What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2024-02-09 · 332 added, 213 removed, 765 unchanged (42% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

December 31, September 30,

March 31, September 30,

Current assets

30 unchanged sentences

Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized;

0 shares issued and outstanding as of December 31, 2023 and September 30, 2023

0 shares issued and outstanding as of March 31, 2024 and September 30, 2023

Class A common stock, par value $ 0.0001 per share, 150,000,000 shares authorized;

23,279,170 and 23,253,272 shares issued and outstanding as of December 31, 2023 and September 30, 2023, respectively

23,416,518 and 23,253,272 shares issued and outstanding as of March 31, 2024 and September 30, 2023, respectively

Class B common stock, par value $ 0.0001 per share, 40,000,000 shares authorized;

10,093,394 and 10,093,394 shares issued and outstanding as of December 31, 2023 and September 30, 2023, respectively

10,052,676 and 10,093,394 shares issued and outstanding as of March 31, 2024 and September 30, 2023, respectively

Additional paid-in capital 259,242 249,688

8 unchanged sentences

(In thousands, except share and per share amounts)

Three months ended December 31,

Three months ended March 31, Six months ended March 31, 2024

2024 2023 2024 2023

Revenue $ 94,542 $ 93,872 $ 186,532 $ 179,901

6 unchanged sentences

Income from operations 9,421 5,444 17,953 11,282

Other expenses (income)

Interest expense, net 7,750 6,199 14,457 11,689

Other expense (income) 107 ( 203 )

Other income ( 2,257 ) — ( 2,150 ) ( 203 )

Total other expenses 5,493 6,199 12,307 11,486

Income before income taxes 1,718 551

Provision for income taxes 182 382

Net income 1,536 169

Net income attributable to non-controlling interest 438 409

Income (loss) before income taxes 3,928 ( 755 ) 5,646 ( 204 )

Provision for (benefit from) income taxes 580 ( 563 ) 762 ( 181 )

Net income (loss) 3,348 ( 192 ) 4,884 ( 23 )

Net income (loss) attributable to non-controlling interest 1,470 ( 228 ) 1,908 181

Net income (loss) attributable to i3 Verticals, Inc.

20 unchanged sentences

Balance at December 31, 2023 23,279,170 2 10,093,394 1 254,562 ( 11,846 ) 94,437 337,156

Equity-based compensation — — — — 5,777 — — 5,777

Net income — — — — — 1,878 1,470 3,348

Redemption of common units in i3 Verticals, LLC 40,718 — ( 40,718 ) — 384 — ( 384 ) —

Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 42 — — 42

Exercise or release of equity-based awards 96,630 — — — ( 223 ) — — ( 223 )

Allocation of equity to non-controlling interests — — — — ( 1,300 ) — 1,300 —

Balance at March 31, 2024 23,416,518 $ 2 10,052,676 $ 1 $ 259,242 $ ( 9,968 ) $ 96,823 $ 346,100

See Notes to the Interim Condensed Consolidated Financial Statements

i3 Verticals, Inc.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (CONTINUED)

(In thousands, except share amounts)

Class A Common Stock Class B Common Stock Additional Paid-In Capital Retained Earnings (Deficit) Non-Controlling Interest Total Equity

8 unchanged sentences

Balance at December 31, 2022 23,011,193 2 10,118,142 1 228,016 ( 12,373 ) 87,812 303,458

Equity-based compensation — — — — 6,802 — — 6,802

Net loss — — — — — 36 ( 228 ) ( 192 )

Redemption of common units in i3 Verticals, LLC 9,924 — ( 9,924 ) — 86 — ( 86 ) —

Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 349 — — 349

Exercise of equity-based awards 64,443 — — — ( 606 ) — — ( 606 )

Allocation of equity to non-controlling interests — — — — ( 2,205 ) — 2,205 —

Issuance of Class A common stock under the 2020 Inducement Plan 82,170 — — — 2,000 — — 2,000

Balance at March 31, 2023 23,167,730 $ 2 10,108,218 $ 1 $ 234,442 $ ( 12,337 ) $ 89,703 $ 311,811

See Notes to the Interim Condensed Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Three months ended December 31,

Six months ended March 31,

Cash flows from operating activities:

Net income $ 1,536 $ 169

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) $ 4,884 $ ( 23 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 19,808 17,691

Equity-based compensation 12,285 13,648

Amortization of debt discount and issuance costs 414 361

Provision for income taxes 182 355

Amortization of debt issuance costs 676 729

Gain on repurchase of exchangeable notes ( 2,397 ) —

Loss on sale of exchangeable senior note hedges 245 —

Gain on repurchases of warrants ( 105 ) —

Provision for (benefit from) income taxes ( 1,238 ) ( 208 )

Non-cash lease expense 2,349 2,289

9 unchanged sentences

Acquisition escrow obligations ( 1,848 ) ( 1,564 )

Settlement obligations ( 1,355 ) 4,246

Deferred revenue 2,257 ( 2,628 )

16 unchanged sentences

(In thousands)

Three months ended December 31,

Six months ended March 31,

Cash flows from financing activities:

1 unchanged sentence

Payments on revolving credit facility ( 132,710 ) ( 179,939 )

Payments for repurchase of exchangeable notes ( 87,840 ) —

Proceeds from sale of exchangeable senior note hedges 1,238 —

1 unchanged sentence

Payments of debt issuance costs — ( 87 )

Net payments for settlement obligations (1)

( 3,287 ) ( 355 )

Cash paid for contingent consideration ( 760 ) ( 1,175 )

3 unchanged sentences

Net cash (used in) provided by financing activities ( 17,885 ) 83,814

Net (decrease) increase in cash, cash equivalents and restricted cash ( 1,316 ) 574

Net decrease in cash, cash equivalents and restricted cash ( 5,107 ) ( 1,432 )

Cash, cash equivalents and restricted cash at beginning of period 12,400 23,765

3 unchanged sentences

Cash paid for income taxes $ 5,376 $ 1,419

_________________________________________

Refer to Note 2 for discussion of the change in the current period presentation.

The following tables provide reconciliations of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to that shown in the condensed consolidated statements of cash flows:

36 unchanged sentences

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company and its subsidiaries as of December 31, 2023 and for the three months ended December 31, 2023 and 2022.

The results of operations for the three months ended December 31, 2023 and 2022 are not necessarily indicative of the operating results for the full year.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company and its subsidiaries as of March 31, 2024 and for the three and six months ended March 31, 2024 and 2023.

The results of operations for the three and six months ended March 31, 2024 and 2023 are not necessarily indicative of the operating results for the full year.

As permitted by the rules and regulations of the SEC, certain information and disclosures otherwise included in the notes to the consolidated financial statements have been condensed or omitted from the summary of significant accounting policies.

17 unchanged sentences

With the exception of merchant reserves, settlement assets or settlement obligations are generally collected and paid within one to four days .

Settlement assets and settlement obligations were both $ 3,518 as of December 31, 2023 and $ 4,873 as of September 30, 2023, respectively.

Settlement assets and settlement obligations were both $ 1,586 as of March 31, 2024 and $ 4,873 as of September 30, 2023, respectively.

Reclassifications

Certain prior period amounts have been reclassified in order to conform with the current period presentation.

These reclassifications have no impact on the Company’s previously reported consolidated net income (loss).

Change in presentation

During the second quarter of 2024, the Company elected to change its presentation of cash flows associated with "Settlement obligations" from operating activities to financing actives within the Condensed Consolidated Statements of Cash Flows.

Comparative amounts have been reclassified to conform to the current period presentation.

This change has no impact on the Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Operations or Condensed Consolidated Statement of Changes in Equity.

