UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~Washington,~~WASHINGTON, D.C. 20549

FORM 10‑Q

(Mark One)

☒~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~

March 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~FOR THE TRANSITION PERIOD FROM TO~~

For the transition period from ______________ to ___________.

Commission File Number: 001‑37979

~~GORES HOLDINGS II, INC.~~VERRA MOBILITY CORPORATION

(Exact name of ~~registrant~~Registrant as specified in its ~~Charter)~~charter)

Delaware		81‑3563824
(State ~~or other jurisdiction~~ of		(I.R.S. Employer
incorporation ~~or organization)~~)		Identification No.)

~~9800 Wilshire Blvd.~~
~~Beverly Hills, CA~~1150 North Alma School Road	~~90212~~	85201
Mesa, Arizona		(Zip Code)
(Address of ~~principal executive offices)~~Principal Executive Offices)	~~(Zip Code)~~

(480) 443-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). YES ☒ NO ☐

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


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	~~Accelerated filer~~Smaller reporting company	☐

~~Non-accelerated filer~~Emerging growth company	☒	~~(Do not check if a smaller reporting company)~~		~~Smaller reporting company~~	☐


~~Emerging growth company~~ ☒

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). YES ☐ NO☒ NO ☐

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

The registrant was not a public company as of June 30, 2016 and therefore it cannot calculate the aggregate market value of its voting and non-voting common equity held by non-affiliates as of such date.

(Title of each class)		(Trading symbol)		(Name of each exchange on which registered)
Class A common stock, par value $0.0001 per share		VRRM		Nasdaq Capital Market

As of ~~November 6, 2017,~~May 03, 2019, there were ~~40,000,000~~158,556,642 shares of the Company’s Class A ~~common stock, par value $0.0001 per share, and 10,000,000 shares of the Company’s Class F~~ common stock, par value $0.0001 per share, issued and outstanding.

VERRA MOBILITY CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2019

TABLE OF CONTENTS


PART I—FINANCIAL INFORMATION		~~Page~~4
~~PART I—FINANCIAL INFORMATION~~
Item 1. Financial Statements.		4
~~Item 1.~~	~~Financial Statements~~
Condensed Consolidated Balance Sheets ~~(Unaudited)~~		3
~~Statement of Operations (Unaudited)~~		4
~~Statement of Changes in Stockholders’ Equity (Unaudited)~~		5
~~Statement of Cash Flows (Unaudited)~~		6
~~Notes to Financial Statements (Unaudited)~~		7
		4
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)		5
Condensed Consolidated Statements of Stockholders’ Equity		6
Condensed Consolidated Statements of Cash Flows		7
Notes to Condensed Consolidated Financial Statements		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
		28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
		39
Item 4.	Controls and Procedures	17
		39
PART II—OTHER INFORMATION
		40
Item 1.	Legal Proceedings	17
		40
Item 1A.	Risk Factors	17
		40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
		40
Item 3.	Defaults Upon Senior Securities	18
		40
Item 4.	Mine Safety Disclosures	18
		40
Item 5.	Other Information	18
		40
Item 6.	Exhibits	19	41
SIGNATURES		43

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of federal securities laws. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, products, services, and technology offerings, market conditions, growth and trends, expansion plans and opportunities and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in our Annual Report on Form 10-K/A for the year ended December 31, 2018, under Part I, Item 1A, “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely on forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.

Unless the context indicates otherwise, as used in this Quarterly Report on Form 10-Q, the terms “Verra Mobility,” the “Company,” “we,” “us,” and “our” refer to Verra Mobility Corporation, a Delaware corporation, and its subsidiaries taken as a whole, unless otherwise noted.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

~~GORES HOLDINGS II, INC.~~

~~BALANCE SHEETS~~

September 30, 2017

December 31, 2016

(unaudited)

(audited)
CURRENT ASSETS:

Cash and cash equivalents

$
626,193

$
3,185
Deferred offering costs

—

414,606
Receivable - related party

—

436
Prepaid assets

201,005

—
Total current assets

827,198

418,227
Investments and cash held in Trust Account

402,042,193

—
Total assets

$
402,869,391

$
418,227

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accrued expenses, formation and offering costs

$
42,301

$
282,436
State franchise tax accrual

67,237

1,750
Notes and advances payable – related party

—

150,000
Total current liabilities

109,538

434,186
Deferred underwriting compensation

14,000,000

—
Income tax payable

209,785

—
Net deferred income tax

337,797

—
Total liabilities

14,657,120

434,186

Commitments and Contingencies:

Class A subject to possible redemption, 38,321,227 and -0- shares at September 30, 2017 and December 31, 2016, respectively (at redemption value of $10 per share)

383,212,270

—

Stockholders’ equity:

Preferred stock, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding

—

—
Common stock

Class A common stock, $0.0001 par value; 200,000,000 shares authorized, 1,678,773 and -0- shares issued and outstanding (excluding 38,321,227 and -0- shares subject to possible redemption) at September 30, 2017 and December, 31, 2016, respectively

168

—
Class F common stock, $0.0001 par value; 20,000,000 shares authorized, 10,000,000 shares issued and outstanding

1,000

25,000
Additional paid-in-capital

4,091,567

—
Retained Earnings

907,266

(40,959)

Total stockholders’ equity

5,000,001

(15,959)

Total liabilities and stockholders’ equity

$
402,869,391

$
418,227

($ in thousands except per share data)	March 31, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	91,484		$	65,048
Restricted cash		1,704			2,033
Accounts receivable, net		94,630			87,511
Unbilled receivables		16,753			12,956
Prepaid expenses and other current assets		19,012			17,600
Total current assets		223,583			185,148
Installation and service parts, net		10,822			9,282
Property and equipment, net		71,686			69,243
Intangible assets, net		491,853			514,542
Goodwill		565,596			564,723
Other non-current assets		2,072			1,845
Total assets	$	1,365,612		$	1,344,783
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	52,239		$	45,188
Accrued liabilities		30,448			14,444
Current portion of long-term debt		9,104			9,104
Total current liabilities		91,791			68,736
Long-term debt, net of current portion and deferred financing costs		859,768			860,249
Other long-term liabilities		3,633			3,369
Payable related to tax receivable agreement		66,097			69,996
Asset retirement obligation		6,855			6,750
Deferred tax liabilities		32,647			33,627
Total liabilities		1,060,791			1,042,727
Commitments and Contingencies
Stockholders' equity
Preferred stock, $.0001 par value		—			—
Common stock, $.0001 par value		16			16
Common stock contingent consideration		73,150			73,150
Additional paid-in capital		346,895			348,017
Retained earnings (accumulated deficit)		(110,743	)		(113,306	)
Accumulated other comprehensive loss		(4,497	)		(5,821	)
Total stockholders' equity		304,821			302,056
Total liabilities and stockholders' equity	$	1,365,612		$	1,344,783

See accompanying notes to the ~~unaudited, interim financial statements.~~Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

3(Unaudited)

~~GORES HOLDINGS II, INC.~~

~~STATEMENT OF OPERATIONS~~

~~(Unaudited)~~

For the period form

For the period form

August 15, 2016

August 15, 2016

Three Months

(inception) to

Nine Months

(inception) to

Ended September 30,

September 30,

Ended September 30,

September 30,

2017

2016

2017

2016
Revenues

$
—

$
—

$
—

$
—
Professional fees and other expenses

(135,746)

(23,219)

(416,615)

(23,219)
State franchise taxes, other than income tax

(45,000)

(1,312)

(135,000)

(1,312)
Net loss from operations

(180,746)

(24,531)

(551,615)

(24,531)
Other income - interest income

983,012

50

2,047,422

50
Net income before income taxes

$
802,266

$
(24,481)

$
1,495,807

$
(24,481)
Provision for income tax

(547,582)

—

(547,582)

—
Net income attributable to common shares

$
254,684

$
(24,481)

$
948,225

$
(24,481)

Net Income/(Loss) per ordinary share:

Class A ordinary shares - basic and diluted

$
0.01

$
-

$
0.03

$
-
Class F ordinary shares - basic and diluted

$
(0.01)

$
-

$
(0.02)

$
-

	Three Months Ended March 31,
(In thousands, except per share data)	2019			2018
Service revenue	$	98,070		$	69,006
Product sales		391			235
Total revenue		98,461			69,241
Cost of service revenue		1,389			831
Cost of product sales		276			172
Operating expenses		29,338			23,681
Selling, general and administrative expenses		20,551			33,276
Depreciation, amortization, impairment and (gain) loss on disposal of assets, net		28,941			18,544
Total costs and expenses		80,495			76,504
Income (loss) from operations		17,966			(7,263	)
Interest expense		16,033			12,647
Loss on extinguishment of debt		—			10,151
Other income, net		(2,207	)		(1,293	)
Total other expense		13,826			21,505
Income (loss) before income tax (benefit) provision		4,140			(28,768	)
Income tax (benefit) provision		1,320			(6,610	)
Net income (loss)	$	2,820		$	(22,158	)
Other comprehensive income (loss):
Foreign currency translation adjustment		1,324			—
Total comprehensive income (loss)	$	4,144		$	(22,158	)
Earnings (loss) per share:
Basic weighted average shares outstanding		156,057			62,501
Basic earnings (loss) per share	$	0.02		$	(0.35	)
Diluted weighted average shares outstanding		156,458			62,501
Diluted earnings (loss) per share	$	0.02		$	(0.35	)

See accompanying notes to the ~~unaudited, interim financial statements.~~Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

~~GORES HOLDINGS II, INC.~~

~~STATEMENT~~CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES IN~~ STOCKHOLDERS’ EQUITY

~~For the Nine months Ended September 30, 2017~~

(Unaudited)

Class A Ordinary Shares

Class F Ordinary Shares

Additional

Accumulated

Shareholder's

Shares

Amount

Shares

Amount

Paid-In Capital

Deficit/Retained Earnings

Equity
Beginning Balance at January 1, 2017

-

$
-

10,781,250

$
1,078

$
23,922

$
(40,959)

$
(15,959)
Forfeited Class F Common stock by Sponsor

-

-

(781,250)

(78)

78

-

-
Proceeds from initial public offering of Units on January 19, 2017 at $10.00 per Unit

40,000,000

4,000

-

-

399,996,000

-

400,000,000
Sale of 6,666,666 Private Placement Warrants to Sponsor on January 19, 2017 at $1.50 per Private Placement Warrant

-

-

-

-

10,000,000

-

10,000,000
Underwriter's discounts

-

-

-

-

(8,000,000)

-

(8,000,000)
Offering costs charged to additional paid-in capital

-

-

-

-

(719,995)

-

(719,995)
Deferred underwriting compensation

-

-

-

-

(14,000,000)

-

(14,000,000)
Class A common stock subject to possible redemption; 38,321,227 shares at a redemption price of $10.00

(38,321,227)

(3,832)

-

-

(383,208,438)

-

(383,212,270)
Net income

-

-

-

-

-

948,225

948,225
Balance at September 30, 2017

1,678,773

$
168

10,000,000

$
1,000

$
4,091,567

$
907,266

$
5,000,001

For the Three Months Ended March 31, 2019
	Common Stock				Common Stock Contingent		Additional Paid-in			Retained Earnings			Accumulated Other Comprehensive			Total Shareholders'
(In thousands)	Shares		Amount		Consideration		Capital			(Deficit)			Loss			Equity
Balance, December 31, 2018		156,057	$	16	$	73,150	$	348,017		$	(113,306	)	$	(5,821	)	$	302,056
Net income		—		—		—		—			2,820			—			2,820
Cumulative effect of adoption of new accounting standard		—		—		—		—			(257	)		—			(257	)
Adjustment to equity infusion from Gores		—		—		—		(6,205	)		—			—			(6,205	)
Adjustment to tax receivable agreement liability		—		—		—		2,940			—			—			2,940
Stock-based compensation		—		—		—		2,143			—			—			2,143
Other comprehensive loss		—		—		—		—			—			1,324			1,324
Balance, March 31, 2019		156,057	$	16	$	73,150	$	346,895		$	(110,743	)	$	(4,497	)	$	304,821

For the Three Months Ended March 31, 2018

Balance, December 31, 2017		60,484	$	6	$	—	$	129,020		$	18,238		$	—		$	147,264
Net loss		—		—		—		—			(22,158	)		—			(22,158	)
Stock issued in exchange for HTA acquisition		6,051		1		—		57,270			—			—			57,271
Balance, March 31, 2018		66,535	$	7	$	—	$	186,290		$	(3,920	)	$	—		$	182,377

See accompanying notes to the ~~unaudited, interim financial statements.~~Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

condensed consolidated Statements of Cash Flows

~~GORES HOLDINGS II, INC.~~

~~STATEMENT OF CASH FLOWS~~

~~(Unaudited)~~

For the period from

August 15, 2016

Nine Months

(inception) to

Ended September 30,

September 30,
Cash flows from operating activities:

2017

2016
Net income

$
948,225

$
(24,481)
Changes in deferred income tax provision

337,797

—
Changes in receivable - related party

436

—
Changes in state franchise tax accrual

65,487

—
Changes in prepaid assets

(201,005)

—
Changes in deferred offering costs

414,606

—
Changes in income taxes payable

209,785

—
Changes in accrued expenses, formation and offering costs

(240,135)

(55,875)
Net cash provided by operating activities

1,535,196

(80,356)

Cash flows from investing activities:

Cash deposited in Trust Account

(400,000,000)

—
Interest reinvested in Trust Account

(2,042,193)

—
Net cash used in investing activities

(402,042,193)

—

Cash flows from financing activities:

Proceeds from sale of Units in initial public offering

400,000,000

—
Proceeds from sale of Private Placement Warrants to Sponsor

10,000,000

—
Proceeds from note payable - related party

—

150,000
Proceeds from sale of Class F common stock to Sponsor

—

25,000
Repayment of notes and advances payable – related party

(150,000)

—
Payment of underwriter's discounts and commissions

(8,000,000)

—
Payment of accrued offering costs

(719,995)

—
Net cash provided by financing activities

401,130,005

175,000

Increase in cash

623,008

94,644
Cash at beginning of period

3,185

—

Cash at end of period

$
626,193

$
94,644

Supplemental disclosure of non-cash financing activities:

Deferred underwriting compensation

$
14,000,000

$
—
Offering costs included in accrued expenses

$
—

$
143,186

	Three Months Ended March 31,
($ in thousands)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	2,820		$	(22,158	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		28,939			18,550
Amortization of deferred financing costs and discounts		1,833			1,644
Loss on extinguishment of debt		—			10,151
Accretion expense		90			97
Write-downs of installation and service parts and (gain) loss on disposal of assets		3			(6	)
Installation and service parts expense		257			125
Bad debt expense		1,270			1,140
Deferred income taxes		(1,073	)		(6,805	)
Stock-based compensation		2,143			—
Changes in operating assets and liabilities:
Accounts receivable, net		(8,372	)		(3,614	)
Unbilled receivables		(3,797	)		(4,171	)
Prepaid expense and other current assets		(1,301	)		(1,138	)
Other assets		(226	)		(576	)
Accounts payable and accrued liabilities		18,413			3,452
Other liabilities		(3,648	)		113
Net cash provided by (used in) operating activities		37,351			(3,196	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net of cash and restricted cash acquired		—			(531,741	)
Purchases of installation and service parts and property and equipment		(9,219	)		(5,885	)
Cash proceeds from the sale of assets and insurance recoveries		52			185
Net cash used in investing activities		(9,167	)		(537,441	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolver		—			468
Repayment on revolver		—			(468	)
Borrowings of long-term debt		—			1,033,800
Repayment of long-term debt		(2,276	)		(448,375	)
Payment of debt issuance costs		(37	)		(29,242	)
Payment of debt extinguishment costs		—			(8,187	)
Net cash provided by (used in) financing activities		(2,313	)		547,996
Effect of exchange rate changes on cash and cash equivalents		236			—
Net increase in cash, cash equivalents and restricted cash		26,107			7,359
Cash, cash equivalents and restricted cash - beginning of period		67,081			10,509
Cash, cash equivalents and restricted cash - end of period	$	93,188		$	17,868

See accompanying notes to the ~~unaudited, interim financial statements.~~Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

~~GORES HOLDINGS II, INC.~~

~~NOTES TO THE UNAUDITED, INTERIM FINANCIAL STATEMENTS~~(Unaudited)

	Three Months Ended March 31,
	2019			2018
Supplemental cash flow information:
Interest paid	$	13,890		$	5,745
Income taxes paid (refunded), net		(4,710	)		321
Supplemental non-cash investing and financing activities:
Non-cash additions (reductions) to ARO, property and equipment, and other		28			—
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period end		4,084			3,009
Capital contribution received in Parent common stock		—			57,270
Payable to seller in connection with business acquisition		—			12,056

~~1. Organization and Business Operations~~

~~Organization and General~~See accompanying notes to the Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

Notes to the CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	Basis of Presentation and Description of Business

Basis of Presentation

Verra Mobility Corporation (collectively with its subsidiaries, the “Company” or “Verra Mobility”), formerly known as Gores Holdings II, Inc. ~~(the “Company”~~(“Gores”), was originally incorporated in Delaware on August 15, ~~2016. The Company was~~2016, as a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar ~~Business Combination~~business combination with one or more ~~businesses~~target businesses. On January 19, 2017, the Company consummated its initial public offering (the ~~“Business Combination”~~“IPO”), following which its shares began trading on the Nasdaq Capital Market (“Nasdaq”).

On June 21, 2018, Gores, AM Merger Sub I, Inc., a direct, wholly-owned subsidiary of Gores (“First Merger Sub”), AM Merger Sub II, LLC, a direct, wholly-owned subsidiary of Gores (“Second Merger Sub”), Greenlight Holding II Corporation (“Greenlight”), and PE Greenlight Holdings, LLC entered into an Agreement and Plan of Merger as amended on August 23, 2018 by that certain Amendment No. 1 to Agreement and Plan of Merger (as amended, the “Merger Agreement”), which provided for, among other things, (i) the merger of First Merger Sub with and into Greenlight, with Greenlight continuing as the surviving corporation (the “First Merger”) and (ii) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Greenlight with and into Second Merger Sub, with Second Merger Sub continuing as the surviving entity (the “Second Merger” and, together with the First Merger, the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”).

