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, 2023March 31, 2024

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: (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 NovemberMay 3, 2023,2024, the number of the registrant's Common Stock outstanding was 76,722,581.80,065,145.



Table of Contents


Page
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Table of Contents

Commonly Used or Defined Terms


TermDefinition
2018 Plan2018 Equity Incentive Plan
2021 Stock Purchase PlanPriority Technology Holdings, Inc. 2021 Employee Stock Purchase Plan
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
CEOChief Executive Officer
CFOChief Financial Officer
Common StockThe Company's 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
ESPPEmployee Stock Purchase Plan
Exchange ActSecurities Exchange Act of 1934
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
FBOFor the benefit of
FIFinancial institution
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
LIBORLondon Interbank Offered Rate
NCINon-controlling interests in consolidated subsidiaries
Revolving credit facilityPHOT$65.0 million line issued under the Credit AgreementPriority Hospitality Technology, LLC
PlastiqAcquisition of Plastiq, Inc. and certain of its affiliates
PRTHPriority Technology Holdings, Inc.
Revolving credit facility$65.0 million line issued under the Credit Agreement
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)

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

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
September 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
AssetsAssets
Current assets:Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalentsCash and cash equivalents$24,595 $18,454 
Restricted cashRestricted cash13,890 10,582 
Accounts receivable, net of allowances of $1,281 and $1,143, respectively61,134 78,113 
Accounts receivable, net of allowances of $5,536 and $5,289, respectively
Prepaid expenses and other current assetsPrepaid expenses and other current assets13,274 11,832 
Current portion of notes receivable, net of allowance of $0 and $0, respectivelyCurrent portion of notes receivable, net of allowance of $0 and $0, respectively1,561 1,471 
Settlement assets and customer/subscriber account balancesSettlement assets and customer/subscriber account balances712,170 532,018 
Total current assetsTotal current assets826,624 652,470 
Notes receivable, less current portionNotes receivable, less current portion3,616 3,191 
Property, equipment and software, netProperty, equipment and software, net41,851 34,687 
GoodwillGoodwill375,794 369,337 
Intangible assets, netIntangible assets, net285,490 288,794 
Deferred income taxes, netDeferred income taxes, net18,879 16,447 
Other noncurrent assetsOther noncurrent assets11,145 8,437 
Total assetsTotal assets$1,563,399 $1,373,363 
Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit
Liabilities, Redeemable Senior Preferred Stock, Redeemable NCI, and Stockholders' Deficit
Current liabilities:Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable and accrued expenses
Accounts payable and accrued expenses
Accounts payable and accrued expensesAccounts payable and accrued expenses$56,107 $51,864 
Accrued residual commissionsAccrued residual commissions31,023 35,979 
Customer deposits and advance paymentsCustomer deposits and advance payments6,634 2,618 
Current portion of long-term debtCurrent portion of long-term debt6,200 6,200 
Settlement and customer/subscriber account obligationsSettlement and customer/subscriber account obligations710,068 533,340 
Total current liabilitiesTotal current liabilities810,032 630,001 
Long-term debt, net of current portion, discounts and debt issuance costsLong-term debt, net of current portion, discounts and debt issuance costs616,781 598,926 
Other noncurrent liabilitiesOther noncurrent liabilities18,545 11,643 
Total noncurrent liabilities635,326 610,569 
Total liabilitiesTotal liabilities1,445,358 1,240,570 
Commitments and contingencies (Note 13)
Total liabilities
Total liabilities
Commitments and contingencies (Note 14)
Commitments and contingencies (Note 14)
Redeemable senior preferred stock, net of discounts and issuance costs: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 
Redeemable senior preferred stock, $0.001 par value; 250,000 shares authorized; 225,000 issued and outstanding at March 31, 2024 and December 31, 2023
Redeemable senior preferred stock, $0.001 par value; 250,000 shares authorized; 225,000 issued and outstanding at March 31, 2024 and December 31, 2023
Redeemable senior preferred stock, $0.001 par value; 250,000 shares authorized; 225,000 issued and outstanding at March 31, 2024 and December 31, 2023
Redeemable non-controlling interests in consolidated subsidiary
Stockholders' deficit: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)
Preferred stock, $0.001; 100,000,000 shares authorized; 0 issued or outstanding at March 31, 2024 and December 31, 2023
Preferred stock, $0.001; 100,000,000 shares authorized; 0 issued or outstanding at March 31, 2024 and December 31, 2023
Preferred stock, $0.001; 100,000,000 shares authorized; 0 issued or outstanding at March 31, 2024 and December 31, 2023
Common Stock, $0.001 par value; 1,000,000,000 shares authorized; 80,018,209 and 79,589,055 shares issued at March 31, 2024 and December 31, 2023, respectively; and 75,834,517 and 76,956,889 shares outstanding at March 31, 2024 and December 31, 2023, respectively
Treasury stock at cost, 4,183,692 and 2,632,166 shares at March 31, 2024 and December 31, 2023, respectively
Additional paid-in capitalAdditional paid-in capital— 9,650 
Accumulated other comprehensive lossAccumulated other comprehensive loss(34)— 
Accumulated deficitAccumulated deficit(123,714)(102,208)
Total stockholders' deficit attributable to stockholders of PRTHTotal stockholders' deficit attributable to stockholders of PRTH(136,248)(104,041)
Non-controlling interests in consolidated subsidiariesNon-controlling interests in consolidated subsidiaries1,366 1,255 
Total stockholders' deficitTotal stockholders' deficit(134,882)(102,786)
Total liabilities, redeemable senior preferred stock and stockholders' deficit$1,563,399 $1,373,363 
Total liabilities, redeemable senior preferred stock, redeemable NCI and stockholders' deficit
See Notes to Unaudited Consolidated Financial Statements
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Table of Contents
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,
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 
Three Months Ended
March 31,
20242023
Revenues$205,719 $185,028 
Operating expenses
Cost of revenue (excludes depreciation and amortization)129,298 121,966 
Salary and employee benefits22,150 19,048 
Depreciation and amortization15,253 18,048 
Selling, general and administrative10,995 9,118 
Total operating expenses177,696 168,180 
Operating income28,023 16,848 
Other (expense) income
Interest expense(20,880)(17,699)
Other income, net632 212 
Total other expense, net(20,248)(17,487)
Income (loss) before income taxes7,775 (639)
Income tax expense (benefit)2,582 (133)
Net income (loss)5,193 (506)
Less: Dividends and accretion attributable to redeemable senior preferred stockholders(12,662)(11,295)
Less: Return on redeemable NCI in consolidated subsidiary(581)— 
Net loss attributable to common stockholders(8,050)(11,801)
Other comprehensive loss
Foreign currency translation adjustments(13)24 
Comprehensive loss$(8,063)$(11,777)
Loss per common share:
Basic and diluted$(0.10)$(0.15)
Weighted-average common shares outstanding:
Basic and diluted78,021 78,133 

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
APICAOCIAccumulated DeficitDeficit Attributable to StockholdersNCIsTotal
Shares$Shares$
December 31, 202376,957 $77 2,632 $(12,815)$— $(29)$(134,951)$(147,718)$1,654 $(146,064)
Equity-classified stock-based compensation— — — — 1,540 — — 1,540 — 1,540 
ESPP compensation and vesting of stock-based compensation429 — — — 49 — — 49 — 49 
Shares withheld for taxes(123)123 (421)— — — (421)— (421)
Exchange for PHOT redeemable NCI(1,428)(1)1,428 (5,255)(581)— — (5,837)— (5,837)
Dividends on redeemable senior preferred stock— — — — (11,821)— — (11,821)— (11,821)
Accretion of redeemable senior preferred stock— — — — (841)— — (841)— (841)
Issuance of profit interests/common equity in subsidiaries— — — — — — — — 93 93 
Foreign currency translation adjustment— — — — — (13)— (13)— (13)
Reclassification of negative additional paid in capital— — — — 11,654 — (11,654)— — — 
Net income— — — — — — 5,193 5,193 — 5,193 
March 31, 202475,835 $76 4,183 $(18,491)$ $(42)$(141,412)$(159,869)$1,747 $(158,122)

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 adjustment24 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)


See
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 $(124,592)
Notes to Unaudited Consolidated Financial Statements
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Table of Contents
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
Common
Stock
Treasury
Stock
APICAOCIAccumulated DeficitDeficit Attributable to StockholdersNCIsTotal
Shares$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)


Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net income (loss)$5,193 $(506)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of assets15,253 18,048 
Stock-based, ESPP and incentive units compensation1,633 1,936 
Amortization of debt issuance costs and discounts1,065 903 
Deferred income tax(1,872)(5,716)
Change in contingent consideration972 229 
Other non-cash items, net(259)14 
Change in operating assets and liabilities:
Accounts receivable(8,339)81 
Prepaid expenses and other current assets(425)481 
Income taxes (receivable) payable— 8,666 
Notes receivable(266)(163)
Accounts payable and other accrued liabilities1,590 3,916 
Customer deposits and advance payments157 250 
Other assets and liabilities, net(1,395)(462)
Net cash provided by operating activities13,307 27,677 
Cash flows from investing activities:
Additions to property, equipment and software(6,610)(5,046)
Notes receivable, net(1,059)178 
Acquisitions of assets and other investing activities— (2,715)
Net cash used in investing activities(7,669)(7,583)
Cash flows from financing activities:
Repayments of long-term debt(1,678)(1,550)
Repayments of borrowings under revolving credit facility— (6,000)
Repurchases of Common Stock and shares withheld for taxes(421)(777)
Dividends paid to redeemable senior preferred stockholders1
(7,027)(11,435)
Settlement and customer/subscriber accounts obligations, net1,918 79,258 
Payment of contingent consideration related to business combination(3,071)(1,959)
Net cash (used in) provided by financing activities(10,279)57,537 
Net change in cash and cash equivalents and restricted cash:
Net (decrease) increase in cash and cash equivalents, and restricted cash(4,641)77,631 
Cash and cash equivalents and restricted cash at beginning of period796,223 560,610 
Cash and cash equivalents and restricted cash at end of period$791,582 $638,241 
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Table of Contents
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Changes in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
Common
Stock
Treasury
Stock
APICAOCIAccumulated DeficitDeficit Attributable to StockholdersNCIsTotal
Shares$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)
Three Months Ended March 31,
20242023
Reconciliation of cash and cash equivalents, and restricted cash:
Cash and cash equivalents$34,290 $15,882 
Restricted cash12,658 11,012 
Cash and cash equivalents included in settlement assets and customer/subscriber account balances (see Note 4)
744,634 611,347 
Total cash and cash equivalents, and restricted cash$791,582 $638,241 
Supplemental cash flow information:
Cash paid for interest$18,436 $16,330 
Non-cash investing and financing activities:
Forfeiture of liability-classified award$— $596 
Acquisition of intangible asset$— $193 
Issuance of NCI$93 $— 

(1)

The dividend payable for the quarter ended March 31, 2024, was paid on April 1, 2024.

See Notes to Unaudited Consolidated Financial Statements

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Table of Contents
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Cash FlowsChanges in Stockholders' Deficit and Non-Controlling Interest
(in thousands)
Nine Months Ended September 30,
20232022
Cash flows from operating activities:
Net loss$(1,205)$(838)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of assets53,303 52,675 
Stock-based compensation5,183 4,204 
Amortization of debt issuance costs and discounts2,812 2,613 
Deferred income tax(2,432)(3,567)
Change in contingent consideration906 — 
Other non-cash items, net(169)(154)
Change in operating assets and liabilities:
Accounts receivable17,931 (11,265)
Prepaid expenses and other current assets(2,630)(2,575)
Income taxes (receivable) payable498 1,003 
Notes receivable(668)569 
Accounts payable and other accrued liabilities302 13,711 
Customer deposits and advance payments3,802 (1,910)
Other assets and liabilities, net(4,953)(3,908)
Net cash provided by operating activities72,680 50,558 
Cash flows from investing activities:
Acquisition of business, net of cash acquired(28,182)— 
Additions to property, equipment and software(15,268)(11,380)
Notes receivable, net151 (3,250)
Acquisitions of assets and other investing activities(7,925)(6,465)
Net cash used in investing activities(51,224)(21,095)
Cash flows from financing activities:
Debt issuance and modification costs paid(807)— 
Repayments of long-term debt(4,650)(4,650)
Borrowings under revolving credit facility44,000 23,000 
Repayments of borrowings under revolving credit facility(23,500)(32,000)
Repurchases of Common Stock and shares withheld for taxes(1,018)(4,674)
Dividends paid to redeemable senior preferred stockholders(17,908)(11,478)
Settlement and customer/subscriber accounts obligations, net165,610 25,695 
Payment of contingent consideration related to business combination(4,698)(3,992)
Net cash provided by (used in) financing activities157,029 (8,099)
Net change in cash and cash equivalents and restricted cash:
Net increase in cash and cash equivalents, and restricted cash178,485 21,364 
Cash and cash equivalents and restricted cash at beginning of period560,610 518,093 
Cash and cash equivalents and restricted cash at end of period$739,095 $539,457 
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Table of Contents
Priority Technology Holdings, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended September 30,
20232022
Reconciliation of cash and cash equivalents, and restricted cash:
Cash and cash equivalents$24,595 $12,707 
Restricted cash13,890 11,624 
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 cash$739,095 $539,457 
Supplemental cash flow information:
Cash paid for interest$54,670 $33,023 
Non-cash investing and financing activities:
Treasury stock purchases settled after the balance sheet date$— $651 
Contingent consideration accrual$— $4,825 
Non-cash additions to other noncurrent assets for right-of-use operating leases$— $166 
Adjustment to value of profit interest units$596 $— 
Acquisition of intangible asset$193 $— 
Measurement period adjustment to purchase price$110 $— 
Cash portion of dividend payable for redeemable senior preferred stock(1)
$6,810 $— 
Issuance 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.    Basis of Presentation and Significant Accounting Policies
Business, Consolidation and Presentation
Priority Technology Holdings, Inc. is a holding company with no material operations of its own. 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, 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, 20222023 was derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 20222023 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,March 31, 2024, there was no income or loss attributable to NCI in accordance with the applicable operating agreements.
Redeemable NCI represents non-controlling ownership of certain redeemable preferred units in one of the Company's consolidated subsidiaries. These preferred units carry a compounded coupon rate of 6% per annum. The return on the redeemable NCI for the three months ended March 31, 2024, since the reissuance of these redeemable preferred units, is $0.6 million. Refer to Note 13. Related Party Transactions.
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, 2022.2023.
The results for the quarter and nine months ended September, 30, 2023March 31, 2024 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.
Revenue Recognition
For the Plastiq business that was acquired on July 31, 2023 (refer to Note 2. Acquisitions,) the Company accepts card payments from its customers and processes disbursements to their vendors. For these transactions, the Company acts as merchant of record, therefore, considered as the principal 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 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 processing fees, and do not bear interest), agents, merchants and other 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. The 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
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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. Translation adjustments are reported as a component of accumulated other comprehensive income (loss).
Reclassification
In January 2024, the Company changed the grouping of certain business activity to conform to the way we internally manage and monitor the business. As a result, certain immaterial activity was reassigned from the SMB Payments segment to the Enterprise Payments segment effective January 1, 2024. Impact on prior year segment results were determined to be immaterial and have not been reclassified to reflect this change.
Recently AdoptedIssued Accounting Standards Pending Adoption
Credit LossesSegment Reporting ASU 2023-07
In June 2016,November 2023, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments2023-07, ("ASU 2016-13").Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires incremental reportable segment disclosures, primarily about significant segment expenses. The amendments also require entities with a single reportable segment to provide all disclosures required by these amendments, and all existing segment disclosures. This new guidance changes how entities accountis effective for credit impairment for tradefiscal years beginning after December 15, 2023, and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 replaces 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.interim periods after December 15, 2024. The Company adopted ASU 2016-13 effective January 1, 2023 usingwill adopt this guidance for the modified-retrospective approach. The implementation of ASU 2016-13 did not have a materialyear ended December 31, 2024. This guidance is expected to only impact the disclosures with no impact on the Company's Unaudited Consolidated Financial Statements. Additionally, the Company modified its accounting policy to conform with the requirementsresults of the adoption of this standard.operations, financial position or cash flows.
Reference Rate ReformIncome Taxes ASU 2023-09
In March 2020,December 2023, the FASB issued ASU 2020-04, 2023-09,Facilitation Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptionsincome tax disclosures. The guidance includes improvements to income tax disclosures primarily related to the GAAPrate reconciliation and income taxes paid. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is in the process of evaluating the potential effects this guidance will have 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. its disclosures.
Profit Interest ASU 2024-01
In January 2021,March 2024, the FASB issued ASU 2024-01, Profit Interest and Similar Awards ("ASU 2021-01, Reference Rate Reform (Topic 848)2024-01"), Scope ASU 2021-01, which clarifies that certain optional expedientsto improve GAAP by adding an illustrative example to demonstrate how an entity should apply the scope in paragraph 718-10-15-3 to determine whether profit interest and exceptionssimilar awards should be accounted for in accordance with Topic 848718, Compensation- Stock Compensation. This guidance is effective for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.annual periods beginning after December 15, 2024, with early adoption permitted. The Company adoptedis in the optional expedientsprocess of Topic 848evaluating the potential effects this guidance will have 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.disclosures.

2.    AcquisitionsAcquisition
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$37.0 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.
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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)(278)
Total purchase consideration, net of cash and restricted cash acquired$36,93136,971 
Recognized amounts of assets acquired and liabilities assumed:
Accounts receivable$881831 
Prepaid expenses423469 
Settlement assets8,277 
Equipment, net47 
Goodwill(3)
6,9437,261 
Intangible assets(2)
30,460 
Accounts payable and accrued expenses(1,607)(1,881)
Customer deposits(214)
Settlement obligations(8,279)
Total purchase consideration$36,93136,971 
(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.
(3)During the first quarter of 2024, the Company recorded an immaterial measurement period adjustment due to a pre-acquisition tax accrual which resulted in an adjustment to goodwill and accounts payable and accrued expenses.


