20. Unaudited Quarterly Financial Data

The information for the first three quarters of fiscal 2019 and for all fiscal 2018 quarters has been restated to correct the errors described in Note 3, Restatement of Previously Issued Financial Statements.

The following table presents the quarterly information for fiscal 2019 (dollars in thousands, except per share data):


	Q1 2019 (As Restated)		Q2 2019 (As Restated)		Q3 2019 (As Restated)		Q4 2019
Revenue:
ITPS	$	325,172	$	309,840	$	292,607	$	306,665
HS		61,343		63,440		62,132		69,806
LLPS		17,842		17,569		18,806		17,115
Total Revenue		404,357		390,849		373,545		393,586

Cost of revenue:
ITPS		259,272		249,589		241,867		250,927
HS		40,341		43,353		42,717		53,634
LLPS		10,988		10,889		10,861		10,297
Cost of revenue (exclusive of depreciation and amortization)		310,601		303,831		295,445		314,858

Selling, general and administrative expenses (exclusive of depreciation and amortization)		49,677		51,162		48,347		49,678
Depreciation and amortization		26,624		24,779		25,079		24,421
Impairment of goodwill and other intangible assets		—		—		97,158		252,399
Related party expense		998		5,331		1,430		1,742
Operating income (loss)		16,457		5,746		(93,914)		(249,512)

Other expense (income), net:
Interest expense, net		39,701		39,959		40,573		43,216
Debt modification and extinguishment costs		—		1,404		—		—
Sundry expense (income), net		2,715		(1,311)		165		(600)
Other income, net		1,493		2,527		406		10,003
Net loss before income taxes		(27,452)		(36,833)		(135,058)		(302,131)
Income tax (expense) benefit		(4,720)		(4,738)		3,769		(1,953)
Net loss		(32,172)		(41,571)		(131,289)		(304,084)
Cumulative dividends for Series A Preferred Stock		(914)		(914)		(884)		(597)
Net loss attributable to common stockholders	$	(33,086)	$	(42,485)	$	(132,173)	$	(304,681)
Weighted average outstanding common shares (Refer to Net Loss per Share discussion in Note 2)		145,572,221		145,466,193		145,636,749		146,161,353
Earnings per share:
Basic and diluted	$	(0.23)	$	(0.29)	$	(0.91)	$	(2.09)

The following table presents the quarterly information for fiscal 2018 (dollars in thousands, except per share data):


	Q1 2018 (As Restated)		Q2 2018 (As Restated)		Q3 2018 (As Restated)		Q4 2018 (As Restated)
Revenue:
ITPS	$	311,936	$	330,131	$	307,313	$	324,267
HS		58,632		56,314		56,776		56,293
LLPS		22,599		23,937		18,941		19,083
Total Revenue		393,167		410,382		383,030		399,643

Cost of revenue:
ITPS		246,042		262,066		247,021		255,191
HS		35,192		39,538		37,139		40,008
LLPS		13,663		13,563		12,525		11,455
Cost of revenue (exclusive of depreciation and amortization)		294,897		315,167		296,685		306,654

Selling, general and administrative expenses (exclusive of depreciation and amortization)		45,519		46,378		44,897		48,114
Depreciation and amortization		36,239		34,744		33,410		33,684
Impairment of goodwill and other intangible assets		—		—		—		48,127
Related party expense		1,181		6,783		775		3,664
Operating income (loss)		15,331		7,310		7,263		(40,600)

Other expense (income), net:
Interest expense, net		38,676		39,229		39,087		38,999
Debt modification and extinguishment costs		—		—		1,067		—
Sundry expense (income), net		229		(2,122)		(2,283)		905
Other income, net		(3,621)		(907)		(1,069)		2,567
Net loss before income taxes		(19,953)		(28,890)		(29,539)		(83,071)
Income tax (expense) benefit		(4,025)		(1,619)		733		(3,442)
Net loss		(23,978)		(30,509)		(28,806)		(86,513)
Cumulative dividends for Series A Preferred Stock		(914)		(914)		(914)		(914)
Net loss attributable to common stockholders	$	(24,892)	$	(31,423)	$	(29,720)	$	(87,427)
Weighted average outstanding common shares (Refer to Net Loss per Share discussion in Note 2)		147,569,383		147,688,855		147,092,936		147,773,089
Earnings per share:						—
Basic and diluted	$	(0.17)	$	(0.21)	$	(0.20)	$	(0.59)

The restated quarterly Consolidated Balance Sheets for the first three quarters of fiscal 2019 and fiscal 2018 are presented below:

Exela Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands of United States dollars except share and per share amounts)

(Unaudited)