In connection with the closing of the Business Combination on October 17, 2018 (the “Closing Date”), Gores changed its name from Gores Holdings II, Inc. to Verra Mobility Corporation, changed its trading symbols on Nasdaq from “GSHT,” and “GSHTW,” to “VRRM” and “VRRMW,” and Second Merger Sub changed its name from AM Merger Sub II, LLC to Verra Mobility Holdings, LLC. As a result of the Business Combination, Verra Mobility Corporation became the owner, directly or indirectly, of all of the equity interests of Verra Mobility Holdings, LLC and its subsidiaries. The Business Combination is treated as a reverse acquisition and recapitalization in which Greenlight is treated as the accounting acquirer (and legal acquiree) and Gores is treated as the accounting acquiree (and legal acquirer). Accordingly, as of the Closing Date, Greenlight’s historical results of operations replaced Gores’ historical results of operations for periods prior to the Business Combination, and the results of operations of both companies are included in the accompanying condensed consolidated financial statements for periods following the Merger (see Note 3).

On May 31, 2017, Greenlight Acquisition Corporation (“Parent”) acquired ATS Consolidated Inc. (“ATS”) pursuant to the Agreement and Plan of Merger, dated April 15, 2017 by and among ATS, Greenlight Merger Corporation, a wholly-owned subsidiary of Parent (“ATS Merger Sub”) and Parent whereby ATS Consolidated merged with and into Merger Sub with the former surviving (the “ATS Merger”). Prior to the Business Combination, Parent was ultimately owned by Greenlight, which in turn was owned by certain private equity investment vehicles sponsored by Platinum Equity, LLC (collectively, “Platinum”) (See Note 3).

Description of Business

Verra Mobility is a technology-enabled services company offering traffic safety and mobility solutions for state and local governments, commercial fleets and rental car companies. The Company has customers located throughout the United States, Canada and Europe. The Company is organized into two operating divisions: Government Solutions and Commercial Services (See Note 14).

The Government Solutions division provides complete, end-to-end red-light, speed, school bus stop arm and bus lane enforcement solutions. The Company’s programs are designed to reduce traffic violations and resulting collisions, injuries, and fatalities. The Company implements and administers traffic safety programs for municipalities and agencies of all sizes.

The Commercial Services division offers toll and violation management solutions for the commercial fleet and rental car industries by partnering with the leading fleet management and rental car companies in North America and Europe. Electronic toll payment services enable fleet drivers and rental car customers to use high-speed cashless toll lanes or cashless all-electronic toll roads. The service helps commercial fleets reduce toll management costs, while it provides rental car companies with a revenue-generating, value-added service for their customers. Electronic violation processing services reduce the cost and risk associated with vehicle-issued violations, such as toll, parking or camera-enforced tickets. Title and registration services offer title and registration processing for individuals, rental car companies and fleet management companies.

2.	Significant Accounting Principles and Policies

Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

Use of Estimates

The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited interim condensed consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the fair values assigned to net assets acquired (including identifiable intangibles) in business combinations, the carrying amounts of long-lived assets and goodwill, the carrying amount of installation and service parts, the allowance for doubtful accounts, valuation allowances on deferred tax assets, asset retirement obligations, contingent consideration and the recognition and measurement of loss contingencies.

Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.

Recent Accounting Pronouncements

Accounting Standards Adopted

In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. We elected to early adopt the requirements of the new standard in the fourth quarter of 2018 using the retrospective transition method, as required by the new standard. The adoption of this ASU had an immaterial impact to the condensed consolidated statements of cash flows.

The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the condensed consolidated balance sheet as of March 31, 2018 that sums to the total of such amounts in the condensed consolidated statements of cash flows for the three months ended March 31, 2018:

($ in thousands)
Cash and cash equivalents	$	15,703
Restricted cash		2,165
Cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows	$	17,868

Revenue Recognition

On January 1, 2019, the Company adopted ASU 2014-09, Revenue from Contracts with Customers, Topic 606 (“ASC 606”) using the modified retrospective method applied to those contracts that were not completed as of the adoption date. Results for 2019 are presented under ASC 606, while prior periods were not adjusted and are reported under ASC Topic 605, Revenue Recognition (“ASC 605”).

The Company has evaluated its current accounting practices to the requirements of ASC 606. This evaluation included an assessment of representative contracts from each of the Company’s revenue streams. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows, however, there have been additions and modification to its existing financial disclosures. While the overall revenue, systems and controls were minimally impacted by the new standard, the underlying recognition methodology has changed.

Under the new standard, the Company now recognizes revenue when the Company satisfies the performance obligation, including, for some of its contracts, the processing of the violation on the customer’s behalf. The primary difference under ASC 606 within the Government Solutions segment is the deferral of revenue related to certain variable price contracts, until citation payment. The Company recorded a $0.3 million reduction to opening retained earnings as of January 1, 2019 for the cumulative impact of adoption related to the recognition of revenue in its Government Solutions segment. There was no cumulative impact of adoption related to the Commercial Services segment.

The comparative information was not restated and continues to be presented under ASC 605 for those periods. There was no material impact upon adoption related to the costs of obtaining or fulfilling a contract.

Nature of goods and services

The following is a description of principal activities – separated by reportable segments – from which the Company generates revenue:

Government Solutions Segment: The Government Solutions segment principally generates revenue from providing complete, end-to-end red light, speed, school bus stop arm, and bus lane enforcement solutions. Products, when sold, are typically sold together with the services in a bundle. The average initial term of a contract is 3 to 5 years. Payment terms for contracts with government agencies vary depending on whether the consideration is fixed or variable. Payment terms for contracts with fixed consideration are usually based on equal installments over the duration of the contract. Payment terms for contracts with variable consideration are usually billed and collected as citations are issued or paid.

For bundled packages, the Company accounts for individual products and services separately if they are distinct – i.e., if a product or service is separately identifiable from other items in the bundle and if a customer can benefit from it as a stand-alone item. The consideration is allocated between separate products and services in a bundle based on their stand-alone selling prices (“SSP”). The Company ~~has neither engaged~~estimates the SSP of its services based upon observable evidence, market conditions and other relevant inputs.

Product sales (sale of camera and installation) – The Company recognizes revenue when the installation process is completed and the camera is ready to perform the services as expected by the customer. Generally, it occurs at site acceptance or first citation. The Company recognizes revenue for the sale of the camera and installation services at a point in time.

Service revenue – The Company determined its performance obligation is to provide a complete end-to-end safety and enforcement solution. Promises include providing a system to capture images, processing images taken by the camera, forwarding eligible images to the local police department and processing payments on behalf of the municipality. The Company determined that certain of the promises to its customers are capable of being distinct, as they may provide some measure of benefit to the customer either on their own or together with other resources that are readily available to the customer. However, the Company determined that the promises to its customers do not meet the criterion of being distinct within the context of its contracts. The Company would not be able to fulfill its promises individually, as its customers could not obtain the intended benefit from the contract without the Company fulfilling all promises. Accordingly, the Company concluded that each contract represents one service offering and is a single performance obligation to our customer. Further, the Company accounts for all the services as a single continuous service. The Company applies the series guidance for those services as the nature of the service is to provide a service for a period of time with distinct time increments. The Company recognizes revenue from services over time, as they are performed.

Commercial Services Segment: The Commercial Services segment offers toll and violation management solutions for the commercial fleet and rental car industries by partnering with the leading fleet management and rental car companies in North America and Europe. The Company determined its performance obligation is a distinct stand-ready obligation, as there is an unspecified quantity of services provided that does not diminish, and the customer is being charged only when it uses the Company’s services, such as toll payment, title and registration, etc.

Therefore, all services provided within the Commercial Services segment are accounted for as a single performance obligation, of a series of distinct items, with distinct time increments, as a stand-ready obligation. Payment terms for contracts with commercial fleet and rental car companies vary, but are usually billed as services are performed. Revenue from services provided in the Commercial Services segment is recognized over time as the customer simultaneously receives and consumes the benefits provided by the Company and as the Company performs the services.

Remaining Performance Obligations

As of March 31, 2019, the Company had approximately $0.3 million of remaining performance obligations in the Government Solutions segment, which include amounts that will be invoiced and recognized in future periods. The remaining performance obligations are limited only to arrangements that meet the definition of a contract under ASC 606 as of March 31, 2019. As these amounts relate to the initial deferral of revenue under a contract, the Company expects to recognize these amounts over a two month period at the end of the contract.

The Company applies the practical expedient in paragraph 606-10-50-14A of ASC 606 and does not disclose variable consideration allocated entirely to wholly unsatisfied stand-ready performance obligations for certain Government Solutions and Commercial Services contracts as part of the information about remaining performance obligations. The duration for these contracts ranges between 3 and 5 years for new contracts.

Significant judgments

Accounting Standards Not Yet Adopted

In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The new guidance addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most notably, ASU 2016-01 requires the change in fair value of available for sale securities to be recognized in net income. The pronouncement also requires the use of the exit price notion, the separate presentation of financial assets and liabilities by measurement category and form of asset, and the separate presentation in other comprehensive income of changes in fair value resulting from a change in the instrument-specific credit risk. ASU 2016-01 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The impact of the implementation of this standard is still being determined by the Company.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and issued certain amendments within ASU 2018-01, 2018-10, 2018-11 and ASU 2019-01, respectively and collectively Topic 842 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company does not plan to early adopt this standard. The impact of the implementation of this standard is still being determined by the Company.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), which requires companies to present assets held at amortized cost and available for sale debt securities net of the amount expected to be collected. The guidance requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectability. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2019 and early adoption is permitted. Different components of the guidance require modified retrospective or prospective adoption. The impact of the implementation of this standard is still being determined by the Company.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350). ASU 2017-04 simplifies the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value limited to the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. The amendments in this ASU are effective for goodwill impairment tests in fiscal years beginning after December 15, 2021. The impact of the implementation of this standard is still being determined by the Company.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. These amendments expand the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. ASU 2018-07 is effective beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. At this time, the Company does not expect this standard to have a material effect on the Company’s financial position, results of operations or cash flows and disclosures.

In August 2018, the FASB issued ASU 2018-13, (Topic 820) Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any ~~operations nor generated any operating revenue to~~removed or modified disclosures upon issuance of this update and delay adoption of the additional disclosures until their effective date. The impact of the implementation of this standard is still being determined by the Company.

3.	Mergers and Acquisitions

Verra Mobility Merger

As described in Note 1, Gores and Greenlight consummated the Business Combination on October 17, 2018. Pursuant to Business Combinations (Topic 805), the Business Combination qualified as a reverse acquisition because immediately following completion of the transaction the stockholders of Greenlight immediately prior to the Business Combination maintained effective control of Verra Mobility, the post-combination company. For accounting purposes, Greenlight is deemed the accounting acquirer in the transaction and, consequently, the transaction is treated as recapitalization of Greenlight (i.e. a capital transaction involving the issuance of stock by Greenlight in exchange for the payment of cash by Gores to the selling shareholders of Greenlight). Accordingly, the consolidated assets, liabilities and results of operations of Greenlight are the historical financial statements of Verra Mobility and the Gores assets, liabilities and results of operations are consolidated with Greenlight beginning on the acquisition date. No step-up in basis of intangible assets or goodwill was recorded for this transaction. The Company effected this treatment through opening stockholders’ equity by adjusting the number of common shares outstanding. Other than underwriting and professional fees paid to consummate the transaction, the Business Combination primarily involved the exchange of cash and equity between Gores, Greenlight and the stockholders of the respective companies. During the three months ended March 31, 2019, the Company recorded a $6.2 million payable to Platinum, a related party, for the recapitalization related to the working capital adjustment required by the merger agreements. This resulted in a decrease to the additional paid-in capital account for $6.2 million, and a corresponding increase to accrued liabilities.

ATS Merger

On May 31, 2017, ATS was acquired by Parent through the merger of ATS Merger Sub with and into ATS for a total purchase price of $548.2 million ($550.0 million less adjustments set forth in the ATS Merger agreement). The Company recognized approximately $9.9 million of costs related to the ATS Merger, which consisted of $8.0 million of payments for acquisition services to Platinum Equity Advisors, LLC, an affiliate of Platinum (“Advisors”), and $1.9 million of professional fees and other expenses related to the ATS Merger.

On May 31, 2017, ATS Merger Sub obtained debt financing pursuant to a credit agreement entered into with a syndicate of lenders. ATS Merger Sub was merged with and into ATS on the same date, effectively making ATS the sole borrower (see Note 7).

HTA Merger

On March 1, 2018, the Company acquired all of the issued and outstanding membership interests of Highway Toll Administration, LLC, and Canada Highway Toll Administration (collectively, “HTA”), pursuant to a unit purchase agreement (“Unit Agreement”) for a cash purchase price of $525.0 million subject to adjustments set forth in the Unit Agreement which aggregated $9.7 million, a $11.3 million payable to the HTA sellers for certain tax items and the issuance of 5.26 shares of Greenlight common stock resulting in an aggregate purchase price of $603.3 million (the “HTA Merger”). The Greenlight shares issued to the Company were determined to have a fair value of $57.3 million. The Company reflected the receipt of the Greenlight common shares as a capital contribution from Parent and then delivered these shares to the HTA sellers as non-cash purchase consideration.

The Company estimated the fair value of the Greenlight common shares issued in connection with this transaction with input from management and a contemporaneous third-party valuation of the Company. Management determined the fair value of Greenlight was the same as the Company as Greenlight’s only holdings were the Company. The valuation advisory firm prepared a valuation report as of March 1, 2018. The assumptions and inputs used in connection with the valuation reflected management’s best estimate of the Company’s business condition, prospects and operating performance on the valuation date. The Company averaged the results of a discounted cash flow analysis, comparable public company analysis and comparable acquisitions analysis to determine an enterprise value of $2.1 billion. The Company then deducted debt of $1.0 billion to arrive at a concluded equity value of $1.1 billion, which was used to derive a per share value.

($ in thousands)
Assets acquired
Cash	$	2,996
Accounts receivable		10,220
Prepaid expense and other current assets		5,266
Installation and service parts		296
Property and equipment		996
Customer relationships		242,500
Developed technology		72,800
Non-compete agreements		48,500
Trademark		5,500
Goodwill		233,271
Total assets acquired		622,345
Liabilities assumed
Accounts payable and accrued expenses		14,268
Deferred tax liability		4,733
Total liabilities assumed		19,001
Total purchase price	$	603,344

The excess of cost of the HTA Merger over the net amounts assigned to the fair value of the net assets acquired was recorded as goodwill and was assigned to the Company’s Commercial Services segment. The Company made certain immaterial adjustments to the preliminary purchase price allocation resulting in a $1.2 million net reduction to goodwill. The goodwill consists largely of the expected cash flows and future growth anticipated for the Company. Most of the goodwill is expected to be deductible for tax purposes. The customer relationship value was based on an excess earnings methodology utilizing projected cash flows. The non-compete agreement values were based on the with-or-without method. The trademark and the developed technology values were based on a relief from royalty method. The customer relationship, developed technology, non-compete and trademark intangibles were assigned useful lives of 9 years, 5.5 years, 5 years and 3 years, respectively.

The Company recognized $15.6 million of costs related to the HTA Merger, which were included in selling, general and administrative expenses in the condensed consolidated statement of operations in the three months ended March 31, 2018. These costs consisted of $7.2 million for acquisition services to Advisors and $8.4 million of professional fees and other expenses related to the transaction.

EPC Merger

On April 6, 2018, the Company acquired all of the issued and outstanding capital stock of Euro Parking Collection plc (“EPC”), pursuant to a stock purchase agreement for purchase consideration of 5.54 shares of Greenlight common stock and working capital adjustments set forth in the share purchase agreement, which aggregated $2.6 million, resulting in an aggregate purchase price of $62.9 million (the “EPC Merger”). The Company reflected the receipt of the Greenlight II common shares as a capital contribution from Parent and then delivered these shares to the EPC sellers as non-cash purchase consideration.

The Company estimated the fair value of the Greenlight common shares issued in connection with this transaction with input from management and a contemporaneous third-party valuation of the Company.

Management determined the fair value of Greenlight was the same as the Company as Greenlight’s only holdings were the Company. The valuation advisory firm prepared a valuation report as of March 1, 2018. The assumptions and inputs used in connection with the valuation reflected management’s best estimate of the Company’s business condition, prospects and operating performance on the valuation date. The Company averaged the results of a discounted cash flow analysis, comparable public company analysis and comparable acquisitions analysis to determine an enterprise value of $2.1 billion. The Company then deducted debt of $1.0 billion to arrive at a concluded equity value of $1.1 billion, which was used to derive a per share value.

The allocation of the purchase consideration is summarized as follows:

($ in thousands)
Assets acquired
Cash	$	9,029
Other assets		1,948
Trademark		1,100
Customer relationships		19,400
Developed technology		3,900
Goodwill		40,826
Total assets acquired		76,203
Liabilities assumed
Accounts payable and accrued expenses		8,995
Deferred tax liability		4,273
Total liabilities assumed		13,268
Total purchase price	$	62,935

Goodwill arising from the EPC Merger was assigned to the Company’s Commercial Services segment and consists largely of the expected cash flows and future growth anticipated for the Company. The goodwill is not expected to be deductible for tax purposes. The customer relationship value was based on an excess earnings methodology utilizing projected cash flows. The trademark and the developed technology values were based on a relief from royalty method. The customer relationship, trademark, and developed technology intangibles were preliminarily assigned useful lives of 10 years, 5 years and 4.5 years, respectively.

The Company recognized $3.0 million of costs related to the EPC Merger in the three months ended June 30, 2018, which consisted of $2.5 million for acquisition services to Advisors and $0.5 million of professional fees and other expenses.

Pro Forma Financial Information

The pro forma information below gives effect to the Merger, the HTA Merger and the EPC Merger (collectively, the “Transactions”) as if they had been completed on the first day of the period presented. The pro forma results of operations are presented for information purposes only. As such, they are not necessarily indicative of the Company’s results had the Transactions been completed on the first day of the period presented, nor do they intend to represent the Company’s future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions and does not reflect additional revenue opportunities following the Transactions. The pro forma information includes adjustments to record the assets and liabilities associated with the Transactions at their respective fair values based on available information and to give effect to the financing for the Transactions.

