6-K: Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments
Published on November 13, 2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of November
(Commission File No.
(Exact name of registrant as specified in its charter)
Not Applicable
(Translation of registrant’s name into English)
(Address of Principal Executive Offices) (Zip Code)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ |
Form 40-F ☐ |
Information Contained in this Form 6-K Report
Financial Statements
This report contains Paysafe Limited’s (“the Company”) Unaudited Condensed Consolidated Interim Financial Statements as of September 30, 2024, including Management’s Discussion and Analysis of Financial Condition and Results of Operations for the period presented therein.
Incorporation by Reference
This Report shall be deemed to be incorporated by reference into the registration statement of the Company on Form F-3 (No. 333-263910), Form S-8 (No. 333-256692), Form S-8 (No. 333-270582), and Form S-8 (No. 333-279401) and to be a part thereof from the date on which this Report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
Exhibits
Exhibit |
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Description |
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101.INS |
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Inline XBRL Instance Document* |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document* |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)* |
*Filed herewith
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 hereunto duly authorized.
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Paysa |
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PAYSAFE LIMITED |
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By: |
/s/ John Crawford |
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Name: |
John Crawford |
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Title: |
Chief Financial Officer |
Date: November 13, 2024
TABLE OF CONTENTS
1. |
Condensed Consolidated Interim Financial Statements (Unaudited) – September 30, 2024 |
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F-1 |
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2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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1 |
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INDEX TO FINANCIAL STATEMENTS
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Paysafe Limited
Condensed Consolidated Interim Financial Statements (Unaudited) |
Page No.
|
Condensed Consolidated Statement of Comprehensive Income / (Loss) |
F-2 |
F-3 |
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F-4 |
|
F-6 |
|
F-8 |
F-1
Paysafe Limited
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME / (LOSS)
(Unaudited)
(U.S. dollars in thousands, except per share data)
|
|
For the three months ended September 30, |
|
|
For the nine months ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of services (excluding depreciation and amortization) |
|
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||||
Selling, general and administrative |
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Depreciation and amortization |
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|
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||||
Impairment expense on goodwill and intangible assets |
|
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Restructuring and other costs |
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Loss on disposal of subsidiaries and other assets, net |
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||||
Operating income |
|
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|
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|
||||
Other (expense) / income, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
(Loss) / income before taxes |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
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||
Income tax (benefit) / expense |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
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||||
Net loss per share – basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss per share – diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
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||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive loss, net of tax of $0: |
|
|
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||||
Gain / (loss) on foreign currency translation |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total comprehensive income / (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
Paysafe Limited
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited)
(U.S. dollars in thousands, except share data)
|
|
September 30, 2024 |
|
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December 31, 2023 |
|
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Assets |
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Current assets |
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Cash and cash equivalents |
|
$ |
|
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$ |
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||
Customer accounts and other restricted cash |
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Accounts receivable, net of allowance for credit losses of $ |
|
|
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|
|
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||
Settlement receivables, net of allowance for credit losses of $ |
|
|
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Prepaid expenses and other current assets |
|
|
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||
Total current assets |
|
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Deferred tax assets |
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Property, plant and equipment, net |
|
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Operating lease right-of-use assets |
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Derivative financial assets |
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Intangible assets, net |
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Goodwill |
|
|
|
|
|
|
||
Other assets – non-current |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
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Liabilities and equity |
|
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|
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Current liabilities |
|
|
|
|
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|
||
Accounts payable and other liabilities |
|
$ |
|
|
$ |
|
||
Short-term debt |
|
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|
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|
||
Funds payable and amounts due to customers |
|
|
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||