The following tables present the effects of the change in presentation within the Condensed Consolidated Statements of Cash Flows:

For the Six Months Ended March 31, 2024

As Previously Reported Adjustment As Adjusted

Cash flows from operating activities:

Settlement obligations ( 3,287 ) 3,287 —

Net cash provided by operating activities 21,860 3,287 25,147

Cash flows from financing activities:

Net payments for settlement obligations — ( 3,287 ) ( 3,287 )

Net cash used in financing activities ( 14,598 ) ( 3,287 ) ( 17,885 )

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

For the Six Months Ended March 31, 2023

As Previously Reported Adjustment As Adjusted

Cash flows from operating activities:

Settlement obligations ( 355 ) 355 —

Net cash provided by operating activities 25,529 355 25,884

Cash flows from financing activities:

Net payments for settlement obligations — ( 355 ) ( 355 )

Net cash provided by (used in) financing activities 84,169 ( 355 ) 83,814

Inventories consist of point-of-sale equipment to be sold to customers and are stated at the lower of cost, determined on a weighted average or specific basis, or net realizable value.

Inventories were $ 4,251 and $ 4,138 at December 31, 2023 and September 30, 2023, respectively, and are included within prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets.

Inventories were $ 3,978 and $ 4,138 at March 31, 2024 and September 30, 2023, respectively, and are included within prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets.

Business acquisitions have been recorded using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), and, accordingly, the purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair value as of the date of acquisition.

8 unchanged sentences

The Company elected the accounting policy practical expedients for all classes of underlying assets to (i) combine associated lease and non-lease components in a lease arrangement as a combined lease component and (ii) exclude recording short-term leases as right-of-use assets on the condensed consolidated balance sheets.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

At contract inception the Company determines whether an arrangement is, or contains a lease, and for each identified lease, evaluates the classification as operating or financing.

2 unchanged sentences

The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset.

The incremental borrowing rate is a fully collateralized rate that considers the Company’s credit rating, market conditions and the term of the lease.

The incremental borrowing rate is a fully collateralized rate that considers the

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

Company’s credit rating, market conditions and the term of the lease.

The Company accounts for all components in a lease arrangement as a single combined lease component.

6 unchanged sentences

The Company utilized the portfolio approach practical expedient within ASC 606-10-10-4 Revenue from Contracts with Customers—Objectives and the significant financing component practical expedient within ASC 606-10-32-18 Revenue from Contracts with Customers—The Existence of a Significant Financing Component in the Contract in performing the analysis.

The Company's revenue for the three months ended December 31, 2023 and 2022 is derived from the following sources:

The Company's revenue for the six months ended March 31, 2024 and 2023 is derived from the following sources:

• Software and related services — Includes sales of software as a service, transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to our software offerings

8 unchanged sentences

Revenue from SaaS arrangements is recognized over time, over the term of the agreement.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed or a specified per transaction amount, depending on the card type.

5 unchanged sentences

Discount fees are recognized each day based on the volume or transaction count at the time the merchants’ transactions are processed.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

The Company follows the requirements of ASC 606-10-55 Revenue from Contracts with Customers—Principal versus Agent Considerations , which states that the determination of whether a company should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement.

4 unchanged sentences

(1) the Company has no discretion over which card issuing bank will be used to process a transaction and is unable to direct the activity of the merchant to another card issuing bank, and (2) interchange and card network rates are pre-established by the card issuers or card networks, and the Company has no latitude in determining these fees.

Therefore, revenue allocated to the payment authorization performance obligation is presented net of interchange and card network fees paid to the card issuing banks and card networks, respectively, for the three months ended December 31, 2023 and 2022.

With regards to the Company's discount fees, generally, where the Company has control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale equal to the full amount of the discount charged to the merchant, less interchange and network fees.

6 unchanged sentences

The selling price for a deliverable is based on standalone selling price, if available, the adjusted market assessment approach, estimated cost plus margin approach, or residual approach.

The Company establishes estimated selling price, based on the judgment of the Company's management, considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

the product life cycle.

In arrangements with multiple performance obligations, the Company determines allocation of the transaction price at inception of the arrangement and uses the standalone selling prices for the majority of the Company's revenue recognition.

2 unchanged sentences

The Company’s professional services, including training, installation, and repair services are recognized as revenue as these services are performed.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

The tables below present a disaggregation of the Company's revenue from contracts with customers by product by segment.

4 unchanged sentences

• Other — Includes sales of equipment, non-software related professional services and other revenues

For the Three Months Ended December 31, 2023

For the Three Months Ended March 31, 2024

Software and Services Merchant Services Other Total

3 unchanged sentences

Total revenue $ 59,483 $ 35,075 $ ( 16 ) $ 94,542

For the Three Months Ended December 31, 2022

For the Three Months Ended March 31, 2023

Software and Services Merchant Services Other Total

3 unchanged sentences

Total revenue $ 60,797 $ 33,094 $ ( 19 ) $ 93,872

For the Six Months Ended March 31, 2024

Software and Services Merchant Services Other Total

Software and related services revenue $ 82,462 $ 6,839 $ ( 22 ) $ 89,279

Payments revenue 28,837 59,607 ( 15 ) 88,429

Other revenue 4,773 4,051 — 8,824

Total revenue $ 116,072 $ 70,497 $ ( 37 ) $ 186,532

For the Six Months Ended March 31, 2023

Software and Services Merchant Services Other Total

Software and related services revenue $ 82,244 $ 6,196 $ ( 19 ) $ 88,421

Payments revenue 27,038 55,243 ( 18 ) 82,263

Other revenue 4,728 4,489 — 9,217

Total revenue $ 114,010 $ 65,928 $ ( 37 ) $ 179,901

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

The tables below present a disaggregation of the Company's revenue from contracts with customers by timing of transfer of goods or services by segment.

2 unchanged sentences

• Revenue earned at a point in time — Includes point in time service fees that are not stand-ready obligations, software licenses sold as functional intellectual property and other equipment

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

For the Three Months Ended December 31, 2023

For the Three Months Ended March 31, 2024

Software and Services Merchant Services Other Total

2 unchanged sentences

Total revenue $ 59,483 $ 35,075 $ ( 16 ) $ 94,542

For the Three Months Ended December 31, 2022

For the Three Months Ended March 31, 2023

Software and Services Merchant Services Other Total

2 unchanged sentences

Total revenue $ 60,797 $ 33,094 $ ( 19 ) $ 93,872

For the Six Months Ended March 31, 2024

Software and Services Merchant Services Other Total

Revenue earned over time $ 109,715 $ 60,176 $ ( 22 ) $ 169,869

Revenue earned at a point in time 6,357 10,321 ( 15 ) 16,663

Total revenue $ 116,072 $ 70,497 $ ( 37 ) $ 186,532

For the Six Months Ended March 31, 2023

Software and Services Merchant Services Other Total

Revenue earned over time $ 105,009 $ 55,581 $ ( 19 ) $ 160,571

Revenue earned at a point in time 9,001 10,347 ( 18 ) 19,330

Total revenue $ 114,010 $ 65,928 $ ( 37 ) $ 179,901

Contract Assets

3 unchanged sentences

Under this structure, the license revenue is recognized upfront while a portion of the revenue is unbilled.

Unbilled amounts associated with these services are presented as accounts receivable as the Company has an unconditional right to payment for services performed.

As of December 31, 2023 and September 30, 2023, the Company’s contract assets from contracts with customers was $ 10,139 and $ 15,131 , respectively.

Unbilled amounts

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

associated with these services are presented as accounts receivable as the Company has an unconditional right to payment for services performed.

As of March 31, 2024 and September 30, 2023, the Company’s contract assets from contracts with customers was $ 11,478 and $ 15,131 , respectively.

Contract Liabilities

6 unchanged sentences

Substantially all of the Company's deferred revenue is anticipated to be recognized within the next year.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

The following tables present the changes in deferred revenue as of and for the three months ended December 31, 2023 and 2022, respectively:

The following tables present the changes in deferred revenue as of and for the six months ended March 31, 2024 and 2023, respectively:

Balance at September 30, 2023

2 unchanged sentences

Balance at December 31, 2023

Deferral of revenue 11,759

Recognition of unearned revenue ( 13,596 )

Balance at March 31, 2024

Balance at September 30, 2022

2 unchanged sentences

Balance at December 31, 2022

Deferral of revenue 10,475

Recognition of unearned revenue ( 14,286 )

Balance at March 31, 2023

Costs to Obtain and Fulfill a Contract

The Company capitalizes incremental costs to obtain new contracts and contract renewals and amortizes these costs on a straight-line basis as an expense over the benefit period, which is generally the contract term, unless a commensurate payment is not expected at renewal.