	As of March 31, 2019						As of March 31, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Assets
Current assets
Cash and cash equivalents	$	8,262	$	297	$	8,559	$	26,882	$	2,128	$	29,010	c
Restricted cash		4,998		(297)		4,701		12,549		(2,128)		10,421	c
Accounts receivable, net		278,064		—		278,064		238,680		—		238,680
Inventories, net		16,321		—		16,321		13,519		—		13,519
Prepaid expenses and other current assets		25,330		(78)		25,252		27,520		—		27,520	c
Total current assets		332,975		(78)		332,897		319,150		—		319,150
Property, plant and equipment, net		129,621		—		129,621		132,870		—		132,870
Operating lease right-of-use assets, net		100,727		—		100,727		—		—		—
Goodwill		708,285		—		708,285		747,325		—		747,325
Intangible assets, net		397,412		(13,732)		383,680		438,929		(14,678)		424,251	b
Deferred income tax assets		16,202		120		16,322		9,171		796		9,967	c
Other noncurrent assets		17,667		—		17,667		18,490		—		18,490
Total assets	$	1,702,889	$	(13,690)	$	1,689,199	$	1,665,935	$	(13,882)	$	1,652,053
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payables	$	90,924	$	—	$	90,924	$	77,194	$	—	$	77,194
Related party payables		6,184		7,628		13,812		14,172		—		14,172	c
Income tax payable		4,898		—		4,898		6,967		—		6,967
Accrued liabilities		63,138		41,880		105,018		31,805		38,412		70,217	a, c
Accrued compensation and benefits		57,961		(2,216)		55,745		49,738		(2,459)		47,279	c
Accrued interest		23,928		—		23,928		23,795		—		23,795
Customer deposits		28,410		—		28,410		36,542		—		36,542
Deferred revenue		19,966		—		19,966		15,933		—		15,933
Obligation for claim payment		46,063		—		46,063		56,554		—		56,554
Current portion of finance lease liabilities		15,961		—		15,961		14,785		—		14,785
Current portion of operating lease liabilities		27,368		—		27,368		—		—		—
Current portion of long-term debts		32,821		—		32,821		21,170		—		21,170
Total current liabilities		417,622		47,292		464,914		348,655		35,953		384,608
Long-term debt, net of current maturities		1,336,152		—		1,336,152		1,277,029		—		1,277,029
Finance lease liabilities, net of current portion		27,231		—		27,231		26,474		—		26,474
Pension liabilities		25,514		2,216		27,730		26,081		2,459		28,540	c
Deferred income tax liabilities		12,439		2		12,441		5,478		—		5,478	c
Long-term income tax liabilities		3,158		—		3,158		3,470		—		3,470
Operating lease liabilities, net of current portion		78,290		—		78,290		—		—		—
Other long-term liabilities		6,747		—		6,747		13,879		—		13,879
Total liabilities		1,907,153		49,510		1,956,663		1,701,066		38,412		1,739,478
Commitments and Contingencies
Shareholders' equity (deficit)
Common Stock		15		—		15		15		—		15
Preferred Stock		1		—		1		1		—		1
Additional paid-in capital		482,018		(36,566)		445,452		482,018		(36,566)		445,452
Treasury stock		(10,342)		—		(10,342)		(249)		—		(249)
Equity-based compensation		44,529		—		44,529		35,044		—		35,044
Accumulated deficit		(707,787)		(26,776)		(734,563)		(540,041)		(15,703)		(555,744)
Accumulated other comprehensive loss:
Foreign currency translation adjustment		(3,173)		142		(3,031)		(462)		(25)		(487)
Unrealized pension actuarial losses, net of tax		(9,525)		—		(9,525)		(11,457)		—		(11,457)
Total accumulated other comprehensive loss		(12,698)		142		(12,556)		(11,919)		(25)		(11,944)
Total stockholders' equity (deficit)		(204,264)		(63,200)		(267,464)		(35,131)		(52,294)		(87,425)
Total liabilities and equity	$	1,702,889	$	(13,690)	$	1,689,199	$	1,665,935	$	(13,882)	$	1,652,053

As of March 31, 2019

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $41.5 million to accrued liabilities at March 31, 2019.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $13.7 million of decrease to intangible assets, net at March 31, 2019.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $7.6 million to related party payables.

Other Adjustments - Corrections to other misstatements were as follows: (i) Reclassification of operating accounts that are not restricted resulted in an increase of $0.3 million in cash and cash equivalents and decrease of $0.3 million to restricted cash. (ii) Reclassification of pension liabilities between long-term and short-term resulted in a decrease of $2.2 million to Accrued compensation and benefits and an increase of $2.2 million to pension liabilities. (iii) Correction of non-accrual of legal expenses related to 2019 resulted in an increase of $0.4 million to accrued liabilities.

