UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 20222023

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to 
          Priority Technology Holdings, Inc.       
Commission file number: 001-37872
PRTH-Black-H-RGB (2).jpg
Priority Technology Holdings, Inc.
(Exact name of registrant as specified in its charter)

Delaware47-4257046
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2001 Westside Parkway
Suite 155
Alpharetta,Georgia30004
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (800) 935-5961(404) 952-2107
Not applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.001PRTHNasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes       No  
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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  
 
As of November 4, 2022,3, 2023, the number of the registrant's Common Stock outstanding was 76,002,368.76,722,581.



Table of Contents


Page
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Table of Contents

Commonly Used or Defined Terms


Priority Technology Holdings, Inc.
Commonly Used or Defined Terms
TermDefinition
2018 Plan2018 Equity Incentive Plan
2021 Stock Purchase PlanPriority Technology Holdings, Inc. 2021 Employee Stock Purchase Plan
2022 Share Repurchase ProgramPriority Technology Holdings, Inc. 2022 Share Repurchase Program
2021 Share Repurchase ProgramPriority Technology Holdings, Inc. 2021 Share Repurchase Program
AOCIAccumulated other comprehensive income/loss
APAccounts payable
ASCAccounting Standards Codification
APICAdditional paid-in capital
Amended Certificate of DesignationAmended and Restated Certificate of Designation of Senior Preferred Stock effective as of June 30, 2023
ASUAccounting Standards Update
B2BBusiness-to-business
B2CBusiness-to-consumer
C&HC&H Financial Services, Inc.
CEOChief Executive Officer
CFOChief Financial Officer
Common StockThe Company's common stock,Common Stock, par value $0.001
Credit AgreementCredit and Guaranty Agreement with Truist Bank dated as of April 27, 2021 (as amended)
EAETREstimated annual effective tax rate
EBITDAEarnings before interest, taxes, depreciation and amortization
EGCEmerging Growth Company
ESPPEmployee Stock Purchase Plan
Exchange ActSecurities Exchange Act of 1934
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
FBOFor the Benefit Ofbenefit of
FIFinancial Institutioninstitution
FinxeraFinxera Holdings, Inc.
GAAPU.S. Generally Accepted Accounting Principles
IRAInflation Reduction Act, enacted by the U.S. Federal Government on August 16, 2022
ISOIndependent sales organization
ISVIndependent software vendor
JOBS ActJumpstart Our Business Startups Act of 2012
LIBORLondon Interbank Offered Rate
NCINon-controlling interests in consolidated subsidiaries
Revolving credit facility$65.0 million line issued under the Credit Agreement
PIKPlastiqPayment-in-kindAcquisition of Plastiq, Inc. and certain of its affiliates
PHOTPRTHPriority Hospitality Technology LLCHoldings, Inc.
SECSecurities and Exchange Commission
SOFRSecured Overnight Financing Rate
SMBSmall to medium-sized businesses
Term facility$620.0 million senior secured term loan facility issued under the Credit Agreement (including $320.0 million delayed draw facility)
Total Net Leverage RatioThe ratio of consolidated total debt to the Consolidated Adjusted EBITDA (as defined in the Credit Agreement)

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Priority Technology Holdings, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share data)

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Priority Technology Holdings, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share data)
September 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$12,707 $20,300 
Restricted cash11,624 28,859 
Accounts receivable, net of allowances of $1,026 and $555, respectively69,688 58,423 
Prepaid expenses and other current assets16,725 15,807 
Current portion of notes receivable986 272 
Settlement assets and customer account balances516,687 479,471 
Total current assets628,417 603,132 
Notes receivable, less current portion2,072 105 
Property, equipment and software, net29,773 25,233 
Goodwill365,347 365,740 
Intangible assets, net301,729 340,211 
Deferred income taxes, net12,058 8,265 
Other noncurrent assets10,353 9,256 
Total assets$1,349,749 $1,351,942 
Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses$50,955 $42,523 
Accrued residual commissions32,593 29,532 
Customer deposits and advance payments3,111 5,021 
Current portion of long-term debt6,200 6,200 
Settlement and customer account obligations517,008 500,291 
Total current liabilities609,867 583,567 
Long-term debt, net of current portion, discounts and debt issuance costs593,068 604,105 
Other noncurrent liabilities13,583 18,349 
Total noncurrent liabilities606,651 622,454 
Total liabilities1,216,518 1,206,021 
Commitments and contingencies (Note 12)
Redeemable senior preferred stock, $0.001 par value; 250,000 shares authorized; 225,000 issued and outstanding at September 30, 2022 and December 31, 2021225,095 210,158 
Stockholders' deficit:
Preferred stock, $0.001; 100,000,000 shares authorized; none issued or outstanding at September 30, 2022 and December 31, 2021— — 
Common stock, $0.001 par value; 1,000,000,000 shares authorized; 77,789,291 and 77,460,312 shares issued at September 30, 2022 and December 31, 2021, respectively; and 75,981,186 and 76,739,896 shares outstanding at September 30, 2022 and December 31, 2021, respectively78 77 
Additional paid-in capital17,719 39,835 
Treasury stock at cost, 1,808,105 and 720,416 shares at September 30, 2022 and December 31, 2021, respectively(8,765)(4,091)
Accumulated deficit(100,896)(100,058)
Total stockholders' deficit(91,864)(64,237)
Total liabilities, redeemable senior preferred stock and stockholders' deficit$1,349,749 $1,351,942 

September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$24,595 $18,454 
Restricted cash13,890 10,582 
Accounts receivable, net of allowances of $1,281 and $1,143, respectively61,134 78,113 
Prepaid expenses and other current assets13,274 11,832 
Current portion of notes receivable, net of allowance of $0 and $0, respectively1,561 1,471 
Settlement assets and customer/subscriber account balances712,170 532,018 
Total current assets826,624 652,470 
Notes receivable, less current portion3,616 3,191 
Property, equipment and software, net41,851 34,687 
Goodwill375,794 369,337 
Intangible assets, net285,490 288,794 
Deferred income taxes, net18,879 16,447 
Other noncurrent assets11,145 8,437 
Total assets$1,563,399 $1,373,363 
Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses$56,107 $51,864 
Accrued residual commissions31,023 35,979 
Customer deposits and advance payments6,634 2,618 
Current portion of long-term debt6,200 6,200 
Settlement and customer/subscriber account obligations710,068 533,340 
Total current liabilities810,032 630,001 
Long-term debt, net of current portion, discounts and debt issuance costs616,781 598,926 
Other noncurrent liabilities18,545 11,643 
Total noncurrent liabilities635,326 610,569 
Total liabilities1,445,358 1,240,570 
Commitments and contingencies (Note 13)
Redeemable senior preferred stock, net of discounts and issuance costs:
Redeemable senior preferred stock, $0.001 par value; 250,000 shares authorized; 225,000 issued and outstanding at September 30, 2023 and December 31, 2022252,923 235,579 
Stockholders' deficit:
Preferred stock, $0.001; 100,000,000 shares authorized; 0 issued or outstanding at September 30, 2023 and December 31, 2022— — 
Common Stock, $0.001 par value; 1,000,000,000 shares authorized; 79,197,600 and 78,385,685 shares issued at September 30, 2023 and December 31, 2022, respectively; and 76,633,517 and 76,044,629 shares outstanding at September 30, 2023 and December 31, 2022, respectively77 76 
Treasury stock at cost, 2,564,083 and 2,341,056 shares at September 30, 2023 and December 31, 2022, respectively(12,577)(11,559)
Additional paid-in capital— 9,650 
Accumulated other comprehensive loss(34)— 
Accumulated deficit(123,714)(102,208)
Total stockholders' deficit attributable to stockholders of PRTH(136,248)(104,041)
Non-controlling interests in consolidated subsidiaries1,366 1,255 
Total stockholders' deficit(134,882)(102,786)
Total liabilities, redeemable senior preferred stock and stockholders' deficit$1,563,399 $1,373,363 
See Notes to Unaudited Consolidated Financial Statements
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Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share amounts)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenues$166,417 $132,542 $486,086 $370,853 
Operating expenses
Cost of revenue (excludes depreciation and amortization)107,958 92,833 320,187 264,527 
Salary and employee benefits16,384 11,909 48,231 31,808 
Depreciation and amortization17,817 12,330 52,675 32,123 
Selling, general and administrative10,178 7,220 27,027 22,213 
Total operating expenses152,337 124,292 448,120 350,671 
Operating income14,080 8,250 37,966 20,182 
Other (expense) income
Interest expense(13,412)(8,155)(37,282)(24,608)
Debt extinguishment and modification costs— — — (8,322)
Other income, net231 146 311 92 
Total other expense, net(13,181)(8,009)(36,971)(32,838)
Income (loss) before income taxes899 241 995 (12,656)
Income tax expense1,691 790 1,833 49 
Net loss(792)(549)(838)(12,705)
Less: Dividends and accretion attributable to redeemable senior preferred stockholders(9,466)(5,813)(26,415)(9,724)
Less: NCI preferred unit redemptions— — — (10,777)
Net loss attributable to common stockholders$(10,258)$(6,362)$(27,253)$(33,206)
Loss per common share:
Basic and diluted$(0.13)$(0.09)$(0.35)$(0.48)
Weighted-average common shares outstanding:
Basic and diluted77,984 71,979 78,392 69,689 

Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Revenues$189,015 $166,417 $556,333 $486,086 
Operating expenses
Cost of revenue (excludes depreciation and amortization)116,682 107,958 353,929 320,187 
Salary and employee benefits20,129 16,384 58,286 48,231 
Depreciation and amortization17,275 17,817 53,303 52,675 
Selling, general and administrative11,423 10,178 31,328 27,027 
Total operating expenses165,509 152,337 496,846 448,120 
Operating income23,506 14,080 59,487 37,966 
Other (expense) income
Interest expense(19,997)(13,412)(55,461)(37,282)
Other income, net732 231 1,319 311 
Total other expense, net(19,265)(13,181)(54,142)(36,971)
Income before income taxes4,241 899 5,345 995 
Income tax expense4,328 1,691 6,550 1,833 
Net loss(87)(792)(1,205)(838)
Less: Dividends and accretion attributable to redeemable senior preferred stockholders(12,192)(9,466)(35,252)(26,415)
Net loss attributable to common stockholders(12,279)(10,258)(36,457)(27,253)
Other comprehensive loss
Foreign currency translation adjustments(65)— (34)— 
Comprehensive loss$(12,344)$(10,258)$(36,491)$(27,253)
Loss per common share:
Basic and diluted$(0.16)$(0.13)$(0.47)$(0.35)
Weighted-average common shares outstanding:
Basic and diluted78,381 77,984 78,270 78,392 

See Notes to Unaudited Consolidated Financial Statements
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Table of Contents


Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)

Common
Stock
Treasury
Stock
Additional Paid-In CapitalAccumulated DeficitDeficit Attributable to Stockholders
Shares$Shares$
December 31, 202176,740 $77 720 $(4,091)$39,835 $(100,058)$(64,237)
Equity-classified stock-based compensation— — — — 1,558 — 1,558 
Vesting of stock-based compensation129 — — — — — — 
Share repurchases and shares withheld for taxes(27)27 (157)(1)— (157)
Dividends on redeemable senior preferred stock— — — — (7,595)— (7,595)
Accretion of redeemable senior preferred stock— — — — (805)— (805)
Net loss— — — — — (333)(333)
March 31, 202276,842 $78 747 $(4,248)$32,992 $(100,391)$(71,569)
Equity-classified stock-based compensation— — — — 1,542 — 1,542 
ESPP compensation and vesting of stock-based compensation157 — — — 57 — 57 
Share repurchases and shares withheld for taxes(431)— 431 (1,922)— — (1,922)
Dividends on redeemable senior preferred stock— — — — (7,732)— (7,732)
Accretion of redeemable senior preferred stock— — — — (817)— (817)
Net income— — — — — 287 287 
June 30, 202276,568 $78 1,178 $(6,170)$26,042 $(100,104)$(80,154)
Equity-classified stock-based compensation— — — — 1,104 — 1,104 
ESPP compensation and vesting of stock-based compensation43 — — — 39 — 39 
Share repurchases and shares withheld for taxes(630)— 630 (2,595)— — (2,595)
Dividends on redeemable senior preferred stock— — — — (8,636)— (8,636)
Accretion of redeemable senior preferred stock— — — — (830)— (830)
Net loss— — — — — (792)(792)
September 30, 202275,981 $78 1,808 $(8,765)$17,719 $(100,896)$(91,864)


Common
Stock
Treasury
Stock
APICAOCIAccumulated DeficitDeficit Attributable to StockholdersNCIsTotal
Shares$Shares$
December 31, 202276,044 $76 2,341 $(11,559)$9,650 $— $(102,208)$(104,041)$1,255 $(102,786)
Equity-classified stock-based compensation— — — — 1,936 — — 1,936 — 1,936 
ESPP compensation and vesting of stock-based compensation517 — — — 37 — — 37 — 37 
Shares withheld for taxes(157)— 157 (777)— — — (777)— (777)
Dividends on redeemable senior preferred stock— — — — (10,477)— — (10,477)— (10,477)
Accretion of redeemable senior preferred stock— — — — (818)— — (818)— (818)
Adjustment to NCI— — — — — — — — (403)(403)
Foreign currency translation adjustment— — — — — 24 — 24 — 24 
Net loss— — — — — — (506)(506)— (506)
March 31, 202376,404 $76 2,498 $(12,336)$328 $24 $(102,714)$(114,622)$852 $(113,770)
Equity-classified stock-based compensation— — — — 1,746 — — 1,746 — 1,746 
ESPP compensation and vesting of stock-based compensation192 — — — 43 — — 43 — 43 
Shares withheld for taxes(65)— 65 (241)— — — (241)— (241)
Dividends on redeemable senior preferred stock— — — — (10,934)— — (10,934)— (10,934)
Accretion of redeemable senior preferred stock— — — — (831)— — (831)— (831)
Foreign currency translation adjustment— — — — — — — 
Reclassification of negative additional paid-in capital— — — — 9,648 — (9,648)— — — 
Net loss— — — — — — (612)(612)— (612)
June 30, 202376,531 $76 2,563 $(12,577)$ $31 $(112,974)$(125,444)$852 $(124,592)
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Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
Common
Stock
Treasury
Stock
APICAOCIAccumulated DeficitDeficit Attributable to StockholdersNCIsTotal
Shares$Shares$
Equity-classified stock-based compensation— — — — 1,501 — — 1,501 — 1,501 
ESPP compensation and vesting of stock-based compensation103 — — 38 — — 39 — 39 
Shares withheld for taxes— — — — — — — — — 
Dividends on redeemable senior preferred stock— — — — (11,348)— — (11,348)— (11,348)
Accretion of redeemable senior preferred stock— — — — (844)— — (844)— (844)
Issuance of profit interests/common equity in subsidiaries— — — — — — — — 514 514 
Foreign currency translation adjustment— — — — — (65)— (65)— (65)
Reclassification of negative additional paid-in capital— — — — 10,653 — (10,653)— — — 
Net loss— — — — — — (87)(87)— (87)
September 30, 202376,634 $77 2,564 $(12,577)$ $(34)$(123,714)$(136,248)$1,366 $(134,882)


Common
Stock
Treasury
Stock
Additional Paid-In CapitalAccumulated DeficitDeficit Attributable to Stockholders
Shares$Shares$
December 31, 202067,391 $68 451 $(2,388)$5,769 $(102,013)$(98,564)
Equity-classified stock-based compensation— — — — 558 — 558 
Vesting of stock-based compensation159 — — — — — — 
Liability-classified stock-based compensation converted to equity-classified— — — — 313 — 313 
Exercise of stock options90 — — — 617 — 617 
Net loss— — — — — (2,679)(2,679)
March 31, 202167,640 $68 451 $(2,388)$7,257 $(104,692)$(99,755)
Equity-classified stock-based compensation— — — — 821 — 821 
Vesting of stock-based compensation12 — — — — — — 
Exercise of stock options30 — — — 204 — 204 
Dividends on redeemable senior preferred stock— — — — (3,413)— (3,413)
Accretion of redeemable senior preferred stock— — — — (498)— (498)
Fair value of warrants issued— — — — 11,357 — 11,357 
Fair value of PHOT preferred units redemption— — — — (10,777)— (10,777)
Fair value of common shares issued for PHOT redemption1,428 — — 9,962 — 9,964 
Net loss— — — — — (9,477)(9,477)
June 30, 202169,110 $70 451 $(2,388)$14,913 $(114,169)$(101,574)
Equity-classified stock-based compensation— — — — 790 — 790 
Vesting of stock-based compensation20 — — — — — — 
Issuance of acquisition Common Stock7,551 — — 34,381 — 34,388 
Exercise of stock options53 — — — 369 — 369 
Share repurchases(163)— 163 (1,023)— — (1,023)
Dividends on redeemable senior preferred stock— — — — (5,286)— (5,286)
Accretion of redeemable senior preferred stock— — — — (527)— (527)
Net loss— — — — — (549)(549)
September 30, 202176,571 $77 614 $(3,411)$44,640 $(114,718)$(73,412)
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Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
Common
Stock
Treasury
Stock
APICAOCIAccumulated DeficitDeficit Attributable to StockholdersNCIsTotal
Shares$Shares$
December 31, 202176,740 $77 720 $(4,091)$39,835 $— $(100,058)$(64,237)$— $(64,237)
Equity-classified stock-based compensation— — — — 1,558 — — 1,558 — 1,558 
Vesting of stock-based compensation129 — — — — — — — — — 
Share repurchases and shares withheld for taxes(27)27 (157)(1)— — (157)— (157)
Dividends on redeemable senior preferred stock— — — — (7,595)— — (7,595)— (7,595)
Accretion of redeemable senior preferred stock— — — — (805)— — (805)— (805)
Net loss— — — — — — (333)(333)— (333)
March 31, 202276,842 $78 747 $(4,248)$32,992 $ $(100,391)$(71,569)$ $(71,569)
Equity-classified stock-based compensation— — — — 1,542 — 1,542 — 1,542 
ESPP compensation and vesting of stock-based compensation157 — — — 57 — — 57 — 57 
Share repurchases and shares withheld for taxes(431)— 431 (1,922)— — — (1,922)— (1,922)
Dividends on redeemable senior preferred stock— — — — (7,732)— — (7,732)— (7,732)
Accretion of redeemable senior preferred stock— — — — (817)— — (817)— (817)
Net income— — — — — — 287 287 — 287 
June 30, 202276,568 $78 1,178 $(6,170)$26,042 $ $(100,104)$(80,154)$ $(80,154)
Equity-classified stock-based compensation— — — — 1,104 — — 1,104 — 1,104 
ESPP compensation and vesting of stock-based compensation43 — — — 39 — — 39 — 39 
Share repurchases and shares withheld for taxes(630)— 630 (2,595)— — — (2,595)— (2,595)
Dividends on redeemable senior preferred stock— — — — (8,636)— — (8,636)— (8,636)
Accretion of redeemable senior preferred stock— — — — (830)— — (830)— (830)
Net income— — — — — — (792)(792)— (792)
September 30, 202275,981 $78 1,808 $(8,765)$17,719 $ $(100,896)$(91,864)$ $(91,864)



