SEC Info - Everi Holdings Inc. - ‘10-K’ for 12/31/22

2022

2021

ASSETS

Current assets

Cash and cash equivalents

i 293,394

i 302,009

Settlement receivables

i 263,745

i 89,275

Trade and other receivables, net of allowances for credit losses of $ i 4,855 and $ i 5,161 at December 31, 2022 and December 31, 2021, respectively

i 118,895

i 104,822

Inventory

i 58,350

i 29,233

Prepaid expenses and other current assets

i 38,822

i 27,299

Total current assets

i 773,206

i 552,638

Non-current assets

Property and equipment, net

i 133,645

i 119,993

Goodwill

i 715,870

i 682,663

Other intangible assets, net

i 238,275

i 214,594

Other receivables

i 27,757

i 13,982

Deferred tax assets, net

i 1,584

i 32,121

Other assets

i 27,906

i 19,659

Total non-current assets

i 1,145,037

i 1,083,012

Total assets

i 1,918,243

i 1,635,650

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Settlement liabilities

i 467,903

i 291,861

Accounts payable and accrued expenses

i 217,424

i 173,933

Current portion of long-term debt

i 6,000

Total current liabilities

i 691,327

i 471,794

Non-current liabilities

Deferred tax liabilities, net

i 5,994

i —

Long-term debt, less current portion

i 971,995

i 975,525

Other accrued expenses and liabilities

i 31,286

i 13,831

Total non-current liabilities

i 1,009,275

i 989,356

Total liabilities

i 1,700,602

i 1,461,150

Commitments and contingencies (Note 13)

Stockholders’ equity

Common stock, $ i i 0.001 / par value, i i 500,000 / shares authorized and i 119,390 and i 88,036 shares issued and outstanding at December 31, 2022, respectively, and i 116,996 and i 91,313 shares issued and outstanding at December 31, 2021, respectively

i 119

i 117

Convertible preferred stock, $ i i 0.001 / par value, i i 50,000 / shares authorized and i i no / shares outstanding at December 31, 2022 and December 31, 2021, respectively

i —

Additional paid-in capital

i 527,465

i 505,757

Accumulated deficit

( i 21,266)

( i 141,755)

Accumulated other comprehensive loss

( i 4,197)

( i 1,455)

Treasury stock, at cost, i 31,353 and i 25,683 shares at December 31, 2022 and December 31, 2021, respectively

( i 284,480)

( i 188,164)

Total stockholders’ equity

i 217,641

i 174,500

Total liabilities and stockholders’ equity

i 1,918,243

i 1,635,650

See notes to consolidated financial statements.

EVERI HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

2022

2021

2020

Cash flows from operating activities

Net income (loss)

i 120,489

i 152,925

( i 81,680)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation

i 66,801

i 61,487

i 67,459

Amortization

i 59,558

i 57,987

i 75,305

Non-cash lease expense

i 4,847

i 4,401

i 4,880

Amortization of financing costs and discounts

i 2,854

i 3,937

i 4,283

Loss on sale or disposal of assets

i 591

i 1,658

i 450

Accretion of contract rights

i 9,578

i 9,318

i 7,675

Provision for credit losses

i 10,115

i 7,540

i 8,010

Deferred income taxes

i 32,618

( i 52,077)

( i 6,579)

Reserve for inventory obsolescence

i 792

i 2,275

i 2,166

Write-down of assets

i —

i 13,068

Loss on extinguishment of debt

i —

i 34,389

i 7,457

Stock-based compensation

i 19,789

i 20,900

i 13,036

Other non-cash items

i —

i 53

i 456

Changes in operating assets and liabilities:

Settlement receivables

( i 174,604)

( i 28,624)

i 9,881

Trade and other receivables

( i 30,974)

( i 37,617)

i 8,621

Inventory

( i 26,314)

( i 3,755)

( i 5,650)

Prepaid expenses and other assets

( i 25,717)

( i 10,219)

( i 4,301)

Settlement liabilities

i 176,274

i 118,651

( i 61,133)

Accounts payable and accrued expenses

i 25,944

i 48,401

( i 27,225)

Net cash provided by operating activities

i 272,641

i 391,630

i 36,179

Cash flows from investing activities

Capital expenditures

( i 127,568)

( i 104,708)

( i 76,429)

Acquisitions, net of cash acquired

( i 51,450)

( i 16,000)

( i 15,000)

Proceeds from sale of property and equipment

i 227

i 261

i 396

Placement fee agreements

( i 547)

( i 31,465)

( i 3,085)

Net cash used in investing activities

( i 179,338)

( i 151,912)

( i 94,118)

EVERI HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

2022

2021

2020

Cash flows from financing activities

Proceeds from new term loan

i —

i 600,000

i —

Repayments of new term loan

( i 6,000)

( i 1,500)

i —

Repayments of prior term loan

i —

( i 735,500)

( i 13,500)

Proceeds from prior incremental term loan

i —

i 125,000

Repayment of prior incremental term loan

i —

( i 124,375)

( i 625)

Proceeds from prior revolver

i —

i 35,000

Repayments of prior revolver

i —

( i 35,000)

Proceeds from 2021 unsecured notes

i —

i 400,000

i —

Repayments of 2017 unsecured notes

i —

( i 285,381)

( i 89,619)

Fees associated with debt transactions — new debt

i —

( i 19,797)

i —

Fees associated with debt transactions — prior debt

i —

( i 20,828)

( i 11,128)

Proceeds from exercise of stock options

i 1,921

i 18,251

i 6,226

Treasury stock - restricted share vestings and withholdings

( i 11,969)

( i 9,354)

( i 1,288)

Treasury stock - repurchase of shares

( i 84,347)

i —

Payment of acquisition contingent consideration

( i 173)

( i 9,875)

i —

Net cash (used in) provided by financing activities

( i 100,568)

( i 188,359)

i 15,066

Effect of exchange rates on cash and cash equivalents

( i 1,398)

i 18

( i 1,388)

Cash, cash equivalents and restricted cash

Net (decrease) increase for the period

( i 8,663)

i 51,377

( i 44,261)

Balance, beginning of the period

i 303,726

i 252,349

i 296,610

Balance, end of the period

i 295,063

i 303,726

i 252,349

Year Ended December 31,

2022

2021

2020

Supplemental cash disclosures

Cash paid for interest

i 54,749

i 51,224

i 67,562

Cash paid for income tax, net of refunds

i 4,522

i 1,062

i 576

Supplemental non-cash disclosures

Accrued and unpaid capital expenditures

i 3,222

i 3,690

i 2,801

Transfer of leased gaming equipment to inventory

i 9,588

i 8,782

i 5,775

See notes to consolidated financial statements.

EVERI HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands)

Common Stock—
Series A

Additional

Accumulated
Other

Total

Number of
Shares

Amount

Paid-in
Capital

Accumulated
Deficit

Comprehensive Loss

Treasury
Stock

Equity (Deficit)

Balance, January 1, 2020

i 109,493

i 109

i 445,162

( i 212,940)

( i 819)

( i 177,524)

i 53,988

Net loss

—

( i 81,680)

—

( i 81,680)

Foreign currency translation

—

( i 372)

—

( i 372)

Issuance of warrants

—

i 502

—

i 502

Stock-based compensation expense

—

i 14,726

—

i 14,726

Exercise of options

i 1,474

i 2

i 6,224

—

i 6,226

Restricted share vestings and withholdings

i 905

i 1

—

( i 1,289)

( i 1,288)

Balance, December 31, 2021

i 111,872

i 112

i 466,614

( i 294,620)

( i 1,191)

( i 178,813)

( i 7,898)

Net income

—

i 152,925

—

i 152,925

Dissolution adjustment

—

( i 60)

—

( i 60)

Foreign currency translation

—

( i 264)

—

( i 264)

Stock-based compensation expense

—

i 20,900

—

i 20,900

Exercise of warrants

i 378

—

i —

Exercise of options

i 3,180

i 3

i 18,248

—

i 18,251

Restricted share vestings and withholdings

i 1,566

i 2

( i 5)

—

( i 9,351)

( i 9,354)

Balance, December 31, 2021

i 116,996

i 117

i 505,757

( i 141,755)

( i 1,455)

( i 188,164)

i 174,500

Net income

—

i 120,489

—

i 120,489

Foreign currency translation

—

( i 2,742)

—

( i 2,742)

Stock-based compensation expense

—

i 19,789

—

i 19,789

Exercise of options

i 333

—

i 1,921

—

i 1,921

Restricted share vestings and withholdings

i 2,061

i 2

( i 2)

—

( i 11,969)

Repurchase of shares

—

( i 84,347)

Balance, December 31, 2022

i 119,390

i 119

i 527,465

( i 21,266)

( i 4,197)

( i 284,480)

i 217,641

See notes to consolidated financial statements.

EVERI HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In this filing, we refer to: (i) our audited consolidated financial statements and notes thereto as our “Financial Statements”; (ii) our audited Consolidated Statements of Operations and Comprehensive Income (Loss) as our “Statements of Operations”; and (iii) our audited Consolidated Balance Sheets as our “Balance Sheets.”

1. i BUSINESS

Everi Holdings Inc. (“Everi Holdings,” or “Everi”) is a holding company, the assets of which are the issued and outstanding shares of capital stock of each of Everi Payments Inc. (“Everi FinTech” or “FinTech”) and Everi Games Holding Inc., which owns all of the issued and outstanding shares of capital stock of Everi Games Inc. (“Everi Games” or “Games”). Unless otherwise indicated, the terms the “Company,” “we,” “us,” and “our” refer to Everi Holdings together with its consolidated subsidiaries.

Everi reports its financial performance, and organizes and manages its operations, across the following i two business segments: (i) Games and (ii) Financial Technology Solutions (“FinTech”).

Impact of COVID-19, Macro-Economic Volatility and Global Instability, Employment Constraints and Supply Chain Disruptions

We continue to monitor the remaining effects of COVID-19 and believe we are prepared to respond appropriately to the extent additional variants surface that disrupt our business.

We have experienced an impact from supply chain disruptions that have resulted in additional costs incurred to develop, produce, and ship our products.

2. i BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

i The consolidated financial statements are prepared under U.S. Generally Accepted Accounting Principles (GAAP) and include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Business Combinations

i When we acquire a business, we recognize the assets acquired and the liabilities assumed, at their acquisition date fair values. Goodwill is measured and recognized as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are preliminary and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset over its estimated useful life. As a result, up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill (referred to as the measurement period). In addition, deferred tax assets, deferred tax liabilities, uncertain tax positions, and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date and any adjustments to preliminary estimates are recorded to goodwill, in the period of identification, if identified within the measurement period. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the Statements of Operations.

Cash and Cash Equivalents

i Cash and cash equivalents include cash and balances on deposit in banks and financial institutions. We consider highly liquid investments with maturities of three months or less at the time of purchase to be cash and cash equivalents. Such balances generally exceed the federal insurance limits; however, we periodically evaluate the creditworthiness of these institutions to minimize risk.

ATM Funding Agreements

We obtain all of the cash required to operate our ATMs through various ATM Funding Agreements. Some gaming operators provide the cash utilized within the ATM (“Site-Funded”). The Site-Funded receivables generated for cash dispensed from transactions performed at our ATMs are owned by us and we are liable to the gaming operator for the face amount of the cash dispensed. In our Balance Sheets, the amount of the receivable for transactions processed on these funds dispensed transactions is included within settlement receivables and the amount due to the gaming operator for the face amount of dispensing transactions is included within settlement liabilities.

For the non-Site-Funded locations, we enter into commercial arrangements with third party vendors to provide us the currency needed for normal operating requirements for our ATMs. For the use of these funds, we pay a cash usage fee based upon the target federal funds rate. Under these agreements, the currency supplied by the third-party vendors remains the sole property of these suppliers until funds are dispensed, at which time the third-party vendors obtain an interest in the corresponding settlement receivable. As the cash is an asset of these suppliers, it is therefore not reflected on our Balance Sheets. The usage fee for the cash supplied in these ATMs is included as interest expense in the Statements of Operations. Our rationale to record cash usage fees as interest expense is primarily due to the similar operational characteristics to a revolving line of credit, the fact that the fees are calculated on a financial index, and the fees are paid for access to a capital resource.

Settlement Receivables and Settlement Liabilities

i We provide cash settlement services to gaming operators related to our financial access services, which involve the movement of funds between various parties involved in these types of transactions. We receive reimbursement from the patron’s credit or debit card issuing financial institution for the amount owed to the gaming operator plus the fee charged to the patron. These activities result in amounts due to us at the end of each business day that we generally recover over the next few business days, which are classified as settlement receivables on our Balance Sheets. In addition, cash settlement services result in amounts due to gaming operators for the cash disbursed to patrons through the issuance of a negotiable instrument or through electronic settlement for the face amount provided to patrons that we generally remit over the next few business days, which are classified as settlement liabilities on our Balance Sheets.

Warranty Receivables

If a gaming operator chooses to have a check warranted, it sends a request to our third-party check warranty service provider, asking whether it would be willing to accept the risk of cashing the check. If the check warranty provider accepts the risk and warrants the check, the gaming operator negotiates the patron’s check by providing cash for the face amount of the check. If the check is dishonored by the patron’s bank upon presentment, the gaming operator invokes the warranty, and the check warranty service provider purchases the check from the gaming operator for the full check amount and then pursues collection activities on its own. In our Central Credit Check Warranty product under our agreement with the third-party service provider, we receive all of the check warranty revenue. We are exposed to risk for losses associated with any warranted items that cannot be collected from patrons issuing the items.

The warranty receivables amount is recorded in trade and other receivables, net on our Balance Sheets. On a monthly basis, the Company evaluates the collectability of the outstanding balances and establishes a reserve for the face amount of the expected losses on these receivables. The warranty expense associated with this reserve is included within cost of revenues (exclusive of depreciation and amortization) on our Statements of Operations.

Allowance for Credit Losses

i We continually evaluate the collectability of outstanding balances and maintain an allowance for credit losses related to our trade and other receivables and notes receivable that have been determined to have a high risk of uncollectability, which represents our best estimates of the current expected credit losses to be incurred in the future. To derive our estimates, we analyze historical collection trends and changes in our customer payment patterns, current and expected conditions and market trends along with our operating forecasts, concentration, and creditworthiness when evaluating the adequacy of our allowance for credit losses. In addition, with respect to our check warranty receivables, we are exposed to risk for the losses associated with warranted items that cannot be collected from patrons issuing these items. We evaluate the collectability of the outstanding balances and establish a reserve for the face amount of the current expected credit losses related to these receivables. Account balances are charged against the provision when the Company believes it is probable the receivable will not be recovered. The provision for doubtful accounts receivable is included within operating expenses and the check warranty loss reserves are included within financial access services cost of revenues in the Statements of Operations.

Inventory

i Our inventory primarily consists of component parts as well as finished goods and work-in-progress. The cost of inventory includes cost of materials, labor, overhead and freight. The inventory is stated at the lower of cost or net realizable value and accounted for using the first in, first out method (“FIFO”).

Restricted Cash

i Our restricted cash primarily consists of: (i) funds held in connection with certain customer agreements; (ii) funds held in connection with a sponsorship agreement; (iii) wide-area progressive (“WAP”)-related restricted funds; and (iv) financial access activities related to cashless balances held on behalf of patrons. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Balance Sheets that sum to the total of the same such amounts shown in the statements of cash flows for the years ended December 31, 2022, 2021, and 2020, respectively (in thousands).

Year Ended December 31,

Classification on our Balance Sheets

2022

2021

2020

Cash and cash equivalents

i 293,394

i 302,009

i 251,706

Restricted cash — current

Prepaid expenses and other current assets

i 1,568

i 1,616

i 542

Restricted cash — non-current

Other assets

i 101

Total

i 295,063

i 303,726

i 252,349

Property and Equipment

i Property and equipment, which includes assets leased to customers, are stated at cost, less accumulated depreciation, and are computed using the straight-line method over the lesser of the lease term or estimated life of the related assets, generally one to i five years. Player terminals and related components and equipment are included in our rental pool. The rental pool can be further delineated as “rental pool – deployed,” which consists of assets deployed at customer sites under participation or fixed fee arrangements, and “rental pool – undeployed,” which consists of assets held by us that are available for customer use. Rental pool – undeployed also consists of previously deployed units currently back with us to be refurbished awaiting re- /

deployment. Routine maintenance of property, equipment and leased gaming equipment is expensed in the period incurred, while major component upgrades are capitalized and depreciated over the estimated remaining useful life of the component. Sales and retirements of depreciable property are recorded by removing the related cost and accumulated depreciation from the accounts. Gains or losses on sales and retirements of property are reflected in our Statements of Operations. Property, equipment and leased assets are reviewed for impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. Impairment is indicated when future cash flows, on an undiscounted basis, do not exceed the carrying value of the asset.

