows the changes in impairment losses on trade receivables for the years ended December 31, 2022, 2021 and 2020:

e. Changes on provision

| December 31, 2022 |  |  | December 31, 2021 |  |  | December 31, 2020 |
Opening balance | 46,500 |  |  | 32,055 |  |  | 22,524 |
Additions | 45,904 |  |  | 39,326 |  |  | 29,870 |
Reversals | (288 | ) |  | (2,854 | ) |  | (4,855 | )
Write offs (i) | (22,635 | ) |  | (22,027 | ) |  | (15,484 | )
Closing balance | 69,481 |  |  | 46,500 |  |  | 32,055 |

(i) | The Company assessed its customers credit lines, on a regular basis. Due to historical losses and lack of prospects of credit recovery alongside these customers, the Company recognized R$ 22,635 as write-off as of December 31, 2022 (R$ 22,027 as of December 31, 2021).

11 Inventories

The balance of this account comprises the following amounts:

1. Composition

| December 31, 2022 |  |  | December 31, 2021 |
Finished products (i) | 160,519 |  |  | 160,318 |
Work in process | 73,993 |  |  | 51,152 |
Raw materials | 30,773 |  |  | 27,081 |
Imports in progress | 347 |  |  | 1,681 |
Right to returned goods (ii) | 818 |  |  | 2,131 |
| 266,450 |  |  | 242,363 |

(i) | These amounts are net of slow-moving items and net realizable value.
(ii) | Represents the Company’s right to recover products from customers when customers exercise their right of return under the Company’s returns policies, where the Company estimates the volume of goods returned based on experience and foreseen expectations.

F-37

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Changes in provision for losses with slow-moving inventories, net realizable value and provision for right to returned goods are broken down as follows:

b. Changes in provision

| December 31, 2022 |  |  | December 31, 2021 |  |  | December 31, 2020 |
Opening balance | 58,723 |  |  | 62,210 |  |  | 69,080 |
Additions | 46,138 |  |  | 24,178 |  |  | 8,783 |
(Reversals) | (5,214 | ) |  | (2,061 | ) |  | (4,726 | )
Inventory losses (i) | (15,598 | ) |  | (25,604 | ) |  | (10,927 | )
Closing balance | 84,049 |  |  | 58,723 |  |  | 62,210 |

(i) | Refers substantially to physical books destroyed, previously provisioned, due to indication of damage or obsolescence caused by changes in the educational content during the school year.

1 2 Equity accounted investees

a) Composition of investments

|  | Investment type |  | Interest % |  | Investment |  | Fair value |  | Goodwill |  | December 31, 2022
Educbank |  | Associate |  | 45% |  | 41,485 |  | 7,868 |  | 33,786 |  | 83,139
|  |  |  |  |  | 41,485 |  | 7,868 |  | 33,786 |  | 83,139

b) Investments without control and significant influence

|  | EducBank |
As of December 31, 2021 |  | - |
Acquisition |  | 87,651 |
Equity method |  | (4,512 | )
As of December 31,2022 |  | 83,139 |

13 Property, plant and equipment

The cost, weighted average depreciation rates and accumulated depreciation are as follows:

|  |  |  | December 31, 2022 |  |  | December 31, 2021 |
| Weighted average depreciation rate |  |  | Cost |  |  | Accumulated depreciation |  |  | Net book value |  |  | Cost |  |  | Accumulated depreciation |  |  | Net book value |
IT equipment | 10% - 33% |  |  | 80,262 |  |  | (43,294 | ) |  | 36,968 |  |  | 44,181 |  |  | (27,565 | ) |  | 16,615 |
Furniture, equipment and fittings | 10% - 33% |  |  | 60,920 |  |  | (36,818 | ) |  | 24,102 |  |  | 38,116 |  |  | (29,726 | ) |  | 8,390 |
Property, buildings and improvements | 5%-20% |  |  | 53,027 |  |  | (40,381 | ) |  | 12,646 |  |  | 54,508 |  |  | (36,636 | ) |  | 17,872 |
In progress | - |  |  | 4,494 |  |  | - |  |  | 4,494 |  |  | 677 |  |  | - |  |  | 677 |
Right of use assets | 6%-33% |  |  | 257,034 |  |  | (137,948 | ) |  | 119,086 |  |  | 251,694 |  |  | (109,957 | ) |  | 141,737 |
Land | - |  |  | 391 |  |  | - |  |  | 391 |  |  | 391 |  |  | - |  |  | 391 |
Total |  |  |  | 456,128 |  |  | (258,441 | ) |  | 197,688 |  |  | 389,567 |  |  | (203,885 | ) |  | 185,682 |

F-38

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Changes in property, plant and equipment are as follows:

| IT equipment |  |  | Furniture, equipment and fittings |  |  | Property, buildings and improvements |  |  | In progress |  |  | Right of use assets (i) |  |  | Land |  |  | Total |
As of December 31, 2021 | 16,615 |  |  | 8,390 |  |  | 17,872 |  |  | 677 |  |  | 141,737 |  |  | 391 |  |  | 185,682 |
Additions | 35,086 |  |  | 21,571 |  |  | 657 |  |  | 3,829 |  |  | 12,002 |  |  | - |  |  | 73,145 |
Additions through business combinations | 54 |  |  | 12 |  |  | - |  |  | 6 |  |  | - |  |  | - |  |  | 72 |
Disposals / Cancelled contracts | - |  |  | (6 | ) |  | - |  |  | (18 | ) |  | (3,796 | ) |  | - |  |  | (3,820 | )
Depreciation | (15,727 | ) |  | (5,379 | ) |  | (5,428 | ) |  | - |  |  | (30,857 | ) |  | - |  |  | (57,391 | )
Transfers | 941 |  |  | (486 | ) |  | (455 | ) |  | - |  |  | - |  |  | - |  |  | - |
As of December 31, 2022 | 36,968 |  |  | 24,102 |  |  | 12,646 |  |  | 4,494 |  |  | 119,086 |  |  | 391 |  |  | 197,688 |

(i) | Refers to recognition of new lease agreements of R$ 12,002 which the Company considers as part of its digital learning solutions through computer tablets that have been part of current learning system solutions. See the corresponding lease liabilities in Note 17.

| IT equipment |  |  | Furniture, equipment and fittings |  |  | Property, buildings and improvements |  |  | In progress |  |  | Right of use assets |  |  | Land |  |  | Total |
As of December 31, 2020 | 1,479 |  |  | 9,908 |  |  | 19,978 |  |  | 315 |  |  | 159,873 |  |  | 453 |  |  | 192,006 |
Additions (i) | 16,105 |  |  | 1,028 |  |  | 597 |  |  | 2,732 |  |  | 25,513 |  |  | - |  |  | 45,975 |
Additions through business combinations | 1,041 |  |  | 835 |  |  | 135 |  |  | - |  |  | - |  |  | - |  |  | 2,011 |
Renegotiation (ii) | - |  |  | - |  |  | - |  |  | - |  |  | (12,439 | ) |  | - |  |  | (12,439 | )
Disposals / Cancelled contracts | - |  |  | (124 | ) |  | - |  |  | - |  |  | (3,286 | ) |  | - |  |  | (3,410 | )
Depreciation | (2,010 | ) |  | (3,319 | ) |  | (5,208 | ) |  | - |  |  | (27,924 | ) |  | - |  |  | (38,461 | )
Transfers | - |  |  | 62 |  |  | 2,370 |  |  | (2,370 | ) |  | - |  |  | (62 | ) |  | - |
As of December 31, 2021 | 16,615 |  |  | 8,390 |  |  | 17,872 |  |  | 677 |  |  | 141,737 |  |  | 391 |  |  | 185,682 |

(i) | Refers substantially to recognition of new lease agreements of R$ 25,513 which the Company considers as part of its digital learning solutions through computer tablets that have been part of current learning system solutions. See the corresponding lease liabilities in Note 17.
(ii) | The Company returned part of the São José dos Campos warehouse to the lessor in September 2021, maintaining the lease agreement and term, changing only in the subsequent lease installments leading to the reversal adjustments of the right-of-use asset and corresponding lease liabilities.

The Company assesses at each reporting date, whether there is an indication that a property, plant and equipment asset may be impaired. If any indication exists, the Company estimates the asset’s recoverable amount. There were no indications of impairment of property, plant and equipment as of December 31, 2022 and 2021.

F-39

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

14 Intangible Assets and Goodwill

The cost, weighted average amortization rates and accumulated amortization of intangible assets and goodwill comprise the following amounts:

|  |  | December 31, 2022 |  | December 31, 2021 |
| Weighted average amortization rate |  | Cost |  |  | Accumulated amortization |  |  | Net book value |  |  | Cost |  |  | Accumulated amortization |  |  | Net book value |
Software | 20% |  | 263,433 |  |  | (182,711 | ) |  | 80,722 |  |  | 247,326 |  |  | (151,281 | ) |  | 96,045 |
Customer Portfolio | 8% |  | 1,201,074 |  |  | (377,891 | ) |  | 823,183 |  |  | 1,197,381 |  |  | (275,276 | ) |  | 922,105 |
Trademarks | 5% |  | 631,582 |  |  | (112,967 | ) |  | 518,615 |  |  | 632,016 |  |  | (85,658 | ) |  | 546,358 |
Trade Agreement | 8% |  | 247,622 |  |  | (28,795 | ) |  | 218,827 |  |  | 247,622 |  |  | (4,127 | ) |  | 243,495 |
Platform content production | 33% |  | 123,251 |  |  | (74,881 | ) |  | 48,370 |  |  | 73,877 |  |  | (49,583 | ) |  | 24,294 |
Other Intangible assets | 33% |  | 39,422 |  |  | (32,142 | ) |  | 7,280 |  |  | 39,421 |  |  | (32,140 | ) |  | 7,281 |
In progress |  |  | 18,958 |  |  | - |  |  | 18,958 |  |  | 3,991 |  |  | - |  |  | 3,991 |
Goodwill |  |  | 3,711,721 |  |  | - |  |  | 3,711,721 |  |  | 3,694,798 |  |  | - |  |  | 3,694,798 |
|  |  | 6,237,063 |  |  | (809,387 | ) |  | 5,427,676 |  |  | 6,136,432 |  |  | (598,065 | ) |  | 5,538,367 |

Changes in intangible assets and goodwill were as follows:

| Software |  |  | Customer Portfolio |  |  | Trademarks |  |  | Trade Agreement |  |  | Platform content production |  |  | Other Intangible assets |  |  | In progress |  |  | Goodwill |  |  | Total |
As of December 31, 2021 (i) | 96,045 |  |  | 922,105 |  |  | 546,358 |  |  | 243,495 |  |  | 24,294 |  |  | 7,281 |  |  | 3,991 |  |  | 3,694,798 |  |  | 5,538,367 |
Additions | 12,881 |  |  | - |  |  | - |  |  | - |  |  | 62,722 |  |  | 17 |  |  | 14,967 |  |  | - |  |  | 90,587 |
Additions through business combinations | 3,225 |  |  | 3,833 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 16,923 |  |  | 23,981 |
Disposals | - |  |  | (140 | ) |  | (434 | ) |  | - |  |  | (13,348 | ) |  | (15 | ) |  | - |  |  | - |  |  | (13,937 | )
Amortization | (31,430 | ) |  | (102,615 | ) |  | (27,309 | ) |  | (24,668 | ) |  | (25,298 | ) |  | ( 3 | ) |  | - |  |  | - |  |  | (211,323 | )
As of December 31, 2022 | 80,722 |  |  | 823,183 |  |  | 518,615 |  |  | 218,827 |  |  | 48,370 |  |  | 7,280 |  |  | 18,958 |  |  | 3,711,721 |  |  | 5,427,676 |