See Notes to Unaudited Consolidated Financial Statements

45

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Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended September 30,Nine Months Ended September 30,
2022202120232022
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net lossNet loss$(838)$(12,705)Net loss$(1,205)$(838)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of assetsDepreciation and amortization of assets52,675 32,123 Depreciation and amortization of assets53,303 52,675 
Stock-based compensationStock-based compensation4,204 2,349 Stock-based compensation5,183 4,204 
Amortization of debt issuance costs and discountsAmortization of debt issuance costs and discounts2,613 1,607 Amortization of debt issuance costs and discounts2,812 2,613 
Write-off of deferred loan costs and discount— 2,580 
Deferred income tax benefit(3,567)(160)
PIK interest paid— (23,715)
Deferred income taxDeferred income tax(2,432)(3,567)
Change in contingent considerationChange in contingent consideration906 — 
Other non-cash items, netOther non-cash items, net(154)(39)Other non-cash items, net(169)(154)
Change in operating assets and liabilities:Change in operating assets and liabilities:Change in operating assets and liabilities:
Accounts receivableAccounts receivable(11,265)(10,847)Accounts receivable17,931 (11,265)
Prepaid expenses and other current assetsPrepaid expenses and other current assets(2,575)(1,947)Prepaid expenses and other current assets(2,630)(2,575)
Income taxes (receivable) payableIncome taxes (receivable) payable1,003 (1,541)Income taxes (receivable) payable498 1,003 
Notes receivableNotes receivable569 (190)Notes receivable(668)569 
Accounts payable and other accrued liabilitiesAccounts payable and other accrued liabilities13,711 9,192 Accounts payable and other accrued liabilities302 13,711 
Customer deposits and advance paymentsCustomer deposits and advance payments(1,910)713 Customer deposits and advance payments3,802 (1,910)
Other assets and liabilities, netOther assets and liabilities, net(3,908)13 Other assets and liabilities, net(4,953)(3,908)
Net cash provided by (used in) operating activities50,558 (2,567)
Net cash provided by operating activitiesNet cash provided by operating activities72,680 50,558 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired— (407,129)
Acquisition of business, net of cash acquiredAcquisition of business, net of cash acquired(28,182)— 
Additions to property, equipment and softwareAdditions to property, equipment and software(11,380)(7,530)Additions to property, equipment and software(15,268)(11,380)
Notes receivable loan funding(3,250)— 
Acquisitions of intangible assets(6,715)(48,219)
Other investing activities250 — 
Notes receivable, netNotes receivable, net151 (3,250)
Acquisitions of assets and other investing activitiesAcquisitions of assets and other investing activities(7,925)(6,465)
Net cash used in investing activitiesNet cash used in investing activities(21,095)(462,878)Net cash used in investing activities(51,224)(21,095)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of issue discount— 607,318 
Debt issuance and modification costs paidDebt issuance and modification costs paid— (9,073)Debt issuance and modification costs paid(807)— 
Repayments of long-term debtRepayments of long-term debt(4,650)(359,875)Repayments of long-term debt(4,650)(4,650)
Borrowings under revolving credit facilityBorrowings under revolving credit facility23,000 30,000 Borrowings under revolving credit facility44,000 23,000 
Repayments of borrowings under revolving credit facilityRepayments of borrowings under revolving credit facility(32,000)— Repayments of borrowings under revolving credit facility(23,500)(32,000)
Proceeds from the issuance of redeemable senior preferred stock, net of discount— 219,062 
Redeemable senior preferred stock issuance fees and costs— (8,098)
Repurchases of Common Stock and shares withheld for taxesRepurchases of Common Stock and shares withheld for taxes(4,674)(1,023)Repurchases of Common Stock and shares withheld for taxes(1,018)(4,674)
Dividends paid to redeemable senior preferred stockholdersDividends paid to redeemable senior preferred stockholders(11,478)(4,015)Dividends paid to redeemable senior preferred stockholders(17,908)(11,478)
Proceeds from exercise of stock options— 1,190 
Settlement and customer accounts obligations, net25,695 396,338 
Contingent consideration for business combinations and asset acquisitions(3,992)— 
Other financing activities— (814)
Settlement and customer/subscriber accounts obligations, netSettlement and customer/subscriber accounts obligations, net165,610 25,695 
Payment of contingent consideration related to business combinationPayment of contingent consideration related to business combination(4,698)(3,992)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities157,029 (8,099)
Net change in cash and cash equivalents and restricted cash:Net change in cash and cash equivalents and restricted cash:
Net increase in cash and cash equivalents, and restricted cashNet increase in cash and cash equivalents, and restricted cash178,485 21,364 
Cash and cash equivalents and restricted cash at beginning of periodCash and cash equivalents and restricted cash at beginning of period560,610 518,093 
Cash and cash equivalents and restricted cash at end of periodCash and cash equivalents and restricted cash at end of period$739,095 $539,457 
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Priority Technology Holdings, Inc
.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended September 30,Nine Months Ended September 30,
2022202120232022
Net cash (used in) provided by financing activities(8,099)871,010 
Net change in cash and cash equivalents, and restricted cash:
Net increase in cash and cash equivalents, and restricted cash21,364 405,565 
Cash and cash equivalents, and restricted cash at beginning of period518,093 88,120 
Cash and cash equivalents, and restricted cash equivalents at end of period$539,457 $493,685 
Reconciliation of cash and cash equivalents, and restricted cash:Reconciliation of cash and cash equivalents, and restricted cash:
Cash and cash equivalentsCash and cash equivalents$24,595 $12,707 
Restricted cashRestricted cash13,890 11,624 
Cash and cash equivalents included in settlement assets and customer/subscriber account balances (see Note 4)
Cash and cash equivalents included in settlement assets and customer/subscriber account balances (see Note 4)
700,610 515,126 
Total cash and cash equivalents, and restricted cashTotal cash and cash equivalents, and restricted cash$739,095 $539,457 
Supplemental cash flow information:Supplemental cash flow information:Supplemental cash flow information:
Cash paid for interestCash paid for interest$33,023 $17,043 Cash paid for interest$54,670 $33,023 
Non-cash investing and financing activities:Non-cash investing and financing activities:Non-cash investing and financing activities:
Treasury stock purchases settled after the balance sheet dateTreasury stock purchases settled after the balance sheet date$651 $— Treasury stock purchases settled after the balance sheet date$— $651 
Accruals for future contingent payments$4,825 $6,833 
Notes receivable from sellers used as partial consideration for acquisitions$— $3,499 
Contingent consideration accrualContingent consideration accrual$— $4,825 
Non-cash additions to other noncurrent assets for right-of-use operating leasesNon-cash additions to other noncurrent assets for right-of-use operating leases$166 $— Non-cash additions to other noncurrent assets for right-of-use operating leases$— $166 
Reconciliation of cash and cash equivalents, and restricted cash:
Cash and cash equivalents$12,707 $16,974 
Restricted cash11,624 17,258 
Cash and cash equivalents included in settlement assets and customer account balances (see Note 4)
515,126 459,453 
Total cash and cash equivalents, and restricted cash$539,457 $493,685 
Adjustment to value of profit interest unitsAdjustment to value of profit interest units$596 $— 
Acquisition of intangible assetAcquisition of intangible asset$193 $— 
Measurement period adjustment to purchase priceMeasurement period adjustment to purchase price$110 $— 
Cash portion of dividend payable for redeemable senior preferred stock(1)
Cash portion of dividend payable for redeemable senior preferred stock(1)
$6,810 $— 
Issuance of NCIIssuance of NCI$184 $— 
(1)Paid on October 2, 2023

See Notes to Unaudited Consolidated Financial Statements

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Priority Technology Holdings, Inc.
Notes to Unaudited Consolidated Financial Statements

1.    NatureBasis of BusinessPresentation and Significant Accounting Policies
Business, Consolidation and Presentation
Priority Technology Holdings, Inc. and its consolidated subsidiaries are referred to herein collectively as "Priority," "PRTH," the "Company," "we," "our" or "us," unless the context requires otherwise. Priority is a provider of merchant acquiring, integrated payment software, licensed money transmission services and commercial payments solutions.
The Company operates on a calendar year ending each December 31 and on four calendar quarters ending on March 31, June 30, September 30 and December 31 of each year. Results of operations reported for interim periods are not necessarily indicative of results for the entire year.
The accompanying Unaudited Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. These Unaudited Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information pursuant to the rules and regulations of the SEC. The Consolidated Balance Sheet as of December 31, 20212022 was derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 20212022 but does not include all disclosures required by GAAP for annual financial statements.
NCI represents the equity interest in certain consolidated entities in which the Company owns less than 100% of the profit interests. Changes in the Company's ownership interest while the Company retains its controlling interest are accounted for as equity transactions. As of September 30, 2023, there was no income or loss attributable to NCI in accordance with the applicable operating agreements.
In the opinion of the Company's management, all known adjustments necessary for a fair presentation of the Unaudited Consolidated Financial Statements for interim periods have been made. These adjustments consist of normal recurring accruals and estimates that affect the carrying amounts of assets and liabilities. These Unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.2022.
The results for the quarter and nine months ended September, 30, 2023 include the results of the Plastiq business acquired through Chapter 11 bankruptcy process on July 31, 2023.
Use of Estimates
The preparation of Unaudited Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Unaudited Consolidated Financial Statements and the reported amounts of revenues and expenses during the reported period. Actual results could materially differ from those estimates. In particular,
Revenue Recognition
For the continued magnitude, durationPlastiq business that was acquired on July 31, 2023 (refer to Note 2. Acquisitions,) the Company accepts card payments from its customers and effectsprocesses disbursements to their vendors. For these transactions, the Company acts as merchant of record, therefore, considered as the COVID-19 pandemicprincipal and accordingly presents its revenue on a gross basis. The Company also offers
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volume rebates as an incentive to increase business and customer engagement. These rebates are difficult to predict,presented as net of revenue. Transaction processing costs, including interchange fees, are presented as costs of revenue.
Accounts Receivable, net
Accounts receivables include dues from the Company's sponsor banks (for revenues earned, net of related interchange and the ultimate effect could result in future charges related to the recoverability of assets, including financial assets, long-lived assets, goodwillprocessing fees, and do not bear interest), agents, merchants and other losses.customers, stated net of allowance for current expected credit losses for any uncollectible amounts.
Foreign Currency
The Company's reporting currency is the U.S. dollar. AssetsThe functional currency of the Indian subsidiary of the Company is Indian Rupee (i.e. local currency of Republic of India). The functional currency of the Canadian subsidiary of the Company is the Canadian Dollar. Accordingly, assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current exchange rate on the last day of the reporting period. Revenues and expenses are translated using the average exchange rate in effect during the reporting period. Foreign exchange translation and transaction gains and losses were not material for the periods presented andTranslation adjustments are included in the Unaudited Consolidated Statementsreported as a component of Operations.

Emerging Growth Company Status
Prior to December 31, 2021, the Company was an EGC, as defined in JOBS Act, and elected to take advantage of certain exemptions from various reporting requirements that are applicable toaccumulated other public companies until the Company is no longer an EGC, including using the extended transition period for complying with new or revised accounting standards. On December 31, 2021, we ceased to qualify as an EGC and have adopted any new standards that we are now required to adopt.
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comprehensive income (loss).
Recently IssuedAdopted Accounting Standards Pending Adoption
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financial Rate. If certain criteria are met, entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform. An entity that makes this election would not have to remeasure the contract at the modification date or reassess a previous accounting determination. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. These updates can be adopted at any time before December 31, 2022. The Company's term facility and revolving credit facility bear interest at rates based on LIBOR, and the dividend rate on the Company's redeemable senior preferred stock is also based on LIBOR. The Company is evaluating the potential impact these updates may have on its Unaudited Consolidated Financial Statements.
Credit Losses
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This new guidance will changechanges how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 will replacereplaces the current "incurred loss" model with an "expected loss" model. Under the "incurred loss" model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been "incurred"). Under the "expected loss" model, a loss (or allowance) is recognized upon initial recognition of the asset that reflects all future events that leads to a loss being realized, regardless of whether it is probable that the future event will occur. The "incurred loss" model considers past events and current conditions, whileCompany adopted ASU 2016-13 effective January 1, 2023 using the "expected loss" model includes expectations for the future whichmodified-retrospective approach. The implementation of ASU 2016-13 did not have yet to occur. The standard will require entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the potential impact that this update may have on the timing of recognizing future provisions for expected losses on the Company's accounts receivable and notes receivable. Since the Company is a smaller reporting company, the Company must adopt this new standard no later than the beginning of 2023 for annual and interim reporting periods.
Recently Adopted Accounting Standards
Business Combinations
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASC 606, as if the acquirer had originated the contracts. Generally this will result in the acquirer recognizing and measuring the acquired contract assets and liabilities consistent with the manner by which they were recognized and measured by the acquiree. This update is effective for public companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and early adoption is permitted, including in an interim period. If this update is adopted early in an interim period, it must be applied retrospectively to all business combinations that occurred since the beginning of the fiscal year. The Company elected to early adopt ASU 2021-08 in the second quarter of 2022. The Company has not acquired any businesses during 2022, therefore there was nomaterial impact on the Company's Unaudited Consolidated Financial Statements. Additionally, the Company modified its accounting policy to conform with the requirements of the adoption of this standard.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates, such as the SOFR. An entity that makes this election would not have to remeasure the contract at the modification date or reassess a previous accounting determination. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), Scope ASU 2021-01, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The Company adopted the optional expedients of Topic 848 on June 30, 2023 upon the amendments of its Credit Agreement (see Note 8. Debt Obligations) and the Certificate of Designation (see Note 9. Redeemable Senior Preferred Stock and Warrants), which transitioned the Company's reference rates from LIBOR to SOFR. The adoption of this standard did not have a material impact on the Company's Unaudited Consolidated Financial Statements.