As of March 31, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $38.4 million to accrued liabilities at March 31, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $14.7 million of decrease to intangible assets, net at March 31, 2018.

(c)

Other Misstatement Adjustments:

Other Adjustments - Corrections to other misstatements were as follows: (i) Reclassification of operating accounts that are not restricted resulted in an increase of $2.1 million in cash and cash equivalents and decrease of $2.1 million to restricted cash. (ii) Reclassification of pension liabilities between long-term and short-term resulted in a decrease of $2.5 million to Accrued compensation and benefits and an increase of $2.5 million to pension liabilities. (iii) The correction of all misstatements resulted in an increase of $0.8 million to deferred income tax assets.

Exela Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands of United States dollars except share and per share amounts)

(Unaudited)


	As of June 30, 2019						As of June 30, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Assets
Current assets
Cash and cash equivalents	$	18,449	$	(43)	$	18,406	$	55,783	$	1,178	$	56,961	c
Restricted cash		4,977		43		5,020		31,088		(1,178)		29,910	c
Accounts receivable, net		266,660		—		266,660		262,260		—		262,260
Related party receivables		206		—		206		—		—		—
Inventories, net		16,735		—		16,735		15,088		—		15,088
Prepaid expenses and other current assets		23,791		(78)		23,713		24,108		—		24,108	c
Total current assets		330,818		(78)		330,740		388,327		—		388,327
Property, plant and equipment, net		125,018		—		125,018		135,585		—		135,585
Operating lease right-of-use assets, net		96,498		—		96,498		—		—		—
Goodwill		708,246		—		708,246		748,708		—		748,708
Intangible assets, net		387,775		(15,771)		372,004		419,725		(14,268)		405,457	b
Deferred income tax assets		16,181		120		16,301		15,280		796		16,076	c
Other noncurrent assets		14,714		—		14,714		21,276		—		21,276
Total assets	$	1,679,250	$	(15,729)	$	1,663,521	$	1,728,901	$	(13,472)	$	1,715,429
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payables	$	99,089	$	—	$	99,089	$	86,304	$	—	$	86,304
Related party payables		238		11,433		11,671		11,987		5,036		17,023	c
Income tax payable		2,525		—		2,525		5,385		—		5,385
Accrued liabilities		59,487		42,778		102,265		40,737		39,114		79,851	a, c
Accrued compensation and benefits		52,493		(2,275)		50,218		50,905		(2,496)		48,409	c
Accrued interest		48,935		—		48,935		48,885		—		48,885
Customer deposits		28,914		—		28,914		36,997		—		36,997
Deferred revenue		19,428		—		19,428		20,654		—		20,654
Obligation for claim payment		41,496		—		41,496		94,233		—		94,233
Current portion of finance lease liabilities		15,897		—		15,897		16,568		—		16,568
Current portion of operating lease liabilities		27,444		—		27,444		—		—		—
Current portion of long-term debts		38,929		—		38,929		16,299		3,500		19,799
Total current liabilities		434,875		51,936		486,811		428,954		45,154		474,108
Long-term debt, net of current maturities		1,331,898		—		1,331,898		1,281,697		(3,500)		1,278,197
Finance lease liabilities, net of current portion		25,772		—		25,772		25,193		—		25,193
Pension liabilities		24,866		2,275		27,141		30,471		2,496		32,967	c
Deferred income tax liabilities		15,896		2		15,898		5,016		—		5,016	c
Long-term income tax liabilities		2,842		—		2,842		3,470		—		3,470
Operating lease liabilities, net of current portion		74,290		—		74,290		—		—		—
Other long-term liabilities		7,882		—		7,882		16,208		—		16,208
Total liabilities		1,918,321		54,213		1,972,534		1,791,009		44,150		1,835,159
Commitments and Contingencies
Shareholders' equity (deficit)
Common Stock		15		—		15		15		—		15
Preferred Stock		1		—		1		1		—		1
Additional paid-in capital		482,018		(36,566)		445,452		482,018		(36,566)		445,452
Treasury stock		(10,949)		—		(10,949)		(3,728)		—		(3,728)
Equity-based compensation		47,190		—		47,190		36,980		—		36,980
Accumulated deficit		(742,616)		(33,518)		(776,134)		(565,222)		(21,031)		(586,253)
Accumulated other comprehensive loss:
Foreign currency translation adjustment		(5,461)		142		(5,319)		(1,341)		(25)		(1,366)
Unrealized pension actuarial losses, net of tax		(9,269)		—		(9,269)		(10,831)		—		(10,831)
Total accumulated other comprehensive loss		(14,730)		142		(14,588)		(12,172)		(25)		(12,197)
Total stockholders' equity (deficit)		(239,071)		(69,942)		(309,013)		(62,108)		(57,622)		(119,730)
Total liabilities and equity	$	1,679,250	$	(15,729)	$	1,663,521	$	1,728,901	$	(13,472)	$	1,715,429

As of June 30, 2019

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $42.3 million to accrued liabilities at June 30, 2019.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $15.8 million of decrease to intangible assets, net at June 30, 2019.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $11.4 million to related party payables.

Other Adjustments - Corrections to other misstatements were as follows: (i) Reclassification of operating accounts that are not restricted resulted in a decrease of $0.04 million in cash and cash equivalents and increase of $0.04 million to restricted cash. (ii) Reclassification of pension liabilities between long-term and short-term resulted in a decrease of $2.3 million to Accrued compensation and benefits and an increase of $2.3 million to pension liabilities. (iii) Correction of non-accrual of legal expenses related to 2019 resulted in an increase of $0.5 million to accrued liabilities.

As of June 30, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $39.1 million to accrued liabilities at June 30, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $14.3 million of decrease to intangible assets, net at June 30, 2018.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $5.0 million to related party payables.

Other Adjustments - Corrections to other misstatements were as follows: (i) Reclassification of operating accounts that are not restricted resulted in an increase of $1.2 million in cash and cash equivalents and decrease of $1.2 million to restricted cash. (ii) Reclassification of pension liabilities between long-term and short-term resulted in a decrease of $2.5 million to Accrued compensation and benefits and an increase of $2.5 million to pension liabilities. (iii) Reclassification of debt between current and long-term resulted in an increase of $3.5 million to current portion of long-term debts and a decrease of $3.5 million to long-term debt, net of current maturities. (iv)The correction of all misstatements resulted in an increase of $0.8 million to deferred income tax assets.

Exela Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands of United States dollars except share and per share amounts)

(Unaudited)


	As of September 30, 2019						As of September 30, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Assets
Current assets
Cash and cash equivalents	$	10,312	$	(954)	$	9,358	$	40,692	$	514	$	41,206	c
Restricted cash		4,913		954		5,867		8,955		(514)		8,441	c
Accounts receivable, net		260,438		—		260,438		253,986		—		253,986
Related party receivables		42		—		42		—		—		—
Inventories, net		16,996		—		16,996		16,122		—		16,122
Prepaid expenses and other current assets		22,695		(78)		22,617		26,933		—		26,933	c
Total current assets		315,396		(78)		315,318		346,688		—		346,688
Property, plant and equipment, net		119,469		—		119,469		131,156		—		131,156
Operating lease right-of-use assets, net		93,352		—		93,352		—		—		—
Goodwill		609,458		2,524		611,982		749,762		—		749,762
Intangible assets, net		374,445		(17,331)		357,114		398,280		(13,385)		384,895	b
Deferred income tax assets		15,830		120		15,950		14,810		796		15,606	c
Other noncurrent assets		13,557		—		13,557		21,650		—		21,650
Total assets	$	1,541,507	$	(14,765)	$	1,526,742	$	1,662,346	$	(12,589)	$	1,649,757
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payables	$	93,815	$	—	$	93,815	$	90,673	$	—	$	90,673
Related party payables		274		9,933		10,207		10,756		5,036		15,792	c
Income tax payable		—		—		—		5,422		—		5,422
Accrued liabilities		60,994		43,103		104,097		41,397		39,862		81,259	a
Accrued compensation and benefits		51,819		(2,183)		49,636		54,975		(2,511)		52,464	c
Accrued interest		24,602		—		24,602		23,845		—		23,845
Customer deposits		30,161		—		30,161		39,419		—		39,419
Deferred revenue		17,368		—		17,368		18,084		—		18,084
Obligation for claim payment		43,267		—		43,267		52,889		—		52,889
Current portion of finance lease liabilities		15,172		—		15,172		15,926		—		15,926
Current portion of operating lease liabilities		26,604		—		26,604		—		—		—
Current portion of long-term debts		37,237		—		37,237		20,062		—		20,062
Total current liabilities		401,313		50,853		452,166		373,448		42,387		415,835
Long-term debt, net of current maturities		1,367,583		—		1,367,583		1,307,884		—		1,307,884
Finance lease liabilities, net of current portion		24,159		—		24,159		22,945		—		22,945
Pension liabilities		26,667		2,183		28,850		30,376		2,511		32,887	c
Deferred income tax liabilities		12,677		2		12,679		2,115		—		2,115	c
Long-term income tax liabilities		2,892		—		2,892		3,470		—		3,470
Operating lease liabilities, net of current portion		71,661		—		71,661		—		—		—
Other long-term liabilities		7,866		—		7,866		15,307		—		15,307
Total liabilities		1,914,818		53,038		1,967,856		1,755,545		44,898		1,800,443
Commitments and Contingencies
Shareholders' equity (deficit)
Common Stock		15		—		15		15		—		15
Preferred Stock		1		—		1		1		—		1
Additional paid-in capital		482,018		(36,566)		445,452		482,018		(36,566)		445,452
Treasury stock		(10,949)		—		(10,949)		(5,148)		—		(5,148)
Equity-based compensation		48,411		—		48,411		38,601		—		38,601
Accumulated deficit		(876,043)		(31,379)		(907,422)		(594,162)		(20,896)		(615,058)
Accumulated other comprehensive loss:
Foreign currency translation adjustment		(7,786)		142		(7,644)		(3,833)		(25)		(3,858)
Unrealized pension actuarial losses, net of tax		(8,978)		—		(8,978)		(10,691)		—		(10,691)
Total accumulated other comprehensive loss		(16,764)		142		(16,622)		(14,524)		(25)		(14,549)
Total stockholders' equity (deficit)		(373,311)		(67,803)		(441,114)		(93,199)		(57,487)		(150,686)
Total liabilities and equity	$	1,541,507	$	(14,765)	$	1,526,742	$	1,662,346	$	(12,589)	$	1,649,757

As of September 30, 2019

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $43.1 million to accrued liabilities at September 30, 2019.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $17.3 million of decrease to intangible assets, net at September 30, 2019.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $9.9 million to related party payables.

Other Adjustments - Corrections to other misstatements were as follows: (i) Reclassification of operating accounts that are not restricted resulted in a decrease of $1.0 million in cash and cash equivalents and increase of $1.0 million to restricted cash. (ii) Reclassification of pension liabilities between long-term and short-term resulted in a decrease of $2.2 million to Accrued compensation and benefits and an increase of $2.2 million to pension liabilities. (iii) Correction of goodwill impairment charges resulted in an increase of $2.5 million to goodwill.

As of September 30, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $39.9 million to accrued liabilities at September 30, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $13.4 million of decrease to intangible assets, net at September 30, 2018.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $5.0 million to related party payables for non-accrual of expenses related to reimbursement obligations under the Consent, Waiver and Amendment incurred by Ex-Sigma 2 required to be reimbursed pursuant to the terms of the Consent, Waiver and Amendment.

Other Adjustments - Corrections to other misstatements were as follows: (i) Reclassification of operating accounts that are not restricted resulted in an increase of $0.5 million in cash and cash equivalents and decrease of $0.5 million to restricted cash. (ii) Reclassification of pension liabilities between long-term and short-term resulted in a decrease of $2.5 million to Accrued compensation and benefits and an increase of $2.5 million to pension liabilities. (iii) The correction of all misstatements resulted in an increase of $0.8 million to deferred income tax assets.

The restated quarterly Consolidated Statements of Operations for the first three quarters of fiscal 2019 and each of the quarterly periods in fiscal 2018 are presented below:

Exela Technologies, Inc. and Subsidiaries

Consolidated Statement of Operations

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended March 31, 2019
	As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reference
Revenue	$	403,765	$	592	$	404,357	c
Cost of revenue (exclusive of depreciation and amortization)		306,882		3,719		310,601	b, c
Selling, general and administrative expenses (exclusive of depreciation and amortization)		49,949		(272)		49,677	c
Depreciation and amortization		28,020		(1,396)		26,624	b
Related party expense		994		4		998	c
Operating loss		17,920		(1,463)		16,457
Other expense (income), net:
Interest expense, net		38,899		802		39,701	a
Sundry expense (income), net		2,531		184		2,715	c
Other expense (income), net		1,677		(184)		1,493	c
Net loss before income taxes		(25,187)		(2,265)		(27,452)
Income tax (expense) benefit		(4,720)		—		(4,720)
Net loss	$	(29,907)	$	(2,265)	$	(32,172)
Cumulative dividends for Series A Preferred Stock		(914)		—		(914)
Net loss attributable to common stockholders	$	(30,821)	$	(2,265)	$	(33,086)

For the three months ended March 31, 2019

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $0.8 million to interest expense for the three months ended March 31, 2019.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $3.1 million of increase to cost of revenue and a decrease of $1.4 million to depreciation and amortization for the three months ended March 31, 2019.

(c)

Other Misstatement Adjustments:

Revenue Recognition Adjustments: The correction of this misstatement resulted in an increase of $0.6 million to revenue and an increase of $0.6 million to cost of revenue for the three months ended March 31, 2019.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction of non-accrual of legal expenses resulted in a decrease of $0.3 million to selling, general and administrative expenses. (ii) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.2 million to sundry expense (income), net and a decrease of $0.2 million to other expense (loss), net.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended June 30, 2019						For the Six Months Ended June 30, 2019
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Revenue	$	390,160	$	689	$	390,849	$	793,924	$	1,282	$	795,206		c
Cost of revenue (exclusive of depreciation and amortization)		298,006		5,825		303,831		604,888		9,544		614,432		b, c
Selling, general and administrative expenses (exclusive of depreciation and amortization)		51,564		(402)		51,162		101,513		(674)		100,839		c
Depreciation and amortization		27,191		(2,412)		24,779		55,211		(3,808)		51,403		b, c
Related party expense		1,055		4,276		5,331		2,049		4,280		6,329		c
Operating loss		12,344		(6,598)		5,746		30,263		(8,060)		22,203
Other expense (income), net:
Interest expense, net		39,132		827		39,959		78,031		1,629		79,660		a
Debt modification and extinguishment costs		1,404		—		1,404		1,404		—		1,404
Sundry expense (income), net		(1,493)		182		(1,311)		1,038		366		1,404		c
Other expense (income), net		2,709		(182)		2,527		4,386		(366)		4,020		c
Net loss before income taxes		(29,408)		(7,425)		(36,833)		(54,596)		(9,689)		(64,285)
Income tax (expense) benefit		(4,738)		—		(4,738)		(9,458)		—		(9,458)
Net loss	$	(34,146)	$	(7,425)	$	(41,571)	$	(64,054)	$	(9,689)	$	(73,743)
Cumulative dividends for Series A Preferred Stock		(914)		—		(914)		(1,828)		—		(1,828)
Net loss attributable to common stockholders	$	(35,060)	$	(7,425)	$	(42,485)	$	(65,882)	$	(9,689)	$	(75,571)

For the three months ended June 30, 2019

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $0.8 million to interest expense for the three months ended June 30, 2019.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $4.5 million of increase to cost of revenue and a decrease of $1.7 million to depreciation and amortization for the three months ended June 30, 2019.

(c)

Other Misstatement Adjustments:

Revenue Recognition Adjustments: The correction of this misstatement resulted in an increase of $0.7 million to revenue and an increase of $0.7 million to cost of revenue for the three months ended June 30, 2019.

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $4.3 million to related party expense.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction to reclassify legal expenses and related party expenses to appropriate quarters resulted in a net decrease of $0.4 million to selling, general and administrative expenses. (ii) Correction of ASC 842 implementation related deferred rents resulted in an increase of $0.7 million to cost of revenue. (iii) Correction of amortization related to internally developed software resulted in $0.7 million of decrease to depreciation and amortization. (iv) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.2 million to sundry expense (income), net and a decrease of $0.2 million to other expense (loss), net.

For the six months ended June 30, 2019

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $1.6 million to interest expense for the six months ended June 30, 2019.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $7.6 million of increase to cost of revenue and a decrease of $3.1 million to depreciation and amortization for the six months ended June 30, 2019.

(c)

Other Misstatement Adjustments:

Revenue Recognition Adjustments: The correction of this misstatement resulted in an increase of $1.3 million to revenue and an increase of $1.3 million to cost of revenue for the six months ended June 30, 2019.

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $4.3 million to related party expense.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction of non-accrual of legal expenses resulted in a net decrease of $0.7 million to selling, general and administrative expenses. (ii) Correction of ASC 842 implementation related deferred rents resulted in an increase of $0.7 million to cost of revenue. (iii) Correction of amortization related to internally developed software resulted in $0.7 million of decrease to depreciation and amortization. (iv) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.4 million to sundry expense (income), net and a decrease of $0.4 million to other expense (loss), net.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended September 30, 2019						For the Nine Months Ended September 30, 2019
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Revenue	$	372,917	$	628	$	373,545	$	1,166,841	$	1,910	$	1,168,751	c
Cost of revenue (exclusive of depreciation and amortization)		291,222		4,223		295,445		896,110		13,767		909,877	b, c
Selling, general and administrative expenses (exclusive of depreciation and amortization)		50,372		(2,025)		48,347		151,884		(2,698)		149,186	c
Depreciation and amortization		27,114		(2,035)		25,079		82,326		(5,844)		76,482	b, c
Impairment of goodwill and other intangible assets		99,682		(2,524)		97,158		99,682		(2,524)		97,158
Related party expense		1,405		25		1,430		3,454		4,305		7,759	c
Operating loss		(96,878)		2,964		(93,914)		(66,615)		(5,096)		(71,711)
Other expense (income), net:
Interest expense, net		39,747		826		40,573		117,778		2,457		120,235	a
Debt modification and extinguishment costs		—		—		—		1,404		—		1,404
Sundry expense (income), net		(10)		175		165		1,028		541		1,569	c
Other expense (income), net		581		(175)		406		4,965		(541)		4,424	c
Net loss before income taxes		(137,196)		2,138		(135,058)		(191,790)		(7,553)		(199,343)
Income tax (expense) benefit		3,769		—		3,769		(5,689)		—		(5,689)
Net loss	$	(133,427)	$	2,138	$	(131,289)	$	(197,479)	$	(7,553)	$	(205,032)
Cumulative dividends for Series A Preferred Stock		(884)		—		(884)		(2,712)		—		(2,712)
Net loss attributable to common stockholders	$	(134,311)	$	2,138	$	(132,173)	$	(200,191)	$	(7,553)	$	(207,744)