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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:
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:
Three Months Ended September 30,Nine Months Ended September 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in thousands)(in thousands)2023202220232022(in thousands)20242023
Revenue Type:Revenue Type:
Merchant card fees
Merchant card fees
Merchant card feesMerchant card fees$146,974 $137,659 $441,142 $405,404 
Money transmission servicesMoney transmission services25,831 18,291 70,955 51,757 
Outsourced services and other servicesOutsourced services and other services13,181 7,933 34,768 21,917 
EquipmentEquipment3,029 2,534 9,468 7,008 
Total revenues(1),(2)
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 $9.7$11.9 million and $21.9$5.0 million of interest income for the three and nine months ended September 30,March 31, 2024 and 2023, and $2.0 million and $3.4 million for the three and nine months ended September 30, 2022, respectively, is included in outsourced services and other services revenue in the table above. Approximately $0.5$0.6 million and $1.1$0.2 million of interest income for the three and nine months ended September 30,March 31, 2024, and 2023, and $0.2 million and $0.4 million three and nine months ended September 30, 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
Three months ended March 31, 2024Three months ended March 31, 2024
(in thousands)(in thousands)Merchant Card FeesMoney Transmission ServicesOutsourced and Other ServicesEquipmentTotal(in thousands)Merchant Card FeesMoney Transmission ServicesOutsourced and Other ServicesEquipmentTotal
SegmentSegment
SMB Payments
SMB Payments
SMB PaymentsSMB Payments$136,086 $— $994 $3,029 $140,109 
B2B PaymentsB2B Payments10,837 — 2,911 — 13,748 
Enterprise PaymentsEnterprise Payments51 25,831 9,276 — 35,158 
Total revenuesTotal 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
Three Months Ended March 31, 2023Three Months Ended March 31, 2023
(in thousands)(in thousands)Merchant Card FeesMoney Transmission ServicesOutsourced and Other ServicesEquipmentTotal(in thousands)Merchant Card FeesMoney Transmission ServicesOutsourced and Other ServicesEquipmentTotal
SegmentSegment
SMB Payments
SMB Payments
SMB PaymentsSMB Payments$402,890 $— $2,459 $7,008 $412,357 
B2B PaymentsB2B Payments2,514 — 13,574 — 16,088 
Enterprise PaymentsEnterprise Payments— 51,757 5,884 — 57,641 
Total revenuesTotal 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, 2023March 31, 2024 and 2022.2023.
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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.
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Contract liabilities were $0.4$0.6 million and $0.2$0.6 million as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. Substantially all of these balances are recognized as revenue within 12 months.
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, 2023March 31, 2024 and September 30, 2022.2023.

4.    Settlement Assets and Customer/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 are not liabilities of the Company. Therefore, neither is recognized in the Company's Unaudited Consolidated Balance Sheets. Member banks held merchant funds of $102.9$109.2 million and $110.3$98.0 million at September 30, 2023March 31, 2024 and December 31, 2022,2023, 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 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 customer/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,March 31, 2024 and 2023 were $1.6$4.7 million and $3.7 million, respectively. Expenses for merchant losses for the three and nine months ended September 30, 2022 were $0.7 million and $2.8$1.0 million, respectively.
B2B Payments Segment
In the Company's B2B Payments segment, the Company earns revenues 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 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 $93.4$79.1 million and $42.7$69.0 million at September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. Company-owned bank accounts held $9.5$1.6 million and $1.8$1.2 million at September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively, which are included in restricted cash and settlement and customer/subscriber account obligations in the Company's Unaudited Consolidated Balance Sheets.
Exception items that the Company is still attempting to collect from the customers through the funds settlement process are recognized as settlement assets and customer/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 these merchant losses for the three months ended March 31, 2024 were $0.2 million. There were no expenses for these merchant losses in 2023.
For 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 card transactions creates certain receivables (from card networks) and
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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 customer/subscriber account balances and the related obligations as settlement and customer/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$46.2 million and $6.1$19.6 million at September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively.
The Company's consolidated settlement assets and customer/subscriber account balances and settlement and customer/subscriber account obligations were as follows:
(in thousands)(in thousands)September 30, 2023December 31, 2022(in thousands)March 31, 2024December 31, 2023
Settlement Assets, net of estimated losses(1):
Settlement Assets, net of estimated losses(1):
Card settlements due from merchantsCard settlements due from merchants$4,768 $444 
Card settlements due from merchants
Card settlements due from merchants
Card settlements due from networksCard settlements due from networks6,792  
Customer/Subscriber Account Balances:
Other settlement assets
Customer/subscriber account balances
Cash and cash equivalentsCash and cash equivalents700,610 531,574 
Cash and cash equivalents
Cash and cash equivalents
Total settlement assets and customer/subscriber account balancesTotal settlement assets and customer/subscriber account balances$712,170 $532,018 
Settlement and Customer/Subscriber Account Obligations:Settlement and Customer/Subscriber Account Obligations:
Settlement and Customer/Subscriber Account Obligations:
Settlement and Customer/Subscriber Account Obligations:
Customer account obligations
Customer account obligations
Customer account obligationsCustomer account obligations$672,183 $516,086 
Subscriber account obligationsSubscriber account obligations28,427 15,488 
Total customer/subscriber account obligationsTotal customer/subscriber account obligations700,610 531,574 
Due to customers' payees(2)
Due to customers' payees(2)
9,458 1,766 
Total settlement and customer/subscriber account obligationsTotal settlement and customer/subscriber account obligations$710,068 $533,340 
(1)Allowance for estimated losses was $5.6$9.2 million and $5.0$6.6 million as of September 30, 2023March 31, 2024 and December 31, 2022,2023, respectively
(2)Card settlements due from networks includes $6.8$6.3 million and $8.2 million as of March 31, 2024 and December 31, 2023, respectively, related assets and remainder are included in restricted cash on our Unaudited Consolidated Balance Sheets.

5.     Notes Receivable
The Company had notes receivable of $5.2$6.5 million and $4.7$5.2 million as of September 30, 2023March 31, 2024 and December 31, 2022,2023, 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 18.2%18.5% and 15.4%18.6% as of September 30, 2023March 31,
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2024 and December 31, 2022.2023. 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, 2023March 31, 2024 and December 31, 2022,2023, the Company had no allowance for doubtful notes receivable.
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As of September 30, 2023,March 31, 2024, the principal payments for the Company's notes receivable are due as follows:
(in thousands)(in thousands)
Twelve months ending September 30,
2024$1,561 
Twelve months ending March 31,
Twelve months ending March 31,
Twelve months ending March 31,
2025
2025
202520251,350 
20262026827 
20272027909 
After 2027530 
2028
After 2028
TotalTotal$5,177 