2.    Acquisitions
Plastiq Acquisition
On May 23, 2023, PRTH’s subsidiary, Plastiq, Powered by Priority, LLC (the "acquiring entity"), entered into a stalking horse equity and asset purchase agreement (the "Purchase Agreement") with Plastiq, Inc. and certain of its affiliates ("Plastiq") to acquire substantially all of the assets of Plastiq, including the equity interest in Plastiq Canada, Inc. Plastiq is a buyer funded
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B2B payments platform offering bill pay and instant access to working capital to its customers and will complement the Company's existing supplier-funded B2B payments business. On May 24, 2023, Plastiq filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware.
The purchase was completed on July 31, 2023 for a total purchase consideration of approximately $37.3 million. The total purchase consideration included $28.5 million in cash and the remaining consideration is in the nature of deferred or contingent consideration and certain equity interest in the acquiring entity. The cash consideration for the purchase was funded by borrowings from the Company's revolving credit facility.
The acquisition was accounted for as a business combination using the acquisition method of accounting, under which the acquired assets and assumed liabilities were recognized at their fair values as of July 31, 2023, with the excess of the fair value of consideration transferred over the fair value of the net assets acquired recognized as goodwill. The fair values of the acquired assets and assumed liabilities as of July 31, 2023 were estimated by management using the discounted cash flow method and other factors specific to certain assets and liabilities. The preliminary purchase price allocation is set forth in the table below and expected to be finalized as soon as practicable but no later than one year from the closing date.
(in thousands)
Consideration:
Cash$28,500 
Contingent consideration payments (1)
8,419 
Common equity of acquiring entity330 
Less: cash and restricted cash acquired(318)
Total purchase consideration, net of cash and restricted cash acquired$36,931
Recognized amounts of assets acquired and liabilities assumed:
Accounts receivable$881 
Prepaid expenses423 
Settlement assets8,277 
Equipment, net47 
Goodwill6,943 
Intangible assets(2)
30,460 
Accounts payable and accrued expenses(1,607)
Customer deposits(214)
Settlement obligations(8,279)
Total purchase consideration$36,931
(1)The fair value of the contingent consideration payments issued was determined utilizing a Monte Carlo simulation. The contingent consideration payments were calculated based on the path for the simulated metrics and the contractual terms of the contingent consideration payments and were discounted to present value at a rate reflecting the risk associated with the payoffs. The fair value was estimated to be the average present value of the contingent consideration payments over all iterations of the simulation.
(2)The intangible assets acquired consist of $13.0 million for customer relationships, $7.0 million for referral partner relationships, $6.5 million for technology and $3.9 million for trade name.
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This business is reported within the Company's B2B Payments reportable segment. The Company's Unaudited Consolidated Financial Statements for three and nine months ended September 30, 2023 include the operating results of Plastiq from August 1, 2023 through September 30, 2023 as noted in the table below:
2.
Three Months Ended September 30, 2023
(in thousands)
Revenues$9,932 
Operating loss(1)
$(699)
(1)Excluding acquisition related costs of $1.3 million
For the three and nine months ended September 30, 2023, the Company incurred $1.3 million and $1.7 million respectively, in acquisition related costs, which primarily consisted of consulting, legal and accounting and valuation expenses. These expenses were recorded in selling, general and administrative expenses in the Company's Unaudited Consolidated Statements of Operations and Comprehensive Loss. Based on the purchase consideration and pre-acquisition operating results, this business combination did not meet the materiality requirements for pro forma disclosures.
Ovvi Acquisition
On November 18, 2022, the Company completed its acquisition of certain assets and assumption of a certain liability of Ovvi, LLC, under an asset purchase agreement through its wholly-owned subsidiary, Priority Ovvi, LLC ("Ovvi"). The acquisition was accounted for as a business combination using the acquisition method of accounting. Prior to this acquisition, the business operated as a SaaS proprietary platform for the restaurant, hospitality and retail industries by providing complete all-in-one point of sale software and hardware systems, comprehensive ancillary services including fraud detection and mitigation, and processing services for various types of cards including credit cards, debit cards, private label cards and prepaid cards. This business is reported within the Company's SMB Payments reportable segment. Transaction costs were not material and were expensed. The non-voting incentive shares issued to the seller will be evaluated at each reporting period to determine whether or not profit or loss should be allocated to NCI based on the subsidiary's operating agreement. The preliminary purchase price allocation is set forth in the table below and is expected to be finalized as soon as practicable, but no later than one year from the acquisition date.
(in thousands)
Consideration:
Cash(1)
$5,026 
Total purchase consideration5,026
Fair value of class B shares issued in Ovvi (NCI)(3)
659 
Total enterprise value of business acquired(3)
$5,685
Recognized amounts of assets acquired and liabilities assumed:
Accounts receivable(4)
$43 
Inventory(4)
98 
Property, equipment and software, net20 
Goodwill(3)(4)
3,504 
Intangible assets(2)
2,021 
Other non-current asset152 
Other non-current liability(153)
Total enterprise value of business acquired(3)
$5,685
(1)Includes $50,000 withheld for inventory acquired which was subsequently released in March 2023.
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(2)The intangible assets consist of $1.3 million for technology, $0.4 million for customer relationships and $0.3 million for trade names.
(3)During the three months ended March 31, 2023, the Company recorded measurement period adjustments due to additional information received related to the valuation of the Class B shares. This measurement period adjustment resulted in a decrease of $0.6 million in goodwill and NCI.
(4)During the three months ended September 30, 2023, the Company recorded measurement period adjustments due to additional information received related to accounts receivable and inventory. This measurement period adjustment resulted in a decrease of $0.1 million in accounts receivable and inventory, offset by an increase in goodwill of $0.1 million.
Other Acquisition
The Company also completed another acquisition during 2022 for approximately $1.2 million, which was not material. The acquisition did not meet the definition of a business, therefore it was accounted for as an asset acquisition under which the cost of acquisition was allocated to the technology asset acquired.

3.    Revenues
Disaggregation of Revenues
The following table presents a disaggregation of our consolidated revenues by type for the three and nine months ended September 30, 2022 and 2021:type:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Revenue Type:Revenue Type:Revenue Type:
Merchant card feesMerchant card fees$137,659 $122,175 $405,404 $348,244 Merchant card fees$146,974 $137,659 $441,142 $405,404 
Money transmission services revenue18,291 2,873 51,757 2,873 
Money transmission servicesMoney transmission services25,831 18,291 70,955 51,757 
Outsourced services and other servicesOutsourced services and other services7,933 5,778 21,917 14,981 Outsourced services and other services13,181 7,933 34,768 21,917 
EquipmentEquipment2,534 1,716 7,008 4,755 Equipment3,029 2,534 9,468 7,008 
Total revenues(1),(2)
Total revenues(1),(2)
$166,417 $132,542 $486,086 $370,853 
Total revenues(1),(2)
$189,015 $166,417 $556,333 $486,086 
(1)Includes contracts with an original duration of one year or less and variable consideration under a stand-ready series of distinct days of service. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material.
(2)Approximately $2.0$9.7 million and $3.4$21.9 million of interest income for the three and nine months ended September 30, 2022, respectively,2023 and $0.1$2.0 million and $0.1$3.4 million for the three and nine months ended September 30, 2021,2022, respectively, is included in outsourced services and other services revenue in the table above. Approximately $0.2$0.5 million and $0.4$1.1 million of interest income for the three and nine months ended September 30, 2022, respectively,2023, and $0.1$0.2 million and $0.6$0.4 million of interest income three and nine months ended September 30, 2021,2022, respectively, is included in other income, net on the Company's Unaudited Consolidated Statements of Operations and Comprehensive Loss and not reflected in the table above.
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The following table presents a disaggregation of our consolidated revenues by segment:
Three Months Ended September 30, 2023
(in thousands)Merchant Card FeesMoney Transmission ServicesOutsourced and Other ServicesEquipmentTotal
Segment
SMB Payments$136,086 $— $994 $3,029 $140,109 
B2B Payments10,837 — 2,911 — 13,748 
Enterprise Payments51 25,831 9,276 — 35,158 
Total revenues$146,974 $25,831 $13,181 $3,029 $189,015 
 Nine months ended September 30, 2023
(in thousands)Merchant Card FeesMoney Transmission ServicesOutsourced and Other ServicesEquipmentTotal
Segment
SMB Payments$428,318 $— $5,151 $9,468 $442,937 
B2B Payments12,718 — 6,787 — 19,505 
Enterprise Payments106 70,955 22,830 — 93,891 
Total revenues$441,142 $70,955 $34,768 $9,468 $556,333 
Three Months Ended September 30, 2022
(in thousands)Merchant Card FeesMoney Transmission ServicesOutsourced and Other ServicesEquipmentTotal
Segment
SMB Payments$136,340 $— $1,018 $2,534 $139,892 
B2B Payments1,319 — 3,549 — 4,868 
Enterprise Payments— 18,291 3,366 — 21,657 
Total revenues$137,659 $18,291 $7,933 $2,534 $166,417 
Nine Months Ended September 30, 2022
(in thousands)Merchant Card FeesMoney Transmission ServicesOutsourced and Other ServicesEquipmentTotal
Segment
SMB Payments$402,890 $— $2,459 $7,008 $412,357 
B2B Payments2,514 — 13,574 — 16,088 
Enterprise Payments— 51,757 5,884 — 57,641 
Total revenues$405,404 $51,757 $21,917 $7,008 $486,086 
Deferred revenues were not material for the three and nine months ended September 30, 20222023 and 2021.2022.
Contract Assets and Contract Liabilities
Material contract assets and liabilities are presented net at the individual contract level in the Unaudited Consolidated Balance Sheets and are classified as current or noncurrent based on the nature of the underlying contractual rights and obligations.
Supplemental balance sheet information related to contracts from customers
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Contract liabilities were $0.4 million and $0.2 million as of September 30, 20222023 and December 31, 2021 was as follows:
(in thousands)Consolidated Balance Sheet Line ItemSeptember 30, 2022December 31, 2021
Liabilities:
Contract liabilities, net (current)Customer deposits and advance payments$— $1,280 
2022, respectively. Substantially all of these balances are recognized as revenue within 12 months. As of September 30, 2022, all of the contract liabilities, have been recognized as revenue.
Net contract assets were not material for any period presented.
Impairment losses recognized on receivables or contract assets arising from the Company's contracts with customers were not material for the three and nine months ended September 30, 20222023 and September 30, 2021.

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3.    Acquisitions
Finxera Acquisition
On September 17, 2021, the Company completed its acquisition of 100% of the equity interests of Finxera. Finxera is a provider of deposit account management and licensed money transmission services in the U.S. The acquisition will allow the Company to offer clients turn-key merchant services, payment facilitation, card issuing, automated payables, virtual banking, e-wallet tools, risk management, underwriting and compliance on a single platform.
The transaction was funded with the Company's cash on hand, proceeds from the issuance of the redeemable senior preferred stock and debt, and the issuance of common equity shares to the sellers.
The acquisition was accounted for as a business combination using the acquisition method of accounting, under which the assets acquired and liabilities assumed were recognized at their fair values as of September 17, 2021, with the excess of the fair value of consideration transferred over the fair value of the net assets acquired recognized as goodwill. The fair values of the assets acquired and liabilities assumed as of September 17, 2021 were estimated by management based on the valuation of the Finxera business using the discounted cash flow method and other factors specific to certain assets and liabilities. The final purchase price allocation is set forth in the table below.
(in thousands)
Consideration:
Cash$379,220 
Equity instruments(1)
34,388 
Less: cash and restricted cash acquired(6,598)
Total purchase consideration, net of cash and restricted cash acquired$407,010
Recognized amounts of assets acquired and liabilities assumed:
Accounts receivable$385 
Prepaid expenses and other current assets(2)
5,298 
Current portion of notes receivable784 
Settlement assets and customer account balances498,811 
Property, equipment and software, net712 
Goodwill(2)
244,711 
Intangible assets, net(3)
211,400 
Other noncurrent assets955 
Accounts payable and accrued expenses(7,837)
Settlement and customer account obligations(498,811)
Deferred income taxes, net(2)
(44,018)
Other noncurrent liabilities(5,380)
Total purchase consideration$407,010
(1)The fair value of the 7,551,354 shares of Common stock that were issued was determined based on their market price at the time of closing adjusted for an appropriate liquidity discount due to trading restrictions under Securities Act Rule 144.
(2)During the nine months ended September 30, 2022, the Company recorded measurement period adjustments due to additional information received related to income taxes and deferred income taxes, net. These measurement period adjustments resulted in an increase of $0.1 million in prepaid expenses and an increase of $0.3 million in other current assets and deferred income taxes, offset by a decrease in goodwill of $0.4 million.
(3)The intangible assets acquired consist of $154.9 million for referral partner relationships, $34.3 million for technology, $20.1 million for customer relationships and $2.1 million for money transmission licenses.
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Goodwill of $244.7 million arising from the acquisition of Finxera primarily consists of the expected synergies and other benefits from combining operations. Goodwill attributable to the acquisition of $8.7 million was deductible for income tax purposes. The goodwill was allocated 100% to the Company's Enterprise Payments reportable segment.
In 2020, Finxera acquired two businesses for which the purchase price included contingent consideration valued at $6.1 million. The contingent consideration payable is comprised of earnout opportunities equal to 25% to 50% of certain revenues earned from the customers assumed in these acquisitions. The associated earnout opportunities are to be measured and paid every six months and expire at various dates through December 31, 2023. As of September 30, 2022, an adjustment of $1.1 million was recorded due to changes in the fair value of the contingent consideration (as selling, general and administrative expenses in the Company's Consolidated Statements of Operations) resulting in total contingent consideration of $7.2 million. The accretion of contingent consideration was $0.1 million and $0.4 million for the three and nine months ended September 30, 2022, respectively, which is included in interest expense on the Company's Unaudited Consolidated Statements of Operations, increasing the total liability to $7.6 million of which $1.8 million has been paid. The remaining $5.8 million was accrued, of which $3.9 million and $1.9 million were included in accounts payable and accrued expenses and other noncurrent liabilities, respectively, on the Company's Unaudited Consolidated Balance Sheet as of September 30, 2022.
Other Acquisitions
Wholesale Payments, Inc.
On April 28, 2021, a subsidiary of the Company completed its acquisition of certain residual portfolio rights for a purchase price of $42.4 million in addition to $24.8 million of post-closing payments and earnout payments based on meeting certain attrition thresholds over a three-year period from the date of acquisition. The transaction did not meet the definition of a business, therefore it was accounted for as an asset acquisition under which the cost of the acquisition was allocated to the acquired assets based on relative fair values. As this is an asset acquisition, additional purchase price is accounted for when payment to the seller becomes probable and is added to the carrying value of the asset. The seller's note payable to the Company of $3.0 million and an advance of $2.0 million outstanding at the time of the purchase was netted against the initial purchase price, resulting in cash of $41.2 million being paid by the Company to the seller, which was funded from cash proceeds from the issuance of the redeemable senior preferred stock and cash on hand.
As of the second quarter 2022, the sellers earned $9.4 million of the $24.8 million earnout, increasing the total purchase price recorded to $51.8 million, which was recorded to residual buyout intangible assets with a seven-year useful life amortized on a straight-line basis. In September 2022, an adjustment of $0.5 million was recorded, decreasing the total amount earned as of September 30, 2022 to $8.9 million. As of September 30, 2022, $5.1 million had been paid.
C&H
On June 25, 2021, a subsidiary of the Company acquired certain assets and assumed certain related liabilities of C&H under an asset purchase agreement. C&H was an ISO partner of the Company where it developed expertise in software-integrated payment services, as well as marketing programs for specific verticals such as automotive and youth sports. This business is reported within the Company's SMB Payments reportable segment. The initial purchase price for the net assets was $35.0 million in cash and a total purchase price of not more than $60.0 million including post-closing payments and earnout payments based on certain gross profit and revenue achievements over a three-year period from the date of acquisition. The acquisition date fair value of the contingent consideration was $4.7 million, which increased the total purchase price to $39.7 million. The seller's note payable to the Company of $0.5 million at the time of purchase was netted against the initial purchase price, resulting in cash of $34.5 million being paid by the Company to the seller, which was funded from a $30.0 million draw down of the revolving credit facility under the Credit Agreement held by the Company and $4.5 million cash on hand. Transaction costs were not material and were expensed. The purchase price allocation is set forth in the table below.
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(in thousands)
Accounts receivable$214 
Prepaid expenses and other current assets209 
Property, equipment and software, net and other current assets287 
Goodwill13,804 
Intangible assets, net(1)
25,400 
Other noncurrent liabilities(214)
Total purchase price$39,700
(1)The intangible assets acquired consist of $20.2 million for merchant portfolio intangible assets with a ten-year useful life and $5.2 million for ISO partner relationships with a twelve-year useful life.
As of September 30, 2022, the fair value of the C&H contingent consideration was $5.0 million, of which $3.0 million and $2.0 million were included in accounts payable and accrued expenses and other noncurrent liabilities, respectively, on the Company's Unaudited Consolidated Balance Sheet as of September 30, 2022. The accretion of contingent consideration was $0.3 million for the three and nine months ended September 30, 2022, which is included in interest expense on the Company's Unaudited Consolidated Statements of Operations.
The goodwill for the C&H business combination is deductible by the Company for income tax purposes.

4.    Settlement Assets and CustomerCustomer/Subscriber Account Balances and Related Obligations
SMB Payments Segment
In the Company's SMB Payments reportable segment, funds settlement refers to the process of transferring funds for sales and credits between card issuers and merchants. The standards of the card networks require possession of funds during the settlement process by a member bank which controls the clearing transactions. Since settlement funds are required to be in the possession of a member bank until the merchant is funded, these funds are not assets of the Company and the associated obligations related to these funds are not liabilities of the Company. Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets. Member banks held merchant funds of $113.3$102.9 million and $102.1$110.3 million at September 30, 20222023 and December 31, 2021,2022, respectively.
Exception items that become the liability of the Company are recorded as merchant losses, a component of cost of revenue in the Company's Unaudited Consolidated Statements of Operations.Operations and Comprehensive Loss. Exception items that the Company is still attempting to collect from the merchants through the funds settlement process or merchant reserves are recognized as settlement assets and customercustomer/subscriber account balances in the Company's Unaudited Consolidated Balance Sheets, with an offsetting reserve for those amounts the Company estimates it will not be able to recover. Expenses for merchant losses for the three and nine months ended September 30, 20222023 were $0.7$1.6 million and $2.8$3.7 million, respectively. Expenses for merchant losses for the three and nine months ended September 30, 20212022 were $0.6$0.7 million and $1.6$2.8 million, respectively.
B2B Payments Segment
In the Company's B2B Payments segment, the Company earns revenues from certain of its services by processing transactions for FIs and other business customers. Customers transfer funds to the Company, which are held in either company-owned bank accounts controlled by the Company or bank-owned FBO accounts controlled by the banks, until such time that the transactions are settled with the customer payees. Amounts due to customer payees that are held by the Company in company-owned bank accounts are included in restricted cash. Amounts due to customer payees that are held in bank-owned FBO accounts are not assets of the Company, and the associated obligations related to these funds are not liabilities of the Company. Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets. Bank-owned FBO accounts held funds of $71.8$93.4 million and $45.5$42.7 million at September 30, 20222023 and December 31, 2021,2022, respectively. Company-owned bank accounts held $4.4$9.5 million and $21.4$1.8 million at September 30, 20222023 and December 31, 2021,2022, respectively, which are included in restricted cash and settlement and customercustomer/subscriber account obligations in the Company's Unaudited Consolidated Balance Sheets.
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TableFor the Plastiq business, the Company accepts card payments from its customers and processes disbursements to their vendors. The time lag between authorization and settlement of Contents

card transactions creates certain receivables (from card networks) and payables (to the vendors of customers). These receivables and payables arise from the settlement activities that the Company performs on the behalf of its customers and therefore, are presented as Settlement assets and related obligations.
Enterprise Payments Segment
In the Company's Enterprise Payments segment revenue is derived primarily from enrollment fees, monthly subscription fees and transaction-based fees from licensed money transmission services. As part of its licensed money transmission services, the Company accepts deposits from consumers and subscribers which are held in bank accounts maintained by the Company on behalf of consumers and subscribers. After accepting deposits, the Company is allowed to invest available balances in these accounts in certain permitted investments, and the return on such investments contributes to the Company's net cash inflows. These balances are payable on demand. As such, the Company recorded these balances and related obligations as current assets
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and current liabilities. The nature of these balances are cash and cash equivalents, but they are not available for day-to-day operations of the Company. Therefore, the Company has classified these balances as settlement assets and customercustomer/subscriber account balances and the related obligations as settlement and customercustomer/subscriber account obligations in the Company's Unaudited Consolidated Balance Sheets.

