Form: 6-K

Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

November 15, 2021

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2021

(Commission File No.  001-40302)

 

PAYSAFE LIMITED

(Exact name of registrant as specified in its charter)  

 

Not Applicable

(Translation of registrant’s name into English)

 

Paysafe Limited

Victoria Place

31 Victoria Street

Hamilton H10, Bermuda

(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  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):

 

Yes  

No  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):

 

Yes  

No  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

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, 2021, including Management’s Discussion and Analysis of Financial Condition and Results of Operations for the period presented therein.

Departure of a Director

 

This report contains information on the departure of a Paysafe Limited director.  On October 31, 2021, Walt Macnee resigned as a director of Paysafe Limited.  The resignation was not as a result of any dispute or disagreement with the Company or the Company’s Board of Directors on any matter relating to the operations, policies or practices of the Company .  Effective upon Mr. Macnee’s resignation, the board size was reduced to 11 directors.  The class designation is set forth below.

 

oPhilip McHugh, James Murren and Jonathan Murphy, are classified as Class I directors and elected to serve as Class I directors until the Class I term expires at the first annual meeting following the Transaction.

 

oMatthew Bryant, Dagmar Kollmann, Hilary Stewart-Jones and Mark Brooker, are classified as Class II directors and elected to serve as Class II directors until the Class II term expires at the second annual meeting following the Transaction.

 

oWilliam P. Foley, II, Anthony Jabbour, Eli Nagler and Peter Rutland, are classified as Class IIII directors and elected to serve as Class III directors until the Class III term expires at the third annual meeting following the Transaction.

 

 

 


 

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.

 

 

Paysa

 

 

PAYSAFE LIMITED

 

 

 

 

 

 

By:

/s/ Ismail Dawood

 

Name:

Ismail Dawood

 

Title:

Chief Financial Officer

 

Date: November 15, 2021

 


 

 

TABLE OF CONTENTS

 

1.

Unaudited Condensed Consolidated Interim Financial Statements – September 30, 2021

 

F-1

 

 

 

 

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

1

 

 

 

 

 

 

 

 


 

INDEX TO FINANCIAL STATEMENTS

 

Paysafe Limited

 

Unaudited Condensed Consolidated Interim Financial Statements

Page No.

 

Unaudited Consolidated Statement of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020

F-2

 

 

Consolidated Statement of Financial Position as of September 30, 2021 and December 31, 2020

F-3

 

 

Unaudited Consolidated Statement of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020

F-4

 

 

Unaudited Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2021 and 2020

F-5

 

 

Notes to the Unaudited Consolidated Financial Statements

F-7

 

 

 

F-1


 

Paysafe Limited

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

(U.S. dollars in thousands, except per share data)

 

 

 

For the three months ended September 30,

 

 

For the nine months ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

353,585

 

 

$

355,505

 

 

$

1,115,352

 

 

$

1,056,204

 

Cost of services (excluding depreciation and amortization)

 

 

144,852

 

 

 

135,352

 

 

 

451,667

 

 

 

390,985

 

Selling, general and administrative

 

 

111,041

 

 

 

112,873

 

 

 

418,076

 

 

 

334,794

 

Depreciation and amortization

 

 

61,832

 

 

 

66,141

 

 

 

197,408

 

 

 

203,132

 

Impairment expense on intangible assets

 

 

322,210

 

 

 

44,401

 

 

 

324,145

 

 

 

123,804

 

Restructuring and other costs

 

 

14,833

 

 

 

505

 

 

 

22,321

 

 

 

10,511

 

Loss / (gain) on disposal of subsidiary and other assets, net

 

 

 

 

 

98

 

 

 

(28

)

 

 

359

 

Operating loss

 

 

(301,183

)

 

 

(3,865

)

 

 

(298,237

)

 

 

(7,381

)

Other income / (expense), net

 

 

96,490

 

 

 

(6,484

)

 

 

175,573

 

 

 

(31,062

)

Interest expense, net

 

 

(19,272

)

 

 

(42,578

)

 

 

(144,291

)

 

 

(123,332

)

Loss before taxes

 

 

(223,965

)

 

 

(52,927

)

 

 

(266,955

)

 

 

(161,775

)

Income tax benefit

 

 

(76,859

)

 

 

(14,305

)

 

 

(66,105

)

 

 

(38,073

)

Net loss

 

$

(147,106

)

 

$

(38,622

)

 

