View Filing Data

(in thousands)

Consolidated Balance Sheet Location

March 31, 2020

December 31, 2019

Liabilities:

Contract liabilities, net (current)

Customer deposits and advance payments

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Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2020	May 08, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2020
Document Transition Report	false
Entity File Number	001-37872
Entity Registrant Name	Priority Technology Holdings, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-4257046
Entity Address, Address Line One	2001 Westside Parkway
Entity Address, Address Line Two	Suite 155
Entity Address, City or Town	Alpharetta,
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30004
City Area Code	(800)
Local Phone Number	935-5964
Title of 12(b) Security	Common stock, par value $0.001
Trading Symbol	PRTH
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		67,114,135
Entity Central Index Key	0001653558
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current Assets:
Cash	$ 2,858	$ 3,234
Restricted cash	36,873	47,231
Accounts receivable, net of allowance for doubtful accounts of $989 and $803	37,362	37,993
Prepaid expenses and other current assets	3,445	3,897
Current portion of notes receivable	1,266	1,326
Settlement assets	456	533
Total current assets	82,260	94,214
Notes receivable, less current portion	5,382	4,395
Property, equipment, and software, net	24,060	23,518
Goodwill	109,515	109,515
Intangible assets, net	175,303	182,826
Deferred income taxes, net	50,890	49,657
Other non-current assets	509	380
Total assets	447,919	464,505
Current liabilities:
Accounts payable and accrued expenses	24,413	26,965
Accrued residual commissions	18,326	19,315
Customer deposits and advance payments	3,281	4,928
Current portion of long-term debt	7,866	4,007
Settlement obligations	30,665	37,789
Total current liabilities	84,551	93,004
Long-term debt, net of current portion, discounts and debt issuance costs	483,319	485,578
Other non-current liabilities	6,269	6,612
Total long-term liabilities	489,588	492,190
Total liabilities	574,139	585,194
Commitments and Contingencies (Notes 10 and 11)
Stockholders' deficit:
Preferred stock	0	0
Common stock	68	68
Additional paid-in capital	3,989	3,651
Treasury stock, 451,224 common shares, at cost	(2,388)	(2,388)
Accumulated deficit	(133,543)	(127,674)
Total Priority Technology Holdings, Inc. stockholders' deficit	(131,874)	(126,343)
Non-controlling interest in a subsidiary	5,654	5,654
Total stockholders' deficit	(126,220)	(120,689)
Total liabilities and stockholders' deficit	$ 447,919	$ 464,505

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 989	$ 803
Treasury stock (in shares)	451,224	451,224

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
REVENUES
REVENUES	$ 96,933	$ 87,646
OPERATING EXPENSES:
Costs of services	66,364	60,106
Salary and employee benefits	10,129	10,899
Depreciation and amortization	10,272	8,925
Selling, general and administrative	6,609	6,750
Total operating expenses	93,374	86,680
Income from operations	3,559	966
OTHER INCOME (EXPENSES):
Interest expense	(10,315)	(9,363)
Other (expense) income, net	(346)	227
Total other expenses, net	(10,661)	(9,136)
Loss before income taxes	(7,102)	(8,170)
Income tax benefit	(1,233)	(1,724)
Net loss	$ (5,869)	$ (6,446)
Loss per common share:
Basic and diluted (USD per share)	$ (0.09)	$ (0.10)
Weighted-average common shares outstanding:
Weighted-average common shares outstanding - basic and diluted (in shares)	67,061	67,164

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net loss	$ (5,869)	$ (6,446)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of assets	10,272	8,925
Stock-based compensation	338	1,160
Amortization of debt issuance costs and discounts	460	405
Deferred income tax benefit	(1,699)	(1,621)
Change in allowance for deferred tax assets	466	0
Payment-in-kind interest	1,391	1,210
Other non-cash items	208	(168)
Change in operating assets and liabilities:
Accounts receivable	631	(2,252)
Settlement assets and obligations, net	(7,047)	2,285
Prepaid expenses and other current assets	390	(752)
Notes receivable	(927)	(324)
Accounts payable and other accrued liabilities	(3,541)	(4,089)
Customer deposits and advance payments	(1,647)	455
Other assets and liabilities	(680)	(28)
Net cash used in operating activities	(7,254)	(1,240)
Cash flows from investing activities:
Additions to property, equipment and software	(2,281)	(2,382)
Acquisitions of intangible assets	(948)	(79,612)
Other investing activity	0	(184)
Net cash used in investing activities	(3,229)	(82,178)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of issue discount	0	69,650
Repayment of long-term debt	(1,002)	(823)
Debt modification costs	(2,749)	0
Borrowings under revolving credit facility	3,500	10,000
Net cash (used in) provided by financing activities	(251)	78,827
Net decrease in cash and restricted cash	(10,734)	(4,591)
Cash and restricted cash at beginning of year	50,465	33,831
Cash and restricted cash at March 31	39,731	29,240
Supplemental cash flow information:
Cash paid for interest	8,186	7,126
Non-cash investing and financing activities:
Intangible assets acquired by issuing non-controlling interest in a subsidiary	0	5,654
Reconciliation of cash and restricted cash:
Total cash and restricted cash	$ 39,731	$ 29,240

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Business, Consolidation, and Presentation Priority Technology Holdings, Inc. and its consolidated subsidiaries are referred to herein collectively as "Priority," "PRTH," the "Company," "we," "our" or "us," unless the context requires otherwise. Priority is provider of merchant acquiring, integrated payment software and commercial payment solutions. The Company operates on a calendar year ending each December 31 and on four calendar quarters ending on March 31, June 30, September 30, and December 31 of each year. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These unaudited condensed consolidated financial statements include the accounts of the Company including those of its majority-owned subsidiaries, and all material intercompany balances and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The consolidated balance sheet as of December 31, 2019 was derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 but does not include all disclosures required by GAAP for annual financial statements. In the opinion of the Company's management, all known adjustments necessary for a fair presentation of the results of the interim periods have been made. These adjustments consist of normal recurring accruals and estimates that affect the carrying amount of assets and liabilities. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. In particular, the magnitude, duration and effects of the COVID-19 pandemic are difficult to predict at this time, and the ultimate effect could result in future charges related to the recoverability of assets, including financial assets, long-lived assets, goodwill, and other losses. Status as an Emerging Growth Company The Company remains an "emerging growth company" (EGC), as defined in the Jumpstart Our Business Startups Act of 2012. The Company may remain an EGC until December 31, 2021. However, if the Company's non-convertible debt issued within a rolling three-year period exceeds $1.0 billion, the Company would cease to be an EGC immediately, or if its revenue for any fiscal year exceed $1.07 billion, or the market value of its common stock that is held by non-affiliates exceeds $700.0 million on the last day of the second quarter of any given year, the Company would cease to be an EGC as of the beginning of the following year. As an EGC, the Company may continue to elect to delay the adoption of any new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. Additionally, as a smaller reporting company ("SRC") as defined by the SEC, the Company has the option to adopt certain new or revised accounting standards on a permitted delayed basis that is not available to other public companies not meeting the definition of a SRC. Therefore, the Company's financial statements may not be comparable to other public companies. Comprehensive Income (Loss) For the three-month periods ended March 31, 2020 and 2019, the Company had no activities to report as components of other comprehensive income (loss). Therefore, no separate Statement of Comprehensive Income (Loss) was prepared for any reporting period as the Company's net loss from continuing operations comprises all of its comprehensive loss. Comparability of Reporting Periods Certain prior period amounts in these unaudited condensed consolidated financial statements have been reclassified to conform to the current period presentation, with no net effect on income from operations, loss before income taxes, net loss, stockholders' deficit, or cash flows from operations, investing, or financing activities for any period presented. The Company adopted Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, for the 2019 annual reporting period included in its Annual Report on Form 10-K for the year ended December 31, 2019 using the full retrospective transition method. Accordingly, the unaudited condensed consolidated statement of operations for the three months ended March 31, 2019 presented herein has been recasted to retroactively reflect the provisions of ASC 606. The adoption of ASC 606 had no net effect on the Company's income from operations, loss before income taxes, net loss, consolidated balance sheet, or cash flows from operations, investing, or financing activities. Accounting Policies and New Accounting Standards Adopted There have been no material changes to the Company's accounting policies as described in its most recent Annual Report on Form 10-K for the year ended December 31, 2019. The Company did not adopt any new accounting standards during the three months ended March 31, 2020, except for ASU 2018-13, as described below. Disclosures for Fair Value Measurements (ASU 2018-13) On January 1, 2020, the Company adopted Accounting Standards Update ("ASU") No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). ASU 2018-13 eliminated, added, and modified certain disclosure requirements for fair value measurements as part of the FASB's disclosure framework project. Certain amendments must be applied prospectively while others are applied on a retrospective basis to all periods presented. As disclosure guidance, the adoption of this ASU had no effect on the Company's financial position, results of operations or cash flows. Note 14, Fair Value, reflects the disclosure provisions of ASU 2018-13. Recently Issued Accounting Standards Not Yet Adopted The following standards are pending adoption and will likely apply to the Company in future periods based on the Company's current business activities: Reference Rate Reform (ASU 2020-04) On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financial Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contact at the modification date or reassess a previous accounting determination. ASU 2020-04 can be adopted at any time before December 31, 2022. The provisions of ASU 2020-04 may impact the Company if future debt modifications or refinancings utilize one or more of the reference rates covered by the provisions of this ASU. Leases (ASC 842) In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, Leases-Topic 842, which has been codified in ASC 842, Leases, and supplemented by subsequent ASUs. Under this new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases): 1) a lease liability equal to the lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and 2) a right-of-use asset which will represent the lessee's right to use, or control the use of, a specified asset for the lease term. As an EGC, this standard is effective for the Company's annual reporting period beginning in 2021 and interim reporting periods beginning first quarter of 2022. The FASB has recently proposed delaying the effective date of ASC 842 for certain entities. If the proposal becomes effective, the Company will be required to adopt ASC 842 for interim and annual periods beginning January 1, 2022 based on the current expectation for the expiration of the Company's EGC status. The adoption of ASC 842 will require the Company to recognize non-current assets and liabilities for right-of-use assets and operating lease liabilities on its consolidated balance sheet, but it is not expected to have a material effect on the Company's results of operations or cash flows. ASC 842 will also require additional footnote disclosures to the Company's consolidated financial statements. Credit Losses (ASU 2016-13) In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This new guidance will change how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 will replace the current "incurred loss" model with an "expected loss" model. Under the "incurred loss" model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been "incurred"). Under the "expected loss" model, a loss (or allowance) is recognized upon initial recognition of the asset that reflects all future events that leads to a loss being realized, regardless of whether it is probable that the future event will occur. The "incurred loss" model considers past events and current conditions, while the "expected loss" model includes expectations for the future which have yet to occur. The standard will require entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the potential impact that ASU 2016-13 may have on the timing of recognizing future provisions for expected losses on the Company's accounts receivable. As a Smaller Reporting Company (as defined by the SEC), the Company must adopt this new standard no later than the beginning of 2023. Goodwill Impairment Testing (ASU 2017-04) In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 will eliminate the requirement to calculate the implied fair value of goodwill (i.e., step 2 of the current goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value (i.e., measure the charge based on the current step 1). Any impairment charge will be limited to the amount of goodwill allocated to an impacted reporting unit. ASU 2017-04 will not change the current guidance for completing Step 1 of the goodwill impairment test, and an entity will still be able to perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. Upon adoption, the ASU will be applied prospectively. As an EGC, this ASU will be effective for annual and interim impairment tests performed in periods beginning in 2022. The impact that ASU 2017-04 may have on the Company's financial condition or results of operations will depend on the circumstances of any goodwill impairment event that may occur after adoption. Share-Based Payments to Non-Employees (ASU 2018-07) In June 2018, the FASB issued ASU 2018-07, Share-based Payments to Non-Employees, to simplify the accounting for share-based payments to non-employees by aligning it with the accounting for share-based payments to employees, with certain exceptions. As an EGC, the ASU is effective for annual reporting periods beginning in 2020 and interim periods within annual periods beginning first quarter 2021. The Company is evaluating the impact this ASU will have on its consolidated financial statements, and such impact will be dependent on any share-based payments issued to non-employees. Share-Based Payments to Customers (ASU 2019-08) In November 2019, the FASB issued ASU 2019-08, Stock Compensation and Revenue from Contracts with Customers ("ASU 2019-08"). ASU 2019-08 will apply to share-based payments granted in conjunction with the sale of goods and services to a customer that are not in exchange for a distinct good or service. Entities will apply ASC 718 to measure and classify share-based sales incentives, and reflect the measurement of such incentives, as a reduction of the transaction price and also recognize such incentives in accordance with the guidance in ASC 606 on consideration payable to a customer. Entities that receive distinct goods or services from a customer will account for the share-based payment in the same manner as they account for other purchases from suppliers (i.e., by applying the guidance in ASC 718). Any excess of the fair-value-based measure of the share-based payment award over the fair value of the distinct goods or services received will be reflected as a reduction to the transaction price and recognized in accordance with the guidance in ASC 606 on consideration payable to a customer. ASU 2019-08 is effective for the Company at the same time it adopts ASU 2018-07, which is annual reporting periods beginning in 2020 and interim periods within annual periods beginning first quarter 2021. The Company is evaluating the impact this ASU will have on its consolidated financial statements, and such impact will be dependent on any share-based payments issued to customers. Implementation Costs Incurred in Cloud Computing Arrangements (ASU 2018-15) In August 2018, the FASB issued ASU 2018-15, Implementation Costs Incurred in Cloud Computing Arrangements ("ASU 2018-15"), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). As an EGC, this ASU is effective for the Company for annual reporting periods beginning in 2021, and interim periods within annual periods beginning in 2022. The amendments should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is evaluating the impact this ASU will have on its consolidated financial statements. Simplifying the Accounting for Income Taxes (ASU 2019-12) In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 will affect several topics of income tax accounting, including: tax-basis step-up in goodwill obtained in a transaction that is not a business combination; intra-period tax allocation; ownership changes in investments when an equity method investment becomes a subsidiary of an entity; interim-period accounting for enacted changes in tax law; and year-to-date loss limitation in interim-period tax accounting. This ASU is effective for the Company on January 1, 2022. The effects that the adoption of this ASU will have on the Company's results of operations, financial position, and cash flows will depend on specific events occurring for the Company after the adoption of ASU 2019-12.