As of December 31, 2023 and September 30, 2023, the Company had $ 5,106 and $ 4,966 , respectively, of capitalized contract costs, which relates to commissions paid to employees and agents as well as other incentives given to customers to obtain new sales, included within “Other assets" on the condensed consolidated balance sheets.

The Company recorded expense related to these costs of $ 229 for the three months ended December 31, 2023, and $ 183 for the three months ended December 31, 2022.

As of March 31, 2024 and September 30, 2023, the Company had $ 5,417 and $ 4,966 , respectively, of capitalized contract costs, which relates to commissions paid to employees and agents as well as other incentives given to customers to obtain new sales, included within “Other assets" on the condensed consolidated balance sheets.

The Company recorded expense related to these costs of $ 241 and $ 470 for the three and six months ended March 31, 2024, respectively and $ 193 and $ 376 for the three and six months ended March 31, 2023.

The Company expenses sales commissions as incurred for the Company's sales commission plans that are paid on recurring monthly revenues, portfolios of existing customers, or have a substantive stay requirement prior to payment.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

Other Cost of Services

10 unchanged sentences

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

recognition, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities as well as the related valuation allowances.

Such estimates include, but are not limited to, the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, goodwill and intangible asset impairment review, determination of performance obligations for revenue recognition, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities as well as the related valuation allowances.

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

17 unchanged sentences

The Company is currently evaluating the impact of the adoption of ASU 2023-07 on the Company’s financial statement disclosures.

During the three months ended December 31, 2023 and 2022, the Company acquired the following intangible assets and businesses:

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

During the six months ended March 31, 2024 and 2023, the Company acquired the following intangible assets and businesses:

Residual Buyouts

3 unchanged sentences

These assets are amortized using a method of amortization that reflects the pattern in which the economic benefits of the intangible asset are expected to be utilized over their estimated useful lives.

During the three months ended December 31, 2023 and 2022, the Company purchased residuals for $ 3,359 and $ 275 of consideration, respectively.

During the six months ended March 31, 2024 and 2023, the Company purchased residuals for $ 4,466 and $ 387 of consideration, respectively.

The purchases were funded with a combination of cash on hand and borrowings on the Company's revolving credit facility.

The acquired residual buyout intangible asset has an estimated amortization period of eight years .

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

Business Combinations during the three months ended December 31, 2023

During the three months ended December 31, 2023 the Company completed the acquisition of a business to expand the Company’s software offerings.

Referral Agreements

From time to time, the Company enters into referral agreements with agent banks (“Referral Partners”).

Under these agreements, the Referral Partner refers its customers to the Company for credit card processing services.

Total consideration paid for these agreements in the six months ended March 31, 2023 was $ 420 , all of which was settled with cash on hand.

Because the Company pays an up-front fee to compensate the Referral Partner, the amount is treated as an asset acquisition in which the Company has acquired an intangible stream of referrals.

This asset is amortized over a straight-line period of five years .

Business Combinations during the six months ended March 31, 2024

During the six months ended March 31, 2024 the Company completed the acquisition of a business to expand the Company’s software offerings.

Total purchase consideration was $ 1,270 , including $ 1,100 in cash consideration, funded by proceeds from the Company's revolving credit facility, and $ 170 of contingent consideration.

In connection with this acquisition, the Company allocated approximately $ 5 to property and equipment, approximately $ 40 to capitalized software, approximately $ 220 to customer relationships and the remainder, approximately $ 1,005 , to goodwill, all of which is deductible for tax purposes.

Certain of the purchase price allocations assigned for this acquisition is considered preliminary as of December 31, 2023.

Certain of the purchase price allocations assigned for this acquisition is considered preliminary as of March 31, 2024.

The acquired customer relationships intangible assets have an estimated amortization periods of ten years .

4 unchanged sentences

and Celtic Systems Pvt.

During the three months ended December 31, 2022, the Company completed the acquisition of Celtic Cross Holdings, Inc., in Scottsdale, Arizona and Celtic Systems Pvt.

During the six months ended March 31, 2023, the Company completed the acquisition of Celtic Cross Holdings, Inc., in Scottsdale, Arizona and Celtic Systems Pvt.

in Vadodara, India (collectively "Celtic") to expand the Company’s software offerings in the Public Sector vertical.

3 unchanged sentences

The acquired customer relationships intangible assets has an estimated amortization period of eighteen years .

The trade name and non-compete agreements associated with the acquisition have amortization periods of five years and three years , respectively.

The weighted-average amortization period for all intangibles acquired is eighteen years .

The acquired capitalized software has a weighted-average amortization period of ten years .

Acquisition-related costs for this acquisition amounted to approximately $ 1,782 and were expensed as incurred.

The trade name and non-compete agreements associated with the acquisition have amortization periods of five years and three years ,

i3 VERTICALS, Inc.

1 unchanged sentence

(in thousands, except unit, share and per share amounts)

respectively.

The weighted-average amortization period for all intangibles acquired is eighteen years .

The acquired capitalized software has a weighted-average amortization period of ten years .

Acquisition-related costs for this acquisition amounted to approximately $ 1,782 and were expensed as incurred.

Summary of Celtic Cross Holdings, Inc.

19 unchanged sentences

In connection with this acquisition, the Company allocated approximately $ 159 of the consideration to net working capital, approximately $ 374 to property and equipment, approximately $ 670 to capitalized software, approximately $ 8,400 to customer relationships, approximately $ 100 to trade names, and the remainder, approximately $ 12,229 , to goodwill, of which $ 2,864 is deductible for tax purposes, and approximately $ 2,178 to other long-term liabilities.

Certain of the purchase price allocations assigned for one of these acquisitions is considered preliminary as of December 31, 2023.

Certain of the purchase price allocations assigned for one of these acquisitions is considered preliminary as of March 31, 2024.

The acquired capital software and customer relationships intangible asset have estimated amortization periods of seven to eight years and ten to fifteen years , respectively.

Certain of the purchase price allocations assigned for one of the acquisitions are considered preliminary as of December 31, 2023.

i3 VERTICALS, Inc.

2 unchanged sentences

PREPAID EXPENSES AND OTHER CURRENT ASSETS

A summary of the Company's prepaid expenses and other current assets as of December 31, 2023 and September 30, 2023 is as follows:

December 31, September 30,

A summary of the Company's prepaid expenses and other current assets as of March 31, 2024 and September 30, 2023 is as follows:

March 31, September 30,

Inventory $ 3,978 $ 4,138

9 unchanged sentences

$ 287,613 $ 121,950 $ — $ 409,563

Goodwill attributable to preliminary purchase price adjustments and acquisitions during the three months ended December 31, 2023 1,209 — — 1,209

Balance at December 31, 2023 $ 288,822 $ 121,950 $ — $ 410,772

Intangible assets consisted of the following as of December 31, 2023:

Goodwill attributable to preliminary purchase price adjustments and acquisitions during the six months ended March 31, 2024 1,209 — — 1,209

Balance at March 31, 2024 $ 288,822 $ 121,950 $ — $ 410,772

Intangible assets consisted of the following as of March 31, 2024:

Cost Accumulated

11 unchanged sentences

Total identifiable intangible assets $ 336,522 $ ( 115,377 ) $ 221,145

Amortization expense for intangible assets amounted to $ 5,234 and $ 5,059 during the three months ended December 31, 2023 and 2022 respectively.

Amortization expense for intangible assets amounted to $ 5,270 and $ 10,505 for the three and six months ended March 31, 2024, respectively, and $ 5,157 and $ 10,216 for the three and six months ended March 31, 2023, respectively.

i3 VERTICALS, Inc.