In certain states, the Company accepts deposits under agency arrangement with member banks wherein accepted deposits remain under the control of the member banks. Therefore, the Company does not record assets for the deposits accepted and liabilities for the associated obligation. Agency owned accounts held $8.6 million and $6.1 million at September 30, 2023 and December 31, 2022, respectively.
The Company's consolidated settlement assets and customercustomer/subscriber account balances and settlement and customercustomer/subscriber account obligations were as follows:
(in thousands)September 30, 2022December 31, 2021
Settlement Assets:
Card settlements due from merchants, net of estimated losses$1,561 $537 
Customer Account Balances:
Cash and cash equivalents515,126 468,934 
Time deposits— 10,000 
Total settlement assets and customer account balances$516,687 $479,471 
Settlement and Customer Account Obligations:
Customer account obligations$515,126 $478,935 
Due to customer payees(1)
1,882 21,356 
Total settlement and customer account obligations$517,008 $500,291 
(in thousands)September 30, 2023December 31, 2022
Settlement Assets, net of estimated losses(1):
Card settlements due from merchants$4,768 $444 
Card settlements due from networks6,792  
Customer/Subscriber Account Balances:
Cash and cash equivalents700,610 531,574 
Total settlement assets and customer/subscriber account balances$712,170 $532,018 
Settlement and Customer/Subscriber Account Obligations:
Customer account obligations$672,183 $516,086 
Subscriber account obligations28,427 15,488 
Total customer/subscriber account obligations700,610 531,574 
Due to customers' payees(2)
9,458 1,766 
Total settlement and customer/subscriber account obligations$710,068 $533,340 
(1)TheAllowance for estimated losses was $5.6 million and $5.0 million as of September 30, 2023 and December 31, 2022, respectively
(2)Card settlements due from networks includes $6.8 million of related assets and remainder are included in restricted cash on our Unaudited Consolidated Balance Sheets.

5.     Goodwill and Other Intangible Assets
Goodwill
The Company's goodwill relates to the following reporting units as of September 30, 2022 and December 31, 2021:
(in thousands)September 30, 2022December 31, 2021
SMB Payments$120,636 $120,636 
Enterprise Payments244,711 245,104 
Total$365,347 $365,740 
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The following table summarizes the changes in the carrying value of goodwill for the periods ended September 30, 2022 and December 31, 2021
(in thousands)Amount
Balance at December 31, 2021$365,740 
Changes in the value of goodwill— 
Balance at March 31, 2022365,740 
Changes in the value of goodwill— 
Balance at June 30, 2022365,740 
Final purchase price adjustment for Finxera(393)
Balance at September 30, 2022$365,347
As of September 30, 2022, the Company is not aware of any triggering events for impairment that have occurred since the last annual impairment test.
Other Intangible Assets
At September 30, 2022 and December 31, 2021, other intangible assets consisted of the following:
(in thousands, except weighted-average data)September 30, 2022Weighted-average
Useful Life
Gross Carrying ValueAccumulated AmortizationNet Carrying Value
Other intangible assets:
ISO and referral partner relationships$175,300 $(20,941)$154,359 14.8
Residual buyouts132,997 (71,182)61,815 6.2
Customer relationships95,566 (80,254)15,312 8.0
Merchant portfolios76,423 (40,087)36,336 6.7
Technology48,690 (17,684)31,006 9.9
Non-compete agreements3,390 (3,390)— 0.0
Trade names2,870 (2,069)801 11.7
Money transmission licenses(1)
2,100 — 2,100 
Total$537,336 $(235,607)$301,729 9.9
(1)Money transmission licenses have an indefinite useful life.
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(in thousands, except weighted-average data)December 31, 2021Weighted-average
Useful Life
Gross Carrying ValueAccumulated AmortizationNet Carrying Value
Other intangible assets:
ISO and referral partner relationships$175,300 $(11,679)$163,621 14.8
Residual buyouts(1)
126,225 (56,186)70,039 6.4
Customer relationships95,566 (70,883)24,683 8.1
Merchant portfolios76,016 (30,879)45,137 6.7
Technology(2)
48,690 (15,039)33,651 9.9
Non-compete agreements(2)
3,390 (3,390)— 0.0
Trade names2,870 (1,890)980 11.6
Money transmission licenses(3)
2,100  2,100 
Total$530,157 $(189,946)$340,211 9.7
(1)Additions to residual buyouts were offset by certain assets that became fully amortized in 2021 but are still in service.
(2)Certain assets in the group became fully amortized in 2021 but are still in service.
(3)These assets have an indefinite useful life.
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Amortization expense$15,452 $10,191 $45,773 $25,858 
As of September 30, 2022, there were no impairment indicators present.
6.    Property, Equipment and Software
A summary of property, equipment and software, net as of September 30, 2022 and December 31, 2021 was as follows:
(in thousands)September 30, 2022December 31, 2021
Computer software$63,087 $52,715 
Equipment12,916 12,255 
Leasehold improvements6,720 6,467 
Furniture and fixtures2,869 2,819 
Property, equipment and software85,592 74,256 
Less: accumulated depreciation(55,819)(49,023)
Property, equipment and software, net$29,773 $25,233 
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Depreciation expense$2,365 $2,139 $6,902 $6,265 
Computer software represents purchased software and internally developed back office and merchant interfacing systems used to assist in the reporting of merchant processing transactions and other related information.

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7.     Notes Receivable
The Company had notes receivable of $3.1$5.2 million and $0.4$4.7 million as of September 30, 20222023 and December 31, 2021,2022, respectively, which are reported as current portion of notes receivable and notes receivable less current portion on the Company's Unaudited Consolidated Balance Sheets. The notes receivable carried weighted-average interest rates of 14.8%18.2% and 13.8%15.4% as of September 30, 20222023 and December 31, 2021, respectively.2022. The notes receivable are comprised of notes receivable from ISOs, and under the terms of the agreements the Company preserves the right to hold back residual payments due to the ISOs and to apply such residuals against future payments due to the Company. As of September 30, 20222023 and December 31, 2021,2022, the Company had no allowance for doubtful notes receivable.
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As of September 30, 2022,2023, the principal payments for the Company's notes receivable are due as follows:
(in thousands)(in thousands)(in thousands)
Twelve months ending September 30,Twelve months ending September 30,Twelve months ending September 30,
2023$986 
20242024792 2024$1,561 
20252025522 20251,350 
20262026515 2026827 
20272027243 2027909 
After 2027After 2027— After 2027530 
TotalTotal$3,058 Total$5,177 

6.    Property, Equipment and Software
A summary of property, equipment and software, net was as follows:
(in thousands)September 30, 2023December 31, 2022
Computer software$71,463 $64,197 
Equipment10,027 13,302 
Leasehold improvements1,535 6,990 
Furniture and fixtures1,442 2,909 
Property, equipment and software84,467 87,398 
Less: Accumulated depreciation(53,208)(58,409)
Capital work in-progress10,592 5,698 
Property, equipment and software, net$41,851 $34,687 
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Depreciation expense$2,763 $2,365 $8,335 $6,902 
Computer software represents purchased software and internally developed software that is used to provide the Company's services to its customers.
Fully depreciated assets are retained in property, equipment and software, net, until removed from service. During the quarter ended September 30, 2023, certain fully depreciated assets were removed from service.

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7.    Goodwill and Other Intangible Assets
Goodwill
The Company's goodwill relates to the following reporting units:
(in thousands)September 30, 2023December 31, 2022
SMB Payments$124,139 $124,625 
Enterprise Payments244,712 244,712 
Plastiq (B2B Payments)6,943 — 
Total$375,794 $369,337 
The following table summarizes the changes in the carrying value of goodwill:
(in thousands)Amount
Balance at December 31, 2022$369,337 
Purchase price adjustment for Ovvi(486)
Plastiq acquisition6,943 
Balance at September 30, 2023$375,794
As of September 30, 2023, the Company is not aware of any triggering events for impairment that have occurred since the last annual impairment test.
Other Intangible Assets
Other intangible assets consisted of the following:
September 30, 2023Weighted-average
Useful Life
(in thousands, except weighted-average data)Gross Carrying ValueAccumulated AmortizationNet Carrying Value
Other intangible assets:
ISO and referral partner relationships$182,339 $(33,764)$148,575 14.7
Residual buyouts136,064 (90,121)45,943 6.3
Customer relationships109,017 (91,619)17,398 8.4
Merchant portfolios83,350 (52,711)30,639 6.5
Technology57,639 (21,525)36,114 9.0
Trade names7,104 (2,383)4,721 10.6
Non-compete agreements3,390 (3,390)— 0.0
Money transmission licenses(1)
2,100 — 2,100 
Total$581,003 $(295,513)$285,490 9.7
(1)These assets have an indefinite useful life.
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December 31, 2022Weighted-average
Useful Life
(in thousands, except weighted-average data)Gross Carrying ValueAccumulated AmortizationNet Carrying Value
Other intangible assets:
ISO and referral partner relationships$175,300 $(24,021)$151,279 14.8
Residual buyouts132,325 (76,316)56,009 6.6
Customer relationships96,000 (83,298)12,702 8.2
Merchant portfolios76,423 (43,170)33,253 6.7
Technology50,963 (18,566)32,397 8.4
Trade names3,183 (2,129)1,054 11.6
Non-compete agreements3,390 (3,390)— 0.0
Money transmission licenses(1)
2,100  2,100 
Total$539,684 $(250,890)$288,794 9.7
(1)These assets have an indefinite useful life.
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Amortization expense$14,512 $15,452 $44,968 $45,773 
As of September 30, 2023, there were no impairment indicators present.
8.    Debt Obligations
Outstanding debt obligations as of September 30, 2022 and December 31, 2021 consisted of the following:
(in thousands)(in thousands)September 30, 2022December 31, 2021(in thousands)September 30, 2023December 31, 2022
Term facility - matures April 27, 2027, interest rates of 8.27% and 6.75% at September 30, 2022 and December 31, 2021, respectively$612,250 $616,900 
Revolving credit facility - $40.0 million line, matures April 27, 2026, interest rates of 7.24% and 5.75% at September 30, 2022 and December 31, 2021, respectively6,000 15,000 
Term facility - matures April 27, 2027, interest rates of 11.43% and 9.82% at September 30, 2023 and December 31, 2022, respectivelyTerm facility - matures April 27, 2027, interest rates of 11.43% and 9.82% at September 30, 2023 and December 31, 2022, respectively$606,050 $610,700 
Revolving credit facility - $65.0 million line as of September 30, 2023 and $40.0 million as of December 31, 2022, matures April 27, 2026, interest rates of 10.20% and 8.82% at September 30, 2023 and December 31, 2022, respectivelyRevolving credit facility - $65.0 million line as of September 30, 2023 and $40.0 million as of December 31, 2022, matures April 27, 2026, interest rates of 10.20% and 8.82% at September 30, 2023 and December 31, 2022, respectively33,000 12,500 
Total debt obligationsTotal debt obligations618,250 631,900 Total debt obligations639,050 623,200 
Less: current portion of long-term debtLess: current portion of long-term debt(6,200)(6,200)Less: current portion of long-term debt(6,200)(6,200)
Less: unamortized debt discounts and deferred financing costsLess: unamortized debt discounts and deferred financing costs(18,982)(21,595)Less: unamortized debt discounts and deferred financing costs(16,069)(18,074)
Long-term debt, netLong-term debt, net$593,068 $604,105 Long-term debt, net$616,781 $598,926 
Interest Expense and Amortization of Deferred Loan Costs and Discounts
Deferred financing costs and debt discounts are amortized using the effective interest method over the remaining term of the respective debt and are recorded as a component of interest expense. Unamortized deferred financing costs and debt discounts are included in long-term debt on the Company's Unaudited Consolidated Balance Sheets.

Outstanding borrowings under the Credit Agreement accrue interest using either a base rate or a LIBOR rate plus an applicable margin per year, subject to a LIBOR rate floor of 1.00% per year. The revolving credit facility incurs an unused commitment fee on any undrawn amount in an amount equal to 0.50% per year of the unused portion. The future applicable interest rate margins may vary based on the Company's Total Net Leverage Ratio in addition to future changes in the underlying market rates for LIBOR and the rate used for base-rate borrowings.
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Interest expense for outstanding debt, including fees for undrawn amounts and amortization of deferred financing costs and debt discounts was as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Interest expense$13,303 $8,155 $36,571 $24,608 
Interest expense(1),(2)
Interest expense(1),(2)
$19,997 $13,412 $55,461 $37,282 
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(1)Included in interest expense is $0.6 million and $0.8 million related to the accretion of contingent consideration from acquisitions for the three and nine months ended September 30, 2023, respectively, $0.1 million and $0.7 million for the three and nine months ended September 30, 2022, respectively.
(2)Interest expense included amortization of deferred financing costs and debt discounts of $1.0 million and $2.8 million for the three and nine months ended September 30, 2023, respectively, and $0.9 million and $2.6 million for the three and nine months ended September 30, 2022, respectively, and $2.1 million and $3.3 million three and nine months ended September 30, 2021, respectively.
Deferred Loan Costs and Discounts, and Debt Extinguishment and Modification Expenses
In connection withThird Amendment to the April 2021 refinancing,Credit Agreement
On June 30, 2023, the Credit Agreement of the Company recorded $8.3 million of debt extinguishment and modification costswas amended to incorporate the following:
Reference rate: The reference rate for the nine months endedcalculation of interest on the Company’s term loan and revolving credit facility was amended from LIBOR to SOFR effective June 30, 2023. Per the amended terms, the outstanding borrowings under the Credit Agreement interest will accrue using the SOFR rate plus a term SOFR adjustment plus an applicable margin per year, subject to a SOFR floor of 1.00% per year. The applicable interest rate as of September 30, 20212023, for the revolving credit facility based on one-month SOFR was 10.20% and for the Company's Unaudited Consolidated Statements of Operations.term facility based on three-month SOFR was 11.43%.
Increase in the revolving credit facility: The amendments also resulted in an increase in the Company’s revolving credit facility from $40 million to $65 million.
Debt Covenants
The Credit Agreement contains representations and warranties, financial and collateral requirements, mandatory payment events, events of default and affirmative and negative covenants, including without limitation, covenants that restrict among other things, the ability to create liens, pay dividends or distribute assets from the loan parties to the Company, merge or consolidate, dispose of assets, incur additional indebtedness, make certain investments or acquisitions, enter into certain transactions (including with affiliates) and to enter into certain leases.
If the aggregate principal amount of outstanding revolving loans and letters of credit under the Credit Agreement exceeds 35% of the total revolving credit facility thereunder, the loan parties are required to comply with certain restrictions on its Total Net Leverage Ratio. If applicable, the maximum permitted Total Net Leverage Ratio is: 1) 6.50:1.00 at each fiscal quarter ended September 30, 2021 through June 30, 2022; 2) 6.00:1.00 at each fiscal quarter ended September 30, 2022 through June 30, 2023; and 3) 5.50:1.00 at each fiscal quarter ended September 30, 2023 each fiscal quarter thereafter. As of September 30, 2022, the Total Net Leverage Ratio was not applicable and2023, the Company was in compliance with our financial covenants.the covenants in the Credit Agreement.

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9.    Fair Value
Fair Value Measurements
Contingent consideration related to the Company's business combinations is estimated based on the present value of a weighted payout probability at the measurement date, which falls within Level 3 on the fair value hierarchy. The current portion of contingent consideration is included in accounts payable and accrued expenses on the Company's Unaudited Consolidated Balance Sheets and the noncurrent portion of contingent consideration is included in other noncurrent liabilities on the Company's Unaudited Consolidated Balance Sheets.
Liabilities measured at fair value on a recurring basis consisted of the following:
(in thousands)Fair Value HierarchySeptember 30, 2022December 31, 2021
Contingent consideration, current portionLevel 3$6,883 $4,006 
Contingent consideration, noncurrent portionLevel 33,870 6,680 
Total contingent consideration$10,753 $10,686 
During the three and nine months ended September 30, 2022, there were no transfers into, out of, or between levels of the fair value hierarchy.
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The following table provides a reconciliation of the beginning and ending balance of the Company's contingent consideration liability for the three and nine months ended September 30, 2022:
(in thousands)Contingent Consideration Liability
December 31, 2021$10,686 
Payment of contingent consideration(415)
March 31, 202210,271 
Accretion of discount on contingent consideration602 
Fair value adjustments due to resolution of contingencies related to future payments(48)
June 30, 202210,825 
Addition of contingent consideration due to acquisition— 
Accretion of discount on contingent consideration108 
Fair value adjustments due to resolution of contingencies related to future payments1,070 
Payment of contingent consideration(1,250)
September 30, 2022$10,753
The following table provides a reconciliation of the beginning and ending balance of the Company's contingent consideration liability for the three and nine months ended September 30, 2021:
(in thousands)Contingent Consideration Liability
December 31, 2020$— 
Payment of contingent consideration— 
March 31, 2021— 
Addition of contingent consideration due to acquisition4,700 
Payment of contingent consideration— 
June 30, 20214,700 
Addition of contingent consideration due to acquisition5,986 
Accretion of discount on contingent consideration— 
Fair value adjustments due to resolution of contingencies related to future payments— 
Payment of contingent consideration— 
September 30, 2021$10,686
Fair Value Disclosures
Notes Receivable
Notes receivable are carried at amortized cost. Substantially all of the Company's notes receivable are secured, and the Company provides for allowances when it believes that certain notes receivable may not be collectible. The carrying value of the Company's notes receivable, net approximates fair value and was approximately $3.1 million and $0.4 million at September 30, 2022 and December 31, 2021, respectively. On the fair value hierarchy, Level 3 inputs are used to estimate the fair value of these notes receivable.
Debt Obligations
Outstanding debt obligations are reflected in the Company's Unaudited Consolidated Balance Sheets at carrying value since the Company did not elect to remeasure debt obligations to fair value at the end of each reporting period.
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The fair value of the of the term facility was estimated to be $590.8 million and $613.8 million at September 30, 2022 and December 31, 2021, respectively, and was estimated using binding and non-binding quoted prices in an active secondary market, which considersthe credit risk and market related conditions, and is within Level 3 of the fair value hierarchy.
The carrying values of the other long-term debt obligations approximate fair value due to mechanisms in the credit agreements that adjust the applicable interest rates and the lack of a market for these debt obligations.