Placement Fee and Development Agreements

i We enter into placement fee and, to a certain extent, development agreements to provide financing for the expansion of existing facilities, or for new gaming facilities. Funds provided under placement fee agreements are not reimbursed, while funds provided under development agreements are reimbursed to us, in whole, or in part. In return, the customer facility dedicates a percentage of its floor space to placement of our player terminals, and we receive a fixed percentage of those player terminals’ hold amounts per day over the term of the agreement, which is generally from i 12 to i 83 months. Certain of the agreements contain player terminal performance standards that could allow the facility to reduce a portion of our guaranteed floor space. In addition, certain development agreements allow the facilities to buy out floor space after advances that are subject to repayment have been repaid. The agreements typically provide for a portion of the amounts retained by the gaming facility for their share of the operating profits of the facility to be used to repay some or all of the advances recorded as notes receivable. /

Goodwill

Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. We test for impairment annually on a reporting unit basis, at the beginning of our fourth fiscal quarter and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The annual impairment test is completed using either: a qualitative “Step 0” assessment based on reviewing relevant events and circumstances; or a quantitative “Step 1” assessment, which determines the fair value of the reporting unit, using both an income approach that discounts future cash flows based on the estimated future results of our reporting units and a market approach that compares market multiples of comparable companies to determine whether or not any impairment exists. To the extent the carrying amount of a reporting unit is less than its estimated fair value, an impairment charge is recorded.

The evaluation of impairment of goodwill requires the use of estimates about future operating results. Changes in forecasted operations can materially affect these estimates, which could materially affect our results of operations and financial condition. The estimates of expected future cash flows require significant judgment and are based on assumptions we determined to be reasonable; however, they are unpredictable and inherently uncertain, including, estimates of future growth rates, operating margins, and assumptions about the overall economic climate as well as the competitive environment within which we operate. There can be no assurance that our estimates and assumptions made for purposes of our impairment assessments as of the time of evaluation will prove to be accurate predictions of the future. If our assumptions regarding business plans, competitive environments or anticipated growth rates are not correct, we may be required to record non-cash impairment charges in future periods, whether in connection with our normal review procedures periodically, or earlier, if an indicator of an impairment is present prior to such evaluation.

Our reporting units are identified as operating segments or one level below. Reporting units must: (i) engage in business activities from which they earn revenues and incur expenses; (ii) have operating results that are regularly reviewed by our segment management to ascertain the resources to be allocated to the segment and assess its performance; and (iii) have discrete financial information available. As of December 31, 2022, our reporting units included: (i) Games; (ii) Financial Access Services; (iii) Kiosk Sales and Services; (iv) Central Credit Services; (v) Compliance Sales and Services; (vi) Loyalty Sales and Services, and (vii) Mobile Technologies.

Other Intangible Assets

i Other intangible assets are stated at cost, less accumulated amortization, and are computed primarily using the straight-line method. Other intangible assets consist primarily of: (i) customer relationships (rights to provide Games and FinTech services to gaming operator customers), developed technology, trade names and trademarks, acquired through business combinations and contract rights; and (ii) capitalized software development costs. Customer relationships require us to make renewal assumptions, which impact the estimated useful lives of such assets. Capitalized software development costs require us to make certain judgments as to the stages of development and costs eligible for capitalization. Capitalized software costs placed in service are amortized over their useful lives, generally not to exceed i six years. We review intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business or market price of the asset, a significant adverse change in legal factors or business climate that could affect the value of an asset, or a current period operating or cash flow loss combined with a history of operating or cash flow losses. We group intangible assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of definite lived intangible assets is measured by a comparison of the carrying amount of the asset to future net cash flows expected to be generated by the asset, on an undiscounted basis and without interest or taxes. Any impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. /

Debt Issuance Costs

i Debt issuance costs incurred in connection with long-term borrowings are capitalized and amortized to interest expense based upon the related debt agreements using the straight-line method, which approximates the effective interest method. Debt issuance costs related to line-of-credit arrangements are included in other assets, non-current, on our Balance Sheets. All other debt issuance costs are included as contra-liabilities in long-term debt.

Revenue Recognition

Overview

We evaluate the recognition of revenue based on the criteria set forth in Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers and ASC 842 — Leases, as appropriate. We recognize revenue upon transferring control of goods or services to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We enter into contracts with customers that include various performance obligations consisting of goods, services, or combinations of goods and services. Timing of the transfer of control varies based on the nature of the contract. We recognize revenue net of any sales and other taxes collected from customers, which are subsequently remitted to governmental authorities and are not included in revenues or operating expenses. We measure revenue based on the consideration specified in a contract with a customer and adjusted, as necessary.

Collectability

To assess collectability, we determine whether it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services transferred to the customer in accordance with the terms and conditions of the contract. In connection with these procedures, we evaluate the customer using internal and external information available, including, but not limited to, research and analysis of our credit history with the customer. Based on the nature of our transactions and historical trends, we determine whether our customers have the ability and intention to pay the amounts of consideration when they become due to identify potentially significant credit risk exposure.

Contract Combinations - Multiple Promised Goods and Services

Our contracts may include various performance obligations for promises to transfer multiple goods and services to a customer, especially since our Games and FinTech businesses may enter into multiple agreements with the same customer that meet the criteria to be combined for accounting purposes under ASC 606. When this occurs, a Stand-Alone Selling Price (“SSP”) will be determined for each performance obligation in the combined arrangement, and the consideration will be allocated between the respective performance obligations. The SSP of our goods and services is generally determined based on observable prices, an adjusted market assessment approach, or an expected cost-plus margin approach. We utilize a residual approach only when the SSP for performance obligations with observable prices has been established and the remaining performance obligation in the contract with a customer does not have an observable price as it is uncertain or highly variable and, therefore, is not discernible. We use our judgment to analyze the nature of the promises made and determine whether each is distinct or should be combined with other promises in the contract based on the level of integration and interdependency between the individual deliverables.

Disaggregation of Revenues

We disaggregate revenues based on the nature and timing of the cash flows generated by such revenues as presented in “Note 18 — Segment Information.”

Outbound Freight Costs, Installation and Training

Upon transferring control of goods to a customer, the shipping and handling costs in connection with sale transactions are generally accounted for as fulfillment costs and included in cost of revenues.

Our performance of installation and training services relating to the sales of gaming equipment and systems and FinTech equipment does not modify the software or hardware in those equipment and systems. Such installation and training services are generally immaterial in the context of the contract; and therefore, such items do not represent a separate performance obligation.

Costs to Acquire a Contract with a Customer

We typically incur incremental costs to acquire customer contracts in the form of sales commissions; however, because the expected benefit from these contracts is one year or less, we expense these amounts as incurred.

Contract Balances

Since our contracts may include multiple performance obligations, there is often a timing difference between cash collections and the satisfaction of such performance obligations and revenue recognition. Such arrangements are evaluated to determine whether contract assets and liabilities exist. We generally record contract assets when the timing of billing differs from when revenue is recognized due to contracts containing specific performance obligations that are required to be met prior to a customer being invoiced. We generally record contract liabilities when cash is collected in advance of us satisfying performance obligations, including those that are satisfied over a period of time. Balances of our contract assets and contract liabilities may fluctuate due to timing of cash collections.

The following table summarizes our contract assets and contract liabilities arising from contracts with customers (in thousands):

Year Ended December 31,

2022

2021

Contract assets (1)

Balance at January 1 — current

i 9,927

i 9,240

Balance at January 1 — non-current

i 5,294

i 8,321

Total

i 15,221

i 17,561

Balance at December 31 — current

i 12,561

i 9,927

Balance at December 31 — non-current

i 9,856

i 5,294

Total

i 22,417

i 15,221

Increase (Decrease)

i 7,196

( i 2,340)

Contract liabilities (2)

Balance at January 1 — current

i 36,238

i 26,980

Balance at January 1 — non-current

i 377

i 289

Total

i 36,615

i 27,269

Balance at December 31 — current

i 50,872

i 36,238

Balance at December 31 — non-current

i 2,547

i 377

Total

i 53,419

i 36,615

Increase

i 16,804

i 9,346

(1) The current portion of contract assets is included within trade and other receivables, net and the non-current portion is included within other receivables in our Balance Sheets.

(2) The current portion of contract liabilities is included within accounts payable and accrued expenses, and the non-current portion is included within other accrued expenses and liabilities in our Balance Sheets.

We recognized approximately $ i 27.5 million and $ i 21.3 million in revenue that was included in the beginning contract liability balance during 2022 and 2021, respectively.

Games Revenues

Our products and services include electronic gaming devices, such as Native American Class II offerings and other electronic bingo products, Class III slot machine offerings, HHR offerings, VLTs installed in the State of New York and similar technology in certain tribal jurisdictions, B2B digital online gaming activities, accounting and central determinant systems, and other back-office systems. We conduct our Games segment business based on results generated from the following major revenue streams: (i) Gaming Operations; and ii) Gaming Equipment and Systems.

Gaming Operations

We primarily provide: (i) leased gaming equipment, both Class II and Class III offerings, and HHR on a participation or a daily fixed-fee basis, including standard games and hardware and premium games and hardware, inclusive of local-area progressive, and WAP; (ii) accounting and central determinant systems; and (iii) digital online gaming activities. We evaluate the recognition of lease revenues based on criteria set forth in ASC 842. Under these arrangements, we retain ownership of the machines installed at customer facilities. We recognize recurring rental income over time based on a percentage of the net win per day generated by the leased gaming equipment or a daily fixed fee based on the timing services are provided. Such revenues are generated daily and are limited to the lesser of the net win per day generated by the leased gaming equipment or the fixed daily fee and the lease payments that have been collected from the lessee. Gaming operations revenues generated by leased gaming equipment deployed at sites under placement fee agreements give rise to contract rights, which are amounts recorded to intangible assets for dedicated floor space resulting from such agreements. The gaming operations revenues generated by these arrangements are reduced by the accretion of contract rights, which represents the related amortization of the contract rights recorded in connection with such agreements. Gaming operations lease revenues accounted for under ASC 842 are generally short-term in nature with payment terms ranging from i 30 to i 90 days. We recognized $ i 197.9 million, $ i 189.8 million, and $ i 116.1 million in lease revenues for the years ended December 31, 2022, 2021, and 2020, respectively.

Gaming operations revenues include amounts generated by WAP systems, which are recognized under ASC 606. WAP consists of linked slot machines located in multiple casino properties that are connected to a central system. WAP-based gaming machines have a progressive jackpot administered by us that increases with every wager until a player wins the top award combination. Casino operators pay us a percentage of the coin-in (the total amount wagered), a percentage of net win, or a combination of both for services related to the design, assembly, installation, operation, maintenance, administration, and marketing of the WAP offering. The gaming operations revenues with respect to WAP machines represent a separate performance obligation and we transfer control and recognize revenue over time based on a percentage of the coin-in, a percentage of net win, or a combination of both, based on the timing services are provided. These arrangements are generally short-term in nature with a majority of invoices payable within i 30 to i 90 days. Such revenues are presented in the Statements of Operations, net of the jackpot expense, which are composed of incremental amounts funded by a portion of coin-in from the players. At the time a jackpot is won by a player, an additional jackpot expense is recorded in connection with the base seed amount required to fund the minimum level as set forth in the WAP arrangements with the casino operators.

In addition, gaming operations include revenues generated under our arrangement to provide the New York State Gaming Commission (the “NYSGC”) with a central determinant monitoring and accounting system for the VLTs in operation at licensed State of New York gaming facilities. Pursuant to our agreement with the NYSGC, we receive a portion of the network-wide net win (generally, cash-in less prizes paid) per day in exchange for provision and maintenance of the central determinant system and recognize revenue over time, based on the timing services are provided. We also provide the central determinant system technology to Native American tribes in other licensed jurisdictions, for which we receive a portion of the revenue generated from the VLTs connected to the system. These arrangements are generally short-term in nature with payments due monthly.

Gaming operations also include revenues generated by our digital solutions comprised of B2B activities. Our B2B operations provide games to our business customers, including both regulated real money and social casinos, which offer the games to consumers on their apps. Our B2B arrangements primarily provide access to our game content, and revenue is recognized over time as the control transfers upon our business partners’ daily access to such content based on either a flat fee or revenue share arrangements with the social and regulated real money casinos, based on the timing services are provided.

Gaming operations also include other revenues that are generated from fees paid by casino customers that participate in our TournEvent of Champions® national slot tournament or who contract with us to provide certain service functions on games that are owned by the customer.

Gaming Equipment and Systems

Gaming equipment and systems revenues are derived from the sale of some combination of: (i) gaming equipment and player terminals; (ii) game content; (iii) license fees; and (iv) ancillary equipment, such as signage and lighting packages. Such arrangements are predominately short-term in nature with payment terms ranging from i 30 to i 180 days, and with certain agreements providing for extended payment terms up to i 39 months. Each contract containing extended payment terms over a period of 12 months is evaluated for the presence of a financing component; however, our contracts generally do not contain a financing component that has been determined to be significant to the contract. Distinct and thus, separately identifiable performance obligations for gaming equipment and systems arrangements include gaming equipment, player terminals, content, system software, license fees, ancillary equipment, or various combinations thereof. Gaming equipment and systems revenues are recognized at a point in time when control of the promised goods and services transfers to the customer, which is generally upon shipment or delivery pursuant to the terms of the contract. The performance obligations are generally satisfied at the same time or within a short period of time.

FinTech Revenues

Financial Access Services

Financial Access Services revenues are generally comprised of the following distinct performance obligations: funds advanced, funds dispensed, and check services. We do not control the funds advanced and funds dispensed services provided to a customer and, therefore, we are acting as an agent whose performance obligation is to arrange for the provision of these services. Our financial access services involve the movement of funds between the various parties associated with financial access transactions and give rise to settlement receivables and settlement liabilities, both of which are settled in days following the transaction.

Funds advance revenues are primarily comprised of transaction fees assessed to gaming patrons in connection with credit card financial access and POS debit card financial access transactions. Such fees are primarily based on a combination of a fixed amount plus a percentage of the face amount of the credit card financial access or POS debit card financial access transaction amount. In connection with these types of transactions, we report certain direct costs incurred as reductions to revenues on a net basis, which generally include: (i) commission expenses payable to casino operators; (ii) interchange fees payable to the network associations; and (iii) processing and related costs payable to other third-party partners.

Funds dispensed revenues are primarily comprised of transaction fees in the form of cardholder surcharges assessed to gaming patrons in connection with funds dispensed cash withdrawals at the time the transactions are authorized and interchange reimbursement fees paid to us by the patrons’ issuing banks. The cardholder surcharges assessed to gaming patrons in connection with funds dispensed cash withdrawals are currently a fixed dollar amount and not a percentage of the transaction amount. In connection with these types of transactions, we report certain direct costs incurred as reductions to revenues on a net basis, which generally include: (i) commission expenses payable to casino operators; (ii) interchange fees payable to the network associations; and (iii) processing and related costs payable to other third-party partners.

Funds transmitted revenues are primarily comprised of transaction fees assessed to gaming patrons in connection with funds transmitted to a patron’s external bank account or other approved account from a physical device such as our kiosks, or via the CashClub Wallet. In connection with these types of transactions, we report certain direct costs incurred as reductions to revenues on a net basis.

Check services revenues are principally comprised of check warranty revenues and are generally based upon a percentage of the face amount of checks warranted. These fees are paid to us by gaming operators. We report certain direct costs incurred as reductions to revenues on a net basis, which include: (i) warranty expenses, defined as amounts paid by the third-party check warranty service provider to gaming operators to purchase dishonored checks; and (ii) service fees, defined as amounts paid to the third-party check warranty service provider for its assistance.

For financial access services arrangements, since the customer simultaneously receives and consumes the benefits as the performance obligations occur, we recognize revenues as earned over a period of time using an output method depicting the transfer of control to the customer based on variable consideration, such as volume of transactions processed with variability generally resolved in the reporting period.

Software and Other

Software and other revenues include amounts derived from our financial access, loyalty kiosk, compliance, and loyalty related revenue streams from the sale of: (i) software licenses, software subscriptions, professional services, and certain other ancillary fees; (ii) service-related fees associated with the sale, installation, training, and maintenance of equipment directly to our customers under contracts, which are generally short-term in nature with payment terms ranging from i 30 to i 90 days, secured by the related equipment; (iii) credit worthiness-related software subscription services that are based upon either a flat monthly unlimited usage fee or a variable fee structure driven by the volume of patron credit histories generated; and (iv) ancillary marketing and database services. Software license revenues are recognized at a point in time; software subscriptions are recognized over the term of the contract.

Hardware

Hardware revenues are derived from the sale of our financial access and loyalty kiosks and related equipment and are accounted for under ASC 606, unless such transactions meet definition of a sales type or direct financing lease which are accounted for under ASC 842. Revenues are recognized at a point in time when control of the promised goods and services transfers to the customer generally upon shipment or delivery pursuant to the terms of the contract. The sales contracts are generally short-term in nature with payment terms ranging from i 30 to i 90 days, while certain agreements provide for extended payment terms of up to i 60 months. Each contract containing extended payment terms over a period of 12 months

is evaluated for the presence of a financing component; however, our contracts generally do not contain a financing component that has been determined to be significant to the contract.

Cost of Revenues (Exclusive of Depreciation and Amortization)

The cost of revenues (exclusive of depreciation and amortization) represents the direct costs required to perform revenue generating transactions. The costs included within cost of revenues (exclusive of depreciation and amortization) are comprised primarily of inventory and related costs associated with the sale of our financial access and loyalty kiosks and software, electronic gaming machines and system sale, check cashing warranties, field service, and network operations personnel.

Advertising, Marketing, and Promotional Costs

i We expense advertising, marketing, and promotional costs as incurred. Total advertising, marketing, and promotional costs, included in operating expenses in the Statements of Operations, were $ i 3.5 million, $ i 2.6 million, and $ i 1.3 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Research and Development Costs

i We conduct research and development activities for both our Games and FinTech segments. Our Gaming research and development activities are primarily to develop gaming systems, game engines, casino data management systems, central determination and other electronic bingo-outcome determination systems, video lottery outcome determination systems, gaming platforms and gaming content, and to enhance our existing product lines. Our FinTech research and development activities are primarily to develop: (i) payments products, systems, and related capabilities such as security, encryption and business rule engines that deliver differentiated patron experiences and integrate with our other products; (ii) compliance products that increase efficiencies, profitability, enhance employee/patron relationships, and meet regulatory reporting requirements; (iii) loyalty products, systems, and features that attract, engage, and retain patrons in more intuitive and contextual ways than our competition; (iv) cashless alternatives, such as the CashClub Wallet; and (v) mobile-first applications aimed at enhancing patron engagement for customers in the casino, sports, entertainment, and hospitality industries.

Research and development costs consist primarily of salaries and benefits, consulting fees, certification and testing fees. Once the technological feasibility has been established, the project is capitalized until it becomes available for general release.

Research and development costs were $ i 60.5 million, $ i 39.1 million, and $ i 27.9 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Income Taxes

We are subject to income taxes in the United States as well as various states and foreign jurisdictions in which we operate. We account for income taxes in accordance with accounting guidance whereby deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or income tax returns. Deferred tax assets and liabilities are determined based upon differences between financial statement carrying amounts of existing assets and their respective tax bases using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on the income tax provision and deferred tax assets and liabilities generally is recognized in the results of operations in the period that includes the enactment date. We evaluate the realization of our deferred tax assets based on all available evidence and establish a valuation allowance to reduce deferred tax assets when it is more likely than not that they will not be realized. This assessment considers all available positive and negative evidence, including our past operating results, forecasts of future earnings, the scheduled reversal of deferred tax liabilities, the duration of statutory carryforward periods and tax planning strategies.

We recognize tax benefits from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized is the largest benefit that we believe has greater than a 50% likelihood of being realized upon settlement.

Although we believe our assumptions, judgments and estimates are reasonable, changes in tax laws, and their interpretation, as well as the examination of our tax returns by taxing authorities, could significantly impact the amounts provided for income taxes in our consolidated financial statements. Our effective tax rate is affected by a number of factors including the actual results of operations, changes in our stock price for shares issued as employee compensation, changes in the valuation of our deferred tax assets or liabilities and changes in tax laws or rates for income taxes and other non-income taxes in various jurisdictions.

Employee Benefits Plan

i The Company provides a 401(k) Plan that allows employees to defer up to the lesser of the Internal Revenue Code prescribed maximum amount or i 75% of their income on a pre-tax basis through contributions to the plan. As a benefit to employees, the Company matches a percentage of these employee contributions (as defined in the plan document). / Expenses related to the matching portion of the contributions to the 401(k) Plan were $ i 4.6 million, $ i 2.6 million, and $ i 0.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Fair Values of Financial Instruments

i The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument.

The carrying amount of cash and cash equivalents, restricted cash, settlement receivables, short-term trade and other receivables, settlement liabilities, accounts payable, and accrued expenses approximate fair value due to the short-term maturities of these instruments. The fair value of the long-term trade and loans receivable is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. The fair value of long-term accounts payable is estimated by discounting the total obligation. As of December 31, 2022 and 2021, the fair value of trade and loan receivable approximated the carrying value due to contractual terms generally being slightly over i i 12 / months. The fair value of our borrowings is estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity, and similar instruments trading in more active markets.

The estimated fair value and outstanding balances of our borrowings are as follows (dollars in thousands):


	Level of Hierarchy	Fair Value		Outstanding Balance
December 31, 2022
$ i 600 million New Term Loan	2	$	i 588,560	$	i 592,500
$ i 400 million 2021 Unsecured Notes	2	$	i 346,000	$	i 400,000
December 31, 2021
$ i 600 million New Term Loan	2	$	i 598,171	$	i 598,500
$ i 400 million 2021 Unsecured Notes	2	$	i 404,000	$	i 400,000

The fair values of our borrowings were determined using Level 2 inputs based on quoted market prices for these securities.

Foreign Currency Translation

i Foreign currency denominated assets and liabilities for those foreign entities for which the local currency is the functional currency are translated into U.S. dollars based on exchange rates prevailing at the end of each year. Revenues and expenses are translated at average exchange rates during the year. The effects of foreign exchange gains and losses arising from these translations are included as a component of other comprehensive income (loss) in the Statements of Operations. Translation adjustments on intercompany balances of a long-term investment nature are recorded as a component of accumulated other comprehensive loss in our Balance Sheets.

Use of Estimates

i We have made estimates and judgments affecting the amounts reported in these financial statements and the accompanying notes in conformity with GAAP. The actual results may materially differ from these estimates.

Earnings Applicable to Common Stock

i Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the effect of potential common stock resulting from assumed stock option exercises and vesting of restricted stock unless it is anti-dilutive. To the extent we report a net loss from continuing operations in a particular period, no potential dilution from the application of the treasury stock method would be applicable.

Stock-Based Compensation

Stock-based compensation results in a cost that is measured at fair value on the grant date of an award. Generally, we issue grants that are classified as equity awards. To the extent we issue grants that are considered liability awards, they are remeasured at fair value at the end of each reporting period until settlement with changes being recognized as stock-based compensation cost with a corresponding adjustment recorded to the liability, either immediately or during the remaining service period depending on the vested status of the award. Generally, with respect to stock option awards granted under our plans, they expire i 10 years from the date of grant with the exercise price based on the closing market price of our common stock on the date of the grant.

Our restricted stock awards, restricted stock units, and performance-based stock units, are measured at fair value based on the closing stock price on the grant date. Our time-based stock option awards are measured at fair value on the grant date using the Black Scholes model. The stock-based compensation cost is recognized on a straight-line basis over the vesting period of the awards.

Forfeiture amounts are estimated at the grant date for stock awards and are updated periodically based on actual results, to the extent they differ from the estimates.

Acquisition-Related Costs

i We recognize a liability for acquisition-related costs when the expense is incurred. Acquisition-related costs include, but are not limited to: financial advisory, legal and debt fees; accounting, consulting and professional fees associated with due diligence, valuation and integration; severance; and other related costs and adjustments.

Reclassification of Balances

Certain amounts in the accompanying consolidated financial statements and accompanying notes have been reclassified to be consistent with the current year presentation. These reclassifications had no effect on net income for the prior periods.

Recent Accounting Guidance

Recently Adopted Accounting Guidance


Standard	Description	Date of Adoption	Effect on Financial Statements
ASU 2021-05, 'Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments	This ASU amends the lease classification requirements for lessors to align them with practice under ASC Topic 840.	January 1, 2022	The adoption of this ASU did not have a material effect on our Financial Statements or on our disclosures.
ASU 2021-08, 'Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers	This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.	January 1, 2022	The adoption of this ASU did not have a material effect on our Financial Statements or on our disclosures.
ASU 2022-06, 'Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848	These amendments extend the period of time preparers can utilize the reference rate reform relief guidance in Topic 848.	December 21, 2022	The adoption of this ASU did not have a material effect on our Financial Statements or on our disclosures.

Recent Accounting Guidance Not Yet Adopted

As of December 31, 2022, other than what has been described above, we do not anticipate recently issued accounting guidance to have a significant impact on our consolidated financial statements.

3. i i LEASES /

We determine if a contract is, or contains, a lease at the inception, or modification, of a contract based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of an asset is predicated upon the notion that a lessee has both the right to (i) obtain substantially all of the economic benefit from the use of the asset; and (ii) direct the use of the asset.

Operating lease right-of-use (“ROU”) assets and liabilities are recognized based on the present value of minimum lease payments over the expected lease term at commencement date. Lease expense is recognized on a straight-line basis over the expected lease term. Our lease arrangements have both lease and non-lease components, and we have elected the practical expedient to account for the lease and non-lease elements as a single lease.

Certain of our lease arrangements contain options to renew with terms that generally have the ability to extend the lease term to a range of approximately one to i ten years. The exercise of lease renewal options is generally at our sole discretion. The expected lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such option. The depreciable life of leased assets and leasehold improvements are limited by the expected term of such assets, unless there is a transfer of title or purchase option reasonably certain to be exercised.

Lessee

We enter into operating lease agreements for real estate purposes that generally consist of buildings for office space and warehouses for manufacturing purposes. Certain of our lease agreements consist of rental payments that are periodically adjusted for inflation. Our lease agreements do not contain material residual value guarantees or material restrictive covenants. Our lease agreements do not generally provide explicit rates of interest; therefore, we use our incremental collateralized borrowing rate, which is based on a fully collateralized and fully amortizing loan with a maturity date the same as the length of the lease that is based on the information available at the commencement date to determine the present value of lease payments. Leases with an initial expected term of 12 months or less (short-term) are not accounted for on our Balance Sheets. As of December 31, 2022 and December 31, 2021, our finance leases were not material.

Supplemental balance sheet information related to our operating leases is as follows (in thousands):

Classification on our Balance Sheets

Assets

Operating lease ROU assets

Other assets, non-current

i 17,169

i 12,692

Liabilities

Current operating lease liabilities

Accounts payable and accrued expenses

i 6,507

i 5,663

Non-current operating lease liabilities

Other accrued expenses and liabilities

i 14,738

i 11,869

/ i

Supplemental cash flow information related to leases is as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Cash paid for:
Long-term operating leases	$	i 6,885	$	i 6,675	$	i 6,411
Short-term operating leases	$	i 1,660	$	i 1,622	$	i 1,908
Right-of-use assets obtained in exchange for lease obligations:
Operating leases(1)	$	i 7,502	$	i 1,362	$	i 10,356

(1) The amounts are presented net of current year terminations and exclude amortization for the period.

Other information related to lease terms and discount rates is as follows:

Weighted Average Remaining Lease Term (in years):

Operating leases

i 3.37

i 3.52

Weighted Average Discount Rate:

Operating leases

i 4.72

i 5.04

Components of lease expense are as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Operating Lease Cost:
Operating lease cost (1)	$	i 6,008	$	i 5,474	$	i 5,770
Variable lease cost	$	i 1,164	$	i 1,267	$	i 1,682

(1) The amount includes approximately $ i 4.8 million, $ i 4.4 million and $ i 4.9 million in non-cash lease expense attributable to amortization of ROU assets for the years ended December 31, 2022, 2021 and 2020, respectively.

Maturities of lease liabilities are summarized as follows as of December 31, 2022 (in thousands):


Year ending December 31,	Amount
2023	$	i 7,330
2024	i 6,718
2025	i 5,855
2026	i 2,137
2027	i 608
Thereafter	i 359
Total future minimum lease payments	$	i 23,007
Amount representing interest	i 1,762
Present value of future minimum lease payments	$	i 21,245
Current operating lease obligations	i 6,507
Long-term lease obligations	$	i 14,738

As of December 31, 2022, the Company entered into a real estate lease that has not yet commenced with a term of i ten years and future minimum lease payments of approximately $ i 27.3 million.

Lessor

We generate lease revenues primarily from our gaming operations activities, and the majority of our leases are month-to-month leases. Under these arrangements, we retain ownership of the electronic gaming machines (“EGMs”) installed at customer facilities. We receive recurring revenues based on a percentage of the net win per day generated by the leased gaming equipment or a fixed daily fee. Such revenues are generated daily and are limited to the lesser of the net win per day generated by the leased gaming equipment or the fixed daily fee and the lease payments that have been collected from the lessee. Certain of our leases have terms and conditions with options for a lessee to purchase the underlying assets. Refer to “Note 2 — Basis of Presentation and Summary of Significant Accounting Policies” for further discussion of lease revenues. The cost of EGMs the Company is leasing to third-parties as of December 31, 2022 is approximately $ i 279.5 million.

We did not have material sales transactions that qualified for sales-type lease accounting treatment during the years ended December 31, 2022 and December 31, 2021.

Supplemental balance sheet information related to our sales-type leases is as follows (in thousands):

Classification on our Balance Sheets

Assets

Net investment in sales-type leases — current

Trade and other receivables, net

i 54

i 1,331

4. i BUSINESS COMBINATIONS

We account for business combinations in accordance with ASC 805 — Business Combinations, which requires that the identifiable assets acquired and liabilities assumed be recorded at their estimated fair values on the acquisition date separately from goodwill, which is the excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities. We include the results of operations of an acquired business starting from the acquisition date.

eCash Holdings Pty Limited

On March 1, 2022 (the “eCash Closing Date”), the Company acquired the stock of eCash Holdings Pty Limited and wholly-owned subsidiaries Global Payment Technologies Australia Pty Limited, and ACN 121 187 068 Pty Limited (collectively “eCash”), a privately owned, Australia-based developer and provider of innovative cash handling and financial payment solutions for the broader gaming industry in Australia, Asia, Europe, and the United States. The acquisition of eCash’s products and services represents a strategic extension of Everi’s current suite of financial technology solutions within the FinTech segment. The acquisition provides Everi with a complementary portfolio of new customer locations throughout Australia, the United States, and other geographies.

Under the terms of the stock purchase agreement, we paid the seller AUD$ i 20 million (approximately USD$ i 15 million) on the eCash Closing Date of the transaction and we will pay an additional AUD$ i 6.5 million i one year following the eCash Closing Date and another AUD$ i 6.5 million i two years following the eCash Closing Date. In addition, we paid approximately AUD$ i 8.7 million (approximately USD$ i 6.0 million) for the excess net working capital during the year ended December 31, 2022. As of December 31, 2022 we expect to receive a refund of approximately AUD$ i 1.0 million pursuant to the right of offset terms in the stock purchase agreement.

Pursuant to the arrangement, there is an earn-out provision of up to AUD$ i 10 million, to the extent certain growth targets are achieved in future periods. The payment, if any, is subject to certain employment restrictions and will be accounted for as compensation expense.

The acquisition did not have a significant impact on our results of operations or financial condition for the year ended December 31, 2022.

The total preliminary purchase consideration for eCash was as follows (in thousands, at fair value):


	Amount in USD
Purchase consideration
Cash consideration paid at closing	$	i 14,980
Cash consideration to be paid post-closing	i 14,916
Total purchase consideration	$	i 29,896

Cash consideration to be paid is comprised of a short-term component that is recorded in accounts payable and accrued expenses and a long-term component payable within i two years recorded in other accrued expenses and liabilities in our Balance Sheets.

The transaction was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The excess of the purchase price over those fair values was recorded as goodwill, which will be amortized over a period of i 15 years for tax purposes. The goodwill recognized is primarily attributable to the income potential from the expansion of our footprint in the gaming space by enhancing our financial technology solution portfolio to add new markets and business lines and an assembled workforce, among other strategic benefits.

The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates reflecting risk inherent in the future cash flows. The estimated fair values of assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as the Company finalizes its purchase price accounting. The significant items for which a final fair value has not been determined include, but are not limited to deferred income taxes. We do not expect our fair value determinations to materially change; however, there may be differences between the amounts recorded at the eCash Closing Date and the final fair value analysis, which we expect to complete no later than the first quarter of 2023.

i The information below reflects the amounts of identifiable assets acquired and liabilities assumed (in thousands):


	Amount in USD*
Current assets	$	i 11,977
Property and equipment	i 1,218
Other intangible assets	i 11,600
Goodwill	i 11,115
Other assets	i 947
Total Assets	i 36,857
Accounts payable and accrued expenses	i 6,816
Other accrued expenses and liabilities	i 145
Total liabilities	i 6,961
Net assets acquired	$	i 29,896

_______________________

*Reflects a measurement period adjustment of approximately $ i 0.5 million from the initial allocation as of the closing date of the transaction.

Current assets acquired included approximately $ i 2.8 million in cash. Trade receivables acquired of approximately $ i 5.7 million were short-term in nature and considered to be collectible, and therefore, the carrying amounts of these assets represented their fair values. Inventory acquired of approximately $ i 3.3 million consisted of raw materials and finished goods and was recorded at fair value based on the estimated net realizable value of these assets. Property, equipment, and leased assets acquired were not material in size or scope, and the carrying amounts of these assets approximated their fair values.

The following table summarizes preliminary values of acquired intangible assets (dollars in thousands):


	Useful Life (Years)	Estimated Fair Value (USD)
Other Intangible Assets
Trade name	i 3	$	i 700
Developed technology	i 3	i 3,600
Customer relationships	i 9	i 7,300
Total other intangible assets		$	i 11,600

The fair value of intangible assets was determined by applying the income approach. Other intangible assets acquired of approximately $ i 11.6 million were comprised of customer relationships, developed technology and trade name. The fair value of customer relationships of approximately $ i 7.3 million was determined by applying the income approach utilizing the excess earnings methodology based on Level 3 inputs in the fair value hierarchy including a discount rate of i 17% and estimated attrition rates. The fair value of developed technology of approximately $ i 3.6 million was determined by applying the income approach utilizing the relief from royalty methodology based on Level 3 inputs with a royalty rate of i 7.5% and a discount rate of i 17%. The fair value of trade name of approximately $ i 0.7 million was determined by applying the income approach utilizing the relief from royalty methodology based on Level 3 inputs with a royalty rate of i 2% and a discount rate of i 17%.

The financial results included in our Statements of Operations since the acquisition date and through December 31, 2022 reflected revenues of approximately $ i 14.9 million and net income of approximately $ i 1.2 million. We incurred acquisition-related costs of approximately $ i 0.9 million for the year ended December 31, 2022.

Intuicode Gaming Corporation

On April 30, 2022 (the “Intuicode Closing Date”), the Company acquired the stock of Intuicode Gaming Corporation (“Intuicode”), a privately owned game development and engineering firm focused on HHR games. The acquisition of Intuicode provides Everi with additional HHR expertise that will help the Company accelerate its growth in the expanding HHR market that will benefit the Games segment.

Under the terms of the stock purchase agreement, we paid the seller $ i 12.5 million on the Intuicode Closing Date of the transaction and a net working capital payment of $ i 1.6 million during the year ended December 31, 2022. In addition, we expect to pay approximately $ i 13.0 million in contingent consideration based upon the achievement of certain revenue targets

on the first and second anniversaries of the Intuicode Closing Date. As of December 31, 2022 we expect to receive a refund of approximately $ i 0.1 million pursuant to the right of offset terms in the stock purchase agreement.

The acquisition did not have a significant impact on our results of operations or financial condition for the year ended December 31, 2022.

The total preliminary purchase consideration for Intuicode was as follows (in thousands, at fair value):


	Amount
Purchase consideration
Cash consideration paid at closing	$	i 12,500
Cash consideration to be paid post-closing	i 1,478
Total cash consideration	i 13,978
Contingent consideration (at fair value)	i 12,150
Total purchase consideration	$	i 26,128

The fair value of the contingent consideration was based on Level 3 inputs utilizing a discounted cash flow methodology. The estimates and assumptions included projected future revenues of the acquired business and a discount rate of approximately i 5%. Contingent consideration to be paid is comprised of a short-term component that is recorded in accounts payable and accrued expenses and a long-term component payable within i two years recorded in other accrued expenses and liabilities in our Balance Sheets. The change in fair value of the contingent consideration between the acquisition date and year ended December 31, 2022 was not material.

The transaction was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The excess of the purchase price over those fair values was recorded as goodwill, which will be amortized over a period of i 15 years for tax purposes. The goodwill recognized is primarily attributable to the income potential from the expansion of our footprint in the gaming space by accelerating our entry into and growth in the expanding HHR market and business line, assembled workforce, among other strategic benefits.

The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates reflecting risk inherent in the future cash flows. The estimated fair values of assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as the Company finalizes its purchase price accounting. The significant items for which a final fair value has not been determined include, but are not limited to deferred income taxes. We do not expect our fair value determinations to materially change; however, there may be differences between the amounts recorded at the Intuicode Closing Date and the final fair value analysis, which we expect to complete no later than the second quarter of 2023.

The information below reflects the preliminary amounts of identifiable assets acquired and liabilities assumed as of the closing date of the transaction (in thousands):


	Amount
Current assets	$	i 3,827
Other intangible assets	i 18,757
Goodwill	i 10,422
Total Assets	i 33,006
Accounts payable and accrued expenses	i 2,407
Deferred tax liabilities	i 4,471
Total liabilities	i 6,878
Net assets acquired	$	i 26,128

Current assets acquired included approximately $ i 2.1 million in cash. Trade receivables acquired of approximately $ i 0.6 million were short-term in nature and considered to be collectible, and therefore, the carrying amounts of these assets represented their fair values. Inventory acquired of approximately $ i 0.2 million consisted of raw materials and finished goods and was recorded at fair value based on the estimated net realizable value of these assets. Property, equipment, and leased assets acquired were not material in size or scope, and the carrying amounts of these assets approximated their fair values.

The following table summarizes preliminary values of acquired intangible assets (dollars in thousands):


	Useful Life (Years)	Estimated Fair Value
Other Intangible Assets
Trade name	i 10	$	i 400
Developed technology	i 2	i 3,357
Customer relationships	i 9	i 15,000
Total other intangible assets		$	i 18,757

The fair value of intangible assets was determined by applying the income approach. Other intangible assets acquired of approximately $ i 18.8 million were comprised of customer relationships, developed technology and trade name. The fair value of customer relationships of approximately $ i 15.0 million was determined by applying the income approach utilizing the excess earnings methodology based on Level 3 inputs in the hierarchy with a discount rate of i 40% and estimated attrition rates. The fair value of developed technology of approximately $ i 3.4 million was determined by applying the income approach utilizing the relief from royalty methodology based on Level 3 inputs with a royalty rate of i 25% and a discount rate of i 35%. The fair value of trade name of approximately $ i 0.4 million was determined by applying the income approach utilizing the relief from royalty methodology based on Level 3 inputs with a royalty rate of i 1% and a discount rate of i 40%.

The financial results included in our Statements of Operations since the acquisition date and through December 31, 2022 reflected revenues of approximately $ i 5.6 million and net income of approximately $ i 1.4 million. We incurred acquisition-related costs of approximately $ i 0.1 million for the year ended December 31, 2022.

Venuetize, Inc.

On October 14, 2022 (the “Venuetize Closing Date”), the Company acquired certain strategic assets of Venuetize, Inc. (“Venuetize”), a privately owned innovator of mobile-first technologies that provide an advanced guest engagement and m-commerce platform for the sports, entertainment and hospitality industries. The acquisition of Venuetize’s products and services represents a strategic extension within and beyond casino gaming of Everi’s current suite of solutions within the FinTech segment. The acquisition will help to elevate the capabilities of mobile and wallet offerings, and provide Everi with complementary assets and an established customer base expected to enable further growth into additional entertainment, sports and hospitality venues, and also to create new crossover marketing opportunities within the Company’s existing footprint.

Under the terms of the asset purchase agreement, we paid the seller $ i 18.2 million on the Venuetize Closing Date of the transaction. In addition, we expect to pay approximately $ i 2.8 million in contingent consideration based upon the achievement of certain revenue targets on the twelve-month, twenty-four month and thirty-month anniversaries of the Venuetize Closing Date.

The acquisition did not have a significant impact on our results of operations or financial condition for the year ended December 31, 2022.

The total preliminary purchase consideration for Venuetize was as follows (in thousands, at fair value):


	Amount
Purchase consideration
Cash consideration paid at closing	$	i 18,200
Contingent consideration (at fair value)	i 2,452
Total purchase consideration	$	i 20,652

The fair value of the contingent consideration was based on Level 3 inputs utilizing a discounted cash flow methodology. The estimates and assumptions included projected future revenues of the acquired business and a discount rate of approximately i 7%. Contingent consideration to be paid is comprised of a short-term component that is recorded in accounts payable and accrued expenses and a long-term component payable within i three years recorded in other accrued expenses and liabilities in our Balance Sheets. The change in fair value of the contingent consideration between the acquisition date and year ended December 31, 2022 was not material.

The transaction was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The excess of the purchase price over those fair values was recorded as goodwill, which will be amortized over a period of i 15 years for tax purposes. The goodwill recognized is primarily attributable to the income potential from the expansion of our footprint in the gaming space by elevating our mobile and wallet offering capabilities to enable further growth into additional venues, an assembled workforce, among other strategic benefits.

The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates reflecting risk inherent in the future cash flows. The estimated fair values of assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as the Company finalizes its purchase price accounting. The significant items for which a final fair value has not been determined include, but are not limited to: the valuation and estimated useful lives of intangible assets, deferred and unearned revenues, and deferred income taxes. We do not expect our fair value determinations to materially change; however, there may be differences between the amounts recorded at the Venuetize Closing Date and the final fair value analysis, which we expect to complete no later than the fourth quarter of 2023.

The information below reflects the preliminary amounts of identifiable assets acquired and liabilities assumed as of the closing date of the transaction (in thousands):


	Amount
Current assets	$	i 1,081
Other intangible assets	i 11,250
Goodwill	i 10,361
Total Assets	i 22,692
Accounts payable and accrued expenses	i 2,040
Total liabilities	i 2,040
Net assets acquired	$	i 20,652

Current assets acquired included trade receivables of approximately $ i 0.9 million that were short-term in nature and considered to be collectible, and therefore, the carrying amounts of these assets represented their fair values.

The following table summarizes preliminary values of acquired intangible assets (dollars in thousands):


	Useful Life (Years)	Estimated Fair Value
Other Intangible Assets
Trade name	i 10	$	i 250
Developed technology	i 7	i 3,950
Customer relationships	i 11	i 7,050
Total other intangible assets		$	i 11,250

The fair value of intangible assets was determined by applying the income approach. Other intangible assets acquired of approximately $ i 11.3 million were comprised of customer relationships, developed technology and trade name. The fair value of customer relationships of approximately $ i 7.1 million was determined by applying the income approach utilizing the excess earnings methodology based on Level 3 inputs in the hierarchy with a discount rate of i 30% and estimated attrition rates. The fair value of developed technology of approximately $ i 4.0 million was determined by applying the income approach utilizing the relief from royalty methodology based on Level 3 inputs with a royalty rate of i 20% and a discount rate of i 30%. The fair value of trade name of approximately $ i 0.3 million was determined by applying the income approach utilizing the relief from royalty methodology based on Level 3 inputs with a royalty rate of i 1% and a discount rate of i 33%.

The financial results included in our Statements of Operations since the acquisition date and through December 31, 2022 reflected revenues of approximately $ i 0.8 million and net loss of approximately $ i 1.7 million. We incurred acquisition-related costs of approximately $ i 0.1 million for the year ended December 31, 2022.

Pro-forma financial information (unaudited)

The unaudited pro forma financial data includes the historical operating results of the Company and the i three acquired businesses prior to the acquisitions as if the transactions occurred on January 1, 2021. The unaudited pro forma results include increases to depreciation and amortization expense based on the purchased intangible assets and costs directly attributable to the acquisitions. The unaudited pro forma results do not purport to be indicative of results of operations as of the date hereof, for any period ended on the date hereof, or for any other future date or period; nor do they give effect to synergies, cost savings, fair market value adjustments and other changes expected as a result of the acquisitions.

The unaudited pro forma financial data on a consolidated basis as if the eCash, Intuicode and Venuetize acquisitions occurred on January 1, 2021 included revenue of approximately $ i 797.6 million and net income of approximately $ i 111.4 million for the year ended December 31, 2022, and revenue of approximately $ i 697.4 million and net income of approximately $ i 144.5 million for the year ended December 31, 2021.

5. i FUNDING AGREEMENTS

Commercial Cash Arrangements

We have commercial arrangements with third-party vendors to provide cash for certain of our fund dispensing devices. For the use of these funds, we pay a usage fee on either the average daily balance of funds utilized multiplied by a contractually defined usage rate or the amounts supplied multiplied by a contractually defined usage rate. These fund usage fees, reflected as interest expense within the Statements of Operations, were approximately $ i 9.3 million, $ i 4.0 million, and $ i 3.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. We are exposed to interest rate risk to the extent that the applicable rates increase.

Under these agreements, the currency supplied by third party vendors remain their sole property until the funds are dispensed. As these funds are not our assets, supplied cash is not reflected in our Balance Sheets. The outstanding balance of funds provided from the third parties were approximately $ i 444.6 million and $ i 401.8 million as of December 31, 2022 and 2021, respectively.

Our primary commercial arrangement, the Contract Cash Solutions Agreement, as amended, is with Wells Fargo, N.A. (“Wells Fargo”). Wells Fargo provides us with cash up to $ i 300 million with the ability to increase the amount permitted by the vault cash provider. The term of the agreement expires on June 30, 2024 and will automatically renew for additional i one-year periods unless either party provides a i ninety-day written notice of its intent not to renew.

We are responsible for losses of cash in the fund dispensing devices under this agreement, and we self-insure for this type of risk. There were no material losses for the years ended December 31, 2022, 2021, and 2020.

Site-Funded ATMs

We operate ATMs at certain gaming operators’ establishments where the gaming operator provides the cash required for the ATMs’ operational needs. We are required to reimburse the customer for the amount of cash dispensed from these site-funded ATMs. The site-funded ATM liability included within settlement liabilities in the accompanying Balance Sheets was approximately $ i 337.6 million and $ i 194.3 million as of December 31, 2022 and 2021, respectively.

Third-Party Funded ATMs

We enter into agreements with international customers for certain of our ATMs whereby we engage with third-parties to provide the cash required to operate the ATMs. The amount of cash supplied by these third-parties is included within settlement liabilities in the accompanying Balance Sheets. The outstanding balances in connection with these arrangements were immaterial at December 31, 2022 and 2021.

Pre-Funded Financial Access Agreements

Due to regulatory requirements in certain jurisdictions, some international gaming operators require pre-funding of cash to cover the outstanding settlement amounts in order for us to provide financial access services to their properties. We enter into agreements with these gaming operators for which we supply our financial access services to their properties. Under these agreements, we maintain sole discretion to either continue or cease operations as well as discretion over the amounts pre-funded to the properties and may request amounts to be refunded to us, with appropriate notice to the operator, at any time. The initial pre-funded amounts and subsequent amounts from the settlement of transactions are deposited into a bank account that is to be used exclusively for financial access services, and we maintain the right to monitor the transaction activity in that account. The total amount of pre-funded cash outstanding was approximately $ i 3.0 million at December 31, 2022 and 2021, respectively, and is included in prepaid expenses and other current assets line on our Balance Sheets.

6. i TRADE AND OTHER RECEIVABLES

Trade and other receivables represent short-term credit granted to customers and long-term loans receivable in connection with our Games and FinTech equipment and software, and compliance products. Trade and loans receivable generally do not require collateral.

The balance of trade and loans receivable consists of outstanding balances owed to us by gaming operators. Other receivables include income tax receivables and other miscellaneous receivables.

The balance of trade and other receivables consisted of the following (in thousands):

2022

2021

Trade and other receivables, net

Games trade and loans receivable

i 78,200

i 77,053

FinTech trade and loans receivable

i 39,925

i 21,504

Contract assets (1)

i 22,417

i 15,221

Other receivables

i 6,110

i 5,026

Total trade and other receivables, net

i 146,652

i 118,804

Non-current portion of receivables

Games trade and loans receivable

i 1,382

i 1,348

FinTech trade and loans receivable

i 16,519

i 7,340

Contract assets (1)

i 9,856

i 5,294

Total non-current portion of receivables

i 27,757

i 13,982

Total trade and other receivables, current portion

i 118,895

i 104,822

(1) Refer to “Note 2 — Basis of Presentation and Summary of Significant Accounting Policies” for a discussion on the contract assets.

Allowance for Credit Losses

The activity in our allowance for credit losses for the years ended December 31, 2022 and 2021 is as follows (in thousands):


	At December 31,
	2022		2021
Beginning allowance for credit losses	$	( i 5,161)	$	( i 3,689)
Provision	( i 10,115)		( i 7,540)
Charge-offs and recoveries	i 10,421		i 6,068
Ending allowance for credit losses	$	( i 4,855)	$	( i 5,161)

7. i INVENTORY

Our inventory primarily consists of component parts as well as work-in-progress and finished goods. The cost of inventory includes cost of materials, labor, overhead and freight, and is accounted for using the first in, first out method. The inventory is stated at the lower of cost or net realizable value.

Inventory consisted of the following (in thousands):

2022

2021

Inventory

Component parts, net of reserves of $ i 2,919 and $ i 2,422 at December 31, 2022 and December 31, 2021, respectively

i 48,688

i 22,490

Work-in-progress

i 323

i 554

Finished goods

i 9,339

i 6,189

Total inventory

i 58,350

i 29,233

8. i PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets include the balance of prepaid expenses, deposits, debt issuance costs on our New Revolver (as defined below “Note 12 — Long-Term Debt”), restricted cash, operating lease ROU assets, and other assets. The current portion of these assets is included in prepaid expenses and other current assets and the non-current portion is included in other assets, both of which are contained within our Balance Sheets.

The balance of the current portion of prepaid expenses and other assets consisted of the following (in thousands):

2022

2021

Prepaid expenses and other current assets

Prepaid expenses

i 21,197

i 14,389

Deposits

i 13,749

i 7,709

Restricted cash(1)

i 1,568

i 1,616

Other

i 2,308

i 3,585

Total prepaid expenses and other current assets

i 38,822

i 27,299

(1) Refer to “Note 2 — Basis of Presentation and Summary of Significant Accounting Policies” for discussion on the composition of the restricted cash balance.

/ i

The balance of the non-current portion of other assets consisted of the following (in thousands):

2022

2021

Other assets

Operating lease ROU assets

i 17,169

i 12,692

Prepaid expenses and deposits

i 9,164

i 4,789

Debt issuance costs of revolving credit facility

i 1,377

i 1,760

Other

i 196

i 418

Total other assets

i 27,906

i 19,659

9. i PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

Useful Life (Years)

Cost

Accumulated Depreciation

Net Book Value

Cost

Accumulated Depreciation

Net Book Value

Property and equipment

Rental pool - deployed

i 2- i 4

i 279,524

i 188,369

i 91,155

i 248,958

i 166,075

i 82,883

Rental pool - undeployed

i 2- i 4

i 30,378

i 23,930

i 6,448

i 23,284

i 18,285

i 4,999

FinTech equipment

i 1- i 5

i 36,442

i 24,167

i 12,275

i 32,802

i 21,257

i 11,545

Leasehold and building improvements

Lease Term

i 13,666

i 10,689

i 2,977

i 12,598

i 9,234

i 3,364

Machinery, office, and other equipment

i 1- i 5

i 55,246

i 34,456

i 20,790

i 45,277

i 28,075

i 17,202

Total

i 415,256

i 281,611

i 133,645

i 362,919

i 242,926

i 119,993

Depreciation expense related to property and equipment totaled approximately $ i 66.8 million, $ i 61.5 million, and $ i 67.5 million for the years ended December 31, 2022, 2021, and 2020, respectively.

10. i GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. The balance of goodwill was approximately $ i 715.9 million and $ i 682.7 million at December 31, 2022 and 2021, respectively. We have the following reporting units: (i) Games; (ii) Financial Access Services; (iii) Kiosk Sales and Services; (iv) Central Credit Services; (v) Compliance Sales and Services; (vi) Loyalty Sales and Services; and (vii) Mobile Technologies.

In accordance with ASC 350 (“Intangibles—Goodwill and Other”), we test goodwill at the reporting unit level, which is identified as an operating segment or one level below, for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

We test our goodwill for impairment on October 1 each year, or more frequently if events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The annual impairment test is completed using either: a qualitative “Step 0” assessment based on reviewing relevant events and circumstances or a quantitative “Step 1” assessment, which determines the fair value of the reporting unit, using both an income approach that discounts future cash flows based on the estimated future results of our reporting units and a market approach that compares market multiples of comparable companies to determine whether or not any impairment exists. To the extent the carrying amount of a reporting unit is less than its estimated fair value, an impairment charge is recorded.

In connection with our annual goodwill impairment testing process for 2022 and 2021, we determined that no impairment adjustments were necessary for each of our reporting units.

The changes in the carrying amount of goodwill are as follows (in thousands):

Games

Financial Access Services

Kiosk Sales and Services

Central Credit Services

Compliance Sales and Services

Loyalty Sales and Services

Mobile Technologies

Total

Goodwill

Balance, December 31, 2020

$ i 449,041

$ i 157,088

$ i 5,745

$ i 17,127

$ i 11,578

$ i 41,395

$ i —

$ i 681,974

Foreign currency translation

i —

i 2

i —

i 2

Acquisition related adjustments

i —

i 687

i —

i 687

Balance, December 31, 2021

$ i 449,041

$ i 157,090

$ i 5,745

$ i 17,127

$ i 12,265

$ i 41,395

$ i —

$ i 682,663

Foreign currency translation

i —

( i 41)

( i 661)

i —

( i 702)

Acquisition related adjustments

i 12,402

i —

i 10,776

i —

( i 129)

i —

i 10,860

i 33,909

Balance, December 31, 2022

$ i 461,443

$ i 157,049

$ i 15,860

$ i 17,127

$ i 12,136

$ i 41,395

$ i 10,860

$ i 715,870

Other Intangible Assets

Other intangible assets consist of the following (in thousands):

Useful Life (Years)

Cost

Accumulated Amortization

Net Book Value

Cost

Accumulated Amortization

Net Book Value

Other intangible assets

Contract rights under placement fee agreements

i 2- i 7

i 57,821

i 12,252

i 45,569

i 58,837

i 4,237

i 54,600

Customer relationships

i 3- i 14

i 331,999

i 233,150

i 98,849

i 303,238

i 206,273

i 96,965

Developed technology and software

i 1- i 6

i 401,087

i 309,285

i 91,802

i 342,309

i 280,412

i 61,897

Patents, trademarks, and other

i 2- i 18

i 22,334

i 20,279

i 2,055

i 20,547

i 19,415

i 1,132

Total

i 813,241

i 574,966

i 238,275

i 724,931

i 510,337

i 214,594

Amortization expense related to other intangible assets totaled approximately $ i 59.6 million, $ i 58.0 million, and $ i 75.3 million for the years ended December 31, 2022, 2021, and 2020, respectively. We capitalized $ i 46.3 million, $ i 30.2 million, and $ i 21.2 million of internally-developed software costs for the years ended December 31, 2022, 2021, and 2020, respectively.

On a quarterly basis, we evaluate our other intangible assets for potential impairment as part of our review process. There was i i no / material impairment identified for any of our other intangible assets for the years ended December 31, 2022 and 2021. During 2020, we recorded a write-off of intangible assets of approximately $ i 6.3 million.

The anticipated amortization expense related to other intangible assets, assuming no subsequent impairment of the underlying assets, is as follows (in thousands):


Anticipated amortization expense	Amount
2023	$	i 60,868
2024	i 45,423
2025	i 34,965
2026	i 30,306
2027	i 13,635
Thereafter	i 8,375
Total (1)	$	i 193,572

(1) For the year ended December 31, 2022, the Company had $ i 44.7 million in other intangible assets that had not yet been placed into service.

Placement fees and amounts advanced in excess of those to be reimbursed by the customer for real property and land improvements are allocated to intangible assets and are generally amortized over the term of the contract, which is recorded as a reduction of revenue generated from the facility. In the past we have, and in the future, we may, by mutual agreement, amend the agreements to reduce our floor space at these facilities. Any proceeds received for the reduction of floor space are first applied against the intangible asset for that particular placement fee agreement, if any, and the remaining net book value of the intangible asset is prospectively amortized on a straight-line method over its remaining estimated useful life.

We paid approximately $ i 0.5 million, $ i 31.5 million, and $ i 3.1 million in placement fees for the years ended December 31, 2022, 2021, and 2020, respectively. In September 2021, we entered into a placement fee agreement with a customer for certain of its locations for approximately $ i 28.9 million, which we settled in October 2021. There were i i no / imputed interest amounts recorded in connection with these payments for the years ended December 31, 2022 and 2021, respectively.

11. i ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The following table presents our accounts payable and accrued expenses (amounts in thousands):

2022

2021

Accounts payable and accrued expenses

Customer commissions payable

i 65,387

i 57,515

Contract liabilities

i 50,872

i 36,238

Accounts payable - trade

i 29,645

i 25,453

Payroll and related expenses

i 24,335

i 29,125

Contingent consideration and acquisition-related liabilities (1)

i 12,030

i —

Accrued income taxes

i 3,673

i 2,756

Accrued interest

i 9,451

i 9,273

Financial access processing and related expenses

i 7,829

i 3,619

Operating lease liabilities

i 6,507

i 5,663

Other

i 7,695

i 4,291

Total accounts payable and accrued expenses

i 217,424

i 173,933

(1) Refer to “Note 4 — Business Combinations” for discussion on contingent consideration and acquisition-related liabilities.

12. i LONG-TERM DEBT

The following table summarizes our indebtedness (in thousands):

Maturity

Interest

At December 31,

Date

Rate

2022

2021

Long-term debt

$ i 600 million New Term Loan

2028

LIBOR+ i 2.50%

i 592,500

i 598,500

$ i 125 million New Revolver

2026

LIBOR+ i 2.50%

i —

Senior Secured Credit Facilities

i 592,500

i 598,500

$ i 400 million 2021 Unsecured Notes

2029

i 5.00%

i 400,000

Total debt

i 992,500

i 998,500

Debt issuance costs and discount

( i 14,505)

( i 16,975)

Total debt after debt issuance costs and discount

i 977,995

i 981,525

Current portion of long-term debt

( i 6,000)

Total long-term debt, net of current portion

i 971,995

i 975,525

New Credit Facilities

Our Senior Secured Credit Facilities consist of: (i) a i seven-year $ i 600 million senior secured term loan due 2028 issued at i 99.75% of par (the “New Term Loan”); and (ii) a $ i 125 million senior secured revolving credit facility due 2026, which was undrawn at closing (the “New Revolver” and together with the New Term Loan, the “New Credit Facilities”). The Company, as borrower, entered into the credit agreement dated as of August 3, 2021 (the “Closing Date”), among the Company, the lenders party thereto and Jefferies Finance LLC, as administrative agent, collateral agent, swing line lender and a letter of credit issuer (the “New Credit Agreement”).

The interest rate per annum applicable to the New Credit Facilities will be, at the Company’s option, either the Eurodollar rate with a i 0.50% LIBOR floor plus a margin of i 2.50% or the base rate plus a margin of i 1.50%.

The New Revolver is available for general corporate purposes, including permitted acquisitions, working capital and the issuance of letters of credit. Borrowings under the New Revolver are subject to the satisfaction of customary conditions, including the absence of defaults and the accuracy of representations and warranties. Our New Revolver remained fully undrawn as of December 31, 2022.

The Company is required to make periodic payments on the New Term Loan in an amount equal to i 0.25% per quarter of the initial aggregate principal, with the final principal repayment installment on the maturity date. Interest is due in arrears on each interest payment date applicable thereto and at such other times as may be specified in the New Credit Agreement. As to any loan other than a base rate loan, the interest payment dates shall be the last day of each interest period applicable to such loan and the maturity date (provided, however, that if any interest period for a Eurodollar Rate loan exceeds three months, the respective dates that fall every three months after the beginning of such interest period shall also be interest payment dates). As to any base rate loan, commencing on the last business day of December 2021, the interest payment dates shall be last business day of each of March, June, September and December and the maturity date.

Voluntary prepayments of the New Term Loan and the New Revolver and voluntary reductions in the unused commitments are permitted in whole or in part, in minimum amounts as set forth in the New Credit Agreement governing the New Credit Facilities, with prior notice, and without premium or penalty, except that certain refinancings or repricings of the New Term Loan within i six months after the Closing Date will be subject to a prepayment premium of i 1.00% of the principal amount repaid.

The New Credit Agreement contains certain covenants that, among other things, limit the Company’s ability, and the ability of certain of its subsidiaries, to incur additional indebtedness, sell assets or consolidate or merge with or into other companies, pay dividends or repurchase or redeem capital stock, make certain investments, issue capital stock of subsidiaries, incur liens, prepay, redeem or repurchase subordinated debt, and enter into certain types of transactions with its affiliates. The New Credit Agreement also requires the Company, together with its subsidiaries, to comply with a maximum consolidated secured leverage ratio of i 4.25:1.00 as of the measurement date.

The weighted average interest rate on the New Term Loan was i 4.29% for the year ended December 31, 2022.

Senior Unsecured Notes

Our Senior Unsecured Notes (the “2021 Unsecured Notes”) due 2029 had an outstanding balance of $ i 400 million as of December 31, 2022, for which interest accrues at a rate of i 5.00% per annum and is payable semi-annually in arrears on each January 15 and July 15.

The fees associated with the 2021 Unsecured Notes included debt issuance costs of approximately $ i 5.9 million incurred during the year ended December 31, 2021.

Compliance with Debt Covenants

We were in compliance with the covenants and terms of the New Credit Facilities and the 2021 Unsecured Notes as of December 31, 2022.

Principal Repayments

The maturities of our borrowings at December 31, 2022 are as follows (in thousands):


	Amount
Maturities of borrowings
2023	$	i 6,000
2024	i 6,000
2025	i 6,000
2026	i 6,000
2027	i 6,000
Thereafter	i 962,500
Total	$	i 992,500

13. i COMMITMENTS AND CONTINGENCIES

We are involved in various legal proceedings in the ordinary course of our business. While we believe resolution of the claims brought against us, both individually and in the aggregate, will not have a material adverse impact on our financial condition or results of operations, litigation of this nature is inherently unpredictable. Our views on these legal proceedings, including those described below, may change in the future. We intend to vigorously defend against these actions, and ultimately believe we should prevail.

Legal Contingencies

We evaluate matters and record an accrual for legal contingencies when it is both probable that a liability has been incurred and the amount or range of the loss may be reasonably estimated. We evaluate legal contingencies at least quarterly and, as appropriate, establish new accruals or adjust existing accruals to reflect: (i) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings, and other relevant events and developments; (ii) the advice and analyses of counsel; and (iii) the assumptions and judgment of management. Legal costs associated with such proceedings are expensed as incurred. Due to the inherent uncertainty of legal proceedings as a result of the procedural, factual, and legal issues involved, the outcomes of our legal contingencies could result in losses in excess of amounts we have accrued.

We did not have any new material legal matters that were accrued as of December 31, 2022.

NRT matter:

NRT Technology Corp., et al. v. Everi Holdings Inc., et al. is a civil action filed on April 30, 2019 against Everi Holdings and Everi FinTech in the United States District Court for the District of Delaware by NRT Technology Corp. and NRT Technology, Inc., alleging monopolization of the market for unmanned, integrated kiosks in violation of federal antitrust laws, fraudulent procurement of patents on functionality related to such unmanned, integrated kiosks and sham litigation related to prior litigation brought by Everi FinTech (operating as Global Cash Access Inc.) against the plaintiff entities. The plaintiffs are seeking compensatory damages, treble damages, and injunctive and declaratory relief. Discovery is closed. The Court removed the case from the September trial calendar and requested briefs from the parties on relevant legal issues. Briefing was completed in December 2022. The parties are currently awaiting an order from the court setting the matter for

evidentiary hearing. Due to the current stage of the litigation, we are currently unable to estimate the probability of the outcome of this matter or reasonably estimate the range of possible damages, if any.

Zenergy Systems, LLC matter:

Zenergy Systems, LLC v. Everi Payments Inc. is a civil action filed on May 29, 2020, against Everi FinTech in the United States District Court for the District of Nevada, Clark County by Zenergy Systems, LLC, alleging breach of contract, breach of a non-disclosure agreement, conversion, breach of the covenant of good faith and fair dealing, and breach of a confidential relationship related to a contract with Everi FinTech that expired in November 2019. The plaintiff is seeking compensatory and punitive damages. Everi FinTech has counterclaimed against Zenergy alleging breach of contract, breach of implied covenant of good faith and fair dealing, and for declaratory relief. The case is set for trial in April 2023. Due to the current stage of the litigation, we are currently unable to estimate the probability of the outcome of this matter or reasonably estimate the range of possible damages, if any.

Sightline Payments matter:

Sightline Payments LLC v. Everi Holdings Inc., et al. is a civil action filed on September 30, 2021, against Everi Holdings, Everi FinTech, Everi Games Holding Inc., and Everi Games (collectively referred to herein as “Everi”) in the United States District Court, Western District of Texas (Waco Division) by Sightline Payments LLC alleging patent infringement in violation of 35 U.S.C. § 271 et seq. The plaintiff’s complaint alleges that Everi’s CashClub Wallet product infringes on certain patents owned by the plaintiff. The plaintiff is seeking compensatory damages. Everi filed a Motion to Dismiss or Transfer for Lack of Venue. On June 1, 2022, the Court granted Everi’s Motion to Dismiss ruling that the Western District of Texas was not the proper venue for an action against Everi Fintech, Everi Holdings, and Everi Games. On June 23, 2022, the plaintiff, Sightline Payments LLC, filed an appeal of the District Court’s Order. The appeal is underway. Due to the current stage of the litigation, we are currently unable to estimate the probability of the outcome of this matter or reasonably estimate the range of possible damages, if any.

Sightline USPTO matters:

In February and March 2022, Everi Payments Inc. filed five Petitions for Inter Partes Review (“IPR”) with the Patent Trial and Appeal Board (the “PTAB”) of the United States Patent and Trademark Office seeking invalidation of certain claims of U.S. Patent Nos. 8,708,809, 8,998,708, 9,196,123, 9,466,176, and 9,785,926 owned by Sightline Partners LLC. In August and September 2022, decisions by the PTAB were issued granting the IPRs. Briefing and discovery is underway. Oral argument is scheduled for June 24, 2023. Due to the current stage of these matters, we are currently unable to estimate the probability of the outcome or reasonably estimate the range of possible damages, if any.

Mary Parrish matter:

Mary Parrish v. Everi Holdings Inc., et al. is a civil action filed on December 28, 2021, against Everi Holdings and Everi FinTech in the District Court of Nevada, Clark County by Mary Parrish alleging violation of the Fair and Accurate Credit Transactions Act (FACTA) amendment to the Fair Credit Reporting Act (FCRA). Plaintiff’s complaint alleges she received a printed receipt for cash access services performed at an Everi Payments’ ATM which displayed more than four (4) digits of the account number. Plaintiff seeks statutory damages, punitive damages, injunctive relief, attorneys’ fees, and other relief. Everi filed a Petition for Removal to the United States District Court, District of Nevada. Thereafter, Everi filed a Motion to Dismiss, which is pending in the United States District Court. Due to the early stages of the litigation, we are currently unable to estimate the probability of the outcome of this matter or reasonably estimate the range of possible damages, if any.

In addition, we have commitments with respect to certain lease obligations discussed in “Note 3 — Leases” and installment payments under our asset purchase agreements discussed in “Note 4 — Business Combinations.”

14. i STOCKHOLDERS’ EQUITY

On May 4, 2022, our Board of Directors authorized and approved a new share repurchase program in an amount not to exceed $ i 150.0 million pursuant to which we may purchase outstanding Company common stock in open market or privately negotiated transactions over a period of eighteen ( i 18) months through November 4, 2023, in accordance with Company and regulatory policies and trading plans established in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934. The actual number of shares to be purchased will depend upon market conditions and is subject to available liquidity, general market and economic conditions, alternative uses for the capital and other factors. All shares purchased will be held in the Company’s treasury for possible future use. There is no minimum number of shares that the Company is required to repurchase, and the program may be suspended or discontinued at any time without prior notice. This new repurchase program supersedes and replaces, in its entirety, the previous share repurchase program.

There were approximately i 5.0 million shares repurchased during the year ended December 31, 2022 at an average price of $ i 16.93 per share for an aggregate amount of $ i 84.3 million. The remaining availability under the May 2022 $ i 150.0 million share repurchase program was $ i 65.7 million as of December 31, 2022. There were i no share repurchases during the year ended December 31, 2021.

Preferred Stock. Our amended and restated certificate of incorporation, as amended, allows our Board of Directors, without further action by stockholders, to issue up to i 50,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges and relative participating, optional, or special rights as well as the qualifications, limitations or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences. As of December 31, 2022 and 2021, we had i i no / shares of preferred stock outstanding.

Common Stock. Subject to the preferences that may apply to shares of preferred stock that may be outstanding at the time, the holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as our Board of Directors may from time to time determine. All dividends are non-cumulative. In the event of the liquidation, dissolution or winding up of Everi, the holders of common stock are entitled to share ratably in all assets remaining after the payment of liabilities, subject to the prior distribution rights of preferred stock, if any, then outstanding. Each stockholder is entitled to i one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for. The common stock is not entitled to preemptive rights and is not subject to conversion or redemption. There are no sinking fund provisions applicable to the common stock. Each outstanding share of common stock is fully paid and non-assessable. As of December 31, 2022 and 2021, we had i 119,389,510 and i 116,996,348 shares of common stock issued, respectively.

Treasury Stock. In addition to open market purchases of common stock authorized under the Share Repurchase Program, employees may direct us to withhold vested shares of restricted stock to satisfy the maximum statutory withholding requirements applicable to their restricted stock vesting. We repurchased or withheld from restricted stock awards i 0.7 million and i 0.5 million shares of common stock at an aggregate purchase price of approximately $ i 12.0 million and $ i 9.4 million for the years ended December 31, 2022 and 2021, respectively, to satisfy the maximum applicable tax withholding obligations related to the vesting of such restricted stock awards.

15. i WEIGHTED AVERAGE SHARES OF COMMON STOCK

The weighted average number of common stock outstanding used in the computation of basic and diluted earnings per share is as follows (in thousands):

2022

2021

2020

Weighted average shares

Weighted average number of common shares outstanding — basic

i 90,494

i 89,284

i 85,379

Potential dilution from equity awards (1)

i 7,013

i 10,683

i —

Weighted average number of common shares outstanding — diluted (1)

i 97,507

i 99,967

i 85,379

(1) There were i 0.1 million shares that were anti-dilutive under the treasury stock method for the year ended December 31, 2022. There were i no shares and i 3.3 million shares that were anti-dilutive under the treasury stock method for the years ended December 31, 2021 and 2020, respectively. The Company was in a net loss position for the year ended December 31, 2020; therefore, no potential dilution from the application of the treasury stock method was applicable.

16. i SHARE-BASED COMPENSATION

Equity Incentive Awards

Our 2014 Equity Incentive Plan (as amended and restated effective May 19, 2021, the “Equity Incentive Plan”) is used to attract and retain key personnel, to provide additional incentives to employees, directors, and consultants, and to promote the success of our business. Our Equity Incentive Plan is administered by the Compensation Committee of our Board of Directors, which has the authority to select individuals who are to receive equity incentive awards and to specify the terms and conditions of grants of such awards, including, but not limited to the vesting provisions and exercise prices, as applicable.

Generally, we grant the following types of awards: (i) restricted stock units with either time- or performance-based criteria; (ii) time-based options; and (iii) market-based options. We estimate forfeiture amounts based on historical patterns.

A summary of award activity is as follows (in thousands):

Stock Options Granted

Restricted Stock Units Granted

Outstanding, December 31, 2021

i 7,073

i 3,540

Granted

i 81

i 1,298

Exercised options or vested shares

( i 333)

( i 2,061)

Canceled or forfeited

( i 28)

( i 68)

Outstanding, December 31, 2022

i 6,793

i 2,709

There are approximately i 3.7 million awards of our common stock available for future equity grants under our existing equity incentive plans.

Stock Options

The fair value of our standard time-based options was determined as of the date of grant using the Black-Scholes option pricing model. The assumptions used for options granted for the year ended December 31, 2022 included a i 3% risk-free interest rate, an expected life of i 4.9 years, an expected volatility of i 56%, and a i zero percent expected dividend yield. There were no time-based options granted for the years ended December 31, 2021 and 2020, respectively.

Our time-based stock options granted under our equity plans generally vest at a rate of either i i i 33 / / % or i i i i 25 / / / % per year on each of the first three or four anniversaries of the grant dates, and expire after a i ten-year period.

The following table presents the options activity:

Number of Options
(in thousands)

Weighted Average Exercise Price
(per Share)

Weighted Average Life Remaining
(Years)

Aggregate Intrinsic Value
(in thousands)

Outstanding, December 31, 2021

i 7,073

i 4.93

i 3.8

i 116,155

Granted

i 81

i 16.69

Exercised

( i 333)

i 5.77

Canceled or forfeited

( i 28)

i 7.80

Outstanding, December 31, 2022

i 6,793

i 5.01

i 2.8

i 63,604

Vested and expected to vest after, December 31, 2022

i 6,787

i 5.00

i 2.8

i 63,604

Exercisable, December 31, 2022

i 6,713

i 4.87

i 2.7

i 63,604

The following table presents the options outstanding and exercisable by price range:

Options Outstanding

Options Exercisable

Number
Outstanding

Weighted

Average

Remaining

Contract

Life

Weighted
Average
Exercise

Number
Exercisable

Weighted
Average
Exercise

Range of Exercise Prices

(in thousands)

(Years)

Prices

(in thousands)

Price

i 1.46

i 1,006

i 3.4

i 1.46

i 1,006

i 1.46

i 1.57

i 2.78

i 816

i 3.1

i 2.54

i 816

i 2.54

i 3.29

i 2,073

i 3.8

i 3.29

i 2,073

i 3.29

i 6.30

i 7.09

i 770

i 1.4

i 6.67

i 770

i 6.67

i 7.10

i 7.74

i 830

i 2.2

i 7.70

i 830

i 7.70

i 7.88

i 20

i 5.6

i 7.88

i 20

i 7.88

i 8.32

i 18

i 4.8

i 8.32

i 18

i 8.32

i 8.92

i 1,172

i 1.1

i 8.92

i 1,172

i 8.92

i 9.74

i 8

i 1.0

i 9.74

i 8

i 9.74

i 16.69

i 80

i 9.5

i 16.69

i —

i 6,793

i 6,713

The total intrinsic value of options exercised was $ i 4.9 million, $ i 46.5 million, and $ i 6.7 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The unrecognized non-cash compensation expense related to options expected to vest as of December 31, 2022, 2021 and 2020 was not material.

We recorded approximately $ i 0.1 million, $ i 0.3 million and $ i 1.4 million in non-cash compensation expense related to options granted that were expected to vest as of December 31, 2022, 2021 and 2020, respectively. We received approximately $ i 1.9 million, $ i 18.2 million and $ i 6.2 million in cash proceeds from the exercise of options during 2022, 2021 and 2020, respectively.

Restricted Stock Units

The fair value of our restricted stock units awarded is based on the closing stock price of our common stock at the date of grant.

Time-based Awards

The time-based restricted stock units (“RSUs”) granted to executives and the employee base, during 2022, 2021 and 2020, generally vest at a rate of either i i i 33 / / % per year on each of the first three anniversaries of the dates of grant, or 100% on the anniversary of grant date ending after either i 1 year, i 2 years or i 3 years.

The RSUs granted to independent members of our Board of Directors, during 2022, 2021 and 2020, vest on the i one-year anniversary of the date of grant and settle on the earliest of the following events: (i) i ten-year anniversary of the date of grant; (ii) death; (iii) the occurrence of a Change in Control (as defined in the Equity Incentive Plan), subject to qualifying conditions; or (iv) the date that is i six months following the separation from service, subject to qualifying conditions.

Performance-based Awards

The performance-based restricted stock units (“PSUs”) granted during 2022 will be evaluated by the Compensation Committee of our Board of Directors after a performance period, beginning on the date of grant through December 31, 2024, based on certain revenue and adjusted operating cash flow growth rate metrics, with achievement of each measure to be determined independently of one another. To the extent the performance criteria of the metrics are approved, the eligible awards will become vested on the third anniversary of the date of grant. We record stock-based compensation expense over the required service period based on the amount of shares expected to vest pursuant to the achievement measures associated with the performance award.

The performance-based restricted stock units (“PSUs”) granted during 2021 will be evaluated by the Compensation Committee of our Board of Directors after a performance period, beginning on the date of grant through December 31, 2023, based on certain revenue and free cash flow growth rate metrics, with achievement of each measure to be determined

independently of one another. To the extent the performance criteria of the metrics are approved, the eligible awards will become vested on the third anniversary of the date of grant.

The PSUs granted during 2020 will be evaluated by the Compensation Committee of our Board of Directors after a performance period, beginning on the date of grant through December 31, 2022, based on total revenue and certain revenue growth rate metrics. If the performance criteria of the metrics are approved, the eligible awards will become vested on the third anniversary of the grant dates.

The following table presents our RSU and PSU awards activity:

Shares Outstanding
(in thousands)

Weighted Average Grant Date Fair Value
(per Share)

Weighted Average Life Remaining
(Years)

Aggregate Intrinsic Value
(in thousands)

Outstanding, December 31, 2021

i 3,540

i 10.49

i 1.0

i 75,532

Granted

i 1,298

i 16.08

Vested

( i 2,061)

i 9.97

Forfeited

( i 68)

i 14.48

Outstanding, December 31, 2022

i 2,709

i 13.46

i 0.9

i 38,850

Vested and expected to vest after, December 31, 2022

i 2,330

i 13.81

i 0.9

i 33,433

There was approximately $ i 20.1 million in unrecognized compensation expense related to the awards expected to vest as of December 31, 2022. This cost is expected to be recognized on a straight-line basis over a weighted average period of i 1.2 years. We recorded approximately $ i 19.7 million in non-cash compensation expense related to these awards for the year ended December 31, 2022.

There were approximately i 1.0 million and i 2.2 million shares of these awards granted for the years ended December 31, 2021 and 2020, respectively. The weighted average grant date fair value per share of these awards granted was $ i 17.70 and $ i 6.08 for the years ended December 31, 2021 and 2020, respectively. There were i 1.6 million and i 0.9 million RSU awards that vested during the years ended December 31, 2021 and 2020, respectively. There was approximately $ i 23.3 million and $ i 15.3 million unrecognized compensation expense related to these awards expected to vest as of December 31, 2021 and 2020, respectively. This cost was expected to be recognized on a straight-line basis over a weighted average period of i 1.4 years and i 1.8 years, respectively. We recorded approximately $ i 20.6 million and $ i 11.6 million in non-cash compensation expense related to RSU awards for the years ended December 31, 2021 and 2020, respectively.

17. i INCOME TAXES

Provision (Benefit) for Income Taxes

The following presents consolidated income (loss) before tax for domestic and foreign operations (in thousands):

Year Ended December 31,

2022

2021

2020

Consolidated income (loss) before tax

Domestic

i 157,510

i 100,232

( i 87,832)

Foreign

i 90

i 793

i 396

Total

i 157,600

i 101,025

( i 87,436)

/ i

The income tax provision (benefit) attributable to the income (loss) before tax consists of the following components (in thousands):

Year Ended December 31,

2022

2021

2020

Income tax provision (benefit)

Domestic

i 36,440

( i 51,923)

( i 5,711)

Foreign

i 671

i 23

( i 45)

Total income tax provision (benefit)

i 37,111

( i 51,900)

( i 5,756)

Income tax provision (benefit)

Current

i 4,446

i 177

i 823

Deferred

i 32,665

( i 52,077)

( i 6,579)

Total income tax provision (benefit)

i 37,111

( i 51,900)

( i 5,756)

Effective Tax Rate

A reconciliation of the federal statutory rate and the effective income tax rate is as follows:


	Year Ended December 31,
	2022		2021		2020
Income tax reconciliation
Federal statutory rate	i 21.0	%	i 21.0	%	i 21.0	%
Foreign provision	( i 0.1)	%	i —	%	( i 0.2)	%
State/province income tax	i 3.3	%	i 3.5	%	i 4.2	%
Compensation deduction limitations	i 2.9	%	i 2.5	%	( i 0.3)	%
Stock-based compensation expense	( i 2.5)	%	( i 10.6)	%	i 0.8	%
Adjustments to carrying values	i 0.3	%	i 1.7	%	i 0.2	%
Research and development credit	( i 2.2)	%	( i 2.3)	%	i 1.0	%
Valuation allowance(1)	i —	%	( i 67.2)	%	( i 19.7)	%
Global intangible low-taxed income(2)	i 0.4	%	i 0.1	%	i —	%
Non-deductible expenses - other	i —	%	i 0.1	%	( i 0.1)	%
Other	i 0.4	%	( i 0.2)	%	( i 0.3)	%
Effective tax rate	i 23.5	%	( i 51.4)	%	i 6.6	%

(1) We removed the full valuation allowance in the federal and certain state jurisdictions in the fourth quarter of 2021.

(2) We had no GILTI inclusion in 2020 due to the high tax exception in some foreign jurisdictions and losses in others.

Deferred Income Taxes

The major tax-effected components of the deferred tax assets and liabilities are as follows (in thousands):

2022

2021

2020

Deferred income tax assets related to:

Net operating losses

i 27,901

i 84,619

i 109,872

Tax credits

i 18,467

i 14,688

i 12,377

Capitalized research expenditures(1)

i 15,705

i —

Accrued and prepaid expenses

i 10,481

i 11,284

i 8,977

Stock compensation expense

i 6,041

i 6,210

i 7,293

Accounts receivable allowances

i 1,204

i 1,275

i 912

Other

i 1,841

i 913

i 2,098

Valuation allowance

( i 739)

( i 804)

( i 68,746)

Total deferred income tax assets

i 80,901

i 118,185

i 72,783

Deferred income tax liabilities related to:

Other intangible assets

i 57,487

i 59,156

i 67,996

Property and equipment

i 23,352

i 23,610

i 18,699

Long-term debt

i —

i 7

i 1,482

Other

i 4,472

i 3,291

i 4,562

Total deferred income tax liabilities

i 85,311

i 86,064

i 92,739

Deferred income taxes, net

( i 4,410)

i 32,121

( i 19,956)

(1) As required by the 2017 Tax Cuts and Jobs Act, effective January 1, 2022, our research and development expenditures were capitalized and amortized, which resulted in higher taxable income for 2022 with an equal amount of deferred tax benefit.

Net Operating Losses (“NOLs”) and Research Credits Carry-forwards

We had approximately $ i 115.5 million, or $ i 24.3 million, tax effected, of accumulated federal NOLs as of December 31, 2022. These NOLs include $ i 20.7 million, or $ i 4.4 million, tax effected, of losses incurred prior to 2018, which may be carried forward and applied to offset taxable income for 20 years and will expire starting in 2037. In addition, these NOLs include approximately $ i 94.8 million, or $ i 19.9 million, tax effected, of losses incurred subsequent to 2017, which may be carried forward indefinitely and offset 80% of our taxable income in future years.

We had tax effected state NOL carry-forwards of approximately $ i 3.6 million as of December 31, 2022, which will expire between 2023 and 2042. The determination and utilization of these state NOL carry-forwards are dependent upon apportionment percentages and other respective state laws, which may change from year to year. As of December 31, 2022, approximately $ i 0.6 million of our valuation allowance relates to certain state NOL carry-forwards that we estimate are not more likely than not to be realized.

We had approximately $ i 18.5 million, tax effected, of federal research and development credit carry-forwards as of December 31, 2022. The research and development credits are limited to a 20-year carry-forward period and will expire starting in 2029.

Lastly, we had $ i 0.3 million of Australian research and development credit carry-forwards as of December 31, 2022, which may be carried forward indefinitely.

Deferred Tax Assets - Valuation Allowance Assessment

Deferred tax assets arise primarily because expenses have been recorded in historical financial statement periods that will not become deductible for income taxes until future tax years. We record a valuation allowance to reduce the book value of our deferred tax assets to amounts that are estimated on a more likely than not basis to be realized. This assessment requires judgment and is performed on the basis of the weight of all available evidence, both positive and negative, with greater weight placed on information that is objectively verifiable such as historical performance.

Based on an evaluation of the then-available positive and negative evidence, we determined it was appropriate to establish a full valuation allowance on our federal and states deferred tax assets as of December 31, 2016. At that time, and in subsequent quarters, negative evidence, including three years of cumulative losses, outweighed the positive evidence. However, as of December 31, 2021, our U.S. operations emerged from a three-year cumulative loss position. Based on our analysis, we removed the full valuation allowance in the federal and certain state jurisdictions, contributing to a $ i i 67.9 / million reduction in our valuation allowance in 2021. The significant positive evidence in our analysis included: improvements in profitability, product mix, capital levels, credit metrics, a stabilizing economy and future longer-term forecasts showing sustained profitability. We continue to believe the positive evidence outweighs the negative evidence as of December 31, 2022 and it is more likely than not that these deferred tax assets will be realized.

The following is a tabular reconciliation of the total amounts of deferred tax asset valuation allowance (in thousands):


	At December 31,
	2022		2021		2020
Balance at beginning of period	$	i 804	$	i 68,746	$	i 51,522
Valuation allowance - (reversal) charge	( i 65)		( i 67,942)		i 17,224

Balance at end of period	$	i 739	$	i 804	$	i 68,746

Unrecognized Tax Positions

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):

2022

2021

2020

Unrecognized tax benefit

Unrecognized tax benefit at beginning of period

i 2,151

i 1,714

i 1,435

Gross increases — tax positions in prior period

i 415

i 437

i 279

Unrecognized tax benefit at end of period

i 2,566

i 2,151

i 1,714

We analyzed filing positions in the federal, state, and foreign jurisdictions in which we are required to file income tax returns, as well as the open tax years in these jurisdictions. As of December 31, 2022, we recorded approximately $ i 2.6 million of unrecognized tax benefits, all of which would impact our effective tax rate, if recognized. We do not anticipate that our unrecognized tax benefits will materially change within the next 12 months. The Company has not accrued any penalties and interest for its unrecognized tax benefits. Other than the unrecognized tax benefit recorded, we believe that our income tax filing positions and deductions will be sustained upon audit, and we do not anticipate other adjustments that will result in a material change to our financial position. We may, from time to time, be assessed interest or penalties by tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. Our policy for recording interest and penalties associated with audits and unrecognized tax benefits is to record such items as a component of income tax in our Statements of Operations.

Foreign Operations

We had unrepatriated foreign earnings of approximately $ i 15.3 million as of December 31, 2022. These earnings are considered permanently reinvested, as it is management’s intention to reinvest these foreign earnings in foreign operations. We project sufficient cash flow, or borrowings available under our Senior Secured Credit Facilities in the U.S.; therefore, we do not need to repatriate our remaining foreign earnings to finance U.S. operations at this time. Due to the 2017 Tax Act, there is no U.S. federal tax on cash repatriation from foreign subsidiaries, however, it could be subject to foreign withholding and other taxes.

Other

We are subject to taxation in the U.S. and various states and foreign jurisdictions. We have a number of federal and state income tax years still open for examination as a result of our net operating loss carry-forwards. Accordingly, we are subject to examination for both U.S. federal and some of the state tax returns for the years 2005 to present. For the remaining state, local, and foreign jurisdictions, with some exceptions, we are no longer subject to examination by tax authorities for years before 2019.

18. i SEGMENT INFORMATION

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group (the “CODM”). Our CODM generally consists of the Chief Executive Officer, and the Chief Financial Officer. Our CODM allocates resources and measures profitability based on our operating segments, which are managed and reviewed separately, as each represents products and services that can be sold separately to our customers. Our segments are monitored by management for performance against our internal forecasts.

We have reported our financial performance based on our segments in both the current and prior periods. Our CODM determined that our operating segments for conducting business are: (i) Games and (ii) FinTech:

•Everi Games provides gaming operators with gaming technology and entertainment products and services, including: (i) gaming machines, primarily comprising Class II, Class III and HHR slot machines placed under participation or fixed-fee lease arrangements or sold to casino customers; (ii) providing and maintaining the central determinant systems for the VLTs installed in the State of New York and similar technology in certain tribal jurisdictions; and (iii) B2B digital online gaming activities.

•Everi FinTech provides gaming operators with financial technology products and services, including: (i) financial access and related services supporting digital, cashless and physical cash options across mobile, assisted and self-service channels; (ii) loyalty and marketing software and tools, RegTech software solutions, other information-related products and services, and hardware maintenance services; and (iii) associated casino patron self-service hardware that utilizes our financial access, software and other services. We also develop and offer mobile-first applications aimed at enhancing patron engagement for customers in the casino, sports, entertainment and hospitality industries. Our solutions are secured using an end-to-end security suite to protect against cyber-related attacks allowing us to maintain appropriate levels of security. These solutions include: access to cash and cashless funding at gaming facilities via ATM debit withdrawals, credit card financial access transactions, and POS debit card purchases at casino cages, kiosk and mobile POS devices; accounts for the CashClub Wallet, check warranty services, self-service loyalty and fully integrated kiosk maintenance services; self-service loyalty tools and promotion management software; compliance, audit, and data software; casino credit data and reporting services; marketing and promotional offering subscription-based services; and other ancillary offerings.

Corporate overhead expenses have been allocated to the segments either through specific identification or based on a reasonable methodology. In addition, we record depreciation and amortization expenses to the business segments.

Our business is predominantly domestic with no specific regional concentrations that were material to our results of operations or financial condition, and no significant assets in foreign locations.

The following tables present segment information (in thousands):

For the Year Ended December 31,

2022

2021

2020

Games

Revenue

Gaming operations

i 292,873

i 272,885

i 156,295

Gaming equipment and systems

i 143,553

i 103,844

i 44,006

Total revenues

i 436,426

i 376,729

i 200,301

Costs and expenses

Cost of revenues (1)

Gaming operations

i 25,153

i 21,663

i 15,648

Gaming equipment and systems

i 86,638

i 60,093

i 25,680

Cost of revenues

i 111,791

i 81,756

i 41,328

Operating expenses

i 76,496

i 70,150

i 63,789

Research and development

i 40,353

i 26,060

i 20,060

Depreciation

i 57,106

i 53,876

i 61,566

Amortization

i 43,044

i 42,866

i 59,926

Total costs and expenses

i 328,790

i 274,708

i 246,669

Operating income (loss)

i 107,636

i 102,021

( i 46,368)

(1) Exclusive of depreciation and amortization.

For the Year Ended December 31,

2022

2021

2020

FinTech

Revenues

Financial access services

i 206,860

i 178,019

i 112,035

Software and other

i 80,232

i 67,797

i 47,041

Hardware

i 59,001

i 37,840

i 24,297

Total revenues

i 346,093

i 283,656

i 183,373

Costs and expenses

Cost of revenues (1)

Financial access services

i 10,186

i 6,779

i 6,755

Software and other

i 4,125

i 4,129

i 3,029

Hardware

i 39,220

i 22,785

i 14,724

Cost of revenues

i 53,531

i 33,693

i 24,508

Operating expenses

i 140,463

i 118,750

i 88,757

Research and development

i 20,174

i 12,991

i 7,883

Depreciation

i 9,695

i 7,611

i 5,893

Amortization

i 16,514

i 15,121

i 15,379

Total costs and expenses

i 240,377

i 188,166

i 142,420

Operating income

i 105,716

i 95,490

i 40,953

(1) Exclusive of depreciation and amortization.

For the Year Ended December 31,

2022

2021

2020

Total Games and FinTech

Total revenues

i 782,519

i 660,385

i 383,674

Costs and expenses

Cost of revenues (1)

i 165,322

i 115,449

i 65,836

Operating expenses

i 216,959

i 188,900

i 152,546

Research and development

i 60,527

i 39,051

i 27,943

Depreciation

i 66,801

i 61,487

i 67,459

Amortization

i 59,558

i 57,987

i 75,305

Total costs and expenses

i 569,167

i 462,874

i 389,089

Operating income (loss)

i 213,352

i 197,511

( i 5,415)

(1) Exclusive of depreciation and amortization.

2022

2021

Total assets

Games

i 911,907

i 913,880

FinTech

i 1,006,336

i 721,770

Total assets

i 1,918,243

i 1,635,650

For the year ended December 31, 2022, cash spent for capital expenditures totaled $ i 127.6 million, of which $ i 96.0 million and $ i 31.6 million was related to our Games and FinTech businesses, respectively. For the year ended December 31, 2021, cash spent for capital expenditures totaled $ i 104.7 million, of which $ i 81.7 million and $ i 23.0 million, was related to our Games and FinTech businesses, respectively.

Major customers. For the years ended December 31, 2022, 2021, and 2020, no single customer accounted for more than 10% of our revenues.

19. i SUBSEQUENT EVENTS

As of the date of the filing of our consolidated financial statements, we had not identified, and were not aware of, any material subsequent events that occurred for the year ended December 31, 2022.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as December 31, 2022. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report on Form 10-K, the Company’s disclosure controls and procedures are effective such that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Management’s Report of Internal Control over Financial Reporting

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (“GAAP”). Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Management assessed the effectiveness of internal control over financial reporting as of December 31, 2022, utilizing the criteria described in the “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. Based on this assessment, management has concluded that our internal control over financial reporting was effective at a reasonable assurance level as of December 31, 2022.

On March 1, 2022, the Company acquired the stock of eCash Holdings Pty and wholly-owned subsidiaries Global Payments Technologies Australia Pty Limited, and ACN 121 187 068 Pty Limited (collectively “eCash”). On this basis, the Company is permitted to exclude acquisitions from its report on internal controls over financial reporting for the first year after the acquisition when it is not possible to conduct an assessment of the acquired business. The Company excluded eCash from its annual assessment of the effectiveness of internal control over financial reporting for the year ended December 31, 2022.

On April 30, 2022, the Company acquired the stock of Intuicode Gaming Corporation (“Intuicode”). The Company is permitted to exclude acquisitions from its report on internal controls over financial reporting for the first year after the acquisition when it is not possible to conduct an assessment of the acquired business. On this basis, the Company excluded Intuicode from its annual assessment of the effectiveness of internal control over financial reporting for the year ended December 31, 2022.

On October 14, 2022, the Company acquired certain strategic assets of Venuetize, Inc. (“Venuetize”). The Company is permitted to exclude acquisitions from its report on internal controls over financial reporting for the first year after the acquisition when it is not possible to conduct an assessment of the acquired business. On this basis, the Company excluded Venuetize from its annual assessment of the effectiveness of internal control over financial reporting for the year ended December 31, 2022.

The total assets and total revenues generated by the above-mentioned acquisitions that occurred in 2022 that were excluded from Management’s assessment represented approximately 4.7% and 2.7%, respectively, of the Company’s total assets and total revenues as of and for the year ended December 31, 2022.

Refer to “Part II — Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 4 — Business Combinations” for a further discussion of the above acquisitions and related financial data. We are in the process of integrating eCash, Intuicode and Venuetize into our internal control over financial reporting. As a result of these integration activities, certain controls are being evaluated and may change.

Our independent registered public accounting firm, BDO USA, LLP, independently assessed the effectiveness of the Company’s internal control over financial reporting, as stated in the firm’s attestation report, which is included on the following page.

Changes in Internal Control over Financial Reporting

Except as noted above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fourth quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

100

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Everi Holdings Inc. and Subsidiaries

Las Vegas, Nevada

Opinion on Internal Control over Financial Reporting

We have audited Everi Holdings Inc. and subsidiaries (the “Company’s”) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 28, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

As indicated in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of eCash, Intuicode and Venuetize (as defined in Item 9A), which were acquired on March 1, 2022, April 30, 2022 and October 14, 2022 respectively, and which are included in the consolidated balance sheet of the Company as of December 31, 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the year then ended. The above-mentioned acquired entities constituted in aggregate approximately 4.7% and 2.7% of the Company’s total assets and total revenues as of and for the year ended December 31, 2022, respectively. Management did not assess the effectiveness of internal control over financial reporting of eCash, Intuicode and Venuetize because of the timing of the acquisitions, which were completed during the year ended December 31, 2022. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of eCash, Intuicode and Venuetize.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

101

company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ BDO USA, LLP

Las Vegas, Nevada

February 28, 2023

102

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information regarding our directors, executive officers, and certain corporate governance related matters including our Code of Business Conduct, Standards and Ethics is contained under the headings “Proposal 1,” “Executive Officers,” and “Board and Corporate Governance Matters,” and to the extent applicable, “Delinquent Section 16(a) Reports” in the Company’s definitive proxy statement to be filed with the SEC in connection with our 2023 annual meeting of stockholders (the “2023 Proxy Statement”) is incorporated herein by reference.

Item 11. Executive Compensation.

The information regarding director compensation and executive officer compensation contained under the headings “Board and Corporate Governance Matters — Director Compensation” and “Executive Compensation,” respectively, in the 2023 Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information regarding share ownership contained under the heading “Security Ownership of Certain Beneficial Owners and Management” in the 2023 Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information regarding director independence and related party transactions under the headings “Board and Corporate Governance Matters — Director Independence” and “Certain Relationships and Related Transactions — Transactions with Related Persons,” respectively, in the 2023 Proxy Statement is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services.

The information regarding audit fees, audit-related fees, tax fees, all other fees, and the Audit Committee’s policies and procedures on pre-approval of audit and permissible non-audit services of independent auditors contained under the heading “Ratification of the Appointment of Independent Registered Public Accounting Firm” in the 2023 Proxy Statement is incorporated herein by reference.

103

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)The following documents are filed as part of this Annual Report on Form 10‑K:

1. Financial Statements


Report of Independent Registered Public Accounting Firm (BDO USA, LLP; Las Vegas, NV; PCAOB ID#243)						53
Consolidated Statements of Operations and Comprehensive Income (Loss) for the three years ended December 31, 2022, 2021 and 2020						55
Consolidated Balance Sheets as of December 31, 202 2 and 202 1						57
Consolidated Statements of Cash Flows for the three years ended December 31, 2022, 2021 and 2020						58
Consolidated Statements of Stockholders’ Equity (Deficit) for the three years ended December 31, 2022, 2021, and 2020						59
Notes to Consolidated Financial Statements						60

2. Financial Statement Schedules

All schedules have been omitted as they are either not required or not applicable or the required information is included in the Consolidated Financial Statements or notes thereto.

3. See Item 15(b)

(b) Exhibits:


Exhibit Number						Exhibit Description

3.1						Amended and Restated Certificate of Incorporation of Everi Holdings (incorporated by reference to Exhibit 3.1 of Amendment No.1 Everi Holdings’ Registration Statement on Form S-1 (Registration No. 333-123514) filed with the SEC on May 26, 2005).

3.2						Certificate of Amendment of Amended and Restated Certificate of Incorporation of Everi Holdings (incorporated by reference to Exhibit 3.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on April 30, 2009).

3.3						Certificate of Amendment of Amended and Restated Certificate of Incorporation of Everi Holdings (incorporated by reference to Exhibit 3.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on August 14, 2015).

3.4						Second Amended and Restated Bylaws of Everi Holdings (effective as of August 24, 2015) (incorporated by reference to Exhibit 3.2 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on August 14, 2015).

4.1						Indenture (and Form of 5.000% Senior Unsecured Notes due 2029 attached as Exhibit A thereto), dated as of July 15, 2021, by and among Everi Holdings Inc., certain of its wholly owned subsidiaries, as guarantors, and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on July 15, 2021).

4.2						Indenture (and Form of 7.50% Senior Note due 2025 attached as Exhibit A thereto), dated as of December 5, 2017, by and among Everi FinTech, Everi Holdings, certain of its wholly owned subsidiaries, as guarantors, and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on December 5, 2017).

104


Exhibit Number						Exhibit Description
4.3						First Supplemental Indenture, dated as of December 13, 2019, by and among Everi FinTech, Everi Holdings, certain of its wholly owned subsidiaries, as guarantors, and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 1.2 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on December 17, 2019).

4.4						Description of Securities (incorporated by reference to Exhibit 4.3 of Everi Holdings’ Annual Report on Form 10-K filed with the SEC on March 2, 2020).

10.1						Fifth Amendment to Credit Agreement, dated February 2, 2021, among Everi Payments Inc., as borrower, Everi Holdings Inc., as parent, the subsidiary guarantors party thereto, and Jefferies Finance LLC, as administrative agent (incorporated by reference to Exhibit 10.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on February 2, 2021 ).

10.2						Employment Agreement with Kate C. Lowenhar-Fisher, dated March 10, 2021 (incorporated by reference to Exhibit 10.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on March 15, 2021).

10.3						Credit Agreement, dated as of August 3, 2021, among the Company, the lenders party thereto and Jefferies Finance LLC, as administrative agent, collateral agent, swing line lender and a letter of credit issuer (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on August 3, 2021).

10.4						Security Agreement, dated August 3, 2021, among the Company, as a guarantor, the subsidiary guarantors party thereto, and Jefferies Finance LLC, as collateral agent, related to the Credit Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on August 3, 2021).

10.5						Guaranty, dated August 3, 2021, among the Company, as a guarantor, the subsidiary guarantors party thereto, and Jefferies Finance LLC, as collateral agent, related to the Credit Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on August 3, 2021).

10.6						Credit Agreement, dated as of May 9, 2017, among Everi FinTech, Everi Holdings, the lenders party thereto and Jefferies Finance LLC, as administrative agent, collateral agent, swing line lender, letter of credit issuer, sole lead arranger and sole book manager (incorporated by reference to Exhibit 10.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 9, 2017).

10.7						Security Agreement, dated as of May 9, 2017, among Everi FinTech, Everi Holdings, as a guarantor, the subsidiary guarantors party thereto, and Jefferies Finance LLC, as collateral agent, related to the Credit Agreement (incorporated by reference to Exhibit 10.2 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 9, 2017).

10.8						Guaranty, dated May 9, 2017, by Everi Holdings, as a guarantor, and the subsidiary guarantors party thereto, in favor of the lenders party from time to time to the Credit Agreement and Jefferies Finance LLC, as administrative agent (incorporated by reference to Exhibit 10.3 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 9, 2017).

10.9						First Amendment to Credit Agreement, dated November 13, 2017, among Everi FinTech, Everi Holdings, the subsidiary guarantors party thereto, the lenders party thereto and Jefferies Finance LLC, as administrative agent (incorporated by reference to Exhibit 10.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on November 13, 2017).

10.10						American State Bank Sponsorship Agreement, dated February 11, 2011, between Everi FinTech and American State Bank (incorporated by reference to Exhibit 10.54 of Everi Holdings’ Annual Report on Form 10-K filed with the SEC on March 14, 2011).

†10.11						Everi Holdings 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.25 of the Annual Report on Form 10-K of Everi FinTech filed with the SEC on March 10, 2005).

105


Exhibit Number						Exhibit Description
†10.12						Form of Stock Option Award for Performance Price Vesting under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).

†10.13						Form of Stock Option Award for Cliff Vesting under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).

†10.14						Form of Stock Option Award for Non-Employee Directors under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).

†10.15						Form of Stock Option Award for Executives under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).

†10.16						Form of Stock Option Award for Employees under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 5, 2014).

†10.17						Everi Holdings Amended and Restated 2014 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to Everi Holdings’ Form S-8 filed with the SEC on May 19, 2021).

†10.18						Form of Stock Option Agreement under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.19						Form of Stock Option Award (Performance-Based) (Double-Trigger Acceleration) for Non-Employee Directors under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.20						Form of Stock Option Award (Performance-Based) (Double-Trigger Acceleration) for Executives under the Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.21						Form of Stock Option Award (Time-Based) (Double-Trigger Acceleration) for Non-Employee Directors under the Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.22						Form of Stock Option Award (Time-Based) (Double-Trigger Acceleration) for Executives under the Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.23						Form of Stock Option Award (Time-Based) (Double-Trigger Acceleration) for Employees under the Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.24						Everi Holdings 2012 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to Everi Holdings’ Current Report on Form S-8 filed with the SEC on March 16, 2015).

†10.25						Amendment to the Everi Holdings 2012 Equity Incentive Plan (incorporated by reference to Exhibit 99.2 to Everi Holdings’ Current Report on Form S-8 filed with the SEC on March 16, 2015).

†10.26						Form of Stock Option Agreement under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.13 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.27						Form of Stock Option Award (Performance-Based) (Double-Trigger Acceleration) for Non-Employee Directors under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

106


Exhibit Number						Exhibit Description
†10.28						Form of Stock Option Award (Performance-Based) (Double-Trigger Acceleration) for Executives under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.29						Form of Stock Option Award (Time-Based) (Double-Trigger Acceleration) for Non-Employee Directors under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.30						Form of Stock Option Award (Time-Based) (Double-Trigger Acceleration) for Executives under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.11 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.31						Form of Stock Option Award (Time-Based) (Double-Trigger Acceleration) for Employees under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.12 to Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 10, 2016).

†10.32						Amended and Restated Employment Agreement with Michael Rumbolz (effective May 5, 2017) (incorporated by reference to Exhibit 10.4 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 9, 2017).

†10.33						Notice of Grant of Stock Option with Michael Rumbolz, dated February 13, 2016 (incorporated by reference to Exhibit 10.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on February 16, 2016).

†10.34						Form of Notice of Stock Option Award and Stock Option Award Agreement for Michael Rumbolz (effective August 30, 2010) (incorporated by reference to Exhibit 10.3 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on September 2, 2010).

10.35						Second Amendment to Credit Agreement, dated May 17, 2018, among Everi FinTech, Everi Holdings, the subsidiary guarantors party thereto, the lenders party thereto and Jefferies Finance LLC, as administrative agent (incorporated by reference to Exhibit 10.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on May 17, 2018).

†10.36						First Amendment to Amended and Restated Employment Agreement with Michael Rumbolz (effective February 1, 2019) (incorporated by reference to Exhibit 10.40 of Everi Holdings’ Annual Report on Form 10-K filed with the SEC on March 12, 2019).

†10.37						Notice of Grant of Restricted Stock Units (Time-Based) under the 2014 Equity Incentive Plan for Michael Rumbolz (effective February 1, 2019) (incorporated by reference to Exhibit 10.41 of Everi Holdings’ Annual Report on Form 10-K filed with the SEC on March 12, 2019).

†10.38						Employment Agreement with Dean A. Ehrlich (effective January 1, 2017) (incorporated by reference to Exhibit 10.1 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on May 9, 2018).

†10.39						Form of Deferred Restricted Stock Units Agreement for Non-Employee Directors under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018).

†10.40						Form of Notice of Grant of Deferred Restricted Stock Units for the Non-Employee Directors under the 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018).

†10.41						Form of Deferred Restricted Stock Units Agreement for Non-Employee Directors under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018).

†10.42						Form of Notice of Grant of Deferred Restricted Stock Units Agreement for Non-Employee Directors under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018).

107


Exhibit Number						Exhibit Description
†10.43						Form of Restricted Stock Units Agreement under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018).

†10.44						Form of Notice of Grant of Restricted Stock Units (Performance-Based) for Executives under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018).

†10.45						Form of Notice of Grant of Restricted Stock Units (Time-Based) under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018).

†10.46						Form of Notice of Grant of Restricted Stock Units (Time-Based) for Executives under the 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018).

†10.47						Form of Indemnification Agreement between Everi Holdings and each of its executive officers and directors (incorporated by reference to Exhibit 10.2 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on May 7, 2019).

†10.48						Form of Notice of Grant of Restricted Stock Units (Performance-Based) for Executives under the Amended and Restated 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on August 6, 2019).

10.49						Third Amendment to Credit Agreement, dated December 12, 2019, among Everi FinTech, Everi Holdings, the subsidiary guarantors party thereto, the lenders party thereto and Jefferies Finance LLC, as administrative agent (incorporated by reference to Exhibit 1.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on December 17, 2019).

†10.50						Fourth Amendment to Credit Agreement, dated April 21, 2020, among Everi Payments Inc., as borrower, Everi Holdings Inc., as parent, the subsidiary guarantors party thereto, the lenders party thereto, and Jefferies Finance LLC, as administrative agent (incorporated by reference to Exhibit 10.1 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on April 21, 2020).

†10.51						Term Loan Credit Agreement, dated April 21, 2020, among Everi Payments Inc., as borrower, Everi Holdings Inc., as parent, the lenders party thereto, and Jefferies Finance LLC, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.2 of Everi Holdings’ Current Report on Form 8-K filed with the SEC on April 21, 2020).

†10.52						Form of Notice of Grant of Restricted Stock Units (Time-Based) for Cliff Vesting under the Amended and Restated 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.53						Form of Notice of Grant of Restricted Stock Units (Time-Based) for Cliff Vesting for Executives under the Amended and Restated 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.54						Form of Notice of Grant of Restricted Stock Units (Time-Based) for Executives under the Amended and Restated 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.55						Second Amendment to the Amended and Restated Employment Agreement with Michael D. Rumbolz (effective April 1, 2020) (incorporated by reference to Exhibit 10.6 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.56						Notice of Grant of Restricted Stock Units (Time-Based) under the Amended and Restated 2014 Equity Incentive Plan for Michael D. Rumbolz (effective April 1, 2020) (incorporated by reference to Exhibit 10.7 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

108


Exhibit Number						Exhibit Description

†10.57						Amended and Restated Employment Agreement with Randy L. Taylor (effective April 1, 2020) (incorporated by reference to Exhibit 10.8 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.58						Notice of Grant of Restricted Stock Units (Time-Based) under the Amended and Restated 2014 Equity Incentive Plan for Randy L. Taylor (effective April 1, 2020) (incorporated by reference to Exhibit 10.9 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.59						Amended and Restated Employment Agreement with David J. Lucchese (effective April 1, 2020) (incorporated by reference to Exhibit 10.12 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.60						First Amendment to Employment Agreement with Dean A. Ehrlich (effective April 1, 2020) (incorporated by reference to Exhibit 10.13 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.61						Employment Agreement with Mark F. Labay (effective April 1, 2020) (incorporated by reference to Exhibit 10.14 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.62						Employment Agreement with Darren D.A. Simmons (effective January 1, 2019) (incorporated by reference to Exhibit 10.15 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

†10.63						First Amendment to Employment Agreement with Darren D.A. Simmons (effective April 1, 2020) (incorporated by reference to Exhibit 10.16 of Everi Holdings’ Quarterly Report on Form 10-Q filed with the SEC on June 2, 2020).

+10.64						First Amendment to Sponsorship Agreement (effective March 11, 2013) between Prosperity Bank, successor by merger to American State Bank, and Everi FinTech (incorporated by reference to Exhibit 10.60 of Everi Holdings’ Annual Report on Form 10-K filed on March 15, 2021).

+10.65						Second Amendment to Sponsorship Agreement (effective September 10, 2013) between Prosperity Bank, successor by merger to American State Bank, and Everi Fin Tech (incorporated by reference to Exhibit 10.61 of Everi Holdings’ Annual Report on Form 10-K filed on March 15, 2021).

10.66						Third Amendment to the Sponsorship Agreement (effective October 31, 2014) between Prosperity Bank, successor by merger to American State Bank, and Everi FinTech (incorporated by reference to Exhibit 10.62 of Everi Holdings’ Annual Report on Form 10-K filed on March 15, 2021).

+10.67						Amended and Restated Agreement for Processing Services (effective July 1, 2020) by and between Cardtronics USA, as successor in interest to Columbus Data Services, LLC, and Everi FinTech (incorporated by reference to Exhibit 10.63 of Everi Holdings’ Annual Report on Form 10-K filed on March 15, 2021).

†10.68						Executive Chairman Agreement with Michael D. Rumbolz (effective April 1, 2022) (incorporated by reference to Exhibit 10.68 of Everi Holdings ’ Annual Report on Form 10 -K filed on March 1, 2022).

†10.69						Employment Agreement with Randy L. Taylor (effective April 1, 2022) (incorporated by reference to Exhibit 10.69 of Everi Holdings ’ Annual Report on Form 10-K filed on March 1, 2022).

*10.70						Fourth Amendment to the Sponsorship Agreement (effective February 1, 20 22 ) between Prosperity Bank, successor by merger to American State Bank, and Everi FinTech.

*21.1						Subsidiaries of Everi Holdings Inc.

*23.1						Consent of BDO USA, LLP.

109


Exhibit Number						Exhibit Description
*24.1						Power of Attorney (included on signature page).

*31.1						Certification of Randy L. Taylor , Chief Executive Officer of Everi Holdings in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2						Certification of Mark F. Labay, Chief Financial Officer of Everi Holdings in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

**32.1						Certification of the Chief Executive Officer and Chief Financial Officer of Everi Holdings in accordance with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS						XBRL Instance Document - this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*101.SCH						Inline XBRL Taxonomy Extension Schema Document.

*101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

*101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.

*101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.

*101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

*104						The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL (included as Exhibit 101).


*			Filed herewith.
**			Furnished herewith.
†			Management contracts or compensatory plans or arrangements.
+			Portions of the exhibit have been omitted pursuant to the rules and regulations of the SEC.

Item 16. Form 10-K Summary.

None.

110

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.


Dated: March 1, 2023	EVERI HOLDINGS INC.

	By:	/s/ *TODD A. VALLI*
		Todd A. Valli Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Randy L. Taylor, Mark F. Labay, and Todd A. Valli and each of them, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature

Title

Date

/s/ RANDY L. TAYLOR

President and Chief Executive Officer and Director

Randy L. Taylor

(Principal Executive Officer)

/s/ MARK F. LABAY

Executive Vice President, Chief Financial Officer

Mark F. Labay

(Principal Financial Officer) and Treasurer

/s/ TODD A. VALLI

Senior Vice President, Chief Accounting Officer

Todd A. Valli

(Principal Accounting Officer)

/s/ MICHAEL D. RUMBOLZ

Executive Chairman of the Board

Michael D. Rumbolz

Director

/s/ ATUL BALI

Lead Independent Director

Atul Bali

/s/ GEOFFREY P. JUDGE

Director

Geoffrey P. Judge

/s/ LINSTER W. FOX

Director

Linster W. Fox

/s/ MAUREEN T. MULLARKEY

Director

Maureen T. Mullarkey

/s/ SECIL TABLI WATSON

Director

Secil Tabli Watson

/s/ PAUL FINCH

Director