1 unchanged sentence

(in thousands, except unit, share and per share amounts)

Based on net carrying amounts at December 31, 2023, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30:

2024 (nine months remaining) $ 15,625

Based on net carrying amounts at March 31, 2024, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30:

2024 (six months remaining) $ 10,435

Thereafter 130,716

ACCRUED EXPENSES AND OTHER LIABILITIES

A summary of the Company's accrued expenses and other current liabilities as of December 31, 2023 and September 30, 2023 is as follows is as follows:

December 31, September 30,

A summary of the Company's accrued expenses and other current liabilities as of March 31, 2024 and September 30, 2023 is as follows is as follows:

March 31, September 30,

Accrued wages, bonuses, commissions and vacation $ 6,290 $ 8,713

7 unchanged sentences

Accrued expenses and other current liabilities $ 26,854 $ 37,740

A summary of the Company's long-term liabilities as of December 31, 2023 and September 30, 2023 is as follows:

December 31, September 30,

A summary of the Company's long-term liabilities as of March 31, 2024 and September 30, 2023 is as follows:

March 31, September 30,

Accrued contingent consideration — long-term portion $ 101 $ 1,414

6 unchanged sentences

LONG-TERM DEBT, NET

A summary of long-term debt, net as of December 31, 2023 and September 30, 2023 is as follows:

December 31, September 30,

A summary of long-term debt, net as of March 31, 2024 and September 30, 2023 is as follows:

March 31, September 30,

Maturity 2024 2023

14 unchanged sentences

For a discussion of the terms of the Exchangeable Notes, refer to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Non-cash interest expense, including amortization of debt issuance costs, related to the Exchangeable Notes for the three months ended December 31, 2023 was $ 255 and $ 227 for the three months ended December 31, 2022.

Total unamortized debt issuance costs related to the Exchangeable Notes were $ 1,246 and $ 1,501 as of December 31, 2023 and September 30, 2023, respectively.

The estimated fair value of the Exchangeable Notes was $ 108,635 as of December 31, 2023.

The estimated fair value of the Exchangeable Notes was determined through consideration of quoted market prices for similar instruments.

The fair value is classified as Level 2, as defined in Note 10.

Non-cash interest expense, including amortization of debt issuance costs, related to the Exchangeable Notes for the three and six months ended March 31, 2024 was $ 104 and $ 359 , respectively and $ 233 and $ 460 for the three and six months ended March 31, 2023.

Total unamortized debt issuance costs related to the Exchangeable Notes were $ 216 and $ 1,501 as of March 31, 2024 and September 30, 2023, respectively.

During fiscal year 2020, we repurchased $ 21,000 in aggregate principal amount of Exchangeable Notes in open market purchases.

In addition, on December 21, 2023, i3 Verticals, LLC entered into agreements to repurchase an additional portion of its Exchangeable Notes pursuant to privately negotiated transactions with a limited number of holders of the Exchangeable Notes (the "Exchangeable Note Repurchases").

The repurchase payments were determined by the Company’s average stock price over the 15 trading-day measurement period ending January 16, 2024, and the closing of the Exchangeable Note Purchases occurred on January 18, 2024.

The Company reclassified the $ 90,777 Exchangeable Note Repurchases from long-term to current effective December 21, 2023 to reflect the agreements.

The Company will record the impact of the difference in the estimated acquisition price and the net carrying amount of the repurchased portion of the Exchangeable Notes, adjusted for unamortized debt issuance costs and costs and third-party fees related to the transaction, in January

The repurchase payments were determined by the Company’s average stock price over the 15 trading-day measurement period ending January 16, 2024.

The closing of the Exchangeable Note Purchases occurred on January 18, 2024, and the Company paid $ 87,391 to repurchase $ 90,777 in aggregate principal amount of its Exchangeable Notes and to repay approximately $ 386 in accrued interest on the repurchased portion of the Exchangeable Notes.

The Company wrote off $ 926 of debt issuance costs in connection with the repurchase transactions.

These repurchases resulted in a decrease in the Company's total leverage ratio, and following the completion of the repurchases of these Exchangeable Notes, approximately $ 26,223 in aggregate principal amount of the Exchangeable Notes remained outstanding, with terms unchanged.

The Company recorded a gain on retirement of debt of $ 2,397 due to the estimated acquisition price exceeding the net carrying amount of the repurchased

i3 VERTICALS, Inc.

1 unchanged sentence

(in thousands, except unit, share and per share amounts)

2024 after giving effect to the settlement.

Refer to Note 18 for additional information regarding the settlement of these Exchangeable Notes.

As of December 31, 2023, the aggregate principal amount outstanding of the Exchangeable Notes was $ 117,000 .

portion of the Exchangeable Notes, adjusted for unamortized debt issuance costs and costs and third-party fees related to the transaction.

As of March 31, 2024, the aggregate principal amount outstanding of the Exchangeable Notes was $ 26,223 .

The estimated fair value of the Exchangeable Notes was $ 25,043 as of March 31, 2024.

The estimated fair value of the Exchangeable Notes was determined through consideration of quoted market prices for similar instruments.

The fair value is classified as Level 2, as defined in Note 10.

Exchangeable Note Hedge Transactions

9 unchanged sentences

In December 2023, i3 Verticals, LLC received $ 250 from the Counterparties to terminate the portion of the Note Hedge Transactions corresponding to the Exchangeable Notes that were repurchased in fiscal year 2020.

Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Note Hedge Transactions corresponding to the Exchangeable Note Repurchases, which settled in January 2024.

For additional information regarding the termination of these Note Hedge Transactions, see Note 18.

Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Note Hedge Transactions corresponding to the Exchangeable Note Repurchases.

On January 18, 2024, in connection with the Exchangeable Note Repurchases, the Company and i3 Verticals, LLC terminated the corresponding portions of the Note Hedge Transactions ("Note Hedge Unwinds"), and i3 Verticals, LLC received $ 987 for the sale of the Note Hedge Unwinds and recorded a loss on the sale of the Note Hedge Unwinds of $ 245 .

Warrant Transactions

5 unchanged sentences

The Company received approximately $ 14,669 from the offering and sale of the Warrants.

The Warrants do not require separate accounting as a derivative as they meet a scope exception for certain contracts involving an entity's own equity.

The premiums paid for the Warrants have been included as a net increase to additional paid-in capital within stockholders' equity.

In December 2023, the Company paid $ 119 to the Counterparties to terminate the portion of the Warrants corresponding to the Exchangeable Notes that were repurchased in fiscal year 2020.

Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Warrants

The Warrants do not require separate accounting as a derivative as they meet a scope exception for

i3 VERTICALS, Inc.

1 unchanged sentence

(in thousands, except unit, share and per share amounts)

corresponding to the Exchangeable Note Repurchases, which settled in January 2024.

For additional information regarding the termination of these Warrants, see Note 18.

certain contracts involving an entity's own equity.

The premiums paid for the Warrants have been included as a net increase to additional paid-in capital within stockholders' equity.

In December 2023, the Company paid $ 119 to the Counterparties to terminate the portion of the Warrants corresponding to the Exchangeable Notes that were repurchased in fiscal year 2020.

Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Warrants corresponding to the Exchangeable Note Repurchases.

On January 18, 2024, in connection with the Exchangeable Note Repurchases, the Company and i3 Verticals, LLC terminated the corresponding portions of the and Warrants ("Warrant Unwinds"), and the Company paid $ 433 for the repurchase of the Warrant Unwinds and recorded a gain on the repurchase of the Warrant Unwinds of $ 105 .

2023 Senior Secured Revolving Credit Facility

On May 8, 2023, i3 Verticals, LLC (the “Borrower”), entered into that certain Credit Agreement (the “2023 Senior Secured Credit Facility”) with the guarantors and lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan”).

The 2023 Senior Secured Credit Facility replaces the Prior Senior Secured Credit Facility (as defined below).