10.9.    Redeemable Senior Preferred Stock and Warrants
The following table provides the redemption value of the redeemable senior preferred stock for the periods presented:
(in thousands)September 30, 2023December 31, 2022
Redeemable senior preferred stock$225,000 $225,000 
Accumulated unpaid dividend38,880 25,498 
Dividend payable6,810 5,341 
Redemption value270,690 255,839 
Less: unamortized discounts and issuance costs(17,767)(20,260)
Redeemable senior preferred stock, net of discounts and issuance costs:$252,923 $235,579 
The following table provides a reconciliation of the beginning and ending carrying amounts of the redeemable senior preferred stock for the three and nine months endedperiods presented:
(in thousands)SharesAmount
December 31, 2022225 $235,579 
Payment of cash portion of dividend and ticking fee outstanding at December 31, 2022— (5,341)
Unpaid dividend on redeemable senior preferred stock— 4,383 
Accretion of discounts and issuance costs— 818 
March 31, 2023225 235,439 
Unpaid dividend on redeemable senior preferred stock— 4,461 
Accretion of discounts and issuance costs— 831 
June 30, 2023225 $240,731 
Unpaid dividend on redeemable senior preferred stock— 4,538 
Accretion of discounts and issuance cost— 844 
Cash portion of dividend outstanding at September 30, 20236,810 
September 30, 2023225 $252,923 
The dividend rate as of September 30, 2022:2023 and December 31, 2022, was 17.5% and 15.7% respectively.
(in thousands)SharesAmount
December 31, 2021225 $210,158 
Unpaid dividend on redeemable senior preferred stock— 4,090 
Accretion of discounts and issuance cost— 805 
March 31, 2022225 215,053 
Unpaid dividend on redeemable senior preferred stock— 4,161 
Accretion of discounts and issuance cost— 817 
June 30, 2022225 $220,031 
Unpaid dividend on redeemable senior preferred stock— 4,234 
Accretion of discounts and issuance cost— 830 
September 30, 2022225 $225,095 
The following table provides a reconciliation of the beginning and ending carrying amounts of the redeemable senior preferred stock for the three and nine months ended September 30, 2021
(in thousands)SharesAmount
December 31, 2020— $— 
Proceeds from issuance of redeemable senior preferred stock, net of discount and issuance costs150 $131,426 
Unpaid dividend on redeemable senior preferred stock— 1,838 
Accretion of discounts and issuance cost— 498 
June 30, 2021150 133,762 
Proceeds from issuance of redeemable senior preferred stock, net of discount and issuance costs75 68,183 
Unpaid dividend on redeemable senior preferred stock— 2,846 
Accretion of discounts and issuance cost— 527 
September 30, 2021225 $205,318 
The following table provides a summary of the dividends for the period presented:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Dividends paid in cash(1)
$6,810 $4,402 $19,377 $11,478 
Accumulated dividends accrued as part of the carrying value of redeemable senior preferred stock4,538 4,234 13,382 12,485 
Dividends declared$11,348 $8,636 $32,759 $23,963 
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Dividends paid in cash$4,402 $2,440 $11,478 $4,015 
Accumulated dividends accrued as part of the carrying value of redeemable senior preferred stock4,234 2,846 12,485 4,684 
Dividends declared at the rate of 13.0% per year$8,636 $5,286 $23,963 $8,699 
(1)Dividend payable for the three months ended September 30, 2023 paid on October 2, 2023.
On June 30, 2023, the Company amended the Certificate of Designation of its redeemable senior preferred stock to transition the reference rate used for the calculation of dividends from LIBOR to SOFR. Under the Amended Certificate of Designation, the dividend rate (capped at 22.50%) will be equal to the three-month term SOFR (minimum of 1.00%), plus the three-month term SOFR spread adjustment of 0.26% plus the applicable margin of 12.00%. All other terms in the agreement were unchanged. For the three months ended September 30, 2023, SOFR is the reference rate for calculation of the dividend. The dividend rate is subject to future increases if the Company doesn't comply with the minimum cash payment requirements outlined in the agreement, which includes required payments of dividends, required payments related to redemption or required
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On April 27,prepayments. The dividend rate may also increase if the Company fails to obtain the required stockholder approval for a forced sale transaction triggered by investors or if an event of default as outlined in the agreement occurs.
In 2021, the Company issued warrants to purchase up to 1,803,841 shares of the Common Stock, at an exercise price of $0.001. As of September 30, 2022,2023, none of the warrants have been exercised. The warrants are considered to be equity contracts indexed in the Company's own shares and therefore were recorded at their inception date relative fair value and are included in additional paid-in capital on the Company's Unaudited Consolidated Balance Sheets.

11.10.    Income Taxes
The Company's consolidated effective income tax rate for the three and nine months ended September 30, 2022,2023, was 102.1% and 122.5%, respectively, compared to a consolidated effective income tax rate of 188.1% and 184.2%, respectively. The effective rate for the three and nine months ended September 30, 2022, respectively. The effective rates differed from the statutory rate of 21.0% primarily due to an increase in the valuation allowance against certain business interest carryover deferred tax assets.
The Company's consolidated effective income tax (benefit) rate for the three and nine months ended September 30, 2021, was 327.8% and (0.4)%, respectively. The effective rate for the three and nine months ended September 30, 2021 differed from the statutory federal rate of 21.0% primarily due to an increase in the valuation allowance against certain business interest carryover deferred tax assets.
Valuation Allowance for Deferred Income Tax Assets
The Company considers all available positive and negative evidence to determine whether sufficient taxable income will be generated in the future to permit realization of the existing deferred tax assets. In accordance with the provisions of ASC 740, Income Taxes, the Company is required to provide a valuation allowance against deferred income tax assets when it is "more likely than not" that some portion or all of the deferred tax assets will not be realized.
Based on management's assessment, as of September 30, 2022,2023, the Company continues to record a full valuation allowance against non-deductible interest expense. The Company will continue to evaluate the realizability of the net deferred tax asset on a quarterly basis and, as a result, the valuation allowance may change in future periods.
On August 16,
11.     Stockholders' Deficit
The Company is authorized to issue 100,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors. As of September 30, 2023 and December 31, 2022, the U.S. government enactedCompany has not issued any shares of preferred stock.
Share Repurchase Program
During the Inflation Reduction Act into law. The IRA, among other provisions, implementssecond quarter of 2022, PRTH's Board of Directors authorized a 15% corporate alternative minimum tax based on global adjusted financial statement incomegeneral share repurchase program under which the Company may purchase up to 2.0 million shares of its outstanding Common Stock for a total of up to $10.0 million. Under the terms of this plan, the Company may purchase shares through open market purchases, unsolicited or solicited privately negotiated transactions, or in another manner so long as it complies with applicable rules and a 1% excise tax onregulations.
September 30, 2023December 31, 2022
in thousands, except share data, which is in whole units
Number of shares purchased(1)
— 1,309,374 
Average price paid per share$— $4.42 
Total Investment(1)
$— $5,791 
(1)These amounts may differ from the repurchases of Common Stock amounts in the Unaudited Statements of Cash Flows due to shares withheld for taxes and unsettled share repurchases which shall take effect in tax years beginning after December 31, 2022. We are inat the process of evaluating the provisionsend of the IRA, but we do not currently believe the IRA will have a material effect on our reported results, cash flows, or financial position when it becomes effective. If applicable, we expect to reflect the excise tax within equity as part of the repurchase price of common stock.quarter.

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12.    Commitments and Contingencies
Minimum Annual Commitments with Third-party Processors
The Company has multi-year agreements with third parties to provide certain payment processing services to the Company. The Company pays processing fees under these agreements that are based on the volume and dollar amounts of processed payment transactions. Some of these agreements have minimum annual requirements for processing volumes. Based on existing contracts in place at September 30, 2022, the Company is committed to pay minimum processing fees under these agreements of approximately $15.7 million in 2022 and $17.0 million in 2023.
Contingent Consideration
For asset acquisitions that do not meet the definition of a business, the portion of the unpaid purchase price that is contingent on future activities is not initially recorded by the acquirer on the date of acquisition. Rather, the acquirer generally recognizes contingent consideration when it becomes probable and estimable.
On April 14, 2022, the Company amended the purchase agreement related to its acquisition of certain residual portfolio rights in 2019 to provide for an additional earnout opportunity to be earned during the 12 months ending March 31, 2023. The initial
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purchase price was subject to an increase of up to $6.4 million in accordance with the terms of the agreement between the Company and the sellers. In connection with this amendment, the Company paid $2.1 million to the sellers during the second quarter of 2022.
As of September 30, 2022 and December 31, 2021, the Company had accrued $0.1 million and $2.4 million, respectively, of estimated remaining cash consideration and additional accumulated costs related to its October 2019 acquisition of certain merchant portfolio rights. The Company had recorded aggregate costs, including both actual costs and estimated remaining consideration, totaling $11.5 million and $11.1 million as of September 30, 2022 and December 31, 2021, respectively. Amortization expense was adjusted to reflect the new carrying value at the original purchase date. As of September 30, 2022 and December 31, 2021, accumulated amortization was $6.7 million and $5.0 million, respectively. The merchant portfolio has an estimated remaining life of two years at September 30, 2022.
See Note 3, Acquisitions, for information about contingent consideration related to other acquisitions.
Legal Proceedings
The Company is involved in certain legal proceedings and claims which arise in the ordinary course of business. In the opinion of the Company and based on consultations with internal and external counsel, the results of any of these matters, individually and in the aggregate, are not expected to have a material effect on the Company's results of operations, financial condition or cash flows. As more information becomes available, and the Company determines that an unfavorable outcome is probable on a claim and that the amount of probable loss that the Company will incur on that claim is reasonably estimable, the Company will record an accrued expense for the claim in question. If and when the Company records such an accrual, it could be material and could adversely impact the Company's results of operations, financial condition and cash flows.
Concentration of Risks
The Company's revenue is substantially derived from processing Visa and Mastercard bankcard transactions. Because the Company is not a member bank, in order to process these bankcard transactions, the Company maintains sponsorship agreements with member banks which require, among other things, that the Company abide by the by-laws and regulations of the card associations.
A majority of the Company's cash and restricted cash is held in certain FIs, substantially all of which is in excess of federal deposit insurance corporation limits. The Company does not believe it is exposed to any significant credit risk from these transactions.


13.    Related Party Transactions
Employee Loan
In February 2021, the Company loaned $0.9 million to an employee who is considered to be an affiliate of the Company. Under the terms the loan agreement, the loan accrues interest at the rate of 4.0% per year and is secured by shares of the Company's Common Stock that are owned by the employee. The loan was originally repayable in August 2021, but the agreement was amended in August 2021 to automatically renew for one year terms until the Company requires repayment. The loan may be prepaid at any time. As of September 30, 2022 and December 31, 2021, the amount due to the Company for this loan was $0.9 million.
PHOT Preferred Unit Redemption - Distribution to NCIs
In November 2020, the Company agreed to an exchange of shares of Common Stock of the Company, or cash, for the $4.8 million of remaining undistributed preferred equity interests related to the February 2019 contribution of the eTab and Cumulus assets to PHOT. An exchange valuation for the Company's Common Stock was established as of November 12, 2020 at the prior 20-day volume weighted average price of $2.78 per share. The exchange was contingent upon receiving approval of the Company's lenders; therefore, the binding exchange agreements were not entered into until after lender approval was received in April 2021. In May 2021, the Company entered into exchange agreements and completed the exchange of 1,428,358
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shares of Common Stock and $0.8 million of cash for the undistributed preferred equity interests. The CEO received 605,623 shares of Common Stock of the Company in exchange for his 35.3% interest, and the Company's Chief Operating Officer received 413,081 shares of Common Stock of the Company in exchange for her 24.1% interest. Subsequent to establishing the Common Stock valuation in November 2020 and the date of exchange in May 2021, the Company's Common Stock price appreciated to $7.75 per share. The Company's Unaudited Consolidated Financial Statements for the nine months ended September 30, 2021 reflect this exchange as a distribution to NCIs at an appreciated Common Stock value of $6.975 per share, which incorporates a 10% liquidity discount of $0.775 per share due to trading restrictions under Securities Act Rule 144. Therefore, the total distribution amounted to $10.8 million, comprised of $10.0 million of Common Stock and $0.8 million of cash. In addition, the Company recorded a $2.8 million tax benefit related to an increase in the tax basis associated with the share exchange, for a net impact to equity of $8.0 million.

14.12.    Stock-based Compensation
For the three and nine months ended September 30, 2022 and 2021, stock-basedStock-based compensation expense was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Stock-based compensation expense$1,104 $935 4,204 $2,349 
In March 2021, the Company converted a $0.3 million liability-classified stock-based compensation award for restricted stock units under the 2018 Plan, whereby the service inception date preceded the future grant-date, to an equity-classified award when the restricted stock units were granted.
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Stock-based compensation expense$1,501 $1,104 $5,183 $4,204 
Income tax benefit for stock-based compensation was immaterial for the three and nine months ended September 30, 20222023 and 2021.2022. No stock-based compensation has been capitalized.
2018 Plan
The Company's 2018 Plan initially provided for the issuance of up to 6,685,696 shares of the Company's Common Stock. On March 17, 2022, the Company's Board of Directors unanimously approved an amendment to the 2018 Plan, which was subsequently approved by our shareholders, to increase the number of shares authorized for issuance under the plan by 2,500,000 shares, resulting in 9,185,696 shares of the Company's Common Stock authorized for issuance under the plan.
2021 Stock Purchase Plan
The 2021 Stock Purchase Plan provides for up to 200,000 shares to be purchased under the plan. Shares issued under the plan may be authorized but unissued or reacquired shares of Common Stock. All employees of the Company who work more than 20 hours per week and have been employed by the Company for at least 30 days may participate in the 2021 Stock Purchase Plan.
Under the 2021 Stock Purchase Plan, participants are offered, on the first day of the offering period, the option to purchase shares of Common Stock at a discount on the last day of the offering period. The offering period shall be for a period of three months, and the first offering period began on January 10, 2022. The 2021 Stock Purchase Plan provides eligible employees the opportunity to purchase shares of the Company's Common Stock on a quarterly basis through payroll deductions at a price equal to 95% of the lesser of the fair value on the first and last trading day of each offering period. The compensation expense for the three and nine months ended September 30, 2022,2023, was immaterial and is included in stock-based compensation in the table above.

13.    Commitments and Contingencies
Minimum Annual Commitments with Third-party Processors
The Company has multi-year agreements with third parties to provide certain payment processing services to the Company. The Company pays processing fees under these agreements. Based on existing contracts in place, the Company is committed to pay minimum processing fees under these agreements of approximately $19.4 million in 2023 and $22.0 million in 2024.
Annual Commitment with Vendor
Effective January 1, 2022, the Company entered into a three year business cooperation agreement with a vendor to resell its services. Under the agreement, the Company purchased vendor services worth $0.7 million for the year ended December 31, 2022, and is committed to purchase vendor services worth $1.5 million in 2023 and $2.3 million in 2024.
Capital Commitments
The Company committed to capital contributions to fund the operations of certain subsidiaries totaling $26.0 million and $22.0 million as September 30, 2023 and December 31, 2022, respectively. The Company is obligated to make the
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15.     Stockholders' Equity
The Company is authorized to issue 100,000,000 sharescontributions within 10 business days of preferred stock withreceiving notice for such designations, voting and other rights and preferences as may be determinedcontribution from time to time by the Company's Board of Directors.subsidiary. As of September 30, 20222023 and December 31, 2021,2022, the Company has not issued any sharescontributed $11.6 million and $6.9 million, respectively.
Merchant Reserves
See Note 4. Settlement Assets and Customer/Subscriber Account Balances and Related Obligations, for information about merchant reserves.
Contingent Consideration
The following table provides a reconciliation of preferred stock.the beginning and ending balance of the Company's contingent consideration liabilities related to completed acquisitions:
2022 Share Repurchase Program
(in thousands)Contingent Consideration Liabilities
December 31, 2022$8,079 
Addition of contingent consideration (related to asset acquisition)2,100 
Accretion of contingent consideration113 
Fair value adjustments due to changes in estimates of future payments116 
Payment of contingent consideration(4,059)
March 31, 20236,349 
Addition of contingent consideration due to resolution of contingency7,000 
Adjustment for receivable due to residual shortfall(2,053)
Accretion of discount on contingent consideration117 
June 30, 202311,413 
Addition of contingent consideration (related to business combination)8,682 
Accretion of discount on contingent consideration560 
Payment of contingent consideration(7,949)
September 30, 2023$12,706
DuringLegal Proceedings
The Company is involved in certain legal proceedings and claims which arise in the second quarterordinary course of 2022, PRTH's Boardbusiness. In the opinion of Directors authorized the Company and based on consultations with internal and external counsel, the results of any of these matters, individually and in the aggregate, are not expected to implementhave a general share repurchase program under whichmaterial effect on the Company's results of operations, financial condition or cash flows. As more information becomes available, and the Company may purchase up to 2.0 million sharesdetermines that an unfavorable outcome is probable on a claim and that the amount of its outstanding Common Stock for a total of up to $10.0 million. Under the terms of this plan,probable loss that the Company may purchase shares through open market purchases, unsolicited or solicited privately negotiated transactions, or in another manner so long as it complies with applicable rules and regulations.
In August 2021, Priority's Board of Directors authorized a $10.0 million share repurchase program. Under this programwill incur on that claim is reasonably estimable, the Company was authorizedwill record an accrued expense for the claim in question. If and when the Company records such an accrual, it could be material and could adversely impact the Company's results of operations, financial condition and cash flows.
Concentration of Risks
The Company's revenue is substantially derived from processing Visa and Mastercard bankcard transactions. Because the Company is not a member bank, in order to purchase upprocess these bankcard transactions, the Company maintains sponsorship agreements with member banks which require, among other things, that the Company abide by the by-laws and regulations of the card associations.
As of September 30, 2023, the Company's customer account balances of $672.2 million are maintained in FDIC insured accounts with certain FIs (refer to 1.0 million sharesNote 4. Settlement Assets and Customer/Subscriber Account Balances and Related
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Table of its Common Stock through open market transactions, unsolicited or solicited privately negotiated transactions, or otherwiseContents
Obligations) A majority of the Company's cash and restricted cash is held in accordance withcertain FIs, substantially all applicable securities laws and regulations.of which is in excess of FDIC limits. The 2021 Share Repurchase Program was terminated effectiveCompany does not believe it is exposed to any significant credit risk from these transactions.