REVENUES

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

REVENUES

For all periods presented, substantially all of the Company’s revenues from services were recognized over time. Revenues and commissions earned from the sales of payment equipment were typically recognized at a point in time.

The following table presents a disaggregation of the Company's consolidated revenues by type, and the relationships to the Company's reportable segments, for the three months ended March 31, 2020 and 2019:



(in thousands)	Three Months Ended March 31,
	2020		2019

Revenue Type

Merchant card fees	$	89,086	$	79,594
Outsourced services	5,662		5,977
Other services	1,129		1,433
Equipment	1,056		642
Total revenues	$	96,933	$	87,646

The Company's revenues by type are earned in the Company's reportable segments as follows: merchant card fees primarily in Consumer Payments; outsourced services revenues primarily in Commercial Payments; other services revenues in Commercial Payments and Integrated Partners; and equipment revenues in Consumer Payments.

Transaction Price Allocated to Future Performance Obligations

ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations. However, as allowed by ASC 606, the Company has elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. As described above, the Company’s most significant performance obligations consist of variable consideration under a stand-ready series of distinct days of service. Such variable consideration meets the specified criteria for the disclosure exclusion. Therefore, the majority of the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied is variable consideration that is not required for this disclosure. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material.

Contract Costs

For new, renewed, or anticipated contracts with customers, the Company does not incur material amounts of incremental costs to obtain such contracts, as those costs are defined by ASC 340-40.

Fulfillment costs, as defined by ASC 340-40, typically benefit only the period (typically a month in duration) in which they are incurred and therefore are expensed in the period incurred (i.e., not capitalized) unless they meet criteria to be capitalized under other accounting guidance.

The Company pays commissions to most of its ISOs, and for certain ISOs the Company also pays (through a higher commission rate) them to provide customer service and other services directly to our merchant customers. The ISO is typically an independent contractor or agent of the Company. Although certain ISOs may have merchant portability rights, the merchant meets the definition of a customer for the Company even if the ISO has merchant portability rights. Since payments to ISOs are dependent substantially on variable merchant payment volumes generated after the merchant enters into a new or renewed contract, these payments to ISOs are not deemed to be a cost to acquire a new contract since the ISO payments are based on factors that will arise subsequent to the event of obtaining a new or renewed contract. Also, payments to ISOs pertain only to a specific month’s activity. For payments made, or due, to an ISO, the expenses are reported within income from operations on our statements of operations.

The Company from time-to-time may elect to buy out all or a portion of an ISO’s rights to receive future commission payments related to certain merchants. Amounts paid to the ISO for these residual buyouts are capitalized by the Company under the accounting guidance for intangible assets.

Contract Assets and Contract Liabilities

A contract with a customer creates legal rights and obligations. As the Company performs under customer contracts, its right to consideration that is unconditional is considered to be accounts receivable. If the Company’s right to consideration for such performance is contingent upon a future event or satisfaction of additional performance obligations, the amount of revenues recognized in excess of the amount billed to the customer is recognized as a contract asset. Contract liabilities represent consideration received from customers in excess of revenues recognized. Material contract assets and liabilities are presented net at the individual contract level in the consolidated balance sheet and are classified as current or noncurrent based on the nature of the underlying contractual rights and obligations.

Supplemental balance sheet information related to contracts from customers as of March 31, 2020 and December 31, 2019 was as follows:

The balance for the contract liabilities was approximately $1,738,000 and $1,776,000 at March 31, 2019 and January 1, 2019, respectively. Substantially all of these balances are recognized as revenue within twelve months. The changes in the balances during the three months ended March 31, 2020 and 2019 were due to the timing of advance payments received from the customer.

Net contract assets were not material for any period presented.

Impairment losses recognized on receivables or contract assets arising from the Company's contracts with customers were not material for the three months ended March 31, 2020 and 2019.

ASSET ACQUISITIONS	3 Months Ended
ASSET ACQUISITIONS	Mar. 31, 2020
Asset Acquisition [Abstract]
ACQUISITIONS ASSETS	ASSET ACQUISITIONS YapStone In March 2019, the Company, through one of its subsidiaries, Priority Real Estate Technology, LLC ("PRET"), acquired certain assets and assumed certain related liabilities (the "YapStone net assets") from YapStone, Inc. ("YapStone") under an asset purchase and contribution agreement. The purchase price for the YapStone net assets was $65.0 million in cash plus a non-controlling interest in PRET. The fair value of the non-controlling interest was estimated to be approximately $5.7 million. The total purchase price was assigned to customer relationships, except for $1.0 million and $1.2 million which were assigned to a software license agreement and a services agreement, respectively. The $65.0 million of cash was funded from a draw down of the Senior Credit Facility on a delayed basis as provided for and pursuant to the third amendment thereto executed in December 2018. During the three months ended March 31, 2020 and 2019, no earnings of PRET were allocated to the non-controlling interest pursuant to the profit-sharing agreement between the Company and the non-controlling interest. See Note 10, Commitments and Contingencies, for information about merchant portfolios acquired in 2019 that included contingent purchase prices. See Note 11, Related Party Transactions, for information about assets contributed to the Company during the first quarter of 2019 that involved a contingent purchase price.

SETTLEMENT ASSETS AND OBLIGATIONS

3 Months Ended

Mar. 31, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

SETTLEMENT ASSETS AND OBLIGATIONS

Consumer Payments Segment

In the Company’s Consumer Payments reportable segment, funds settlement refers to the process of transferring funds for sales and credits between card issuers and merchants. The standards of the card networks restrict non-members, such as the Company, from performing funds settlement or accessing merchant settlement funds. Instead, these funds must be in the possession of a member bank until the merchant is funded. The Company has agreements with member banks which allow the Company to route transactions under the member bank's control to clear transactions through the card networks. Timing differences, interchange fees, merchant reserves and exception items cause differences between the amounts received from the card networks and the amounts funded to the merchants. Since settlement funds are required to be in the possession of a member bank until the merchant is funded, these funds are not assets of the Company and the associated obligations are not liabilities of the Company. Therefore, neither is recognized in the Company’s consolidated balance sheets. Member banks held merchant funds of approximately $71.7 million and $79.8 million at March 31, 2020 and December 31, 2019, respectively.

Exception items include items such as customer chargeback amounts received from merchants and other losses. Under agreements between the Company and its merchant customers, the merchants assume liability for such chargebacks and losses. If the Company is ultimately unable to collect amounts from the merchants for any charges or losses due to merchant fraud, insolvency, bankruptcy or any other reason, it may be liable for these charges. In order to mitigate the risk of such liability, the Company may 1) require certain merchants to establish and maintain reserves designed to protect the Company from such charges or losses under its risk-based underwriting policy and 2) engage with certain ISOs in partner programs in which the ISOs assume liability for these charges or losses. A merchant reserve account is funded by the merchant and held by the member bank during the term of the merchant agreement. Unused merchant reserves are returned to the merchant after termination of the merchant agreement or in certain instances upon a reassessment of risks during the term of the merchant agreement.

Exception items that the Company is attempting to collect from the merchants through the funds settlement process, merchant reserves or from the ISO partners are recognized as settlement assets in the Company’s consolidated balance sheets, with an offsetting reserve for those amounts the Company estimates it will not be able to recover. Provisions for merchant losses are included as a component of costs of services in the Company’s consolidated statements of operations.

Commercial Payments Segment

In the Company’s Commercial Payments segment, the Company earns revenue from certain of its services by processing ACH transactions for financial institutions and other business customers. Customers transfer funds to the Company, which are held in bank accounts controlled by the Company until such time as the ACH transactions are made. The Company recognizes these cash balances within restricted cash and settlement obligations in its consolidated balance sheets.

The Company's settlement assets and obligations at March 31, 2020 and December 31, 2019 were as follows:



(in thousands)	As of
	March 31, 2020		December 31, 2019
Settlement Assets:
Card settlements due from merchants, net of estimated losses	$	195	$	446
Card settlements due from processors	261		87
Total settlement assets	$	456	$	533

Settlement Obligations:
Card settlements due to merchants	$	22	$	44
Due to ACH payees (1)	30,643		37,745
Total settlement obligations	$	30,665	$	37,789

(1) Amounts due to ACH payees are held by the Company in restricted cash.

GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

The Company records goodwill when an acquisition is made and the purchase price is greater than the fair value assigned to the underlying tangible and intangible assets acquired and the liabilities assumed. The Company's goodwill was allocated to two of the Company's reportable segments as follows:



(in thousands)	March 31, 2020		December 31, 2019
Consumer Payments	$	106,832	$	106,832
Integrated Partners	2,683		2,683
	$	109,515	$	109,515

There were no changes in the carrying amount of goodwill for the three months ended March 31, 2020.

The Company tests goodwill for impairment for each of its reporting units on an annual basis, or when events occur or circumstances indicate the fair value of a reporting unit may be below its carrying value. The Company expects to perform its next annual goodwill impairment test as of November 30, 2020 using market data and discounted cash flow analysis. The Company concluded there was no impairment as of March 31, 2020 or December 31, 2019. As such, there was no accumulated impairment loss as of March 31, 2020 and December 31, 2019.

The Company's intangible assets include acquired merchant portfolios, customer relationships, ISO relationships, trade names, technology, non-compete agreements, and residual buyouts. As of March 31, 2020 and December 31, 2019, intangible assets consisted of the following:



(in thousands)	March 31, 2020			December 31, 2019
Other intangible assets:
Merchant portfolios	$	115,502		$	114,554
Customer relationships	40,740			40,740
Residual buyouts	112,731			112,731
Non-compete agreements	3,390			3,390
Trade names	2,870			2,870
Technology	15,390			15,390
ISO relationships	15,200			15,200
Total gross carrying value	305,823			304,875
Less accumulated amortization:
Merchant portfolios	(16,107		)	(12,655		)
Customer relationships	(26,818		)	(25,836		)
Residual buyouts	(62,895		)	(59,796		)
Non-compete agreements	(3,390		)	(3,390		)
Trade names	(1,331		)	(1,273		)
Technology	(13,387		)	(12,758		)
ISO relationships	(6,592		)	(6,341		)
Total accumulated amortization	(130,520		)	(122,049		)

Net carrying value	$	175,303		$	182,826

See Note 10, Commitments and Contingencies, for information about a merchant portfolio with a contingent purchase price.

Amortization expense for finite-lived intangible assets was approximately $8.5 million and $7.5 million for the three months ended March 31, 2020 and 2019, respectively. Amortization expense for future periods could differ due to new intangible asset acquisitions, changes in useful lives of existing intangible assets, and other relevant events or circumstances.

The Company tests intangible assets for impairment when events occur or circumstances indicate that the fair value of an intangible asset or group of intangible assets may be impaired. The Company concluded there were no impairments as of March 31, 2020 or December 31, 2019. As such, there was no accumulated impairment loss as of March 31, 2020 and December 31, 2019.