The 2023 Senior Secured Credit Facility replaced the prior senior secured credit facility of the Company which was entered into on May 9, 2019 (the "Prior Senior Secured Credit Facility").

The 2023 Senior Secured Credit Facility provides for aggregate commitments of $ 450 million in the form of a senior secured revolving credit facility (the “Revolver”).

The 2023 Senior Secured Credit Facility provides that the Borrower has the right to seek additional commitments to provide additional term loan facilities or additional revolving credit commitments in an aggregate principal amount up to, as of any date of determination, the sum of (i) the greater of $ 100 million and 100 % of the Borrower’s consolidated EBITDA (as defined in the 2023 Senior Secured Credit Facility) for the most recently completed four quarter period, plus (ii) the amount of certain prepayments of certain indebtedness, so long as, among other things, after giving pro forma effect to the incurrence of such additional borrowings and any related transactions, the Borrower’s consolidated interest coverage ratio (as defined in the 2023 Senior Secured Credit Facility) would not be less than 3.0 to 1.0 and the Borrower’s consolidated total net leverage ratio (as defined in the 2023 Senior Secured Credit Facility) would not exceed 5.0 to 1.0.

As of December 31, 2023, the Borrower's consolidated interest coverage ratio was 4.40 and total leverage ratio was 3.60 .

As of March 31, 2024, the Borrower's consolidated interest coverage ratio was 4.1 x and total leverage ratio was 3.5 x.

The provision of any such additional amounts under the additional term loan facilities or additional revolving credit commitments are subject to certain additional conditions and the receipt of certain additional commitments by existing or additional lenders.

2 unchanged sentences

Borrowings under the Revolver will be made, at the Borrower’s option, at the Adjusted Term SOFR rate or the base rate, plus, in each case, an applicable margin.

The Adjusted Term SOFR rate will be the rate of interest per annum equal to the Term SOFR rate (based upon an interest period of one, three or six months), plus 0.10 %, plus an applicable margin of 2.00 % to 3.00 % ( 3.00 % at December 31, 2023).

The Adjusted Term SOFR rate shall not be less than 0 % in any event.

The base rate is a fluctuating rate of interest per annum equal to the highest of (a) the greater of the federal funds rate or the overnight bank funding rate, plus ½ of 1%, (b) Wall Street Journal prime rate and (c) the Adjusted Term SOFR rate for an interest period of one month, plus 1 %, plus an applicable margin of 1.00 % to 2.00 % ( 2.00 % at December 31, 2023).

The base rate shall not be less than 1 % in any event.

10 unchanged sentences

0.15 % 2.00 % 2.00 % 1.00 %

In addition to paying interest on outstanding principal under the Revolver, the Borrower will be required to pay a commitment fee equal to the product of between 0.15 % and 0.30 % (the applicable percentage depending on the Borrower’s consolidated total net leverage ratio as reflected in the schedule above, 0.30 % at December 31, 2023) times the actual daily amount by which $ 450 million exceeds the total amount outstanding under the Revolver and available to be drawn under all outstanding letters of credit.

In addition to paying interest on outstanding principal under the Revolver, the Borrower will be required to pay a commitment fee equal to the product of between 0.15 % and 0.30 % (the applicable percentage depending on the Borrower’s consolidated total net leverage ratio as reflected in the schedule above, 0.30 % at March 31, 2024) times the actual daily amount by which $ 450 million exceeds the total amount outstanding under the Revolver and available to be drawn under all outstanding letters of credit.

The Borrower will be permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the 2023 Senior Secured Credit Facility, whether such amounts are issued under the Revolver or under the additional term loan facilities or additional revolving credit facilities, at any time without premium or penalty.

13 unchanged sentences

The 2023 Senior Secured Credit Facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain events with respect to employee benefit plans, invalidity of loan documents and certain changes in control.

Prior Senior Secured Credit Facility

On May 9, 2019, the Company replaced its then existing credit facility with a new credit agreement (the "Prior Senior Secured Credit Facility") (as noted above, the Prior Senior Secured Credit Facility was replaced by the 2023 Senior Secured Credit Facility in May 2023).

Effective October 3, 2022, the Prior Senior Secured Credit Facility, as amended, consisted of a $ 375,000 revolving credit facility, together with an option to increase the revolving credit facility and/or obtain incremental term loans in an additional principal amount of up to $ 50,000 in the aggregate (subject to the receipt of additional commitments for any such incremental loan amounts).

Debt issuance costs

The Company did not incur any debt issuance costs during the three and six months ended March 31, 2024, and incurred $ 265 in debt issuance costs during the six months ended March 31, 2023.

During the three and six months ended March 31, 2024.

the Company wrote off $ 926 of debt issuance costs in connection with the Exchangeable Note Repurchases.

The Company's debt issuance costs are being amortized over the related term of the debt using the straight-line method, which is not materially different than the effective interest rate method, and are presented net against long-term debt in the condensed consolidated balance sheets.

The amortization of deferred debt issuance costs is included in interest expense and amounted to approximately $ 262 and $ 676

i3 VERTICALS, Inc.

1 unchanged sentence

(in thousands, except unit, share and per share amounts)

The Prior Senior Secured Credit Facility accrued interest at Term SOFR (based upon an interest period of one, three or six months), plus an adjustment of 0.10 %, plus an applicable margin of 2.25 % to 3.25 %, or the base rate (defined as the highest of (x) the Bank of America prime rate, (y) the federal funds rate plus 0.50 % and (z) Term SOFR, plus an adjustment of 0.10 %, plus 1.00 %), plus an applicable margin of 0.25 % to 1.25 %, in each case depending upon the consolidated total leverage ratio, as defined in the agreement.

Interest was payable at the end of the selected interest period, but no less frequently than quarterly.

Additionally, the Prior Senior Secured Credit Facility required the Company to pay unused commitment fees of 0.15 % to 0.30 % on any undrawn amounts under the revolving credit facility and letter of credit fees of up to 3.25 % on the maximum amount available to be drawn under each letter of credit issued under the agreement.

Debt issuance costs

The Company did not incur any debt issuance costs during the three months ended December 31, 2023, and incurred $ 265 in debt issuance costs during the three months ended December 31, 2022.

The amortization of deferred debt issuance costs is included in interest expense and amounted to approximately $ 414 during the three months ended December 31, 2023, and $ 361 during the three months ended December 31, 2022.

during the three and six months ended March 31, 2024, respectively, and $ 368 and $ 729 during the three and six months ended March 31, 2023, respectively.

i3 Verticals, Inc.

6 unchanged sentences

Each quarter, the Company updates its estimate of the annual effective tax rate, and if the Company’s estimated tax rate changes, it makes a cumulative adjustment in that period.

The Company’s provision for income taxes was a provision of $ 182 for the three months ended December 31, 2023, and a provision of $ 382 during the three months ended December 31, 2022.

The Company’s provision for income taxes was a provision of $ 580 and $ 762 for the three and six months ended March 31, 2024, respectively and a benefit of $ 563 and $ 181 during the three and six months ended March 31, 2023, respectively.

Tax Receivable Agreement

3 unchanged sentences

If a Continuing Equity Owner transfers Common Units but does not assign to the transferee of such units its rights under the Tax Receivable Agreement, such Continuing Equity Owner generally will continue to be entitled to receive payments under the Tax Receivable Agreement arising in respect of a subsequent exchange of such Common Units.

In general, the Continuing Equity Owners’ rights under the Tax Receivable Agreement may not be assigned, sold, pledged or otherwise alienated to any person, other than certain permitted transferees, without (a) the Company's prior written consent, which should not be unreasonably withheld, conditioned or delayed, and (b) such persons

The Company expects to benefit from the remaining 15 % of the tax benefits, if any, that the Company may realize.

During the six months ended March 31, 2024, the Company acquired an aggregate of 40,718 Common Units in i3 Verticals, LLC in connection with the redemption of Common Units from the Continuing Equity Owners.

which resulted in an increase in the tax basis of our investment in i3 Verticals, LLC subject to the provisions of the Tax Receivable Agreement.