6.    Property, Equipment and Software
A summary of property, equipment and software, net was as follows:
(in thousands)(in thousands)September 30, 2023December 31, 2022
(in thousands)
(in thousands)
Computer software
Computer software
Computer softwareComputer software$71,463 $64,197 
EquipmentEquipment10,027 13,302 
Equipment
Equipment
Leasehold improvements
Leasehold improvements
Leasehold improvementsLeasehold improvements1,535 6,990 
Furniture and fixturesFurniture and fixtures1,442 2,909 
Furniture and fixtures
Furniture and fixtures
Property, equipment and software
Property, equipment and software
Property, equipment and softwareProperty, equipment and software84,467 87,398 
Less: Accumulated depreciationLess: Accumulated depreciation(53,208)(58,409)
Less: Accumulated depreciation
Less: Accumulated depreciation
Capital work in-progress
Capital work in-progress
Capital work in-progressCapital work in-progress10,592 5,698 
Property, equipment and software, netProperty, equipment and software, net$41,851 $34,687 
Property, equipment and software, net
Property, equipment and software, net
Three Months Ended September 30,Nine Months Ended September 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in thousands)(in thousands)2023202220232022(in thousands)20242023
Depreciation expenseDepreciation expense$2,763 $2,365 $8,335 $6,902 
Depreciation expense
Depreciation expense
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,March 31, 2024, 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)(in thousands)September 30, 2023December 31, 2022
(in thousands)
(in thousands)
SMB Payments
SMB Payments
SMB PaymentsSMB Payments$124,139 $124,625 
Enterprise PaymentsEnterprise Payments244,712 244,712 
Enterprise Payments
Enterprise Payments
Plastiq (B2B Payments)
Plastiq (B2B Payments)
Plastiq (B2B Payments)Plastiq (B2B Payments)6,943 — 
TotalTotal$375,794 $369,337 
Total
Total
The following table summarizes the changes in the carrying value of goodwill:
(in thousands)Amount
Balance at December 31, 20222023$369,337376,103 
Purchase pricePlastiq adjustment for Ovvi(486)
Plastiq acquisition6,943 
Balance at September 30, 2023March 31, 2024$375,794376,112 
As of September 30, 2023,March 31, 2024, 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
March 31, 2024March 31, 2024Weighted-average
Useful Life
(in thousands, except weighted-average data)(in thousands, except weighted-average data)Gross Carrying ValueAccumulated AmortizationNet Carrying ValueWeighted-average
Useful Life
Other intangible assets:Other intangible assets:
Other intangible assets:
Other intangible assets:
ISO and referral partner relationships
ISO and referral partner relationships
ISO and referral partner relationshipsISO and referral partner relationships$182,339 $(33,764)$148,575 14.7$182,339 $$(39,824)$$142,515 14.614.6
Residual buyoutsResidual buyouts136,064 (90,121)45,943 6.3Residual buyouts135,164 (95,505)(95,505)39,659 39,659 6.36.3
Customer relationshipsCustomer relationships109,017 (91,619)17,398 8.4Customer relationships109,017 (93,459)(93,459)15,558 15,558 8.48.4
Merchant portfoliosMerchant portfolios83,350 (52,711)30,639 6.5Merchant portfolios83,350 (59,565)(59,565)23,785 23,785 6.56.5
TechnologyTechnology57,639 (21,525)36,114 9.0Technology57,639 (23,989)(23,989)33,650 33,650 8.78.7
Trade namesTrade names7,104 (2,383)4,721 10.6Trade names7,104 (2,713)(2,713)4,391 4,391 10.610.6
Non-compete agreementsNon-compete agreements3,390 (3,390)— 0.0Non-compete agreements3,390 (3,390)(3,390)— — 0.00.0
Money transmission licenses(1)
Money transmission licenses(1)
2,100 — 2,100 
TotalTotal$581,003 $(295,513)$285,490 9.7
Total
Total$580,103 $(318,445)$261,658 9.6
(1)These assets have an indefinite useful life.
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December 31, 2022Weighted-average
Useful Life
December 31, 2023December 31, 2023Weighted-average
Useful Life
(in thousands, except weighted-average data)(in thousands, except weighted-average data)Gross Carrying ValueAccumulated AmortizationNet Carrying ValueWeighted-average
Useful Life
Other intangible assets:Other intangible assets:
Other intangible assets:
Other intangible assets:
ISO and referral partner relationships
ISO and referral partner relationships
ISO and referral partner relationshipsISO and referral partner relationships$175,300 $(24,021)$151,279 14.8$182,339 $$(36,506)$$145,833 14.714.7
Residual buyoutsResidual buyouts132,325 (76,316)56,009 6.6Residual buyouts135,164 (92,699)(92,699)42,465 42,465 6.36.3
Customer relationshipsCustomer relationships96,000 (83,298)12,702 8.2Customer relationships109,017 (92,781)(92,781)16,236 16,236 8.48.4
Merchant portfoliosMerchant portfolios76,423 (43,170)33,253 6.7Merchant portfolios83,350 (56,139)(56,139)27,211 27,211 6.56.5
TechnologyTechnology50,963 (18,566)32,397 8.4Technology57,639 (22,712)(22,712)34,927 34,927 9.09.0
Trade namesTrade names3,183 (2,129)1,054 11.6Trade names7,104 (2,526)(2,526)4,578 4,578 11.711.7
Non-compete agreementsNon-compete agreements3,390 (3,390)— 0.0Non-compete agreements3,390 (3,390)(3,390)— — 0.00.0
Money transmission licenses(1)
Money transmission licenses(1)
2,100  2,100 
TotalTotal$539,684 $(250,890)$288,794 9.7
Total
Total$580,103 $(306,753)$273,350 9.7
(1)These assets have an indefinite useful life.
Three Months Ended September 30,Nine Months Ended September 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in thousands)(in thousands)2023202220232022(in thousands)20242023
Amortization expense$14,512 $15,452 $44,968 $45,773 
Amortization expense(1)
Amortization expense(1)
Amortization expense(1)
(1)Included in amortization expense is $0.4 million and $0.1 million as of March 31, 2024 and 2023, respectively, related to the amortization of certain contract acquisition costs.
As of September 30, 2023,March 31, 2024, there were no impairment indicators present.

8.    Debt Obligations
Outstanding debt obligations consisted of the following:
(in thousands)(in thousands)September 30, 2023December 31, 2022(in thousands)March 31, 2024December 31, 2023
Term 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, respectively33,000 12,500 
Term facility - matures April 27, 2027, interest rates of 11.19% and 11.21% at March 31, 2024 and December 31, 2023, respectively
Revolving credit facility - $65.0 million line as of March 31, 2024 and December 31, 2023, matures April 27, 2026, interest rate of 10.20% at March 31, 2024 and December 31, 2023
Total debt obligationsTotal debt obligations639,050 623,200 
Less: current portion of long-term debtLess: 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(16,069)(18,074)
Long-term debt, netLong-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.
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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,
(in thousands)2023202220232022
Interest expense(1),(2)
$19,997 $13,412 $55,461 $37,282 
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Three Months Ended March 31,
(in thousands)20242023
Interest expense(1),(2)
$20,880 $17,699 
(1)Included in interest expense is $0.6$1.0 million and $0.8$0.1 million related to the accretion of contingent consideration from acquisitions for the three and nine months ended September 30,March 31, 2024, and 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$1.1 million and $2.8$0.9 million for the three and nine months ended September 30,March 31, 2024, and 2023, respectively, and $0.9 million and $2.6 million for the three and nine months ended September 30, 2022, respectively.
Third Amendment to the April 2021 Credit Agreement
On June 30, 2023, the Credit Agreement of the Company was amended to incorporate the following:
Reference rate: The reference rate for the calculation 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, 2023, for the revolving credit facility based on one-month SOFR was 10.20% and for the 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, 2023,March 31, 2024, the Company was in compliance with the covenants in the Credit Agreement.

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9.    Redeemable Senior Preferred Stock and Warrants
The redeemable senior preferred stock ranks senior to the Company's Common Stock, equal with any other class of the Company's stock designated as being ranked on a parity basis with the redeemable senior preferred stock and junior to any other class of the Company's stock, including preferred stock, that is designated as being ranked senior to the redeemable senior preferred stock, with respect to the payment and distribution of dividends, the purchase or redemption of the Company's stock and the liquidation, winding up of and distribution of assets of the Company.
The following table provides the redemption value of the redeemable senior preferred stock for the periods presented:
(in thousands)(in thousands)September 30, 2023December 31, 2022(in thousands)March 31, 2024December 31, 2023
Redeemable senior preferred stockRedeemable senior preferred stock$225,000 $225,000 
Accumulated unpaid dividendAccumulated unpaid dividend38,880 25,498 
Dividend payableDividend payable6,810 5,341 
Redemption valueRedemption value270,690 255,839 
Less: unamortized discounts and issuance costsLess: unamortized discounts and issuance costs(17,767)(20,260)
Redeemable senior preferred stock, net of discounts and issuance costs:Redeemable senior preferred stock, net of discounts and issuance costs:$252,923 $235,579 
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The following table provides a reconciliation of the beginning and ending carrying amounts of the redeemable senior preferred stock for the periods 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 
(in thousands)SharesAmount
December 31, 2023225 $258,605 
Unpaid dividend on redeemable senior preferred stock— 4,699 
Accretion of discounts and issuance costs— 841 
Cash portion of dividend outstanding at March 31, 2024— 7,122 
Payment of cash portion of dividend outstanding at December 31, 2023(7,027)
March 31, 2024225 $264,240 
The dividend rate as of September 30, 2023March 31, 2024 and December 31, 2022,2023, was 17.5%17.6% and 15.7%17.7% respectively.
The following table provides a summary of the dividends for the period presented:
Three Months Ended September 30,Nine Months Ended September 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in thousands)(in thousands)2023202220232022(in thousands)20242023
Dividends paid in cash(1)
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 stockAccumulated dividends accrued as part of the carrying value of redeemable senior preferred stock4,538 4,234 13,382 12,485 
Dividends declaredDividends declared$11,348 $8,636 $32,759 $23,963 
(1)Dividend payable for the three months ended September 30, 2023March 31, 2024 was paid on October 2, 2023.April 1, 2024.
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 beis 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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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, 2023,March 31, 2024, 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.

10.    Income Taxes
The Company's consolidated effective income tax rate for the three and nine months ended September 30, 2023,March 31, 2024, was 102.1% and 122.5%, respectively,33.2% compared to a consolidated effective income tax rate of 188.1% and 184.2%20.8% for the three and nine months ended September 30, 2022, respectively.March 31, 2023. 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.assets, and certain forecasted nondeductible expenses.
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.
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Based on management's assessment, as of September 30, 2023,March 31, 2024, 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.

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, 2023March 31, 2024 and December 31, 2022,2023, the Company has not issued any shares of preferred stock.
Share Repurchase Program
During the second quarter ofIn 2022, PRTH's Board of Directors authorized 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 $10.0 million. Under the terms of this plan, the Company may purchase shares through open market purchases, unsolicited or solicited privately negotiated transactions, or in another manner so long as it complies with applicable rules and regulations.
September 30, 2023December 31, 2022
in thousands, except share data, which is in whole units
Number of shares purchased(1)
— 1,309,374 
Average price paid per share$— $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 There have been no shares withheld for taxes and unsettled share repurchases at the end of the quarter.repurchased under this plan since December 2022.