$

(200,850

)

 

$

(123,702

)

Less: net income / (loss) attributable to non-controlling interest

 

 

94

 

 

 

(495

)

 

 

400

 

 

 

(382

)

Net loss attributable to the Company

 

$

(147,200

)

 

$

(38,127

)

 

$

(201,250

)

 

$

(123,320

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to the Company – basic

 

$

(0.20

)

 

$

(0.30

)

 

$

(0.28

)

 

$

(0.99

)

Net loss per share attributable to the Company – diluted

 

$

(0.20

)

 

$

(0.30

)

 

$

(0.28

)

 

$

(0.99

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(147,106

)

 

$

(38,622

)

 

$

(200,850

)

 

$

(123,702

)

Other comprehensive income / (loss), net of tax of $0:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss / (gain) on foreign currency translation

 

 

6,602

 

 

 

(6,568

)

 

 

2,144

 

 

 

9,074

 

Total comprehensive loss

 

$

(153,708

)

 

$

(32,054

)

 

$

(202,994

)

 

$

(132,776

)

Less:  comprehensive income / (loss) attributable to non-controlling interest

 

 

94

 

 

 

(495

)

 

 

400

 

 

 

(382

)

Total comprehensive loss attributable to the Company

 

$

(153,802

)

 

$

(31,559

)

 

$

(203,394

)

 

$

(132,394

)

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-2


Paysafe Limited

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(U.S. dollars in thousands, except share data)

 

 

 

September 30, 2021

 

 

December 31, 2020

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

262,267

 

 

$

387,616

 

Customer accounts and other restricted cash, net of allowance for credit losses of $4,350

   and $4,096, respectively

 

 

1,201,801

 

 

 

1,376,236

 

Accounts receivable, net of allowance for credit losses of $10,317 and $25,035, respectively

 

 

131,220

 

 

 

117,410

 

Settlement receivables, net of allowance credit losses of $4,057 and $5,859, respectively

 

 

152,364

 

 

 

223,083

 

Prepaid expenses and other current assets

 

 

68,872

 

 

 

63,252

 

Related party receivables – current

 

 

6,459

 

 

 

6,271

 

Contingent consideration receivable – current

 

 

2,896

 

 

 

26,668

 

Total current assets

 

 

1,825,879

 

 

 

2,200,536

 

Deferred tax assets

 

 

17,236

 

 

 

17,669

 

Property, plant and equipment, net

 

 

15,539

 

 

 

18,691

 

Operating lease right-of-use assets

 

 

33,035

 

 

 

40,187

 

Intangible assets, net

 

 

1,163,072

 

 

 

1,524,817

 

Goodwill

 

 

3,536,623

 

 

 

3,481,816

 

Contingent consideration receivable – non-current

 

 

 

 

 

125,107

 

Other assets – non-current

 

 

1,670

 

 

 

508

 

Total non-current assets

 

 

4,767,175

 

 

 

5,208,795

 

Total assets

 

$

6,593,054

 

 

$

7,409,331

 

 

 

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and other liabilities

 

$

236,974

 

 

$

231,724

 

Short-term debt

 

 

6,280

 

 

 

15,400

 

Funds payable and amounts due to customers

 

 

1,335,568

 

 

 

1,552,187

 

Operating lease liabilities – current

 

 

8,470

 

 

 

8,969

 

Income taxes payable

 

 

19,873

 

 

 

8,161

 

Contingent and deferred consideration payable – current

 

 

10,647

 

 

 

5,820

 

Liability for share-based compensation – current

 

 

5,835

 

 

 

-

 

Derivative financial liabilities – current

 

 

 

 

 

2,651

 

Total current liabilities

 

 

1,623,647

 

 

 

1,824,912

 

Non-current debt

 

 

2,190,938

 

 

 

3,246,871

 

Related party payables – non-current

 

 

 

 

 

195,228

 

Operating lease liabilities – non-current

 

 

28,220

 

 

 

34,540

 

Deferred tax liabilities

 

 

34,603

 

 

 

122,519

 

Warrant liabilities

 

 

99,717

 

 

 

 

Derivative financial liabilities – non-current

 

 

 

 

 

47,547

 

Liability for share-based compensation – non-current

 

 

5,882

 

 

 

 

Contingent and deferred consideration payable – non-current

 

 

3,112

 

 

 

3,742

 

Other liabilities – non-current

 

 

969

 

 