Operating lease liabilities – current |
|
|
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Contingent consideration payable – current |
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|
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Liability for share-based compensation – current |
|
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Total current liabilities |
|
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Non-current debt |
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Operating lease liabilities – non-current |
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Deferred tax liabilities |
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Warrant liabilities |
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Derivative financial liabilities – non-current |
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Liability for share-based compensation – non-current |
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Contingent consideration payable – non-current |
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||
Total non-current liabilities |
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Total liabilities |
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|
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Shareholders' equity |
|
|
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Common shares - $ |
|
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Additional paid in capital |
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|
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|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Treasury shares - at cost; |
|
|
( |
) |
|
|
|
|
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total shareholders' equity |
|
|
|
|
|
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||
Total liabilities and shareholders' equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
Paysafe Limited
(Unaudited)
(U.S. dollars in thousands)
|
|
Common |
|
|
Additional paid in capital |
|
|
Accumulated |
|
|
Treasury shares |
|
|
Accumulated other |
|
|
Total |
|
|
||||||
January 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
||
Loss on foreign currency translation, net of tax of $ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
Restricted stock units issued (Note 10) |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Share-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
||
Common shares repurchased (Note 11) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
March 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Loss on foreign currency translation, net of tax of $ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
Restricted stock units issued (Note 10) |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Share-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
||
Common shares repurchased (Note 11) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
Capital contribution (Note 10) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
||
June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Gain on foreign currency translation, net of tax of $ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
||
Restricted stock units issued (Note 10) |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Share-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
||
September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|||
F-4
|
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Common |
|
|
Additional paid in capital |
|
|
Accumulated |
|
|
Accumulated other |
|
|
Total |
|
|||||
January 1, 2023 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Gain on foreign currency translation, net of tax of $ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Restricted stock units issued |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Share-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Conversion of liability classified award to equity (Note 10) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Capital contribution |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
March 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Gain on foreign currency translation, net of tax of $ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Restricted stock units issued |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
— |
|
|
Share-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
June 30, 2023 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Net loss |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Loss on foreign currency translation, net of tax of $ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Shares issued upon warrants exercised |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Restricted stock units issued |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||||
Share-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
September 30, 2023 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
Paysafe Limited
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(U.S. dollars in thousands)
|
|
Nine months ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments for non-cash items: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Unrealized foreign exchange loss |
|
|
|
|
|
|
||
Deferred tax (benefit) / expense |
|
|
( |
) |
|
|
|
|
Interest expense, net |
|
|
( |
) |
|
|
|
|
Share-based compensation |
|
|
|
|
|
|
||
Other income, net |
|
|
( |
) |
|
|
( |
) |
Impairment expense on goodwill and intangible assets |
|
|
|
|
|
|
||
Allowance for credit losses and other |
|
|
|
|
|
|
||
Loss on disposal of subsidiary and other assets, net |
|
|
|
|
|
|
||
Non-cash lease expense |
|
|
|
|
|
|
||
Movements in working capital: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable and other liabilities |
|
|
( |
) |
|
|
( |
) |
Income tax receivable |
|
|
|
|
|
( |
) |
|
Net cash flows provided by operating activities |
|
|
|
|
|
|
||
Cash flows in investing activities |
|
|
|
|
|
|
||
Purchase of property, plant & equipment |
|
|
( |
) |
|
|
( |
) |
Purchase of merchant portfolios |
|
|
( |
) |
|
|
( |
) |
Other intangible asset expenditures |
|
|
( |
) |
|
|
( |
) |
Cash inflow / (outflow) from merchant reserves |
|
|
|
|
|
( |
) |
|
Receipts under derivative financial instruments |
|
|
|
|
|
|
||
Other investing activities |
|
|
|
|
|
( |
) |
|
Net cash flows used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities |
|
|
|
|
|
|
||
Cash settled equity awards |
|
|
|
|
|
( |
) |
|
Proceeds from exercise of warrants |
|
|
|
|
|
|
||
Repurchases of shares withheld for taxes |
|
|
( |
) |
|
|
( |
) |
Proceeds from employee share purchase plan |
|
|
|
|
|
|
||
Purchase of treasury shares |
|
|
( |
) |
|
|
|
|
Settlement funds - merchants and customers, net |
|
|
( |
) |
|
|
( |
) |
Repurchases of borrowings |
|
|
( |
) |
|
|
( |
) |
Proceeds from loans and borrowings |
|
|
|
|
|
|
||
Repayments of loans and borrowings |