	Three Months Ended
($ in thousands)	March 31, 2018
Revenue	$	88,462
Loss from operations		(2,201	)
Net loss before income tax benefit		(14,774	)
Net loss		(11,752	)
Loss per share - basic	$	(0.19	)

The pro forma results include adjustments to reflect additional amortization of intangibles associated with the acquired businesses and additional interest expense for debt issued in connection with the HTA Merger.

4.	Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets, consist of the following at:

($ in thousands)	March 31, 2019		December 31, 2018
Prepaid income taxes	$	248	$	1,562
Prepaid services		3,584		3,017
Prepaid tolls		10,375		8,434
Prepaid computer maintenance		2,515		1,709
Prepaid insurance		897		1,230
Deposits		873		839
Prepaid rent		490		406
Other		30		403
Total prepaid expenses and other current assets	$	19,012	$	17,600

5.	Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill by reportable segment:

	Government		Commercial
($ in thousands)	Solutions		Services		Total
Balance at December 31, 2018	$	159,746	$	404,977	$	564,723
Foreign currency translation adjustment		—		873		873
Balance at March 31, 2019	$	159,746	$	405,850	$	565,596

Intangible assets consist of the following as of the respective period ends:

	March 31, 2019						December 31, 2018
	Weighted						Weighted
	Average	Gross					Average	Gross
	Remaining	Carrying			Accumulated		Remaining	Carrying			Accumulated
($ in thousands)	Useful Life	Amount			Amortization		Useful Life	Amount			Amortization
Trademarks	2.4 years	$	31,324		$	11,448	2.7 years	$	31,302		$	8,902
Non-compete agreements	3.8 years		62,100			15,495	4.0 years		62,100			12,390
Customer relationships	7.6 years		360,158			52,349	7.9 years		359,768			42,201
Developed technology	4.0 years		160,930			43,367	4.3 years		160,852			35,987
Gross carrying value of intangible assets			614,512		$	122,659			614,022		$	99,480
Less: accumulated amortization			(122,659	)					(99,480	)
Intangible assets, net		$	491,853					$	514,542

The amortization expense was $23.1 million and $12.3 million for the three months ended March 31, 2019 and 2018, respectively.

Estimated amortization expense in future years is expected to be:

($ in thousands)
Remainder of 2019	$	69,159
2020		92,290
2021		83,998
2022		79,274
2023		50,813
2024		40,321
Thereafter		75,998
Total	$	491,853

6.	Accrued Liabilities

Accrued liabilities consist of the following at:

($ in thousands)	March 31, 2019		December 31, 2018
Accrued salaries and wages	$	7,194	$	8,340
Restricted cash due to customers		1,704		2,033
Income taxes payable		6,002		862
Accrued interest payable		542		232
Advanced deposits payable		6,334		805
Gores equity infusion working capital adjustment payable to related party		6,205		—
Current portion of related party TRA liability		959		—
Deferred rent		477		523
Accrued sales commissions		387		463
Other		644		1,186
Total accrued liabilities	$	30,448	$	14,444

Debt

The following table provides a summary of the Company’s long-term debt at:

($ in thousands)	March 31, 2019			December 31, 2018
First lien term loan, due February 28, 2025	$	901,248		$	903,524
Less: original issue discounts		(5,534	)		(5,819	)
Less: unamortized deferred financing costs		(26,842	)		(28,352	)
Total debt		868,872			869,353
Less: Current portion of long-term debt		(9,104	)		(9,104	)
Total long-term debt, net of current portion	$	859,768		$	860,249

In connection with the ATS Merger, ATS Consolidated, Inc., subsequently renamed VM Consolidated, Inc., a wholly owned subsidiary of the Company, entered into a First Lien Term Loan Credit Agreement (the “Old First Lien”), a Second Lien Term Loan Credit Agreement (the “Old Second Lien”), (collectively the “Old Term Loans”), and a Revolving Credit Agreement (the “Old Revolver”) with a syndicate of lenders (collectively, the “2017 Credit Facilities”). The 2017 Credit Facilities provided for committed senior secured financing of $490.0 million, consisting of the following: the Old Term Loans in an aggregate principal amount of $450.0 million; and the Revolver, available for loans and letters of credit with an aggregate revolving commitment of up to $40.0 million (based on borrowing based eligibility as described below).

In connection with the HTA Merger, the Company replaced the 2017 Credit Facilities by entering into a First Lien Term Loan Credit Agreement (the “New First Lien Term Loan”), a Second Lien Term Loan Credit Agreement (the “New Second Lien Term Loan”), (collectively the “New Term Loans”) and a Revolving Credit Facility Agreement (the “New Revolver”) with a syndicate of lenders (collectively, the “2018 Credit Facilities”). The 2018 Credit Facilities provide for committed senior secured financing of $1.115 billion, consisting of the New Term Loans in an aggregate principal amount of $1.04 billion and the New Revolver available for loans and letters of credit with an aggregate revolving commitment of up to $75 million (based on borrowing based eligibility as described below).

The preexisting Old Term Loans were repaid concurrent with the closing on the 2018 Credit Facilities and the preexisting Old Revolver was undrawn at close. The outstanding balances at the date of close on the Old Term Loans, which were repaid with proceeds from the 2018 Credit Facilities, were $323.4 million and $125 million, respectively.

In July 2018, the Company amended the New First Lien Term Loan (the “New First Lien Term Loan Amendment”) to expand the aggregate principal loan amount under the New First Lien Term Loan from $840 million to $910 million and to modify certain defined terms. In connection with this amendment, the Company incurred a consent fee of $0.4 million, which was capitalized as deferred financing costs and is being amortized over the remaining life of the New First Lien Term Loan. The additional $70 million along with funds contributed by Platinum were used to repay the $200 million New Second Lien Term Loan in full contemporaneously with the close of the Business Combination on October 17, 2018.

The New First Lien Term Loan is repayable in quarterly installments of 1.0% per annum of the amount initially borrowed. The New First Lien Loan matures on February 28, 2025. The New First Lien Term Loan bears interest based, at our option, on either (1) LIBOR plus an applicable margin of 3.75% per annum, or (2) an alternate base rate plus an applicable margin of 2.75% per annum. At March 31, 2019, the interest rate on the New First Lien Term Loan was 6.25%.

In addition, the New First Term Loan contains provisions that require mandatory prepayments equal to 50% of excess cash flow (as defined by the New First Lien Term Loan agreement); provided that, at any time the consolidated first lien net leverage ratio (as defined by the New Term First Lien Loan agreement) on the last day of the fiscal year is less than or equal to 3.70:1.00 but greater than 3.20:1.00, the mandatory prepayment of the New First Lien Term Loan is equal to 25% of excess cash flow, and if less than 3.20:1.00, the mandatory prepayment is zero.

The New Revolver matures on February 28, 2023. Borrowing eligibility under the New Revolver is subject to a monthly borrowing base calculation based on (i) certain percentages of eligible accounts receivable and inventory, less (ii) certain reserve items, including outstanding letters of credit and other reserves. The Revolver bears interest on either (1) LIBOR plus an applicable margin, or (2) an alternate base rate, plus an applicable margin. The margin percentage applied to (1) LIBOR is either 1.25%, 1.50%, or 1.75%, or (2) the base rate is either 0.25%, 0.50%, or 0.75%, depending on the Company’s average availability to borrow under the commitment. At March 31, 2019, the Company had no outstanding borrowings on the New Revolver and availability to borrow under the New Revolver was $70.0 million, net of $1.0 million of outstanding letters of credit.

Interest on the unused portion of the New Revolver is payable quarterly at 0.375% at March 31, 2019. The Company also is required to pay participation and fronting fees on $1.0 million in outstanding letters of credit at 1.38% as of March 31, 2019.

All borrowings and other extensions of credits under the 2018 Credit Facilities are subject to the satisfaction of customary conditions and restrictive covenants including absence of defaults and accuracy in material respects of representations and warranties. At March 31, 2019, the Company was compliant with the 2018 Credit Facilities covenants. Substantially all of the Company’s assets are pledged as collateral to secure the Company’s indebtedness under the 2018 Credit Facilities.

The Company recognized a charge of $10.2 million in the three months ended March 31, 2018 consisting of a $3.8 million prepayment penalty on the Old Term Loan balances, a $2.0 million write-off of preexisting deferred financing costs and $4.4 million of lender and third-party costs associated with the issuance of the 2018 Credit Facilities.

The Company recorded interest expense, including amortization of deferred financing costs and discounts, of $16.0 million and $12.6 million for the three months ended March 31, 2019 and March 31, 2018, respectively.

The weighted average effective interest rate of the Company’s outstanding borrowings under the 2018 Credit Facilities was 6.25% at March 31, 2019.

8.	Fair Value Measurements

As of March 31, 2019 and December 31, 2018, the amounts of our assets and liabilities that were accounted for at fair value were immaterial.

ASC Topic 820, Fair Value Measurement includes a single definition of fair value to be used for financial reporting purposes, provides a framework for applying this definition and for measuring fair value under GAAP, and establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are summarized as follows:

Level 1 – Fair value is based on observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2 – Fair value is determined using quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are directly or indirectly observable.

Level 3 – Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow or similar technique.

Fair Value of Financial Instruments

The carrying amounts reported in our unaudited interim condensed consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the immediate to short-term maturity of these financial instruments. The estimated fair value of our First Lien Term Loan as of March 31, 2019 and December 31, 2018 is categorized in Level 2 of the fair value hierarchy and was calculated based upon available market information. The carrying value and fair value of our long-term debt is as follows:

Level in

March 31, 2019

December 31, 2018

Fair Value

Carrying

Estimated

Carrying

Estimated

($ in thousands)

Hierarchy

Amount

Fair Value

Amount

Fair Value

Long-term debt

868,872

905,754

869,353

889,971

9.	Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net income (loss) per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.

The Company has ~~broad discretion~~not included the effect of 19,999,967 warrants, 10,000,000 contingently issuable shares and 86,106 restricted stock units in the calculation of diluted net income per share for the three months ended March 31, 2019 because the inclusion of such shares would be antidilutive. The Company has not included the effect of 19,999,967 warrants in the calculation of diluted net loss for the three months ended March 31, 2018 because the inclusion of such shares would be antidilutive based on the net loss reported. Warrants are considered anti-dilutive and excluded when the exercise price exceeds the average market value of the Company’s common stock price during the applicable period.

The components of basic and diluted net income (loss) per share are as follows:

	Three Months Ended March 31,
(In thousands, except per share data)	2019		2018
Numerator:
Net income (loss)	$	2,820	$	(22,158	)
Denominator:
Weighted average shares - basic		156,057		62,501
Common stock equivalents		401		—
Weighted average shares - diluted		156,458		62,501
Net income (loss) per common share - basic	$	0.02	$	(0.35	)
Net income (loss) per common share - diluted	$	0.02	$	(0.35	)
Antidilutive shares excluded		30,086		20,000

10.	Income Taxes

Our interim income tax provision is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that period. The estimated annual effective tax rate requires judgment and is dependent upon several factors. We provide for income taxes under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the tax basis of assets or liabilities and their carrying amounts in the financial statements.

We provide a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before we are able to realize their benefit. We calculate the valuation allowance in accordance with ~~respect~~the authoritative guidance relating to income taxes, which requires an assessment of both positive and negative evidence regarding the realizability of these deferred tax assets, when measuring the need for a valuation allowance. Significant judgment is required in determining any valuation allowance against deferred tax assets.

Our effective income tax rate was 31.9% and (23.0)% for the three months ended March 31, 2019 and 2018, respectively. The increase, compared to the same period in 2018, was primarily due to higher pretax income across multiple jurisdictions, and an increase in permanent differences between book and taxable income, including the 162(m) executive compensation limitation and the Global Intangible Low Tax Income inclusion.

The total amount of unrecognized tax benefits as of March 31, 2019 was $2.7 million, of which $2.5 million would affect our effective tax rate if recognized. We recognize interest and penalties related to unrecognized tax benefits through income tax expense. As of March 31, 2019, we had $0.8 million accrued for the payment of interest and penalties.

The Company is subject to examination by the Internal Revenue Service and taxing authorities in various states. The Company’s U.S. federal income tax return remains subject to income tax examinations by tax authorities for the years 2015 to 2018. The Company’s state income tax return is currently under examination by the State of Maryland Compliance Division for years 2015 to 2017. Various other state income tax returns for the years 2014 to 2018 are subject to income tax examination, and tax years prior to 2014 remain open in certain states due to tax attributes generated but not utilized yet. The Company regularly assesses the likelihood of additional tax deficiencies in each of the tax jurisdictions and, accordingly, makes appropriate adjustments to the tax provision as deemed necessary.

11.	Stock-based compensation

The following details the components of stock-based compensation for the three months ended March 31, 2019:

($ in thousands)
Operating expenses	$	204
Selling, general and administrative expenses		1,939
Total stock-based compensation expense	$	2,143

There were no corresponding stock compensation amounts in the three months ended March 31, 2018.

12.	Related Party Transactions

Tax Receivable Agreement

At the closing of the Business Combination, the Company entered into a Tax Receivable Agreement (“TRA”) with the PE Greenlight Holdings, LLC (the “Platinum Stockholder”) and Greenlight as the stockholder representative (the “Stockholder Representative”). The TRA generally provides for the payment by the post-closing company to the Platinum Stockholder of 50% of the net cash savings, if any, in U.S. federal, state and local income tax that the post-closing company actually realizes (or is deemed to realize in certain circumstances) in periods after the closing of the Business Combination as a result of the increase in the tax basis of the intangible assets of HTA which resulted from the acquisition of HTA by Verra Mobility prior to the Business Combination. The post-closing company generally will retain the benefit of the remaining 50% of these cash savings. The Company estimated the potential maximum benefit to be paid will be approximately $70 million. The Company recorded an initial liability and corresponding charge to equity of $70 million at the closing of the Business Combination. Subsequently, the Company adjusted this amount. At March 31, 2019, the TRA was approximately $66 million. Future adjustments to the liability under the TRA will be based upon changes to future anticipated taxable income and tax rates and will be recorded in the statement of operations.

Earn-Out Agreement

Under the Merger Agreement, the Platinum Stockholder will be entitled to receive additional shares of Class A Common Stock (the “Earn-Out Shares”) if the volume weighted average closing sale price of one share of Class A Stock on the Nasdaq exceeds certain thresholds for a period of at least 10 days out of 20 consecutive trading days at any time during the five-year period following the closing of the Business Combination (the “Common Stock Price”).

The Earn-Out Shares will be issued by the Company to the Platinum Stockholder as follows:

a one-time issuance of 2,500,000 shares if the Common Stock Price is greater than $13.00;

a one-time issuance of 2,500,000 shares if the Common Stock Price is greater than $15.50;

a one-time issuance of 2,500,000 shares if the Common Stock Price is greater than $18.00; and

a one-time issuance of 2,500,000 shares if the Common Stock Price is greater than $20.50.

If any of the Common Stock Price thresholds described in the foregoing clauses (each, a “Triggering Event”) are not achieved within the five-year period following the closing of the Business Combination, the Company will not be required to issue the Earn-Out Shares in respect of such Common Stock Price threshold. In no event shall the Platinum Stockholder be entitled to receive more than an aggregate of 10,000,000 Earn-Out Shares.

If, during the earn-out period, there is a change of control (as defined in the Merger Agreement) that will result in the holders of Parent Class A Common Stock receiving a per share price equal to or in excess of the applicable Common Stock Price required in connection with any Triggering Event (an “Acceleration Event”), then immediately prior to the consummation of such change of control: (a) any such Triggering Event that has not previously occurred shall be deemed to have occurred; and (b) Parent shall issue the applicable Earn-Out Shares to the cash consideration stockholders (as defined in the Merger Agreement) (in accordance with their respective pro rata cash share), and the recipients of the issued Earn-Out Shares shall be eligible to participate in such change of control.

The Company has estimated the fair value of the contingently issuable shares to be $73.15 million. The Company used a Monte Carlo simulation option-pricing model to arrive at this estimate. Each tranche was valued separately giving specific consideration to the tranche’s price target. The simulation considered volatility and risk free rates utilizing a peer group based on a five year term. This is initially recorded as a distribution to shareholders and is presented as contingently issuable shares. Upon the occurrence of a Triggering Event, any issuable shares would be transferred from contingently issuable shares to common stock and additional paid in capital. Any contingently issuable shares not issued as a result of a Triggering Event not being attained by the end of earn-out period will be cancelled.

Advisory Services Agreement

On January 7, 2019, the Company entered into a new corporate advisory services agreement with Platinum Equity Advisors, LLC (“Advisors”), whereby Advisors will provide certain transactional and corporate advisory services to the Company as mutually agreed by the parties. No fees are payable under the agreement, but the Company must reimburse Advisors for its out-of-pocket expenses incurred in connection with services rendered.

13.	Commitments and Contingencies

The Company has issued various letters of credit under contractual arrangements with certain of its vendors and customers. Outstanding letters of credit under these arrangements totaled $1.0 million at March 31, 2019.

The Company has issued non-cancelable purchase commitments to certain vendors. The aggregate non-cancelable purchase commitments outstanding at March 31, 2019 were $16.5 million.

The Company is subject to tax audits in the normal course of business and does not have material contingencies recorded related to such audits.

Legal Proceedings

The Company is subject to legal and regulatory actions that arise from time to time in the ordinary course of business. The Company records a liability when it believes it is probable a loss was incurred and the amount of loss or range of loss can be reasonably estimated. The assessment as to whether a loss is probable, reasonably possible or remote, and as to whether a loss or a range of such loss is estimable, often involves significant judgment about future events. The Company has determined that resolution of pending matters is not probable to have a material adverse impact on its condensed consolidated results of operations, cash flows, or financial position. However, the outcome of litigation is inherently uncertain. As additional information becomes available, the Company reassesses the potential liability.