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12.    Stock-based Compensation
Stock-based compensation expense was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in thousands)(in thousands)2023202220232022(in thousands)20242023
Stock-based compensation expense$1,501 $1,104 $5,183 $4,204 
Stock options compensation expense
Stock options compensation expense
Stock options compensation expense
Incentive units compensation expense
ESPP compensation expenseESPP compensation expense12 14
Total
Income tax benefit for stock-based compensation was immaterial for the three and nine months ended September 30, 2023March 31, 2024 and 2022.2023. 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
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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.
Non-voting Incentive Units
The compensation expenseCompany issued non-voting incentive units to certain employees and partners in six subsidiaries. These non-voting incentive units were determined to be equity and are accounted for under ASC 718 Stock Compensation. The non-voting incentive units are either fully vested when granted, or vest according to the three and nine months ended September 30, 2023, was immaterial and is included in stock-based compensationservice period and/or performance measure noted in the table above.grant agreement. As the non-voting incentive units are vested, they are recognized as NCI to the Company, who is the majority owner of the subsidiaries.

13.    Related Party Transactions
In February 2019, PHOT, a subsidiary of the Company, received a contribution of substantially all of the operating assets of eTab and Cumulus under asset contribution agreements. PHOT is a part of the Company's SMB reportable segment. These contributed assets were primarily composed of technology-related assets. Prior to these transactions, eTab was 80.0% owned by the Company's Chairman and Chief Executive Officer ("CEO"). No cash consideration was paid to the contributors of the eTab or Cumulus assets on the date of the transactions. As consideration for these contributed assets, the contributors were issued redeemable non-controlling preferred equity interests ("redeemable NCIs") in PHOT. Under these redeemable NCIs, the contributors were eligible to receive up to $4.5 million of profits earned by PHOT, plus a preferred yield (6.0% per year) on any undistributed preferred equity interest ("Total Preferred Equity Interest"). Once the total preferred equity interest is distributed to the holders, the redeemable NCIs cease to exist. The Company's CEO initially owned 83.3% of the redeemable NCIs, which ownership interest was subsequently reduced to 35.3% through the CEO's disposition of interests to others.
In November 2020, the Company agreed with the contributors to an exchange of shares of common stock of the Company, or cash, for the remaining undistributed Total Preferred Equity Interests of $4.8 million. 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 connection with the debt refinancing.
In May 2021, the Company entered into exchange agreements and completed the exchange of 1,428,358 shares of common stock and $0.8 million of cash for the Total 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 (“COO”) received 413,081 shares of common stock of the Company in exchange for her 24.1% interest.
On October 31, 2023, a lawsuit was filed alleging that the Board breached its fiduciary duties by approving the above mentioned exchange transaction. The Company denied any wrongdoing. The lawsuit was settled on January 30, 2024, wherein the Company agreed to unwind the exchange transaction and received previously issued shares of common stock of the Company from the CEO, COO and others in exchange of the reissuance of PHOT redeemable preferred units. The returned shares of common stock of the Company are recorded as treasury stock at their closing market price as of the settlement date of January 30, 2024. The reissued PHOT redeemable preferred units are recorded as redeemable NCI at their estimated fair value as of the settlement date on the Company’s Unaudited Consolidated Balance Sheets. The redeemable preferred units were accreted to their redemption value as of March 31, 2024, through net loss available to common stockholders in the Company’s Unaudited Statements of Operations and Comprehensive Loss.

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14.    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$21.6 million in 20232024 and $22.0$25.0 million in 2024.2025.
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$1.5 million for the year ended December 31, 2022,2023, 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, 2023March 31, 2024 and December 31, 2022, respectively.2023. The Company is obligated to make the
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contributions within 10 business days of receiving notice for such contribution from the subsidiary. As of September 30, 2023March 31, 2024 and December 31, 2022,2023, the Company has contributed $11.6$13.4 million and $6.9$11.8 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 the beginning and ending balance of the Company's contingent consideration liabilities related to completed acquisitions:
(in thousands)Contingent Consideration Liabilities
December 31, 20222023$8,07913,438 
Addition of contingent consideration (related to asset acquisition)2,100 
Accretion of contingent consideration113972 
Fair value adjustments due to changes in estimates of future payments116 
Payment of contingent consideration(4,059)(3,071)
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, 20232024$12,70611,339 
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.
The Company is involved in a case that was filed on October 11, 2023 and is currently pending in the United States District Court for the Northern District of California (the “Complaint”).The Complaint is a putative class action against The Credit Wholesale Company, Inc. (“Wholesale”), Priority Technology Holdings, Inc., Priority Payment Systems (“PPS”), LLC and Wells Fargo Bank, N.A. (“Wells Fargo”).The Complaint alleges that Wholesale is an agent of Priority, PPS and Wells Fargo
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and that it made non-consensual recordation of telephonic communications with California businesses in violation of California Invasion of Privacy Act (the “Act”). The Complaint seeks to certify a class of affected businesses and an award of $5,000 per violation of the Act. As of May 9, 2024, the financial impact, if any, of the outcome of this legal proceeding is neither probable nor estimable.
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.
As of September 30, 2023,March 31, 2024 , the Company's customer account balances of $672.2$703 million are maintained in FDIC insured eligible accounts with certain FIs (refer to Note 4. Settlement Assets and Customer/Subscriber Account Balances and Related
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Obligations) A majority of the Company's cash and restricted cash is held in certain FIs, substantially all of which is in excess of FDIC limits. The Company does not believe it is exposed to any significant credit risk from these transactions.

14.15.    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)(in thousands)Fair Value HierarchySeptember 30, 2023December 31, 2022(in thousands)Fair Value HierarchyMarch 31, 2024December 31, 2023
Contingent consideration, current portionContingent consideration, current portionLevel 3$3,789 $6,079 
Contingent consideration, noncurrent portionContingent consideration, noncurrent portionLevel 38,917 2,000 
Total contingent considerationTotal contingent consideration$12,706 $8,079 
During the three and nine months ended September 30, 2023,March 31, 2024, 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 $6.5 million and $5.2 million and $4.7 million at September 30, 2023March 31, 2024 and December 31, 2022,2023, 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 (see Note 8. 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 term facility was estimated to be $603.0 million and $606.1$651.9 million at September 30, 2023March 31, 2024 and December 31, 2022, respectively,2023 and was estimated using binding and non-binding quoted prices in an active secondary market, which considers the credit risk and market related conditions, and is within Level 32 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.

15.16.    Segment Information
The Company has three reportable segments:
SMB Payments – providesProvides full-service acquiring and payment-enabled solutions for B2C transactions, leveraging the Company'sPriority's proprietary software platform, distributed through ISOs,ISO, direct sales and vertically focused ISV channels.
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B2B Payments – provides market-leading AP automation solutions to corporations, software partners and industry leading FIs (including Citibank and Mastercard) in addition to working capital solutionsimproving cash flow by providing instant access to other business customers.working capital.
Enterprise Payments – providesProvides embedded paymentfinance and bankingtreasury solutions to enterprise customers thatto modernize legacy platforms and accelerate modern software partners lookingpartners' strategies to monetize payments.
Corporate includes costs of corporate functions and shared services not allocated to our reportable segments.
In January 2024, the Company changed the grouping of certain business activity to conform to the way we internally manage and monitor the business. As a result, certain immaterial activity was reassigned from the SMB Payments segment to the Enterprise Payments segment effective January 1, 2024. Impact on prior year segment results were determined to be immaterial and have not been reclassified to reflect this change.
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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,
2023202220232022
(in thousands)
(in thousands)Three Months Ended March 31,
202420242023
Revenues:Revenues:
SMB Payments
SMB Payments
SMB PaymentsSMB Payments$140,109 $139,892 $442,937 $412,357 
B2B PaymentsB2B Payments13,748 4,868 19,505 16,088 
Enterprise PaymentsEnterprise Payments35,158 21,657 93,891 57,641 
Consolidated revenuesConsolidated revenues$189,015 $166,417 $556,333 $486,086 
Depreciation and amortization:Depreciation and amortization:
Depreciation and amortization:
Depreciation and amortization:
SMB Payments
SMB Payments
SMB PaymentsSMB Payments$9,858 $11,040 $31,473 $32,844 
B2B PaymentsB2B Payments772 295 1,024 441 
Enterprise PaymentsEnterprise Payments6,154 6,203 19,557 18,599 
CorporateCorporate491 279 1,249 791 
Consolidated depreciation and amortizationConsolidated depreciation and amortization$17,275 $17,817 $53,303 $52,675 
Operating (loss) income:
Operating income (loss):
Operating income (loss):
Operating income (loss):
SMB Payments
SMB Payments
SMB PaymentsSMB Payments$11,821 $13,447 $35,374 $39,928 
B2B PaymentsB2B Payments78 217 (790)1,289 
Enterprise PaymentsEnterprise Payments21,339 9,312 50,081 19,504 
CorporateCorporate(9,732)(8,896)(25,178)(22,755)
Consolidated operating incomeConsolidated operating income$23,506 $14,080 $59,487 $37,966 

A reconciliation of total operating 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,
2023202220232022
(in thousands)
(in thousands)Three Months Ended March 31,
202420242023
Total operating income of reportable segmentsTotal operating income of reportable segments$33,238 $22,976 $84,665 $60,721 
CorporateCorporate(9,732)(8,896)(25,178)(22,755)
Interest expenseInterest expense(19,997)(13,412)(55,461)(37,282)
Other income, netOther income, net732 231 1,319 311 
Income tax benefit (expense)(4,328)(1,691)(6,550)(1,833)
Net loss$(87)$(792)$(1,205)$(838)
Other income, net
Other income, net
Income tax (expense) benefit
Net income (loss)