|
|
( |
) |
|
|
( |
) |
Payment of debt issuance costs |
|
|
( |
) |
|
|
|
|
Proceeds under line of credit |
|
|
|
|
|
|
||
Repayments under line of credit |
|
|
( |
) |
|
|
( |
) |
Contingent consideration paid |
|
|
( |
) |
|
|
( |
) |
Net cash flows used in financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of foreign exchange rate changes |
|
|
|
|
|
( |
) |
|
Decrease in cash and cash equivalents, including customer accounts and other restricted cash during the period |
|
$ |
( |
) |
|
$ |
( |
) |
Cash and cash equivalents, including customer accounts and other restricted cash at beginning of the period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of the period, including customer accounts and other restricted cash |
|
$ |
|
|
$ |
|
||
|
|
Nine months ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Supplemental cash flow disclosures: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes, net |
|
$ |
|
|
$ |
|
||
F-6
The table below reconciles cash, cash equivalents, customer accounts and other restricted cash as reported in the unaudited condensed consolidated statement of financial position to the total of the same amounts shown in the unaudited condensed consolidated statement of cash flows:
|
|
Nine months ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Customer accounts and other restricted cash |
|
|
|
|
|
|
||
Total cash and cash equivalents, including customer accounts and other restricted cash |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-7
Paysafe Limited
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(U.S. dollars in thousands, except per share data)
1. Basis of presentation and summary of significant accounting policies
Description of the Business
In these unaudited condensed consolidated financial statements and related notes, Paysafe Limited, and its consolidated subsidiaries are referred to collectively as “Paysafe,” “we,” “us,” and “the Company” unless the context requires otherwise. Paysafe is a leading global provider of end-to-end payment solutions. Our core purpose is to enable businesses and consumers to connect and transact seamlessly through our payment platforms.
Paysafe Limited was incorporated as an exempted limited company under the laws of Bermuda on
In connection with the Transaction, which was consummated on March 31, 2021, the Company’s common shares and warrants were listed on the New York Stock Exchange under the symbols PSFE and PSFE.WS, respectively. Subsequent to the Transaction, Pi Jersey Topco Limited (“Topco”), funds advised by affiliates of CVC Capital Partners (such funds collectively, “CVC”) and The Blackstone Group Inc. (“Blackstone”) continue to retain ownership in the Company.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024 and the comparative financial information for the three and nine months ended September 30, 2023 and for the year ended December 31, 2023 include the accounts of the Company, and its subsidiaries, based upon information of Paysafe Limited.
All intercompany transactions have been eliminated in consolidation. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position, results of operations and cash flows have been included.
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 on Form 20-F filed on March 20, 2024.
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other interim period.
Disaggregation of Revenue
The Company provides payment solutions through two primary lines of business: Merchant Solutions and Digital Wallets. For each primary source of revenue within these business lines, the Company’s main performance obligation is to stand ready to provide payment services to merchants and consumers. Due to the concentration of economic factors, products and services in each of the business lines, the Company has presented disaggregated revenue at the segment level (See Note 15).
We do
F-8
Reclassifications
Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported consolidated net loss.
Changes in presentation
During the fourth quarter of 2023, the Company elected to change its presentation of the cash flows associated with "Settlement receivables, net" and "Funds payable and amounts due to customers" from operating activities, to present them as financing activities within its consolidated statement of cash flows. Comparative amounts have been recast to conform to current period presentation. These recasts had no impact on the consolidated statement of comprehensive loss, consolidated statement of financial position or consolidated statement of shareholders' equity.
The following tables present the effects of the changes in presentation within the consolidated statement of cash flows:
|
|
For the nine months ended September 30, 2023 |
|
|||||||||
|
|
As Previously Reported |
|
|
Adjustment |
|
|
As Adjusted |
|
|||
Consolidated Statement of Cash Flows |
|
|
|
|
|
|
|
|
|
|||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|||
Settlement receivables, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Funds payable and amounts due to customers |
|
|
( |
) |
|
|
|
|
|
|
||
Net cash (used in) / provided by operating activities |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|||
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|||
Settlement funds - merchants and customers, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Net cash used in financing activities |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Significant Accounting Policies
There have been
Accounting Pronouncements not yet Adopted
Segment Reporting
In November 2023, the FASB issued ASU 2023-07, which amends Segment reporting (Topic 280). This update enhances reportable segment disclosure requirements, primarily by requiring disclosure of the significant segment expenses for each reportable segment that are regularly provided to the Chief Operating Decision Maker, and aligning the segment reporting disclosure requirements in interim and annual reporting periods. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company expects to adopt this guidance in our December 31, 2024 annual financial statements and this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
Crypto Assets
In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto assets. This update provides guidance on the accounting for and disclosure of crypto assets by requiring that crypto assets that meet criteria defined by the ASU to 1) be measured at fair value separately from other intangible assets in the statement of financial position, 2) to present remeasurement separately from other changes in other intangible assets in the statement of comprehensive income / (loss), and 3) to enhance disclosure requirements related to the crypto assets, including providing roll-forward information of crypto asset holdings. This update is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted.
The Company purchases cryptocurrency assets on behalf of its customers. All the risks and rewards associated with those assets are transferred to the customer at the time of purchase and the Company has no ability to control these assets and no requirement to safeguard these assets. As a result, the Company does not recognize either the cryptocurrency asset or liability to the customer on its balance sheet. The Company expects to adopt ASU 2023-08 on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements.
Income Taxes
F-9
In December 2023, the FASB issued ASU 2023-09, which amends Income taxes (Topic 270). This update enhances income tax disclosure requirements, primarily by requiring public companies to provide disclosures regarding the statutory tax rate and effective tax rate in tabular format with specific categories identified, and to provide additional disclosures for reconciling items that meet quantitative thresholds. This update is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company expects to adopt this guidance on January 1, 2025 which is not expected to have a material impact on the Company’s consolidated financial statements.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). This update requires public companies to expand disclosures about specific expense categories in the notes to the financial statements, including inventory, employee compensation, depreciation, and intangible asset amortization, among others. This update is effective for annual periods beginning after December 15, 2026 and for interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of the adoption of this update on the consolidated financial statements.
2. Net loss per share
The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to the Company.
The Company uses the treasury stock method of calculating diluted net loss per share.
|
For the three months ended September 30, |
|
|
For the nine months ended September 30, |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Numerator |
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss - basic |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss - diluted |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares – basic |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares – diluted |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
3. Taxation
For the three and nine months ended September 30, 2024, we have utilized the discrete effective tax method as allowed under ASC 740, Income Taxes, to calculate the interim tax provision. The discrete method treats the year to date period as if it was the annual period and determines the income tax expense or benefit on that basis. For all periods, preceding the third quarter of 2024, we accounted for income taxes in interim periods by applying an estimated annual effective tax rate to year to date pre-tax book income, with the effects of any discrete income tax items recognized in the periods when they occurred. We believe that the use of the discrete method is more appropriate than the annual effective tax rate method as small changes in estimated pre-tax book income or loss would result in significant changes in the estimated annual effective tax rate.
Our effective tax rate for the three and nine months ended September 30, 2024 was
Our effective tax rate for the three and nine months ended September 30, 2023 was
F-10
On December 12, 2022, the European Union ("EU") Member States agreed in principle on the introduction of a global minimum tax rate of
4. Goodwill
Changes in the carrying amount of goodwill are as follows:
|
|
Merchant Solutions(1) |
|
|
Digital Wallets (2) |
|
|
Total |
|
|||
Balance as of December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Foreign exchange |
|
|
— |
|
|
|
|
|
|
|
||
Balance as of September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The Company performs its annual goodwill impairment test for all reporting units as of October 1st, or when events and circumstances have occurred that would indicate the carrying amount of goodwill exceeds its fair value.
We performed our goodwill impairment test using a weighting of both market and income approaches. The market approach was based on guideline comparable companies and the key assumptions included selected Earnings Before Interest Tax Depreciation and Amortization ("EBITDA") multiples. The income approach was based on a discounted cash flow model and the key assumptions included the discount rate and future cash flows such as long-term growth rates. These valuation methods use assumptions which are considered Level 3 inputs in the fair value hierarchy (See Note 12).
Selected multiples were determined based on guideline comparable companies and discounted based on business-specific considerations. The cash flow forecast, including long term growth rates, considers past experience and future market expectations. Discount rate assumptions are based on determining a cost of debt and equity and an assessment as to whether there are risks not adjusted for in the future cash flows of the respective reporting unit. Failure to achieve the future cash flows, changes in key assumptions or decline in the stock price may cause a future impairment of goodwill at the reporting unit level.
5. Intangible assets
The Company’s intangible assets consisted of the following:
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Brands |
|
$ |
|
|
$ |
|
||