 

969

 

Total non-current liabilities

 

 

2,363,441

 

 

 

3,651,416

 

Total liabilities

 

 

3,987,088

 

 

 

5,476,328

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

 

Common shares - $0.001 par value; 20,000,000,000 shares authorized and 723,712,382 shares issued

   and outstanding as of September 30, 2021 Share capital - $0.01 par value; 125,157,540 shares

   authorized, issued and outstanding as of December 31, 2020

 

 

723

 

 

 

1,252

 

Additional paid in capital / Share premium

 

 

2,939,111

 

 

 

2,188,706

 

Accumulated deficit

 

 

(467,084

)

 

 

(265,834

)

Accumulated other comprehensive loss

 

 

(4,563

)

 

 

(2,419

)

Shareholders' equity in the Company

 

 

2,468,187

 

 

 

1,921,705

 

Non-controlling interest

 

 

137,779

 

 

 

11,298

 

Total shareholders' equity

 

 

2,605,966

 

 

 

1,933,003

 

Total liabilities and shareholders' equity

 

$

6,593,054

 

 

$

7,409,331

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-3


Paysafe Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(U.S. dollars in thousands)

 

 

 

Common

shares

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Accumulated

other

comprehensive

income / (loss)

 

 

Shareholders'

equity in the

Company

 

 

Non-

controlling

interest

 

 

Total

Shareholders'

equity

 

January 1, 2021

 

$

1,252

 

 

$

2,188,706

 

 

$

(265,834

)

 

$

(2,419

)

 

$

1,921,705

 

 

$

11,298

 

 

$

1,933,003

 

Net (loss) / income

 

 

-

 

 

 

-

 

 

 

(60,647

)

 

 

-

 

 

 

(60,647

)

 

 

118

 

 

 

(60,529

)

Loss on foreign currency translation, net of tax of $0

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,498

)

 

 

(8,498

)

 

 

-

 

 

 

(8,498

)

Contributions from non-controlling interest holders (see Note 17)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

26,000

 

 

 

26,000

 

Capital injection in Legacy Paysafe (See Note 17)

 

 

2

 

 

 

10,692

 

 

 

-

 

 

 

-

 

 

 

10,694

 

 

 

-

 

 

 

10,694

 

Shared based compensation, net of tax of $0

 

 

-

 

 

 

67,718

 

 

 

-

 

 

 

-

 

 

 

67,718

 

 

 

-

 

 

 

67,718

 

Share issuance, net of transaction expenses (See Note 2)

 

 

200

 

 

 

1,848,078

 

 

 

-

 

 

 

-

 

 

 

1,848,278

 

 

 

-

 

 

 

1,848,278

 

Capital reorganization (See Note 2)

 

 

(921

)

 

 

(2,447,879

)

 

 

-

 

 

 

-

 

 

 

(2,448,800

)

 

 

-

 

 

 

(2,448,800

)

Merger recapitalization (See Note 2)

 

 

190

 

 

 

1,258,401

 

 

 

-

 

 

 

-

 

 

 

1,258,591

 

 

 

100,081

 

 

 

1,358,672

 

March 31, 2021

 

$

723

 

 

$

2,925,716

 

 

$

(326,481

)

 

$

(10,917

)

 

$

2,589,041

 

 

$

137,497

 

 

$

2,726,538

 

Net income

 

 

-

 

 

 

-

 

 

 

6,597

 

 

 

-

 

 

 

6,597

 

 

 

188

 

 

 

6,785

 

Gain on foreign currency translation, net of tax of $0

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12,956

 

 

 

12,956

 

 

 

-

 

 

 

12,956

 

Shared based compensation, net of tax of $0

 

 

-

 

 

 

4,246

 

 

 

-

 

 

 

-

 

 

 

4,246

 

 

 

-

 

 

 

4,246

 

June 30, 2021

 

$

723

 

 

$

2,929,962

 

 

$

(319,884

)

 

$

2,039

 

 

$

2,612,840

 

 

$

137,685

 

 

$

2,750,525

 

Net loss / (income)

 

 

-

 

 

 

-

 

 

 

(147,200

)

 

 

-

 

 

 

(147,200

)

 

 

94

 

 

 

(147,106

)

Loss on foreign currency translation, net of tax of $0

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,602

)

 

 

(6,602

)

 

 

-

 

 

 

(6,602

)

Shared based compensation, net of tax of $0

 

 