PROPERTY, EQUIPMENT AND SOFTWARE

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

PROPERTY, EQUIPMENT AND SOFTWARE

The Company's property, equipment, and software balance primarily consists of furniture, fixtures, and equipment used in the normal course of business, computer software developed for internal use, and leasehold improvements. Computer software represents purchased software and internally developed back office and merchant interfacing systems used to assist the reporting of merchant processing transactions and other related information.

A summary of property, equipment, and software as of March 31, 2020 and December 31, 2019 follows:



(in thousands)	March 31, 2020			December 31, 2019			Useful Life

Furniture and fixtures	$	2,808		$	2,787		2-7 years
Equipment	10,225			10,101			3-7 years
Computer software	39,553			37,440			3-5 years
Leasehold improvements	6,390			6,367			5-10 years
	58,976			56,695
Less accumulated depreciation	(34,916		)	(33,177		)
Property, equipment, and software, net	$	24,060		$	23,518

Depreciation expense for property, equipment, and software totaled $1.8 million and $1.4 million for the three months ended March 31, 2020 and 2019, respectively.

Purchases of property, equipment and software accrued in accounts payable were not material for any period presented.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

3 Months Ended

Mar. 31, 2020

Accounts Payable [Abstract]

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The Company accrues for certain expenses that have been incurred and not paid, which are classified within accounts payable and accrued expenses in the accompanying consolidated balance sheets.

The components of accounts payable and accrued expenses that exceeded five percent of total current liabilities at either March 31, 2020 or December 31, 2019 consisted of the following:



(in thousands)	March 31, 2020		December 31, 2019

Accounts payable	$	7,375	$	6,968
Accrued network fees	$	6,779	$	6,950

DEBT OBLIGATIONS

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

LONG-TERM DEBT

DEBT OBLIGATIONS

Outstanding debt obligations as of March 31, 2020 and December 31, 2019 consisted of the following:



(in thousands)	March 31, 2020			December 31, 2019

Senior Credit Agreement - Bears interest at LIBOR plus 6.5% and 5.0% at March 31, 2020 and December 31, 2019, respectively (rate of 8.11% at March 31, 2020 and 6.71% at December 31, 2019):
Term facility - Matures January 3, 2023	$	387,836		$	388,837
Revolving credit facility - $25.0 million line, matures January 22, 2022	15,000			11,500
Term Loan - Subordinated, matures July 3, 2023 and bears interest at 5.0% plus an applicable margin (rate of 12.5% and 10.5% at March 31, 2020 and December 31, 2019, respectively)	96,533			95,142
Total debt obligations	499,369			495,479
Less: current portion of long-term debt	(7,866		)	(4,007		)
Less: unamortized debt discounts and deferred financing costs	(8,184		)	(5,894		)
Long-term debt, net	$	483,319		$	485,578

Substantially all of the Company's assets are pledged as collateral under the credit agreements. The Company's parent entity, Priority Technology Holdings, Inc., is neither a borrower nor a guarantor of the credit agreements. The Company's subsidiaries that are borrowers or guarantors under the credit agreements are referred to as the "Borrowers."

Amendments in First Quarter 2020

On March 18, 2020, the Borrowers entered into an amendment to the Senior Credit Agreement with an existing syndicate of lenders (the "Senior Credit Agreement") and into a related amendment to the existing credit agreement with Goldman Sachs Specialty Lending, LLC (the "GS Credit Agreement"). Both amendments were accounted for as debt modifications under GAAP. Together, these amendments are referred to as the "Sixth Amendment."

Under the Sixth Amendment, the outstanding balances under the term loan facilities of the Senior Credit Agreement and the GS Credit Agreement term loan were not changed. Additionally, the Senior Credit Agreement continues to provide a $25.0 million revolving credit facility, which includes accommodation for any outstanding letters of credit and a $5.0 million swing line facility. At March 31, 2020 and December 31, 2019, approximately $10.0 million and $13.5 million, respectively, was available under the revolving credit facility. Undrawn commitments for letters of credit under the revolving credit facility were not material at March 31, 2020 and December 31, 2019.

Senior Credit Agreement

Outstanding borrowings under the term loan facility of the Senior Credit Agreement accrue interest using either a base rate (as defined) or a LIBOR rate plus an applicable margin, or percentage per annum, as provided in the amended credit agreement. Accrued interest is payable quarterly. The revolving credit facility incurs a commitment fee on any undrawn amount of the $25.0 million credit line, which equates to 0.50% per annum for the unused portion.

GS Credit Agreement

Outstanding borrowings under the GS Credit Agreement accrue interest at 5.0%, plus an applicable margin, or percentage per annum, as indicated in the amended credit agreement. Accrued interest is payable quarterly at 5.0% per annum, and the accrued interest attributable to the applicable margin is capitalized as payment-in-kind ("PIK") interest each quarter.

Potential Changes in Future Applicable Interest Rate Margins

Under the terms of the Senior Credit Agreement and the GS Credit Agreement, the future applicable interest rate margins may vary based on the Borrowers' future Total Net Leverage Ratio (as defined) in addition to future changes in the underlying market rates for LIBOR and the rate used for base-rate borrowings. Additionally, the future interest rate margins will increase 1.0% if the Borrowers do not make a permitted accelerated principal payment of at least $100 million under the term loan facility of the Senior Credit Agreement on or before June 16, 2020, with additional 50 basis-point increases in the applicable margins every successive 30 days through October 14, 2020 if the permitted accelerated principal payment of at least $100 million does not occur, up to a total interest rate margin increase of 3.0%. Any increase in the interest rate margin will not be applicable at any time after the Borrowers have made the accelerated payment of at least $100 million, other than with proceeds of indebtedness. Should these increases in the applicable interest rate margins occur, all or a portion of such additional interest rates, at the option of the Borrowers, may be payable in kind. The Company is pursuing the ability to make the accelerated payment by raising cash through various means.

The Senior Credit Agreement and the GS Credit Agreement also have incremental margins that would apply to the future applicable interest rates if the Borrowers are deemed to be in violation of the terms of the credit agreement.

Contractual Maturities

Based on terms and conditions existing at March 31, 2020, future minimum principal payments for long-term debt are as follows:



(in thousands)	Principal Due
	Senior Credit Agreement				GS Credit Agreement		Total
Twelve-month period ending March 31,	Term		Revolver		Term		Total

2021 (current)	$	7,866	$	—	$	—	$	7,866
2022	24,302		15,000		—		39,302
2023	355,668		—		—		355,668
2024	—		—		96,533		96,533
Total	$	387,836	$	15,000	$	96,533	$	499,369

Additionally, the Company may be obligated to make certain additional mandatory prepayments after the end of each year based on excess cash flow, as defined in the Senior Credit Agreement. No such prepayments were due for the year ended December 31, 2019.

Under the Senior Credit Agreement, prepayments of outstanding principal may be made in permitted increments with a 1% penalty for certain prepayments. Under the GS Credit Agreement, prepayment of outstanding principal is subject to a 4.0% penalty for certain prepayments occurring prior to March 18, 2021 and 2.0% for certain prepayments occurring between March 18, 2021 and March 18, 2022. Such penalties will be based on the principal amount that is prepaid, subject to the terms of the credit agreements.

Interest Expense, Deferred Financing Costs, and Debt Discounts

The principal amount borrowed and still outstanding under the GS Credit Agreement was $80.0 million. Included in the outstanding principal balance at March 31, 2020 and December 31, 2019 was accumulated PIK interest of approximately $16.5 million and $15.1 million, respectively. For the three months ended March 31, 2020 and March 31, 2019, PIK interest under the GS Credit Agreement added $1.4 million and $1.2 million, respectively, to the principal amount of the subordinated debt.

For the three months ended March 31, 2020 and 2019, interest expense, including fees for undrawn amounts under the revolving credit facility and amortization of deferred financing costs and debt discounts, was $10.3 million and $9.4 million, respectively.

Interest expense for the three months ended March 31, 2019 also included a $0.4 million fee for the $70.0 million delayed principal draw under December 2018 amendment to the Senior Credit Agreement, which occurred during the first quarter of 2019.

For the Sixth Amendment, approximately $2.7 million of lender fees were capitalized and, along with existing unamortized loan costs and discount of approximately $5.6 million, continue to be amortized as a component of interest expense on the Company's statements of operations. Interest expense related to amortization of deferred financing costs and debt discounts was approximately $0.5 million and $0.4 million for the three months ended March 31, 2020 and 2019, respectively. As a result of the Sixth Amendment, the effective interest rates, which includes the amortization of capitalized deferred financing costs and debt discounts, are 8.87% and 12.91% for the term debt under the Senior Credit Agreement and the GS Credit Agreement, respectively, and are subject to future changes in the applicable interest rate margins as previously described. Approximately $0.4 million of third-party costs were expensed in connection with the Sixth Amendment.

Covenants

The Senior Credit Agreement and the GS Credit Agreement, as amended, contain representations and warranties, financial and collateral requirements, mandatory payment events, events of default, and affirmative and negative covenants, including without limitation, covenants that restrict among other things, the ability to create liens, pay dividends or distribute assets from the Company's subsidiaries to the Company, merge or consolidate, dispose of assets, incur additional indebtedness, make certain investments or acquisitions, enter into certain transactions (including with affiliates), and to enter into certain leases.

The Company is also required to comply with certain restrictions on its Total Net Leverage Ratio, which is defined in the credit agreements as the ratio of consolidated total debt of the Borrowers to the Company's consolidated adjusted EBITDA (as defined in the Senior Credit Agreement and GS Credit Agreement). The maximum permitted Total Net Leverage Ratio was 8.00:1.00 at March 31, 2020. As of March 31, 2020, the Company remained in compliance with the covenants.

INCOME TAXES

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

Income Tax Benefit

The Company's benefit for federal and state income taxes was as follows:



(in thousands)	Three Months Ended
	March 31,
	2020			2019

Current income tax benefit	$	—		$	(103	)
Deferred income tax benefit	(1,699		)	(1,621		)
Provision for DTA valuation allowance	2,006			—
Adjustment for DTA valuation allowance - discrete item	(1,540		)	—
Total income tax benefit	$	(1,233	)	$	(1,724	)

DTA = Deferred income tax asset

The Company's effective income tax rate for the three months ended March 31, 2020 and 2019 was 17.4% and 21.1%, respectively.

Valuation Allowance for Deferred Income Tax Assets

The Company considers all available positive and negative evidence to determine whether sufficient taxable income will be generated in the future to permit realization of the existing deferred tax assets. In accordance with the provisions of ASC 740, Income Taxes ("ASC 740"), the Company is required to provide a valuation allowance against deferred tax assets when it is "more likely than not" that some portion or all of the deferred tax assets will not be realized.

Among other provisions, the Tax Cuts and Jobs Act of 2017 amended Internal Revenue Code Section 163(j) to create limitations on the deductibility of business interest expense. Section 163(j) limits the business interest deduction to 30% of adjusted taxable income (ATI). For taxable years through 2021, the calculation of ATI closely aligns with earnings before interest, taxes, depreciation and amortization (EBITDA). Commencing in 2022, the ATI limitation more closely aligns with earnings before interest and taxes (EBIT), without adjusting for depreciation and amortization. Any business interest in excess of the annual limitation is carried forward indefinitely. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted, which among other provisions, provides for the increase of the 163(j) ATI limitation from 30% to 50% for tax years 2019 and 2020.

With respect to recording a deferred tax benefit for the carryforward of business interest expense, the Company is required to apply the "more likely than not" threshold for assessing recoverability. Based on management’s assessment, the Company recorded an increase in the valuation allowance in the three months ended March 31, 2020 of $0.5 million for the business interest expense carryover comprised of (i) a discrete valuation allowance benefit of $1.5 million associated with the 2019 business interest deferred tax asset as a result of the CARES Act and (ii) a provision for the valuation allowance of $2.0 million associated with the 2020 excess business interest.

The provisions for and adjustments to the valuation allowance are a component of income tax expense (benefit) in the Company's unaudited condensed consolidated statements of operations.

The Company will continue to evaluate the realizability of the deferred tax assets on a quarterly basis and, as a result, the valuation allowance may change in future periods.

Uncertain Tax Positions

The Company recognizes the tax effects of uncertain tax positions only if such positions are more likely than not to be sustained based solely upon its technical merits at the reporting date. The Company refers to the difference between the tax benefit recognized in its financial statements and the tax benefit claimed in the income tax return as an "unrecognized tax benefit." As of March 31, 2020, the net amount of our unrecognized tax benefits was not material.

The Company is subject to U.S. federal income tax and income tax in multiple state jurisdictions. Tax periods for 2016 and all years thereafter remain open to examination by the federal and state taxing jurisdictions and tax periods for 2015 and all years thereafter remain open for certain state taxing jurisdictions to which the Company is subject.

COMMITMENTS AND CONTINGENCIES	3 Months Ended
COMMITMENTS AND CONTINGENCIES	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS, CONTINGENCIES, AND CONCENTRATION OF RISKS	COMMITMENTS AND CONTINGENCIES Minimum Annual Commitments with Third-Party Processors The Company has multi-year agreements with third parties to provide certain payment processing services to the Company. The Company pays processing fees under these agreements that are based on the volume and dollar amounts of processed payments transactions. Some of these agreements have minimum annual requirements for processing volumes. As of March 31, 2020, the Company is committed to pay minimum processing fees under these agreements of approximately $14.0 million through the end of 2021. Commitment to Lend See Note 11, Related Party Transactions, for information on a loan commitment extended by the Company to another entity. Contingent Consideration for Asset Acquisitions Under GAAP that applies to asset acquisitions that do not meet the definition of a business, the portion of the unpaid purchase price that is contingent on future activities is not initially recorded by the acquirer on the date of acquisition. Rather, the acquirer generally recognizes contingent consideration when it becomes probable and estimable. During the year ended December 31, 2019, the Company simultaneously entered into two agreements with another entity. These two related agreements 1) transfer to the Company certain perpetual rights to a merchant portfolio and 2) form a 5-year reseller arrangement whereby the Company will offer and sell to its customer base certain on-line services to be fulfilled by the other entity. No cash consideration was paid to, or received from, the other entity at execution of either agreement. Subsequent cash payments from the Company to the other entity for the merchant portfolio rights are determined based on a combination of both: 1) the actual financial performance of the acquired merchant portfolio rights and 2) actual sales and variable wholesale costs for the on-line services sold by the Company under the reseller arrangement. Amounts subsequently paid to the other entity are accounted for as either 1) standard costs of the services sold by the Company under the 5-year reseller agreement or 2) consideration for the merchant portfolio rights. Amounts paid that are accounted for as consideration for the merchant portfolio rights are capitalized and amortized over the estimated useful life of the merchant portfolio rights. As of March 31, 2020 and December 31, 2019, approximately $2.1 million and $1.1 million, respectively, was capitalized as cost for the merchant portfolio. The capitalized cost, which is in our Consumer Payments reportable segment, is being amortized using an accelerated method. At this time, the Company cannot reasonably estimate the allocation of future cash payments. However, under the two contracts the Company does not anticipate any net losses. On March 15, 2019, a subsidiary of the Company paid $15.2 million cash to acquire certain residual portfolio rights. This acquisition became part of the Company's Consumer Payments reportable segment. Of the $15.2 million, $5.0 million was funded from a delayed draw down of the Senior Credit Facility. Additionally, a $10.0 million draw was made against the revolving credit facility under the Senior Credit Facility and cash on hand was used to fund the remaining amount. The purchase price may be subject to an increase of up to $6.4 million in accordance with the terms of the agreement between the Company and the sellers. Additional purchase price is accounted for when payment to the seller becomes probable and is added to the carrying value of the asset. The Company estimates that $2.1 million of the contingent consideration is owed to the seller at March 31, 2020. Contingent Consideration for Business Combinations See Note 14, Fair Value, for information about contingent consideration related to 2018 business acquisitions. Legal Proceedings The Company is involved in certain legal proceedings and claims which arise in the ordinary course of business. In the opinion of the Company and based on consultations with inside and outside counsel, the results of any of these matters, individually and in the aggregate, are not expected to have a material effect on the Company's results of operations, financial condition, or cash flows. As more information becomes available, and the Company determines that an unfavorable outcome is probable on a claim and that the amount of probable loss that the Company will incur on that claim is reasonably estimable, the Company will record an accrued expense for the claim in question. If and when the Company records such an accrual, it could be material and could adversely impact the Company's results of operations, financial condition, and cash flows. Concentration of Risks The Company's revenue is substantially derived from processing Visa® and MasterCard® bank card transactions. Because the Company is not a member bank, in order to process these bank card transactions, the Company maintains sponsorship agreements with member banks which require, among other things, that the Company abide by the by-laws and regulations of the card associations. A majority of the Company's cash and restricted cash is held in certain financial institutions, substantially all of which is in excess of federal deposit insurance corporation limits. The Company does not believe it is exposed to any significant credit risk from these transactions.

RELATED PARTY TRANSACTIONS	3 Months Ended
RELATED PARTY TRANSACTIONS	Mar. 31, 2020
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONS Commitment to Lend and Warrant to Acquire On May 22, 2019, the Company, through one of its wholly-owned subsidiaries, executed an interest-bearing loan and commitment agreement with another entity. The Company has loaned the entity a total of $3.5 million at March 31, 2020 and December 31, 2019, with a commitment to loan up to a total of $10.0 million based on certain growth metrics of the entity and continued compliance by the entity with the terms and covenants of the agreement. The Company's commitment to make additional advances under the loan agreement is dependent upon such advances not conflicting with covenants or restrictions under any of the Company's debt or other applicable agreements. Amounts loaned to this entity by the Company are secured by substantially all of the assets of the entity and by a personal guarantee. The note receivable has an interest rate of 12.0% per annum and is repayable in full in May 2024. The Company recognized interest income of $0.1 million during the three months ended March 31, 2020. The Company also received a warrant to purchase a non-controlling interest in this entity's equity at a fixed amount. The loan agreement also gives the Company certain rights to purchase some or all of this entity's equity in the future, at the entity's then-current fair value. The fair values of the warrant, loan commitment, and purchase right were not material at inception or as of any subsequent reporting period. Contributions of Assets and Contingent Payment In February 2019, a subsidiary of the Company, Priority Hospitality Technology, LLC ("PHOT"), received a contribution of substantially all of the operating assets of eTab, LLC ("eTab") and CUMULUS POS, LLC ("Cumulus") under asset contribution agreements. No material liabilities were assumed by PHOT. These contributed assets were composed substantially of technology-related assets. Prior to these transactions, eTab was 80.0% owned by the Company's Chairman and Chief Executive Officer. No cash consideration was paid to the contributors of the eTab or Cumulus assets on the date of the transactions. As consideration for these contributed assets, the contributors were issued redeemable preferred equity interests in PHOT. Under these redeemable preferred equity interests, the contributors are eligible to receive up to $4.5 million of profits earned by PHOT, plus a preferred yield (6.0% per annum) on any of the $4.5 million amount that has not been distributed to them. The Company's Chairman and Chief Executive Officer owns 83.3% of the redeemable preferred equity interests in PHOT. Once a total of $4.5 million plus the preferred yield has been distributed to the holders of the redeemable preferred equity interests, the redeemable preferred equity interests will cease to exist. The Company determined that the contributor's carrying value of the eTab net assets (as a common control transaction under GAAP) was not material. Under the guidance for a common control transaction, the contribution of the eTab net assets did not result in a change of entity or the receipt of a business, therefore the Company's financial statements for prior periods have not been adjusted to reflect the historical results attributable to the eTab net assets. Additionally, no material amount was estimated for the fair value of the contributed Cumulus net assets. PHOT is a part of the Company's Integrated Partners reportable segment. Pursuant to the limited liability company agreement of PHOT, any material future earnings generated by the eTab and Cumulus assets that are attributable to the holders of the preferred equity interests will be reported by the Company as a form of non-controlling interests classified as mezzanine equity on the Company's consolidated balance sheet until $4.5 million and the preferred yield have been distributed to the holders of the preferred equity interests. Subsequent changes, if material, in the value of the NCI will be reported as an equity transaction between the Company's consolidated retained earnings (accumulated deficit) and any carrying value of the non-controlling interests in mezzanine equity. Such amounts were not material to the Company's results of operations, financial position, or cash flows for the period covering February 1, 2019 (date the assets were contributed to the Company) through March 31, 2020, and therefore no recognition of the NCI has been reflected in the Company's unaudited condensed consolidated financial statements. Equity-Method Investment During the three months ended March 31, 2020, the Company wrote off its $0.2 million carrying value in an equity-method investment. This loss is reported as a component of Other (expense) income, net on the Company's unaudited condensed consolidated statement of operations. The Company's share of this entity's income or loss was not material for any reporting period presented.

RECONCILIATION OF STOCKHOLDERS' EQUITY (DEFICIT) AND NON-CONTROLLING INTEREST

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

RECONCILIATION OF STOCKHOLDERS' EQUITY (DEFICIT) AND NON-CONTROLLING INTEREST

RECONCILIATION OF STOCKHOLDERS' DEFICIT AND NON-CONTROLLING INTEREST

The Company is authorized to issue 100,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the board of directors. As of March 31, 2020 and December 31, 2019, the Company has not issued any shares of preferred stock.

The following tables provide a reconciliation of the beginning and ending carrying amounts for the periods presented for the components of the deficit attributable to stockholders of the Company and equity attributable to non-controlling interest:



(in thousands)											Additional Paid-In Capital		Accumulated (Deficit)			Total Priority Technology Holdings, Inc. Stockholders' (Deficit)			Non-Controlling Interest (c)
	Preferred Stock			Common Stock			Treasury Stock (a)
	Shares	Amount		Shares	Amount		Shares	Amount

January 1, 2020	—	$	—	67,061	$	68	451	$	(2,388	)	$	3,651	$	(127,674	)	$	(126,343	)	$	5,654
Stock-based compensation	—	—		—	—		—	—			338		—			338			—
Net loss	—	—		—	—		—	—			—		(5,869		)	(5,869		)	—
March 31, 2020	—	$	—	67,061	$	68	451	$	(2,388	)	$	3,989	$	(133,543	)	$	(131,874	)	$	5,654



January 1, 2019	—	$	—	67,038	$	67	—	$	—	$	—	$	(94,085	)	$	(94,018	)	$	—
Stock-based compensation	—	—		—	—		—	—		1,160		—			1,160			—
Warrant redemptions (b)	—	—		420	(b)		—	—		(b)		—			—			—
Net loss	—	—		—	—		—	—		—		(6,446		)	(6,446		)	—
Issuance of non-controlling interest (c)	—	—		—	—		—	—		—		—			—			5,654
March 31, 2019	—	$	—	67,458	$	67	—	$	—	$	1,160	$	(100,531	)	$	(99,304	)	$	5,654

(a) At cost

(b) Par value of the common shares issued in connection with the warrant exchange rounds to less than one thousand dollars. In August 2018, the Company was informed by Nasdaq that it intended to delist the Company's outstanding warrants and units due to an insufficient number of round lot holders for the public warrants. The Company subsequently filed a Registration Statement on Form S-4 with the SEC for the purpose of offering holders of the Company's outstanding 5,310,109 public warrants and 421,107 private warrants the opportunity to exchange each warrant for 0.192 shares of the Company's common stock. The exchange offer expired in February 2019 resulting in a portion of the warrants being tendered in exchange for approximately 420,000 shares of the Company's common stock plus cash in lieu of fractional shares. Nasdaq proceeded to delist the remaining outstanding warrants and units, which were comprised of one share of common stock and one warrant, from The Nasdaq Global Market at the open of business on March 6, 2019. The delisting of the remaining outstanding warrants and units had no impact on the Company's financial statements.

(c) Related to the acquisition of certain assets from YapStone, Inc. See Note 3, Asset Acquisitions. During the three months ended March 31, 2020 and 2019, no earnings or losses were attributable to the non-controlling interest.

EQUITY-BASED COMPENSATION PLANS

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

EQUITY-BASED COMPENSATION PLANS

-BASED COMPENSATION PLANS

Stock-based compensation expense is included in Salary and employee benefits in the accompanying unaudited condensed consolidated statements of operations. The Company recognizes the effects of forfeitures on compensation expense as the forfeitures occur. Expense recognized by plan was as follows:



(in thousands)	Three Months Ended March 31,
	2020		2019

2018 Equity Incentive Plan	$	338	$	924
2014 Management Incentive Plan	—		236
Total	$	338	$	1,160

Income tax benefit for stock-based compensation was not material for the three months ended March 31, 2020 and 2019.

FAIR VALUE	3 Months Ended
FAIR VALUE	Mar. 31, 2020
Fair Value Disclosures [Abstract]
FAIR VALUE	FAIR VALUE Fair Value Measurements The estimated fair value of remaining contingent consideration related to the Priority Payment Systems Tech Partners ("PPS Tech") and Priority Payment Systems Northeast ("PPS Northeast") business combinations were each based on a weighted payout probability for the contingent consideration at the original measurement date and each subsequent remeasurement date, which fall within Level 3 on the fair value hierarchy since these recurring fair value measurements are based on significant unobservable inputs. Both of these business combinations consummated during the third quarter of 2018. For PPS Tech and PPS Northeast, the probabilities used to estimate the payout probability of the contingent considerations ranged between 15% and 35% and between 5% and 80%, respectively. For PPS Tech and PPS Northeast, the estimated weighted average probability for payment of the contingent consideration was 21% and 70%, respectively, at March 31, 2020 and December 31, 2019, and 26% and 70%, respectively, at March 31, 2019. These weighted average probabilities are based on present value of estimated projections for financial metrics for the remaining earnout periods. At March 31, 2020, the remaining maximum amounts of contingent consideration for the PPS Tech and the PPS Northeast business combinations were $500,000 and $250,000, respectively, and the measured fair values were $170,000 and $190,000, respectively. These fair value amounts did not change during the three months ended March 31, 2020 and 2019. There were no transfers among the fair value levels during the three months ended March 31, 2020 and March 31, 2019. There were no unrealized gains or losses included in other comprehensive income for any reporting period, therefore there were no changes in unrealized gains and losses for any reporting period included in other comprehensive income for recurring Level 3 fair value measurements. Fair Value Disclosures Notes Receivable Notes receivable are carried at amortized cost. Substantially all of the Company's notes receivable are secured, and the Company believes that all of its notes receivable are collectible. The fair value of the Company's notes receivable at March 31, 2020 and December 31, 2019 was approximately $6.6 million and $5.7 million, respectively. On the fair value hierarchy, Level 3 inputs are used to estimate the fair value of these notes receivable. Debt Obligations The Borrower's outstanding debt obligations (see Note 8, Debt Obligations) are reflected in the Company's consolidated balance sheets at carrying value since the Company did not elect to remeasure debt obligations to fair value at the end of each reporting period. The fair value of the term loan facility under the Borrowers' Senior Credit Agreement at March 31, 2020 was approximately $327.7 million. The fair value of these notes with a notional value and carrying value (gross of deferred costs and discounts) of $387.8 million was estimated using binding and non-binding quoted prices in an active secondary market, which considers the Borrowers' credit risk and market related conditions, and is within Level 3 of the fair value hierarchy. The carrying values of the Borrowers' other long-term debt obligations approximate fair value due to mechanisms in the credit agreements that adjust the applicable interest rates and the lack of an active market for these notes.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

SEGMENT INFORMATION

The Company has three reportable segments that are reviewed by the Company's chief operating decision maker ("CODM"), who is the Company's Chief Executive Officer and Chairman. The Consumer Payments operating segment and the Integrated Partners operating segments are each reported as separate reportable segments. The Commercial Payments and Institutional Services (sometimes referred to as Managed Services) operating segments are aggregated into one reportable segment, Commercial Payments.

•

Consumer Payments – represents consumer-related services and offerings including merchant acquiring and transaction processing services including the proprietary MX enterprise suite. Either through acquisition of merchant portfolios or through resellers, the Company becomes a party or enters into contracts with a merchant and a sponsor bank. Pursuant to the contracts, for each card transaction, the sponsor bank collects payment from the credit, debit or other payment card issuing bank, net of interchange fees due to the issuing bank, pays credit card association (e.g., Visa, MasterCard) assessments and pays the transaction fee due to the Company for the suite of processing and related services it provides to merchants, with the remainder going to the merchant.


•	Commercial Payments – represents services provided to certain enterprise customers, including outsourced sales force to those customers and accounts payable automation services to commercial customers.


•	Integrated Partners – represents payment adjacent services that are provided primarily to the health care and residential real estate industries.

Corporate includes costs of corporate functions and shared services not allocated to our reportable segments.

Prior to second quarter of 2019, the Integrated Partners operating segment was aggregated with the Commercial Payments and Institutional Services operating segments and reported as one aggregated reportable segment. In the second quarter of 2019, the Integrated Partners operating segment was no longer aggregated with the Commercial Payments and Institutional Services operating segments. All comparative periods have been adjusted to reflect the current three reportable segments.

Information on reportable segments and reconciliations to consolidated revenue, consolidated income from operations, and consolidated depreciation and amortization are as follows for the periods presented:



(in thousands)	Three Months Ended March 31,
	2020			2019
Revenue:
Consumer Payments	$	86,031		$	79,009
Commercial Payments	6,368			6,658
Integrated Partners	4,534			1,979
Consolidated Revenue	$	96,933		$	87,646

Income (loss) from operations:
Consumer Payments	$	7,152		$	7,719
Commercial Payments	764			(451		)
Integrated Partners	368			(233		)
Corporate	(4,725		)	(6,069		)
Consolidated income from operations	$	3,559		$	966

Depreciation and amortization:
Consumer Payments	$	8,583		$	7,808
Commercial Payments	76			98
Integrated Partners	1,311			691
Corporate	302			328
Consolidated depreciation and amortization	$	10,272		$	8,925

A reconciliation of total income from operations of reportable segments to the Company's net loss is provided in the following table:



(in thousands)	Three Months Ended
	March 31,
	2020			2019

Total income from operations of reportable segments	$	8,284		$	7,035
Corporate	(4,725		)	(6,069		)
Interest expense	(10,315		)	(9,363		)
(Less) plus other, net	(346		)	227
Income tax benefit	1,233			1,724
Net loss	$	(5,869	)	$	(6,446	)

Substantially all revenue is generated in the United States.

For the three months ended March 31, 2020 and 2019, no one merchant customer accounted for 10% or more of the Company's consolidated revenues. Most of the Company's merchant customers were referred to the Company by an ISO or other referral partners. If the Company's agreement with an ISO allows the ISO to have merchant portability rights, the ISO can move the underlying merchant relationships to another merchant acquirer upon notice to the Company and completion of a "wind down"

period. For the three months ended March 31, 2020 and 2019, merchants referred by one ISO organization with merchant portability rights generated revenue within the Company's Consumer Payments reportable segment that represented approximately 20% and 18%, respectively, of the Company's consolidated revenues.

LOSS PER COMMON SHARE

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

LOSS PER SHARE

LOSS PER COMMON SHARE

The following tables set forth the computation of the Company's basic and diluted loss per common share:



	Three Months Ended March 31,
(in thousands except per share amounts)	2020			2019

Basic and Diluted Loss Per Common Share:
Numerator:
Net loss	$	(5,869	)	$	(6,446	)
Less: Income (loss) attributable to non-controlling interests	—			—
Net loss attributable to common stockholders	$	(5,869	)	$	(6,446	)

Denominator:
Weighted-average shares outstanding	67,061			67,164

Basic and Diluted Loss Per Common Share	$	(0.09	)	$	(0.10	)

Potentially anti-dilutive securities that were excluded from earnings per share for the three months ended March 31, 2020 and 2019 that could be dilutive in future periods were as follows:



(in thousands)	Common Stock Equivalents
	March 31, 2020	March 31, 2019

Outstanding warrants on common stock	3,556	3,556
Restricted stock unit awards granted under the 2018 Equity Incentive Plan	395	238
Outstanding stock option awards granted under the 2018 Equity Incentive Plan	1,644	2,047
Restricted stock units granted under the Earnout Incentive Plan	—	95
Total	5,595	5,936

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - (Policies)	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Consolidation	These unaudited condensed consolidated financial statements include the accounts of the Company including those of its majority-owned subsidiaries, and all material intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation	Priority Technology Holdings, Inc. and its consolidated subsidiaries are referred to herein collectively as "Priority," "PRTH," the "Company," "we," "our" or "us," unless the context requires otherwise. Priority is provider of merchant acquiring, integrated payment software and commercial payment solutions. The Company operates on a calendar year ending each December 31 and on four calendar quarters ending on March 31, June 30, September 30, and December 31 of each year. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These unaudited condensed consolidated financial statements include the accounts of the Company including those of its majority-owned subsidiaries, and all material intercompany balances and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The consolidated balance sheet as of December 31, 2019 was derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 but does not include all disclosures required by GAAP for annual financial statements. In the opinion of the Company's management, all known adjustments necessary for a fair presentation of the results of the interim periods have been made. These adjustments consist of normal recurring accruals and estimates that affect the carrying amount of assets and liabilities. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. In particular, the magnitude, duration and effects of the COVID-19 pandemic are difficult to predict at this time, and the ultimate effect could result in future charges related to the recoverability of assets, including financial assets, long-lived assets, goodwill, and other losses. Status as an Emerging Growth Company The Company remains an "emerging growth company" (EGC), as defined in the Jumpstart Our Business Startups Act of 2012. The Company may remain an EGC until December 31, 2021. However, if the Company's non-convertible debt issued within a rolling three-year period exceeds $1.0 billion, the Company would cease to be an EGC immediately, or if its revenue for any fiscal year exceed $1.07 billion, or the market value of its common stock that is held by non-affiliates exceeds $700.0 million on the last day of the second quarter of any given year, the Company would cease to be an EGC as of the beginning of the following year. As an EGC, the Company may continue to elect to delay the adoption of any new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. Additionally, as a smaller reporting company ("SRC") as defined by the SEC, the Company has the option to adopt certain new or revised accounting standards on a permitted delayed basis that is not available to other public companies not meeting the definition of a SRC. Therefore, the Company's financial statements may not be comparable to other public companies.
Comprehensive Income (Loss)	Comprehensive Income (Loss) For the three-month periods ended March 31, 2020 and 2019, the Company had no activities to report as components of other comprehensive income (loss). Therefore, no separate Statement of Comprehensive Income (Loss) was prepared for any reporting period as the Company's net loss from continuing operations comprises all of its comprehensive loss.
Reclassification	Comparability of Reporting Periods Certain prior period amounts in these unaudited condensed consolidated financial statements have been reclassified to conform to the current period presentation, with no net effect on income from operations, loss before income taxes, net loss, stockholders' deficit, or cash flows from operations, investing, or financing activities for any period presented. The Company adopted Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, for the 2019 annual reporting period included in its Annual Report on Form 10-K for the year ended December 31, 2019 using the full retrospective transition method. Accordingly, the unaudited condensed consolidated statement of operations for the three months ended March 31, 2019 presented herein has been recasted to retroactively reflect the provisions of ASC 606. The adoption of ASC 606 had no net effect on the Company's income from operations, loss before income taxes, net loss, consolidated balance sheet, or cash flows from operations, investing, or financing activities.
New Accounting Standards Adopted and Recently Issued Standards Not Yet Adopted	Accounting Policies and New Accounting Standards Adopted There have been no material changes to the Company's accounting policies as described in its most recent Annual Report on Form 10-K for the year ended December 31, 2019. The Company did not adopt any new accounting standards during the three months ended March 31, 2020, except for ASU 2018-13, as described below. Disclosures for Fair Value Measurements (ASU 2018-13) On January 1, 2020, the Company adopted Accounting Standards Update ("ASU") No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). ASU 2018-13 eliminated, added, and modified certain disclosure requirements for fair value measurements as part of the FASB's disclosure framework project. Certain amendments must be applied prospectively while others are applied on a retrospective basis to all periods presented. As disclosure guidance, the adoption of this ASU had no effect on the Company's financial position, results of operations or cash flows. Note 14, Fair Value, reflects the disclosure provisions of ASU 2018-13. Recently Issued Accounting Standards Not Yet Adopted The following standards are pending adoption and will likely apply to the Company in future periods based on the Company's current business activities: Reference Rate Reform (ASU 2020-04) On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financial Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contact at the modification date or reassess a previous accounting determination. ASU 2020-04 can be adopted at any time before December 31, 2022. The provisions of ASU 2020-04 may impact the Company if future debt modifications or refinancings utilize one or more of the reference rates covered by the provisions of this ASU. Leases (ASC 842) In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, Leases-Topic 842, which has been codified in ASC 842, Leases, and supplemented by subsequent ASUs. Under this new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases): 1) a lease liability equal to the lessee's obligation to make lease payments arising from a lease, measured on a discounted basis and 2) a right-of-use asset which will represent the lessee's right to use, or control the use of, a specified asset for the lease term. As an EGC, this standard is effective for the Company's annual reporting period beginning in 2021 and interim reporting periods beginning first quarter of 2022. The FASB has recently proposed delaying the effective date of ASC 842 for certain entities. If the proposal becomes effective, the Company will be required to adopt ASC 842 for interim and annual periods beginning January 1, 2022 based on the current expectation for the expiration of the Company's EGC status. The adoption of ASC 842 will require the Company to recognize non-current assets and liabilities for right-of-use assets and operating lease liabilities on its consolidated balance sheet, but it is not expected to have a material effect on the Company's results of operations or cash flows. ASC 842 will also require additional footnote disclosures to the Company's consolidated financial statements. Credit Losses (ASU 2016-13) In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This new guidance will change how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 will replace the current "incurred loss" model with an "expected loss" model. Under the "incurred loss" model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been "incurred"). Under the "expected loss" model, a loss (or allowance) is recognized upon initial recognition of the asset that reflects all future events that leads to a loss being realized, regardless of whether it is probable that the future event will occur. The "incurred loss" model considers past events and current conditions, while the "expected loss" model includes expectations for the future which have yet to occur. The standard will require entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the potential impact that ASU 2016-13 may have on the timing of recognizing future provisions for expected losses on the Company's accounts receivable. As a Smaller Reporting Company (as defined by the SEC), the Company must adopt this new standard no later than the beginning of 2023. Goodwill Impairment Testing (ASU 2017-04) In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 will eliminate the requirement to calculate the implied fair value of goodwill (i.e., step 2 of the current goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value (i.e., measure the charge based on the current step 1). Any impairment charge will be limited to the amount of goodwill allocated to an impacted reporting unit. ASU 2017-04 will not change the current guidance for completing Step 1 of the goodwill impairment test, and an entity will still be able to perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. Upon adoption, the ASU will be applied prospectively. As an EGC, this ASU will be effective for annual and interim impairment tests performed in periods beginning in 2022. The impact that ASU 2017-04 may have on the Company's financial condition or results of operations will depend on the circumstances of any goodwill impairment event that may occur after adoption. Share-Based Payments to Non-Employees (ASU 2018-07) In June 2018, the FASB issued ASU 2018-07, Share-based Payments to Non-Employees, to simplify the accounting for share-based payments to non-employees by aligning it with the accounting for share-based payments to employees, with certain exceptions. As an EGC, the ASU is effective for annual reporting periods beginning in 2020 and interim periods within annual periods beginning first quarter 2021. The Company is evaluating the impact this ASU will have on its consolidated financial statements, and such impact will be dependent on any share-based payments issued to non-employees. Share-Based Payments to Customers (ASU 2019-08) In November 2019, the FASB issued ASU 2019-08, Stock Compensation and Revenue from Contracts with Customers ("ASU 2019-08"). ASU 2019-08 will apply to share-based payments granted in conjunction with the sale of goods and services to a customer that are not in exchange for a distinct good or service. Entities will apply ASC 718 to measure and classify share-based sales incentives, and reflect the measurement of such incentives, as a reduction of the transaction price and also recognize such incentives in accordance with the guidance in ASC 606 on consideration payable to a customer. Entities that receive distinct goods or services from a customer will account for the share-based payment in the same manner as they account for other purchases from suppliers (i.e., by applying the guidance in ASC 718). Any excess of the fair-value-based measure of the share-based payment award over the fair value of the distinct goods or services received will be reflected as a reduction to the transaction price and recognized in accordance with the guidance in ASC 606 on consideration payable to a customer. ASU 2019-08 is effective for the Company at the same time it adopts ASU 2018-07, which is annual reporting periods beginning in 2020 and interim periods within annual periods beginning first quarter 2021. The Company is evaluating the impact this ASU will have on its consolidated financial statements, and such impact will be dependent on any share-based payments issued to customers. Implementation Costs Incurred in Cloud Computing Arrangements (ASU 2018-15) In August 2018, the FASB issued ASU 2018-15, Implementation Costs Incurred in Cloud Computing Arrangements ("ASU 2018-15"), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). As an EGC, this ASU is effective for the Company for annual reporting periods beginning in 2021, and interim periods within annual periods beginning in 2022. The amendments should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is evaluating the impact this ASU will have on its consolidated financial statements. Simplifying the Accounting for Income Taxes (ASU 2019-12) In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 will affect several topics of income tax accounting, including: tax-basis step-up in goodwill obtained in a transaction that is not a business combination; intra-period tax allocation; ownership changes in investments when an equity method investment becomes a subsidiary of an entity; interim-period accounting for enacted changes in tax law; and year-to-date loss limitation in interim-period tax accounting. This ASU is effective for the Company on January 1, 2022. The effects that the adoption of this ASU will have on the Company's results of operations, financial position, and cash flows will depend on specific events occurring for the Company after the adoption of ASU 2019-12.
Revenue Recognition	The Company's revenues by type are earned in the Company's reportable segments as follows: merchant card fees primarily in Consumer Payments; outsourced services revenues primarily in Commercial Payments; other services revenues in Commercial Payments and Integrated Partners; and equipment revenues in Consumer Payments. Transaction Price Allocated to Future Performance Obligations ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations. However, as allowed by ASC 606, the Company has elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. As described above, the Company’s most significant performance obligations consist of variable consideration under a stand-ready series of distinct days of service. Such variable consideration meets the specified criteria for the disclosure exclusion. Therefore, the majority of the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied is variable consideration that is not required for this disclosure. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material. Contract Costs For new, renewed, or anticipated contracts with customers, the Company does not incur material amounts of incremental costs to obtain such contracts, as those costs are defined by ASC 340-40. Fulfillment costs, as defined by ASC 340-40, typically benefit only the period (typically a month in duration) in which they are incurred and therefore are expensed in the period incurred (i.e., not capitalized) unless they meet criteria to be capitalized under other accounting guidance. The Company pays commissions to most of its ISOs, and for certain ISOs the Company also pays (through a higher commission rate) them to provide customer service and other services directly to our merchant customers. The ISO is typically an independent contractor or agent of the Company. Although certain ISOs may have merchant portability rights, the merchant meets the definition of a customer for the Company even if the ISO has merchant portability rights. Since payments to ISOs are dependent substantially on variable merchant payment volumes generated after the merchant enters into a new or renewed contract, these payments to ISOs are not deemed to be a cost to acquire a new contract since the ISO payments are based on factors that will arise subsequent to the event of obtaining a new or renewed contract. Also, payments to ISOs pertain only to a specific month’s activity. For payments made, or due, to an ISO, the expenses are reported within income from operations on our statements of operations. The Company from time-to-time may elect to buy out all or a portion of an ISO’s rights to receive future commission payments related to certain merchants. Amounts paid to the ISO for these residual buyouts are capitalized by the Company under the accounting guidance for intangible assets. Contract Assets and Contract Liabilities A contract with a customer creates legal rights and obligations. As the Company performs under customer contracts, its right to consideration that is unconditional is considered to be accounts receivable. If the Company’s right to consideration for such performance is contingent upon a future event or satisfaction of additional performance obligations, the amount of revenues recognized in excess of the amount billed to the customer is recognized as a contract asset. Contract liabilities represent consideration received from customers in excess of revenues recognized. Material contract assets and liabilities are presented net at the individual contract level in the consolidated balance sheet and are classified as current or noncurrent based on the nature of the underlying contractual rights and obligations. For all periods presented, substantially all of the Company’s revenues from services were recognized over time. Revenues and commissions earned from the sales of payment equipment were typically recognized at a point in time.

REVENUES (Tables)

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue



(in thousands)	Three Months Ended March 31,
	2020		2019

Revenue Type

Merchant card fees	$	89,086	$	79,594
Outsourced services	5,662		5,977
Other services	1,129		1,433
Equipment	1,056		642
Total revenues	$	96,933	$	87,646

Schedule of Contract with Customer, Asset and Liability

Supplemental balance sheet information related to contracts from customers as of March 31, 2020 and December 31, 2019 was as follows:

SETTLEMENT ASSETS AND OBLIGATIONS - (Tables)

3 Months Ended

Mar. 31, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Settlement Assets

The Company's settlement assets and obligations at March 31, 2020 and December 31, 2019 were as follows:



(in thousands)	As of
	March 31, 2020		December 31, 2019
Settlement Assets:
Card settlements due from merchants, net of estimated losses	$	195	$	446
Card settlements due from processors	261		87
Total settlement assets	$	456	$	533

Settlement Obligations:
Card settlements due to merchants	$	22	$	44
Due to ACH payees (1)	30,643		37,745
Total settlement obligations	$	30,665	$	37,789

(1) Amounts due to ACH payees are held by the Company in restricted cash.

Schedule of Settlement Obligations

The Company's settlement assets and obligations at March 31, 2020 and December 31, 2019 were as follows:



(in thousands)	As of
	March 31, 2020		December 31, 2019
Settlement Assets:
Card settlements due from merchants, net of estimated losses	$	195	$	446
Card settlements due from processors	261		87
Total settlement assets	$	456	$	533

Settlement Obligations:
Card settlements due to merchants	$	22	$	44
Due to ACH payees (1)	30,643		37,745
Total settlement obligations	$	30,665	$	37,789

(1) Amounts due to ACH payees are held by the Company in restricted cash.

GOODWILL AND INTANGIBLE ASSETS - (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The Company's goodwill was allocated to two of the Company's reportable segments as follows:



(in thousands)	March 31, 2020		December 31, 2019
Consumer Payments	$	106,832	$	106,832
Integrated Partners	2,683		2,683
	$	109,515	$	109,515

Schedule of Intangible Assets

As of March 31, 2020 and December 31, 2019, intangible assets consisted of the following:



(in thousands)	March 31, 2020			December 31, 2019
Other intangible assets:
Merchant portfolios	$	115,502		$	114,554
Customer relationships	40,740			40,740
Residual buyouts	112,731			112,731
Non-compete agreements	3,390			3,390
Trade names	2,870			2,870
Technology	15,390			15,390
ISO relationships	15,200			15,200
Total gross carrying value	305,823			304,875
Less accumulated amortization:
Merchant portfolios	(16,107		)	(12,655		)
Customer relationships	(26,818		)	(25,836		)
Residual buyouts	(62,895		)	(59,796		)
Non-compete agreements	(3,390		)	(3,390		)
Trade names	(1,331		)	(1,273		)
Technology	(13,387		)	(12,758		)
ISO relationships	(6,592		)	(6,341		)
Total accumulated amortization	(130,520		)	(122,049		)

Net carrying value	$	175,303		$	182,826

PROPERTY, EQUIPMENT AND SOFTWARE - (Tables)

3 Months Ended

Mar. 31, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property, Equipment and Software

A summary of property, equipment, and software as of March 31, 2020 and December 31, 2019 follows:



(in thousands)	March 31, 2020			December 31, 2019			Useful Life

Furniture and fixtures	$	2,808		$	2,787		2-7 years
Equipment	10,225			10,101			3-7 years
Computer software	39,553			37,440			3-5 years
Leasehold improvements	6,390			6,367			5-10 years
	58,976			56,695
Less accumulated depreciation	(34,916		)	(33,177		)
Property, equipment, and software, net	$	24,060		$	23,518

ACCOUNTS PAYABLE AND ACCRUED EXPENSES - (Tables)

3 Months Ended

Mar. 31, 2020

Accounts Payable [Abstract]

Schedule of Accounts Payable and Accrued Expenses

The components of accounts payable and accrued expenses that exceeded five percent of total current liabilities at either March 31, 2020 or December 31, 2019 consisted of the following:



(in thousands)	March 31, 2020		December 31, 2019

Accounts payable	$	7,375	$	6,968
Accrued network fees	$	6,779	$	6,950

DEBT OBLIGATIONS - (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Outstanding debt obligations as of March 31, 2020 and December 31, 2019 consisted of the following:



(in thousands)	March 31, 2020			December 31, 2019

Senior Credit Agreement - Bears interest at LIBOR plus 6.5% and 5.0% at March 31, 2020 and December 31, 2019, respectively (rate of 8.11% at March 31, 2020 and 6.71% at December 31, 2019):
Term facility - Matures January 3, 2023	$	387,836		$	388,837
Revolving credit facility - $25.0 million line, matures January 22, 2022	15,000			11,500
Term Loan - Subordinated, matures July 3, 2023 and bears interest at 5.0% plus an applicable margin (rate of 12.5% and 10.5% at March 31, 2020 and December 31, 2019, respectively)	96,533			95,142
Total debt obligations	499,369			495,479
Less: current portion of long-term debt	(7,866		)	(4,007		)
Less: unamortized debt discounts and deferred financing costs	(8,184		)	(5,894		)
Long-term debt, net	$	483,319		$	485,578

Schedule of Maturities of Long-Term Debt

Based on terms and conditions existing at March 31, 2020, future minimum principal payments for long-term debt are as follows:



(in thousands)	Principal Due
	Senior Credit Agreement				GS Credit Agreement		Total
Twelve-month period ending March 31,	Term		Revolver		Term		Total

2021 (current)	$	7,866	$	—	$	—	$	7,866
2022	24,302		15,000		—		39,302
2023	355,668		—		—		355,668
2024	—		—		96,533		96,533
Total	$	387,836	$	15,000	$	96,533	$	499,369

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

INCOME TAXES - (Tables)

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of Income Tax (Benefit) Provision

The Company's benefit for federal and state income taxes was as follows:



(in thousands)	Three Months Ended
	March 31,
	2020			2019

Current income tax benefit	$	—		$	(103	)
Deferred income tax benefit	(1,699		)	(1,621		)
Provision for DTA valuation allowance	2,006			—
Adjustment for DTA valuation allowance - discrete item	(1,540		)	—
Total income tax benefit	$	(1,233	)	$	(1,724	)

RECONCILIATION OF STOCKHOLDERS' EQUITY (DEFICIT) AND NON-CONTROLLING INTEREST - (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Schedule of Equity Structure



(in thousands)											Additional Paid-In Capital		Accumulated (Deficit)			Total Priority Technology Holdings, Inc. Stockholders' (Deficit)			Non-Controlling Interest (c)
	Preferred Stock			Common Stock			Treasury Stock (a)
	Shares	Amount		Shares	Amount		Shares	Amount

January 1, 2020	—	$	—	67,061	$	68	451	$	(2,388	)	$	3,651	$	(127,674	)	$	(126,343	)	$	5,654
Stock-based compensation	—	—		—	—		—	—			338		—			338			—
Net loss	—	—		—	—		—	—			—		(5,869		)	(5,869		)	—
March 31, 2020	—	$	—	67,061	$	68	451	$	(2,388	)	$	3,989	$	(133,543	)	$	(131,874	)	$	5,654



January 1, 2019	—	$	—	67,038	$	67	—	$	—	$	—	$	(94,085	)	$	(94,018	)	$	—
Stock-based compensation	—	—		—	—		—	—		1,160		—			1,160			—
Warrant redemptions (b)	—	—		420	(b)		—	—		(b)		—			—			—
Net loss	—	—		—	—		—	—		—		(6,446		)	(6,446		)	—
Issuance of non-controlling interest (c)	—	—		—	—		—	—		—		—			—			5,654
March 31, 2019	—	$	—	67,458	$	67	—	$	—	$	1,160	$	(100,531	)	$	(99,304	)	$	5,654

(a) At cost

EQUITY-BASED COMPENSATION PLANS - (Tables)

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Summary of Equity Based Compensation by Plan

Expense recognized by plan was as follows:



(in thousands)	Three Months Ended March 31,
	2020		2019

2018 Equity Incentive Plan	$	338	$	924
2014 Management Incentive Plan	—		236
Total	$	338	$	1,160

SEGMENT INFORMATION - (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of Segment Reporting Information by Segment



(in thousands)	Three Months Ended March 31,
	2020			2019
Revenue:
Consumer Payments	$	86,031		$	79,009
Commercial Payments	6,368			6,658
Integrated Partners	4,534			1,979
Consolidated Revenue	$	96,933		$	87,646

Income (loss) from operations:
Consumer Payments	$	7,152		$	7,719
Commercial Payments	764			(451		)
Integrated Partners	368			(233		)
Corporate	(4,725		)	(6,069		)
Consolidated income from operations	$	3,559		$	966

Depreciation and amortization:
Consumer Payments	$	8,583		$	7,808
Commercial Payments	76			98
Integrated Partners	1,311			691
Corporate	302			328
Consolidated depreciation and amortization	$	10,272		$	8,925

Schedule of Reconciliation of Revenue from Segments to Consolidated

A reconciliation of total income from operations of reportable segments to the Company's net loss is provided in the following table:



(in thousands)	Three Months Ended
	March 31,
	2020			2019

Total income from operations of reportable segments	$	8,284		$	7,035
Corporate	(4,725		)	(6,069		)
Interest expense	(10,315		)	(9,363		)
(Less) plus other, net	(346		)	227
Income tax benefit	1,233			1,724
Net loss	$	(5,869	)	$	(6,446	)

LOSS PER COMMON SHARE - (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

The following tables set forth the computation of the Company's basic and diluted loss per common share:



	Three Months Ended March 31,
(in thousands except per share amounts)	2020			2019

Basic and Diluted Loss Per Common Share:
Numerator:
Net loss	$	(5,869	)	$	(6,446	)
Less: Income (loss) attributable to non-controlling interests	—			—
Net loss attributable to common stockholders	$	(5,869	)	$	(6,446	)

Denominator:
Weighted-average shares outstanding	67,061			67,164

Basic and Diluted Loss Per Common Share	$	(0.09	)	$	(0.10	)

Schedule of Antidilutive Securities

Potentially anti-dilutive securities that were excluded from earnings per share for the three months ended March 31, 2020 and 2019 that could be dilutive in future periods were as follows:



(in thousands)	Common Stock Equivalents
	March 31, 2020	March 31, 2019

Outstanding warrants on common stock	3,556	3,556
Restricted stock unit awards granted under the 2018 Equity Incentive Plan	395	238
Outstanding stock option awards granted under the 2018 Equity Incentive Plan	1,644	2,047
Restricted stock units granted under the Earnout Incentive Plan	—	95
Total	5,595	5,936

REVENUES - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Total revenues	$ 96,933	$ 87,646
Merchant card fees
Disaggregation of Revenue [Line Items]
Total revenues	89,086	79,594
Outsourced services
Disaggregation of Revenue [Line Items]
Total revenues	5,662	5,977
Other services
Disaggregation of Revenue [Line Items]
Total revenues	1,129	1,433
Equipment
Disaggregation of Revenue [Line Items]
Total revenues	$ 1,056	$ 642

REVENUES Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Jan. 01, 2019
Revenue from Contract with Customer [Abstract]
Contract liabilities, net (current)	$ 1,682	$ 1,912	$ 1,738	$ 1,776

REVENUES - Balance Sheet Information (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Jan. 01, 2019
Revenue from Contract with Customer [Abstract]
Contract liabilities, net (current)	$ 1,682	$ 1,912	$ 1,738	$ 1,776

ASSET ACQUISITIONS - YapStone (Details) - USD ($) $ in Thousands	1 Months Ended
	Mar. 31, 2019	Mar. 31, 2020	Dec. 31, 2019
Schedule of Asset Acquisition [Line Items]
Non-controlling interest in a subsidiary		$ 5,654	$ 5,654
YapStone, Inc
Schedule of Asset Acquisition [Line Items]
Payments for asset acquisitions	$ 65,000
Non-controlling interest in a subsidiary	5,700
Asset acquisition,software license agreement	1,000
Asset acquisition,service agreement	$ 1,200

SETTLEMENT ASSETS AND OBLIGATIONS (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Merchant reserves held by sponsor banks	$ 71,700	$ 79,800
Settlement assets	456	533
Settlement obligations	30,665	37,789
Card settlements due to merchants
Accounts, Notes, Loans and Financing Receivable [Line Items]
Settlement obligations	22	44
Due to ACH payees
Accounts, Notes, Loans and Financing Receivable [Line Items]
Settlement obligations	30,643	37,745
Card settlements due from merchants, net of estimated losses
Accounts, Notes, Loans and Financing Receivable [Line Items]
Settlement assets	195	446
Card settlements due from processors
Accounts, Notes, Loans and Financing Receivable [Line Items]
Settlement assets	$ 261	$ 87

GOODWILL AND INTANGIBLE ASSETS - Goodwill Allocation (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Goodwill [Line Items]
Goodwill	$ 109,515	$ 109,515
Consumer Payments
Goodwill [Line Items]
Goodwill	106,832	106,832
Integrated Partners
Goodwill [Line Items]
Goodwill	$ 2,683	$ 2,683

GOODWILL AND INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 305,823	$ 304,875
Intangible assets, accumulated amortization	(130,520)	(122,049)
Intangible assets, net	175,303	182,826
Merchant portfolios
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	115,502	114,554
Intangible assets, accumulated amortization	(16,107)	(12,655)
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	40,740	40,740
Intangible assets, accumulated amortization	(26,818)	(25,836)
Residual buyouts
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	112,731	112,731
Intangible assets, accumulated amortization	(62,895)	(59,796)
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	3,390	3,390
Intangible assets, accumulated amortization	(3,390)	(3,390)
Trade names
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	2,870	2,870
Intangible assets, accumulated amortization	(1,331)	(1,273)
Technology
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	15,390	15,390
Intangible assets, accumulated amortization	(13,387)	(12,758)
ISO relationships
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	15,200	15,200
Intangible assets, accumulated amortization	$ (6,592)	$ (6,341)

GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill accumulated impairment loss	$ 0		$ 0
Amortization of intangible assets	8,500,000	$ 7,500,000
Impairment of intangible assets	$ 0		$ 0

PROPERTY, EQUIPMENT AND SOFTWARE - Narrative and Schedule of Property, Equipment, and Software (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property, equipment and software, gross	$ 58,976		$ 56,695
Less accumulated depreciation	(34,916)		(33,177)
Property, equipment, and software, net	24,060		23,518
Depreciation expense	1,800	$ 1,400
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, equipment and software, gross	$ 2,808		2,787
Furniture and fixtures \| Minimum
Property, Plant and Equipment [Line Items]
Useful Life	2 years
Furniture and fixtures \| Maximum
Property, Plant and Equipment [Line Items]
Useful Life	7 years
Equipment
Property, Plant and Equipment [Line Items]
Property, equipment and software, gross	$ 10,225		10,101
Equipment \| Minimum
Property, Plant and Equipment [Line Items]
Useful Life	3 years
Equipment \| Maximum
Property, Plant and Equipment [Line Items]
Useful Life	7 years
Computer software
Property, Plant and Equipment [Line Items]
Property, equipment and software, gross	$ 39,553		37,440
Computer software \| Minimum
Property, Plant and Equipment [Line Items]
Useful Life	3 years
Computer software \| Maximum
Property, Plant and Equipment [Line Items]
Useful Life	5 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, equipment and software, gross	$ 6,390		$ 6,367
Leasehold improvements \| Minimum
Property, Plant and Equipment [Line Items]
Useful Life	5 years
Leasehold improvements \| Maximum
Property, Plant and Equipment [Line Items]
Useful Life	10 years

ACCOUNTS PAYABLE AND ACCRUED EXPENSES - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accounts Payable [Abstract]
Accounts payable	$ 7,375	$ 6,968
Accrued network fees	$ 6,779	$ 6,950

DEBT OBLIGATIONS - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Total debt obligations	$ 499,369	$ 495,479
Less: current portion of long-term debt	(7,866)	(4,007)
Less: unamortized debt discounts and deferred financing costs	(8,184)	(5,894)
Long-term debt, net	$ 483,319	$ 485,578
Syndicate of Lenders \| Line of Credit
Debt Instrument [Line Items]
Interest rate during period	8.11%	6.71%
Syndicate of Lenders \| Line of Credit \| LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	6.50%	5.00%
Syndicate of Lenders \| Line of Credit \| Revolving Credit Facility
Debt Instrument [Line Items]
Total debt obligations	$ 15,000
Syndicate of Lenders \| Line of Credit \| Term Loan
Debt Instrument [Line Items]
Total debt obligations	$ 387,836
Goldman Sachs Specialty Lending Group \| Line of Credit
Debt Instrument [Line Items]
Basis spread on variable rate	5.00%
Interest rate during period	12.50%	10.50%
Goldman Sachs Specialty Lending Group \| Line of Credit \| Payment-in-Kind Interest Rate
Debt Instrument [Line Items]
Basis spread on variable rate	5.00%	5.00%
Goldman Sachs Specialty Lending Group \| Line of Credit \| Term Loan
Debt Instrument [Line Items]
Total debt obligations	$ 96,533
Senior Term Loan, Maturing January 3, 2023 \| Senior Notes
Debt Instrument [Line Items]
Total debt obligations	387,800
Senior Term Loan, Maturing January 3, 2023 \| Syndicate of Lenders \| Senior Notes
Debt Instrument [Line Items]
Total debt obligations	387,836	$ 388,837
Senior Term Loan, Maturing January 3, 2023 \| Syndicate of Lenders \| Line of Credit \| Revolving Credit Facility
Debt Instrument [Line Items]
Total debt obligations	15,000	11,500
Senior Term Loan, Maturing January 3, 2023 \| Syndicate of Lenders \| Line of Credit \| Letter of Credit
Debt Instrument [Line Items]
Total debt obligations	25,000	25,000
Subordinated Term Loan, Maturing July 3, 2023 \| Goldman Sachs Specialty Lending Group \| Subordinated Debt
Debt Instrument [Line Items]
Total debt obligations	$ 96,533	$ 95,142

DEBT OBLIGATIONS - Narrative (Details) - USD ($)	3 Months Ended			12 Months Ended
DEBT OBLIGATIONS - Narrative (Details) - USD ($)	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2018	Mar. 18, 2022	Mar. 17, 2021	Mar. 18, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Interest payable	$ 16,500,000						$ 15,100,000
Payment-in-kind interest	1,391,000	$ 1,210,000
Interest expense	10,315,000	9,363,000
Capitalized lender fees						$ 2,700,000
Unamortized discount, including capitalized fees. net of amortization expense	5,600,000
Amortization of debt discount (premium) and debt issuance costs	500,000		$ 400,000
Third party costs	$ 400,000
Debt covenant, maximum net leverage ratio	800.00%
Goldman Sachs Specialty Lending Group
Debt Instrument [Line Items]
Borrowings outstanding under revolving credit facility	$ 80,000,000.0
Debt instrument, interest rate,effective percentage						12.91%
Goldman Sachs Specialty Lending Group \| Line of Credit
Debt Instrument [Line Items]
Applicable margin	5.00%
Syndicate of Lenders
Debt Instrument [Line Items]
Debt instrument, interest rate,effective percentage						8.87%
Syndicate of Lenders \| Line of Credit
Debt Instrument [Line Items]
Debt instrument, periodic payment, principal	$ 100,000,000
Interest rate increase	1.00%
Interest rate incremental increases	0.50%
Syndicate of Lenders \| Line of Credit \| Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 25,000,000.0					$ 25,000,000.0
Remaining borrowing capacity	$ 10,000,000.0						$ 13,500,000
Unused commitment fee percentage	0.50%
Line of credit faciity, penalty percentage	1.00%
Syndicate of Lenders \| Line of Credit \| Swing Line Facility
Debt Instrument [Line Items]
Maximum borrowing capacity						$ 5,000,000.0
Delayed Draw \| Goldman Sachs Specialty Lending Group \| Line of Credit \| Term Loan
Debt Instrument [Line Items]
Maximum borrowing capacity		70,000,000.0
Unused commitment fee amount		$ 400,000
Scenario, Forecast \| Goldman Sachs Specialty Lending Group \| Line of Credit
Debt Instrument [Line Items]
Line of credit faciity, penalty percentage				2.00%	4.00%
Maximum \| Syndicate of Lenders \| Line of Credit
Debt Instrument [Line Items]
Debt instrument, interest rate,effective percentage	3.00%

DEBT OBLIGATIONS - Rolling Maturities of Long-Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
2021 (current)	$ 7,866
2022	39,302
2023	355,668
2024	96,533
Total debt obligations	499,369	$ 495,479
Line of Credit \| Syndicate of Lenders \| Term Loan
Debt Instrument [Line Items]
2021 (current)	7,866
2022	24,302
2023	355,668
2024	0
Total debt obligations	387,836
Line of Credit \| Syndicate of Lenders \| Revolving Credit Facility
Debt Instrument [Line Items]
2021 (current)	0
2022	15,000
2023	0
2024	0
Total debt obligations	15,000
Line of Credit \| Goldman Sachs Specialty Lending Group \| Term Loan
Debt Instrument [Line Items]
2021 (current)	0
2022	0
2023	0
2024	96,533
Total debt obligations	$ 96,533

INCOME TAXES - Schedule of Income Tax (Benefit) Provision (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Current income tax benefit	$ 0	$ (103)
Deferred income tax benefit	(1,699)	(1,621)
Provision for DTA valuation allowance	2,006	0
Adjustment for DTA valuation allowance - discrete item	(1,540)	0
Total income tax benefit	$ (1,233)	$ (1,724)

INCOME TAXES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
INCOME TAXES - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Effective income tax rate	17.40%	21.10%
Tax cuts and jobs act of 2017, incomplete accounting, provisional liability	$ 0.5
Tax cuts and jobs act of 2017, incomplete accounting, provisional liability, deferred tax assets	1.5
Tax cuts and jobs act of 2017, incomplete accounting, provisional income tax expense (benefit)	$ 2.0

COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
	Mar. 15, 2019	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Schedule of Asset Acquisition [Line Items]
Commitment to pay minimum processing fees under agreements		$ 14,000
Asset acquisition, contingent consideration	$ 2,100
Asset acquisition, intangible assets	15,200
Proceeds from lines of credit		3,500	$ 10,000
Contingent cash payments for asset acquisitions	6,400
Term Loan \| Syndicate of Lenders \| Line of Credit
Schedule of Asset Acquisition [Line Items]
Proceeds from lines of credit	5,000
Revolving Credit Facility
Schedule of Asset Acquisition [Line Items]
Proceeds from lines of credit	$ 10,000
Service Agreements
Schedule of Asset Acquisition [Line Items]
Asset acquisition, contingent consideration		$ 2,100		$ 1,100

RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended
	Jan. 31, 2019	Feb. 28, 2019	Mar. 31, 2020	May 22, 2019
Related Party Transaction [Line Items]
Notes receivable, noncurrent				$ 3.5
Notes receivable, maximum loan commitment available for future issuance, noncurrent				$ 10.0
Notes receivable, noncurrent, annual interest rate				12.00%
Interest income, related party			$ 0.1
Redeemable noncontrolling interest, equity, preferred, redemption value		$ 4.5
Preferred yield per year		6.00%
Preferred stock, percentage owned		83.30%
Income (loss) from equity method investments			$ 0.2
Chief Executive Officer And Chairman
Related Party Transaction [Line Items]
Percentage of ownership before transaction	80.00%

RECONCILIATION OF STOCKHOLDERS' EQUITY (DEFICIT) AND NON-CONTROLLING INTEREST - Narrative (Details) - shares	Mar. 31, 2020	Dec. 31, 2019
Equity [Abstract]
Preferred stock authorized (in shares)	100,000,000
Preferred stock issued (in shares)	0	0

RECONCILIATION OF STOCKHOLDERS' EQUITY (DEFICIT) AND NON-CONTROLLING INTEREST - Equity Reconciliation (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Feb. 28, 2019	Aug. 31, 2018
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	$ (120,689,000)
Net loss	(5,869,000)	$ (6,446,000)
Ending balance	(126,220,000)
Warrants and rights, number of shares allowed to purchase (in shares)			420,000
Class of warrant or right, number of securities called by each warrant or right (in shares)				0.192
Net income (loss) attributable to noncontrolling interest	$ 0	$ 0
Preferred Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	0	0
Beginning balance	$ 0	$ 0
Ending balance (in shares)	0	0
Ending balance	$ 0	$ 0
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	67,061,000	67,038,000
Beginning balance	$ 68,000	$ 67,000
Warrant redemptions (in shares)		420,000
Ending balance (in shares)	67,061,000	67,458,000
Ending balance	$ 68,000	$ 67,000
Conversion of MI Acquisitions shares		$ 1,000,000
Treasury Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	451,000	0
Beginning balance	$ (2,388,000)	$ 0
Ending balance (in shares)	451,000	0
Ending balance	$ (2,388,000)	$ 0
Additional Paid-In Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	3,651,000	0
Stock-based compensation	338,000	1,160,000
Ending balance	3,989,000	1,160,000
Accumulated (Deficit)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	(127,674,000)	(94,085,000)
Net loss	(5,869,000)	(6,446,000)
Ending balance	(133,543,000)	(100,531,000)
Total Priority Technology Holdings, Inc. Stockholders' (Deficit)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	(126,343,000)	(94,018,000)
Stock-based compensation	338,000	1,160,000
Net loss	(5,869,000)	(6,446,000)
Issuance of non-controlling interest (c)		0
Ending balance	(131,874,000)	(99,304,000)
Non-Controlling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	5,654,000	0
Issuance of non-controlling interest (c)		5,654,000
Ending balance	$ 5,654,000	$ 5,654,000
MI Acquisitions Warrants, Public
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Class of warrant or right, outstanding (in shares)				5,310,109
MI Acquisitions Warrants, Private
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Warrants and rights, number of shares allowed to purchase (in shares)				421,107

EQUITY-BASED COMPENSATION PLANS - Summary of Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation	$ 338	$ 1,160
2018 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation	338	924
2014 Management Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation	$ 0	$ 236

FAIR VALUE - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes receivable, fair value		$ 6,600		$ 5,700
Long-term debt	$ 499,369	$ 495,479
Priority Payment Systems Tech Partners
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration remaining	500
Contingent consideration remaining, fair value	170
Priority Payment Systems Northeast
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration remaining	250
Contingent consideration remaining, fair value	$ 190
Fair Value, Inputs, Level 3 [Member] \| Priority Payment Systems Tech Partners
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration weighted payout probability percentage	21.00%		26.00%
Fair Value, Inputs, Level 3 [Member] \| Priority Payment Systems Northeast
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration weighted payout probability percentage	70.00%		70.00%
Maximum \| Fair Value, Inputs, Level 3 [Member] \| Priority Payment Systems Tech Partners
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration weighted payout probability percentage					35.00%
Maximum \| Fair Value, Inputs, Level 3 [Member] \| Priority Payment Systems Northeast
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration weighted payout probability percentage					80.00%
Minimum \| Fair Value, Inputs, Level 3 [Member] \| Priority Payment Systems Tech Partners
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration weighted payout probability percentage					15.00%
Minimum \| Fair Value, Inputs, Level 3 [Member] \| Priority Payment Systems Northeast
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration weighted payout probability percentage					5.00%
Senior Notes \| Senior Term Loan, Maturing January 3, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt	$ 387,800
Long-term debt fair value	$ 327,700

SEGMENT INFORMATION - Narrative (Details) - segment	3 Months Ended
SEGMENT INFORMATION - Narrative (Details) - segment	Mar. 31, 2020	Mar. 31, 2019
Segment Reporting Information [Line Items]
Number of reportable segments	3
Commercial Payments
Segment Reporting Information [Line Items]
Number of reportable segments	1	1
Consumer Payments
Segment Reporting Information [Line Items]
Percentage of revenue	20.00%	18.00%

SEGMENT INFORMATION - Schedule of Segment Reporting Information by Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue:
Revenue	$ 96,933	$ 87,646
Income (loss) from operations:
Total income from operations of reportable segments	3,559	966
Depreciation and amortization:
Depreciation and amortization	10,272	8,925
Operating Segments
Revenue:
Revenue	96,933	87,646
Income (loss) from operations:
Total income from operations of reportable segments	8,284	7,035
Operating Segments \| Consumer Payments
Revenue:
Revenue	86,031	79,009
Income (loss) from operations:
Total income from operations of reportable segments	7,152	7,719
Depreciation and amortization:
Depreciation and amortization	8,583	7,808
Operating Segments \| Commercial Payments
Revenue:
Revenue	6,368	6,658
Income (loss) from operations:
Total income from operations of reportable segments	764	(451)
Depreciation and amortization:
Depreciation and amortization	76	98
Operating Segments \| Integrated Partners
Revenue:
Revenue	4,534	1,979
Income (loss) from operations:
Total income from operations of reportable segments	368	(233)
Depreciation and amortization:
Depreciation and amortization	1,311	691
Corporate
Income (loss) from operations:
Total income from operations of reportable segments	(4,725)	(6,069)
Depreciation and amortization:
Depreciation and amortization	$ 302	$ 328

SEGMENT INFORMATION - Schedule of Reconciliation of Total Operating Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Segment Reporting Information [Line Items]
Total income from operations of reportable segments	$ 3,559	$ 966
Interest expense	(10,315)	(9,363)
(Less) plus other, net	(346)	227
Income tax benefit	1,233	1,724
Net loss	(5,869)	(6,446)
Operating Segments
Segment Reporting Information [Line Items]
Total income from operations of reportable segments	8,284	7,035
Corporate
Segment Reporting Information [Line Items]
Total income from operations of reportable segments	$ (4,725)	$ (6,069)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

LOSS PER COMMON SHARE - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net loss	$ (5,869)	$ (6,446)
Less: Income (loss) attributable to non-controlling interests	0	0
Net loss attributable to common stockholders	$ (5,869)	$ (6,446)
Denominator:
Weighted average number of shares outstanding, basic and diluted (in shares)	67,061	67,164
Basic and diluted (USD per share)	$ (0.09)	$ (0.10)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

LOSS PER COMMON SHARE - Schedule of Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities that were excluded from EPS (in shares)	5,595	5,936
Outstanding warrants on common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities that were excluded from EPS (in shares)	3,556	3,556
Restricted stock unit awards granted under the 2018 Equity Incentive Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities that were excluded from EPS (in shares)	395	238
Outstanding stock option awards granted under the 2018 Equity Incentive Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities that were excluded from EPS (in shares)	1,644	2,047
Restricted stock units granted under the Earnout Incentive Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities that were excluded from EPS (in shares)	0	95