For the three months ended September 30, 2019

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $0.8 million to interest expense for the three months ended September 30, 2019.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $3.6 million of increase to cost of revenue and a decrease of $2.7 million to depreciation and amortization for the three months ended September 30, 2019.

(c)

Other Misstatement Adjustments:

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction to reclassify legal expenses and related party expenses to appropriate quarters resulted in a net decrease of $2.0 million to selling, general and administrative expenses. (ii) Correction to reclassify goodwill impairment charges resulted in a decrease of $2.5 million to goodwill (iii) Correction of amortization related to internally developed software resulted in $0.7 million of increase to depreciation and amortization. (iv) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.2 million to sundry expense (income), net and a decrease of $0.2 million to other expense (loss), net.

For the nine months ended September 30, 2019

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $2.5 million to interest expense for the nine months ended September 30, 2019.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $11.2 million of increase to cost of revenue and a decrease of $5.8 million to depreciation and amortization for the nine months ended September 30, 2019.

(c)

Other Misstatement Adjustments:

Revenue Recognition Adjustments: The correction of this misstatement resulted in an increase of $1.9 million to revenue and an increase of $1.9 million to cost of revenue for the nine months ended September 30, 2019.

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $4.3 million to related party expense.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction to reclassify legal expenses and related party expenses to appropriate quarters resulted in a net decrease of $2.7 million to selling, general and administrative expenses. (ii) Correction to reclassify goodwill impairment charges resulted in a decrease of $2.5 million to goodwill (iii) Correction of ASC 842 implementation related deferred rents resulted in an increase of $0.7 million to cost of revenue. (iv) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.5 million to sundry expense (income), net and a decrease of $0.5 million to other expense (loss), net.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statement of Operations

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended March 31, 2018
	As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reference
Revenue	$	393,167	$	—	$	393,167
Cost of revenue (exclusive of depreciation and amortization)		293,792		1,105		294,897	b
Selling, general and administrative expenses (exclusive of depreciation and amortization)		45,595		(76)		45,519	c
Depreciation and amortization		38,019		(1,780)		36,239	b
Related party expense		1,105		76		1,181	c
Operating loss		14,656		675		15,331
Other expense (income), net:
Interest expense, net		38,017		659		38,676	a
Sundry expense (income), net		(64)		293		229	c
Other expense (income), net		(3,328)		(293)		(3,621)	c
Net loss before income taxes		(19,969)		16		(19,953)
Income tax (expense) benefit		(4,025)		—		(4,025)
Net loss	$	(23,994)	$	16	$	(23,978)
Cumulative dividends for Series A Preferred Stock		(914)		—		(914)
Net loss attributable to common stockholders	$	(24,908)	$	16	$	(24,892)