14.	Segment Reporting

The Company has two operating and reportable segments, Government Solutions and Commercial Services. Government Solutions delivers traffic law enforcement services and products to state and local governments. Commercial Services delivers tolling and violation management services to rental car companies, commercial fleet vehicle owners and violation issuing authorities. The Company’s ~~Sponsor~~Chief Operating Decision Maker (“CODM”) function is comprised of the Company’s CEO and certain defined representatives of the Company’s executive management team. The Company’s CODM function monitors operating performance, allocates resources and deploys capital based on these two operating and reportable segments.

Segment performance is based on revenues and income (loss) from operations before depreciation, amortization, impairment and gain (loss) on disposal of assets, stock-based compensation and interest expense and after other (income) expense, net. The table below refers to this measure as Segment profit (loss). Depreciation, amortization, impairment and gain (loss) on disposal of assets, stock-based compensation, interest expense, loss on extinguishment of debt and income taxes are not indicative of operating performance, and, as a result are not included in the measures that are reviewed by the CODM function for the operating and reportable segments. Other (income) expense, net consists primarily of credit card rebates earned on the prepayment of tolling violations and therefore included in Segment profit (loss). There are no significant non-cash items reported in Segment profit (loss).

The following tables set forth financial information by segment for the three months ended March 31, 2019 and March 31, 2018, respectively:

	For the three months ended March 31, 2019
	Government			Commercial			Corporate and
($ in thousands)	Solutions			Services			Other			Total
Service revenue	$	35,482		$	62,588		$	—		$	98,070
Product sales		391			—			—			391
Total revenue		35,873			62,588			—			98,461
Cost of service revenue		525			864			—			1,389
Cost of product sales		276			—			—			276
Operating expenses		14,038			15,096			—			29,134
Selling, general and administrative expenses		7,850			10,762			—			18,612
Other (income) expense, net		(37	)		(2,171	)		1			(2,207	)
Segment profit (loss)	$	13,221		$	38,037		$	(1	)	$	51,257
Segment profit (loss)	$	13,221		$	38,037		$	(1	)	$	51,257
Depreciation, amortization, impairment, and (gain) loss on disposal of assets, net		—			—			28,941			28,941
Stock-based compensation		—			—			2,143			2,143
Interest expense		—			—			16,033			16,033
Income (loss) before income tax provision	$	13,221		$	38,037		$	(47,118	)	$	4,140

	For the three months ended March 31, 2018
	Government			Commercial			Corporate and
($ in thousands)	Solutions			Services			Other			Total
Service revenue	$	36,559		$	32,447		$	—		$	69,006
Product sales		235			—			—			235
Total revenue		36,794			32,447			—			69,241
Cost of service revenue		654			177			—			831
Cost of product sales		172			—			—			172
Operating expenses		14,040			9,641			—			23,681
Selling, general and administrative expenses		6,122			21,594			5,560			33,276
Other (income) expense, net		(38	)		(1,288	)		33			(1,293	)
Segment profit (loss)	$	15,844		$	2,323		$	(5,593	)	$	12,574
Segment profit (loss)	$	15,844		$	2,323		$	(5,593	)	$	12,574
Depreciation, amortization, impairment, and (gain) loss on disposal of assets, net		—			—			18,544			18,544
Interest expense		—			—			12,647			12,647
Loss on extinguishment of debt		—			—			10,151			10,151
Income (loss) before income tax (benefit)	$	15,844		$	2,323		$	(46,935	)	$	(28,768	)

15.	Guarantor/Non-Guarantor Financial Information

VM Consolidated, Inc. a wholly owned subsidiary of the Company is the lead borrower of the New First Lien Term Loan and the New Revolver. VM Consolidated, Inc. is owned by the Company through a series of holding companies that ultimately end with the Company. VM Consolidated, Inc. is wholly owned by Greenlight Acquisition Corporation, which is wholly owned by Greenlight Intermediate Holding Corporation, which is wholly owned by Greenlight Holding Corporation, which is wholly owned by Verra Mobility Holdings, LLC, which is wholly owned by Verra Mobility Corporation or the Company. Prior to the Business Combination, VM Consolidated, Inc. was known as ATS Consolidated, Inc. and its financial information was the same as the lead borrower. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions, including transactions with the Company’s wholly-owned subsidiary guarantors and non-guarantor subsidiaries.

The following financial information presents Condensed Consolidated Balance Sheets as of March 31, 2019 and the related Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 for the Company, Combined Guarantor Subsidiaries and Combined Non-Guarantor Subsidiaries:

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

at March 31, 2019

(Unaudited)

			VM
	Verra Mobility		Consolidated Inc.
	Corporation		(Guarantor
($ in thousands)	(Ultimate Parent)		Subsidiary)		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	91,484	$	—		$	91,484
Restricted cash		—		1,704		—			1,704
Accounts receivable, net		—		94,630		—			94,630
Unbilled receivables		—		16,753		—			16,753
Investment in subsidiary		141,767		—		(141,767	)		—
Prepaid expenses and other current assets		—		19,012		—			19,012
Total current assets		141,767		223,583		(141,767	)		223,583
Installation and service parts, net		—		10,822		—			10,822
Property and equipment, net		—		71,686		—			71,686
Intangible assets, net		—		491,853		—			491,853
Goodwill		—		565,596		—			565,596
Due from affiliates		169,259		—		(169,259	)		—
Other non-current assets		—		2,072		—			2,072
Total assets	$	311,026	$	1,365,612	$	(311,026	)	$	1,365,612
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	—	$	52,239	$	—		$	52,239
Accrued liabilities		6,205		24,243		—			30,448
Current portion of long-term debt		—		9,104		—			9,104
Total current liabilities		6,205		85,586		—			91,791
Long-term debt, net of current portion and deferred financing costs		—		859,768		—			859,768
Other long-term liabilities		—		3,633		—			3,633
Payable related to tax receivable agreement				66,097		—			66,097
Due to affiliates		—		169,259		(169,259	)		—
Asset retirement obligation		—		6,855		—			6,855
Deferred tax liabilities		—		32,647		—			32,647
Total liabilities		6,205		1,223,845		(169,259	)		1,060,791
Total stockholders' equity		304,821		141,767		(141,767	)		304,821
Total liabilities and stockholders' equity	$	311,026	$	1,365,612	$	(311,026	)	$	1,365,612

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Three Months Ended March 31, 2019

(Unaudited)

				VM
	Verra Mobility			Consolidated Inc.
	Corporation			(Guarantor
($ in thousands)	(Ultimate Parent)			Subsidiary)			Eliminations			Consolidated
Service revenue	$	—		$	98,070		$	—		$	98,070
Product sales		—			391			—			391
Total revenue		—			98,461			—			98,461
Cost of service revenue		—			1,389			—			1,389
Cost of product sales		—			276			—			276
Operating expenses		—			29,338			—			29,338
Selling, general and administrative expenses		—			20,551			—			20,551
Depreciation, amortization, impairment and (gain) loss on disposal of assets, net		—			28,941			—			28,941
Total costs and expenses		—			80,495			—			80,495
Income from operations		—			17,966			—			17,966
(Income) loss from equity investment		(2,820	)		—			2,820			—
Interest expense		—			16,033			—			16,033
Other income, net		—			(2,207	)		—			(2,207	)
Total other expense (income)		(2,820	)		13,826			2,820			13,826
Income (loss) before income tax (benefit) provision		2,820			4,140			(2,820	)		4,140
Income tax provision		—			1,320			—			1,320
Net income	$	2,820		$	2,820		$	(2,820	)	$	2,820
Other comprehensive income (loss):
Foreign currency translation adjustment		—			1,324			—			1,324
Total comprehensive income (loss)	$	2,820		$	4,144		$	(2,820	)	$	4,144

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2019

(Unaudited)

				VM
	Verra Mobility			Consolidated Inc.
	Corporation			(Guarantor
($ in thousands)	(Ultimate Parent)			Subsidiary)			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,820		$	2,820		$	(2,820	)	$	2,820
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		—			28,939			—			28,939
Amortization of deferred financing costs and discounts		—			1,833			—			1,833
Accretion expense		—			90			—			90
Write-downs of installation and service parts and (gain) loss on disposal of assets		—			3			—			3
Installation and service parts expense		—			257			—			257
Bad debt expense		—			1,270			—			1,270
Deferred income taxes		—			(1,073	)		—			(1,073	)
Loss (income) from equity investment		(2,820	)		—			2,820			—
Stock-based compensation		—			2,143			—			2,143
Changes in operating assets and liabilities:
Accounts receivable, net		—			(8,372	)		—			(8,372	)
Unbilled receivables		—			(3,797	)		—			(3,797	)
Prepaid expense and other current assets		—			(1,301	)		—			(1,301	)
Other assets		—			(226	)		—			(226	)
Accounts payable and accrued liabilities		—			18,413			—			18,413
Due to affiliates		—			—			—			—
Other liabilities		—			(3,648	)		—			(3,648	)
Net cash provided by operating activities		—			37,351			—			37,351
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of installation and service parts and property and equipment		—			(9,219	)		—			(9,219	)
Cash proceeds from the sale of assets and insurance recoveries		—			52			—			52
Net cash used in investing activities		—			(9,167	)		—			(9,167	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt		—			(2,276	)		—			(2,276	)
Payment of debt issuance costs		—			(37	)		—			(37	)
Net cash provided by (used in) financing activities		—			(2,313	)		—			(2,313	)
Effect of exchange rate changes on cash and cash equivalents		—			236			—			236
Net increase in cash, cash equivalents and restricted cash		—			26,107			—			26,107
Cash, cash equivalents and restricted cash - beginning of period		—			67,081			—			67,081
Cash, cash equivalents and restricted cash - end of period	$	—		$	93,188		$	—		$	93,188

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

Three Months Ended March 31, 2019

(Unaudited)

			VM
	Verra Mobility		Consolidated Inc.
	Corporation		(Guarantor
	(Ultimate Parent)		Subsidiary)			Eliminations		Consolidated
Supplemental cash flow information:
Interest paid	$	—	$	13,890		$	—	$	13,890
Income taxes paid (refunded), net		—		(4,710	)		—		(4,710	)
Supplemental non-cash investing and financing activities:
Non-cash additions (reductions) to ARO, property and equipment, and other		—		28			—		28
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period end		—		4,084			—		4,084

16.	Subsequent Event

On April 26, 2019, the triggering event for the issuance of the first tranche of Earn-Out Shares to the Platinum Stockholder (see Note 12) occurred, as the volume weighted average closing price per share of the Company’s Class A Common Stock as of that date had been greater than $13.00 for 10 out of 20 consecutive trading days. This triggering event resulted in the issuance of 2.5 million shares of the Company’s common stock and will result in an increase in the Company’s common stock and additional paid-in capital accounts of $18.2 million, with a corresponding decrease to the common stock contingent consideration account.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Stockholders should read the following discussion and analysis of our financial condition and results of operations together with our Annual Report on Form 10-K/A for the year ended December 31, 2018 and our financial statements included in Part I, Item 1, of this Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the Annual Report on Form 10-K/A for the year ended December 31, 2018.

Business Overview

We believe we are a leading provider of smart mobility technology solutions and services throughout the United States, Canada and Europe. We provide integrated technology solutions and services, which include toll and violations management, title and registration, automated safety solutions, and other data-driven solutions to our customers, which include rental car companies (“RACs”), fleet management companies (“FMCs”), other large fleet owners, municipalities, school districts and violation-issuing authorities. Our solutions simplify the smart mobility ecosystem by utilizing what we believe are industry-leading capabilities, information and technology expertise, and integrated hardware and software to efficiently facilitate the automated processing of tolls and violations for hundreds of agencies and millions of end users annually, while also making cities and roadways safer for everyone.

Segment Information

We have two operating and reportable segments, Commercial Services and Government Solutions:

The Commercial Services division offers toll and violation management solutions for the commercial fleet and rental car industries by partnering with the leading fleet management and rental car companies in North America and Europe. The Commercial Services division also offers title and registration services and processing for individuals, rental car companies and fleet management companies.

The Government Solutions division provides complete, end-to-end red-light, speed, school bus stop arm and bus lane enforcement solutions. The Company implements and administers traffic safety programs for municipalities and agencies of all sizes.

Segment performance is based on revenues and pre-tax income (loss) before depreciation, amortization, impairment and gain (loss) on disposal of assets, interest expense, stock-based compensation and income taxes.

Executive Summary

We operate with long-term contracts and a highly recurring service revenue model. We continue to execute on our strategy of growing revenues with existing customers, expanding offerings into adjacent markets through innovation or acquisition and reducing operating costs. During the periods presented, we:

Executed on growth strategies by completing strategic acquisitions: we acquired Highway Toll Administration, LLC, and Canada Highway Toll Administration (collectively, “HTA”), a tolling company which strengthens our position in tolling and related services to RAC and FMC customers, in the first quarter of 2018; and Euro Parking Collection (“EPC”) in the second quarter of 2018, providing a platform to expand our RAC and FMC solutions into Europe.

Grew service revenue from $69.0 million in the three months ended March 31, 2018 to $98.1 million for the three months ended March 31, 2019. Acquisitions contributed $21.6 million to the revenue growth, while expansion in existing products or customers contributed $7.5 million to the revenue growth.

Improved our cost structure, as operating expenses as a percentage of total revenue decreased from 34.2% in the three months ended March 31, 2018 to 29.8% in the three months ended March 31, 2019.

Generated cash flows from operating activities of $37.4 million for the three months ended March 31, 2019. Cash flows from operating activities for the three months ended March 31, 2018 were negatively impacted by $15.6 million of expenses associated with the HTA acquisition.

Factors Affecting Our Operating Results

Our operating results and financial performance are influenced by certain unique events during the periods discussed herein, including the following:

Business Combination

We were originally incorporated in Delaware on August 15, 2016 as Gores ~~Sponsor~~Holdings II, Inc. (“Gores”), a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more target businesses. On January 19, 2017, we consummated our initial public offering, following which our shares began trading on the Nasdaq Capital Market.

On June 21, 2018, Gores, AM Merger Sub I, Inc., a direct, wholly-owned subsidiary of Gores (“First Merger Sub”), AM Merger Sub II, LLC, a ~~Delaware limited liability company~~direct, wholly-owned subsidiary of Gores (“Second Merger Sub”), Greenlight Holding II Corporation (“Greenlight”), and PE Greenlight Holdings, LLC entered into an Agreement and Plan of Merger as amended on August 23, 2018 by that certain Amendment No. 1 to Agreement and Plan of Merger (as amended, the “Merger Agreement”), which provided for, among other things, (i) the merger of First Merger Sub with and into Greenlight, with Greenlight continuing as the surviving corporation (the ~~“Sponsor”~~“First Merger”) and (ii) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Greenlight with and into Second Merger Sub, with Second Merger Sub continuing as the surviving entity (the “Second Merger” and, together with the First Merger, the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). ~~The Company has selected December 31~~st asIn connection with the closing of the Business Combination on October 17, 2018, we changed our name to Verra Mobility Corporation. As a result of the Business Combination, we became the owner, directly or indirectly, of all of the equity interests of Verra Mobility Holdings, LLC (formerly Second Merger Sub) and its ~~fiscal year-end.~~subsidiaries.

~~At September 30, 2017,~~HTA Acquisition and Refinancing

On March 1, 2018, we acquired HTA for an aggregate purchase price of $603.3 million, consisting of $525.0 million in cash, $9.7 million in purchase price adjustments, a $11.3 million payment to the ~~Company had not commenced any operations. All activity~~sellers for certain tax items, and the issuance of equity in Greenlight with a fair value of approximately $57.3 million. The receipt of the equity was treated for accounting purposes as a capital contribution from Greenlight Acquisition Corporation. We recognized $15.6 million of costs related to the transaction, in the three months ended March 31, 2018. HTA contributed approximately $28.1 million and $9.7 million in revenues for the ~~period~~three months ended March 31, 2019 and 2018, respectively. See Note 3, Mergers and Acquisitions, in Item 1, Financial Statements.

In connection with the HTA acquisition, we refinanced the 2017 Credit Facilities (defined below) and entered into the 2018 Credit Facilities (defined below), which provided for term loans with an aggregate principal amount of $1.04 billion and a revolver with an aggregate commitment of up to $75.0 million. We recorded a loss on extinguishment of the 2017 Credit Facilities of approximately $10.2 million in the three months ended March 31, 2018, which included a prepayment penalty of $3.8 million related to one of the term loans. See Note 7, Debt, in Item 1, Financial Statements.

EPC Acquisition

On April 6, 2018, we acquired EPC for an aggregate purchase price of $62.9 million. The purchase consideration consisted primarily of equity in Greenlight and working capital adjustments, which aggregated $2.6 million. The receipt of the equity was treated for accounting purposes as a capital contribution from ~~August 15, 2016 (inception) through September 30,~~Greenlight Acquisition Corporation. EPC contributed approximately $3.2 million in revenues for the three months ended March 31, 2019. See Note 3, Mergers and Acquisitions, in Item 1, Financial Statements.

ATS Merger

On May 31, 2017, ~~relates~~private equity investment vehicles sponsored by Platinum acquired ATS Consolidated, Inc. (now VM Consolidated, Inc.) pursuant to the ~~Company’s formation~~Agreement and ~~initial public offering (“Public Offering”~~Plan of Merger, dated April 15, 2017, by and among ATS Consolidated, Inc., Greenlight Merger Corporation, a wholly owned subsidiary of Greenlight Acquisition Corporation, and Greenlight Acquisition Corporation, whereby we merged with and into Greenlight Merger Corporation with the former surviving the merger (such transaction, the “ATS Merger”) ~~described below.~~ .

Primary Components of Operating Results

Revenues

Total revenues consist of service revenues generated by our Commercial Services and Government Solutions segments and product sales generated by the Government Solutions segment.

Service Revenue. The ~~Company completed~~Commercial Services segment primarily generates service revenue through the ~~Public Offering~~management and operation of tolling programs for RACs, FMCs and other large fleet customers. These solutions are full service offerings by which we enroll plates of our customers’ vehicles with tolling authorities, process payments on ~~January 19, 2017 (the “Public Offering Closing Date”). The Company will not generate any operating revenues until after~~ the ~~completion of its Business Combination, at~~customers’ behalf and, through proprietary technology, integrate with customer data to match the ~~earliest. Subsequent~~toll to the ~~Public Offering,~~driver and then bill the ~~Company~~driver (or our customer, as applicable) for use of the service. The cost of certain tolls, violations and our customers’ share of administration fees are netted against revenue. We also generate service revenue in the Commercial Services segment through processing titles, registrations and violations for our customers.

The Government Solutions segment generates service revenue through the operation and maintenance of photo enforcement systems. This revenue is generally tied to long-term contracts, and revenue is recognized either when services are performed or when citations are issued or paid, depending on the terms of the customer contract. Revenue drivers included the number of systems installed and the monthly revenue per system. Ancillary service revenue is generated in the Government Solutions segment from payment processing, pass-through fees for collection expense, street light maintenance contracts and other fees.

Product Sales. Product sales are generated by the sale of photo enforcement equipment to certain Government Solutions customers. There are a small number of customers who purchase this equipment, and their buying patterns vary greatly from period to period. Product sales revenue is recognized when the equipment is accepted or installed.

Cost and Expenses

Cost of Service Revenue. Cost of service revenue consists of collection and other professional services contracted with third parties and associated with the delivery of certain ancillary services performed by both the Government Solutions and Commercial Services segments.

Cost of Product Sales. Costs of product sales consist of the costs to acquire and install photo enforcement equipment that is purchased by Government Solutions customers.

Operating Expenses. Operating expenses include payroll and payroll-related costs (including stock-based compensation), costs related to the operation of our call centers and other operational costs, including transaction processing, print, postage and communication costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses includes payroll and payroll-related costs (including stock-based compensation), real estate lease expense, insurance costs, legal fees and general corporate expenses.

Depreciation, Amortization, Impairment and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization, impairment, (gain) loss on disposal of assets, net includes depreciation on property, plant and equipment, and amortization of definite-lived intangible assets. This line item also includes one-time gains or losses incurred in connection with the disposal of certain assets.

Other Income, Net. Other income, net primarily consists of volume rebates from total spend on purchasing cards and gain or loss on foreign currency translation.

Loss on Extinguishment of Debt. Loss on extinguishment of debt generally consists of early payment penalties, the write-off of original issue discounts and deferred financing costs associated with debt extinguishment.

Results of Operations

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

The following table sets forth for each of the periods indicated our statements of operations data and other information and expresses each item as a percentage of total revenues for the periods presented as well as the changes between periods. The tables and information provided were derived from exact numbers and may have immaterial rounding differences.

	Three Months Ended March 31,
							Percentage of Revenue						Increase (Decrease) 2019 vs 2018
($ in thousands)	2019			2018			2019			2018			$			%
Service revenue	$	98,070		$	69,006			99.6	%		99.7	%	$	29,064			42.1	%
Product sales		391			235			0.4	%		0.3	%		156			66.4	%
Total revenue		98,461			69,241			100.0	%		100.0	%		29,220			42.2	%
Cost of service revenue		1,389			831			1.4	%		1.2	%		558			67.1	%
Cost of product sales		276			172			0.3	%		0.2	%		104			60.5	%
Operating expenses		29,338			23,681			29.8	%		34.2	%		5,657			23.9	%
Selling, general and administrative expenses		20,551			33,276			20.9	%		48.1	%		(12,725	)		(38.2	)%
Depreciation, amortization, impairment, and (gain) loss on disposal of assets, net		28,941			18,544			29.4	%		26.8	%		10,397			56.1	%
Total costs and expenses		80,495			76,504			81.8	%		110.5	%		3,991			5.2	%
Income (loss) from operations		17,966			(7,263	)		18.2	%		(10.5	)%		25,229			347.4	%
Interest expense		16,033			12,647			16.3	%		18.3	%		3,386			26.8	%
Loss on extinguishment of debt		—			10,151			—			14.7	%		(10,151	)	n/a
Other income, net		(2,207	)		(1,293	)		(2.2	)%		(1.9	)%		(914	)		70.7	%
Total other expense		13,826			21,505			14.0	%		31.1	%		(7,679	)		(35.7	)%
Income (loss) before income tax (benefit) provision		4,140			(28,768	)		4.2	%		(41.5	)%		32,908			114.4	%
Income tax (benefit)		1,320			(6,610	)		1.3	%		(9.5	)%		7,930			120.0	%
Net income (loss)	$	2,820		$	(22,158	)		2.9	%		(32.0	)%	$	24,978			112.7	%

	Three Months Ended March 31,
					Percentage of Revenue						Increase (Decrease) 2019 vs 2018
($ in thousands)	2019		2018		2019			2018			$		%
Adjusted EBITDA⁽¹⁾	$	51,255	$	33,781		52.1	%		48.8	%	$	17,474		51.7	%

(1)

Adjusted EBITDA is a non-GAAP measure. Refer to the section entitled Non-GAAP Financial Data for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, as well as a discussion of why management believes this information is useful to investors and its limitations.

Service Revenue. Service revenue increased by $29.1 million, or 42.1%, to $98.1 million for the three months ended March 31, 2019 from $69.0 million for the three months ended March 31, 2018, representing 99.6% and 99.7% of total revenue, respectively. The following table depicts service revenue by segment:

	Three Months Ended March 31,
					Percentage of Revenue						Increase (Decrease) 2019 vs 2018
($ in thousands)	2019		2018		2019			2018			$			%
Service Revenue
Commercial Services	$	62,588	$	32,447		63.6	%		46.9	%	$	30,141			92.9	%
Government Solutions		35,482		36,559		36.0	%		52.8	%		(1,077	)		(2.9	)%
Total Service Revenue	$	98,070	$	69,006		99.6	%		99.7	%	$	29,064			42.1	%

Commercial Services service revenue increased by $30.1 million, or 92.9%, from $32.4 million for the three months ended March 31, 2018 to $62.6 million for the three months ended March 31, 2019. We acquired HTA, a toll and violation processor, on March 1, 2018, and EPC, a European violations processor, on April 6, 2018. These acquisitions contributed $21.6 million to year over year service revenue growth. Title and registration service revenue grew $1.4 million year over year representing a nearly 48% increase in revenue. The majority of this increase is related to the timing of transaction flow from our customers and should not be viewed as the go-forward growth rate for this product. The remaining difference of $7.1 million resulted from improved volumes in both billable days and tolls processed across our tolling products.

Government Solutions service revenue includes revenue from red light, speed, school bus arm and bus lane photo enforcement systems. Service revenue decreased slightly by $1.1 million, or 2.9%, to $35.5 million for the three months ended March 31, 2019 from $36.6 million for the three months ended March 31, 2018. Revenue from operation of our red light programs represents 52% of segment service revenue and declined $1.8 million year over year. This decline was driven by transaction volume declines of approximately $0.8 million primarily due to the Miami, Florida program loss, with the remaining decline resulting from lower price per system in variable contracts. Pricing of red light programs can be impacted by timing of transaction volume in our variable contracts as well as the pricing of contract renewals. We believe that red light will be a stable product but we do not expect meaningful growth in the future. Speed programs which make up 26% of service revenue, grew approximately $0.9 million year over year due to increases in the total number of camera systems installed and higher average pricing. We believe that school zone speed programs will continue to be a growth product in fiscal 2019.

Our previous reporting of installed camera systems included systems connected to suspended programs or spare systems at client locations. We re-evaluated our metric, and going forward we will report only installed camera systems that are generating revenue, as we believe this is a more meaningful presentation. There were 4,604 camera systems installed at March 31, 2019 compared to 4,252 at March 31, 2018. The increase in systems was primarily due to new installations of school bus arm systems and to a lesser extent the expansion of speed systems at existing customers. This increase was partially offset by a decline in red light systems primarily due to the loss of the Miami, Florida program noted above.

Product Sales. Product sales includes revenue generated from Government Solutions customers who purchased their equipment. Product sales increased by $0.2 million, from $0.2 million for the three months ended March 31, 2018 to $0.4 million for the same period in 2019. There are a small number of customers who purchase this equipment, and their buying patterns vary greatly from period to period.

Cost of Service Revenue. Cost of service revenue increased by $0.6 million, to $1.4 million for the three months ended March 31, 2019 from $0.8 million for the three months ended March 31, 2018. The increase is primarily due to the inclusion of EPC operations for the entire period in the three months ended March 31, 2019 for which there were no comparable amounts in the prior period.

Cost of Product Sales. Cost of product sales increased slightly by $0.1 million from $0.2 million in the quarter ended March 31, 2018 to $0.3 million in the same period in 2019, and was directly in line with the change in product sales.

Operating Expenses. Operating expenses increased by $5.7 million, or 23.9%, from $23.7 million for the three months ended March 31, 2018 to $29.3 million for the three months ended March 31, 2019. The increase is primarily due to the inclusion of the HTA and EPC operations for the entire period in the three months ended March 31, 2019 compared to one month of expenses for HTA in the three months ended March 31, 2018. Operating expenses as a percentage of revenue decreased from 34.2% to 29.8% for the three months ended March 31, 2018 and 2019, respectively, reflecting management's focus on operational efficiency. Operating expenses by segment appear in the table below:

	Three Months Ended March 31,
					Percentage of Revenue						Increase (Decrease) 2019 vs 2018
($ in thousands)	2019		2018		2019			2018			$			%
Operating Expenses
Commercial Services	$	15,096	$	9,641		15.3	%		13.9	%	$	5,455			56.6	%
Government Solutions		14,038		14,040		14.3	%		20.3	%		(2	)	n/a
Total operating expenses before stock-based compensation		29,134		23,681		29.6	%		34.2	%		5,453			23.0	%
Stock-based compensation		204		—		0.2	%		0.0	%	204			n/a
Total Operating Expenses	$	29,338	$	23,681		29.8	%		34.2	%		5,657			23.9	%

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended March 31, 2019 decreased by $12.7 million to $20.6 million compared to $33.3 million for the three months ended March 31, 2018. The decrease was primarily related to $18.1 million of cost associated with the HTA acquisition of which $15.6 million was recorded directly to the Commercial Services segment and $2.5 million was recorded to Corporate in the quarter ended March 31, 2018 for which there are no comparable amounts in the current period. Additionally, we incurred $1.4 million of other non-recurring expenses primarily associated with the HTA integration in the three months ended March 31, 2018 for which there are no comparable amounts in the current period. These decreases were partially offset by the inclusion of the HTA and EPC operations for the entire period in the three months ended March 31, 2019 compared to one month of expenses for HTA in the three months ended March 31, 2018. Selling, general and administrative expenses as a percentage of revenue decreased from 48.1% to 20.9% for the three months ended March 31, 2018 and 2019, respectively.Selling, general and administrative expenses by segment appear in the table below:

	Three Months Ended March 31,
					Percentage of Revenue						Increase (Decrease) 2019 vs 2018
($ in thousands)	2019		2018		2019			2018			$			%
Selling, General and Administrative Expenses
Commercial Services	$	10,762	$	21,594		10.9	%		31.2	%	$	(10,832	)		(50.2	)%
Government Solutions		7,850		6,122		8.0	%		8.8	%		1,728			28.2	%
Corporate		—		5,560		0.0	%		8.1	%		(5,560	)	n/a
Total selling, general and administrative expenses before stock-based compensation		18,612		33,276		18.9	%		48.1	%		(14,664	)		(44.1	)%
Stock-based compensation		1,939		—		2.0	%		0.0	%		1,939		n/a
Total selling, general and administrative expenses	$	20,551	$	33,276		20.9	%		48.1	%	$	(12,725	)		(38.2	)%

Depreciation, Amortization, Impairment, and Gain or Loss on Disposal of Assets, Net. Depreciation, amortization, impairment, and gain or loss on disposal of assets, net, increased by $10.4 million, or 56.1%, from $18.5 million for the three months ended March 31, 2018 to $28.9 million for the same period in 2019. The increase is primarily due to the increased amortization expense resulting from the HTA and EPC acquisitions inclusion for the entire period in the three months ended March 31, 2019 compared to one month of amortization for HTA in the three months ended March 31, 2018.

Interest Expense. Interest expense increased by $3.4 million from $12.6 million for the three months ended March 31, 2018 to $16.0 million for the same period in 2019. The increase is due to higher average debt balances quarter over quarter primarily related to the acquisition of HTA. The average debt balance for the three months ended March 31, 2018 was $744.2 million compared to $902.4 million for the same period in 2019. See “—Liquidity and Capital Resources.”

Loss on Extinguishment of Debt. Loss on extinguishment of debt of $10.2 million in the three months ended March 31, 2018 was a result of the 2017 Credit Facilities replaced with the 2018 Credit Facilities in connection with the HTA acquisition. The loss consisted of a $3.8 million prepayment penalty on the Old Term Loan balances, a $2.0 million write-off of preexisting deferred financing costs, and $4.4 million of lender and third-party costs associated with the issuance of the 2018 Credit Facilities. See “—Liquidity and Capital Resources.”

Other Income, Net. Other income for the three months ended March 31, 2019 was $2.2 million compared to $1.3 million in the three months ended March 31, 2018. The is primarily due to the increased purchasing card rebates resulting from the inclusion of the HTA acquisition for the entire period in the three months ended March 31, 2019 compared to one month in the three months ended March 31, 2018. We pay a high volume of tolls on behalf of our customers with purchasing cards which generate ~~non-operating~~rebates based on volume, payment terms and rebate frequency.

Income Tax (Benefit). Income tax (benefit) changed by $7.9 million from $(6.6) million, representing an effective tax rate of (23.0%), for the three months ended March 31, 2018 to a tax of $1.3 million, representing an effective tax rate of 31.9% for the same period in 2019. The effective tax rate change was primarily due to higher pretax income across multiple jurisdictions, and an increase in permanent differences between book and taxable income, including the 162(m) executive compensation limitation and the Global Intangible Low Tax Income inclusion.

Net Income (Loss). We had net income of $2.8 million for the three months ended March 31, 2019, as compared to a net loss of $22.2 million for the three months ended March 31, 2018. The increase in net income was primarily due to expenses in the first quarter of fiscal 2018 related to an aggregate of $30 million of acquisition, refinancing and integration costs associated with the HTA acquisition for which there no comparable amounts in the three months ended March 31, 2019. This increase was partially offset by related increased interest expense and amortization expense noted above.

Adjusted EBITDA. For the three months ended March 31, 2019 adjusted EBITDA was $51.3 million, an increase of $17.5 million or 51.7% from the three months ended March 31, 2018. The growth was in line with the income statement activity discussed above, adjusted for certain transactions and non-recurring expenses.

Liquidity and Capital Resources

Our principal sources of liquidity are cash flow from operations, long-term borrowings and borrowings under revolving credit facilities.

We have incurred significant long-term debt, as described below, to fund the ATS Merger and the HTA acquisition.

We believe that the existing cash and cash equivalents and cash flows provided by operating activities will be sufficient to meet operating cash requirements and service debt obligations for at least the next 12 months. Our ability to generate sufficient cash from our operating activities depends on our future performance, which is subject to general economic, political, financial, competitive and other factors beyond our control. In addition, our future capital expenditures and other cash requirements could be higher than currently expected due to various factors, including any expansion of our business that it undertakes, including strategic acquisitions. Should we pursue additional strategic acquisitions, we may need to raise additional capital, which may be in the form of ~~interest~~additional long-term debt, which may not be available to us on favorable terms, borrowings on the revolver under the 2018 Credit Facilities, equity financings or at all.

We have the ability to borrow under our revolving credit facility to meet obligations as they come due. At March 31, 2019, we had $70.0 million available for borrowing, net of letters of credit, under the New Revolver.

The following table sets forth certain captions indicated on our statements of cash flows for the periods indicated:

	Three Months Ended March 31,
($ in thousands)	2019			2018
Net cash provided by (used in) operating activities	$	37,351		$	(3,196	)
Net cash used in investing activities		(9,167	)		(537,441	)
Net cash provided by (used in) financing activities		(2,313	)		547,996

Cash Flows from Operating Activities

Cash provided by (used in) operating activities increased $40.6 million from $(3.2) million for the three months ended March 31, 2018 to $37.4 million for the three months ended March 31, 2019.

The change in cash provided by (used in) operating activities year over year was primarily due to net income increase of $25.0 million from a loss of $22.2 million in the three months ended March 31, 2018 to income of $2.8 million in the three months ended March 31, 2019. The growth in net income was driven by the inclusion of the results of HTA and EPC operations for the full three month period in 2019 versus only the HTA results for one month in the three month period in 2018, the $18.1 million of transaction expenses in March 31, 2018 for which there is no comparable amount and the $10.2 million loss on extinguishment of debt in the three months ended March 31, 2018 for which there is no comparable amount in the current period.

Adjustments to reconcile net income (loss) to net cash provided by (used in) operations increased $8.6 million due to inclusion of the amortization of intangibles associated with the HTA and EPC acquisitions for the full three month period in 2019 versus only the HTA results for one month in the three month period in 2018, the $10.2 million loss on extinguishment of debt in the three months ended March 31, 2018 for which there is no comparable amount in the current period and a $5.7 million decrease in deferred income taxes as a result of the lower rates enacted as part of the December 2017 passage of H.R.1, “An Act to provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018”.

The aggregate change in operating assets and liabilities represents an aggregate increase of $7.0 million for the three months ended March 31, 2019 versus the three months ended March 31, 2018. The increase was primarily driven by the timing of receipts related to certain advanced deposit payment liabilities received from our customers and payments related to income tax payables.

Cash Flows from Investing Activities

Cash used in investing activities was $(9.2) million and $(537.4) million for the three months ended March 31, 2019 and March 31, 2018, respectively. The change in cash ~~equivalents~~used in investing activities year over year was primarily due to net cash paid in connection with the HTA acquisition during the three months ended March 31, 2018. Cash consideration for the HTA acquisition was $531.7 million and was net of $3.0 million of cash acquired. Additionally, purchases of installation and service parts and property plant and equipment increased from $5.9 million in the three months ended March 31, 2018 to $9.2 million in the three months ended March 31, 2019.