F-40

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

(i) | Considers the review of goodwill and intangibles assets of the acquisition of EMME and Redação Nota Mil, acquired during the year 2021.

| Software |  |  | Customer Portfolio |  |  | Trademarks |  |  | Trade Agreement |  |  | Platform content production (i) |  |  | Other intangible assets |  |  | In progress |  |  | Goodwill (ii) |  |  | Total |
As of December 31, 2020 | 83,414 |  |  | 928,858 |  |  | 573,586 |  |  | - |  |  | 23,821 |  |  | 6,243 |  |  | 999 |  |  | 3,307,805 |  |  | 4,924,726 |
Additions | 25,560 |  |  | - |  |  | - |  |  | - |  |  | 20,808 |  |  | 39 |  |  | 9,509 |  |  | - |  |  | 55,916 |
Additions through business combinations | 11,036 |  |  | 83,589 |  |  | - |  |  | 247,622 |  |  | - |  |  | 1,099 |  |  | - |  |  | 387,074 |  |  | 730,419 |
Amortization | (30,482 | ) |  | (90,342 | ) |  | (27,309 | ) |  | (4,127 | ) |  | (20,335 | ) |  | (100 | ) |  | - |  |  | - |  |  | (172,695 | )
Transfers | 6,517 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (6,517 | ) |  | - |  |  | - |
As of December 31, 2021 | 96,045 |  |  | 922,105 |  |  | 546,277 |  |  | 243,495 |  |  | 24,294 |  |  | 7,281 |  |  | 3,991 |  |  | 3,694,879 |  |  | 5,538,367 |

(i) | Substantially refers to development of the projects related to Plurall Platform. The Company has invested in changes in its digital platform that include “Plurall Digital Transformation” in the amount of R$ 20,808 million, and project related to learning systems, in the amount of R$ 9,509 million.
(ii) | The Company recognized R$ 387,074 as goodwill on SEL, Redação Nota 1000, EMME and De Gouges acquisition, see Note 5.

(i) | Goodwill impairment test

The Company performed its annual impairment test in 2022 and 2021 The Company also carried out a sensitivity analysis in the long-term model and cash flows. The conclusion of these tests conducted by the Company for the years ended December 31, 2022 and 2021, showed that no adjustments were required to these assets.

The Company is comprised of two separate CGUs (each one of its reportable operating segments, as per Note 28), for which the recoverable amount has been determined based on value-in-use calculations, Goodwill is allocated to each CGU as shown below:

| December 31, 2022 |  |  | December 31, 2021 |
Content and Edtech Platform | 3,674,034 |  |  | 3,674,036 |
Digital Platform | 37,687 |  |  | 20,843 |
| 3,711,721 |  |  | 3,694,879 |

The recoverable amount of a CGU has been determined based on value-in-use calculations. These calculations use pre-income tax and social contribution cash flow projections based on financial budget approved by management covering a period of eight years. Cash Flows beyond that period are extrapolated using growth rates. The growth rate does not exceed the long-term average growth rate for the business that CGU operates.

F-41

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

For each of the CGUs, the key assumptions, long-term growth rate and discount rate used in the value-in-use calculations are stated in the table below. In addition, the recoverable amount is also disclosed in the table. The key assumptions used for value-in-use calculations as of December 31, 2022 and 2021 are as follows:

|  |  |  | 2022 |  |  |  |  |  | 2021 |
| Content and EdTech Platform |  |  | Digital Platform |  |  | Content and EdTech Platform |  |  | Digital Platform |
Growth rate - % | 13.70 | % |  | 12.5 | % |  | 14.40 | % |  | 9.7 | %
Discount rate - % | 12.10 | % |  | 12.10 | % |  | 10.81 | % |  | 10.81 | %
Growth rate (%) in perpetuity | 4.7 | % |  | 4.7 | % |  | 5.8 | % |  | 5.8 | %
Years projected | 8 |  |  | 8 |  |  | 8 |  |  | 8 |

Growth rate is based on assumptions defined by the Company’s management, underpinned by business performance compared with other competitors and based on internal measures (new initiatives and services provided) taken into consideration. The discount rate is determined by individual WACC (weighted average working capital), net of income taxes.

The assumptions of the long-term model used in the impairment test calculation were assessed and approved by the Business’ Management, as well as the rates used.

(ii) | Impairment of other intangible assets and in progress

There were no indications of impairment of intangible assets for the years ended December 31, 2022 and 2021. Additionally, intangible assets stated as “in progress” were assessed for impairment by comparing its carrying amount with its recoverable amount and no adjustments were considered necessary.

F-42

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

15 Bonds and financing

The balance of bonds and financing comprises the following amounts:

| December 31, 2021 |  |  | Additions (i) |  |  | Payment of interest (ii) |  |  | Payment of principal (ii) |  |  | Interest accrued |  |  | Transaction cost of bonds |  |  | Transfers |  |  | December 31, 2022 |
Bonds with Related Parties | 264,673 |  |  | - |  |  | (33,921 | ) |  | (254,885 | ) |  | 36,573 |  |  | - |  |  | 50,885 |  |  | 63,325 |
Bonds | 16,581 |  |  | - |  |  | (58,425 | ) |  | - |  |  | 72,298 |  |  | 1,018 |  |  | (1,018 | ) |  | 30,454 |
Financing | 237 |  |  | - |  |  | (154 | ) |  | (759 | ) |  | 25 |  |  | - |  |  | 651 |  |  | - |
Current liabilities | 281,491 |  |  | - |  |  | (92,500 | ) |  | (255,644 | ) |  | 108,896 |  |  | 1,018 |  |  | 50,518 |  |  | 93,779 |
Bonds with Related Parties | 51,091 |  |  | 250,000 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (50,885 | ) |  | 250,206 |
Bonds | 497,993 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 1,018 |  |  | 499,011 |
Financing | 651 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (651 | ) |  | - |
Non-current liabilities | 549,735 |  |  | 250,000 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (50,518 | ) |  | 749,217 |
Total | 831,226 |  |  | 250,000 |  |  | (92,500 | ) |  | (255,644 | ) |  | 108,896 |  |  | 1,018 |  |  | - |  |  | 842,996 |

(i) | On September 28, 2022, the Company issued simple debentures not convertible into shares, subject to remunerative interest of 100% of the CDI, plus a spread of 2.40% per year, in the total amount of R$250,000. The debentures aim to strengthen the Company's capital structure and lengthen the maturity profile of the debt, whose average term has become 37 months.
(ii) | We present below the composition of interest and principal payments considering the issues made:

Emission |  | Payments |  |  | Interest |  |  | Principal |
SSED21 – 6th. SOMOS – 2nd. Série |  | 02/15/2022 and 08/11/2022 |  |  | (10,792 | ) |  | (50,885 | )
SEDU21 – 7th. SOMOS 2nd. Série |  | 02/15/2022 and 08/11/2022 |  |  | (23,129 | ) |  | (204,000 | )
GAGL11 – Somos Sistemas |  | 02/07/2022 and 08/05/2022 |  |  | (58,425 | ) |  | - |
Financing |  | 06/22/2022 |  |  | (154 | ) |  | (759 | )
|  | Total |  |  | (92,500 | ) |  | (255,644 | )

F-43

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

| December 31, 2020 |  |  | Additions (ii) |  |  | Payment of interest (i) |  |  | Payment of principal (i) |  |  | Interest accrued |  |  | Transaction cost of bonds |  |  | Transfers |  |  | December 31, 2021 |
Bonds with related parties | 502,743 |  |  | - |  |  | (24,873 | ) |  | (477,564 | ) |  | 25,859 |  |  | - |  |  | 238,509 |  |  | 264,673 |
Bonds | - |  |  | - |  |  | - |  |  | - |  |  | 17,574 |  |  | (993 | ) |  | - |  |  | 16,581 |
Financing | 139 |  |  | - |  |  | (49 | ) |  | (177 | ) |  | 116 |  |  | - |  |  | 208 |  |  | 237 |
Current liabilities | 502,882 |  |  | - |  |  | (24,922 | ) |  | (477,741 | ) |  | 43,549 |  |  | (993 | ) |  | 238,717 |  |  | 281,491 |
Bonds with related parties(i) | 289,600 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (238,509 | ) |  | 51,091 |
Bonds | - |  |  | 500,000 |  |  | - |  |  | - |  |  | - |  |  | (2,007 | ) |  | - |  |  | 497,993 |
Financing | 859 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | (208 | ) |  | 651 |
Non-current liabilities | 290,459 |  |  | 500,000 |  |  | - |  |  | - |  |  | - |  |  | (2,007 | ) |  | (238,717 | ) |  | 549,735 |
Total | 793,341 |  |  | 500,000 |  |  | (24,922 | ) |  | (477,741 | ) |  | 43,549 |  |  | (3,000 | ) |  | - |  |  | 831,226 |

(i) | On March 15, 2021, the Company, substantially settled bonds with related parties amounting to R$ 100,000 and R$ 1,488, in principal and interest, respectively as follows: 5 th Issuance, 1 st series – R$ 101,488. In addition, the Company settled only interest on the following bonds: 5 th Issuance, 2 nd series – R$ 1,451, 6 th Issuance, 2 nd series – R$ 3,613 and 7 th Issuance, single series – R$ 5,663. This measure is part of a commitment with shareholders as a result of the IPO.
| On May 31, 2021, the Company partially settled bonds with related parties amounting to R$ 188,000, of principal of the 7 th issuance single series.
| On August 6, 2021, the Company settled the remaining 7 th issuance with related parties in the amounts of R$189,564 and R$5,871, as principal and interest. In addition, the Company settled only interest on the following bonds: 5 th Issuance, 2 nd series – R$ 2,029 and 6 th Issuance, 2 nd series – R$ 4,758.
| Regarding the financing with Banco de Desenvolvimento de Minas Gerais SA - BDMG, the Company pays monthly the amount of R$ 15 and R$ 4, respectively, of principal and interest, totaling on December 31, 2021 an amount of R$177 and R$49, respectively, of principal and interest
(ii) | On August 6, 2021, the Company´s subsidiary Somos Sistemas de Ensino S.A. issued R$ 500 million in simple debentures not convertible into shares, subject to compensatory interest of 100% of DI Interest Deposit rate (CDI), plus spread of 2.30% per year. The debentures are aimed at reinforcing the Company’s capital structure and elongating the debt maturity profile, which average maturity now stands at 35 months.