14.    Fair Value
Fair Value Measurements
Contingent consideration related to the Company's business combinations is estimated based on the closepresent value of businessa weighted payout probability at the measurement date, which falls within Level 3 on September 23, 2021.the fair value hierarchy. The current portion of contingent consideration is included in accounts payable and accrued expenses on the Company's Unaudited Consolidated Balance Sheets and the noncurrent portion of contingent consideration is included in other noncurrent liabilities on the Company's Unaudited Consolidated Balance Sheets.
ForLiabilities measured at fair value on a recurring basis consisted of the following:
(in thousands)Fair Value HierarchySeptember 30, 2023December 31, 2022
Contingent consideration, current portionLevel 3$3,789 $6,079 
Contingent consideration, noncurrent portionLevel 38,917 2,000 
Total contingent consideration$12,706 $8,079 
During the three and nine months ended September 30, 2023, there were no transfers into, out of, or between levels of the fair value hierarchy.
Fair Value Disclosures
Notes Receivable
Notes receivable are carried at amortized cost. Substantially all of the Company's notes receivable are secured, and the Company provides for allowances when it believes that certain notes receivable may not be collectible. The carrying value of the Company's notes receivable, net approximates fair value and was approximately $5.2 million and $4.7 million at September 30, 2023 and December 31, 2022, and 2021, share repurchase activity was as follows:respectively. On the fair value hierarchy, Level 3 inputs are used to estimate the fair value of these notes receivable.
Three Months Ended September 30,Nine Months Ended September 30,
in thousands, except share data, which is in whole units2022202120222021
Number of shares purchased(1)
626,673 162,715 1,005,918 162,715 
Average price paid per share$4.11 $6.29 $4.20 $6.29 
Total Investment$2,578 $1,023 $4,227 $1,023 
Debt Obligations
(1.)Outstanding debt obligations (see These amounts may differ from the repurchases of common stock amountsNote 8. Debt Obligations) are reflected in the Company's Unaudited Consolidated Statements of Cash Flows dueBalance Sheets at carrying value since the Company did not elect to unsettled share repurchasesremeasure debt obligations to fair value at the end of quarter.each reporting period.
The fair value of the term facility was estimated to be $603.0 million and $606.1 million at September 30, 2023 and December 31, 2022, respectively, and was estimated using binding and non-binding quoted prices in an active secondary market, which considersthe credit risk and market related conditions, and is within Level 3 of the fair value hierarchy.
The carrying values of the other long-term debt obligations approximate fair value due to mechanisms in the credit agreements that adjust the applicable interest rates and the lack of a market for these debt obligations.

16.15.    Segment Information
Prior to the fourth quarter of 2021, the Company's three reportable segments included the Consumer Payments segment, the Commercial Payments segment and the Integrated Partners segment. As a result of the Company's organic growth and recent acquisitions, a new internal reporting structure was implemented which resulted in changes to the Company's reportable segments. The three new reportable operating segments are SMB Payments, B2B Payments and Enterprise Payments. All comparative periods have been adjusted to reflect the new reportable segments.
More information about ourCompany has three reportable segments:
SMB Payments – provides full-service acquiring and payment-enabled solutions for B2C transactions, leveraging the Company's proprietary software platform, distributed through ISOs, direct sales and vertically focused ISV channels.
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B2B Payments – provides AP automation solutions to corporations, software partners and FIs, including Citi, Mastercard and, American Express.working capital solutions to other business customers.
Enterprise Payments – provides embedded payment and banking solutions to enterprise customers that modernize legacy platforms and accelerate modern software partners looking to monetize payments.
Corporate includes costs of corporate functions and shared services not allocated to our reportable segments.
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Information on reportable segments and reconciliations to consolidated revenues, consolidated depreciation and amortization, and consolidated operating income are as follows:
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20222021202220212023202220232022
Revenues:Revenues:Revenues:
SMB PaymentsSMB Payments$139,892 $124,737 $412,357 $354,149 SMB Payments$140,109 $139,892 $442,937 $412,357 
B2B PaymentsB2B Payments4,868 4,181 16,088 11,722 B2B Payments13,748 4,868 19,505 16,088 
Enterprise PaymentsEnterprise Payments21,657 3,624 57,641 4,982 Enterprise Payments35,158 21,657 93,891 57,641 
Consolidated revenuesConsolidated revenues$166,417 $132,542 $486,086 $370,853 Consolidated revenues$189,015 $166,417 $556,333 $486,086 
Depreciation and amortization:Depreciation and amortization:Depreciation and amortization:
SMB PaymentsSMB Payments$11,040 $11,049 $32,844 $30,130 SMB Payments$9,858 $11,040 $31,473 $32,844 
B2B PaymentsB2B Payments295 73 441 220 B2B Payments772 295 1,024 441 
Enterprise PaymentsEnterprise Payments6,203 939 18,599 939 Enterprise Payments6,154 6,203 19,557 18,599 
CorporateCorporate279 269 791 834 Corporate491 279 1,249 791 
Consolidated depreciation and amortizationConsolidated depreciation and amortization$17,817 $12,330 $52,675 $32,123 Consolidated depreciation and amortization$17,275 $17,817 $53,303 $52,675 
Operating (loss) income:Operating (loss) income:Operating (loss) income:
SMB PaymentsSMB Payments$13,447 $14,647 $39,928 $42,380 SMB Payments$11,821 $13,447 $35,374 $39,928 
B2B PaymentsB2B Payments217 (29)1,289 (417)B2B Payments78 217 (790)1,289 
Enterprise PaymentsEnterprise Payments9,312 1,229 19,504 1,564 Enterprise Payments21,339 9,312 50,081 19,504 
CorporateCorporate(8,896)(7,597)(22,755)(23,345)Corporate(9,732)(8,896)(25,178)(22,755)
Consolidated operating incomeConsolidated operating income$14,080 $8,250 $37,966 $20,182 Consolidated operating income$23,506 $14,080 $59,487 $37,966 

A reconciliation of total operating (loss) income of reportable segments to the Company's net (loss) income is provided in the following table:
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20222021202220212023202220232022
Total operating income of reportable segmentsTotal operating income of reportable segments$22,976 $15,847 $60,721 $43,527 Total operating income of reportable segments$33,238 $22,976 $84,665 $60,721 
CorporateCorporate(8,896)(7,597)(22,755)(23,345)Corporate(9,732)(8,896)(25,178)(22,755)
Interest expenseInterest expense(13,412)(8,155)(37,282)(24,608)Interest expense(19,997)(13,412)(55,461)(37,282)
Debt modification and extinguishment costs— — — (8,322)
Other income, netOther income, net231 146 311 92 Other income, net732 231 1,319 311 
Income tax expense(1,691)(790)(1,833)(49)
Income tax benefit (expense)Income tax benefit (expense)(4,328)(1,691)(6,550)(1,833)
Net lossNet loss$(792)$(549)$(838)$(12,705)Net loss$(87)$(792)$(1,205)$(838)

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17.16.    Loss per Common Share
The following tables set forth the computation of the Company's basic and diluted loss per common share:`
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands except per share amounts)(in thousands except per share amounts)Three Months Ended September 30,Nine Months Ended September 30,(in thousands except per share amounts)2023202220232022
2022202120222021
Numerator:Numerator:Numerator:
Net lossNet loss$(792)$(549)$(838)$(12,705)Net loss$(87)$(792)$(1,205)$(838)
Less: Dividends and accretion attributable to redeemable senior preferred stockholdersLess: Dividends and accretion attributable to redeemable senior preferred stockholders(9,466)(5,813)(26,415)(9,724)Less: Dividends and accretion attributable to redeemable senior preferred stockholders(12,192)(9,466)(35,252)(26,415)
Less: Non-controlling interest preferred unit redemptions— — — (10,777)
Net loss attributable to common stockholdersNet loss attributable to common stockholders$(10,258)$(6,362)$(27,253)$(33,206)Net loss attributable to common stockholders$(12,279)$(10,258)$(36,457)$(27,253)
Denominator:Denominator:Denominator:
Basic and diluted:Basic and diluted:Basic and diluted:
Weighted-average common shares outstanding(1)
Weighted-average common shares outstanding(1)
77,984 71,979 78,392 69,689 
Weighted-average common shares outstanding(1)
78,381 77,984 78,270 78,392 
Loss per common shareLoss per common share$(0.13)$(0.09)$(0.35)$(0.48)Loss per common share$(0.16)$(0.13)$(0.47)$(0.35)
(1)The weighted-average common shares outstanding includes 1,803,841 warrants issued in the second quarter of 2021.(refer to Note 9. Redeemable Senior Preferred Stock and Warrants).
For the three and nine months ended September 30, 2023 and 2022, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share. Potentially anti-dilutive securities that were excluded from the Company's loss per common share that could potentially be dilutive in future periods are as follows:
Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)20222021(in thousands)2023202220232022
Outstanding warrants on Common Stock(1)
Outstanding warrants on Common Stock(1)
3,557 3,557 
Outstanding warrants on Common Stock(1)
— 3,557 — 3,557 
Outstanding options and warrants issued to adviser(2)
Outstanding options and warrants issued to adviser(2)
600 600 
Outstanding options and warrants issued to adviser(2)
— 600 — 600 
Restricted stock awards(3)
Restricted stock awards(3)
1,126 1,202 
Restricted stock awards(3)
1,109 2,680 1,297 1,126 
Liability-classified restricted stock units— 135 
Outstanding stock option awards(3)
Outstanding stock option awards(3)
2,292 1,232 
Outstanding stock option awards(3)
918 1,034 909 2,292 
TotalTotal7,575 6,726 Total2,027 7,871 2,206 7,575 
(1)The warrants arewere issued in 2018 and were exercisable at $11.50 per share and expireshare. These warrants expired on August 24, 2023.
(2)The warrants were issued in 2018 and options arewere exercisable at $12.00 per share and expireshare. These warrants expired on August 24, 2023.
(3)Granted under the 2018 Plan.

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17.    Subsequent Events
On October 2, 2023, the Company entered into the fourth amendment to its Credit Agreement to increase its term loan facility by $50.0 million. All other terms remained unchanged. The proceeds of the increase was used to repay the outstanding balance of the revolving credit facility and other general corporate needs. The accounting evaluation of the amendment is in process.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Audited Consolidated Financial Statements and related Notes and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.2022. Certain amounts in this section may not add mathematically due to rounding.

Cautionary Note Regarding Forward-looking Statements
Some of the statements made in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include, but are not limited to, statements regarding our management's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, such as statements about our future financial performance, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "future," "goal," "intend," "likely," "may," "might," "plan," "possible," "potential," "predict," "project," "seek," "should," "would," "will," "approximately," "shall" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: 
the impact of the COVID-19 pandemic and its continuing effects on the economic and business environment in which we operate;
negative economic and political conditions that adversely affect the general economy, consumer confidence and consumer and commercial spending habits, which may, among other things, negatively impact our business, financial condition and results of operations;
competition in the payment processing industry;
the use of distribution partners;
any unauthorized disclosures of merchant or cardholder data, whether through breach of our computer systems, computer viruses or otherwise;
any breakdowns in our processing systems;
government regulation, including regulation of consumer information;
the use of third-party vendors;
any changes in card association and debit network fees or products;
any failure to comply with the rules established by payment networks or standards established by third-party processors;
any proposed acquisitions or dispositions or any risks associated with completed acquisitions or dispositions; and
other risks and uncertainties set forth in the "Item 1A - Risk Factors" section of this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. 
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. You should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities. We cannot assure you that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions, including the risk factors set forth in the "Item 1A - Risk Factors" section of this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K, that may cause our actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. 
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we
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believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially
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available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements. 
You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. 
Forward-looking statements speak only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Terms Used in this Quarterly Report on Form 10-Q
As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to the terms "Company," "Priority," "we," "us" and "our" refer to Priority Technology Holdings, Inc. and its consolidated subsidiaries.
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Results of Operations
This section includes certain components of our results of operations for the three and nine months ended September 30, 2022,2023, compared to the three and nine months ended September 30, 2021.2022. We have derived this data, except the key indicators, for merchant bankcard processing dollar values, transaction volumes and average billed accounts from our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
Revenue
For the three months ended September 30, 2022,2023, our consolidated revenue of $166.4$189.0 million increased by $33.9$22.6 million, or 25.6%13.6%, from $132.5$166.4 million for the three months ended September 30, 2021.2022. This overall increase was mainly driven by an increase in bankcard volumes resultingnew enrollments and higher interest income in our Enterprise Payments segment and revenue from increased consumer spending and acquisitions completed by the CompanyPlastiq business acquired during the quarter in 2021.our B2B Payments segment.
For the nine months ended September 30, 2022,2023, our consolidated revenue of $486.1$556.3 million increased by $115.2$70.2 million, or 31.1%14.4%, from $370.9$486.1 million for the nine months ended September 30, 2021. This2022. The overall increase was primarily driven by increases in merchant card fee rates, offset by a decrease in certain fee based revenue in our SMB Payments segment, an increase in bankcard volumes resultingnew enrollments and higher interest income in our Enterprise Payments segment and revenue from increased consumer spending, an increasethe Plastiq business acquired during the quarter in our B2B Payments segment. These increases were partially offset by a decrease in revenue in B2B Payments segment due to wind down of certain fee-based revenue and acquisitions completed by the Company in 2021.managed services programs.
The following table presents our revenues by typetype:
(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
Revenue Type:
Merchant card fees$146,974$137,659$9,315$441,142$405,404$35,738
Money transmission services25,83118,2917,54070,95551,75719,198
Outsourced services and other services13,1817,9335,24834,76821,91712,851
Equipment3,0292,5344959,4687,0082,460
Total revenues$189,015$166,417$22,598$556,333$486,086$70,247
Merchant card fees
Merchant card fees revenue for the three and nine months ended September 30, 2022 and 2021:
(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20222021$ Change20222021$ Change
Revenue Type:
Merchant card fees$137,659$122,175$15,484$405,404$348,244$57,160
Money transmission services revenue18,2912,87315,41851,7572,87348,884
Outsourced services and other services7,9335,7782,15521,91714,9816,936
Equipment2,5341,7168187,0084,7552,253
Total revenues$166,417$132,542$33,875$486,086$370,853$115,233
For the three months ended September 30, 2022, our merchant card fees revenue2023 was $147.0 million an increase of $137.7 million increased by $15.5$9.3 million, or 12.7%6.8%, from $122.2$137.7 million for the three months ended September 30, 2021.2022. This increase was primarily driven by revenue from the Plastiq business that was acquired during the quarter and rate increases. These increases were partially offset by a decrease in volume due to diversification of merchant portfolio by one of our referral partners.
Merchant card fees revenue for the nine months ended September 30, 2023 was $441.1 million an increase of $35.7 million, or 8.8%, from $405.4 million for the nine months ended September 30, 2022. This increase was primarily driven by the Plastiq business that was acquired in the quarter ended September 30, 2023 and rate increases. These increases were partially offset by a decrease in volume due to diversification of merchant portfolio by one of our referral partners.
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Money transmission services
Money transmission services for the three months ended September 30, 2023 was $25.8 million an increase of $7.5 million, or 41.0%, from $18.3 million for the three months ended September 30, 2022. This increase was primarily driven by an increase in the merchant bankcard volume processed by the Company slightly offset by rate decreases.customer enrollments.
ForMoney transmission services for the nine months ended September 30, 2022, our merchant card fees revenue2023 was $71.0 million an increase of $405.4 million increased by $57.2$19.2 million, or 16.4%37.1%, from $348.2$51.8 million for the nine months ended September 30, 2021.2022. This increase was primarily driven by an increase in the merchant bankcard volume processed by the Companycustomer enrollments.
Outsourced services and an increase in certain fee-based revenue slightly offset by rate decreases.
Money transmissionother services revenue of $18.3 million and $51.8 million for the three and nine months ended September 30, 2022, respectively, is related to the business acquired from Finxera in September 2021.
Outsourced services and other services revenue of $13.2 million for the three months ended September 30, 2023 increased by $5.3 million, or 67.1%, from $7.9 million for the three months ended September 30, 2022, increased by $2.1 million, or 36.2%, from $5.8 million for the three months ended September 30, 2021, primarily due to growth in revenue from AP automation solutionsinterest income due to higher interest rates and increased volumes in the card issuing businessdeposit balances offset by decreasesdecreased managed services revenue due to the wind down of certain customer programs in the managed services business.programs.
Outsourced services and other services revenue of $34.8 million for the nine months ended September 30, 2023 increased by $12.9 million, or 58.9%, from $21.9 million for the nine months ended September 30, 2022, increasedprimarily due to growth in interest income due to higher interest rates and deposit balances offset by $6.9 million, or 46.0%, from $15.0decreased managed services revenue due to wind down of certain programs.
Equipment
Equipment revenue of $3.0 million for the ninethree months ended September 30, 2021. This increase was primarily driven2023 increased by growth in revenue$0.5 million, or 20.0%, from AP automation solutions and increased volumes in the card issuing business.
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Equipment revenue of $2.5 million for the three months ended September 30, 2022 increased by $0.8 million, or 47.1%, from $1.7 million for the three months ended September 30, 2021.2022. The increase was primarily due to increased sales of mobile card reader equipment and other equipment from our MX product line.point of sale equipment.
Equipment revenue of $9.5 million for the nine months ended September 30, 2023 increased by $2.5 million, or 35.7%, from $7.0 million for the nine months ended September 30, 2022 increased by $2.2 million, or 45.8%, from $4.8 million for the nine months ended September 30, 2021. This2022. The increase was primarily due to increased sales of mobile card reader equipment and other equipment from our MX product line.point of sale equipment.
Operating expenses for three and nine months ended September 30, 2022 and 2021 were as follows:
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20222021$ Change20222021$ Change20232022$ Change20232022$ Change
Operating expensesOperating expensesOperating expenses
Cost of revenue (excludes depreciation and amortization)$107,958$92,833$15,125$320,187$264,527$55,660
Cost of services (excludes depreciation and amortization)Cost of services (excludes depreciation and amortization)$116,682$107,958$8,724$353,929$320,187$33,742
Salary and employee benefitsSalary and employee benefits16,38411,9094,47548,23131,80816,423Salary and employee benefits20,12916,3843,74558,28648,23110,055
Depreciation and amortizationDepreciation and amortization17,81712,3305,48752,67532,12320,552Depreciation and amortization17,27517,817(542)53,30352,675628
Selling, general and administrativeSelling, general and administrative10,1787,2202,95827,02722,2134,814Selling, general and administrative11,42310,1781,24531,32827,0274,301
Total operating expensesTotal operating expenses$152,337$124,292$28,045$448,120$350,671$97,449Total operating expenses$165,509$152,337$13,172$496,846$448,120$48,726
Cost of Revenueservices (excludes depreciation and amortization)
Cost of revenueservices (excludes depreciation and amortization) of $116.7 million for the three months ended September 30, 2023 increased by $8.7 million, or 8.1%, from $108.0 million for the three months ended September 30, 2022, increased by $15.2 million, or 16.4%, from $92.8primarily due to corresponding increase in revenues.
Cost of services (excludes depreciation and amortization) of $353.9 million for the threenine months ended September 30, 2021, primarily due to the corresponding increase in revenues. For the three months ended September 30, 2022, cost of revenue (excludes depreciation and amortization) as a percentage of total revenues decreased to 64.9% as compared to 70.0% for the three months ended September 30, 2021. This decrease was primarily due to the impact of the Finxera acquisition, partially offset2023, increased by mix of bankcard volume growth$33.7 million, or 10.5%, from larger partners with higher commissions.
Cost of revenue (excludes depreciation and amortization) of $320.2 million for the nine months ended September 30, 2022, increased by $55.7 million, or 21.1% from $264.5 million for the nine months ended September 30, 2021. For the nine months ended September 30, 2022 cost of revenue (excludes depreciation and amortization) as a percentage of total revenues decreased to 65.9% as compared to 71.3% for the nine months ended September 30, 2021. This decrease was primarily due to the impactcorresponding increase in revenues.
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Salary and Employee Benefitsemployee benefits
Salary and employee benefits expense of $20.1 million for the three months ended September 30, 2023 increased by $3.7 million, or 22.6%, from $16.4 million for the three months ended September 30, 2022, increased by $4.5 million, or 37.8%, from $11.9 million for the three months ended September 30, 2021, primarily due to pay raises,merit increases, in headcount related to our acquisition of Finxera in September 2021, an increase in stock-based compensation and increased headcount from the acquisition of the Plastiq business and to support overall growth of the Company.
Salary and employee benefits expense of $58.3 million for the nine months ended September 30, 2023 increased by $10.1 million, or 21.0%, from $48.2 million for the nine months ended September 30, 2022, increased by $16.4 million, or 51.6%, from $31.8 million for the nine months ended September 30, 2021, primarily due to merit increases, in headcount related to our acquisition of Finxera in September 2021, an increase in stock-based compensation and increased headcount from the acquisition of the Plastiq business and to support overall growth of the Company.
Depreciation and Amortization Expenseamortization expense
Depreciation and amortization expense of $17.3 million for the three months ended September 30, 2023 decreased by $0.5 million, or 2.8%, from $17.8 million for the three months ended September 30, 2022, increased by $5.5 million, or 44.7%, from $12.3 million for the three months ended September 30, 2021, primarily due to thefull amortization of finite-livedcertain intangible assets, acquired frompartially offset by the business combinations completed during 2021.
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new assets placed in service.
Depreciation and amortization expense of $53.3 million for the nine months ended September 30, 2023 increased by $0.6 million, or 1.1%, from $52.7 million for the nine months ended September 30, 2022, increased by $20.6 million, or 64.2%, from $32.1 million for the nine months ended September 30, 2021, primarily due to the depreciation of new assets placed in service, partially offset by full amortization of finite-livedcertain intangible assets acquired from the business combinations completed during 2021.assets.
Selling, Generalgeneral and Administrativeadministrative
Selling, general and administrative expenses of $11.4 million for the three months ended September 30, 2023 increased by $1.2 million, or 11.8%, from $10.2 million for the three months ended September 30, 2022, increased by $3.0 million, or 41.7%, from $7.2 million for the three months ended September 30, 2021, primarily due to an increase incertain nonrecurring expenses from acquired businessesrelated to the acquisition of the Plastiq business and certain non-recurring expenses.other expenses to support overall growth of the Company.
Selling, general and administrative expenses of $31.3 million for the nine months ended September 30, 2023 increased by $4.3 million, or 15.9%, from $27.0 million for the nine months ended September 30, 2022, increased by $4.8 million, or 21.6%, from $22.2 million for the nine months ended September 30, 2021, primarily due to an increase incertain nonrecurring expenses from acquired businesses, offset by a decrease in certain non-recurring transaction related expenses.