As a result of the exchange, during the six months ended March 31, 2024, the Company recognized an increase to its net deferred tax assets in the amount of $ 286 , and corresponding Tax Receivable Agreement liabilities of $ 243 , representing 85 % of the tax benefits due to Continuing Equity Owners.

The deferred tax asset and corresponding Tax Receivable Agreement liability balances were $ 38,009 and $ 40,323 , respectively, as of March 31, 2024.

i3 VERTICALS, Inc.

1 unchanged sentence

(in thousands, except unit, share and per share amounts)

becoming a party to the Tax Receivable Agreement and agreeing to succeed to the applicable Continuing Equity Owner’s interest therein.

The Company expects to benefit from the remaining 15 % of the tax benefits, if any, that the Company may realize.

During the three months ended December 31, 2023, the Company acquired no Common Units in i3 Verticals, LLC in connection with the redemption of Common Units from the Continuing Equity Owners.

The deferred tax asset and corresponding Tax Receivable Agreement liability balances were $ 37,723 and $ 40,079 , respectively, as of December 31, 2023.

Payments to the Continuing Equity Owners related to exchanges through December 31, 2023 will range from $ 0 to $ 3,235 per year and are expected to be paid over the next 23 years.

The amounts recorded as of December 31, 2023, approximate the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S.

Payments to the Continuing Equity Owners related to exchanges through March 31, 2024 will range from $ 0 to $ 3,256 per year and are expected to be paid over the next 24 years.

The amounts recorded as of March 31, 2024, approximate the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S.

federal and state income tax returns.

2 unchanged sentences

At contract inception, the Company determines whether an arrangement is or contains a lease, and for each identified lease, evaluates the classification as operating or financing.

The Company had no finance leases as of December 31, 2023.

The Company had no finance leases as of March 31, 2024.

Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease.

Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised.

The weighted-average remaining lease term at December 31, 2023 and 2022 was two and four years , respectively.

The Company had no significant short-term leases during the three months ended December 31, 2023 and 2022.

The weighted-average remaining lease term at March 31, 2024 and 2023 was two years and four years , respectively.

The Company had no significant short-term leases during the three and six months ended March 31, 2024 and 2023.

The incremental borrowing rates were determined based on a portfolio approach considering the Company’s current secured borrowing rate adjusted for market conditions and the length of the lease term.

The weighted-average discount rate used in the measurement of our lease liabilities was 7.5 % and 6.1 % as of December 31, 2023 and 2022, respectively.

The weighted-average discount rate used in the measurement of our lease liabilities was 7.4 % and 7.3 % as of March 31, 2024 and 2023, respectively.

Operating lease cost is recognized on a straight-line basis over the lease term.

Operating lease costs were $ 1,333 for the three months ended December 31, 2023 and $ 1,504 for the three months ended December 31, 2022, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations.

Total operating lease costs for the three months ended December 31, 2023 include variable lease costs of approximately $ 10 and $ 11 and for the three months ended December 31, 2022, which are primarily comprised of costs of maintenance and utilities and changes in rates, and are determined based on the actual costs incurred during the period.

Operating lease costs were $ 1,318 and $ 2,651 for the three and six months ended March 31, 2024, respectively, and $ 1,405 and $ 2,909 for the three and six months ended March 31, 2023, respectively, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations.

Total operating lease costs include variable lease costs of approximately $ 39 and $ 49 , for the three and six months ended March 31, 2024, respectively, and $ 9 and $ 20 for the three and six months ended March 31, 2023, respectively, which are primarily comprised of costs of maintenance and utilities and changes in rates, and are determined based on the actual costs incurred during the period.

Variable payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities.

Short-term rent expense for the three months ended December 31, 2023 were $ 45 and were $ 35 for the three months ended December 31, 2022, and are included in selling, general and administrative expenses in the condensed consolidated statements of operations.

Short-term rent expense was $ 41 and $ 86 for the three and six months ended March 31, 2024, respectively, and $ 75 and $ 110 for the three and six months ended March 31, 2023, respectively, and are included in selling, general and administrative expenses in the condensed consolidated statements of operations.

i3 VERTICALS, Inc.

1 unchanged sentence

(in thousands, except unit, share and per share amounts)

As of December 31, 2023, maturities of lease liabilities are as follows:

As of March 31, 2024, maturities of lease liabilities are as follows:

Fiscal Years ending September 30:

2024 (nine months remaining) $ 3,833

2024 (six months remaining) $ 2,598

Thereafter 1,261

15 unchanged sentences

Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets.

The carrying value of the Company’s financial instruments, including cash and cash equivalents, restricted cash, settlement assets and obligations, accounts receivable, other assets, accounts payable, and accrued expenses, approximated their fair values as of December 31, 2023 and 2022, because of the relatively short maturity dates on these instruments.

The carrying amount of debt approximates fair value as of December 31, 2023 and 2022, because interest rates on these instruments approximate market interest rates.

The carrying value of the Company’s financial instruments, including cash and cash equivalents, restricted cash, settlement assets and obligations, accounts receivable, other assets, accounts payable, and accrued expenses, approximated their fair values as of March 31, 2024 and 2023, because of the relatively short maturity dates on these instruments.

The carrying amount of debt approximates fair value as of March 31, 2024 and 2023, because interest rates on these instruments approximate market interest rates.

i3 VERTICALS, Inc.

8 unchanged sentences

Contingent consideration paid ( 3,913 )

Balance at December 31, 2023 $ 6,254

Balance at March 31, 2024 $ 3,969

Accrued Contingent Consideration

3 unchanged sentences

Contingent consideration paid ( 5,056 )

Balance at December 31, 2022 $ 20,064

Balance at March 31, 2023 $ 22,259

The fair value of contingent consideration obligations includes inputs not observable in the market and thus represents a Level 3 measurement.

6 unchanged sentences

The Company develops the projected future financial results based on an analysis of historical results, market conditions, and the expected impact of anticipated changes in the Company's overall business and/or product strategies.

Approximately $ 5,905 and $ 6,825 of contingent consideration was recorded in accrued expenses and other current liabilities as of December 31, 2023 and September 30, 2023, respectively.

Approximately $ 349 and $ 1,414 of contingent consideration was recorded in other long-term liabilities as of December 31, 2023 and September 30, 2023, respectively.

Approximately $ 3,868 and $ 6,825 of contingent consideration was recorded in accrued expenses and other current liabilities as of March 31, 2024 and September 30, 2023, respectively.

Approximately $ 101 and $ 1,414 of contingent consideration was recorded in other long-term liabilities as of March 31, 2024 and September 30, 2023, respectively.

Disclosure of Fair Values

1 unchanged sentence

The Company estimates the fair value of the Exchangeable Notes through consideration of quoted market prices of similar instruments, classified as Level 2 as described above.

The estimated fair value of the Exchangeable Notes was $ 108,635 as of December 31, 2023.

The estimated fair value of the Exchangeable Notes was $ 25,043 as of March 31, 2024.

i3 VERTICALS, Inc.

2 unchanged sentences

EQUITY-BASED COMPENSATION

A summary of equity-based compensation expense recognized during the three months ended December 31, 2023 and 2022 is as follows:

Three Months Ended December 31,

A summary of equity-based compensation expense recognized during the three and six months ended March 31, 2024 and 2023 is as follows:

Three Months Ended March 31, Six Months Ended March 31,

2024 2023 2024 2023

Stock options $ 4,554 $ 5,992 $ 9,523 $ 12,280

2 unchanged sentences

Amounts are included in general and administrative expense on the condensed consolidated statements of operations.

Current and deferred income tax benefits of $ 1,078 and $ 1,189 were recognized during the three months ended December 31, 2023 and 2022, respectively.

Current and deferred income tax benefits of $ 927 and $ 2,005 were recognized during the three and six months ended March 31, 2024, respectively, and $ 1,215 and $ 2,404 during the three and six months ended March 31, 2023, respectively.

In May 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) under which the Company may grant up to 3,500,000 stock options and other equity-based awards to employees, directors and officers.