Cash Flows from Financing Activities

Cash provided by (used in) financing activities was $(2.3) million and $548.0 million for the three months ended March 31, 2019 and March 31, 2018, respectively. The change in cash provided by (used in) financing activities year over year was primarily due to the Company entering into the 2018 Credit Facilities during the three months ended March 31, 2018, which included the repayment of the 2017 Credit Facilities.

Debt

In connection with the HTA acquisition, we entered into a First Lien Term Loan Credit Agreement (the “New First Lien Term Loan”), a Second Lien Term Loan Credit Agreement (the “New Second Lien Term Loan” and together with the New First Lien Term Loan, the “New Term Loans”), and a Revolving Credit Facility Agreement (the “New Revolver”) with a syndicate of lenders (collectively with the New Term Loans, the “2018 Credit Facilities”). The 2018 Credit Facilities provide for committed senior secured financing of $1.115 billion, consisting of the New Term Loans in an aggregate principal amount of $1.04 billion and the New Revolver available for loans and letters of credit with an aggregate revolving commitment of up to $75 million (based on borrowing based eligibility as described below).

The 2018 Credit Facilities replaced the previous First Lien Term Loan Credit Agreement (the “Old First Lien Term Loan”), the Second Lien Term Loan Credit Agreement (the “Old Second Lien Term Loan” and together with the Old First Lien Term Loan, the “Old Term Loans”), which were repaid concurrent with the closing on the 2018 Credit Facilities, and a preexisting Revolving Credit Facility Agreement (the “Old Revolver”, collectively with the Old Term Loans, the “2017 Credit Facilities”), which was undrawn at close. The outstanding balances at the date of close on the Old Term Loans, which were repaid with proceeds from the ~~proceeds derived from the Public Offering~~2018 Credit Facilities and ~~the sale~~are no longer outstanding, were $323 million and $125 million, respectively.

The New First Lien Term Loan is repayable in quarterly installments of 1.0% per annum of the ~~Private Placement Warrants~~amount initially borrowed. The New First Lien Loan matures on February 28, 2025. The New First Lien Term Loan bears interest based, at our option, on either (1) LIBOR plus an applicable margin of 3.75% per annum, or (2) an alternate base rate plus an applicable margin of 2.75% per annum. At March 31, 2019, the interest rate on the New First Lien Term Loan was 6.25%.

In addition, the New First Term Loan contains provisions that require mandatory prepayments equal to 50% of excess cash flow (as defined ~~below) held in~~by the ~~Trust Account~~New First Lien Term Loan); provided that, at any time the consolidated first lien net leverage ratio (as defined ~~below).~~

~~Financing~~

~~The Company intends to finance a Business Combination with~~by the ~~net proceeds from its $400,000,000 Public Offering and its sale of $10,000,000 of Private Placement Warrants.~~

~~Upon~~New Term First Lien Loan) on the ~~Public Offering Closing Date and the sale~~last day of the ~~Private Placement Warrants, an aggregate~~fiscal year is less than or equal to 3.70:1.00 but greater than 3.20:1.00, the mandatory prepayment of ~~$400,000,000 was placed in~~the New First Lien Term Loan is equal to 25% of excess cash flow, and if less than 3.20:1.00, the mandatory prepayment is zero.

On July 24, 2018, we secured a ~~Trust Account with Continental Stock Transfer & Trust Company acting as trustee (the “Trust Account”).~~

~~Trust Account~~

~~Funds held in~~$70 million incremental loan commitment under the ~~Trust Account can be invested only in U.S. government treasury bills~~New First Lien Term Loan. The proceeds of this incremental borrowing, together with a maturity of one hundred and eighty (180) days or less or in money market funds meeting certain conditions under Rule 2a‑7 under the Investment Company Act of 1940, as amended, that invest only in direct U.S. government obligations. As of September 30, 2017, the Trust Account consisted of cash and treasury bills compliant with Rule 2a‑7.

~~The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to pay income taxes, if any, none~~portion of the funds held in trust will be released until the earliest of: (i) the completion of the Business Combination; or (ii) the redemption of any public shares of common stock properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of such public shares of common stock if the Company ~~does not complete~~upon the Business Combination within 24 months from the Public Offering Closing Date; or (iii) the redemption of 100% of the public shares of common stock if the Company is unable to complete a Business Combination within 24 months from the Public Offering Closing Date, subject to the requirements of law and stock exchange rules.

~~Business Combination~~

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a Business Combination. The Business Combination must be with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (less any deferred underwriting commissions and taxes payable on interest income earned) at the time of the Company signing a definitive agreement in connection with the Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination.

~~The Company, after signing a definitive agreement for a Business Combination, will either (i) seek stockholder approval~~closing of the Business Combination, were used to repay our $200 million New Second Lien Term Loan in full.

The New Revolver matures on February 28, 2023. Borrowing eligibility under the New Revolver is subject to a monthly borrowing base calculation based on (i) certain percentages of eligible accounts receivable and inventory, less (ii) certain reserve items, including outstanding letters of credit and other reserves. We may at any time, on not more than five occasions, request an increase to the New Revolver of up to an aggregate amount of $50 million. The New Revolver bears interest on either (1) LIBOR plus an applicable margin, or (2) an alternate base rate, plus an applicable margin. The margin percentage applied to (1) LIBOR is either 1.25%, 1.50%, or 1.75%, or (2) the base rate is either 0.25%, 0.50%, or 0.75%, depending on our average availability to borrow under the commitment. At March 31, 2019, we had no outstanding borrowings on the New Revolver and availability to borrow under the New Revolver was $70.0 million, net of $1.0 million of outstanding letters of credit.

Interest on the unused portion of the New Revolver is payable quarterly at 0.375% at March 31, 2019. We are also required to pay participation and fronting fees on $1.0 million in outstanding letters of credit at 1.38% as of March 31, 2019.

All borrowings and other extensions of credits under the 2018 Credit Facilities are subject to the satisfaction of customary conditions and restrictive covenants including absence of defaults and accuracy in material respects of representations and warranties. At March 31, 2019, we were compliant with the 2018 Credit Facilities covenants. Substantially all of our assets are pledged as collateral to secure our indebtedness under the 2018 Credit Facilities.

We recognized a charge of $10.2 million in the three months ending March 31, 2018 consisting of a $3.8 million prepayment penalty on the Old Term Loan balances, a $2.0 million write-off of preexisting deferred financing costs and $4.4 million of lender and third-party costs associated with the issuance of the 2018 Credit Facilities.

We also recorded a loss on extinguishment of the New Second Lien Term Loan of $16.3 million during the fourth quarter of 2018, comprised of prepayment penalty on the full redemption of the New Second Lien Term Loan and the write-off of unamortized deferred financing and lender costs associated with the issuance of the New Second Lien Term Loan facility.

Critical Accounting Policies, Estimates and Judgments

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the fair values assigned to net assets acquired (including identifiable intangibles) in business combinations, the carrying amounts of long-lived assets, goodwill and installation and service parts, the allowance for doubtful accounts, valuation allowances on deferred tax assets, asset retirement obligations, contingent consideration and the recognition and measurement of loss contingencies. Management believes that our estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.

We believe that the critical accounting policy listed below involves our more significant judgments, assumptions, and estimates and, therefore, could have the greatest potential impact on the financial statements. Refer to our 2018 Annual Report on Form 10-K/A for a comprehensive list of our critical accounting policies, estimates and judgments.

Revenue Recognition

Government Solutions. The Government Solutions segment principally generates revenue from providing complete, end-to-end red light, speed, school bus stop arm, and bus lane enforcement solutions. Products, when sold, are typically sold together with the services in a bundle. The average initial term of a contract is 3 to 5 years. Payment terms for contracts with government agencies vary depending on whether the consideration is fixed or variable. Payment terms for contracts with fixed consideration are usually based on equal installments over the duration of the contract. Payment terms for contracts with variable consideration are usually billed and collected as citations are issued or paid.

For bundled packages, we account for individual products and services separately if they are distinct – i.e., if a product or service is separately identifiable from other items in the bundle and if a customer can benefit from it as a stand-alone item. The consideration is allocated between separate products and services in a bundle based on their stand-alone selling prices (“SSP”). We estimate the SSP of our services based upon observable evidence, market conditions and other relevant inputs.

Product sales (sale of camera and installation) – we recognize revenue when the installation process is completed and the camera is ready to perform the services as expected by the customer. Generally, it occurs at site acceptance or first citation. We recognize revenue for the sale of the camera and installation services at a ~~meeting called~~point in time.

Service revenue – we account for ~~such purpose in connection with which stockholders may seek~~all the services as a single continuous service. We have determined our performance obligation is to ~~redeem their shares, regardless of whether they vote for or against~~provide a complete end to end safety and enforcement solution. Promises include providing a system to capture images, processing images taken by the ~~Business Combination, for cash equal~~camera, forwarding eligible images to ~~their pro rata share~~the local police department and processing payments on behalf of the ~~aggregate amount then~~municipality. We determined certain of the promises to our customers are capable of being distinct as they are capable of providing some measure of benefit to the customer either on ~~deposit~~their own or together with other resources that are readily available to the customer. However, we have determined the promises to our customers do not meet the criterion of being distinct within the context of our contracts. We would not be able to fulfill our promises individually as our customers could not obtain the intended benefit from the contract without us fulfilling all promises. Accordingly, we concluded that each contract represents one service offering and is a single performance obligation to our customer. Further, we applied the series guidance for those services as the nature of the service is to provide a service for a period of time with distinct time increments. We recognize revenue from services over time, as it is performed, which is consistent with the pattern in which our customers receive and consume the benefits.

Commercial Services. The Commercial Services segment offers toll and violation management solutions for the commercial fleet and rental car industries by partnering with the leading fleet management and rental car companies in North America and Europe. We have determined our performance obligation is a distinct stand-ready obligation as there is an unspecified quantity of services provided that does not diminish, and the customer is being charged only when it uses our services, such as toll payment, title and registration, etc. Therefore, all services provided within the Commercial Services segment are accounted for as a single performance obligation, of a series of distinct items, with distinct time increments, as a stand ready obligation. Payment terms for contracts with commercial fleet and rental car companies vary, but are usually billed as services are performed. Revenue from services provided in the ~~Trust Account~~Commercial Services segment are recognized over time as the customer simultaneously receives and consumes the benefits provided by us as we perform the services.

Remaining Performance Obligations

As of March 31, 2019, we had approximately $0.3 million of remaining performance obligations in the Government Solutions segment, which includes amounts that will be invoiced and recognized in future periods. The remaining performance obligations are limited only to arrangements that meet the definition of a contract as of ~~two business days prior~~March 31, 2019. As these amounts relate to the ~~consummation~~initial deferral of revenue under a contract, we expect to recognize these amounts over a two month period at the end of the ~~Business Combination, including interest income but less taxes payable, or (ii) provide stockholders~~contract.

We apply the practical expedient and do not disclose variable consideration allocated entirely to a wholly unsatisfied stand-ready performance obligations for certain Government Solutions and Commercial Services contracts as part of the information about remaining performance obligations. The duration for these contracts ranges between 3 and 5 years for new contracts.

Significant Judgments

Under the new revenue standard, significant judgments are required in order to identify contracts with customers and estimate transaction prices. Additional judgments are required for the ~~opportunity to sell their shares~~identification of distinct performance obligations, the estimation of standalone selling prices and the allocation of the transaction price by relative standalone selling prices. Assumptions regarding timing of when control transfers to the ~~Company by means of a tender offer (and thereby avoid~~customer requires significant judgment in order to recognize revenue. We used significant judgment related to identifying the ~~need for a stockholder vote) for an amount in cash equal~~performance obligation and determining whether the services provided are able to ~~their pro rata share of~~be distinct, determining the ~~aggregate amount then on deposit in the Trust Account~~transaction price, specifically as ~~of two business days prior~~it is related to the consummation of the Business Combination, including interest income but less taxes payable. The decision as to whether the Company will seek stockholder approval of the Business Combination or will allow stockholders to sell their sharesdifferent variable consideration structures identified in ~~a tender offer will be made by the Company, solely~~our contracts, and in ~~its discretion, and will be based on a variety of factors such as~~determining the timing of ~~the transaction~~revenue recognition.

Recent Accounting Pronouncements

For discussion of recent accounting pronouncements, refer to Note 2, Summary of Significant Accounting Principles and ~~whether the terms of the transaction would otherwise require the Company to seek stockholder approval, unless a vote is required by law or under NASDAQ rules. If the Company seeks stockholder~~Policies, in Item 1, Financial Statements.

~~approval, it will complete its Business Combination only if a majority of the outstanding shares of common stock voted~~We are ~~voted in favor of the Business Combination. Currently, the Company will not redeem its public shares of common stock in~~ an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its public shares of common stock and the related Business Combination, and instead may search for an alternate Business Combination.

~~As a result of the foregoing redemption provisions, the public shares of common stock will be recorded at the redemption amount and classified~~“emerging growth company” as ~~temporary equity, in accordance with ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) in subsequent periods.~~

The Company will have 24 months from the Public Offering Closing Date to complete its Business Combination. If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the public shares of common stock for a per share pro rata portion of the Trust Account, including interest income, but less taxes payable (less up to $100,000 of such net interest income to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of the Company’s net assets to its remaining stockholders, as part of its plan of dissolution and liquidation. The Sponsor and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they waived their rights to participate in any redemption with respect to their Founder Shares (as defined ~~below); however, if the Sponsor or any of the Company’s officers, directors or affiliates acquire public shares of common stock, they will be entitled to a pro rata share of the Trust Account~~ in the ~~event the Company does not complete a~~Jumpstart Our Business ~~Combination within the required time period.~~

~~In the event~~Startups Act of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per Unit in the Public Offering.

~~Emerging Growth Company~~

~~Section 102(b)(1) of the~~2012 (the “JOBS Act”). The JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. ~~The Company has~~We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, ~~the Company,~~we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

~~2. Significant Accounting Policies~~Non-GAAP Financial Data

~~Basis~~We define “Adjusted EBITDA” as net income (loss) adjusted to exclude (i) interest expense, net, (ii) income tax provision (benefit), (iii) depreciation and amortization, (iv) stock-based compensation and (v) as further adjusted to eliminate the impact of ~~Presentation~~

~~The accompanying~~certain non-recurring items that we do not consider indicative of our ongoing operating performance. These further adjustments are itemized below. Adjusted EBITDA margin % represents Adjusted EBITDA as a percentage of total revenue. We use these metrics to measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors. In addition to Adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial ~~statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)~~ and ~~pursuant~~business trends related to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”), and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position as of September 30, 2017 and theour results of operations and that when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance.

You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments set forth below. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Adjusted EBITDA should not be considered as an alternative to net income (loss), operating income, cash flows ~~for the period presented. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of results that may be expected for the full year~~from operating activities or any other ~~period. The accompanying unaudited financial statements~~performance measures derived in accordance with GAAP, or measures of operating performance or cash flows as measures of liquidity. Adjusted EBITDA and Adjusted EBITDA margin % have important limitations as analytical tools, and you should not consider either in isolation, or as a substitute for analysis of our results as reported under GAAP. In addition, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies and may, therefore, have limitations as a comparative analytical tool. For example, Adjusted EBITDA and Adjusted EBITDA margin %:

do not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;

do not reflect changes in, or cash requirements for, our working capital needs;

do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

do not reflect income tax expense or the cash necessary to pay income taxes; and

does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future.

Our non-GAAP information below should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10‑K filed with the SEC on March 30, 2017 and the notes thereto included the current report Form 8-K dated January 19, 2017 by the Company filed with the SEC.

~~Net Income/(Loss) Per Common Share~~

The Company has two classes of shares, which are referred to as Class A common stock and Class F common stocks. Net income/(loss) per common share is computed utilizing the two-class method. The two-class method is an earnings allocation formula that determines earnings per share separately for each class of common stock based on an allocation of undistributed earnings per the rights of each class. At September 30, 2017, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company under the treasury stock method. As a result, diluted net income/(loss) per common share is the same as basic net income/(loss) per common share for the period. The table below presents a reconciliation of the numerator and denominator used to complute basic and diluted net income/(loss) per share for each class of common stock:

For the Three Months Ended September 30, 2017

For the period from August 15, 2016 (inception) to September 30, 2016

For the Nine Months Ended September 30, 2017

For the period from August 15, 2016 (inception) to September 30, 2016


Class A

Class F

Class A

Class F

Class A

Class F

Class A

Class F
Basic and diluted net income/(loss) per share:










Numerator:










   Allocation of net income/(loss)

$
400,350

$
(145,666)

$
-

$
(24,481)

$
1,183,343

$
(235,118)

$
-

$
(24,481)











Denominator:










   Weighted-average shares outstanding


40,000,000


10,000,000

-


10,781,250

37,352,000


10,163,750

-


10,781,250
Basic and diluted net income/(loss) per share

$
0.01

$
(0.01)

$
-

$
(0.00)

$
0.03

$
(0.02)

$
-

$
(0.00)

~~Concentration of Credit Risk~~

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution and the Trust Account, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

~~Financial Instruments~~

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.

~~Offering Costs~~

The Company complies with the requirements of the ASC 340‑10‑S99‑1 and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering and were charged to stockholders’ equity upon the completion of the Public Offering. Accordingly, at September 30, 2017 and December 31, 2016, offering costs totaling approximately $22,719,995 and $414,606 respectively, (including $22,000,000 in underwriter’s fees), have been charged to stockholders’ equity.

~~Redeemable Common Stock~~

As discussed in Note 3, all of the 40,000,000 shares of class A common stock sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s charter. In accordance with ASC 480, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Although the Company did not specify a maximum redemption threshold, its charter provides that currently, the Company will not redeem its public shares in an amount that would cause its net tangible assets (stockholders’ equity) to be less than $5,000,001.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital.

~~Accordingly, at September 30, 2017, 38,321,227 of the 40,000,000 public shares are classified outside of permanent equity at their redemption value.~~

~~Use of Estimates~~

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s 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 theour unaudited interim condensed consolidated financial statements and the ~~reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.~~

~~Income Taxes~~

The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and

liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

For those liabilities or benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related ~~to unrecognized tax liabilities as income tax expense. No amounts were accrued for the payment of interest and penalties at September 30, 2017.~~

The Company may be subject to potential examination by U.S. federal, states or foreign jurisdiction authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income amounts in various tax jurisdictions and compliance with U.S. federal, states or foreign tax laws.