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16.17.    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,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in thousands except per share amounts)(in thousands except per share amounts)2023202220232022(in thousands except per share amounts)20242023
Numerator:Numerator:
Net loss$(87)$(792)$(1,205)$(838)
Net income (loss)
Net income (loss)
Net income (loss)
Less: Dividends and accretion attributable to redeemable senior preferred stockholdersLess: Dividends and accretion attributable to redeemable senior preferred stockholders(12,192)(9,466)(35,252)(26,415)
Less: Return on redeemable NCI in consolidated subsidiary
Net loss attributable to common stockholders
Net loss attributable to common stockholders
Net loss attributable to common stockholdersNet loss attributable to common stockholders$(12,279)$(10,258)$(36,457)$(27,253)
Denominator:Denominator:
Basic and diluted:Basic and diluted:
Basic and diluted:
Basic and diluted:
Weighted-average common shares outstanding(1)
Weighted-average common shares outstanding(1)
Weighted-average common shares outstanding(1)
Weighted-average common shares outstanding(1)
78,381 77,984 78,270 78,392 
Loss per common shareLoss per common share$(0.16)$(0.13)$(0.47)$(0.35)
(1)The weighted-average common shares outstanding includes 1,803,841 warrants (refer to Note 9. Redeemable Senior Preferred Stock and Warrants).
For the three and nine months ended September 30,March 31, 2024 and 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 are as follows:
Three Months Ended September 30,Nine Months Ended September 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in thousands)(in thousands)2023202220232022(in thousands)20242023
Outstanding warrants on Common Stock(1)
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 
Restricted stock awards(3)
Restricted stock awards(3)
1,109 2,680 1,297 1,126 
Outstanding stock option awards(3)
Outstanding stock option awards(3)
918 1,034 909 2,292 
Outstanding stock option awards(3)
Outstanding stock option awards(3)
TotalTotal2,027 7,871 2,206 7,575 
(1)The warrants were issued in 2018 and were exercisable at $11.50 per share. These warrants expired on August 24, 2023.
(2)The warrants were issued in 2018 and were exercisable at $12.00 per share. 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, 2022.2023. 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: 
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 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. 
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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, 2023,March 31, 2024, compared to the three and nine months ended September 30, 2022.March 31, 2023. We have derived this data, except the key indicators, 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, 2022.2023.
Revenue
For the three months ended September 30, 2023,March 31, 2024, our consolidated revenue of $189.0$205.7 million increased by $22.6$20.7 million, or 13.6%11.2%, from $166.4$185.0 million for the three months ended September 30, 2022. ThisMarch 31, 2023. The overall increase was mainly driven by an increase in new enrollments and higher interest income in our Enterprise Payments segment and revenue from the Plastiq business acquired during the quarter in our B2B Payments segment.
Forsegment that was acquired in the nine monthsquarter ended September 30, 2023, our consolidated revenue of $556.3 million increased by $70.2 million, or 14.4%, from $486.1 million for the nine months ended September 30, 2022. The overall increase was driven by increases in merchant card fee rates, offset by a decrease in certain fee based revenue in our SMB Payments segment, an increase in new enrollments and higher interest income in our Enterprise Payments segment and revenue from the Plastiq business acquired during the quarter in our B2B Payments segment.2023. These increases were partially offset by a decrease in revenuerevenues in B2Bour SMB Payments segment due to wind down of certain managed services programs.decreased volumes.
The following table presents our revenues by type:
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
(in thousands)
(in thousands)Three Months Ended March 31,
202420242023$ Change
Revenue Type:Revenue Type:
Merchant card fees
Merchant card fees
Merchant card feesMerchant card fees$146,974$137,659$9,315$441,142$405,404$35,738$157,947$149,644$8,303
Money transmission servicesMoney transmission services25,83118,2917,54070,95551,75719,198Money transmission services29,14421,4067,738
Outsourced services and other servicesOutsourced services and other services13,1817,9335,24834,76821,91712,851Outsourced services and other services15,66511,0054,660
EquipmentEquipment3,0292,5344959,4687,0082,460Equipment2,9632,973(10)
Total revenuesTotal revenues$189,015$166,417$22,598$556,333$486,086$70,247Total revenues$205,719$185,028$20,691
Merchant card fees
Merchant card fees revenue for the three months ended September 30, 2023March 31, 2024 was $147.0$157.9 million an increase of $9.3$8.3 million or 6.8%5.5%, from $137.7$149.6 million for the three months ended September 30, 2022. ThisMarch 31, 2023. The 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 the diversification of our 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, 2023March 31, 2024 was $25.8$29.1 million an increase of $7.5$7.7 million, or 41.0%36.1%, from $18.3$21.4 million for the three months ended September 30, 2022.March 31, 2023. This increase was primarily driven by an increase in customer enrollments.
Money transmission services for the nine months ended September 30, 2023 was $71.0 million an increase
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Table of $19.2 million, or 37.1%, from $51.8 million for the nine months ended September 30, 2022. This increase was primarily driven by an increase in customer enrollments.Contents
Outsourced services and other services revenue
Outsourced services and other services revenue of $13.2$15.7 million for the three months ended September 30, 2023March 31, 2024 increased by $5.3$4.7 million, or 67.1%42.3%, from $7.9$11.0 million for the three months ended September 30, 2022,March 31, 2023, primarily due to growth in interest income due to higher interest rates and deposit balances offset by decreased managed services revenue due to wind down of certain 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, primarily due to growth in interest income due to higher interest rates and deposit balances offset by decreased managed services revenue due to wind down of certain programs.balances.
Equipment
Equipment revenue of $3.0 million for the three months ended September 30, 2023 increased by $0.5 million, or 20.0%, from $2.5March 31, 2024 remained consistent with $3.0 million for the three months ended September 30, 2022. The increase was primarily due to increased sales of 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 $7.0 million for the nine months ended September 30, 2022. The increase was primarily due to increased sales of point of sale equipment.March 31, 2023.
Operating expenses were as follows:
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
(in thousands)
(in thousands)Three Months Ended March 31,
202420242023$ Change
Operating expensesOperating expenses
Cost of services (excludes depreciation and amortization)
Cost of services (excludes depreciation and amortization)
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$129,298$121,966$7,332
Salary and employee benefitsSalary and employee benefits20,12916,3843,74558,28648,23110,055Salary and employee benefits22,15019,0483,102
Depreciation and amortizationDepreciation and amortization17,27517,817(542)53,30352,675628Depreciation and amortization15,25318,048(2,795)
Selling, general and administrativeSelling, general and administrative11,42310,1781,24531,32827,0274,301Selling, general and administrative10,9949,1181,876
Total operating expensesTotal operating expenses$165,509$152,337$13,172$496,846$448,120$48,726Total operating expenses$177,695$168,180$9,515
Cost of services (excludes depreciation and amortization)
Cost of services (excludes depreciation and amortization) of $116.7$129.3 million for the three months ended September 30, 2023March 31, 2024, increased by $8.7$7.3 million, or 8.1%6.0%, from $108.0$122.0 million for the three months ended September 30, 2022, primarily due to corresponding increase in revenues.
Cost of services (excludes depreciation and amortization) of $353.9 million for the nine months ended September 30,March 31, 2023, increased by $33.7 million, or 10.5%, from $320.2 million for the nine months ended September 30, 2022, primarily due to the corresponding increase in revenues.
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Salary and employee benefits
Salary and employee benefits expense of $20.1$22.2 million for the three months ended September 30, 2023March 31, 2024 increased by $3.7$3.1 million, or 22.6%16.3%, from $16.4$19.0 million for the three months ended September 30, 2022,March 31, 2023, primarily due to merit increases, an increase in stock-based compensationcertain performance based non-recurring bonuses 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, primarily due to merit increases, 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 expense
Depreciation and amortization expense of $17.3$15.3 million for the three months ended September 30, 2023March 31, 2024 decreased by $0.5$2.8 million, or 2.8%15.5%, from $17.8$18.0 million for the three months ended September 30, 2022,March 31, 2023, primarily due to full amortization of certain intangible assets partially offset by the depreciation of 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, primarily due to the depreciation of new assets placed in service, partially offset by full amortization of certain intangible assets.during 2023.
Selling, general and administrative
Selling, general and administrative expenses of $11.4$11.0 million for the three months ended September 30, 2023March 31, 2024 increased by $1.2$1.9 million, or 11.8%20.6%, from $10.2$9.1 million for the three months ended September 30, 2022,March 31, 2023, primarily due to certain nonrecurringsoftware and maintenance expenses related to the acquisition of the Plastiq business and other expenses to support overall growth of the Company.
Selling, general and administrative expenses
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Table of $31.3 million for the nine months ended September 30, 2023 increased by $4.3 million, or 15.9%, from $27.0 million for the nine months ended September 30, 2022, primarily due to certain nonrecurring expenses related to the acquisition of the Plastiq business and other expenses to support overall growth of the Company.Contents
Other Expense, net
Other expenses, net were as follows:
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
(in thousands)
(in thousands)Three Months Ended March 31,
202420242023$ Change
Other (expense) incomeOther (expense) income
Interest expense
Interest expense
Interest expenseInterest expense$(19,997)$(13,412)$(6,585)$(55,461)$(37,282)$(18,179)$(20,880)$(17,699)$(3,181)
Other income, netOther income, net7322315011,3193111,008
Other income, net
Other income, net632212420
Total other expense, netTotal other expense, net$(19,265)$(13,181)$(6,084)$(54,142)$(36,971)$(17,171)Total other expense, net$(20,248)$(17,487)$(2,761)