The number of shares of Class A common stock available for issuance under the 2018 Plan includes an annual increase on the first day of each calendar year equal to 4.0 % of the outstanding shares of all classes of the Company's common stock as of the last day of the immediately preceding calendar year, unless the Company’s board of directors determines prior to the last trading day of December of the immediately preceding calendar year that the increase shall be less than 4.0 %.

As of December 31, 2023, equity awards with respect to 2,433,717 shares of the Company's Class A common stock were available for grant under the 2018 Plan.

As of March 31, 2024, equity awards with respect to 1,259,827 shares of the Company's Class A common stock were available for grant under the 2018 Plan.

In September 2020, the Company adopted the 2020 Acquisition Equity Incentive Plan (the “2020 Inducement Plan”) under which the Company may grant up to 1,500,000 stock options and other equity-based awards to individuals that were not previously employees of the Company or its subsidiaries in connection with acquisitions, as a material inducement to the individual's entry into employment with the Company or its subsidiaries within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules.

In May 2021, the Company amended the 2020 Inducement Plan to increase the number of shares of the Company's Class A common stock available for issuance from 1,500,000 to 3,000,000 shares.

As of December 31, 2023, equity awards with respect to 1,230,668 shares of the Company's Class A common stock were available for grant under the 2020 Inducement Plan.

As of March 31, 2024, equity awards with respect to 1,230,668 shares of the Company's Class A common stock were available for grant under the 2020 Inducement Plan.

Share-based compensation expense includes the estimated effects of forfeitures, which will be adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

Stock Options

The Company has issued stock option awards under the 2018 Plan and the 2020 Inducement Plan.

The fair value of the stock option awards during the three months ended December 31, 2023 and during the year ended September 30, 2023 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions:

December 31, 2023 September 30, 2023

The fair value of the stock option awards during the six months ended March 31, 2024 and during the year ended September 30, 2023 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions:

March 31, 2024 September 30, 2023

Expected volatility (1)

10 unchanged sentences

Treasury securities with maturities equivalent to the expected term.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

A summary of stock option activity for the three months ended December 31, 2023 is as follows:

A summary of stock option activity for the six months ended March 31, 2024 is as follows:

Stock Options Weighted Average Exercise Price

3 unchanged sentences

Forfeited ( 230,180 ) 27.57

Outstanding at December 31, 2023 8,463,075 $ 25.13

Exercisable at December 31, 2023 6,030,296 $ 24.65

The weighted-average grant date fair value of stock options granted during the three months ended December 31, 2023 was $ 11.04 .

As of December 31, 2023, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $ 18,211 , which is expected to be recognized over a weighted-average period of 2.14 years.

Outstanding at March 31, 2024 9,258,529 $ 24.52

Exercisable at March 31, 2024 6,602,597 $ 25.08

The weighted-average grant date fair value of stock options granted during the six months ended March 31, 2024 was $ 10.54 .

As of March 31, 2024, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $ 22,046 , which is expected to be recognized over a weighted-average period of 2.68 years.

The Company's policy is to account for forfeitures of stock-based compensation awards as they occur.

The total fair value of stock options that vested during the three months ended December 31, 2023 was $ 6,395 .

The total fair value of stock options that vested during the three and six months ended March 31, 2024 was $ 10,853 and 17,248 , respectively.

Restricted Stock Units

The Company has issued Class A common stock in the form of restricted stock units ("RSUs") under the 2018 Plan.

A summary of activity related to restricted stock units for the three months ended December 31, 2023 is as follows:

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

A summary of activity related to restricted stock units for the six months ended March 31, 2024 is as follows:

Restricted Stock Units Weighted Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 32,084 ) 24.86

Outstanding at December 31, 2023 852,336 $ 24.93

As of December 31, 2023, total unrecognized compensation expense related to unvested RSUs, including an estimate for pre-vesting forfeitures, was $ 12,240 , which is expected to be recognized over a weighted average period of 2.97 years.

$ 698 of RSUs vested during the three months ended December 31, 2023.

Outstanding at March 31, 2024 928,465 $ 23.24

As of March 31, 2024, total unrecognized compensation expense related to unvested RSUs, including an estimate for pre-vesting forfeitures, was $ 14,329 , which is expected to be recognized over a weighted average period of 3.01 years.

The total fair value of RSUs that vested during the three and six months ended March 31, 2024 was $ 3,718 and $ 4,416 , respectively.

COMMITMENTS AND CONTINGENCIES

The Company utilizes office space and equipment under operating leases.

Rent expense under these leases amounted to $ 1,378 and $ 1,539 during the three months ended December 31, 2023 and 2022, respectively.

Rent expense under these leases amounted to $ 1,359 and $ 2,737 during the three and six months ended March 31, 2024, respectively, and $ 1,480 and $ 3,019 during the and three and six months ended March 31, 2023, respectively.

Refer to Note 9 for further discussion and a table of the future minimum payments under these leases.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

Minimum Processing Commitments

2 unchanged sentences

If the Company submits a number of transactions that is lower than the minimum, it is required to pay to the processor the fees the processor would have received if the Company had submitted the required minimum number of transactions.

As of December 31, 2023, such minimum fee commitments were as follows:

As of March 31, 2024, such minimum fee commitments were as follows:

Fiscal Years ending September 30:

2024 (nine months remaining) $ 3,425

2024 (six months remaining) $ 2,177

Total $ 3,205

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

With respect to all legal, regulatory and governmental proceedings, and in accordance with ASC 450-20, Contingencies—Loss Contingencies , the Company considers the likelihood of a negative outcome.

5 unchanged sentences

After taking into consideration the evaluation of such legal matters by the Company's legal counsel, the Company's management believes at this time such matters will not have a material impact on the Company's consolidated balance sheet, results of operations or cash flows.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

S&S Litigation

18 unchanged sentences

On September 29, 2023, all Defendants-Appellants filed a Petition for Rehearing En Banc, which the Plaintiffs-Appellees opposed on October 12, 2023.

The parties await a decision on that motion.

As a result of Defendants’ petition, the Fifth Circuit held its mandate, effectively staying the effective date of its decision, but the Fifth Circuit

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

ultimately denied the petition for rehearing on February 22, 2024, sending the case back to the 19th Judicial District Court for the Parish of East Baton Rouge, where the case remains pending.

The assets of the S&S business were acquired from South Pointe by the Company in 2018 for $ 17,000 , including upfront cash consideration and contingent consideration, and provides software and payments services within the Company’s Public Sector vertical to local government agencies almost exclusively in Louisiana.

5 unchanged sentences

However, after taking into consideration the evaluation of such matters by the Company’s legal counsel, the Company’s management believes at this time that the anticipated outcome of any existing or potential indemnification liabilities related to this matter will not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

RELATED PARTY TRANSACTIONS

2 unchanged sentences

See Note 8 for further information.

As of December 31, 2023, the total amount due under the Tax Receivable Agreement was $ 40,079 .

As of March 31, 2024, the total amount due under the Tax Receivable Agreement was $ 40,323 .

The Company determines its operating segments based on ASC 280, Segment Reporting , in alignment with how the chief operating decision-making group monitors and manages the performance of the business as well as the level at which financial information is reviewed.

12 unchanged sentences

Processing margin is equal to revenue less other cost of services plus residuals expense, which are a component of other cost of services.

The following is a summary of reportable segment operating performance for the three months ended December 31, 2023 and 2022.

As of and for the Three Months Ended December 31, 2023

The following is a summary of reportable segment operating performance for the three and six months ended March 31, 2024 and 2023.