to the acquisition of the Plastiq business and other expenses to support overall growth of the Company.
Other Expense, net
Other expenses, net were as follows:
(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
Other (expense) income
Interest expense$(19,997)$(13,412)$(6,585)$(55,461)$(37,282)$(18,179)
Other income, net7322315011,3193111,008
Total other expense, net$(19,265)$(13,181)$(6,084)$(54,142)$(36,971)$(17,171)

Interest expense
Interest expense of $20.0 million for the three and nine months ended September 30, 2022 and 2021 were as follows:
(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20222021$ Change20222021$ Change
Other (expense) income
Interest expense$(13,412)$(8,155)$(5,257)$(37,282)$(24,608)$(12,674)
Debt extinguishment and modification costs(8,322)8,322
Other income, net2311468531192219
Total other expense, net$(13,181)$(8,009)$(5,172)$(36,971)$(32,838)$(4,133)

Interest Expense
Interest expense of2023 increased by $6.6 million, or 49.3%, from $13.4 million for the three months ended September 30, 2022, increased by $5.2 million, or 63.4%, from $8.2 million for the three months ended September 30, 2021, due to additional borrowings to fundincreased interest rates and increased outstanding balance in the revolving credit facility used for the acquisition of Finxera in September 2021 and increased interest ratesthe Plastiq business in the three months ended September 30, 2022.2023.
Interest expense of $55.5 million for the nine months ended September 30, 2023 increased by $18.2 million, or 48.8%, from $37.3 million for the nine months ended September 30, 2022, increased by $12.7 million, or 51.6%, from $24.6 million for the nine months ended September 30, 2021, primarily due to additional borrowings to fundincreased interest rates and increased outstanding balance in the revolving credit facility used for the acquisition of Finxera in September 2021 and increased interest ratesthe Plastiq business in the nine months ended September 30, 2022.
Debt Extinguishment and Modification Costs
In April 2021, the Company expensed unamortized deferred costs and discounts of $3.0 million associated with the retirement of our subordinated debt facility and refinancing of our senior debt facility, and expensed $5.3 million of third-party costs incurred in connection with the refinancing.2023.

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Income Tax Expense (Benefit)tax (benefit) expense
Income tax expense (benefit) for three and nine months ended September 30, 2022 and 2021 was as follows:
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20222021$ Change20222021$ Change20232022$ Change20232022$ Change
Income (loss) before income taxes$899 $241 $658 $995 $(12,656)$13,651 
Income before income taxesIncome before income taxes$4,241 $899 $3,342 $5,345 $995 $4,350 
Income tax expenseIncome tax expense$1,691 $790 $901 $1,833 $49 $1,784 Income tax expense$4,328 $1,691 $2,637 $6,550 $1,833 $4,717 
Effective tax rateEffective tax rate188.1 %327.8 %184.2 %(0.4)%Effective tax rate102.1 %188.1 %122.5 %184.2 %
We compute our interim period income tax expense or benefit by using a forecasted EAETR and adjust for any discrete items arising during the interim period and any changes in our projected full-year business interest expense and taxable income. The EAETR for 20222023 is 162.7%117.6% and includes the income tax provision on pre-tax income and a tax provision related to establishment of a valuation allowance for deferred income tax on the future portion of the Section 163(j) limitation created by additional 20222023 interest expense. The effective tax rate for 20222023 changed primarily due to an increase in the valuation allowance against certain business interest carryover deferred tax assets.
Our consolidated effective income tax rates differ from the statutory rate due to timing and permanent differences between amounts calculated under accounting principles GAAP and the U.S. tax code. The consolidated effective income tax rate for 20222023 may not be indicative of our effective tax rate for future periods.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act into law. The IRA, among other provisions, implements a 15% corporate alternative minimum tax based on global adjusted financial statement income and a 1% excise tax on share repurchases, which shall take effect in tax years beginning after December 31, 2022. We are in the process of evaluating the provisions of the IRA, but we do not currently believeexpect the enactment of the IRA will have a material effect on our reported results, cash flows, or financial position when it becomes effective.position. If applicable, we expect to reflect the excise tax within equity as part of the repurchase price of common stock.

Segment Results
The Company reorganized its business segments as of December 31, 2021, resulting in three segments: SMB Payments, B2B Payments and Enterprise Payments. Segment results included in the discussion below were restated in accordance with the new segment structure for comparison purposes.
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The impact of the restatement of the prior period results is as follows:
(in thousands)Three Months Ended September 30, 2021
SMB Payments(1)
B2B Payments(2)
Enterprise Payments(3)
Revenue:
Restated$124,737$4,181$3,624
Historically reported124,0274,1814,334
Difference$710$$(710)
Operating Income (Loss):
Restated$14,647$(29)$1,229
Historically reported14,656(29)1,220
Difference(4)
$(9)$$9
Depreciation and Amortization:
Restated$11,049$73$939
Historically reported10,971731,017
Difference$78$$(78)

(in thousands)Nine Months Ended September 30, 2021
SMB Payments(1)
B2B Payments(2)
Enterprise Payments(3)
Revenue:
Restated$354,149$11,722$4,982
Historically reported352,04511,7227,086
Difference$2,104$$(2,104)
Operating Income (Loss):
Restated$42,380$(417)$1,564
Historically reported42,467(417)1,477
Difference$(87)$$87
Depreciation and Amortization:
Restated$30,130$220$939
Historically reported29,8472201,222
Difference$283$$(283)
(1)Compared to the Company's legacy Consumer Payments segment.
(2)Compared to the Company's legacy Commercial Payments segment.
(3)Compared to the Company's legacy Integrated Partners segment.
(4)Amounts may not net to zero due to rounding differences.
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SMB Payments
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20222021$ Change20222021$ Change20232022$ Change20232022$ Change
RevenueRevenue$139,892$124,737$15,155$412,357$354,149$58,208Revenue$140,109$139,892$217$442,937$412,357$30,580
Operating expensesOperating expenses126,445110,09016,355372,429311,76960,660Operating expenses128,288126,4451,843407,563372,42935,134
Operating incomeOperating income$13,447$14,647$(1,200)$39,928$42,380$(2,452)Operating income$11,821$13,447$(1,626)$35,374$39,928$(4,554)
Operating marginOperating margin9.6 %11.7 %9.7 %12.0 %Operating margin8.4 %9.6 %8.0 %9.7 %
Depreciation and amortizationDepreciation and amortization$11,040$11,049$(9)$32,844$30,130$2,714Depreciation and amortization$9,858$11,040$(1,182)$31,473$32,844$(1,371)
Key Indicators:Key Indicators:Key Indicators:
Merchant bankcard processing dollar valueMerchant bankcard processing dollar value$15,098,450$13,830,550$1,267,900$44,577,857$39,602,577$4,975,280Merchant bankcard processing dollar value$14,150,995$15,098,450$(947,455)$44,483,491$44,577,857$(94,366)
Merchant bankcard transaction volume165,796153,05312,743476,084431,36944,715
Merchant bankcard transaction countMerchant bankcard transaction count178,721165,79612,925522,470476,08446,386
Revenue
Revenue from our SMB Payments segment wasof $140.1 million for the three months ended September 30, 2023, remained consistent to $139.9 million for the three months ended September 30, 2022, compared2022. The Company experienced a decline in its processed merchant bankcard volume due to $124.7 million for the three months ended September 30, 2021.diversification of merchant portfolio by one of its referral partners. The increase of $15.2 million, or 12.2%,decrease in revenue due to decline in volume was primarily drivenpartially offset by increased transaction count and merchant bankcard volume.card fee rate increases. The Company's revenue from the SMB Payments segment as a percentage of merchant bankcard processing dollar value during 2022
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2023 increased to 0.92%0.98% from 0.90%0.93% during 2021.2022. The increase was primarily driven by increased volume (transaction count) related fees revenuesa rate increase and changes in the merchant mix.
Revenue from our SMB Payments segment was $442.9 million for the nine months ended September 30, 2023, compared to $412.4 million for the nine months ended September 30, 2022, compared to $354.1 million for the nine months ended September 30, 2021.2022. The increase of $58.3$30.5 million, or 16.5%7.4%, was primarily driven by increased transaction count, merchant card fee rate increases and accrual of certain incentives, offset by a decrease in certain fee-based revenue, a true up of an invoice from one of the partner banks for certain services provided in Q1 2022 and a decline in processed merchant bankcard volume and an increase in certain fee-based revenue.due to diversification of merchant portfolio by one of its referral partners. The Company's revenue from the SMB Payments segment as a percentage of merchant bankcard processing dollar value during 20222023 increased to 1.0% from 0.92% from 0.89% during 2021.2022. The increase was primarily driven by an increase in other fees revenuesincentive revenue and changes in the merchant mix.
Operating Income
Operating income from our SMB Payments segment was $11.8 million for the three months ended September 30, 2023, compared to $13.4 million for the three months ended September 30, 2022, compared to $14.62022. The decrease of $1.6 million, foror 11.9%, was primarily driven by the timing of certain billing adjustments in the three months ended September 30, 2021. The decrease of $1.2 million, or 8.2%, was primarily driven by mix-related2022, the mix related margin compression, a $1.7$1.3 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, and a $0.7$0.3 million increase in selling, general and administrative expenses driven by higher software and travel and other operating costs and a $0.1 million increase in depreciation and amortization, offset by an increase in operating income from higher revenue.costs. The increase in headcount and selling, general and administrative expenses are mainly attributable to growth initiatives.
Operating income from our SMB Payments segment was $35.4 million for the nine months ended September 30, 2023, compared to $39.9 million for the nine months ended September 30, 2022, compared to $42.4 million for the nine months ended September 30, 2021.2022. The decrease of $2.5$4.5 million, or 5.9%11.3%, was primarily driven by the timing of certain billing adjustments in the three months ended September 30, 2022, the mix related margin compression, a $5.3$4.9 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, and a $2.3$2.2 million increase in selling, general and administrative expenses driven by higher software and travel and other operating costs and a $2.7 million increase in depreciation and amortization offset by an increase in operating income from higher revenue.costs. The increase in headcount and selling, general and administrative expenses are mainly attributable to growth initiatives.
Depreciation and Amortization
Depreciation and amortization expense fromof our SMB Payments segment was $11.0$9.9 million for the three months ended September 30, 2022,2023, compared to $11.0 million for the three months ended September 30, 2021.2022. The decrease of $1.1 million is due to full amortization of certain intangible assets.
Depreciation and amortization expense fromof our SMB Payments segment was $31.5 million for the nine months ended September 30, 2023, compared to $32.8 million for the nine months ended September 30, 2022, compared2022. The decrease of $1.3 million is due to $30.1 million for the nine months ended September 30, 2021. The increasefull amortization of $2.7 millioncertain intangible assets.
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was primarily driven by the amortization of acquired intangibles resulting from the C&H and Wholesale Payments, Inc. acquisitions.
B2B Payments
(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20222021$ Change20222021$ Change
Revenue$4,868$4,181$687$16,088$11,722$4,366
Operating expenses4,6514,21044114,79912,1392,660
Operating income (loss)$217$(29)$246$1,289$(417)$1,706
Operating margin4.5 %(0.7)%8.0 %(3.6)%
Depreciation and amortization$295$73$222$441$220$221
Key Indicators:
Merchant bankcard processing dollar value$116,348$87,116$29,232$380,217$226,056$154,161
Merchant bankcard transaction volume6355823914396
(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
Revenue$13,748$4,868$8,880$19,505$16,088$3,417
Operating expenses13,6704,6519,01920,29514,7995,496
Operating income (loss)$78$217$(139)$(790)$1,289$(2,079)
Operating margin0.6 %4.5 %(4.1)%8.0 %
Depreciation and amortization$772$295$477$1,024$441$583
Key Indicators:
B2B issuing dollar volume$221,456$214,085$7,371$636,361$597,665$38,696
B2B issuing transaction count26724720829683146
Revenue
Revenue from our B2B Payments segment was $13.7 million for the three months ended September 30, 2023, compared to $4.9 million for the three months ended September 30, 2022, compared to $4.2 million for the three months ended September 30, 2021.2022. The increase of $0.7$8.8 million, or 16.7%179.6%, was primarily driven by an increase of $1.1 million in the CPX business, of which $0.5 million is related to volume growth, and the remaining increase of $0.6 million isrevenue from the recognition of certain revenues for which recovery became probablePlastiq business that was acquired during the current quarter. This increase was offset by a decrease of $0.4 million driven by wind down of certain customer programs in managed services business.
Revenue from our B2B Payments segment was $19.5 million for the nine months ended September 30, 2023, compared to $16.1 million for the nine months ended September 30, 2022, compared to $11.7 million for the nine months ended September 30, 2021.2022. The increase of $4.4$3.4 million, or 37.6%21.1%, was primarily driven by an increase of $0.8 million,revenue from the Plastiq business that was acquired during the first six months of 2022, asquarter, partially offset by a result of the accelerationdecrease in managed services business due to wind down of certain programs in the managed services business operations that were scaled back in 2021 as a result of the COVID-19 pandemic, an increase of $3.6 million in the CPX business, of which $2.0 million is related to volume growth, and the remaining increase of $1.6 million is from the recognition of certain revenues for which recovery became probable.during 2022 related to a contract termination.
Operating Income (Loss)
Operating income from our B2B Payments segment was $0.1 million for the three months ended September 30, 2023 compared to an operating income of $0.2 million for the three months ended September 30, 2022, compared to a loss2022. The decrease of $29 thousand for the three months ended September 30, 2021. The increase$0.1 million was primarily attributable to increases in revenue.the Plastiq business that was acquired during the quarter and currently being stabilized.
Operating incomeloss from our B2B Payments segment was $0.8 million for the nine months ended September 30, 2023 compared to an operating income of $1.3 million for the nine months ended September 30, 2022. compared to an operating lossThe decrease of $0.4 million for the nine months ended September 30, 2021. The increase of $1.7$2.1 million was primarily attributable to increasesdecreases in revenue.revenue from managed services business business and the Plastiq business that was acquired during the quarter and currently being stabilized.
Depreciation and Amortization
Depreciation and amortization from our B2B Payments segment was $0.8 million for the three months ended September 30, 2023, compared to $0.3 million depreciation and amortization expense for the three months ended September 30, 2022.
Depreciation and amortization from our B2B Payments segment was $1.0 million for the three months ended September 30, 2023, compared to $0.4 million depreciation and amortization expense for the three months ended September 30, 2022.
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Enterprise Payments
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20222021$ Change20222021$ Change20232022$ Change20232022$ Change
RevenueRevenue$21,657$3,624$18,033$57,641$4,982$52,659Revenue$35,158$21,657$13,501$93,891$57,641$36,250
Operating expensesOperating expenses12,3452,3959,95038,1373,41834,719Operating expenses13,81912,3451,47443,81038,1375,673
Operating incomeOperating income$9,312$1,229$8,083$19,504$1,564$17,940Operating income$21,339$9,312$12,027$50,081$19,504$30,577
Operating marginOperating margin43.0 %33.9 %33.8 %31.4 %Operating margin60.7 %43.0 %53.3 %33.8 %
Depreciation and amortizationDepreciation and amortization$6,203$939$5,264$18,599$939$17,660Depreciation and amortization$6,154$6,203$(49)$19,557$18,599$958
Key Indicators:Key Indicators:Key Indicators:
Merchant bankcard processing dollar value$585,382$23$585,359$1,189,034$23$1,189,011
Merchant bankcard transaction volume8088082,023 2,023
Average billed clientsAverage billed clients387,384342,78944,595363,993349,59514,398Average billed clients590,578387,384203,194525,274364,766160,508
Average new enrollmentsAverage new enrollments56,26937,74618,52351,86429,81322,051
Revenue
Revenue from our Enterprise Payments segment was $35.2 million for the three months ended September 30, 2023, compared to $21.7 million for the three months ended September 30, 2022, compared to $3.6 million for the three months ended September 30, 2021.2022. The increase of $18.1$13.5 million or 62.2%, was primarily driven by revenues contributed by the Finxera business acquiredan increase in September 2021.billed clients and customer enrollments, and growth in interest income due to higher interest rates and deposit balances.
Revenue from our Enterprise Payments segment was $93.9 million for the nine months ended September 30, 2023, compared to $57.6 million for the nine months ended September 30, 2022, compared to $5.0 million for the nine months ended September 30, 2021.2022. The increase of $52.6$36.3 million or 63.0%, was primarily driven by revenues contributed by the Finxera business acquiredan increase in September 2021.billed clients and customer enrollments, and growth in interest income due to higher interest rates and deposit balances.
Operating Income
Operating income from our Enterprise Payments segment was $21.3 million for the three months ended September 30, 2023, compared to $9.3 million for the three months ended September 30, 2022, compared to $1.2 million for the three months ended September 30, 2021.2022. The increase of $8.1$12.0 million or 129.0%, was primarily driven by operating income contributed by the Finxera business acquiredincreases in September 2021.revenues.
Operating income from our Enterprise Payments segment was $50.1 million for the nine months ended September 30, 2023, compared to $19.5 million for the nine months ended September 30, 2022, compared to $1.6 million for the nine months ended September 30, 2021.2022. The increase of $17.9$30.6 million or 156.9%, was primarily driven by operating income contributed by the Finxera business acquiredincreases in September 2021.revenues.
Depreciation and Amortization
Depreciation and amortization expense from our Enterprise Payments segment was $6.2 million for the three months ended September 30, 2022, compared to $0.92023, which was consistent with $6.2 million depreciation and amortization expense for the three months ended September 30, 2021. The increase of $5.3 million was primarily driven by the amortization of acquired intangibles resulting from the Finxera acquisition in September 2021.2022.
Depreciation and amortization from our Enterprise Payments segment was $18.6$19.6 million for the nine months ended September 30, 2022,2023, compared to $0.9$18.6 million depreciation and amortization expense for the nine months ended September 30, 2021.2022. The increase of $17.7$1.0 million or 5.4%, was primarily driven by the amortization of acquired intangibles resulting from the Finxera acquisition in September 2021.additional capitalized internal use software.