F-44

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

1. Bonds’ description

See below the bonds outstanding on December 31, 2022:

Subscriber | Related Parties |  | Related Parties |  | Third parties
Issuance | 5th |  | 9th |  | 1st
Series | 2 nd Series |  | 2nd Series |  | Single Series
Date of issuance | 08/15/2018 |  | 09/28/2022 |  | 08/06/2021
Maturity Date | 08/15/2023 |  | 09/28/2025 |  | 08/05/2024
First payment after | 60 months |  | 36 months |  | 35 months
Remuneration payment | Semi-annual interest |  | Semi-annual interest |  | Semi-annual interest
Financials charges | CDI + 1.00% p.a. |  | CDI + 2.40% p.a. |  | CDI + 2.30% p.a.
Principal amount (in millions of R$) | 100 |  | 250 |  | 500

b. Bond’s maturities

The maturities range of these accounts, considering related and third parties are as follow:

Maturity of installments |  | December 31, 2022 |  | % |  | December 31, 2021 |  | %
2023 |  | 93,779 |  | 11.1 |  | 281,491 |  | 33.9
2024 |  | 499,217 |  | 59.2 |  | 51,063 |  | 6.1
2025 |  | 250,000 |  | 29.7 |  | 498,672 |  | 60.0
Total non-current liabilities |  | 749,217 |  | 88.9 |  | 549,735 |  | 66.1
|  | 842,996 |  | 100.0 |  | 831,226 |  | 100.0

c. Debit commitments

The maintenance of the contractual maturity of debentures at their original maturities is subject to covenants, which are being regularly complied with. The covenant compliance indicators are the following:

Bonds with related parties

On November 19, 2019, all rights and obligations related to bonds issued by Saber with third parties were transferred to Cogna, under the condition that R$ 1,535,800 of the amounts should be transferred to the Company upon the Corporate Restructuring. Through this process, the Company is subject to the following clauses: (i) the acceleration of the other debentures originally issued by Saber; (ii) the grant by the Company of any liens on Company assets or its capital stock; (iii) a change in control by Cogna of Saber’s subsidiaries, subject to certain exceptions. Additionally, the Company has agreed until the maturity of the private debentures that: (i) it will allocate at least 50% of the use of proceeds from any liquidity event to repay such debentures; (ii) it will not obtain any new loans unless the proceeds of such loans are directed to repayment of its debentures with Cogna; and (iii) the Company will not pledge shares and/or dividends.

The Company complied with all debt commitments in the period applicable on December 31, 2022 and 2021.

F-45

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Bonds with third parties

The bond issued by Somos Sistemas requires the maintenance of certain financial indicators “covenants” which are annually calculated based on Somos Sistemas Consolidated financial statements. The period of covenants compliance comprises 12 months immediately prior to the end of each year, being the first year of analysis December 31, 2022 and based on ratio between adjusted net debt by adjusted consolidated EBITDA. The net debt adjusted EBITDA ratio should be less or equal:

- 4.25%in 2021
- 4.00% in 2022
- 3.75% in 2023
- 3.50% in 2024

This ratio cannot be breached for two consecutive periods or three alternate periods.

Consolidated net debt: Company’s total debt (short- and long-term loans and financing, including capital markets operations, less cash equivalents cash which could be withdrawn until five business days added by accounts payable for business combinations)

Adjusted consolidated EBITDA: Earnings before income taxes, depreciation and amortization, financial results (excluding financial expenses), and non recuring expenses.

On December 31, 2022, the financial ratio net debt by adjusted EBITDA reached the result of 2.74%, within the conditions established in the aforementioned financial contractual clauses. On December 31, 2021, the financial ratio net debt by adjusted EBITDA reached the result of 4.47%, exceeding the ratio, but yet within the clauses established.

16 Suppliers

The balance of this account comprises the following amounts:

1. Composition

| December 31, 2022 |  |  | December 31, 2021 |
Local suppliers | 215,593 |  |  | 132,124 |
Related parties (note 21) | 13,781 |  |  | 19,534 |
Copyright | 21,273 |  |  | 15,510 |
| 250,647 |  |  | 167,168 |
Reverse Factoring (i) | 155,469 |  |  | 97,619 |

(i) | As of December 31, 2022, the balance of reverse factoring was R$ 155,469 (R$ 97,619 as of December 31, 2021), and the discount rates of assignment operations carried out by our suppliers with financial institutions had a weighted average of 1.27% per month (as of December 31, 2021, the weighted average was 1.05% per month) and a maximum payment term of 360 days. The balance is initially recognized net of the present value adjustment, which is subsequently recognized as a financial expense.

F-46

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 2022

17 Lease liabilities

The lease agreements have an average term of 7 years and weighted average rate of 14.32% p.a.

| December 31, 2022 |  |  | December 31, 2021 |
Opening balance | 160,542 |  |  | 173,103 |
Additions for new lease agreements (i) | 12,002 |  |  | 25,513 |
Renegotiation | - |  |  | (12,439 | )
Cancelled contracts | (3,180 | ) |  | (3,481 | )
Renegotiation - COVID-19 impact | - |  |  | (448 | )
Interest | 13,143 |  |  | 14,984 |
Payment of interest | (14,941 | ) |  | (14,692 | )
Payment of principal | (27,003 | ) |  | (21,998 | )
Closing balance | 140,563 |  |  | 160,542 |
Current liabilities | 23,151 |  |  | 26,636 |
Non-current liabilities | 117,412 |  |  | 133,906 |
| 140,563 |  |  | 160,542 |

(i) | Refers to new lease agreements which the Company has embedded part of its digital learning solutions. These lease agreements (digital learning) refer to lease terms of 36 months, with rates negotiated in the range of 10.3% p.a to 10.9% p.a.

Short-term leases (lease period of 12 months or less) and leases of low-value assets (such as personal computers and office furniture) are recognized on a straight-line basis in rent expenses for the period and are not included in lease liabilities. Fixed and variable lease payments, including those related to short-term contracts and to low-value assets, were the following for the years ended December 31, 2022 and 2021:

| For the years ended December 31 |
| 2022 |  |  | 2021 |
Fixed Payments | 41,944 |  |  | 36,689 |
Payments related to short-term contracts and low value assets, variable price contracts (note 26) | 18,312 |  |  | 17,775 |
| 60,256 |  |  | 54,464 |

F-47

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 2022

18 Contractual obligations and deferred income

| December 31, 2022 |  |  | December 31, 2021 |
Refund liability (i) | 51,533 |  |  | 37,122 |
Contract of exclusivity for processing payroll | 587 |  |  | 783 |
Deferred income in leaseback agreement (ii) | 4,075 |  |  | 5,678 |
Other contractual obligations | 1,657 |  |  | 2,582 |
| 57,852 |  |  | 46,165 |
Current | 57,852 |  |  | 46,037 |
Non-current | - |  |  | 128 |
| 57,852 |  |  | 46,165 |

(i) | Refers to the customer’s right to return products, as mentioned in Note 11, the Company business cycle is from September to September for each year, being the provision reduced in the end of business cycle and estimated in the fourth quarter.
(ii) | In March 2018, the predecessor Somos-Anglo entered into a sales and leaseback agreement of a property located at Avenida João Dias in the city of São Paulo in the amount of R$ 25,500. This transaction included deferred income of R$ 9,104, which has been appropriated according to the lease term of the property (120 months).

19 Accounts payable for business combination and acquisition of associates

| December 31, 2022 |  |  | December 31, 2021 |
Pluri | 3,653 |  |  | 3,251 |
Mind Makers | 7,915 |  |  | 7,044 |
Livro Fácil | 10,516 |  |  | 14,055 |
Meritt | 300 |  |  | 3,347 |
SEL | 30,267 |  |  | 26,935 |
Redação Nota 1000 | 6,030 |  |  | 7,230 |
EMME | 10,827 |  |  | 12,780 |
Editora De Gouges | 514,299 |  |  | 457,671 |
Phidelis | 16,976 |  |  | - |
Educbank | 24,494 |  |  | - |
| 625,277 |  |  | 532,313 |
Current | 73,007 |  |  | 20,502 |
Non-current | 552,270 |  |  | 511,811 |
| 625,277 |  |  | 532,313 |

F-48

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

The changes in the balance are as follows:

| December 31, 2022 |  |  | December 31, 2021 |
Opening balance | 532,313 |  |  | 48,055 |
Additions | 120,344 |  |  | 703,257 |
Cash payment | (80,939 | ) |  | (205,280 | )
Payments in installments | (11,379 | ) |  | (19,168 | )
Interest payment | (603 | ) |  | (1,571 | )
Interest adjustment | 65,725 |  |  | 8,158 |
Remeasurement | (184 | ) |  | (1,138 | )
Closing balance | 625,277 |  |  | 532,313 |

The maturity years of such balances as of December 31, 202 2 are shown in the table below:

|  | December 31, 2022 |  |  | December 31, 2021 |
Maturity of installments |  | Total |  |  | % |  |  | Total |  |  | % |
In up to one year |  | 73,007 |  |  | 11.7 | % |  | 20,502 |  |  | 3.9 | %
One to two years |  | 389,186 |  |  | 62.2 | % |  | 35,685 |  |  | 6.7 | %
Two to three years |  | 163,084 |  |  | 26.1 | % |  | 166,730 |  |  | 31.3 | %
Three years on |  | - |  |  | - |  |  | 309,396 |  |  | 58.1 | %
|  | 625,277 |  |  | 100.0 | % |  | 532,313 |  |  | 100.0 | %

F-49

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

20 Salaries and Social Contribution

| December 31, 2022 |  |  | December 31, 2021 |
Salaries payable | 28,351 |  |  | 22,348 |
Social contribution payable (i) | 25,205 |  |  | 23,926 |
Provision for vacation pay and 13th salary | 21,454 |  |  | 10,616 |
Provision for profit sharing (ii) | 25,047 |  |  | 5,923 |
Others | - |  |  | 16 |
| 100,057 |  |  | 62,829 |

(i) | Refers to the effect of social contribution over restricted share units' compensation plans issued on July 31 and November 10, 2020. The Company records the taxes over the shares on a monthly basis according to the Company’s share price.
(ii) | The provision for profit sharing is based on qualitative and quantitative metrics determined by Management.

21 Related parties

As presented in note 1, the Company is part of Cogna Group and some of the Company’s transactions and arrangements involve entities that belong to the Cogna Group. The effect of these transactions is reflected in these Consolidated Financial Statements, with these related parties segregated by nature of transaction measured on an arm’s length basis and determined by intercompany agreements and approved by the Company’s Management. Furthermore, all of them are settled in cash, except for certain intangibles described in item 21(d).

The balances and transactions between the Company and its associates have been eliminated in the Company’s Consolidated Financial Statements. The balances and transactions between related parties are shown below:

|  | December 31, 2022 |
|  | Other receivables (i) |  |  | Trade receivables (Note 10 and 21C) |  |  | Indemnification asset (note 21 b) |  |  | Other payments |  |  | Suppliers (note 16) |  |  | Bonds (note 15) |
Cogna Educação S.A. |  | - |  |  | - |  |  | 180,417 |  |  | - |  |  | 3,828 |  |  | 313,531 |
Editora Atica S.A. |  | - |  |  | 5,754 |  |  | - |  |  | - |  |  | 9,778 |  |  | - |
Editora E Distribuidora Educacional S.A. |  | 1,722 |  |  | 19 |  |  | - |  |  | - |  |  | - |  |  | - |
Educação Inovação e Tecnologia S.A. |  | - |  |  | 389 |  |  | - |  |  | - |  |  | 175 |  |  | - |
Nice Participações Ltda |  | - |  |  | 37 |  |  | - |  |  | - |  |  | - |  |  | - |
Saraiva Educação S.A. |  | - |  |  | 749 |  |  | - |  |  | - |  |  | - |  |  | - |
Somos Idiomas S.A. |  | - |  |  | 229 |  |  | - |  |  | - |  |  | - |  |  | - |
Others |  | 37 |  |  | - |  |  | - |  |  | 54 |  |  | - |  |  | - |
|  | 1,759 |  |  | 7,177 |  |  | 180,417 |  |  | 54 |  |  | 13,781 |  |  | 313,531 |

(i) | Refers substantially to accounts receivable generated from sharing costs e.g IT services shared by the Company to Cogna Group.