~~The Company is incorporated in the State of Delaware and is required to pay franchise taxes to the State of Delaware on an annual basis.~~

~~Cash and Cash Equivalents~~

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with and the credit quality of the financial institutions with which it invests. As of the balance sheet date, and periodically throughout the year, the Company has maintained balances in various operating accounts in excess of federally insured limits.

~~Investments and Cash Held in Trust Account~~

At September 30, 2017, the Company had $402,042,193 in the Trust Account which may be utilized for Business Combinations. At September 30, 2017, the Trust Account consisted of both cash and treasury bills.

The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to pay taxes, if any, none of the funds held in trust will be released until the earlier of: (i) the completion of the Business Combination; (ii) the redemption of any public shares of common stock properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of such public shares of common stock if the Company does not complete the Business Combination within 24 months from the Public Offering Closing Date; or (iii) the redemption of 100% of the public shares of common stock if the Company is unable to complete a Business Combination within 24 months from the Public Offering Closing Date, subject to the requirements of law and stock exchange rules.

~~Recently Adopted Accounting Pronouncements~~

~~In November 2016, the FASB issued ASU No. 2016‑17,~~ ~~Income Taxes - Balance Sheet Classification of Deferred Taxes (Topic 740).~~ The amendments under the new guidance require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The guidance is effective for consolidated financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendmentsnotes included elsewhere in this ASU may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company has early adopted this guidance effective December 31, 2016 on a retrospective basis, the impact of which was not significant to the financial statements.

~~Going Concern Consideration~~

If the Company does not complete its Business Combination by January 19, 2019, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the common stock sold as part of the units in the Public Offering, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of franchise and income taxes payable and less up to $100,000 of such net interest which may be distributed to the Company to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s Board of Directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per unit in the Public Offering. In addition if the Company fails to complete its Business Combination by January 19, 2019, there will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless.

~~In addition, at September 30, 2017 and December 31, 2016, the Company had current liabilities of $109,538 and $434,186, respectively, and~~ ~~working capital of $717,660 and ($15,959), respectively, largely~~ due to amounts owed to professionals, consultants, advisors and others who are working on seeking a Business Combination as described in Note 1. Such work is continuing after September 30, 2017 and amounts are continuing to accrue.

~~3. Public Offering~~

~~Public Units~~

On January 19, 2017, the Company sold 40,000,000 units at a price of $10.00 per unit (the “Units”), including 2,500,000 Units as a result of the underwriter’s partial exercise of its over-allotment option, generating gross proceeds of $400,000,000. Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value, and one-third of one redeemable Class A common stock purchase warrant (the “Warrants”). Each whole warrant entitles the holder to purchase one share of Class A common stock for $11.50 per share. Each Warrant will become exercisable on the later of 30 days after the completion of the Business Combination or 12 months from the Public Offering Closing Date and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. However, if the Company does not complete the Business Combination on or prior to the 24-month period allotted to complete the Business Combination, the Warrants will expire at the end of such period. The Warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and the Company. The Company did not register the shares of common stock issuable upon exercise of the Warrants under the Securities Act of 1933, as amended (the “Securities Act”) or any state securities law. Under the terms of the warrant agreement, the Company has agreed to use its best efforts to file a registration statement under the Securities Act following the completion of the Business Combination covering the shares of common stock issuable upon exercise of the Warrants. The Company paid an upfront underwriting discount of 2.00% ($8,000,000) of the per Unit offering price to the underwriter at the Public Offering Closing Date, with an additional fee (the “Deferred Discount”) of 3.50% of the per Unit offering price payable upon the Company’s completion of a Business Combination. The Deferred Discount will become payable to the underwriter from the amounts held in the Trust Account solely in the event the Company completes a Business Combination.

~~4. Related Party Transactions~~

~~Founder Shares~~

On August 19, 2016, the Sponsor purchased 10,781,250 shares of the Company’s Class F common stock (the “Founder Shares”) for an aggregate purchase price of $25,000, or approximately $0.002 per share. Subsequently, the Sponsor transferred an aggregate of 75,000 Founder Shares to the Company’s independent directors (together with the Sponsor, the “Initial Stockholders”). On February 27, 2017, the Sponsor forfeited 781,250 Founder Shares following the expiration of the unexercised portion of underwriter’s over-allotment option, so that the Founder Shares held by the Initial Stockholders would represent 20.0% of the outstanding shares of common stock following completion of the Public Offering. The Founder Shares are identical to the common stock included in the Units sold in the Public Offering except that the Founder Shares will automatically convert into shares of Class A common stock at the time of the Business Combination on a one-for-one basis, subject to adjustment as described in the Company’s amended and restated certificate of incorporation.

~~Private Placement Warrants~~

The Sponsor purchased from the Company an aggregate of 6,666,666 warrants at a price of $1.50 per warrant (a purchase price of $10,000,000) in a private placement that occurred simultaneously with the Public Offering (the “Private Placement Warrants”). Each Private Placement Warrant entitles the holder to purchase one share of Class A common stock at $11.50 per share. A portion of the purchase price of the Private Placement Warrants was added to the proceeds from the Public Offering to be held in the Trust Account pending completion of the Business Combination.

The Private Placement Warrants have terms and provisions that are identical to those of the Warrants sold as part of the Units in the Public Offering, except that the Private Placement Warrants may be net cash settled and are not redeemable so long as they are held by the Sponsor or its permitted transferees.

If the Company does not complete a Business Combination, then the Private Placement Warrants proceeds will be part of the liquidation distribution to the public stockholders and the Private Placement Warrants will expire worthless.

~~Registration Rights~~

The holders of Founder Shares, Private Placement Warrants and warrants issued upon conversion of working capital loans, if any, have registration rights (in the case of the Founder Shares, only after conversion of such shares to common shares) pursuant to a registration rights agreement entered into by the Company, the Sponsor and the other security holders named therein on January 12, 2017. These holders will also have certain demand and “piggy back” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Sponsor Loan~~

On August 19, 2016, the Sponsor loaned the Company an aggregate of $150,000 by the issuance of an unsecured promissory note for $150,000 to cover expenses related to the Public Offering, and on January 11, 2017, the Sponsor loaned the Company an additional $150,000 by the issuance of a second unsecured promissory note for $150,000 to cover expenses related to the Public Offering (collectively, the “Notes”). These

~~Notes were non-interest bearing and payable on the earlier of January 31, 2017 or the completion of the Public Offering. These Notes were repaid in full upon the completion of the Public Offering.~~

~~Administrative Services Agreement~~

The Company entered into an administrative services agreement on January 12, 2017, pursuant to which it agreed to pay to an affiliate of the Sponsor $20,000 a month for office space, utilities and secretarial support. Services commenced on the date the securities were first listed on the NASDAQ Capital Market and will terminate upon the earlier of the consummation by the Company of a Business Combination or the liquidation of the Company.

~~For the period commencing January 12, 2017 through September 30, 2017 the Company has paid the affiliate $172,258.~~

~~5. Deferred Underwriting Compensation~~

The Company is committed to pay a deferred underwriting discount totaling $14,000,000 or 3.50% of the gross offering proceeds of the Public Offering, to the underwriter upon the Company’s consummation of a Business Combination. The underwriter is not entitled to any interest accrued on the Deferred Discount, and no Deferred Discount is payable to the underwriter if there is no Business Combination.

~~6. Income Taxes~~

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The Company’s effective tax rate is estimated at 38.01%. The provision for income taxes for the nine months ended September 30, 2017 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 35% to pre-tax income primarily because of state income taxes.

The deferred tax assets and liabilities at September 30, 2017 consist of net operating income and unrealized gains for that period. The Company has a net operating income of approximately $599,091 at September 30,2017.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes.

The Company has evaluated tax positions taken or expected to be taken in the course of preparing the financial statements to determine if the tax positions are “more likely than not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more likely than not” threshold would be recorded as a tax benefit or expense in the current year. The Company has concluded that there was no impact related to uncertain tax positions on the results of its operations for the period ended September 30, 2017. At September 30, 2017, the Company has no accrued interest or penalties related to uncertain tax positions. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company’s conclusions regarding tax positions will be subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analyses of tax laws, regulations, and interpretations thereof.

~~7. Investments and cash held in Trust~~

At September 30, 2017, investment securities in the Company’s Trust Account consist of $402,035,443 in United States Treasury Bills and $6,750 in cash. The Company classifies its United States Treasury and equivalent securities as held-to-maturity in accordance with FASB ASC 320, “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts.

~~8. Fair Value Measurement~~

The Company complies with FASB ASC 820, Fair Value Measurements, for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. ASC 820 determines fair value to be the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date.quarterly report.

The following table ~~presents information about~~sets forth our reconciliation of Adjusted EBITDA to net income (loss) (unaudited):

	Three Months Ended March 31,
($ in thousands)	2019		2018
Net income (loss)	$	2,820	$	(22,158	)
Interest expense		16,033		12,647
Income tax provision (benefit)		1,320		(6,610	)
Depreciation and amortization		28,939		18,550
EBITDA		49,112		2,429
Transaction and other related expenses ⁽ⁱ⁾		—		18,103
Transformation expenses ⁽ⁱⁱ⁾		—		1,740
Loss on extinguishment of debt ⁽ⁱⁱⁱ⁾		—		10,151
Sponsor fees and expenses ^(iv)		—		1,358
Stock-based compensation ^(v)		2,143		—
Adjusted EBITDA	$	51,255	$	33,781

(i)

Transaction and other related expenses incurred in the three months ended March 31, 2018 included $18.1 million of costs related to the HTA acquisition, primarily consisting of $7.2 million for acquisition services to Platinum Equity Advisors, LLC, $8.4 million of professional fees processed through the funds flow and $2.5 million of professional fees paid directly by us.

(ii)

Transformation expenses for the three months ended March 31, 2018 represent one-time costs related to optimizing the expense structure and defining the Company’s growth strategy.

(iii)

This amount represents the loss on extinguishment of debt related to the 2017 Credit Facilities which were replaced by the 2018 Credit facilities in conjunction with the HTA acquisition.

(iv)

We incurred expenses associated with a Corporate Advisory Services Agreement with an affiliate of our primary shareholder.

(v)

Stock-based compensation for the three months ended March 31, 2019 represents the non-cash charge related to the issuance of awards under the Verra Mobility Corporation 2018 Equity Incentive Plan.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to interest rate market risk due to the Company’s assets that are measured at fair value on a recurring basis at September 30, 2017, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2

~~inputs utilize data points that are observable such as quoted prices,~~variable interest rates ~~and yield curves. Fair values determined by Level 3 inputs are unobservable data points for~~on the ~~asset or liability, and includes situations where there is little, if any, market activity for the asset or liability:~~

Significant

Significant

Other

Other

Quoted Prices in

Observable

Unobservable

September 30,

Active Markets

Inputs

Inputs
Description

2017

(Level 1)

(Level 2)

(Level 3)
Investments and cash held in Trust Account

402,042,193

402,042,193

—

—
Total

$
402,042,193

$
402,042,193

$
—

$
—

~~9. Stockholders’ Equity~~

~~Common Stock~~

The Company is authorized to issue 220,000,000 shares of common stock, consisting of 200,000,000 shares of Class A common stock, par value $0.0001 per share and 20,000,000 shares of Class F common stock, par value $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share of common stock and vote together as a single class. At September 30, 2017, there were 40,000,000 shares of Class A common stock (inclusive of the 38,321,227 shares subject to redemption) and 10,000,000 shares of Class F common stock issued and outstanding.

~~Preferred Stock~~

The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors. At September 30, 2017, there were no shares of preferred stock issued and outstanding.

~~10. Subsequent Events~~

~~Management has performed an evaluation of subsequent events through the date of issuance of the financial statements, noting no items which require adjustment or disclosure other than those set forth~~New Term Loans described in ~~the preceding notes to the financial statements.~~

~~Item~~“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes related thereto which are included in “Item 1. Financial Statements” of this Quarterly Report on Form 10‑Q.

~~Cautionary note regarding forward-looking statements~~

All statements other than statements of historical fact included in this Quarterly Report on Form 10‑Q including, without limitation, statements under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report on Form 10‑Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety by this paragraph.

~~Overview~~

We are a blank check company incorporated on August 15, 2016 as a Delaware corporation and formed for the purpose of effecting a Business Combination with one or more target businesses. We completed our Public Offering on January 19, 2017. At September 30, 2017, we had not identified any business combination target nor initiated any substantive discussions directly or indirectly, with respect to identifying any business combination target.

Since completing our Public Offering, we have reviewed, and continue to review, a number of opportunities to enter into a Business Combination with an operating business, but we are not able to determine at this time whether we will complete a Business Combination with any of the target businesses that we have reviewed or with any other target business. We intend to effectuate our Business Combination using cash from the proceeds of our Public Offering and the sale of the Private Placement Warrants, our capital stock, debt, or a combination of cash, stock and debt.

~~Results of Operations~~

For the three months ended September 30, 2017, we had net income of $254,684. Our business activities during the quarter mainly consisted of identifying and evaluating prospective acquisition candidates for a Business Combination. We believe that we have sufficient funds available to complete our efforts to effect a Business Combination with an operating business by January 19, 2019. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to a Business Combination.

As indicated in the accompanying unaudited consolidated financial statements, at September 30, 2017, we had approximately $626,000 in cash and deferred offering costs of $14,000,000. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our Business Combination will be successful.

Operations--Liquidity and Capital Resources.”

~~In August 2016,~~Interest rate risk represents our ~~Sponsor purchased~~exposure to movements in interest rates associated with the variable rate debt represented by the New First Lien Term Loan. Total borrowing under the New First Lien Term Loan was $901 million at March 31, 2019. The New First Lien Term Loan bears interest based, at our option, on either (1) LIBOR plus an ~~aggregate~~applicable margin of ~~10,781,250 Founder Shares for~~3.75% per annum, or (2) an ~~aggregate purchase price~~alternate base rate plus an applicable margin of ~~$25,000, or approximately $0.002~~2.75% per ~~share. Subsequently, our Sponsor transferred an aggregate of 75,000 Founder Shares to each of our independent directors. On February 27, 2017, following~~annum. At March 31, 2019, the expiration of the unexercised portion of the underwriter’s over-allotment option, our Sponsor forfeited 781,250 Founder Shares so that the remaining Founder Shares held by our Initial Stockholders represented 20.0% of the outstanding shares upon completion of our Public Offering.

On January 19, 2017, we consummated our Public Offering of 40,000,000 Units at a price of $10.00 per Unit, including 2,500,000 Units as a result of the underwriter’s partial exercise of their over-allotment option, generating gross proceeds of $400,000,000. On the Public Offering Closing Date, we completed the private sale of an aggregate of 6,666,666 Private Placement Warrants, each exercisable to purchase one share of Common Stock at $11.50 per share, to our Sponsor, at a price of $1.50 per Private Placement Warrant, generating gross proceeds, before expenses, of $10,000,000. After deducting the underwriting discounts and commissions (excluding the Deferred Discount, which amount will be payable upon consummation of the Business Combination, if consummated) and the estimated offering expenses, the total net proceeds from our Public Offering and the sale of the Private Placement Warrants were $401,100,000, of which $400,000,000 (or $10.00 per share sold in the Public Offering) was placed in the Trust Account. The amount of proceeds not deposited in the Trust Account was $1,100,000 at the Public Offering Closing Date. Interest earnedinterest rate on the funds held in the Trust Account may be released to us to fund our Regulatory Withdrawals (subject to an annual limit of $750,000, for a maximum of 24 months) and/or to pay our franchise and income taxes.

On August 19, 2016, our Sponsor loaned us an aggregate of $150,000 by the issuance of an unsecured promissory note for $150,000 to cover expenses related to the Public Offering, and on January 11, 2017, our Sponsor loaned us an additional $150,000 by the issuance of a second unsecured promissory note for $150,000 to cover expenses related to the Public Offering. These Notes were non-interest bearing and payableNew First Lien Term Loan was 6.25%. Based on the ~~earlier of January~~March 31, ~~2017 or the completion of the Public Offering. These Notes were repaid~~2019 New First Lien Term Loan balance outstanding, each 1% movement in ~~full upon the completion of the Public Offering.~~

As of September 30, 2017 and December 31, 2016, we had cash held outside of the Trust Account of approximately $626,000 and $3,000, respectively, which is available to fund our working capital requirements.

At September 30, 2017 and December 31, 2016, the Company had current liabilities of $109,538 and $434,186 and working capital of $717,660 and ($15,959), respectively, largely due to amounts owed to professionals, consultants, advisors and others who are working on seeking a Business Combination. Such work is continuing after September 30, 2017 and amounts are continuing to accrue.

~~We intend to use substantially all of the funds held in the Trust Account, including~~ interest (which interest shall be net of Regulatory Withdrawals and taxes payable) to consummate our Business Combination. Moreover, we may need to obtain additional financing either to complete a Business Combination or because we become obligated to redeem a significant number of shares of our Common Stock upon completion of a Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. To the extent that our capital stock or debt is used, in whole or in part, as consideration to consummate our Business Combination, the remaining proceeds held in our Trust Account, if any, will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategy.

~~Off-balance sheet financing arrangements~~

We had no obligations, assets or liabilities which would be considered off-balance sheet arrangements at September 30, 2017. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

We had not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.

~~Contractual obligations~~

At September 30, 2017 and December 31, 2016, we did not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities. In connection with the Public Offering, we entered into an administrative services agreement to pay monthly recurring expenses of $20,000 to The Gores Group for office space, utilities and secretarial support. The administrative services agreement terminates upon the earlier of the completion of a Business Combination or the liquidation of the Company.

The underwriter is entitled to underwriting discounts and commissions of 5.5%, of which 2.0% ($8,000,000) was paid at the Public Offering Closing Date, and 3.5% ($14,000,000) was deferred. The Deferred Discount will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. The underwriter is not entitled to any interest accrued on the Deferred Discount.