Critical Accounting Policies and Estimates 
Our Unaudited Consolidated Financial Statements have been prepared in accordance with GAAP for interim periods, which often require the judgment of management in the selection and application of certain accounting principles and methods. Our
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critical accounting policies and estimates are discussed in "Management's Discussion and Analysis of Financial Condition and
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Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021.2022. There have been no material changes to these critical accounting policies and estimates as of September 30, 2022.2023.

Liquidity and Capital Resources
Liquidity and capital resource management is a process focused on providing the funding we need to meet our short-term and long-term cash and working capital needs. We have used our funding sources to build our merchant portfolio, for technology solutions and to make acquisitions with the expectation that such investments will generate cash flows sufficient to cover our working capital and other anticipated needs, including our acquisition strategy. We anticipate that cash on hand, funds generated from operations and available borrowings under our revolving credit facility are sufficient to meet our working capital requirements for at least the next 12 months.
During the second quarter of 2022, PRTH's Board of Directors authorized the Company to implement a general share repurchase program under which the Company may purchase up to 2.0 million shares of its outstanding Common Stock for a total of up to $10.0 million. Under the terms of this plan, the Company may purchase shares through open market purchases, unsolicited or solicited privately negotiated transactions, or in another manner so long as it complies with applicable rules and regulations. AsThe Company had repurchased shares of September 30, 2022, 1,005,918 shares were repurchased under$5.7 million during the plan, with a total purchase price of $4.2 million. Average price per share was $4.20 and there were approximately 1.0 million shares available for repurchase under the plan.year ended December 31, 2022.
Our principal uses of cash are to fund business operations and administrative costs, and to service our debt. 
Our working capital, defined as current assets less current liabilities, was $16.6 million at September 30, 2023 and $18.6 million at September 30, 2022 and $19.6 million at December 31, 2021.2022. As of September 30, 2022,2023, we had cash totaling $12.7$24.6 million compared to $20.3$12.7 million at December 31, 2021.September 30, 2022. These cash balances do not include restricted cash of $11.6$13.9 million and $28.9$11.6 million at September 30, 20222023 and December 31, 2021,September 30, 2022, respectively, which reflects cash accounts holding customer settlement funds and cash reserves for potential losses. The current portion of long-term debt included in current liabilities was $6.2 million at September 30, 20222023 and December 31, 2021.September 30, 2022. At September 30, 2022,2023, we had availability of approximately $34.0$32.0 million under our revolving credit facility. 
The following table and discussion reflect our changes in cash flows for the comparative nine month periods.
Nine Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)20222021(in thousands)20232022
Net cash provided by (used in):Net cash provided by (used in): Net cash provided by (used in): 
Operating activitiesOperating activities$50,558 $(2,567)Operating activities$72,680 $50,558 
Investing activitiesInvesting activities(21,095)(462,878)Investing activities(51,224)(21,095)
Financing activitiesFinancing activities(8,099)871,010 Financing activities157,029 (8,099)
Net increase in cash and cash equivalents and restricted cashNet increase in cash and cash equivalents and restricted cash$21,364 $405,565 Net increase in cash and cash equivalents and restricted cash$178,485 $21,364 
Cash Provided by (Used in) Operating Activities
Net cash provided by operating activities was $72.7 million for the nine months ended September 30, 2023 compared to $50.6 million for the nine months ended September 30, 2022 compared to $2.6 million of net cash used in operating activities for the nine months ended September 30, 2021.2022. The $53.2$22.1 million increase in 20222023 was primarily driven by the PIK interest upon the refinancing of our credit facilitieschanges in April 2021 and cash generated from the operations of the Company, offset by changes in operating assets and liabilities.
Cash Used in Investing Activities 
Net cash used in investing activities was $21.1$51.2 million and $462.9$21.1 million for the nine months ended September 30, 2023 and 2022, respectively. For the nine months ended September 30, 2023, net cash used in investing activities included the acquisition of business of $28.2 million, additions to property, equipment and 2021, respectively.software of $15.3 million, and, acquisitions of intangible assets of $7.9 million, which was offset by $0.2 million related to the net payments received on loans to ISOs. For the nine months ended September 30, 2022, net cash used in investing activities included $3.3$6.5 million of cash used to fund acquisitions
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of intangible assets, $3.3 million related to the funding of new loans to ISOs additions to property, equipment and software of $11.4 million, and acquisitions of intangible assets of $6.7 million. For the nine months ended September 30, 2021, net cash used in investing activities included $48.2 million of cash used to fund acquisitions of intangible assets, $407.1 million of net cash used for the acquisition of businesses and $7.5 million of cash used to acquire property, equipment and software.
Cash (Used in) Provided by Financing Activities 
Net cash used inprovided by financing activities was $8.1$157.0 million for the nine months ended September 30, 2022,2023, compared to $871.0$8.1 million of cash provided byused in financing activities for the nine months ended September 30, 2021.2022. The net cash provided by financing activities for the nine months ended September 30, 20222023 included changes in the net obligations for funds held on the behalf of customers of $25.7$165.6 million and $23.0$44.0 million related to additionalin borrowings under the revolving credit facility, offset by $28.2 million of cash used for the repayment of debt, $17.9 million of cash dividends paid to redeemable senior preferred stockholders, $1.0 million of cash used for shares withheld for taxes, $4.7 million of payments of contingent consideration for business combinations and $0.9 million of debt modification costs . The net cash used in financing activities for the nine months ended September 30, 2022 included $36.7 million of cash used for the repayment of debt, $11.5 million of cash dividends paid to redeemable senior preferred stockholders and $4.7 million of cash used for stock repurchases, including a portion related to shares withheld for taxes and share repurchases, and $4.0 million of payments of contingent consideration for business combinations, and asset acquisitions. The net cash provided by financing activities for the nine months ended September 30, 2021 included $598.2 million of cash proceeds from the issuance of long-term debt, net of debt issuance and modification costs, $211.0 million of proceeds from the issuance of the redeemable senior preferred stock, net of issuance fees and costs, and $30.0 million related to borrowings under the revolving credit facility, offset by $359.9 million of cash used for the repayment of debt, $396.3 million of cash provided by related to changes in the net obligations for funds held on the behalf of customers of $25.7 million and $4.0 millionborrowings under the revolving credit facility of cash dividends paid to the redeemable senior preferred stockholders.$23.0 million.
Long-term Debt 
As of September 30, 2022,2023, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $599.3$623.0 million, compared to $610.3$605.1 million at December 31, 2021,2022, resulting in a decreaseincrease of $11.0$17.9 million. The debt balance at September 30, 20222023 consisted of $612.3$606.1 million outstanding under the term facility and $6.0$33.0 million outstanding under the revolving credit facility, offset by $19.0$16.1 million of unamortized debt discounts and issuance costs. Minimum amortization of the term facility are equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal, with the balance paid upon maturity. The term facility matures in April 2027 and the revolving credit facility expires in April 2026.
The Credit Agreement contains representations and warranties, financial and collateral requirements, mandatory payment events, events of default and affirmative and negative covenants, including without limitation, covenants that restrict among other things, the ability to create liens, pay dividends or distribute assets from the loan parties to the Company, merge or consolidate, dispose of assets, incur additional indebtedness, make certain investments or acquisitions, enter into certain transactions (including with affiliates) and to enter into certain leases.
If the aggregate principal amount of outstanding revolving loans and letters of credit under the Credit Agreement exceeds 35% of the total revolving credit facility thereunder, the loan parties are required to comply with certain restrictions on its Total Net Leverage Ratio. If applicable, the maximum permitted Total Net Leverage Ratio is: 1) 6.50:1.00 at each fiscal quarter ended September 30, 2021 through June 30, 2022; 2) 6.00:1.00 at each fiscal quarter ended September 30, 2022 through June 30, 2023; and 3) 5.50:1.00 at each fiscal quarter ended September 30, 2023 each fiscal quarter thereafter. As of September 30, 2022, the Total Net Leverage Ratio was not applicable and2023, the Company was in compliance with our financial covenants.the covenants in the Credit Agreement.

Effect of New Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted
From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that may affect our current and/or future financial statements. See Note 1, Basis of Presentation and Significant Accounting Policies, to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, for a discussion of recently issued accounting pronouncements not yet adopted. 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," of our Annual Report on Form 10-K for the year ended December 31, 2021.2022. Our exposures to market risk have not changed materially since December 31, 2021.2022.

Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, designed to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized or reported within the time periods specified in SEC rules and regulations and that such information is accumulated and communicated to our management, including our principal executive officer (CEO), our principal financial officer (CFO) and, as appropriate, to allow timely decisions regarding required disclosures.
Management, with the participation of the CEO and CFO, has evaluated the effectiveness of the Company's disclosure controls and procedures as of September 30, 2022.2023. Based on that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of September 30, 2022.2023.
Changes in Internal Control over Financial Reporting
During the three months ended September 30, 2022, the Company implemented new general ledger, accounts payable, consolidation and financial reporting systems. The implementation involved changes to certain processes and related internal controls over financial reporting. The Company has reviewed the system and controls affected and has made the appropriate changes as necessary.
There have been no other changes in the Company's internal control over financial reporting during the three and nine months ended September 30, 20222023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in certain legal proceedings and claims, which arise in the ordinary course of business. In the opinion of the Company, based on consultations with internal and external counsel, the results of any of these ordinary course matters, individually and in the aggregate, are not expected to have a material effect on our results of operations, financial condition, or cash flows. As more information becomes available and we determine that an unfavorable outcome is probable on a claim and that the amount of probable loss that we will incur on that claim is reasonably estimable, we will record an accrued expense for the claim in question. If and when we record such an accrual, it could be material and could adversely impact our results of operations, financial condition and cash flows.

Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in our Annual Report under Part I, Item 1A "Risk Factors" because these risk factors may affect our operations and financial results. The risks described in the Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Issuer Purchases of Equity Securities
The Company's purchases of its Common Stock during the three months ended September 30, 20222023 were as follows:
Period
Total Number of Shares Purchased(1)
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1-31, 2022395,743$4.02 391,9211,228,834
August 1-31, 2022103,305 $4.53 103,3051,125,529
September 1-30, 2022131,447$4.07 131,447994,082
Total630,495 $4.09 626,673 
Period
Total Number of Shares Purchased(1)
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1-31, 20231,636$4.14 690,626
August 1-31, 2023— $— 690,626
September 1-30, 2023690,626
Total1,636 $4.14 — 

(1)IncludesRepresents shares (in whole units) withheld to satisfy employees' tax withholding obligations related to the vesting of restricted stock awards, which was determined based on the fair market value on the vesting date.
(2)In May 2022, the Company's Board of Directors approved a stock repurchase program for the purchase of up to 2.0 million of the Company's Common Stock outstanding for up to $10.0 million.

Item 3. Defaults Upon Senior Securities
N/A

Item 4. Mine Safety Disclosures
N/A

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Item 5. Other Information
N/ARule 10b5-1 Director and Officer Trading Arrangements
On June 16, 2023, Sean Kiewiet, an officer of the Company as defined in Section 16 of the Exchange Act, adopted a Rule 10b5-1 trading arrangement as defined in Item 408(a) of the SEC's Regulation S-K.
Officer or Director Name and TitleActionPlan TypeDateNumber of Shares to be soldExpiration
Sean Kiewiet,
Chief Strategy Officer
AdoptedRule 10b5-1June 16, 2023620,000December 31, 2024


Item 6. Exhibits
Exhibit Description
 
2.2
 
 
 
 
10.2
 
10.4
10.5
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32 **
101.INS *XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH *XBRL Taxonomy Extension Schema Document
101.CAL *XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB *XBRL Taxonomy Extension Label Linkbase Document
101.PRE *XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF *XBRL Taxonomy Extension Definition Linkbase Document
* Filed herewith.
** Furnished herewith.
Indicates exhibits that constitute management contracts or compensation plans or arrangements.


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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.
                        PRIORITY TECHNOLOGY HOLDINGS, INC.
November 10, 20229, 2023
/s/ Thomas C. Priore
Thomas C. Priore
President, Chief Executive Officer and Chairman
(Principal Executive Officer)
November 10, 20229, 2023
/s/ Timothy M. O'Leary
Tim O'Leary
Chief Financial Officer
(Principal Financial Officer)


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