F-50

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

| December 31, 2021
| Other receivables (i) |  |  | Trade receivables (Note 10 and 21c) |  |  | Indemnification asset (note 21b) |  |  | Other payments (ii) |  |  | Suppliers (note 16) |  |  | Bonds (note 15) |
Acel Adminstração de Cursos Educacionais Ltda | - |  |  | 6,482 |  |  | - |  |  | - |  |  | 474 |  |  | - |
Anhanguera Educacional Participacoes S.A. | - |  |  | 413 |  |  | - |  |  | - |  |  | - |  |  | - |
Centro Educacional Leonardo Da Vinci SS | - |  |  | - |  |  | - |  |  | - |  |  | 6 |  |  | - |
Cogna Educação S.A. | - |  |  | - |  |  | 160,470 |  |  | 3,021 |  |  | - |  |  | 315,764 |
Colégio Ambiental Ltda | - |  |  | 805 |  |  | - |  |  | - |  |  | - |  |  | - |
Colégio JAO Ltda. | - |  |  | 4,974 |  |  | - |  |  | - |  |  | 33 |  |  | - |
Colegio Manauara Lato Sensu Ltda. | - |  |  | 3,291 |  |  | - |  |  | - |  |  | 458 |  |  | - |
Colegio Manauara Cidade Nova Ltda. |  |  |  | 395 |  |  |  |  |  |  |  |  | - |  |  |  |
Colegio Visao Eireli | - |  |  | 132 |  |  | - |  |  | - |  |  | 13 |  |  | - |
Colégio Cidade Ltda | - |  |  | 397 |  |  | - |  |  | - |  |  | 15 |  |  | - |
COLEGIO DO SALVADOR LTDA |  |  |  | 1 |  |  |  |  |  |  |  |  | - |  |  |  |
Curso e Colégio Coqueiro Ltda | - |  |  | 434 |  |  | - |  |  | - |  |  | 20 |  |  | - |
ECSA Escola A Chave do Saber Ltda | - |  |  | 1,444 |  |  | - |  |  | - |  |  | 16 |  |  | - |
Editora Atica S.A. | - |  |  | 2,207 |  |  | - |  |  | 20,040 |  |  | 9,239 |  |  | - |
Editora E Distribuidora Educacional S.A. | - |  |  | 436 |  |  | - |  |  | 15,754 |  |  | 88 |  |  | - |
Editora Scipione S.A. | - |  |  | 445 |  |  | - |  |  | 211 |  |  | 556 |  |  | - |
Educação Inovação e Tecnologia S.A. | - |  |  | - |  |  | - |  |  | 128 |  |  | - |  |  | - |
Escola Mater Christi Ltda. | - |  |  | 765 |  |  | - |  |  | - |  |  | 139 |  |  | - |
Escola Riacho Doce Ltda | - |  |  | - |  |  | - |  |  | - |  |  | 24 |  |  | - |
Maxiprint Editora Ltda. | - |  |  | 1,205 |  |  | - |  |  | 117 |  |  | 76 |  |  | - |
Nucleo Brasileiro de Estudos Avançados Ltda | - |  |  | 420 |  |  | - |  |  | - |  |  | 45 |  |  | - |
Papelaria Brasiliana Ltda | - |  |  | 644 |  |  | - |  |  | - |  |  | - |  |  | - |
Pitagoras Sistema De Educacão Superior Ltda. | - |  |  | 76 |  |  | - |  |  | - |  |  | - |  |  | - |
Saber Serviços Educacionais S.A. | 14 |  |  | 7,269 |  |  | - |  |  | - |  |  | 578 |  |  | - |
Saraiva Educacão S.A. | 365 |  |  | 1,179 |  |  | - |  |  | - |  |  | 5,136 |  |  | - |
SGE Comercio De Material Didatico Ltda. | - |  |  | - |  |  | - |  |  | - |  |  | 1,687 |  |  | - |
Sistema P H De Ensino Ltda. | - |  |  | 4,421 |  |  | - |  |  | - |  |  | 177 |  |  | - |
Sociedade Educacional Alphaville Ltda | - |  |  | 1,257 |  |  | - |  |  | - |  |  | 1 |  |  | - |
Sociedade Educacional Doze De Outubro Ltda. | - |  |  | 734 |  |  | - |  |  | - |  |  | 47 |  |  | - |
Sociedade Educacional Parana Ltda. | - |  |  | 91 |  |  | - |  |  | - |  |  | 11 |  |  | - |
Somos Idiomas S.A. | 122 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
Somos Operações Escolares S.A. | - |  |  | 3,305 |  |  | - |  |  | - |  |  | 29 |  |  | - |
SSE Serviços Educacionais Ltda. | - |  |  | 3,602 |  |  | - |  |  | - |  |  | 665 |  |  | - |
| 501 |  |  | 46,824 |  |  | 160,470 |  |  | 39,271 |  |  | 19,533 |  |  | 315,764 |

(i)

(i) | Refers substantially to accounts receivable generated from sharing costs e.g IT services shared by the Company to Cogna Group.
(ii) | Refers substantially to accounts payable by sharing expenses e.g property leasing, personnel and IT licenses shared with Cogna Group.

F-51

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

|  | Year ended December 31, 2022 |  |  | Year ended December 31, 2021 |  |  | Year ended December 31, 2020
Transactions held: |  | Revenues |  |  | Finance costs (i) note 15 |  |  | Cost Sharing (note 21d) |  |  | Sublease (note 21f) |  |  | Revenues |  |  | Finance costs |  |  | Cost Sharing (note 21d) |  |  | Sublease (note 21f) |  |  | Revenues |  |  | Finance costs |  |  | Cost Sharing (note 21 d) |  |  | Sublease (note 21 f) |
Acel Administracao De Cursos Educacionais Ltda. |  | - |  |  | - |  |  | - |  |  | - |  |  | 2,790 |  |  | - |  |  | - |  |  | - |  |  | 1,230 |  |  | - |  |  | - |  |  | - |
Centro Educacional Leonardo Da Vinci SS |  | - |  |  | - |  |  | - |  |  | - |  |  | 41 |  |  | - |  |  | - |  |  | - |  |  | 1,319 |  |  | - |  |  | - |  |  | - |
Cogna Educação S.A. |  | - |  |  | 36,573 |  |  | - |  |  | - |  |  | - |  |  | 25,859 |  |  | - |  |  | - |  |  | - |  |  | 48,432 |  |  | - |  |  | - |
Colégio Ambiental Ltda |  | - |  |  | - |  |  | - |  |  | - |  |  | 496 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
Colégio Cidade Ltda |  | - |  |  | - |  |  | - |  |  | - |  |  | 146 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
Colegio JAO Ltda. |  | - |  |  | - |  |  | - |  |  | - |  |  | 1,582 |  |  | - |  |  | - |  |  | - |  |  | 387 |  |  | - |  |  | - |  |  | - |
Colégio Manauara Lato Sensu Ltda. |  | - |  |  | - |  |  | - |  |  | - |  |  | 1,903 |  |  | - |  |  | - |  |  | - |  |  | 3,139 |  |  | - |  |  | - |  |  | - |
Colégio Manauara Cidade Nova Ltda |  | - |  |  | - |  |  | - |  |  | - |  |  | 275 |  |  | - |  |  |  |  |  |  |  |  | - |  |  | - |  |  | - |  |  | - |
Colégio Motivo Ltda. |  | - |  |  | - |  |  | - |  |  | - |  |  | 35 |  |  | - |  |  | - |  |  | - |  |  | 1,308 |  |  | - |  |  | - |  |  | - |
Colégio Visão Ltda |  | - |  |  | - |  |  | - |  |  | - |  |  | 287 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
Cursos e Colégio Coqueiros Ltda |  | - |  |  | - |  |  | - |  |  | - |  |  | 268 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
Ecsa Escola A Chave Do Saber Ltda. |  | - |  |  | - |  |  | - |  |  | - |  |  | 593 |  |  | - |  |  | - |  |  | - |  |  | 657 |  |  | - |  |  | - |  |  | - |
Editora Atica S.A. |  | 16,286 |  |  | - |  |  | 5,757 |  |  | 8,551 |  |  | 5,374 |  |  | - |  |  | 6,130 |  |  | 13,153 |  |  | 7,287 |  |  | 229 |  |  | 11,989 |  |  | 15,364 |
Editora E Distribuidora Educacional SA. |  | - |  |  | - |  |  | 29,475 |  |  | - |  |  | - |  |  | - |  |  | 31,384 |  |  | - |  |  | 1,841 |  |  | - |  |  | 36,144 |  |  | 1,489 |
Editora Scipione SA. |  | 3,096 |  |  | - |  |  | - |  |  | - |  |  | 1,341 |  |  | - |  |  | - |  |  | - |  |  | 1,551 |  |  | - |  |  | - |  |  | - |
Escola Mater Christi |  | - |  |  | - |  |  | - |  |  | - |  |  | 311 |  |  | - |  |  | - |  |  | - |  |  | 246 |  |  | - |  |  | - |  |  | - |
Escola Riacho Doce Ltda |  | - |  |  | - |  |  | - |  |  | - |  |  | 77 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
Maxiprint Editora Ltda. |  | 6,665 |  |  | - |  |  | - |  |  | - |  |  | 1,107 |  |  | - |  |  | - |  |  | - |  |  | 612 |  |  | - |  |  | - |  |  | - |
Nucleo Brasileiro de Estudos Avancados Ltda |  | - |  |  | - |  |  | - |  |  | - |  |  | 276 |  |  | - |  |  | - |  |  | - |  |  | 423 |  |  | - |  |  | - |  |  | - |
Papelaria Brasiliana Ltda |  | - |  |  | - |  |  | - |  |  | - |  |  | 249 |  |  | - |  |  | - |  |  | - |  |  | 1,287 |  |  | - |  |  | - |  |  | - |
Saber Serviços Educacionais S.A. |  | 41 |  |  | - |  |  | - |  |  | - |  |  | 900 |  |  | - |  |  | - |  |  | - |  |  | 1,254 |  |  | 6,740 |  |  | - |  |  | 729 |
Saraiva Educacao SA. |  | 4,090 |  |  | - |  |  | - |  |  | 1,905 |  |  | 2,405 |  |  | - |  |  | - |  |  | 2,528 |  |  | 3,364 |  |  | - |  |  | - |  |  | 3,739 |
Sistema P H De Ensino Ltda. |  | - |  |  | - |  |  | - |  |  | - |  |  | 4,417 |  |  | - |  |  | - |  |  | - |  |  | 5,776 |  |  | - |  |  | - |  |  | - |
Sociedade Educacional Alphaville SA |  | - |  |  | - |  |  | - |  |  | - |  |  | 414 |  |  | - |  |  | - |  |  | - |  |  | 317 |  |  | - |  |  | - |  |  | - |
Sociedade Educacional Doze De Outubro Ltda |  | - |  |  | - |  |  | - |  |  | - |  |  | 360 |  |  | - |  |  | - |  |  | - |  |  | 295 |  |  | - |  |  | - |  |  | - |
Sociedade Educacional Neodna Cuiaba Ltda. |  | - |  |  | - |  |  | - |  |  | - |  |  | 224 |  |  | - |  |  | - |  |  | - |  |  | 367 |  |  | - |  |  | - |  |  | - |
SOE Operações Escolares SA. |  | - |  |  | - |  |  | - |  |  | - |  |  | 1,086 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
Somos Idiomas Ltda |  | 641 |  |  | - |  |  | - |  |  | 2,591 |  |  | - |  |  | - |  |  | - |  |  | 258 |  |  | - |  |  | - |  |  | - |  |  | - |
Somos Operações Escolares SA. |  | - |  |  | - |  |  | - |  |  | - |  |  | 243 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
SSE Serviços Educacionais Ltda. |  | 863 |  |  | - |  |  | - |  |  | - |  |  | 1,463 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |
Sociedade Educacional Paraná Ltda. |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 795 |  |  | - |  |  | - |  |  | - |
Sociedade Educacional Neodna Cuiaba Ltda. - EPP |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 367 |  |  | - |  |  | - |  |  | - |
Somos Educação S.A. |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 278 |  |  | - |  |  | - |
Others |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 362 |
|  | 31,682 |  |  | 36,573 |  |  | 35,232 |  |  | 13,047 |  |  | 28,663 |  |  | 25,859 |  |  | 37,514 |  |  | 15,939 |  |  | 33,822 |  |  | 55,679 |  |  | 48,133 |  |  | 21,683 |