As of and for the Three Months Ended March 31, 2024

Software and Services Merchant Services Other Total

10 unchanged sentences

Goodwill $ 288,822 $ 121,950 $ — $ 410,772

As of and for the Three Months Ended December 31, 2022

As of and for the Six Months Ended March 31, 2024

Software and Services Merchant Services Other Total

10 unchanged sentences

Goodwill $ 288,822 $ 121,950 $ — $ 410,772

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

As of and for the Three Months Ended March 31, 2023

Software and Services Merchant Services Other Total

Revenue $ 60,797 $ 33,094 $ ( 19 ) $ 93,872

Other costs of services ( 4,229 ) ( 15,719 ) 18 ( 19,930 )

Residuals 799 10,039 ( 9 ) 10,829

Processing Margin $ 57,367 $ 27,414 $ ( 10 ) $ 84,771

Residuals ( 10,829 )

Selling, general and administrative ( 57,204 )

Depreciation and amortization ( 9,015 )

Change in fair value of contingent consideration ( 2,279 )

Income from operations $ 5,444

Total assets $ 620,126 $ 205,898 $ 57,002 $ 883,026

Goodwill $ 287,092 $ 121,950 $ — $ 409,042

As of and for the Six Months Ended March 31, 2023

Software and Services Merchant Services Other Total

Revenue $ 114,010 $ 65,928 $ ( 37 ) $ 179,901

Other costs of services ( 7,752 ) ( 31,286 ) 39 ( 38,999 )

Residuals 1,322 19,848 ( 20 ) 21,150

Processing margin $ 107,580 $ 54,490 $ ( 18 ) $ 162,052

Residuals ( 21,150 )

Selling, general and administrative ( 108,207 )

Depreciation and amortization ( 17,691 )

Change in fair value of contingent consideration ( 3,722 )

Income from operations $ 11,282

Total assets $ 620,126 $ 205,898 $ 57,002 $ 883,026

Goodwill $ 287,092 $ 121,950 $ — $ 409,042

The Company has not disclosed expenditures on long-lived assets as such expenditures are not reviewed by or provided to the chief operating decision maker.

8 unchanged sentences

As such, future redemptions or direct exchanges of Common Units of i3 Verticals, LLC by the Continuing Equity Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when i3 Verticals, LLC has positive or negative net assets, respectively.

As of December 31, 2023 and 2022, respectively, i3 Verticals, Inc.

As of March 31, 2024 and 2023, respectively, i3 Verticals, Inc.

owned 23,416,518 and 23,167,730 of i3 Verticals, LLC's Common Units, representing a 70.0 % and 69.6 % economic ownership interest in i3 Verticals, LLC.

The following table summarizes the impact on equity due to changes in the Company's ownership interest in i3 Verticals, LLC:

Three Months Ended December 31,

Six Months Ended March 31,

Net income attributable to non-controlling interest

Transfers to (from) non-controlling interests:

Allocation of equity to (from) non-controlling interests 2,450 ( 1,906 )

Net transfers to (from) non-controlling interests 2,450 ( 1,906 )

Change from net income (loss) attributable to non-controlling interests and transfers to non-controlling interests $ 2,888 $ ( 1,497 )

$ 1,908 $ 181

Transfers (from) to non-controlling interests:

Redemption of common units in i3 Verticals, LLC ( 384 ) ( 86 )

Allocation of equity to non-controlling interests 3,750 299

Net transfers to non-controlling interests 3,366 213

Change from net income attributable to non-controlling interests and net transfers to non-controlling interests $ 5,274 $ 394

EARNINGS PER SHARE

6 unchanged sentences

(in thousands, except unit, share and per share amounts)

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the three months ended December 31, 2023 and 2022:

Three Months Ended December 31,

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the three and six months ended March 31, 2024 and 2023:

Three Months Ended March 31, Six Months Ended March 31,

2024 2023 2024 2023

Basic net income (loss) per share:

Net income (loss)

$ 3,348 $ ( 192 ) $ 4,884 $ ( 23 )

Net income attributable to non-controlling interest

Net income (loss) attributable to non-controlling interest

1,470 ( 228 ) 1,908 181

Net income (loss) attributable to Class A common stockholders

6 unchanged sentences

Net income attributable to Class A common stockholders $ 1,878 $ 36 $ 2,976

Reallocation of net income assuming conversion of common units 331

Net income attributable to Class A common stockholders - diluted 1,429

Reallocation of net loss assuming conversion of common units (2)(3)

Net income (loss) attributable to Class A common stockholders - diluted

1,878 ( 135 ) 2,976

Weighted average shares of Class A common stock outstanding

23,331,239 23,135,898 23,299,214

Weighted average effect of dilutive securities (2)

387,235 11,133,242 427,506

Weighted average shares of Class A common stock outstanding - diluted

Diluted net income per share $ 0.04

23,718,474 34,269,140 23,726,720

For the three months ended December 31, 2022, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share.

Diluted net income (loss) per share $ 0.08 $ 0.00 $ 0.13

__________________________

For the six months ended March 31, 2023, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share.

The following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net loss per share of Class A common stock:

10,118,142 weighted average shares of Class B common stock for the three months ended December 31, 2022, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive.

5,652,711 stock options for the three months ended December 31, 2022, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and

696,427 shares for the three months ended December 31, 2022, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because of the effect of including them would have been anti-dilutive.

For the three months ended December 31, 2023, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net loss per share of Class A common stock:

7,496,394 stock options for the three months ended December 31, 2023, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive.

10,114,598 weighted average shares of Class B common stock for the six months ended March 31, 2023, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive.

5,165,478 stock options for the six months ended March 31, 2023, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and

633,453 shares for the six months ended March 31, 2023, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because of the effect of including them would have been anti-dilutive.

i3 VERTICALS, Inc.

1 unchanged sentence

(in thousands, except unit, share and per share amounts)

For the three and six months ended March 31, 2024 and the three months ended March 31, 2023, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net income per share of Class A common stock:

10,091,604 and 10,092,504 weighted average shares of Class B common stock for the three and six months ended March 31, 2024, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, and

7,852,595 and 8,246,542 stock options for the three and six months ended March 31, 2024, respectively, and 4,018,042 stock options for the three months ended March 31, 2023, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive.

The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 8 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period.

The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of pro forma diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the period.

In September 2022 the Company made the irrevocable election to settle the principal portion of its Exchangeable Notes only in cash, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable.

7 unchanged sentences

SIGNIFICANT NON-CASH TRANSACTIONS

The Company engaged in the following significant non-cash investing and financing activities during the three months ended December 31, 2023 and 2022:

Three months ended December 31,

The Company engaged in the following significant non-cash investing and financing activities during the six months ended March 31, 2024 and 2023:

Six months ended March 31,

Acquisition date fair value of contingent consideration in connection with business combinations $ 170 $ 760

Debt issuance costs financed with proceeds from the 2023 Senior Secured Credit Facility $ — $ 178

Consideration accrued for December 2023 residual buyout $ 476 $ —

Consideration accrued for residual buyouts $ 252 $ —

Right-of-use assets obtained in exchange for operating lease obligations $ 1,279 $ 1,098

SUBSEQUENT EVENTS

Exchangeable Note Repurchases

On January 18, 2024, the Company paid $ 87,391 to repurchase $ 90,777 in aggregate principal amount of its Exchangeable Notes and to repay approximately $ 386 in accrued interest on the repurchased portion of the Exchangeable Notes pursuant to agreements entered into with certain holders of the Exchangeable Notes as described in Note 7.

The Company wrote off $ 926 of debt issuance costs in connection with the repurchase transactions.

The Company recorded a gain on retirement of debt of $ 2,397 due to the estimated acquisition price exceeding the net carrying amount of the repurchased portion of the Exchangeable Notes, adjusted for unamortized debt issuance costs and costs and third-party fees related to the transaction.

i3 VERTICALS, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except unit, share and per share amounts)

Note Hedge and Warrant Unwind Transactions

Also on January 18, 2024, in connection with the Exchangeable Note Repurchases, the Company and i3 Verticals, LLC terminated the corresponding portions of the Note Hedge Transactions ("Note Hedge Unwinds") and Warrants ("Warrant Unwinds").

i3 Verticals, LLC received $ 987 for the sale of the Note Hedge Unwinds and the Company paid $ 433 for the repurchase of the Warrant Unwinds.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements