What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-16 · 254 added, 280 removed, 254 unchanged (68% of the section changed)

16 unchanged sentences

• any changes in card association and debit network fees or products;

• any failure to comply with the rules established by payment networks or standards established by third-party processor;

• any failure to comply with the rules established by payment networks or standards established by third-party processors;

• any proposed acquisitions or any risks associated with completed acquisitions;

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We cannot assure you that future developments affecting us will be those that we have anticipated.

These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause our actual results or performance to be materially different

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from those expressed or implied by these forward-looking statements.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

Should one or more of these risks or uncertainties

materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject.

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Results of Operations

This section includes a discussion and analysis of our results of operations for the three months ended June 30, 2021 (or second quarter 2021) compared to the three months ended June 30, 2020 (or second quarter 2020), and the six months ended June 30, 2021 (or first half 2021) compared to the six months ended June 30, 2020 (or first half 2020).

This section includes a discussion and analysis of our results of operations for the three months ended September 30, 2021 (or third quarter 2021) compared to the three months ended September 30, 2020 (or third quarter 2020), and the nine months ended September 30, 2021 (or 2021 period) compared to the nine months ended September 30, 2020 (or 2020 period).

We have derived this data, except key indicators for merchant bankcard processing dollar values and transaction volumes, from our Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and our audited Consolidated Financial Statements included in our latest Annual Report on Form 10-K.

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Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020

(dollars in thousands) Three Months Ended June 30,

Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020

(dollars in thousands) Three Months Ended September 30,

2021 2020 Change % Change

REVENUES $ 125,014 $ 92,356 $ 32,658 35.4 %

Revenue $ 132,542 $ 108,962 $ 23,580 21.6 %

Operating expenses

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Total operating expenses 124,292 101,920 22,372 22.0 %

Income from operations 7,405 4,031 3,374 83.7 %

OTHER EXPENSES:

Operating income 8,250 7,042 1,208 17.2 %

Other (expenses) income

Interest expense (8,155) (13,471) 5,316 (39.5) %

Debt extinguishment and modification costs (8,322) — (8,322) nm*

Debt extinguishment and modification costs — (1,523) 1,523 (100.0) %

Gain on sale of business — 107,239 (107,239) (100.0) %

Other income, net 146 190 (44) (23.2) %

Total other expenses, net (15,392) (11,474) (3,918) 34.1 %

Loss before income taxes (7,987) (7,443) (544) 7.3 %

Total other (expenses) income, net (8,009) 92,435 (100,444) (108.7) %

Income before income taxes 241 99,477 (99,236) (99.8) %

Income tax expense 790 13,737 (12,947) (94.2) %

Net loss $ (9,477) $ (7,858) $ (1,619) 20.6 %

*Calculation is not meaningful ("nm").

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Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020

(dollars in thousands) Six Months Ended June 30,

Net (loss) income $ (549) $ 85,740 $ (86,289) (100.6) %

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

(dollars in thousands) Nine Months Ended September 30,

2021 2020 Change % Change

REVENUES $ 238,311 $ 189,289 $ 49,022 25.9 %

Revenue $ 370,853 $ 298,251 $ 72,602 24.3 %

Operating expenses

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Total operating expenses 350,671 283,619 67,052 23.6 %

Income from operations 11,932 7,590 4,342 57.2 %

OTHER EXPENSES:

Interest (expense) income (16,453) (21,983) 5,530 (25.2) %

Debt extinguishment and modification costs (8,322) (376) (7,946) nm*

Other (expenses) income, net (54) 224 (278) (124.1) %

Total other expenses, net (24,829) (22,135) (2,694) 12.2 %

Loss before income taxes (12,897) (14,545) 1,648 (11.3) %

Income tax benefit (741) (818) 77 (9.4) %

Net loss $ (12,156) $ (13,727) $ 1,571 (11.4) %

*Calculation is not meaningful ("nm").

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The following table shows our reportable segments' financial performance data and selected performance measures for the three months ended June 30, 2021 compared to the three months ended June 30, 2020:

(in thousands) Three Months Ended June 30,

Operating income 20,182 14,632 5,550 37.9 %

Other (expenses) income

Interest expense (24,608) (35,454) 10,846 (30.6) %

Debt extinguishment and modification costs (8,322) (1,899) (6,423) 338.2 %

Gain on sale of business — 107,239 (107,239) (100.0) %

Other income, net 92 414 (322) (77.8) %

Total other (expenses) income, net (32,838) 70,300 (103,138) (146.7) %

(Loss) income before income taxes (12,656) 84,932 (97,588) (114.9) %

Income tax expense 49 12,919 (12,870) (99.6) %

Net (loss) income $ (12,705) $ 72,013 $ (84,718) (117.6) %

The following table shows our reportable segments' financial performance data and selected performance measures for the three months ended September 30, 2021 compared to the three months ended September 30, 2020:

(in thousands) Three Months Ended September 30,

2021 2020 Change % Change

Consumer Payments:

Revenue $ 119,625 $ 81,707 $ 37,918 46.4 %

Revenues $ 124,027 $ 99,301 $ 24,726 24.9 %

Operating expenses 109,371 88,203 21,168 24.0 %

Income from operations $ 14,448 $ 7,270 $ 7,178 98.7 %

Operating income $ 14,656 $ 11,098 $ 3,558 32.1 %

Operating margin 11.8% 11.2%

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Commercial Payments:

Revenue $ 4,041 $ 5,654 $ (1,613) (28.5) %

Revenues $ 4,181 $ 4,995 $ (814) (16.3) %

Operating expenses 4,210 4,826 (616) (12.8) %

Income (loss) from operations $ 21 $ 475 $ (454) (95.6) %

Operating (loss) income $ (29) $ 169 $ (198) (117.2) %

Operating margin (0.7)% 3.4%

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Integrated Partners:

Revenue $ 1,348 $ 4,995 $ (3,647) (73.0) %

Revenues $ 4,334 $ 4,666 $ (332) (7.1) %

Operating expenses 3,114 4,413 (1,299) (29.4) %

Income from operations $ 165 $ 845 $ (680) (80.5) %

Operating income $ 1,220 $ 253 $ 967 382.2 %

Operating margin 28.1% 5.4%

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Merchant bankcard transaction volume 160 371 (211) (56.9) %

Income from operations of reportable segments $ 14,634 $ 8,590 $ 6,044 70.4 %

Operating income of reportable segments $ 15,847 $ 11,520 $ 4,327 37.6 %

Corporate expense (7,597) (4,478) (3,119) (69.7) %

Consolidated income from operations $ 7,405 $ 4,031 $ 3,374 83.7 %

Consolidated operating income $ 8,250 $ 7,042 $ 1,208 17.2 %

Corporate depreciation and amortization $ 269 $ 290 $ (21) (7.2) %

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Merchant bankcard transaction volume 151,738 123,018 28,720 23.3 %

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The following table shows our reportable segments' financial performance data and selected performance measures for the six months ended June 30, 2021 compared to the six months ended June 30, 2020:

(in thousands) Six Months Ended June 30,

The following table shows our reportable segments' financial performance data and selected performance measures for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020:

(in thousands) Nine Months Ended September 30,

2021 2020 Change % Change

Consumer Payments:

Revenue $ 228,018 $ 167,738 $ 60,280 35.9 %

Revenues $ 352,045 $ 267,039 $ 85,006 31.8 %

Operating expenses 309,578 241,519 68,059 28.2 %

Income from operations $ 27,811 $ 14,422 $ 13,389 92.8 %

Operating income $ 42,467 $ 25,520 $ 16,947 66.4 %

Operating margin 12.1 % 9.6 %

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Commercial Payments:

Revenue $ 7,541 $ 12,022 $ (4,481) (37.3) %

Revenues $ 11,722 $ 17,017 $ (5,295) (31.1) %

Operating expenses 12,139 15,609 (3,470) (22.2) %

(Loss) income from operations $ (388) $ 1,239 $ (1,627) (131.3) %

Operating income (loss) $ (417) $ 1,408 $ (1,825) (129.6) %

Operating margin (3.6) % 8.3 %

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Integrated Partners:

Revenue $ 2,752 $ 9,529 $ (6,777) (71.1) %

Revenues $ 7,086 $ 14,195 $ (7,109) (50.1) %

Operating expenses 5,609 12,729 (7,120) (55.9) %

Income from operations $ 257 $ 1,213 $ (956) (78.8) %

Operating income $ 1,477 $ 1,466 $ 11 0.8 %

Operating margin 20.8 % 10.3 %

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Merchant bankcard transaction volume 390 1,207 (817) (67.7) %

Income from operations of reportable segments $ 27,680 $ 16,874 $ 10,806 64.0 %

Operating income of reportable segments $ 43,527 $ 28,394 $ 15,133 53.3 %

Corporate expense (23,345) (13,762) (9,583) (69.6) %

Consolidated income from operations $ 11,932 $ 7,590 $ 4,342 57.2 %

Consolidated operating income $ 20,182 $ 14,632 $ 5,550 37.9 %

Corporate depreciation and amortization $ 834 $ 886 $ (52) (5.9) %

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Merchant bankcard transaction volume 430,140 336,173 93,967 28.0 %

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Impact of COVID-19 on Results and Trends

The outbreak of COVID-19 in the United States, which was declared a pandemic by the World Health Organization on March 11, 2020, adversely affected commercial activity and contributed to a significant decline in economic activity in 2020, particularly in the second quarter of 2020.

Starting in mid-March 2020 through April 2020, COVID-19 had a significant negative affect on our results.

This impact was evident in a decline in merchant bankcard volume and our revenue particularly during the period of restrictive shelter-in-place requirements instituted across the United States toward the end of March 2020 through April 2020.

In May 2020, as shelter in place restrictions began to be lifted and regional economies started to reopen, our processing volumes began to return, and revenue growth was supplemented by the acceleration of certain specialized product offerings and ecommerce payment transactions.

This recovery momentum continued through the second half of 2020 and first half of 2021.

While there continues to be uncertainty regarding the future economic impacts of COVID-19 variants, our operating results reflect a significant recovery from the pandemic's negative affects during the first half of 2020.

The pandemic’s future impact on the overall economy and our results are beyond our ability to predict or control.

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Consolidated revenue

Our consolidated revenue in second quarter 2021 of $125.0 million increased by $32.7 million, or 35.4%, from revenue in second quarter 2020 of $92.4 million.

Starting in mid-March 2020 through April 2020, COVID-19 had a significant negative effect on our results.

This impact was evident in a decline in merchant bankcard volume and our revenues particularly during the period of restrictive shelter-in-place requirements instituted across the United States toward the end of March 2020 through April 2020.

In May 2020, as shelter-in-place restrictions began to be lifted and regional economies started to reopen, our processing volumes began to return, and revenue growth was supplemented by the acceleration of certain specialized product offerings and e-commerce payment transactions.

This recovery momentum continued through the second half of 2020 and first nine months of 2021.

The pandemic's impact on the overall economy and on our comparative historical results and future results are beyond our ability to quantify predict or control.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Consolidated revenues

Our consolidated revenues in the third quarter of 2021 of $132.5 million increased by $23.6 million, or 21.6%, from revenues in the third quarter of 2020 of $109.0 million.

Revenue growth of $24.7 million in our Consumer Payments segment was partially offset by revenue declines of $0.8 million and $0.3 million in our Commercial Payments and Integrated Partners segments, respectively.

Revenue in Consumer Payments segment

Consumer payments revenue in the second quarter 2021 of $119.6 million increased $37.9 million, or 46.4%, compared to revenue in second quarter 2020 of $81.7 million.

This increase was driven by $36.2 million, or 47.6%, revenue growth from our base merchant business, and was supplemented by $1.7 million, or 30.6%, revenue growth from specialized ecommerce merchants.

Starting in March 2020 through April 2020, COVID-19 had a significant negative affect on our results.

This impact was evident in a decline in merchant bankcard processing dollar value ("volume") and revenue during the period of restrictive shelter-in-place requirements instituted across the United States toward the end of March 2020 through April 2020.

This recovery momentum continued through the second half of 2020 and first half of 2021.

The pandemic’s negative impact to second quarter 2020 revenue contributed to the exceptionally high second quarter 2021 comparative revenue growth rate;

however, the pandemic’s precise impact to the second quarter revenue growth rate is not quantifiable by the Company.

Merchant bankcard volume in the second quarter of 2021 of $13.9 billion increased by $4.9 billion, or 54.0%, as compared with $9.0 billion in the second quarter of 2020.

Merchant bankcard transactions of 150.6 million in the second quarter of 2021 increased by 62.2%, as compared with 92.8 million in the second quarter of 2020.

Average ticket (calculated by dividing bankcard processing dollar value by the associated number of transactions processed) of $92.14 in second quarter 2021 decreased by 5.1%, as compared with $97.06 in second quarter 2020.

Revenues in Consumer Payments segment

Consumer payments revenues in the third quarter 2021 of $124.0 million increased $24.7 million, or 24.9%, compared to revenues in the third quarter of 2020 of $99.3 million.

This increase was driven by $30.0 million, or 33.3%, in revenue growth from our base merchant business, and was partially offset by a $5.3 million, or 58.0%, revenue decline from specialized e-commerce merchants.

Merchant bankcard volume in the third quarter of 2021 of $13.8 billion increased by $2.6 billion, or 23.0%, as compared with $11.2 billion in the third quarter of 2020.

Merchant bankcard transactions of 151.5 million in the third quarter of 2021 increased by 23.6%, as compared with 122.6 million in the third quarter of 2020.

Average ticket (calculated by dividing bankcard processing dollar value by the associated number of transactions processed) of $91.19 in the third quarter of 2021 decreased by 0.5%, as compared with $91.62 in the third quarter of 2020.

The pandemic's influence on consumer behavior impacted the comparative volume, vertical industry mix and overall consumer spending trends.

Following the pandemic declaration in March 2020, consumers began to conduct fewer payment transactions at higher average tickets, and card-not-present transactions increased.

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Revenue in Commercial Payments segment

Commercial Payments revenue in second quarter 2021 of $4.0 million decreased by $1.6 million, or 28.5%, compared to revenue in second quarter 2020 of $5.7 million.

Revenue in this segment is derived primarily from the accounts payable automated solutions business and from our curated managed services business.

Revenue from the accounts payable automated solutions business in the second quarter of 2021 of $1.6 million increased $0.2 million, or 16.3%, from $1.4 million in second quarter of 2020.

This increase was due to increased volume from existing customers.

Revenue from our curated managed services business in the second quarter of 2021 of $2.4 million decreased by $1.8 million, or 43.3%, from revenue in the second quarter of 2020 of $4.2 million.

This decrease was driven by a decline and curtailment in 2020 of a customer’s merchant financing program in response to the COVID-19 related economic conditions and subsequent changes in the customer’s business model.

However, this customer initiated a new supplier enablement program during the first quarter of 2021 which contributed $1.1 million of revenue in second quarter 2021.

Revenue in Integrated Partners segment

Integrated Partners revenue in the second quarter of 2021 of $1.3 million decreased by $3.6 million, or 73.0%, compared to revenue in the second quarter of 2020 of $5.0 million.

PRET comprised $0.8 million and $4.5 million of this segment's revenue in the second quarter of 2021 and 2020, respectively.

Revenues in Commercial Payments segment

Commercial Payments revenues in the third quarter of 2021 of $4.2 million decreased by $0.8 million, or 16.3%, compared to revenues in the third quarter of 2020 of $5.0 million.

Revenues in this segment are derived primarily from the accounts payable automated solutions business and from our curated managed services business.

Revenues from the accounts payable automated solutions business in the third quarter of 2021 of $1.6 million increased $0.1 million, or 3.9%, from $1.5 million in the third quarter of 2020.

This increase was moderate due to increased volume from customers with lower yield.

Revenues from our curated managed services business in the third quarter of 2021 of $2.6 million decreased by $0.9 million, or 25.7%, from revenues in the third quarter of 2020 of $3.5 million.

This decrease was driven by a decline and curtailment in 2020 of a customer's merchant financing program in response to the COVID-19 related economic

conditions and subsequent changes in the customer's business model.

However, this customer initiated a new supplier enablement program during the first quarter of 2021 which contributed $1.0 million of additional revenue in the third quarter of 2021.

Revenues in Integrated Partners segment

Integrated Partners revenues in the third quarter of 2021 of $4.3 million decreased by $0.3 million, or 7.1%, compared to revenues in the third quarter of 2020 of $4.7 million.

PRET comprised $0.8 million and $4.1 million of this segment's revenues in the third quarter of 2021 and 2020, respectively.

Through September 22, 2020, PRET was comprised of our RentPayment and Landlord Station businesses.

RentPayment, which was sold on September 22, 2020, generated revenue of $4.4 million in the second quarter of 2020.

RentPayment, which was sold on September 22, 2020, generated revenue of $3.9 million in the third quarter of 2020.

Simultaneous with the sale of RentPayment, PRET entered into revenue-producing agreements with the buyer to provide ongoing technology support and payment processing services, which offers us an opportunity to expand this relationship and provide payment processing services to existing customers of the buyer.

Revenue in the second quarter 2021 of $0.8 million from PRET’s ongoing business increased $0.7 million, or 547.1%, compared with revenue of $0.1 million in the second quarter of 2020.

Priority PayRight Health Solutions and PHOT comprise the remainder of this segment's revenue.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Consolidated revenue

Our consolidated revenue in the first half of 2021 of $238.3 million increased by $49.0 million, or 25.9%, from revenue in the first half of 2020 of $189.3 million.

Revenues in the third quarter 2021 of $0.8 million from PRET's ongoing business increased $0.6 million, or 274.2%, compared with revenues of $0.2 million in the third quarter of 2020.

Finxera Holdings, Inc.

("Finxera"), which was acquired on September 17, 2021, contributed $3.0 million to this segment’s revenues in the third quarter of 2021.

Priority PayRight Health Solutions and PHOT contributed $0.6 million of this segment's revenues in the third quarter of 2021.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Consolidated revenues

Our consolidated revenues in the first nine months of 2021 of $370.9 million increased by $72.6 million, or 24.3%, from revenues in the first nine months of 2020 of $298.3 million.

Revenue growth of $85.0 million in our Consumer Payments segment was partially offset by revenue declines of $5.3 million and $7.1 million in our Commercial Payments and Integrated Partners segments, respectively.

Revenue in Consumer Payments segment

Consumer payments revenue in the first half of 2021 of $228.0 million increased $60.3 million, or 35.9%, compared to revenue in the first half of 2020 of $167.7 million.

This increase was driven by $48.8 million, or 30.6%, revenue growth from our base merchant business, and was supplemented by $11.4 million, or 137.9%, revenue growth from specialized ecommerce merchants.

Starting in March 2020 through April 2020, COVID-19 had a significant negative affect on our results.

This impact was evident in a decline in merchant bankcard volume and revenue during the period of restrictive shelter-in-place requirements instituted across the United States toward the end of March 2020 through April 2020.

This recovery momentum continued through the second half of 2020 and first half of 2021.

The pandemic’s negative impact to first half 2020 revenue contributed to the exceptionally high first half 2021 comparative revenue growth rate;

however, the pandemic’s precise impact to the first half revenue growth rate is not quantifiable by the Company.

Merchant bankcard volume in the first half of 2021 of $25.7 billion increased by $6.4 billion, or 32.7%, as compared with $19.4 billion in the first half of 2020.

Merchant bankcard transactions of 278.1 million in the first half of 2021 increased by 31.0%, as compared with 212.3 million in the first half of 2020.

Average ticket of $92.59 in the first half of 2021 increased 1.3%, as compared with $91.38 in first half of 2020.

The pandemic’s influence on consumer behavior impacted the comparative volume, vertical industry mix and overall consumer spending trends.

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Revenue in Commercial Payments segment

Commercial Payments revenue in the first half of 2021 of $7.5 million decreased by $4.5 million, or 37.3%, compared to revenue in the first half of 2020 of $12.0 million.

Revenues in Consumer Payments segment

Consumer payments revenues in the first nine months of 2021 of $352.0 million increased $85.0 million, or 31.8%, compared to revenues in the first nine months of 2020 of $267.0 million.

This increase was driven by $87.6 million, or 35.1%, revenue growth from our base merchant business, and a $2.6 million, or 14.9%, decrease in revenue from specialized e-commerce merchants.

Merchant bankcard volume in the first nine months of 2021 of $39.6 billion increased by $8.9 billion, or 29.2%, as compared with $30.6 billion in the first nine months of 2020.

Merchant bankcard transactions of 429.6 million in the first nine months of 2021 increased by 28.3%, as compared with 334.9 million in the first nine months of 2020.

Average ticket of $92.09 in the first nine months of 2021 increased 0.7%, as compared with $91.47 in first nine months of 2020.

Revenues in Commercial Payments segment

Commercial Payments revenues in the first nine months of 2021 of $11.7 million decreased by $5.3 million, or 31.1%, compared to revenues in the first nine months of 2020 of $17.0 million.

Revenue in this segment is derived primarily from the accounts payable automated solutions business and from our curated managed services business.

Revenue from the accounts payable automated solutions business in the first half of 2021 of $3.3 million increased $0.3 million, or 10.5%, from $3.0 million in the first half of 2020.

This increase was due to increased business from existing customers.

Revenue from our curated managed services business in the first half of 2021 of $4.2 million decreased by $4.8 million, or 53.1%, from revenue in first half 2020 of $9.0 million.

Revenue from the accounts payable automated solutions business in the first nine months of 2021 of $4.9 million increased $0.4 million, or 8.9%, from $4.5 million in the first nine months of 2020.

This increase was due to increased volume from customers with lower yield.

Revenue from our curated managed services business in the first nine months of 2021 of $6.8 million decreased by $5.7 million, or 45.6%, from revenue in the first nine months 2020 of $12.5 million.

This decrease was driven by a decline and curtailment in 2020 of a customer's merchant financing program in response to the COVID-19 related economic conditions and subsequent changes in the customer's business model.

However, this customer initiated a new supplier enablement program during the first quarter 2021 which contributed $1.5 million of revenue in the first half of 2021.

Revenue in Integrated Partners segment

Integrated Partners revenue in the first half of 2021 of $2.8 million, decreased by $6.8 million, or 71.1%, compared to revenue in the first half of 2020 of $9.5 million.

PRET comprised $1.6 million and $8.5 million of this segment's revenue in the first half of 2021 and 2020, respectively.

However, this customer initiated a new supplier enablement program during the first quarter 2021 which contributed $1.7 million of additional revenue in the first nine months of 2021.

Revenues in Integrated Partners segment

Integrated Partners revenues in the first nine months of 2021 of $7.1 million, decreased by $7.1 million, or 50.1%, compared to revenues in the first nine months of 2020 of $14.2 million.

PRET comprised $2.3 million and $12.6 million of this segment's revenues in the first nine months of 2021 and 2020, respectively.

Through September 22, 2020, PRET was comprised of our RentPayment and our Landlord Station businesses.

RentPayment, which was sold on September 22, 2020, generated revenue of $8.2 million in the first half of 2020.

RentPayment, which was sold on September 22, 2020, generated revenue of $12.1 million in the first nine months of 2020.

Revenue in the first half of 2021 of $1.6 million from PRET’s ongoing business increased $1.3 million, or 562.7%, compared with revenue of $0.2 million in the in the first half of 2020.

Priority PayRight Health Solutions and PHOT comprise the remainder of this segment's revenue.

Revenue in the first nine months of 2021 of $2.3 million from PRET's ongoing business increased $1.9 million, or 475.0%, compared with revenue of $0.4 million in the in the first nine months of 2020.

Finxera, which was acquired on September 17, 2021, contributed $3.0 million to this segment’s revenue in the first nine months of 2021.

Priority PayRight Health Solutions and PHOT contributed $1.8 million of this segment's revenue in the first nine months of 2021.

Consolidated Operating expenses

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Our consolidated operating expenses in the second quarter of 2021 of $117.6 million increased $29.3 million, or 33.2%, from consolidated operating expenses in the second quarter of 2020 of $88.3 million.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Our consolidated operating expenses in the third quarter of 2021 of $124.3 million increased $22.4 million, or 22.0%, from consolidated operating expenses in the third quarter of 2020 of $101.9 million.

This increase was driven by an increase in costs of services.

Costs of services is the second quarter of 2021 of $89.8 million increased by $27.4 million or 44.0%, from costs of services in the second quarter of 2020 of $62.4 million due to higher revenues in the second quarter of 2021.

Depreciation and amortization expense in the second quarter of 2021 of $10.7 million increased by $0.4 million, or 3.5%, from depreciation and amortization expense in the second quarter of 2020 of $10.4 million.

Salary and employee benefits expense in the second quarter of 2021 of $10.4 million increased $0.8 million, or 8.3%, from salary and employee benefits expense in the second quarter of 2020 of $9.6 million, primarily attributable to higher incentive compensation accruals driven by our improved financial results and higher stock-based compensation.

Selling, General & Administrative ("SG&A") expense in the second quarter of 2021 of $6.7 million increased $0.7 million, or 11.6%, from SG&A expense in the second quarter of 2020 of $6.0 million, primarily attributable to acquisition and corporate financing activities.

During the second quarter of 2021, Corporate SG&A expense included $1.8 million of professional fees and expenses incurred in connection with the pending acquisition of Finxera, the April 2021 debt refinancing and issuance of redeemable senior preferred stock, and other acquisition activities.

During the second quarter of 2020, Corporate SG&A expense included $0.5 million of professional fees and expenses primarily incurred in connection with acquisition and litigation activities, and the Integrated Partners segment SG&A expense included $0.8 million of acquisition-related transition services.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Our consolidated operating expenses in the first half of 2021 of $226.4 million increased $44.7 million, or 24.6%, from consolidated operating expenses in the first half of 2020 of $181.7 million.

Costs of services is the third quarter of 2021 of $92.8 million increased by $17.9 million or 23.8%, from costs of services in the third quarter of 2020 of $74.9 million due to higher revenues in the third quarter of 2021.

Depreciation and amortization expense in the third quarter of 2021 of $12.3 million increased by $2.1 million, or 20.3%, from depreciation and amortization expense in the third quarter of 2020 of $10.3 million primarily due to amortization expense from intangible assets acquired during the period.

Salary and employee benefits expense in the third quarter of 2021 of $11.9 million increased $1.9 million, or 19.0%, from salary and employee benefits expense in the third quarter of 2020 of $10.0 million, primarily attributable to an increase in the number of employees and contracted resources caused by the increased level of operations and acquisitions, as well as higher stock-based compensation expense.

Selling, general and administrative ("SG&A") expense in the third quarter of 2021 of $7.2 million increased $0.5 million, or 8.0%, from SG&A expense in the third quarter of 2020 of $6.7 million, primarily attributable to acquisition and corporate financing activities, tax-related assessments, and slightly higher costs for travel, tradeshows and office-related expenses.

During the third quarter of 2021, SG&A expense included $1.3 million of professional fees and expenses incurred in connection with the acquisition of Finxera, as well as certain litigation activities, and $0.6 million of tax-related assessments and acquisition-related transition services.

During the third quarter of 2020, SG&A expense included $0.6 million of professional fees and expenses primarily incurred in connection with acquisition and litigation activities, $1.0 million of acquisition-related transition services in the Integrated Partners segment, and a $1.0 million write-down in the carrying value of an intangible asset in the Consumer Payments segment.

These expenses were partially offset by a $0.8 million legal recovery settled in the third quarter of 2020.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Our consolidated operating expenses in the first nine months of 2021 of $350.7 million increased $67.1 million, or 23.6%, from consolidated operating expenses in the first nine months of 2020 of $283.6 million.

This increase was driven by higher costs of services.

Costs of services in the first of half 2021 of $171.7 million increased $42.9 million, or 33.3%, from costs of services in the first of half 2020 of $128.8 million due to higher revenues in the first half of 2021.

Depreciation and amortization expense in the first half of 2021 of $19.8 million decreased by $0.8 million, or 4.1%, from depreciation and amortization expense in the first

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half of 2020 of $20.6 million.

Salary and employee benefits expense in the first half of 2021 of $19.9 million increased $0.2 million, or 1.1%, from salary and employee benefits expense in the first half of 2020 of $19.7 million.

SG&A expense in the first half of 2021 of $15.0 million increased $2.4 million, or 18.8%, from SG&A expense in the first half of 2020 of $12.6 million.

During the first half of 2021, Corporate SG&A expense included $5.5 million of professional fees and expenses incurred in connection with the pending acquisition of Finxera, the April 2021 debt refinancing and issuance of preferred stock, and other acquisition activities.

During the first half of 2020, Corporate SG&A expense included $1.0 million of professional fees and expenses primarily incurred in connection with acquisition and litigation activities, and the Integrated Partners segment SG&A expense included $1.7 million of acquisition-related transition services.

Income (loss) from operations

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Consolidated income from operations in the second quarter of 2021 of $7.4 million increased by $3.4 million, or 83.7%, from $4.0 million in the second quarter of 2020.

This increase was the result of $5.2 million of higher revenue less costs of services partially offset by $0.8 million of higher salary and employee benefits expense, $0.7 million of higher SG&A expense and $0.4 million of higher depreciation and amortization expense.

Our Consumer Payments segment contributed $14.4 million in income from operations for the second quarter of 2021, an increase of $7.2 million, or 98.7%, from $7.3 million in the second quarter of 2020.

This increase was the result of $9.5 million higher revenue less costs of services and $0.2 million of lower SG&A expense being partially offset by $0.8 million of higher salary and employee benefits expense and $1.6 million of higher depreciation and amortization expense.

Our Commercial Payments segment had an income from operations slightly above breakeven for the second quarter of 2021 compared to income from operations of $0.5 million for the second quarter of 2020.

This decline was primarily the result of $0.5 million of lower revenues less costs of services.

Our Integrated Partners segment contributed income from operations of $0.2 million for the second quarter of 2021, a decrease of $0.7 million compared to $0.8 million of income from operations for the second quarter of 2020.

The decrease was driven by the September 2020 sale of PRET’s RentPayment business.

Revenues less costs of services decreased by $3.7 million, which was largely offset by decreases in SG&A of $1.2 million, depreciation and amortization expense of $1.3 million and salary and employee benefits of $0.6 million.

Corporate expenses were $7.2 million for the second quarter of 2021, an increase of $2.7 million from expenses of $4.6 million for the second quarter of 2020.

This increase was driven by a $2.1 million increase in professional fees and expenses and a $0.6 million increase in salaries and employee benefits, as described above in the prior section for Consolidated Operating Expenses.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Consolidated income from operations in the first half of 2021 of $11.9 million increased by $4.3 million, or 57.2%, from $7.6 million in the first half of 2020.

This increase was the result of $6.1 million of higher revenue less costs of services and $0.8 million of lower depreciation and amortization expense being partially offset by $0.2 million of higher salary and employee benefits expense and $2.4 million of higher SG&A expense.

Our Consumer Payments segment contributed $27.8 million in income from operations in the first half of 2021, an increase of $13.4 million, or 92.8%, from $14.4 million in the first half of 2020.

This increase was the result of $15.0 million higher revenue less costs of services and $0.7 million of lower SG&A expense being partially offset by $0.7 million of higher salary and employee benefits expense and $1.6 million of higher depreciation and amortization expense.

Our Commercial Payments segment had a loss from operations of $0.4 million in the first half of 2021 compared to income from operations of $1.2 million in the first half of 2020.

Costs of services in the first nine months 2021 of $264.5 million increased $60.8 million, or 29.8%, from costs of services in the first nine months 2020 of $203.7 million due to higher revenues in the first nine months of 2021.

Depreciation and amortization expense in the first nine months of 2021 of $32.1 million increased by $1.2 million, or 4.0%, from depreciation and amortization expense in the first nine months of 2020 of $30.9 million due to amortization expense from intangible assets acquired during the period.

Salary and employee benefits expense in the first nine months of 2021 of $31.8 million increased $2.1 million, or 7.1%, from salary and employee benefits expenses in the first nine months of 2020 of $29.7 million, primarily attributable to an increase in the number of employees and contracted resources caused by the increased level of operations, as well as higher stock-based compensation expense.

SG&A expense in the first nine months of 2021 of $22.2 million increased $2.9 million, or 15.1%, from SG&A expense in the first nine months of 2020 of $19.3 million.

During the first nine months of 2021, SG&A expense included $6.8 million of professional fees and expenses incurred in connection with the acquisition of Finxera, the April 2021 debt refinancing and issuance of preferred stock and other acquisition activities, as well as litigation activities, and $0.6 million of tax-related assessments and acquisition-related

transition services.

During the first nine months of 2020, Corporate SG&A expense included $1.5 million of professional fees and expenses primarily incurred in connection with acquisition and litigation activities, partially offset by $0.7 million of legal settlement recoveries.

The Integrated Partners segment SG&A expense included $2.7 million of acquisition-related transition services, while the Consumer Payments segment expense included a $1.0 million write-down of the carrying value of an intangible asset.

Operating income (loss)

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Consolidated operating income in the third quarter of 2021 of $8.3 million increased by $1.2 million, or 17.2%, from $7.0 million in the third quarter of 2020.

This increase was the result of $5.7 million of higher revenues less costs of services partially offset by $1.9 million of higher salary and employee benefits expense, $0.5 million of higher SG&A expense and $2.1 million of higher depreciation and amortization expense.

Our Consumer Payments segment contributed $14.7 million in operating income for the third quarter of 2021, an increase of $3.6 million, or 32.1%, from $11.1 million in the third quarter of 2020.

This increase was the result of $6.6 million higher revenues less costs of services and $0.8 million of lower SG&A expense being partially offset by $1.3 million of higher salary and employee benefits expense and $2.5 million of higher depreciation and amortization expense.

Our Commercial Payments segment had an operating income slightly below breakeven for the third quarter of 2021 compared to operating income of $0.2 million for the third quarter of 2020.

This decline was primarily the result of $0.4 million of lower revenues less costs of services being partially offset by $0.2 million of lower other operating costs, primarily salaries and employee benefits.

Our Integrated Partners segment contributed operating income of $1.2 million for the third quarter of 2021, an increase of $1.0 million compared to $0.3 million of operating income for the third quarter of 2020.

The increase was driven by the September 2021 acquisition of Finxera.

Revenues less costs of services decreased by $0.5 million, which was more than offset by a decrease in SG&A of $1.1 million, and a decrease in depreciation and amortization expense of $0.4 million.

SG&A in the third quarter of 2020 included $1.0 million of RentPayment acquisition-related transition services.

The RentPayment business was sold in September, 2020.

Corporate expenses were $7.6 million for the third quarter of 2021, an increase of $3.1 million from expenses of $4.5 million for the third quarter of 2020.

This increase was driven by an increase in professional fees, selling, general and administrative expenses, and salaries and employee benefits, as described above in the prior section for Consolidated Operating expenses.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Consolidated operating income in the first nine months of 2021 of $20.2 million increased by $5.6 million, or 37.9%, from $14.6 million in the first nine months of 2020.

This increase was the result of $11.8 million of higher revenues less costs of services being partially offset by $2.1 million of higher salary and employee benefits expense, $2.9 million of higher SG&A expense and $1.2 million of higher depreciation and amortization expense.

Our Consumer Payments segment contributed $42.5 million in operating income in the first nine months of 2021, an increase of $16.9 million, or 66.4%, from $25.5 million in the first nine months of 2020.

This increase was the result of $21.6 million higher revenues less costs of services and $1.4 million of lower SG&A expense being partially offset by $1.9 million of higher salary and employee benefits expense and $4.1 million of higher depreciation and amortization due to an increase in intangible assets from acquisitions.

Our Commercial Payments segment had an operating loss of $0.4 million in the first nine months of 2021 compared to operating income of $1.4 million in the first nine months of 2020.

This $1.8 million decline was the result of $2.3 million of lower revenues less costs of services, partially offset by $0.5 million of lower salary and employee benefits.

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Our Integrated Partners segment contributed income from operations of $0.3 million in the first half of 2021, a decrease of $1.0 million compared to $1.2 million of income from operations in the first half of 2020.

The decrease was driven by the September 2020 sale of PRET’s RentPayment business.

Revenues less costs of services decreased by $7.0 million, which was largely offset by decreases in SG&A of $2.4 million, depreciation and amortization expense of $2.4 million and salary and employee benefits of $1.2 million.

Corporate expenses were $15.7 million in the first half of 2021, an increase of $6.5 million from expenses of $9.3 million in the first half of 2020.

This increase was driven by a $5.3 million increase in professional fees and expenses and a $1.2 million increase in salaries and employee benefits, as described above in the prior section for Consolidated Operating Expenses.

Our Integrated Partners segment contributed operating income of $1.5 million in the first nine months of 2021, which is consistent with $1.5 million of operating income in the first nine months of 2020.

The September 2021 acquisition of Finxera resulting in $1.0 million of operating profit, and PRET's ongoing operating profit increased $0.8 million for the first nine months of 2021, which was offset by the September 2020 sale of PRET's RentPayment business, which had operating profit of $1.8 million for the first nine months of 2020.

Corporate expenses were $23.3 million in the first nine months of 2021, an increase of $9.5 million from expenses of $13.8 million in the first nine months of 2020.

This increase was driven by a $5.5 million increase in professional fees, a $2.1 million increase in selling, general and administrative expenses, and a $1.9 million increase in salaries and employee benefits, as described above in the prior section for Consolidated Operating expenses.

Interest expense

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Interest expense in the second quarter of 2021 of $7.3 million decreased by $4.4 million, or 37.6%, from $11.7 million in the second quarter of 2020.

This decline was primarily driven by lower outstanding debt resulting from the $106.5 million senior debt principal repayment in September 2020 and the $104.5 million subordinated debt retirement in April 2021.

Proceeds from the RentPayment sale in September 2020 were used to fund the senior debt principal repayment, and proceeds from the issuance of our redeemable senior preferred stock in April 2021 were used to fund the subordinated debt retirement.

The senior debt refinancing in April 2021 reduced the interest rate on our senior indebtedness by 75 basis points.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Interest expense in the third quarter of 2021 of $8.2 million decreased by $5.3 million, or 39.5%, from $13.5 million in the third quarter of 2020.

This decline was primarily driven by lower rate of interest on the new loans secured by the Company on the refinancing of its credit facilities in April 2021.

The new term and revolver loans carry an interest rate of 6.75% and 5.75%, respectively, as compared to the old term loans and subordinated term loans, which carried an interest rate of 7.5% and 12.5%, respectively.

The outstanding debt during the third quarter 2020 was also higher as proceeds from the RentPayment sale in September 2020 were used to fund the senior debt principal repayment.

Additionally, proceeds from the issuance of our redeemable senior preferred stock in April 2021 were used to repay the subordinated debt which carried a higher rate of interest.

Interest expense included cash interest, payment-in-kind interest and amortization of deferred financing costs and debt discounts.

During the second quarter of 2021 and 2020, interest expense was comprised of:

(dollars in thousands) Three Months Ended June 30,

During the third quarter of 2021 and 2020, interest expense was comprised of:

(dollars in thousands) Three Months Ended September 30,

Cash $ 8,296 $ 9,589

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$ 8,155 $ 13,471

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Interest expense in the first half of 2021 of $16.5 million decreased by $5.5 million, or 25.2%, from $22.0 million in the first half of 2020.

This decline was primarily driven by the factors described above for the three months ended June 30, 2021 compared to three months ended June 30, 2020.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Interest expense in the first nine months of 2021 of $24.6 million decreased by $10.9 million, or 30.6%, from $35.5 million in the first nine months of 2020.

This decline was primarily driven by the factors described above for the three months ended September 30, 2021 compared to three months ended September 30, 2020.

Interest expense included cash interest, payment-in-kind interest and amortization of deferred financing costs and debt discounts.

During the first half of 2021 and 2020, interest expense was comprised of:

(dollars in thousands) Six Months Ended June 30,

During the first nine months of 2021 and 2020, interest expense was comprised of:

(dollars in thousands) Nine Months Ended September 30,

Cash $ 17,250 $ 27,028

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$ 24,608 $ 35,454

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Debt extinguishment and modification costs

Three and Six Months Ended June 30, 2021 Compared to Three and Six Months Ended June 30, 2020

During April 2021, we wrote off unamortized deferred costs and discounts of $3.0 million associated with the retirement of our subordinated debt facility and refinancing of our senior debt facility, and expensed $5.3 million of third-party costs incurred in connection with the refinancing.

In the first quarter of 2020, we expensed $0.4 million of third-party costs incurred in connection with the amendment of our debt facilities.

Three and Nine Months Ended September 30, 2021 Compared to Three and Nine Months Ended September 30, 2020

During April 2021, the Company expensed unamortized deferred costs and discounts of $3.0 million associated with the retirement of our subordinated debt facility and refinancing of our senior debt facility and expensed $5.3 million of third-party costs incurred in connection with the refinancing.

During September 2020 the Company expensed unamortized deferred costs and discount of $1.5 million associated with the $106.5 million principal prepayment for the term facility under our Senior Credit Facility.

In the first quarter of 2020, the Company expensed $0.4 million of third-party costs incurred in connection with the amendment of our debt facilities.

We assess all available positive and negative evidence to estimate whether sufficient taxable income will be generated in the future to permit use of the existing deferred tax assets.

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With respect to recording a deferred tax benefit for the carryforward of business interest expense, GAAP applies a "more likely than not" threshold for assessing recoverability.

Based on management’s assessment, as of the second quarter of 2021 the Company continues to record a full valuation allowance against non-deductible interest expense.

Based on management's assessment, as of the third quarter of 2021 the Company continues to record a full valuation allowance against non-deductible interest expense.

The Company will continue to evaluate the realizability of the net deferred tax asset on a quarterly basis and, as a result, the valuation allowance may change in future periods.

We have historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.

We have used a discrete effective tax rate method to calculate taxes for the fiscal three- and six-month periods ended June 30, 2021.

We determined that since small changes in estimated "ordinary" income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate of the year to date tax provision for the fiscal three and six month periods ended June 30, 2021.

We have historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.

We have used a discrete effective tax rate method to calculate taxes for the fiscal three month and nine month periods ended September 30, 2021.

Financial Condition

The following discussion describes key changes that have occurred to our consolidated balance sheet at June 30, 2021 compared to December 31, 2020.

Total current assets of $86.3 million at June 30, 2021 decreased by $49.6 million from $135.9 million at December 31, 2020 due primarily to the following factors:

Unrestricted cash of $11.1 million at June 30, 2021 increased by $1.9 million from $9.2 million at December 31, 2020.

Net unrestricted cash provided by operating activities of $15.5 million and net cash provided by financing activities of $69.4 million were largely offset by 83.1 million used in investing activities.

Cash used in investing activities was comprised of capitalized software development of $3.7 million, purchases of property and equipment of $1.5 million, and acquisitions of a business and intangible assets of $77.9 million.

Net cash provided by financing activities was comprised of net repayments of long-term debt totaling $384.6 million, primarily in connection with the April 2021 debt refinancing, payment of debt issuance and modification costs of $7.6 million, borrowings under the revolving credit facility of $30.0 million, proceeds from issuing senior preferred equity of $150.0 million, payment of $10.5 million of preferred equity issuance fees and costs, payment of the cash portion of redeemable senior preferred stockholder dividends of $1.6 million, proceeds from the exercise of stock options of $0.8 million and cash distribution to non-controlling interests in a subsidiary of $0.8 million.

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The following discussion describes key changes that have occurred to our consolidated balance sheet at September 30, 2021 compared to December 31, 2020.

Total current assets of $580.7 million at September 30, 2021 increased by $444.8 million from $135.9 million at December 31, 2020 due primarily to the following factors:

Cash and cash equivalents

Unrestricted cash of $17.0 million at September 30, 2021 increased by $7.8 million from $9.2 million at December 31, 2020.

The increase is largely attributable to net cash used in operating activities of $2.6 million, offset by the net impact of cash provided by (used in) investing and financing activities.

Restricted cash

Restricted cash of $18.2 million decreased by $60.6 million in first half 2021, largely attributable to the transfer of customer restricted cash from a Priority-owned account to a bank-owned FBO account resulting from a change in our business practice for certain types of customer deposits and cash advance payments.

Restricted cash of $17.3 million decreased by $61.6 million in the first nine months 2021, largely attributable to the transfer of customer restricted cash from a Priority-owned account to a bank-owned FBO account resulting from a change in our business practice for certain types of customer deposits and cash advance payments.

Prepaid expenses and other current assets

Prepaid expenses and other current assets of $13.3 million increased by $9.8 million in the first nine months 2021, largely attributable to acquisition of Finxera.

Settlement assets and customer account balances

Settlement assets and customer account balances of $480.3 million increased by $479.5 million in the first nine months of 2021, largely attributable to the acquisition of Finxera for cash balances in client and subscriber accounts.

Accounts receivable, net of allowance for doubtful accounts

Accounts receivable, net of $50.6 million increased $9.3 million in first half 2021, largely attributable to higher revenue.

Total assets of $442.9 million at June 30, 2021 decreased by $25.0 million from $417.8 million at December 31, 2020 due primarily to the $49.6 million decrease in current assets and the following increases in long-term assets:

Goodwill of $124.1 million increased $17.2 million in the first half of 2021, resulting from the acquisition of C&H Financial Services, Inc.

in June 2021.

Accounts receivable, net of $52.7 million increased by $11.3 million in the first nine months of 2021, largely attributable to higher revenues.

Total assets of $1,335.2 million at September 30, 2021 increased by $917.4 million from $417.8 million at December 31, 2020 due primarily to the $444.8 million increase in current assets and the following increases in long-term assets:

Goodwill of $372.7 million increased by $265.9 million in the first nine months of 2021, resulting from the acquisition of C&H Financial Services, Inc.in June 2021 and the acquisition of Finxera in September 2021.

Intangible assets

Intangible assets, net of accumulated amortization, of $145.8 million increased $47.8 million in first half 2021, resulting from amortization expense of $15.7 million and total additions of $63.4 million from the tuck-in acquisitions in April and June 2021.

Other non-current assets

Other non-current assets of $10.9 million increased $8.9 million in first half 2021, resulting largely from value allocation of $3.3 million to a put right related to future issuance of up to $100 million of additional redeemable senior preferred stock to provide partial financing for the pending acquisition of Finxera and other permitted acquisitions, and $5.7 million of underwriting fees paid in connection with the delayed draw term loan facility, the proceeds of which may be used to provide partial financing for the pending acquisition of Finxera.

The April 2021 issuance of redeemable senior preferred stock and debt refinancing are discussed below in the subsequent section for Liquidity and Capital Resources.

Total current liabilities of $84.2 million at June 30, 2021 decreased by $64.7 million from $148.8 million at December 31, 2020 due primarily to the following factors:

Settlement obligations

Settlement obligations of $11.3 million at June 30, 2021 decreased by $61.6 million from $72.9 million at December 31, 2020 largely attributable to the transfer of customer restricted cash from a Priority-owned account to a bank-owned FBO account resulting from a change in our business practice for certain types of customer cash advance activities.

This decrease is directly correlated with the corresponding decrease in restricted cash.

Intangible assets, net of accumulated amortization, of $346.7 million increased by $248.6 million in the first nine months of 2021, resulting from acquisitions of $274.5 million, offset by amortization expense of $25.9 million.

Deferred taxes

The net deferred tax asset of $3.5 million decreased by $43.2 million in the first nine months of 2021, primarily resulting from a deferred tax liability recorded as part of the acquisition of Finxera in September 2021.

Total current liabilities of $569.2 million at September 30, 2021 increased by $420.4 million from $148.8 million at December 31, 2020 due primarily to the following factors:

Accounts payable and accrued expenses

Accounts payable and accrued expenses of $42.1 million increased by $12.3 million in the first nine months of 2021, as a result of the acquisition of Finxera and an increase in operations.

Settlement and customer account obligations

Settlement and customer account obligations of $489.3 million at September 30, 2021 increased by $416.4 million from $72.9 million at December 31, 2020 largely attributable to obligations related to customer account balances of $479.5 million from the Finxera acquisition offset by a decrease in customer restricted cash from a Priority-owned account to a bank-owned FBO account resulting from a change in our business practice for certain types of customer cash advance activities.

The increase in customer account obligations is directly correlated with the increase in customer account balances.

Current portion of long-term debt

Current portion of long-term debt of $3.0 million at June 30, 2021 decreased by $16.4 million from $19.4 million at December 31, 2020 due to the April 2021 debt refinancing, which reduced minimum annual amortization to quarterly installments in aggregate annual amounts equal to 1.0% of original principal, with the balance paid upon maturity in April 2027.

Current portion of long-term debt of $6.2 million at September 30, 2021 decreased by $13.2 million from $19.4 million at December 31, 2020 due to the April 2021 debt refinancing, which resulted in an updated repayment schedule.

The April 2021 debt refinancing is discussed below in the subsequent section for Liquidity and Capital Resources.

Total liabilities of $410.7 million at June 30, 2021 decreased by $105.7 million from $516.4 million at December 31, 2020 due primarily to the $64.7 million decrease in current liabilities and the following changes in long-term liabilities:

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Total liabilities of $1,203.3 million at September 30, 2021 increased by $686.9 million from $516.4 million at December 31, 2020 due primarily to the $420.4 million increase in current liabilities and the following changes in long-term liabilities:

Long-term debt, net of current portion, discounts and debt issuance costs

Long-term debt of $318.2 million, including borrowings under the revolving credit facility of $30.0 million at June 30, 2021 decreased by $39.7 million from $357.9 million at December 31, 2020 due largely to the April 2021 debt refinancing.

Borrowings under the revolving credit facility of $30.0 million at June 30, 2021 increased by $30.0 million from no outstanding borrowings at December 31, 2020.

In June 2021, $30.0 million was borrowed under the revolving credit facility to partially fund the acquisition of C&H Financial Services, Inc.

The April 2021 debt refinancing is discussed below in the subsequent section for Liquidity and Capital Resources.

Long-term debt of $620.0 million, including borrowings under the revolving credit facility of $30.0 million at September 30, 2021 increased by $262.1 million from $357.9 million at December 31, 2020 due largely to the April 2021 debt refinancing and additional borrowings for the funding of the Finxera and the C&H Financial Services, Inc.

acquisitions.

Redeemable senior preferred stock

Redeemable senior preferred stock of $133.8 million at June 30, 2021 increased by $133.8 million due to the April 2021 issuance and sale of the Initial Redeemable Senior Preferred Stock.

The April 2021 issuance of redeemable senior preferred stock is discussed below in the subsequent section for Liquidity and Capital Resources.

The Company issued $150 million of redeemable senior preferred stock along with detachable Warrants to purchase up to 1,803,841 shares of the Company’s common stock, par value $0.001 per share, at an exercise price $0.001.

The Company received a commitment from the investors to purchase up to an additional $100 million of redeemable senior preferred stock to provide partial financing for the pending Finxera acquisition and other permitted acquisitions.

Issuance fees and costs of $10.5 million were paid by the Company in connection with this transaction.

The net proceeds of $139.5 million were allocated on the balance sheet, based upon valuations, to the redeemable senior preferred stock of $131.4 million, additional paid-in capital of $11.4 million for the warrants, and non-current assets of $3.3 million for the committed financing put right.

Redeemable senior preferred stock of $205.3 million at September 30, 2021 increased by $205.3 million due to the issuance and sale Redeemable Senior Preferred Stock.

The issuance of redeemable senior preferred stock is discussed below in the subsequent section for Liquidity and Capital Resources.

The Company issued 150.0 million of redeemable senior preferred stock along with detachable Warrants to purchase up to 1,803,841 shares of the Company's common stock, par value $0.001 per share, at an exercise price $0.001 in April 2021.

In September 2021, an additional $75.0 million of redeemable senior preferred stock was issued as part of the September 17, 2021 Finxera acquisition.

The Company received a commitment from the investors to purchase up to an additional $25.0 million of redeemable senior preferred stock to provide financing for other permitted acquisitions.

Proceeds from the issuance of the redeemable senior preferred stock of $211.0 million (net of discount of $5.9 million and issuance costs of $7.4 million) were allocated to the redeemable senior preferred stock $199.6 million and to the warrants $11.4 million.

Stockholders' deficit

Stockholders' deficit of $101.6 million at June 30, 2021 increased by $3.0 million from a deficit of $98.6 million at December 31, 2020.

Accumulated deficit of $114.2 million increased $12.2 million in the first half of 2021 due to the net loss of $12.2 million.

Additional paid-in capital of $14.9 million increased $9.1 million in first half 2021.

Total increases of $23.8 million resulted from $11.4 million from issuance of detachable warrants, $10.0 million from issuance of common stock in redemptions of non-controlling interest preferred units, $1.7 million from stock-based compensation, and $0.8 million from stock option exercises.

Total decreases of $14.7 million resulted from $10.8 million of non-controlling interest preferred unit redemptions and $3.9 million of dividends to redeemable senior preferred stockholders, including $0.5 million of discount accretion.

Stockholders' deficit of $73.4 million at September 30, 2021 decreased by $25.2 million from a deficit of $98.6 million at December 31, 2020.

Accumulated deficit of $114.7 million increased $12.7 million in the first nine months of 2021 due to the net loss of $12.7 million for nine months ended September 30, 2021.

Additional paid-in capital of $44.6 million increased by $38.8 million in the first nine months of 2021.

The increase was primarily driven by a $34.4 million in proceeds from the issuance of 7,551,354 common shares from the Finxera merger, $11.4 million from the issuance of detachable warrants, $10.0 million from the issuance of common stock in redemptions of non-controlling interest preferred units, $2.2 million from stock-based compensation and $1.2 million from stock option exercises.

These increases were offset by a decrease of $10.8 million related to non-controlling interest preferred unit redemptions and a decrease of $9.7 million for dividends to redeemable senior preferred stockholders, including $1.0 million of discount accretion.

The preferred unit redemption is discussed below in PHOT Preferred Unit Redemption – Distribution to Non-Controlling Interests.

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Liquidity and capital resource management is a process focused on providing the funding we need to meet our short-term and long-term cash and working capital needs.

We have used our funding sources to build our merchant portfolio, technology solutions, and to make acquisitions with the expectation that such investments will generate cash flows sufficient to cover our working capital needs and other anticipated needs, including for our acquisition strategy.

We have used our funding sources to build our merchant portfolio, technology solutions and to make acquisitions with the expectation that such investments will generate cash flows sufficient to cover our working capital needs and other anticipated needs, including our acquisition strategy.

We anticipate that cash on hand, funds generated from operations and available borrowings under our revolving credit facility are sufficient to meet our working capital requirements for at least the next twelve months.

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Our principal uses of cash are to fund business operations, administrative costs and debt service.

Our working capital, defined as current assets less current liabilities, was $2.2 million at June 30, 2021 and $(13.0) million December 31, 2020, respectively.

At June 30, 2021, we had $30.0 million outstanding under the $40.0 million revolving credit facility of our Senior Credit Agreement.

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The following tables and narrative reflect our changes in cash flows for the comparative six month periods ended June 30, 2021 and 2020:

(dollars in thousands) Six Months Ended June 30,

Our working capital, defined as current assets less current liabilities, was $11.5 million at September 30, 2021 and $(13.0) million December 31, 2020, respectively.

At September 30, 2021, we had $30.0 million outstanding under the $40.0 million revolving credit facility of our Senior Credit Agreement.

The following tables and narrative reflect our changes in cash flows for the comparative nine month periods ended September 30, 2021 and 2020:

(dollars in thousands) Nine Months Ended September 30,

Net cash (used in) provided by:

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Financing activities 871,010 (171,056)

Net (decrease) increase in cash and restricted cash $ (58,777) $ 535

Net increase in cash and cash equivalents, and restricted cash $ 405,565 $ 8,365

Cash (Used In) Provided By Operating Activities

Net cash used in operating activities, which includes changes in restricted cash, was $45.1 million in the first half of 2021 compared to net cash provided by operating activities of $9.8 million in the first half of 2020.

Restricted cash operating activities, which are operating activities related to disbursement and receipt of restricted cash held on behalf of customers, used $60.6 million of cash in the first half of 2021 and used $2.1 million of cash in the first half of 2020.

This comparative change in restricted cash flow is driven by the June 2021 transfer of customer restricted cash from a Priority-owned account to a bank-owned FBO account resulting from a change in our business practice for certain types of customer cash advance activities.

Unrestricted cash activities provided $15.5 million of cash in the first half of 2021 and provided $11.9 million of cash in the first half of 2020.

Cash Used In Investing Activities

Net cash used in investing activities was $83.1 million in the first half 2021 compared to net cash used in investing activities of $7.5 million in the first half of 2020.

Cash used to acquire intangible portfolio assets amounted to $43.4 million in the first half of 2021 compared to $3.3 million in the first half of 2020.

Cash used to acquire a business in the first half of 2021 amounted to $34.5 million.

Cash used to acquire property, equipment, and software amounted to $5.2 million in the first half of 2021 and $4.2 million in the first half of 2020.

Net cash used in operating activities was $2.6 million in the first nine months of 2021 compared to net cash provided by operating activities of $10.4 million in the first nine months of 2020.

The decrease is primarily driven by the payment of PIK interest and changes in operating assets and liabilities.

Cash (Used In) Provided by Investing Activities

Net cash used in investing activities was $462.9 million in the first nine months 2021 compared to net cash provided by investing activities of $169.0 million in the first nine months of 2020.

Cash used to acquire intangible portfolio assets amounted to $48.2 million in the first nine months of 2021 compared to $4.4 million in the first nine months of 2020.

Cash used to acquire businesses in the first nine months of 2021 amounted to $407.1 million.

Cash used to acquire property, equipment and software amounted to $7.5 million in the first nine months of 2021 and $6.0 million in the first half of 2020.

Cash Provided By (Used In) Financing Activities

Net cash provided by financing activities was $69.4 million in the first half of 2021 compared to net cash used in financing activities of $1.8 million in the first half of 2020.

In the first half of 2021, total debt principal repayments were $384.6 million;

Net cash provided by financing activities was $871.0 million in the first nine months compared to net cash used in financing activities of $171.1 million in the first nine months of 2020.

In the first nine months of 2021, total debt principal repayments were $359.9 million;

proceeds from the issuance of long-term debt, net of deferred discounts and debt issuance costs, were $598.2 million;

proceeds from borrowings under the revolving credit facility were $30.0 million;

proceeds from issuance of senior preferred equity, net of discounts and issuance costs, were $139.5 million;

cash portion of dividend paid to redeemable senior preferred stockholder was $1.6 million;

cash portion of preferred unit redemption to non-controlling interests was $0.8 million and proceeds from exercise of stock options was $0.8 million.

In the first half of 2020, senior debt principal repayments of $2.0 million and debt modification costs of $2.7 million were offset by $3.0 million of net borrowings under the revolving credit facility.

Long-Term Debt at June 30, 2021

On April 27, 2021, we refinanced our previous credit facilities by entering into a new Credit Agreement.

The Credit Agreement, is comprised of a senior secured first lien term loan facility in an aggregate principal amount of $300.0 million (the "Initial Term Loan", or "Term Loan"), a senior secured revolving credit facility in an aggregate amount not to exceed $40.0 million outstanding at any time, and a senior secured first lien delayed draw term loan facility in an aggregate principal amount of $290.0 million ("Delayed Draw Term Loan", or "Term Loan"), the proceeds of which may be used to fund the Company’s

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acquisition of Finxera.

proceeds from issuance of senior preferred equity, net of discounts and issuance costs, were $211.0 million cash portion of dividend paid to redeemable senior preferred stockholder was $4.0 million;

cash portion of preferred unit redemption to non-controlling interests was $0.8 million, proceeds from exercise of stock options was $1.2 million and the Company repurchased 162,715 shares of its common stock at a cost of $1.0 million under its share repurchase program.

In the first nine months of 2020, senior debt principal repayments of $109.5 million, debt modification costs of $2.7 million , $0.5 million of net repayments under the revolving credit facility, redemption of redeemable non-controlling interests of $5.7 million and profit distributions to non-controlling interests of $45.3 million.

In the first nine months of 2021, cash provided by financing activities included balances in customer accounts of $396.3 million resulting from the acquisition of Finxera.

Long-Term Debt at September 30, 2021

On April 27, 2021, the Company refinanced its previous credit facilities by entering into a new Credit and Guaranty Agreement ("the Credit Agreement").

The Credit Agreement, is comprised of a senior secured first lien term loan facility in an aggregate principal amount of $300.0 million (the "Initial Term Loan", or "Term Loan"), a senior secured revolving credit facility in an aggregate amount not to exceed $40.0 million outstanding at any time and a senior secured first lien delayed draw term loan facility in an aggregate principal amount of $290.0 million ("Delayed Draw Term Loan", or "Term Loan"), the proceeds of which may be used to fund the Company's acquisition of Finxera.

The Term Loan's interest rate is LIBOR (1.0% floor) plus 5.75%, which is a 75 basis point reduction from LIBOR (1.0% floor) plus 6.5% under the prior senior indebtedness.

As of June 30, 2021, we had outstanding debt obligations of $330.0 million compared to $382.0 million at December 31, 2020, a decrease of $52.0 million.

The debt balance at June 30, 2021 consisted of $300.0 million outstanding under the Initial Term Loan and $30 million outstanding under the revolving credit facility.

As of September 30, 2021, we had outstanding debt obligations, including current portion and net of unamortized debt discount of $626.2 million, compared to $377.3 million at December 31, 2020, resulting in an increase of $248.9 million.

The debt balance at September 30, 2021 consisted of $596.2 million outstanding under the Term Loan and $30 million outstanding under the revolving credit facility.

Minimum amortization of the Initial Term Loan are equal quarterly installments in aggregate annual amounts equal to 1.0% of original principal, with the balance paid upon maturity.

The Initial Term Loan matures in April 2027 and the revolving credit facility expires in April 2026.

The Term Loan matures in April 2027 and the revolving credit facility expires in April 2026.

The Credit Agreement contains representations and warranties, financial and collateral requirements, mandatory payment events, events of default and affirmative and negative covenants, including without limitation, covenants that restrict among other things, the ability to create liens, pay dividends or distribute assets from the Loan Parties to the Company, merge or consolidate, dispose of assets, incur additional indebtedness, make certain investments or acquisitions, enter into certain transactions (including with affiliates) and to enter into certain leases.

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If applicable, the maximum permitted Total Net Leverage Ratio is 6.50:1.00 at each fiscal quarter ended September 30, 2021 through June 30, 2022, 6.00:1.00 at each fiscal quarter ended September 30, 2022 through June 30, 2023 and 5.50:1.00 at each fiscal quarter ended September 30, 2023 each fiscal quarter thereafter.

As of June 30, 2021, we were in compliance with our financial covenants.

As of September 30, 2021, we were in compliance with our financial covenants.

Total Net Leverage Ratio, Consolidated Total Debt and Consolidated Adjusted EBITDA are defined in the Credit and Guaranty Agreement and are summarized below:

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Under the provisions of the agreement, calculation of Consolidated Adjusted EBITDA is determined on a last twelve months basis.

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Consolidated Adjusted EBITDA is a non-GAAP liquidity measure.

For determining the Total Net Leverage Ratio at June 30, 2021, Consolidated Adjusted EBITDA was calculated as follows in accordance with the referenced clause definitions from the Credit and Guaranty Agreement executed on April 27, 2021:

For determining the Total Net Leverage Ratio at September 30, 2021, Consolidated Adjusted EBITDA was calculated as follows in accordance with the referenced clause definitions from the Credit and Guaranty Agreement executed on April 27, 2021:

(in thousands) Last Twelve Months Ended

June 30, 2021

September 30, 2021

Consolidated Net Income (GAAP) $ (13,709)

Applicable Adjustments:

Gain on sale of business, less amounts attributable and paid to NCIs (clause (ii)(c)) (62,091)

Interest expense (clause (i)(b)) 33,992

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Consolidated Adjusted EBITDA (non-GAAP) $ 147,845

At June 30, 2021, the Total Net Leverage Ratio was 3.43:1.00, calculated as follows:

(in thousands, except ratio) June 30, 2021

At September 30, 2021, the Total Net Leverage Ratio was 4.27:1.00, calculated as follows:

(in thousands, except ratio) September 30, 2021

Consolidated Total Debt:

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Total Net Leverage Ratio 4.27x

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Redeemable Senior Preferred Stock.

On April 27, 2021, we entered into the Securities Purchase Agreement with credit funds managed by certain affiliates of Ares Management Corporation ("Investors"), pursuant to which we issued and sold 150,000 shares of Redeemable Senior Preferred Stock, par value $0.001 per share, at a purchase price of $150.0 million, or $1,000 per Redeemable Senior Preferred Share, less a $5.0 million discount, and issued Warrants to purchase up to 1,803,841 shares of the Company’s common stock, par value $0.001 per share, at an exercise price $0.001.

On April 27, 2021, we entered into the Securities Purchase Agreement with credit funds managed by certain affiliates of Ares Management Corporation ("Investors"), pursuant to which we issued and sold 150,000 shares of Redeemable Senior Preferred Stock, par value $0.001 per share, at a purchase price of $150.0 million, or $1,000 per Redeemable Senior Preferred Share, less a $5.0 million discount and issued Warrants to purchase up to 1,803,841 shares of the Company's common stock, par value

$0.001 per share, at an exercise price $0.001.

The exercise price and the number of shares issuable upon exercise of the warrants are subject to certain adjustments from time to time on the terms outlined in the Warrants.

In addition to the issuance and sale of the Initial Redeemable Senior Preferred Stock, under the Securities Purchase Agreement, upon the consummation of the Company’s acquisition of Finxera, we may issue and sell to the Investors an additional 50,000 shares of Redeemable Senior Preferred Stock, at a purchase price of $50.0 million, or $1,000 per share ("Acquisition Redeemable Senior Preferred Stock"), less a discount of $625,000.

We may also issue and sell to the Investors up to an additional 50,000 shares of Redeemable Senior Preferred Stock, at a purchase price of $1,000 per share, less a discount of $625,000, within 18 months after the consummation of the Acquisition Redeemable Senior Preferred Stock sale, upon the completion of a permitted acquisition and satisfaction of certain customary closing conditions.

We used the proceeds from the sale of the Initial Redeemable Senior Preferred Stock to repay our subordinated debt, pay certain fees and expenses relating to the debt refinancing and the Securities Purchase Agreement, and fund an April 2021 asset acquisition.

In addition on September 17, 2021 the Company issued an additional 75,000 shares of Redeemable Senior Preferred Stock, upon the consummation of the Company's acquisition of Finxera for a purchase price of $75.0 million, or $100 per share, less a discount of $0.9 million.

The Company may also issue and sell to the Investors up to an additional 25,000 shares of Redeemable Senior Preferred Stock, at a purchase price of $1,000 per share, less a discount of $0.3 million, within 18 months after September 17, 2021, upon the completion of a permitted acquisition and satisfaction of certain customary closing conditions.

Proceeds from the sale of the Redeemable Senior Preferred Stock were used to repay subordinated debt, pay certain fees and expenses relating to the debt refinancing and the Securities Purchase Agreement, fund an April 2021 asset acquisition and fund the Finxera acquisition in September 2021.

On April 27, 2021 the Company entered into a Registration Rights Agreement, by and among the Company and the Investors pursuant to which the Company agreed to provide certain registration rights with respect to the shares of Common Stock issuable upon exercise of the Warrants (the "Registrable Securities").

Under the Registration Rights Agreement, the holders of the Registrable Securities were granted piggyback rights to be included in certain underwritten offerings of Common Stock and the right to demand a shelf registration of Registrable Securities.

The Redeemable Senior Preferred Stock has a quarterly cumulative preferred dividend at LIBOR plus 12.0%, with a cash portion at the discretion of the Company at LIBOR (1.0% floor) plus 5.0% and PIK portion at 7.0%.

The dividend is subject to a 2.0% increase if the Company elects the cash portion to be added to PIK.

The dividend is subject to a 2.0% increase if the Company elects the cash portion to be added to accumulated.

There are scheduled dividend rate increases after the fifth anniversary of issuance.

In June 2021, the Company’s Board of Directors declared and authorized the second quarter 2021 dividend with a 6.0% cash portion of $1.6 million and a 7.0% PIK portion of $1.8 million.

The Company paid the dividend on June 30, 2021.

In the first nine months of 2021, the Company's Board of Directors declared and authorized the second and third quarter 2021 dividends with a 6.0% cash portion of $1.6 million and $2.4 million, respectively, and a 7.0% accumulated portion of $1.8 million and $2.9 million respectively.

The Company paid the dividend on June 30, 2021 and September 30, 2021.

Additionally, the Company recorded $0.5 million of discount accretion.

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As consideration for these contributed assets, the contributors were issued redeemable NCIs in PHOT.

Under these redeemable NCIs, the contributors were eligible to receive up

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to $4.5 million of profits earned by PHOT, plus a preferred yield (6.0% per annum) on any undistributed preferred equity interest ("Total Preferred Equity Interest").

Under these redeemable NCIs, the contributors were eligible to receive up to $4.5 million of profits earned by PHOT, plus a preferred yield (6.0% per year) on any undistributed preferred equity interest ("Total Preferred Equity Interest").

Once the Total Preferred Equity Interest is distributed to the holders, the redeemable NCIs cease to exist.

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Commitments and Contractual Obligations

See Note 4, Acquisitions, and Note 11, Commitments and Contingencies , to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for disclosure information about potential contingent payments that we may be required to make in future periods that are not required to be recognized in our consolidated balance sheets as of June 30, 2021 or December 31, 2020.

Acquisitions and Note 1 2 .

Commitments and Contingencies , to our Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for disclosure information about potential contingent payments that we may be required to make in future periods that are not required to be recognized in our consolidated balance sheets as of September 30, 2021 or December 31, 2020.

Contractual Obligations

Except as described in the following, there have been no significant changes to our contractual obligations compared to those disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations of Priority" included in the Annual Report for the year ended December 31, 2020.

Changes in the minimum annual spend commitments with third-party processor partners and contingent consideration for acquisitions are further described in Note 11, Commitments and Contingencies .

For an updated schedule of debt repayments under the Credit and Guaranty Agreement executed on April 27, 2021, see Note 8, Debt Obligations.

Changes in the minimum annual spend commitments with third-party processor partners and contingent consideration for acquisitions are further described in Note 1 2 .

Commitments and Contingencies .

For an updated schedule of debt repayments under the Credit and Guaranty Agreement executed on April 27, 2021 and amended on September 17, 2021, see Note 9 .

Debt Obligations .

Also, at December 31, 2020, the Company accrued approximately $6.2 million for the remaining cash consideration it estimates it will be required to pay under an assignment of merchant portfolio rights agreement and related reseller agreement it executed with a third-party in October 2019.

Payments are required to be made on a quarterly

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basis through September 30, 2022.

Payments are required to be made on a quarterly basis through September 30, 2022.

The Company continues to review its estimate of the remaining consideration to be paid and will adjust its obligation accordingly if deemed necessary.

As of June 30, 2021, the only change in the amounts accrued was for the required payment made in the first and second quarters of 2021.

As of September 30, 2021, the only change in the amounts accrued was for the required payments made in 2021.

Critical Accounting Policies and Estimates

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Our critical accounting policies and estimates are discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent Annual Report on Form 10-K.

There have been no material changes to these critical accounting policies and estimates as of June 30, 2021.

There have been no material changes to these critical accounting policies and estimates as of September 30, 2021.

Effect of New Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standards setting bodies that may affect our current and/or future financial statements.

See Note 1, Basis of Presentation and Significant Accounting Policies , to our unaudited condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recently issued accounting pronouncements not yet adopted.

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Basis of Presentation and Significant Accounting Policies , to our Unaudited Condensed Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recently issued accounting pronouncements not yet adopted.

Quantitative and Qualitative Disclosures About Market Risk

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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 2. Management’s Discussion and Analysis