Interest expense
Interest expense of $20.0$20.9 million for the three months ended September 30, 2023March 31, 2024 increased by $6.6$3.2 million, or 49.3%18.0%, from $13.4$17.7 million for the three months ended September 30, 2022,March 31, 2023, due to increased interest rates and increased outstanding balance infor the revolving creditterm loan facility used for the acquisition of the Plastiq business, in the three months ended September 30, 2023.
Interest expense of $55.5 million for the nine months ended September 30, 2023 increasedoffset by $18.2 million, or 48.8%, from $37.3 million for the nine months ended September 30, 2022, due to increased interest rates and increased outstanding balancea decrease in the revolving credit facility used for the acquisition of the Plastiq business in the nine months ended September 30, 2023.facility.

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Income tax (benefit) expense
Income tax expense was as follows:
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
Income before income taxes$4,241 $899 $3,342 $5,345 $995 $4,350 
Income tax expense$4,328 $1,691 $2,637 $6,550 $1,833 $4,717 
(in thousands)
(in thousands)Three Months Ended March 31,
202420242023$ Change
Income (loss) before income taxes
Income tax expense (benefit)
Effective tax rateEffective 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 20232024 is 117.6%29.9% 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 20232024 interest expense. The effective tax rate for 20232024 changed primarily due to an increase in the valuation allowance against certain business interest carryover deferred tax assets.forecasted nondeductible expenses.
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 20232024 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 do not expect the enactment
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Table of the IRA will have a material effect on our reported results, cash flows, or financial position. If applicable, we expect to reflect the excise tax within equity as part of the repurchase price of common stock.

Contents
Segment Results
SMB Payments
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
(in thousands)
(in thousands)Three Months Ended March 31,
202420242023$ Change
RevenueRevenue$140,109$139,892$217$442,937$412,357$30,580Revenue$143,751$154,933$(11,182)
Operating expensesOperating expenses128,288126,4451,843407,563372,42935,134Operating expenses131,368142,922(11,554)
Operating incomeOperating income$11,821$13,447$(1,626)$35,374$39,928$(4,554)Operating income$12,383$12,011$372
Operating marginOperating margin8.4 %9.6 %8.0 %9.7 %
Depreciation and amortizationDepreciation and amortization$9,858$11,040$(1,182)$31,473$32,844$(1,371)
Depreciation and amortization
Depreciation and amortization$8,802$10,846$(2,044)
Key Indicators:Key Indicators:
Merchant bankcard processing dollar valueMerchant bankcard processing dollar value$14,150,995$15,098,450$(947,455)$44,483,491$44,577,857$(94,366)
Merchant bankcard processing dollar value
Merchant bankcard processing dollar value$14,788,095$15,220,715$(432,620)
Merchant bankcard transaction countMerchant bankcard transaction count178,721165,79612,925522,470476,08446,386Merchant bankcard transaction count175,228163,40611,822
Revenue
Revenue from our SMB Payments segment of $140.1was $143.8 million for the three months ended September 30, 2023, remained consistentMarch 31, 2024, compared to $139.9$154.9 million for the three months ended September 30, 2022.March 31, 2023. The Company experienceddecrease of $11.2 million, or 7.2%, was primarily driven by a declinedecrease in itscertain incentives and, decreased transaction count and processed merchant bankcard volume due to diversification of merchant portfolioportfolios by one of itsthe Company's referral partners. The decrease in revenue due to decline in volume was partially offset by increased transaction count andCompany's merchant card fee rate increases. The Company's revenue from the SMB Payments segment as a percentage of merchant bankcard processing dollar value during
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2023 increased to 0.98% from 0.93% during 2022. The increase was primarily driven by a rate increase and changes in the merchant mix.
Revenue from our SMB Payments segment was $442.9($139.5 million for the nine months ended September 30, 2023, compared to $412.42024 and $148.7 million for the nine months ended September 30, 2022. The increase of $30.5 million, or 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 due to diversification of merchant portfolio by one of its referral partners. The Company's revenue from the SMB Payments segment2023) as a percentage of merchant bankcard processing dollar value during 2023 increased2024 decrease to 0.9% from 1.0% from 0.92% during 2022.2023. The increasedecrease was primarily driven by an increase in incentive revenue and changes in the merchant and card mix.
Operating Income
Operating income from our SMB Payments segment was $11.8$12.4 million for the three months ended September 30, 2023,March 31, 2024, compared to $13.4$12.0 million for the three months ended September 30, 2022.March 31, 2023. The decreaseincrease of $1.6$0.4 million or 11.9%,3.1% was primarilythe result of a decrease in operating income of $4.0 million in merchant card fee revenue driven by the timingdiversification of certain billing adjustments inmerchant portfolios by one of the three months ended September 30, 2022,Company's referral partners, the mix related margin compression and a $1.3 million increasedecrease in certain incentive revenue. This decrease was offset by decreases in the allocation of salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, andexpense of $1.7 million, a $0.3 million increasedecrease in selling, general and administrative expenses driven by higher softwareof $0.7 million due to efficiencies and travelrealignment at the corporate level and other operating costs. The increasea decrease in headcountdepreciation and selling, general and administrative expenses are mainly attributableamortization expense of $2.0 million due 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. The decrease of $4.5 million, or 11.3%, was primarily driven by the timingfull amortization of certain billing adjustmentsintangible assets in the three months ended September 30, 2022, the mix related margin compression, a $4.9 million increase in salary and employee benefits due to higher headcount, higher stock-based compensation and annual pay raises, and a $2.2 million increase in selling, general and administrative expenses driven by higher software and travel and other operating costs. The increase in headcount and selling, general and administrative expenses are mainly attributable to growth initiatives.2023.
Depreciation and Amortization
Depreciation and amortization expense of our SMB Payments segment was $9.9$8.8 million for the three months ended September 30, 2023,March 31, 2024, compared to $11.0$10.8 million for the three months ended September 30, 2022.March 31, 2023. The decrease of $1.1$2.0 million is due to full amortization of certain intangible assets.
Depreciation and amortization expense of 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. The decrease of $1.3 million is due to full amortization of certain intangible assets.assets in 2023.
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B2B Payments
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
(in thousands)
(in thousands)Three Months Ended March 31,
202420242023$ Change
RevenueRevenue$13,748$4,868$8,880$19,505$16,088$3,417Revenue$21,115$2,786$18,329
Operating expensesOperating expenses13,6704,6519,01920,29514,7995,496Operating expenses21,9083,63518,273
Operating income (loss)$78$217$(139)$(790)$1,289$(2,079)
Operating lossOperating loss$(793)$(849)$56
Operating marginOperating margin0.6 %4.5 %(4.1)%8.0 %
Depreciation and amortization
Depreciation and amortization
Depreciation and amortizationDepreciation and amortization$772$295$477$1,024$441$583$1,640$125$1,515
Key Indicators:Key Indicators:
B2B issuing dollar volumeB2B issuing dollar volume$221,456$214,085$7,371$636,361$597,665$38,696
B2B issuing dollar volume
B2B issuing dollar volume$227,811$198,546$29,265
B2B issuing transaction countB2B issuing transaction count26724720829683146B2B issuing transaction count240280$(40)
Revenue
Revenue from our B2B Payments segment was $13.7$21.1 million for the three months ended September 30, 2023,March 31, 2024, compared to $4.9$2.8 million for the three months ended September 30, 2022.March 31, 2023. The increase of $8.8$18.3 million or 179.6%, was primarily driven by revenue from the Plastiq business that was acquired during the quarter.
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. The increase of $3.4 million, or 21.1%, was primarily driven by revenue from the Plastiq business that was acquired during the quarter, partially offset by a decrease in managed services business due to wind down of certain programs and recognition of certain revenues during 2022 related to a contract termination.business.
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. The decrease of $0.1 million was primarily attributable to the Plastiq business that was acquired during the quarter and currently being stabilized.Loss
Operating loss from our B2B Payments segment wasof $0.8 million for the ninethree months ended September 30, 2023March 31, 2024 remained consistent compared to anthe three months ended March 31, 2023. The increase in operating income of $1.3 million for the nine months ended September 30, 2022. The decrease of $2.1 milliondue to increased revenue was primarily attributableoffset by certain performance based non-recurring bonuses related to decreases in revenue from managed services business business and the Plastiq business that was acquired duringand processing losses related to the quarter and currently being stabilized.CPX business.
Depreciation and Amortization
Depreciation and amortization from our B2B Payments segment was $0.8$1.6 million for the three months ended September 30, 2023,March 31, 2024, compared to $0.3 million$125.0 thousand depreciation and amortization expense for the three months ended September 30, 2022.
Depreciation and amortization from our B2B Payments segment was $1.0 million forMarch 31, 2023. The increase is primarily attributable to the three months ended September 30, 2023, compared to $0.4 million depreciation and amortization expense for the three months ended September 30, 2022.
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Plastiq business.
Enterprise Payments
(in thousands)(in thousands)Three Months Ended September 30,Nine Months Ended September 30,
20232022$ Change20232022$ Change
(in thousands)
(in thousands)Three Months Ended March 31,
202420242023$ Change
RevenueRevenue$35,158$21,657$13,501$93,891$57,641$36,250Revenue$40,853$27,309$13,544
Operating expensesOperating expenses13,81912,3451,47443,81038,1375,673Operating expenses15,30614,646660
Operating incomeOperating income$21,339$9,312$12,027$50,081$19,504$30,577Operating income$25,547$12,663$12,884
Operating marginOperating margin60.7 %43.0 %53.3 %33.8 %
Depreciation and amortizationDepreciation and amortization$6,154$6,203$(49)$19,557$18,599$958
Depreciation and amortization
Depreciation and amortization$4,356$6,690$(2,334)
Key Indicators:Key Indicators:
Average billed clientsAverage billed clients590,578387,384203,194525,274364,766160,508
Average billed clients
Average billed clients703,887465,219238,668
Average new enrollmentsAverage new enrollments56,26937,74618,52351,86429,81322,051Average new enrollments53,55145,9487,603
Revenue
Revenue from our Enterprise Payments segment was $35.2$40.9 million for the three months ended September 30, 2023,March 31, 2024, compared to $21.7$27.3 million for the three months ended September 30, 2022.March 31, 2023. The increase of $13.5 million or 62.2%49.6%, was primarily driven by an increase in 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. The increase
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Table of $36.3 million or 63.0%, was primarily driven by an increase in billed clients and customer enrollments, and growth in interest income due to higher interest rates and deposit balances.Contents
Operating Income
Operating income from our Enterprise Payments segment was $21.3$25.5 million for the three months ended September 30, 2023,March 31, 2024, compared to $9.3$12.7 million for the three months ended September 30, 2022.March 31, 2023. The increase of $12.0$12.9 million or 129.0%, was primarily driven by increases in 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. The increase of $30.6 million or 156.9%101.7%, was primarily driven by increases in revenues.
Depreciation and Amortization
Depreciation and amortization from our Enterprise Payments segment was $6.2$4.4 million for the three months ended September 30, 2023, which was consistent with $6.2March 31, 2024, compared to $6.7 million depreciation and amortization expense for the three months ended September 30, 2022.
Depreciation and amortization from our Enterprise Payments segment was $19.6 million for the nine months ended September 30, 2023, compared to $18.6 million depreciation and amortization expense for the nine months ended September 30, 2022.March 31, 2023. The increasedecrease of $1.0$2.3 million or 5.4%34.9%, was primarily driven by thefull amortization of additional capitalized internal use software.