(i) | Refers to debentures interest; see Note 15.

F-52

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

a. Suppliers and other arrangements with related parties

In consequence to carve out process on December 31, 2019, Cogna’s associates also had some shared expenses such as property lease, expenses with personnel and software license, which continued even after the carve-out process was completed and still remain today. As of December 31, 2022, only shared expense transactions are part of these commitments, which amounted to R$54 (R$39,271 as of December 31, 2021).

b. Indemnification asset

In December 2019, the Company and Cogna Group signed the agreement to legally bind the indemnification from the seller in connection with the acquisition of Somos by the Cogna Group, in order to indemnify the Company for any and all losses that may be incurred in connection with all contingencies or lawsuits related to Somos-Anglo up to the maximum amount of R$ 180,417 as of December 31, 2022 (R$ 160,470 as of December 31, 2021). See Provision for risks of tax, civil and labor losses and judicial deposits and escrow account footnote (note 22).

c. Trade receivables

The Company and its subsidiaries provide learning systems, textbooks, and complementary educational solutions to the Cogna Group which substantially comprises schools, publishers, language schools and stationery shops. All sales and services provided are based on intercompany contracts and its commercial conditions, which include price, margin and payment terms, were determined on an arm’s length basis.

F-53

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

d. Cost sharing agreements with related parties

The Company expensed certain amounts based on an apportionment from Cogna Group related to shared services, including the shared service center, IT expenses, proprietary IT systems and legal and accounting activities, and shared warehouses and other logistic activities based on agreements. Those expenses, in the amount of R$ 35,232 as of December 31, 2022 (R$ 37,514 for the year ended December 31, 2021) are related to these apportionments.

e. Brand and Copyrights sharing agreements with related parties

In November and December 2019, the Company entered into brand and copyrights sharing agreements with related parties, as follows:

(i) | On November 6, 2019, the Company entered into a trademark license agreement (as amended in 2020) with EDE whereby the Company was granted at no cost rights to use related to the trademark “Pitágoras,” This agreement is valid for a period of 20 years, automatically and successively renewable for the same period.
(ii) | On November 11, 2019, the Company and EDE (Cogna Group’s Parent Company) entered into a copyright license agreement whereby EDE agreed to grant a license, at no cost, to the Company, for commercial exploitation and use of copyrights related to the educational platform materials. This agreement was valid for three years, and it has not been renewed.
(iii) | On December 6, 2019, the Company also entered into two trademark license agreements (as amended in 2020) whereby the rights to use related to certain trademarks, such as “Somos Educação”, “Editora Atica”, “Editora Scipione,” “Atual Editora,” “Par Plataforma Educacional,” “Sistema Maxi de Ensino,” “Bilingual Experience,” “English Stars” and “Rede Cristã de Educação,” were granted at no cost to certain related parties, this agreement is valid for a period of 20 years, automatically and successively renewable for the same period.

f. Lease and sublease agreements with related parties

The Company and its related parties also shared the infrastructure of leased warehouses and other properties, which are direct expenses of the Cogna Group, The expenses related to these lease payments were recognized in the consolidated financial statements according to assumptions defined by Management based on utilization of these properties by the Company,

However, as part of its corporate restructuring (Note 1), the Company entered into lease and sublease agreements with its related parties on December 5, 2019, to continue to share these leased warehouses and other properties, as follows:

f,1 Commercial lease agreement

Lessee Entity | Counterparty to lease agreement (Lessor) | Monthly payments | Maturity | Rate | State of the property in use
Somos Sistemas de Ensino S.A. | Editora Scipione S.A. | R$44 | 60 months from the agreement date | Inflation index | Pernambuco (Recife)
Somos Sistemas de Ensino S.A. | Editora Ática S.A. | R$37 | 60 months from the agreement date | Inflation index | Bahia (Salvador)

F-54

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

f,2 Commercial sublease agreement

Entity (Sublessor) | Counterparty to the sublease agreement (Sublessee) | Monthly payments | Maturity | Rate | State of the property in use
Editora e Distribuidora Educacional S.A. (“EDE”) | Somos Sistemas de Ensino S.A. | R$ 430 | September 30, 2025. | Inflation index | São Paulo (São Paulo)
Somos Sistemas de Ensino S.A. | Editora Ática S.A. | R$827 | September 30, 2025. | Inflation index | São Paulo (São José dos Campos)
Somos Sistemas de Ensino S.A. | Somos Idiomas S.A. | R$ 53 | September 30, 2025. | Inflation index | São Paulo (São José dos Campos)
Somos Sistemas de Ensino S.A. | Saraiva Educação S.A (“Saraiva”) | R$ 207 | September 30, 2025. | Inflation index | São Paulo (São José dos Campos)
Somos Sistemas de Ensino S.A. | Livraria Livro Fácil Ltda,(“Livro Fácil”) | R$ 1,160 | September 30, 2025. | Inflation index | São Paulo (São José dos Campos)

Income from these lease and sublease agreements with related parties was recognized in the Consolidated Financial Statements as of December 31, 2022 in the amount of R$ 13,047 (R$ 15,939 for the year ended December 31, 2021).

g. Compensation of key management personnel

Key management personnel include the members of the Board of Directors, Audit Committee, the CEO and the vice-presidents, for which the nature of the tasks performed were related to the activities of the Company.

For the year ended December 31, 2022, key management compensation, including charges and variable compensation amounted to R$ 20,426 (R$ 12,990 for the year ended December 31, 2021). The Audit Committee and Board of Directors were established in July 2020 as a result of the IPO.

The following benefits are granted to the Company’s management members: healthcare plan, share-based compensation plan, discounts on monthly tuition of K-12 in the Cogna Group’s schools, besides discounts over the Company’ own products.

See below the compensation of key management personnel by nature:

a) | Short term benefits - Short-term benefits include fixed compensation (salaries and fees, vacation, mandatory bonus, and “13th salary” bonus), payroll charges (Company share of contributions to social security – INSS) and variable compensation such as profit sharing, the short-term benefits, that included Bonus IPO. For the year ended December 31, 2022 amounted to R$ 10,786 (R$ 4,685 for the year ended December 31, 2021), including payroll charges.
b) | Long-term benefits - The Company also offered to certain key management personnel payment based on its restricted shares units – ILP, amounting to R$ 9,640 for the year ended December 31, 2022 (R$ 8,305 for the year ended December 31, 2021) including payroll charges.

The Key management personnel compensation expenses comprised the following:

| December 31, 2022 |  |  | December 31, 2021 |  |  | December 31, 2020 |
Short-term employee benefits | 10,786 |  |  | 4,685 |  |  | 6,982 |
Share-based compensation plan | 9,640 |  |  | 8,305 |  |  | 33,594 |
| 20,426 |  |  | 12,990 |  |  | 40,576 |

h. Guarantees related to finance

On November 21, 2018, Mind Makers entered into a bank credit note in favor of Banco de Desenvolvimento de Minas Gerais SA - BDMG, for an aggregate amount of R$1,676 with maturity on November 15, 2026. A personal lien to secure this bank credit note was granted by certain individuals, including, our Chief Executive Officer. This liability was settled during 2022.

F-55

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

22 Provision for tax, civil and labor losses and Judicial deposits and escrow accounts

The Company classifies the likelihood of loss in judicial/administrative proceedings in which it is a defendant. Provisions are recorded for contingencies classified as probable loss in an amount that Management, in conjunction with its legal advisors, believes is enough to cover probable losses or when related to contingences resulting from business combinations.

In connection with the acquisition of Somos Group (Vasta’s predecessor) by Cogna Group, provisions for contingent liabilities assumed by Cogna were recognized when potential non-compliance with labor and civil legislation arising from past practices of subsidiaries acquired were identified. Thus, at the acquisition date, Cogna reviewed all proceedings for which liabilities were transferred to assess whether there was a present obligation and if the fair value could be measured reliably. The contingent liabilities are composed as follows:

a. Composition

| December 31, 2022 |  |  | December 31, 2021 |
Proceedings whose likelihood of loss is probable |  |  |  |  |
Tax proceedings (i) | 622,440 |  |  | 607,084 |
Labor proceedings (ii) | 25,812 |  |  | 38,159 |
Civil proceedings | 496 |  |  | 376 |
| 648,748 |  |  | 645,619 |
Liabilities assumed in Business Combination |  |  |  |  |
Labor proceedings (ii) | 1,755 |  |  | - |
Civil proceedings | - |  |  | 1,231 |
Tax proceedings | 749 |  |  | - |
| 2,504 |  |  | 1,231 |
Total of provision for tax, civil and labor losses | 651,252 |  |  | 646,850 |

(i) Primarily refers to income tax positions taken by Somos and the Company in connection with a corporate restructuring held by the predecessor in 2010, In 2018, given a tax assessment via an Infraction Notice received by the predecessor for certain periods opened for tax audit coupled with unfavorable case law on a similar tax case also reached in 2018, the Company reassessed this income tax position and recorded a liability, including interest and penalties.

(ii) The Company is a party to labor demands, which mostly refer to proportional vacation, salary difference, night shift premium, overtime and social charges, among others. There are no individual labor demands with material amounts that require specific disclosure.

The changes in provision for the years ended December 31, 2022 and 2021 were as follows:

|  | December 31, 2021 |  |  | Business combination |  |  | Additions |  |  | Reversals |  |  | Interest |  |  | Payments |  |  | Decem ber 31, 2022 |
Tax proceedings |  | 607,084 |  |  | 749 |  |  | 2,904 |  |  | (27,790 | ) |  | 41,261 |  |  | (1,019 | ) |  | 623,189 |
Labor proceedings |  | 38,159 |  |  | 1,755 |  |  | 3,376 |  |  | (16,045 | ) |  | 776 |  |  | (454 | ) |  | 27,567 |
Civil proceedings |  | 1,607 |  |  | - |  |  | 368 |  |  | (1,615 | ) |  | 26 |  |  | 110 |  |  | 496 |
Total |  | 646,850 |  |  | 2,504 |  |  | 6,648 |  |  | (45,450 | ) |  | 42,063 |  |  | (1,363 | ) |  | 651,252 |
Reconciliation with profit or loss for the period |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance expense |  |  |  |  |  |  |  | - |  |  | - |  |  | (42,063 | ) |  |  |  |  |  |
General and administrative expenses |  |  |  |  |  |  |  | (6,648 | ) |  | 21,747 |  |  | - |  |  |  |  |  |  |
Income tax and social contribution |  |  |  |  |  |  |  | - |  |  | 23,703 |  |  | - |  |  |  |  |  |  |
Total |  |  |  |  |  |  |  | (6,648 | ) |  | 45,450 |  |  | (42,063 | ) |  |  |  |  |  |

F-56

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

| December 31, 2020 |  |  | Business combination |  |  | Additions |  |  | Reversals |  |  | Interest |  |  | Payments |  |  | December 31, 2021 |
Tax proceedings | 575,724 |  |  | - |  |  | 16 |  |  | (262 | ) |  | 31,623 |  |  | (17 | ) |  | 607,084 |
Labor proceedings | 37,896 |  |  | - |  |  | 3,468 |  |  | (5,294 | ) |  | 2,636 |  |  | (547 | ) |  | 38,159 |
Civil proceedings | 313 |  |  | 1,231 |  |  | 110 |  |  | (24 | ) |  | 41 |  |  | (64 | ) |  | 1,607 |
Total | 613,933 |  |  | 1,231 |  |  | 3,594 |  |  | (5,580 | ) |  | 34,300 |  |  | (628 | ) |  | 646,850 |
Reconciliation with profit or loss for the period |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance costs |  |  |  |  |  |  | - |  |  | - |  |  | (34,300 | ) |  |  |  |  |  |
General and administrative expenses |  |  |  |  |  |  | (3,594 | ) |  | 5,580 |  |  | - |  |  |  |  |  |  |
Total |  |  |  |  |  |  | (3,594 | ) |  | 5,580 |  |  | (34,300 | ) |  |  |  |  |  |

b. Judicial Deposits and Escrow Accounts

Judicial deposits and escrow accounts recorded as non-current assets are as follows:

| December 31, 2022 |  |  | December 31, 2021 |
Tax proceedings | 2,126 |  |  | 2,300 |
Indemnification asset -Former owner | 1,801 |  |  | 1,998 |
Indemnification asset – Related parties (i) | 180,417 |  |  | 160,470 |
Escrow-account (ii) | 10,515 |  |  | 14,055 |
| 194,859 |  |  | 178,824 |

(i) Refers to an indemnification asset of the seller in connection with the acquisition of Somos (Vasta’s Predecessor) by Cogna Group (Vasta’s Parent Company) and recognized at the date of the business combination, in order to indemnify the Company for all losses that may be incurred in connection with all contingencies or lawsuits, substantially tax proceedings related to business combinations up to the maximum amount of R$180,417 (R$ 160,470 on December 31, 2021). See Note 21. This asset is indexed to CDI (Certificates of Interbank Deposits).

(ii) Refers to guarantees received as a consequence of business combinations, in connection with contingencies whose likelihood of loss is probable, and for which the former owners are liable. According to the Sale Agreement, these former owners will reimburse the Company in case payments are required and if those contingencies materialize.

F-57

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

23 Current and Deferred Income Tax and Social Contribution

a. Reconciliation of income tax and social contribution

The reconciliation of income tax and social contribution expense is as follows:

| As of December 31, 2022 |  |  | As of December 31, 2021 |  |  | As of December 31, 2020 |
Loss before income tax and social contribution for the year | (105,687 | ) |  | (155,843 | ) |  | (71,053 | )
Nominal statutory rate of income tax and social contribution | 34% |  |  | 34% |  |  | 34% |
IRPJ and CSLL calculated at the nominal rates | 35,934 |  |  | 52,987 |  |  | 24,158 |
Share of loss equity-accounted investees | (1,534 | ) |  | - |  |  | - |
Permanent additions | (8,292 | ) |  | (7,265 | ) |  | 1,246 |
Additional IRPJ | - |  |  | 24 |  |  | - |
Difference in presumed profit rate of subsidiary | 3,617 |  |  | - |  |  | - |
Tax Contingencies IRPJ and CSLL | 23,703 |  |  | - |  |  | - |
Impairment write-off on tax loss carryforward | (2,314 | ) |  | (8,657 | ) |  | - |
Total IRPJ and CSLL | 51,114 |  |  | 37,089 |  |  | 25,404 |
Current IRPJ and CSLL in the result | 10,668 |  |  | (11,297 | ) |  | 7,874 |
Deferred IRPJ and CSLL in the result | 40,446 |  |  | 48,386 |  |  | 17,530 |
| 51,114 |  |  | 37,089 |  |  | 25,404 |
Effective tax rate of Income and social contribution tax benefit | 48% |  |  | 24% |  |  | 36% |

b. Deferred taxes

Changes in deferred income tax and social contribution assets and liabilities are as follows:

i. December 31, 2022

| As of December 31, 2021 |  |  | Effect on profit (loss) |  |  | As of December 31, 2022 |
Income tax/social contribution: |  |  |  |  |  |  |  |
Income tax and social contribution losses carryforwards (ii) | 307,319 |  |  | 114,921 |  |  | 422,240 |
Temporary Differences: |  |  |  |  |  |  |  |
Impairment losses on trade receivables | 13,010 |  |  | 7,461 |  |  | 20,471 |
Provision for obsolete inventories | (1,262 | ) |  | 4,608 |  |  | 3,346 |
Imputed interest on suppliers | (2,157 | ) |  | (3,391 | ) |  | (5,548 | )
Provision for risks of tax, civil and labor losses | 20,025 |  |  | 420 |  |  | 20,445 |
Refund liabilities and right to returned goods | 9,470 |  |  | 6,348 |  |  | 15,818 |
Lease Liabilities | 6,660 |  |  | 1,276 |  |  | 7,936 |
Fair value adjustments on business combination and goodwill amortization (i) | (248,628 | ) |  | (109,826 | ) |  | (358,454 | )
Other temporary difference | 25,968 |  |  | 18,628 |  |  | 44,596 |
Deferred Assets, net | 130,405 |  |  | 40,446 |  |  | 170,851 |

(i) | Goodwill and fair value adjustments on business combination comprise three components, being (i) goodwill and fair value adjustment of prior business combination by Somos; (ii) amortization of fair value adjustment related to acquisition of the company; and (iii) deductibility of the acquisition goodwill for tax purposes as allowed by tax law.
(ii) | The Company’s income tax and social contribution loss carryforwards are primarily the result of tax amortization of goodwill and the amortization of certain intangibles recognized related to the business combination in 2018. In accordance with Brazilian tax regulation, tax loss carryforwards have a limitation for use of 30% of taxable profit generated in each year and do not expire. The tax benefit is expected to be realized over an estimated 6 year period beginning in 2026.

F-58

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

ii. December 31, 2021 and 2020

Changes in deferred income tax and social contribution assets and liabilities are as follows:

| As of December 31, 2020 |  |  | Effect on profit (loss) |  |  | Deferred tax on business combination |  |  | As of December 31, 2021 |
Income tax/social contribution: |  |  |  |  |  |  |  |  |  |  |
Income tax and social contribution losses carryforwards | 182,257 |  |  | 125,062 |  |  | - |  |  | 307,319 |
Temporary Differences: |  |  |  |  |  |  |  |  |  |  |
Impairment losses on trade receivables | 9,543 |  |  | 3,467 |  |  | - |  |  | 13,010 |
Provision for obsolete inventories | 3,263 |  |  | (4,525 | ) |  | - |  |  | (1,262 | )
Imputed interest on suppliers | (744 | ) |  | (1,413 | ) |  | - |  |  | (2,157 | )
Provision for risks of tax, civil and labor losses | 19,138 |  |  | 887 |  |  | - |  |  | 20,025 |
Refund liabilities and right to returned goods | 10,903 |  |  | (1,433 | ) |  | - |  |  | 9,470 |
Lease Liabilities | 4,764 |  |  | 1,896 |  |  | - |  |  | 6,660 |
Fair value adjustments on business combination and goodwill amortization (i) | (150,598 | ) |  | (90,588 | ) |  | (7,442 | ) |  | (248,628 | )
Other temporary difference | 10,020 |  |  | 15,033 |  |  | 915 |  |  | 25,968 |
Deferred Assets, net | 88,546 |  |  | 48,386 |  |  | (6,527 | ) |  | 130,405 |

(i) | Goodwill and fair value adjustments on business combination comprise three components, being (i) goodwill and fair value adjustment of prior business combination by predecessor Somos Anglo; (ii) amortization of fair value adjustment related to acquisition of the predecessor Somos Anglo by the successor Vasta; and (iii) deductibility of the acquisition goodwill for tax purpose allowed by tax law.

24 Shareholder’s Equity

2 4 a. Share Capital

Considering the corporate restructuring mentioned in note 1.2, in addition to the capital contributions made by Cogna during the periods, and the IPO that took place in 2020, the Company holds Class A shares (issued and sold in the IPO), in addition to Class B shares (owned by Cogna).

As of December 31, 2020, the Company had 83,011,585 common shares issued and outstanding, of which 64,436,093 were Class B common shares and 18,575,492 were Class A common shares.

On June 22, 2021, the Board of Directors approved the issuance of 382,266 class A common shares, at par value of US$0.00005 per share. As a result, the Company’s share capital on December 31, 2021 totals 83,393,851 shares, of which 64,436,093 Class B shares are owned by the Cogna Group and 18,957,758 are owned by third parties.

F-59

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

Considering the ILP exercised during 2022, in addition to the remuneration of restricted shares recognized in the same period, on December 31, 2022, the Company's capital stock totals 83,649,887 shares, of which 64,436,093 are Class B shares owned by the Cogna Group and 18,213,794 are Class A shares owned by third-parties and 1,000,000 shares Class A are held in treasury.

The Company’s Shareholders Agreement authorizes the Board of Directors to grant restricted share units to certain executives and employees and other service providers with respect to up to 3% (three per cent) of the issued and outstanding shares of the Company. Thus, during 2022 the Company granted the following Class A shares to certain employees and executives:

| Class A Shares (units) |  |  | Class B Shares (units) |  |  | Total |
December 31, 2021 | 18,957,758 |  |  | 64,436,093 |  |  | 83,393,851 |
Remuneration |  |  |  |  |  |  |  |
ILP exercised | 184,117 |  |  | - |  |  | 184,117 |
Premium recognized | 71,919 |  |  | - |  |  | 71,919 |
December 31, 2022 | 19,213,794 |  |  | 64,436,093 |  |  | 83,649,887 |

See below the Company’s description of each restricted share unit plan vested and its corresponding changes disclosed in the Consolidated Statement of Changes in Equity, specifically in the “Share based compensation reserve (vested)”:

(i) | The Company issued 298,268 class A share units as part of Bonus IPO remuneration, which were granted to eligible executives and employees. These share units represented R$ 29,124 (net of withholding taxes) previously provisioned in Share Based Compensation Reserves (granted) and transferred to Share Based Compensation Reserves (vested) – exercised in the Consolidated Statement of Changes in Shareholders’ Equity. The Bonus IPO was conditioned to a 1-year lockup period expired in July 2021. There were no shares vested in 2022 in connection with the Bonus IPO. In 2021, the corresponding payroll charges amounted to R$ 21,456.
(ii) | As result of the carve-out process, as described in Note 1.2, part of Cogna’s executives and employees (eligible) were transferred to the Company. Those eligible executives and employees were part of the Cogna Plan and their plans were migrated to the Vasta ILP Plan, as described in Note 2 4 c. In as much as those eligible parties exercise their plan, the Company delivers a fixed quantity of share units to them. The amount provisioned previously in Share based Compensation Reserves (granted) in the Consolidated Statement of Changes in Shareholders’ Equity on December 31, 202 2 is R$ 259 (R$ 58 on December 31, 2021), and was transferred to Share based compensation reserves (vested) – exercised. The corresponding payroll charges in 202 2 amounted to R$ 167 (R$ 70 in 2021).
(iii) | The Company remunerated part of its executives based on restricted share units. The amount provisioned and paid in 202 2 was R$ 1,912 (R$ 1,861 in 2021), net of withholding taxes, see Share Based Compensation Reserves (granted) and subsequently vested to Share based compensation reserves (vested). Payroll charges in 202 2 amounted to R$ 1,748 (R$ 1,538 in 2021).

The Company’s shareholders on December 31, 202 2 are as follows:

| In units |
Company Shareholders | Class A |  |  | Class B |  |  | Total |
Cogna Group | - |  |  | 64,436,093 |  |  | 64,436,093 |
Free Float | 18,213,794 |  |  | - |  |  | 18,213,794 |
Treasury shares (Note 24d) | 1,000,000 |  |  | - |  |  | 1,000,000 |
Total (%) | 23% |  |  | 77% |  |  | 83,649,887 |

2 4 b Loss per share

The basic loss per share is measured by dividing the profit attributable to the Company’s shareholders by the weighted average common shares outstanding during the year. The Company considers as diluted earnings per share, the number of common shares calculated added by the weighted average number of common shares that should be issued upon conversion of all potentially dilutive shares into common shares; potentially dilutive shares were deemed to have been converted into common shares at the beginning of the period.

F-60

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

| December 31, 2022 |  |  | December 31, 2021 |  |  | December 31, 2020 |
Loss Attributable to Shareholder´s | (54,573 | ) |  | (118,754 | ) |  | (45,649 | )
Weighted average number of ordinary shares outstanding (thousands) (i) | 83,651 |  |  | 82,254 |  |  | 83,012 |
Basic earning (loss) per share - R$ | (0.65 | ) |  | (1.44 | ) |  | (0.55 | )
Diluted earning (loss) per share - R$ | (0.65 | ) |  | (1.44 | ) |  | (0.55 | )

(i) | The Company has not changed its number of voting rights since the IPO on July 31, 2020.

2 4 c Capital reserve - Share-based compensation (granted)

The Company as of December 31, 202 2 had two share based compensation plans and one bonus plan paid in restricted share units, being:

a) | Cogna Plan - On September 3, 2018, Cogna Group´ shareholders approved a restricted share-based compensation plan, which may grant rights to receive a maximum number of restricted shares not exceeding 19,416,233 shares, corresponding to 1.2% of Cogna Group’s total share capital at the Plan’s approval date, excluding shares held in treasury on such date. This program should be wholly settled with delivery of Cogna’s shares. Cogna Group´s obligation to transfer the restricted shares under the Plan, in up to 10 days from the end of the vesting period, is contingent upon the continuing employment relationship of the employee or officer, as appropriate, for a period of three years from the date the respective agreement is signed. The number of outstanding restricted shares as of December 31, 202 2 was zero (155,919 as of December 31, 202 1) and the grant date fair value was R$10,58. The effect of events on compensation in the Consolidated Statement of Profit or Loss for the year ended December 31, 202 2 was R$ 557 including labor charges (R$ 2,234, including labor charges for the year ended December 31, 202 1).
b) | Long Term Investment – (“ILP”) – Refers to two tranches granted being the first issued on July 23, 2020 and November 10, 2020. The Company compensates part of its employees and management. This plan will grant up to 3% of the Company’s class A share units. The Company will grant the limit of five tranches approved by the Company’s Board of Directors. The fair value of share units is measured at fair value quoted on the grant date. The plan has a vesting period corresponding to 5 years added by expected volatility of 30% and will be settled with Company’s shares. All taxes and contributions are paid by the Company without additional costs to employees and management. This program should be wholly settled with the delivery of the shares. The effect of events on share-based compensation in the Consolidated Statement of Profit or Loss for the year ended December 31, 202 2 was R$ 22,461, being R$ 22,404 in Shareholder’s the Equity and a credit of R$ 58 as labor charges in liabilities, due to share price fluctuation (R$ 21,372 being R$ 21,250 in Shareholder’s the Equity and a credit of R$ 122 as labor charges in liabilities for the year ended December 31, 202 1).
c) | Bonus paid in restricted share units – “Premium recognized” - The Company granted and vested 99,193 shares on April, 2022 to certain members of management based on performance recognized. This program was wholly settled with the delivery of the shares. The amount provisioned and paid was R$ 1,748 (net of withholding taxes), of which R$ 1,023 corresponds to labor charges.

F-61

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

2 4 d Vasta’s share Repurchase Program

On 2021 the Company announced that its Board of Directors has approved its first share repurchase program, or the Repurchase Program. Under the Repurchase Program, the Company may repurchase up to 1,000,000 in Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period beginning on August 17, 2021, continuing until the earlier of the completion of the repurchase or February 17, 2022, depending upon market conditions. The Company concluded the Repurchase Program on December 10, 2021, using its existing funds to finance the repurchase, and on December 31, 2021, the Company had a balance of R$23,880 or 1,000,000 shares in its possession.

25 Net Revenue from sales and Services

The breakdown of net sales of the Company for the years ended December 31, 2022, 2021 and 2020 is shown below, Revenue is broken down into the categories that, according to the Company the nature, amount, timing and uncertainty of revenue through provisions as follows:

F-62

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

| December 31, 2022 |  | December 31, 2021 |  | December 31, 2020
Learning Systems |  |  |  |  |  |  |  |
Gross revenue | 878,468 |  |  | 568,522 |  |  | 608,200 |
Taxes | (382 | ) |  | (219 | ) |  | (40 | )
Discounts | (13,157 | ) |  | (14,302 | ) |  | (8,603 | )
Returns | (78,468 | ) |  | (41,919 | ) |  | (17,553 | )
Net revenue | 786,461 |  |  | 512,082 |  |  | 582,004 |
Textbooks |  |  |  |  |  |  |  |
Gross revenue | 228,094 |  |  | 212,708 |  |  | 308,298 |
Taxes | (214 | ) |  | (1,608 | ) |  | (250 | )
Discounts | (1,120 | ) |  | - |  |  | - |
Returns | (31,401 | ) |  | (41,330 | ) |  | (72,488 | )
Net revenue | 195,359 |  |  | 169,770 |  |  | 235,560 |
Complementary Education Services |  |  |  |  |  |  |  |
Gross revenue | 159,207 |  |  | 148,817 |  |  | 63,491 |
Taxes | (193 | ) |  | (961 | ) |  | (17 | )
Discounts | (1,415 | ) |  | - |  |  | (6 | )
Returns | (15,755 | ) |  | (10,459 | ) |  | (2,880 | )
Net revenue | 141,844 |  |  | 137,397 |  |  | 60,588 |
Other services |  |  |  |  |  |  |  |
Gross revenue | 38,727 |  |  | 34,498 |  |  | 34,118 |
Taxes | (7,046 | ) |  | (3,034 | ) |  | (3,864 | )
Net revenue | 31,681 |  |  | 31,464 |  |  | 30,254 |
Total Content & EdTech |  |  |  |  |  |  |  |
Gross revenue | 1,304,496 |  |  | 964,545 |  |  | 1,014,107 |
Taxes | (7,835 | ) |  | (5,822 | ) |  | (4,171 | )
Discounts | (15,692 | ) |  | (14,302 | ) |  | (8,609 | )
Returns | (125,624 | ) |  | (93,708 | ) |  | (92,921 | )
Net revenue | 1,155,345 |  |  | 850,713 |  |  | 908,406 |
E-commerce |  |  |  |  |  |  |  |
Gross revenue | 113,569 |  |  | 100,084 |  |  | 97,632 |
Taxes | (1,873 | ) |  | (2,473 | ) |  | (2,261 | )
Returns | (5,533 | ) |  | (2,595 | ) |  | (6,149 | )
Net revenue | 106,163 |  |  | 95,016 |  |  | 89,222 |
Other digital services |  |  |  |  |  |  |  |
Gross revenue | 3,026 |  |  | 1,850 |  |  | - |
Taxes | (254 | ) |  | (160 | ) |  | - |
Net revenue | 2,772 |  |  | 1,690 |  |  | - |
Total Digital Services |  |  |  |  |  |  |  |
Gross revenue | 116,595 |  |  | 101,934 |  |  | 97,632 |
Taxes | (2,127 | ) |  | (2,633 | ) |  | (2,261 | )
Returns | (5,533 | ) |  | (2,595 | ) |  | (6,149 | )
Net revenue | 108,935 |  |  | 96,706 |  |  | 89,222 |
Total |  |  |  |  |  |  |  |
Gross revenue | 1,421,091 |  |  | 1,066,479 |  |  | 1,111,739 |
Taxes | (9,962 | ) |  | (8,455 | ) |  | (6,432 | )
Discounts | (15,692 | ) |  | (14,302 | ) |  | (8,609 | )
Returns | (131,157 | ) |  | (96,303 | ) |  | (99,070 | )
Net revenue | 1,264,280 |  |  | 947,419 |  |  | 997,628 |
Sales | 1,229,827 |  |  | 914,266 |  |  | 967,374 |
Service | 34,453 |  |  | 33,153 |  |  | 30,254 |
Net revenue | 1,264,280 |  |  | 947,419 |  |  | 997,628 |

F-63

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

26 Costs and Expenses by Nature

| December 31, 2022 |  |  | December 31, 2021 |  |  | December 31, 2020 |
Salaries and payroll charges | (281,894 | ) |  | (274,581 | ) |  | (279,523 | )
Raw materials and productions costs | (201,700 | ) |  | (185,862 | ) |  | (216,791 | )
Editorial costs | (49,329 | ) |  | (71,705 | ) |  | (52,794 | )
Depreciation and amortization | (268,714 | ) |  | (211,156 | ) |  | (174,088 | )
Copyright | (72,348 | ) |  | (58,885 | ) |  | (59,597 | )
Advertising and publicity | (99,834 | ) |  | (77,655 | ) |  | (88,965 | )
Utilities, cleaning and security | (20,087 | ) |  | (25,505 | ) |  | (19,499 | )
Rent and condominium fees | (18,312 | ) |  | (17,775 | ) |  | (14,278 | )
Third-party services | (47,667 | ) |  | (25,758 | ) |  | (23,904 | )
Travel | (23,577 | ) |  | (8,747 | ) |  | (8,760 | )
Consulting and advisory services | (34,166 | ) |  | (23,395 | ) |  | (25,269 | )
Impairment losses on trade receivables | (45,904 | ) |  | (32,726 | ) |  | (25,015 | )
Material | (6,263 | ) |  | (3,523 | ) |  | (3,708 | )
Taxes and contributions | (1,777 | ) |  | (2,808 | ) |  | (2,066 | )
Reversal for tax, civil and labor risks | 15,099 |  |  | 1,986 |  |  | 2,092 |
Provision for obsolete inventories | (40,924 | ) |  | (22,117 | ) |  | (4,057 | )
Income from lease and sublease agreements with related parties | 13,047 |  |  | 15,939 |  |  | 21,683 |
Other income, net | 662 |  |  | 5,554 |  |  | 4,283 |
| (1,183,688 | ) |  | (1,018,719 | ) |  | (970,256 | )
Cost of goods sold and services | (473,135 | ) |  | (396,829 | ) |  | (378,003 | )
Commercial expenses | (194,043 | ) |  | (164,439 | ) |  | (165,169 | )
General and administrative expenses | (471,626 | ) |  | (430,279 | ) |  | (406,352 | )
Impairment loss on accounts receivable | (45,904 | ) |  | (32,726 | ) |  | (25,015 | )
Other operating income, net | 1,020 |  |  | 5,554 |  |  | 4,283 |
| (1,183,688 | ) |  | (1,018,719 | ) |  | (970,256 | )

F-64

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

27 Finance result

| December 31, 2022 |  |  | December 31, 2021 |  |  | December 31, 2020 |
Finance income |  |  |  |  |  |  |  |
Income from financial investments and marketable securities (i) | 54,954 |  |  | 26,719 |  |  | 16,907 |
Income finance from indemnification assets and contingencies (ii) | 31,077 |  |  | 6,818 |  |  | 1,476 |
Other finance income | 2,526 |  |  | 2,103 |  |  | 2,601 |
| 88,557 |  |  | 35,640 |  |  | 20,984 |
Finance costs |  |  |  |  |  |  |  |
Interest on bonds and financing | (108,896 | ) |  | (43,549 | ) |  | (52,935 | )
Interest on account payables for business combinations | (65,725 | ) |  | (8,158 | ) |  | (1,568 | )
Imputed interest on suppliers | (19,810 | ) |  | (6,609 | ) |  | (12,286 | )
Interest on Loans from related parties | - |  |  | (157 | ) |  | (3,344 | )
Bank and collection fees | (3,891 | ) |  | (6,587 | ) |  | (17,771 | )
Interest on provision for tax, civil and labor losses | (52,891 | ) |  | (34,300 | ) |  | (13,297 | )
Interest on Lease Liabilities | (13,143 | ) |  | (14,984 | ) |  | (15,077 | )
Other finance costs | (5,968 | ) |  | (5,839 | ) |  | (3,131 | )
| (270,324 | ) |  | (120,183 | ) |  | (119,409 | )
Financial Result (net) | (181,767 | ) |  | (84,543 | ) |  | (98,425 | )

(i) | Refers to income from marketable securities indexed at CDI.
(ii) | Refers to an indemnification asset in the amount of R$ 20,249 in connection with the acquisition of Somos (Vasta’s Predecessor) by Cogna Group (Vasta’s Parent Company), as mentioned in the note 21b, and reversal of interest on provision for tax losses in the amount of R$ 10,828.

28 Segment Reporting

Information reported to the Chief Operating Decision Maker (CODM) for the purposes of resource allocation and assessment of segment performance is focused on revenue, “profit (loss) before finance result and tax”, assets and liabilities segregated by the nature of the services provided to the Company’s customers. Thus, the reportable segments are: (i) Content & EdTech Platform; and (ii) Digital Services.

The Content & EdTech platform derives its results from core and complementary educational content solutions through digital and printed content, including textbooks, learning systems and other complementary educational services.

The Digital Services aims to unify the entire school administrative ecosystem, allowing private schools to add multiple learning strategies and help them to focus on education, through the physical and digital e-commerce platform (Livro Fácil) and other digital services of the Company. Operations related to this segment began with the acquisition of Livro Fácil. In August 2021, the Company acquired EMME, which has its digital platform aimed at the production of educational marketing material for the Company's partner schools. Additionally, in January 2022, the Company acquired MVP and Phidelis, see note 5.

Due to the nature of the Company’s e-commerce platform, the Content & EdTech Platform segment sells its printed and digital content to the Digital Services segment. These transactions are priced on an arm’s length basis and are to be settled in cash. However, the eliminations made in preparing the consolidated financial statements are included in the measure of the segment’s profit or loss that is used by the CODM, and therefore the amounts presented herein are net of such intersegment transactions.

T he following table presents the Company’s revenue, its reconciliation to “profit (loss) before finance result and tax”, assets and liabilities by reportable segment. No other information is used by the CODM when assessing segment performance:

F-65

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

| December 31, 2022 |
| Content & EdTech Platform |  |  | Digital Services Platform |  |  | Total |
Net revenue from sales and services | 1,155,345 |  |  | 108,935 |  |  | 1,264,280 |
Cost of goods sold and services | (375,167 | ) |  | (97,968 | ) |  | (473,135 | )
Operating income (expenses) |  |  |  |  |  |  |  |
General and administrative expenses | (445,330 | ) |  | (26,295 | ) |  | (471,626 | )
Commercial expenses | (183,118 | ) |  | (10,926 | ) |  | (194,043 | )
Other operating income, net | 2,260 |  |  | (1,240 | ) |  | 1,020 |
Impairment losses on trade receivables | (45,769 | ) |  | (135 | ) |  | (45,904 | )
Share of loss equity-accounted investees | (4,512 | ) |  | - |  |  | (4,512 | )
Profit (loss) before finance result and taxes | 103,709 |  |  | (27,629 | ) |  | 76,080 |
Assets | 7,438,094 |  |  | 82,497 |  |  | 7,520,591 |
Current and non-current liabilities | 2,852,390 |  |  | 38,521 |  |  | 2,890,911 |

| December 31, 2021 |  |
| Content & EdTech Platform |  |  | Digital Services |  |  | Total |
Net revenue from sales and services | 850,713 |  |  | 96,706 |  |  | 947,419 |
Cost of goods sold and services | (327,651 | ) |  | (69,178 | ) |  | (396,829 | )
Operating income (expenses) |  |  |  |  |  |  |  |
General and administrative expenses | (413,746 | ) |  | (16,533 | ) |  | (430,279 | )
Commercial expenses | (147,664 | ) |  | (16,775 | ) |  | (164,439 | )
Other operating income | 5,469 |  |  | 85 |  |  | 5,554 |
Impairment losses on trade receivables | (32,344 | ) |  | (382 | ) |  | (32,726 | )
Loss before finance result and taxes | (65,223 | ) |  | (6,077 | ) |  | (71,300 | )
Assets | 7,207,084 |  |  | 126,323 |  |  | 7,333,407 |
Current and non-current liabilities | 2,605,351 |  |  | 62,847 |  |  | 2,668,198 |

| December 31, 2020 |
| Content & EdTech Platform |  |  | Digital Services |  |  | Total |
Net revenue from sales and services | 908,406 |  |  | 89,222 |  |  | 997,628 |
Cost of goods sold and services | (301,882 | ) |  | (76,121 | ) |  | (378,003 | )
Operating income (expenses) |  |  |  |  |  |  |  |
General and administrative expenses | (387,023 | ) |  | (19,329 | ) |  | (406,352 | )
Commercial expenses | (152,659 | ) |  | (12,510 | ) |  | (165,169 | )
Other operating income | 4,283 |  |  | - |  |  | 4,283 |
Impairment losses on trade receivables | (25,015 | ) |  | - |  |  | (25,015 | )
Profit (Loss) before finance result and taxes | 46,110 |  |  | (18,738 | ) |  | 27,372 |
Assets | 6,848,198 |  |  | 130,072 |  |  | 6,978,270 |
Current and non-current liabilities | 2,141,107 |  |  | 51,847 |  |  | 2,192,953 |

F-66

Vasta Platform Limited

Consolidated Financial Statements as of December 31, 2022 and 2021

Notes to the Consolidated Financial Statements as of December 31, 202 2

The Segments’ profit represents the profit earned by each segment without finance results and income tax expense. This is the measure reported to the CODM for the purpose of resource allocation and assessment of segment performance.

The Company operates in Brazil, with no revenue from foreign customers, Additionally, no single customer contributed 10% or more to the Company’s segments revenue for the years ended December 31, 2022, 2021 and 2020.

29 Non-cash transactions

Non-cash transactions for the years ended December 31, 2022, 2021 and 2020 are, respectively: (i) Additions of right of use assets and lease liabilities in the amount of R$ 12,002, R$ 25,513 and R$ 35,925 (Note 17), (ii) Disposals of contracts of right of use assets and lease liabilities in the amount of R$ 3,180, R$ 3,481 and R$ 3,429 (Note 17), and (iii) Accounts payable assumed in the acquisition of Phidelis, during year 2022, in the amount of R$ 12,733 (net of the cash paid), SEL, in the amount of R$ 26,876, Redação Nota 1000, in the amount of R$ 7,294, EMME, in the amount of R$ 12,253, De Gouges, in the amount of R$ 451,554, and Pluri, in the amount of R$ 12,347, Mind Makers, in the amount of R$ 13,621, Meritt, in the amount R$ 4,330 (during year 2021). See note 5.

3 0 Subsequent events

Anglo Start Acquisition

The Company, through its subsidiary Somos Sistemas de Ensino S.A (“Somos”), acquired a 51% interest in the capital of “Escola Start Ltda.”, (“Start”), on March 3, 2023.

Start is a company dedicated to providing bilingual education services for kindergarten, primary and secondary education, and preparatory courses for entrance exams, including the sale of books, teaching materials, school uniforms and stationery.

The purchase price of R$4,454 will be paid in two (2) installments, a fixed installment of R$4,100 in cash on the acquisition date and a variable installment of R$354, subject to price adjustment depending on the calculation of financial indicators defined as contract and corrected by 100% of the CDI, to be paid in May 2023.

On the same date, a purchase option agreement was entered into for the acquisition of the remaining shares issued by Anglo Start held by the minority shareholder, representing 49% of the share capital, as of January 2028, through which the amount of R$11,700.

* * * * * * * * * * * * * * * * * * *

F-67