~~Critical Accounting Policies~~

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:

~~Offering costs~~

We comply with the requirements of the Accounting Standards Codification (the “ASC”) 340‑10‑S99‑1 and SEC Staff Accounting Bulletin Topic 5A — “Expenses of Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to our Public Offering and were charged to stockholders’ equity upon the completion of our Public Offering. Accordingly, at September 30, 2017 and December 31, 2016, offering costs totaling approximately $22,719,995 and $414,606, respectively, (including $22,000,000 in underwriter’s fees), have been charged to stockholders’ equity.

~~Redeemable Common Stock~~

All of the 40,000,000 shares of Class A common stock sold as part of the Units in our Public Offering contain a redemption feature which allows for the redemption of such shares in connection with our liquidation, if there is a stockholder vote or tender offer in connection with our Business Combination and in connection with certain amendments to our charter. In accordance with ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), redemption provisions not solely within our control require common stock subject to redemption to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Although we did not specify a maximum redemption threshold, our charter provides that the Company will not redeem our public shares in an amount that would cause our net tangible assets (stockholders’ equity) to be less than $5,000,001.

We recognize changes in redemption value immediately as they occur and adjust the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against accumulated deficit.

~~Accordingly, at September 30, 2017, 38,321,227 of the 40,000,000 public shares are classified outside of permanent equity at their redemption value.~~

~~Net income per common share~~

The Company has two classes of shares, which are referred to as Class A common stock and Class F common stocks. Net loss per common share is computed utilizing the two-class method. The two-class method is an earnings allocation formula that determines earnings per share separately for each class of common stock based on an allocation of undistributed earnings per the rights of each class. At September 30, 2017, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company under the treasury stock method. As a result, diluted net income/(loss) per common share is the same as basic net income/(loss) per common share for the period.

~~Income taxes~~

~~Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that~~rates will result in ~~future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods~~an approximately $9.0 million change in ~~which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.~~

~~Recently adopted accounting pronouncement~~

~~In November 2016, the FASB issued ASU No. 2016‑17,~~ ~~Income Taxes - Balance Sheet Classification of Deferred Taxes (Topic 740).~~ The amendments under the new guidance require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The guidance is effective for consolidated financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments in this ASU may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company has early adopted this guidance effective December 31, 2016 on a retrospective basis, the impact of which was not significant to the financial statements.

~~Recently issued accounting pronouncements not yet adopted~~

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We currently anticipate the adoption of ASU 2014-09 will not have a material impact on our financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (Topic 842) "Leases." Topic 842 supersedes the lease recognition requirements in Accounting Standards Codification (ASC) Topic 840, "Leases." Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. Topic 842 is effective for annual reporting periods and interim periods within those years beginning after December 15, 2018. Early adoption by public entities is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and there are certain optional practical expedients that an entity may elect to apply. We are currently in the process of evaluating the impact of the adoption of ASU 2016-02 on our financial statements.

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~

~~Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including~~ interest rates, foreign exchange rates, commodity prices and/or equity prices. Our business activities for the nine months ended September 30, 2017 consisted solely of organizational activities and activities relating to our Public Offering and the identification of a target company for a Business Combination. At September 30, 2017, $402,042,193 (including accrued interest and subject to reduction by the Deferred Discount due at the consummation of the Business Combination) was held in the Trust Account for the purposes of consummating our Business Combination. At September 30, 2017, investment securities in the Company’s Trust Account consist of $402,035,443 and in United States Treasury Bills and $6,750 in cash. At September 30, 2017, the effective annualized interest rate payable on our investments was approximately 1.00 %.expense.

We have not engaged in any hedging activities during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.

Item 4. Controls and Procedures

~~Disclosure~~We maintain “disclosure controls and procedures, ~~are controls~~” as defined in Rules 13a-15(e) and ~~other procedures~~15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in ~~our~~the reports ~~filed~~that it files or ~~submitted~~submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in ~~company~~the reports ~~filed~~that it files or ~~submitted~~submits under the Exchange Act is accumulated and communicated to the company’s management, including ~~our Chief Executive Officer~~its principal executive and ~~Chief Financial Officer,~~principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

~~As required by Rules 13a‑15 and 15d‑15 under~~ Our management, with the ~~Exchange Act,~~participation of our Chief Executive Officer and our Chief Financial Officer, ~~carried out an evaluation of~~evaluated the effectiveness ~~of the design and operation~~ of our disclosure controls and procedures as of ~~September 30, 2017.~~March 31, 2019. Based ~~upon their~~on the evaluation of our disclosure controls and procedures as of March 31, 2019, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures ~~(as defined in Rules 13a‑15(e) and 15d‑15(e) under~~were effective at the ~~Exchange Act) were effective.~~reasonable assurance level.

During the ~~most recently completed fiscal~~ quarter ended March 31, 2019, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART ~~II—OTHER INFORMATION~~II—OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Factors that could cause our actual results to differ materially from those in this report are any of the risks described in our Annual Report on Form 10‑KK/A filed with the SEC on ~~March~~April 30, ~~2017.~~2019. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

As of the date of this Quarterly Report on Form 10‑Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10‑~~K filed on March 30, 2017~~K/A with the ~~SEC; however, we~~SEC on April 30, 2019. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Unregistered Sales~~None.

On August 19, 2016, our Sponsor purchased 10,781,250 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.002 per share. Subsequently, our Sponsor transferred an aggregate of 75,000 Founder Shares to our independent directors. On February 27, 2017, following the expiration of the unexercised portion of the underwriter’s over-allotment option, our Sponsor forfeited 781,250 Founder Shares, so that the remaining Founder Shares held by the Initial Stockholders would represent 20.0% of the outstanding shares upon the completion of our Public Offering. Our Public Offering was consummated on January 19, 2017.

Prior to the Public Offering Closing Date, we completed the private sale of an aggregate of 6,666,666 Private Placement Warrants to our Sponsor at a price of $1.50 per Private Placement Warrant, generating total proceeds, before expenses, of $10,000,000. The Private Placement Warrants are substantially similar to the Warrants underlying the Units issued in our Public Offering, except that the Private Placement Warrants may be net cash settled and are not redeemable so long as they are held by our Sponsor or its permitted transferees. If the Private Placement Warrants are held by holders other than our Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by us and exercisable by the holders on the same basis as the Warrants.

~~The sales of the above securities by the Company were exempt from registration in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.~~

~~Use of Proceeds~~

On January 12, 2017, our registration statement on Form S‑1 (File No. 333‑215033) was declared effective by the SEC for the Public Offering pursuant to which we sold an aggregate of 40,000,000 Units at an offering price to the public of $10.00 per Unit, including 2,500,000 Units as a result of the underwriter’s partial exercise of its over-allotment option, generating gross proceeds of $400,000,000.

After deducting the underwriting discounts and commissions (excluding the Deferred Discount, which amount will be payable upon the consummation of our Business Combination, if consummated) and the estimated offering expenses, the total net proceeds from our Public Offering and the sale of the Private Placement Warrants were $401,100,000, of which $400,000,000 (or $10.00 per share sold in the Public Offering) was placed in the Trust Account in the United States maintained by the trustee.

Through September 30, 2017, we incurred approximately $8,721,646 for costs and expenses related to the Public Offering. At the Public Offering Closing Date, we paid a total of $8,000,000 in underwriting discounts and commissions. In addition, the underwriter agreed to defer $14,000,000 in underwriting commissions, which amount will be payable upon consummation of our Business Combination, if consummated. There has been no material change in the planned use of proceeds from our Public Offering as described in our final prospectus dated January 12, 2017 which was filed with the SEC.

Our Sponsor, executive officers and directors have agreed, and our amended and restated certificate of incorporation provides, that we will have only 24 months from the Public Offering Closing Date to complete our Business Combination. If we are unable to complete our Business Combination within such 24‑month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in our Trust Account, including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

At September 30, 2017, after giving effect to our Public Offering and our operations subsequent thereto, approximately $402,042,193 was held in the Trust Account, and we had approximately $626,000 of unrestricted cash available to us for our activities in connection with identifying and conducting due diligence of a suitable Business Combination, and for general corporate matters.

Item 3. Defaults Upon Senior Securities

~~None~~None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

~~SIGNATURES~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	~~GORES HOLDINGS II, INC.~~VERRA MOBILITY CORPORATION

Date: May 06, 2019	By:	/s/ David Roberts

~~Date: November 6, 2017~~	~~By:~~	~~/s/ Mark Stone~~David Roberts
		~~Mark Stone~~
		President and Chief Executive Officer
		(Principal Executive Officer)


		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
2.1	Merger Agreement, dated as of June 21, 2018, by and among Gores Holdings II, Inc., AM Merger Sub I, Inc., AM Merger Sub II, LLC, Greenlight Holding II Corporation and PE Greenlight Holdings, LLC, in its capacity as the Stockholder Representative.	8-K	001-37979	2.1	June 21, 2018
2.2	Amendment No. 1 to Agreement and Plan of Merger, dated as of August 23, 2018, by and among Gores Holdings II, Inc., AM Merger Sub I, Inc., AM Merger Sub II, LLC, Greenlight Holding II Corporation and PE Greenlight Holdings, LLC, in its capacity as the Stockholder Representative.	8-K	001-37979	2.1	Aug. 24, 2018
3.1	Second Amended and Restated Certificate of Incorporation of Verra Mobility Corporation.	8-K	001-37979	3.1	Oct. 22, 2018
3.2	Amended and Restated Bylaws of Verra Mobility Corporation.	8-K	001-37979	3.2	Oct. 22, 2018
4.1	Specimen Class A Common Stock Certificate.	S-1	333-21503	4.2	Dec. 9, 2016
4.2	Specimen Warrant Certificate.	S-1	333-21503	4.3	Dec. 9, 2016
4.3	Warrant Agreement, dated January 12, 2017, between the Registrant and Continental Stock Transfer & Trust Company, as warrant agent.	8-K	001-37979	4.1	Jan. 19, 2017
10.1	Confidential Separation and Release Agreement by and between Highway Toll Administration, LLC and Jonathan Routledge, dated January 4, 2019.					X
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X

Exhibit Number		~~Description~~
~~3.1~~		~~Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8‑K filed with the SEC on January 19, 2017).~~

~~3.2~~		~~By Laws (incorporated~~Incorporated by ~~reference to Exhibit 3.3 filed with the Form S‑1 filed by the Registrant on December 9, 2016).~~

~~4.1~~		~~Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 filed with the Form S‑1 filed by the Registrant on December 9, 2016).~~

~~4.2~~		~~Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.2 filed with the Form S‑1 filed by the Registrant on December 9, 2016).~~

~~4.3~~		~~Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 filed with the Form S‑1 filed by the Registrant on December 9, 2016).~~

~~4.4~~		Warrant Agreement, dated January 12, 2017, between the Company and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8‑K filed with the SEC on January 19, 2017).

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		~~Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

32.2*		~~Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
	Reference
Exhibit ~~101~~Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
101	The following financial statements from the Quarterly Report on Form 10-Q of ~~Gores Holdings II, Inc.for~~Verra Mobility Corporation for the quarter ended ~~September 30, 2017,~~March 31, 2019, formatted in eXtensible Business Reporting Language (XBRL): (i) Balance Sheets, (ii) Statements of Income, (iii) Statements of Changes in Shareholders’ Equity, (iv) Statement of Cash Flows and (v) Notes to Financial ~~Statements.~~Statements					X
* This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.


	September 30, 2017		December 31, 2016
	(unaudited)		(audited)
CURRENT ASSETS:
Cash and cash equivalents	$	626,193	$	3,185
Deferred offering costs		—		414,606
Receivable - related party		—		436
Prepaid assets		201,005		—
Total current assets		827,198		418,227
Investments and cash held in Trust Account		402,042,193		—
Total assets	$	402,869,391	$	418,227

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses, formation and offering costs	$	42,301	$	282,436
State franchise tax accrual		67,237		1,750
Notes and advances payable – related party		—		150,000
Total current liabilities		109,538		434,186
Deferred underwriting compensation		14,000,000		—
Income tax payable		209,785		—
Net deferred income tax		337,797		—
Total liabilities		14,657,120		434,186

Commitments and Contingencies:
Class A subject to possible redemption, 38,321,227 and -0- shares at September 30, 2017 and December 31, 2016, respectively (at redemption value of $10 per share)		383,212,270		—

Stockholders’ equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding		—		—
Common stock
Class A common stock, $0.0001 par value; 200,000,000 shares authorized, 1,678,773 and -0- shares issued and outstanding (excluding 38,321,227 and -0- shares subject to possible redemption) at September 30, 2017 and December, 31, 2016, respectively		168		—
Class F common stock, $0.0001 par value; 20,000,000 shares authorized, 10,000,000 shares issued and outstanding		1,000		25,000
Additional paid-in-capital		4,091,567		—
Retained Earnings		907,266		(40,959)

Total stockholders’ equity		5,000,001		(15,959)

Total liabilities and stockholders’ equity	$	402,869,391	$	418,227


				For the period form				For the period form
				August 15, 2016				August 15, 2016
		Three Months		(inception) to		Nine Months		(inception) to
		Ended September 30,		September 30,		Ended September 30,		September 30,
		2017		2016		2017		2016
Revenues	$	—	$	—	$	—	$	—
Professional fees and other expenses		(135,746)		(23,219)		(416,615)		(23,219)
State franchise taxes, other than income tax		(45,000)		(1,312)		(135,000)		(1,312)
Net loss from operations		(180,746)		(24,531)		(551,615)		(24,531)
Other income - interest income		983,012		50		2,047,422		50
Net income before income taxes	$	802,266	$	(24,481)	$	1,495,807	$	(24,481)
Provision for income tax		(547,582)		—		(547,582)		—
Net income attributable to common shares	$	254,684	$	(24,481)	$	948,225	$	(24,481)

Net Income/(Loss) per ordinary share:
Class A ordinary shares - basic and diluted	$	0.01	$	-	$	0.03	$	-
Class F ordinary shares - basic and diluted	$	(0.01)	$	-	$	(0.02)	$	-


	Class A Ordinary Shares			Class F Ordinary Shares				Additional		Accumulated		Shareholder's
	Shares	Amount			Shares	Amount		Paid-In Capital		Deficit/Retained Earnings		Equity
Beginning Balance at January 1, 2017	-	$	-		10,781,250	$	1,078	$	23,922	$	(40,959)	$	(15,959)
Forfeited Class F Common stock by Sponsor	-		-		(781,250)		(78)		78		-		-
Proceeds from initial public offering of Units on January 19, 2017 at $10.00 per Unit	40,000,000		4,000		-		-		399,996,000		-		400,000,000
Sale of 6,666,666 Private Placement Warrants to Sponsor on January 19, 2017 at $1.50 per Private Placement Warrant	-		-		-		-		10,000,000		-		10,000,000
Underwriter's discounts	-		-		-		-		(8,000,000)		-		(8,000,000)
Offering costs charged to additional paid-in capital	-		-		-		-		(719,995)		-		(719,995)
Deferred underwriting compensation	-		-		-		-		(14,000,000)		-		(14,000,000)
Class A common stock subject to possible redemption; 38,321,227 shares at a redemption price of $10.00	(38,321,227)		(3,832)		-		-		(383,208,438)		-		(383,212,270)
Net income	-		-		-		-		-		948,225		948,225
Balance at September 30, 2017	1,678,773	$	168		10,000,000	$	1,000	$	4,091,567	$	907,266	$	5,000,001


				For the period from
				August 15, 2016
		Nine Months		(inception) to
		Ended September 30,		September 30,
Cash flows from operating activities:		2017		2016
Net income	$	948,225	$	(24,481)
Changes in deferred income tax provision		337,797		—
Changes in receivable - related party		436		—
Changes in state franchise tax accrual		65,487		—
Changes in prepaid assets		(201,005)		—
Changes in deferred offering costs		414,606		—
Changes in income taxes payable		209,785		—
Changes in accrued expenses, formation and offering costs		(240,135)		(55,875)
Net cash provided by operating activities		1,535,196		(80,356)

Cash flows from investing activities:
Cash deposited in Trust Account		(400,000,000)		—
Interest reinvested in Trust Account		(2,042,193)		—
Net cash used in investing activities		(402,042,193)		—

Cash flows from financing activities:
Proceeds from sale of Units in initial public offering		400,000,000		—
Proceeds from sale of Private Placement Warrants to Sponsor		10,000,000		—
Proceeds from note payable - related party		—		150,000
Proceeds from sale of Class F common stock to Sponsor		—		25,000
Repayment of notes and advances payable – related party		(150,000)		—
Payment of underwriter's discounts and commissions		(8,000,000)		—
Payment of accrued offering costs		(719,995)		—
Net cash provided by financing activities		401,130,005		175,000

Increase in cash		623,008		94,644
Cash at beginning of period		3,185		—

Cash at end of period	$	626,193	$	94,644

Supplemental disclosure of non-cash financing activities:
Deferred underwriting compensation	$	14,000,000	$	—
Offering costs included in accrued expenses	$	—	$	143,186


	For the Three Months Ended September 30, 2017				For the period from August 15, 2016 (inception) to September 30, 2016				For the Nine Months Ended September 30, 2017				For the period from August 15, 2016 (inception) to September 30, 2016
	Class A		Class F		Class A		Class F		Class A		Class F		Class A		Class F
Basic and diluted net income/(loss) per share:
Numerator:
Allocation of net income/(loss)	$	400,350	$	(145,666)	$	-	$	(24,481)	$	1,183,343	$	(235,118)	$	-	$	(24,481)

Denominator:
Weighted-average shares outstanding		40,000,000		10,000,000		-		10,781,250		37,352,000		10,163,750		-		10,781,250
Basic and diluted net income/(loss) per share	$	0.01	$	(0.01)	$	-	$	(0.00)	$	0.03	$	(0.02)	$	-	$	(0.00)


					Significant		Significant
					Other		Other
			Quoted Prices in		Observable		Unobservable
	September 30,		Active Markets		Inputs		Inputs
Description	2017		(Level 1)		(Level 2)		(Level 3)
Investments and cash held in Trust Account		402,042,193		402,042,193		—		—
Total	$	402,042,193	$	402,042,193	$	—	$	—