-

 

 

 

9,149

 

 

 

-

 

 

 

-

 

 

 

9,149

 

 

 

-

 

 

 

9,149

 

September 30, 2021

 

$

723

 

 

$

2,939,111

 

 

$

(467,084

)

 

$

(4,563

)

 

$

2,468,187

 

 

$

137,779

 

 

$

2,605,966

 

 

 

 

Share

capital

 

 

Share

premium

 

 

Accumulated

deficit

 

 

Accumulated

other

comprehensive

loss

 

 

Shareholders'

equity in the

Company

 

 

Non-

controlling

interest

 

 

Total

Shareholders'

equity

 

January 1, 2020

 

$

1,252

 

 

$

2,188,706

 

 

$

(131,610

)

 

$

(602

)

 

$

2,057,746

 

 

$

5,961

 

 

$

2,063,707

 

Net (loss) / income

 

 

-

 

 

 

-

 

 

 

(69,292

)

 

 

-

 

 

 

(69,292

)

 

 

41

 

 

 

(69,251

)

Cumulative adjustment for adoption of credit loss accounting standard, net of tax

 

 

-

 

 

 

-

 

 

 

(7,509

)

 

 

-

 

 

 

(7,509

)

 

 

-

 

 

 

(7,509

)

Loss on foreign currency translation, net of tax of $0

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(11,041

)

 

 

(11,041

)

 

 

-

 

 

 

(11,041

)

March 31, 2020

 

$

1,252

 

 

$

2,188,706

 

 

$

(208,411

)

 

$

(11,643

)

 

$

1,969,904

 

 

$

6,002

 

 

$

1,975,906

 

Net (loss) / income

 

 

-

 

 

 

-

 

 

 

(15,901

)

 

 

-

 

 

 

(15,901

)

 

 

72

 

 

 

(15,829

)

Loss on foreign currency translation, net of tax of $0

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,601

)

 

 

(4,601

)

 

 

-

 

 

 

(4,601

)

Contributions from noncontrolling interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,336

 

 

 

5,336

 

June 30, 2020

 

$

1,252

 

 

$

2,188,706

 

 

$

(224,312

)

 

$

(16,244

)

 

$

1,949,402

 

 

$

11,410

 

 

$

1,960,812

 

Net loss

 

 

-

 

 

 

-

 

 

 

(38,127

)

 

 

-

 

 

 

(38,127

)

 

 

(495

)

 

 

(38,622

)

Gain on foreign currency translation, net of tax of $0

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,568

 

 

 

6,568

 

 

 

-

 

 

 

6,568

 

September 30, 2020

 

$

1,252

 

 

$

2,188,706

 

 

$

(262,439

)

 

$

(9,676

)

 

$

1,917,843

 

 

$

10,915

 

 

$

1,928,758

 

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-4


Paysafe Limited

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

(U.S. dollars in thousands)

 

 

 

Nine months ended September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(200,850

)

 

$

(123,702

)

Adjustments for non-cash items:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

197,408

 

 

 

203,132

 

Unrealized foreign exchange gain

 

 

(3,167

)

 

 

(8,843

)

Deferred tax benefit

 

 

(94,255

)

 

 

(39,324

)

Interest expense, net

 

 

81,494

 

 

 

5,552

 

Share based compensation

 

 

92,830

 

 

 

 

Other (income) / expense, net

 

 

(166,818

)

 

 

14,613

 

Impairment expense on intangible assets

 

 

324,145

 

 

 

123,804

 

Allowance for credit losses and other

 

 

13,611

 

 

 

42,518

 

(Gain) / loss on disposal of subsidiary and other assets, net

 

 

(28

)

 

 

359

 

Non-cash lease expense

 

 

7,192

 

 

 

7,847

 

Movements in working capital:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(26,862

)

 

 

(47,165

)

Prepaid expenses, other current assets, and related party receivables

 

 

(8,969

)

 

 

7,522

 

Settlement receivables, net

 

 

60,542

 

 

 

10,636

 

Accounts payable, other liabilities, and related party payables

 

 

(6,850

)

 

 

(18,866

)

Funds payable and amounts due to customers

 

 

(176,091

)

 

 

3,322

 

Income tax payable

 

 

(732

)

 

 

(8,599

)

Net cash flows from operating activities

 

 

92,600

 

 

 

172,806

 

Cash flows in investing activities

 

 

 

 

 

 

 

 

Purchase of property, plant & equipment

 

 

(4,452

)

 

 

(2,303

)

Purchase of merchant portfolios

 

 

(48,533

)

 

 

(3,241

)

Cash outflows related to capital development and other intangibles

 

 

(57,083

)

 

 

(43,356

)

Acquisition of businesses, net of cash acquired

 

 

(119,177

)

 

 

(9,137

)

Net cash flows used in investing activities

 

 

(229,245

)

 

 

(58,037

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Net cash inflow from reorganization and recapitalization

 

 

1,167,874

 

 

 

 

Payment of equity issuance costs

 

 

(151,455

)

 

 

 

Proceeds from loans and borrowings

 

 

2,241,081

 

 

 

270,050

 

Repayments of loans and borrowings

 

 

(3,295,658

)

 

 

(323,264

)

Payment of debt issuance costs

 

 

(5,930

)

 

 

 

Payments under derivative financial instruments, net

 

 

(48,457

)

 

 

(3,259

)

Cash outflow on foreign exchange forward contract

 

 

(6,504

)

 

 

 

Proceeds under line of credit

 

 

450,000

 

 

 

346,867

 

Repayments under line of credit

 

 

(450,000

)

 

 

(328,230

)

Contingent consideration received

 

 

7,942

 

 

 

 

Contingent consideration paid

 

 

(4,497

)

 

 

(4,359

)

Net cash flows used in financing activities

 

 

(95,604

)

 

 

(42,195

)

Effect of foreign exchange rate changes

 

 

(67,535

)

 

 

45,485

 

(Decrease) / increase in cash and cash equivalents, including customer accounts and other restricted cash during the period

 

$

(299,784

)

 

$

118,059

 

Less: Net decrease in cash and cash equivalents classified within current assets held for sale

 

$

 

 

$

(2,250

)

Net (decrease) / increase in cash and cash equivalents, including customer accounts and other restricted cash during the year

 

$

(299,784

)

 

$

115,809

 

Cash and cash equivalents, including customer accounts and other restricted cash at beginning of the period (1)

 

 

1,763,852

 

 

 

1,382,361

 

Cash and cash equivalents at end of the period, including customer accounts and other restricted cash

 

$

1,464,068

 

 

$

1,498,170

 

 

(1)

Cash and cash equivalents, including customer accounts and other restricted cash, as of January 1, 2020 decreased by $2,788 as a result of the cumulative-effect adjustment to Customer accounts and other restricted cash for the adoption of the ASC 326 Financial Instruments - Credit Losses (See Note 8).

 

 

 

Nine months ended September 30,

 

 

 

2021

 

 

2020

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

62,797

 

 

$

117,780

 

Cash paid for Income taxes, net

 

$

28,882

 

 

$

9,850

 

 

F-5


 

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,

 

 

 

2021

 

 

2020

 

Cash and cash equivalents

 

$

262,267

 

 

$

298,800

 

Customer accounts and other restricted cash, net

 

 

1,201,801

 

 

 

1,199,370

 

Total cash and cash equivalents, including customer accounts and other restricted cash, net

 

$

1,464,068

 

 

$

1,498,170

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

F-6


 

Paysafe Limited
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except per share data)

 

1.

Basis of presentation and summary of significant accounting policies

Description of the Business and Basis of Presentation

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.

The Company provides payment solutions through three primary lines of business that represent our reporting segments: Integrated Processing, Digital Wallet and eCash Solutions. Our Integrated Processing business is focused on card not present and card present solutions for small to medium size business merchants. The Digital Wallet business provides wallet based online payment solutions through our Skrill and NETELLER brands; and our eCash Solutions business enables consumers to use cash to facilitate online purchases through our paysafecard prepaid vouchers. With over 20 years of online payment experience, the Company connects businesses and consumers across 70 payment types in over 40 currencies around the world. The Company provides these payment solutions in the following principal verticals; e-commerce, on-line gambling, and on-line gaming; the principal markets being in North America and Europe.  

Paysafe Limited was originally incorporated as an exempted limited company under the laws of Bermuda on November 23, 2020 for purposes of acquiring Foley Trasimene Acquisition Corp. II (“FTAC”).  FTAC was originally incorporated in the State of Delaware on July 15, 2020 as a special purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar transaction with one or more businesses. FTAC completed its Initial Public Offering (“IPO”) in August 2020.  

On December 7, 2020, Paysafe Limited, FTAC, Merger Sub Inc., (a Delaware corporation and direct, wholly owned subsidiary of Paysafe Limited, herein referred to as “Merger Sub”), Paysafe Bermuda Holding LLC (a Bermuda exempted limited liability company and direct, wholly owned subsidiary of Paysafe Limited, herein referred to as “LLC”), Pi Jersey Holdco 1.5 Limited (a private limited company incorporated under the laws of Jersey, Channel Islands on November 17, 2017, herein referred to as “Legacy Paysafe” or “Accounting Predecessor”), and Paysafe Group Holdings Limited (a private limited company incorporated under the laws of England and Wales, herein referred to as “PGHL”), entered into a definitive agreement and plan of merger which was consummated on March 30, 2021. This is further discussed in Note 2 under Reorganization and Recapitalization (the “Transaction”).  In connection with the Transaction, the Company’s common shares and warrants were listed on the New York Stock Exchange under the symbols PSFE and PSFE.WS, respectively.

Prior to the Transaction, Legacy Paysafe was a direct, wholly owned subsidiary of Paysafe Group Holdings Limited and was primarily owned by funds advised by affiliates of CVC Capital Partners (such funds collectively, “CVC”) and The Blackstone Group Inc. (“Blackstone”). This ownership was through the ultimate parent entity, Pi Jersey Topco Limited (“Topco” or the “Ultimate Parent”), who directly wholly owns PGHL.  As a result of the Transaction, Legacy Paysafe is a wholly owned subsidiary of the Company.  Subsequent to the Transaction, Topco, CVC and Blackstone retain ownership in the Company but do not have a controlling interest.

As of September 30, 2020, the assets and liabilities of Payolution GmbH (“Paylater”), a wholly owned subsidiary within the Integrated Processing Solutions segment, were classified as held for sale. As of September 30, 2020, the assets and liabilities held for sale were being marketed for sale and it was the Company’s intention to complete the sales of these assets within twelve months. The disposition of this subsidiary occurred in October 2020 and did not qualify for discontinued operations as it did not represent a major line of business within the Company.

The accompanying unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2021 include the accounts of the Company, and its subsidiaries, based upon information of Paysafe Limited after giving effect to the transaction with FTAC completed on March 30, 2021.  The comparative financial information for the three and nine months ended September 30, 2020 and for the year ended December 31, 2020 is based upon information of Pi Jersey Holdco 1.5 Limited, prior to giving effect to the Transaction. Prior to the Transaction, Paysafe Limited had no material operations, assets or liabilities.  

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. Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any other interim period.

 

These unaudited 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, 2020 on Form 20-F filed on April 1, 2021.

F-7


In March 2020, an outbreak of a novel strain of the coronavirus (referred to as COVID-19) occurred and developed such that on March 11, 2020, the World Health Organization has characterized the outbreak as a pandemic. As a result of the COVID-19 pandemic, we experienced slowed growth or decline in new demand for our products and services and lower demand from our existing merchants, which contributed, in part, to intangible impairments and an increase in expected credit losses in the prior year.  The Company continues to revise and update the carrying values of its assets or liabilities based on estimates, judgments and circumstances it is aware of, particularly, the expected impact of COVID-19. While the COVID-19 pandemic continues to have ongoing global effects, for the three and nine months ended September 30, 2021, there have been no material impacts on our estimates, but facts and circumstances could change and impact our estimates and affect our results of operations in future periods.

Disaggregation of Revenue

 

The Company provides payment solutions through three primary lines of business: Integrated Processing, Digital Wallet and eCash Solutions. 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. As a result of the concentration of revenue streams within each of the primary lines of business, the Company does not disaggregate revenue below this level. These revenue streams align with our segments and the resulting segment disclosures (See Note 16).

 

We do not have any contract balances associated with our contracts with customers as of September 30, 2021 and December 31, 2020.  The Company has applied the practical expedient to exclude disclosure of remaining performance obligations as the Company's contracts typically have a term of one year or less.

 

Significant accounting policies

 

There have been no material changes in our significant accounting policies during the nine months ended September 30, 2021, except as described in Note 2 as it relates to the accounting for the Warrants. A detailed discussion of our significant accounting policies is included within the audited consolidated financial statements for the year ended December 31, 2020 on Form 20-F filed on April 1, 2021.

Recent Accounting Pronouncements

Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The amendments in this ASU are intend