certain intangible assets in 2023.
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 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, 2022.2023. There have been no material changes to these critical accounting policies and estimates as of September 30, 2023.

March 31, 2024.
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. The Company had repurchased shares of $5.7 million during the 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$32.4 million at September 30, 2023March 31, 2024 and $18.6$8.9 million at September 30, 2022.March 31, 2023. As of September 30, 2023,March 31, 2024, we had cash totaling $24.6$34.3 million compared to $12.7$15.9 million at September 30, 2022.March 31, 2023. These cash balances do not include restricted cash of $13.9$12.7 million and $11.6$11.0 million at September 30,March 31, 2024 and March 31, 2023, and 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 $6.7 million and $6.2 million at September 30,March 31, 2024 and March 31, 2023, and September 30, 2022.respectively. At September 30, 2023,March 31, 2024, we had availability of approximately $32.0$65.0 million under our revolving credit facility. 
The following table and discussion reflect our changes in cash flows for the comparative ninethree month periods.
Nine Months Ended September 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in thousands)(in thousands)20232022
Net cash provided by (used in):Net cash provided by (used in): 
Net cash provided by (used in):
Net cash provided by (used in):
Operating activities
Operating activities
Operating activitiesOperating activities$72,680 $50,558 
Investing activitiesInvesting activities(51,224)(21,095)
Investing activities
Investing activities
Financing activitiesFinancing activities157,029 (8,099)
Net increase in cash and cash equivalents and restricted cash$178,485 $21,364 
Financing activities
Financing activities
Net (decrease) increase in cash and cash equivalents and restricted cash
Net (decrease) increase in cash and cash equivalents and restricted cash
Net (decrease) increase in cash and cash equivalents and restricted cash
Cash Provided by Operating Activities
Net cash provided by operating activities was $72.7$13.3 million for the ninethree months ended September 30, 2023March 31, 2024 compared to $50.6$27.7 million for the ninethree months ended September 30, 2022.March 31, 2023. The $22.1$14.4 million increasedecrease in 20232024 was primarily driven by changes in the operating assets and liabilities.
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Cash Used in Investing Activities 
Net cash used in investing activities was $51.2$7.7 million and $21.1$7.6 million for the ninethree months ended September 30,March 31, 2024 and 2023, and 2022, respectively. For the ninethree months ended September 30,March 31, 2024, investing activities included additions to property, equipment and software of $6.6 million and $1.1 million related funding of new loans to ISOs. For the three months ended March 31, 2023, net cash used in investing activities included the acquisition of business of $28.2 million, additions to property, equipment and 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 $6.5$2.7 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 and $11.4$5.0 million of cash used to acquire property, equipment and software.software offset by $0.2 million related to net payments received on loans to ISOs.
Cash Provided by Financing Activities 
Net cash used in financing activities was $10.3 million for the three months ended March 31, 2024, compared to $57.5 million of cash provided by financing activities was $157.0 million for the ninethree months ended September 30, 2023, compared to $8.1 million ofMarch 31, 2023. The net cash used in financing activities for the ninethree months ended September 30, 2022. The net cash provided by financing activities for the nine months ended September 30, 2023March 31, 2024 included changes in the net obligations for funds held on the behalf of customers of $165.6$1.9 million, and $44.0 million in borrowings under the revolving credit facility, offset by $28.2$1.7 million of cash used for the repayment of debt, $17.9$7.0 million of cash dividends paid to redeemable senior preferred stockholders, $1.0$0.4 million of cash used for shares withheld for taxes $4.7and $3.1 million of payments of contingent consideration for business combinations and $0.9 million of debt modification costs .consideration. The net cash used inprovided by financing activities for the ninethree months ended September 30, 2022March 31, 2023 included $36.7$7.6 million of cash used for the repayment of debt, $11.5$11.4 million of cash dividends paid to redeemable senior preferred stockholders, and $4.7$0.8 million of cash used for shares withheld for taxes and share repurchases, and $4.0$2.0 million of payments of contingent consideration for business combinations, which was offset by changes in the net obligations for funds held on the behalf of customers of $25.7 million and borrowings under the revolving credit facility of $23.0$79.3 million.
Long-term Debt 
As of September 30, 2023,March 31, 2024, we had outstanding debt obligations, including the current portion and net of unamortized debt discount of $623.0$638.1 million, compared to $605.1$638.7 million at December 31, 2022,2023, resulting in a increasedecrease of $17.9$0.6 million. The debt balance at September 30, 2023March 31, 2024 consisted of $606.1$652.7 million outstanding under the term facility and $33.0 million outstanding under the revolving credit facility, offset by $16.1$14.6 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, 2023,March 31, 2024, the Company was in compliance with 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, 2022.2023. Our exposures to market risk have not changed materially since December 31, 2022.2023.

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, 2023.March 31, 2024. 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, 2023.March 31, 2024.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the three and nine months ended September 30, 2023March 31, 2024 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 may 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, 2023March 31, 2024 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, 20231,636$4.14 690,626
August 1-31, 2023— $— 690,626
September 1-30, 2023690,626
Total1,636 $4.14 — 
Period
Total Number of Shares Purchased(1),(2)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1-31, 20241,529,378$3.66 
February 1-29, 202422,148 $3.36 
March 1-31, 2024
Total1,551,526 $3.66 — 

(1)Represents 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 approvedIncludes 1,428,358 treasury shares as a stock repurchase program for the purchase of up to 2.0 millionresult of the Company's Common Stock outstandingPHOT settlement. See Note 13. Related PartyTransactions for up to $10.0 million.more information.


Item 3. Defaults Upon Senior Securities
N/A

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Item 4. Mine Safety Disclosures
N/A

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Item 5. Other Information
Rule 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
 
 
 
 
 
 
10.4
10.5
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10.18
 
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.
NovemberMay 9, 20232024
/s/ Thomas C. Priore
Thomas C. Priore
President, Chief Executive Officer and Chairman
(Principal Executive Officer)
NovemberMay 9, 20232024
/s/ Timothy M. O'Leary
Tim O'Leary
Chief Financial Officer
(Principal Financial Officer)


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