For the three months ended March 31, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $0.7 million to interest expense for the three months ended March 31, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $1.1 million of increase to cost of revenue and a decrease of $1.8 million to depreciation and amortization for the three months ended March 31, 2018.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $0.1 million to related party expense.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction to reclassify legal expenses as related party expenses resulted in a net decrease of $0.1 million to selling, general and administrative expenses. (ii) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.3 million to sundry expense (income), net and a decrease of $0.3 million to other expense (loss), net.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended June 30, 2018						For the Six Months Ended June 30, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Revenue	$	410,382	$	—	$	410,382	$	803,549	$	—	$	803,549
Cost of revenue (exclusive of depreciation and amortization)		313,954		1,213		315,167		607,746		2,318		610,064	b
Selling, general and administrative expenses (exclusive of depreciation and amortization)		46,723		(345)		46,378		92,318		(421)		91,897	c
Depreciation and amortization		36,368		(1,624)		34,744		74,386		(3,404)		70,982	b
Related party expense		1,402		5,381		6,783		2,507		5,457		7,964	c
Operating loss		11,935		(4,625)		7,310		26,592		(3,950)		22,642
Other expense (income), net:
Interest expense, net		38,527		702		39,229		76,544		1,361		77,905	a
Sundry expense (income), net		(2,325)		203		(2,122)		(2,389)		496		(1,893)	c
Other expense (income), net		(704)		(203)		(907)		(4,032)		(496)		(4,528)	c
Net loss before income taxes		(23,563)		(5,327)		(28,890)		(43,531)		(5,311)		(48,842)
Income tax (expense) benefit		(1,619)		—		(1,619)		(5,644)		—		(5,644)
Net loss	$	(25,182)	$	(5,327)	$	(30,509)	$	(49,175)	$	(5,311)	$	(54,486)
Cumulative dividends for Series A Preferred Stock		(914)		—		(914)		(1,828)		—		(1,828)
Net loss attributable to common stockholders	$	(26,096)	$	(5,327)	$	(31,423)	$	(51,003)	$	(5,311)	$	(56,314)

For the three months ended June 30, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $0.7 million to interest expense for the three months ended June 30, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $1.2 million of increase to cost of revenue and a decrease of $1.6 million to depreciation and amortization for the three months ended June 30, 2018.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $5.4 million to related party expense.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction to reclassify legal expenses as related party expenses resulted in a net decrease of $0.3 million to selling, general and administrative expenses. (ii) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.2 million to sundry expense (income), net and a decrease of $0.2 million to other expense (loss), net.

For the six months ended June 30, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $1.4 million to interest expense for the six months ended June 30, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $2.3 million of increase to cost of revenue and a decrease of $3.4 million to depreciation and amortization for the six months ended June 30, 2018.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $5.5 million to related party expense.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction to reclassify legal expenses as related party expenses resulted in a net decrease of $0.4 million to selling, general and administrative expenses. (ii) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.5 million to sundry expense (income), net and a decrease of $0.5 million to other expense (loss), net.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended September 30, 2018						For the Nine Months Ended September 30, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Revenue	$	383,030	$	—	$	383,030	$	1,186,579	$	—	$	1,186,579
Cost of revenue (exclusive of depreciation and amortization)		295,936		749		296,685		903,682		3,067		906,749	b
Selling, general and administrative expenses (exclusive of depreciation and amortization)		44,913		(16)		44,897		137,231		(437)		136,794	c
Depreciation and amortization		35,041		(1,631)		33,410		109,428		(5,035)		104,393	b
Related party expense		759		16		775		3,267		5,472		8,739	c
Operating loss		6,381		882		7,263		32,971		(3,067)		29,904
Other expense (income), net:
Interest expense, net		38,339		748		39,087		114,883		2,109		116,992	a
Debt modification and extinguishment costs		1,067		—		1,067		1,067		—		1,067
Sundry expense (income), net		(2,571)		288		(2,283)		(4,961)		785		(4,176)	c
Other expense (income), net		(781)		(288)		(1,069)		(4,813)		(784)		(5,597)	c
Net loss before income taxes		(29,673)		134		(29,539)		(73,205)		(5,177)		(78,382)
Income tax (expense) benefit		733		—		733		(4,911)		—		(4,911)
Net loss	$	(28,940)	$	134	$	(28,806)	$	(78,116)	$	(5,177)	$	(83,293)
Cumulative dividends for Series A Preferred Stock		(914)		—		(914)		(2,742)		—		(2,742)
Net loss attributable to common stockholders	$	(29,854)	$	134	$	(29,720)	$	(80,858)	$	(5,177)	$	(86,035)

For the three months ended September 30, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $0.7 million to interest expense for the three months ended September 30, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $0.7 million of increase to cost of revenue and a decrease of $1.6 million to depreciation and amortization for the three months ended September 30, 2018.

(c)

Other Misstatement Adjustments:

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.3 million to sundry expense (income), net and a decrease of $0.3 million to other expense (loss), net.

For the nine months ended September 30, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $2.1 million to interest expense for the nine months ended September 30, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $3.0 million of increase to cost of revenue and a decrease of $5.0 million to depreciation and amortization for the nine months ended September 30, 2018.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $5.5 million to related party expense.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction to reclassify legal expenses as related party expenses resulted in a net decrease of $0.4 million to selling, general and administrative expenses. (ii) Correction to reclassify foreign exchange transaction gain / loss resulted in an increase of $0.8 million to sundry expense (income), net and a decrease of $0.8 million to other expense (loss), net.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statement of Operations

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended December 31, 2018
	As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reference
Revenue	$	399,643	$	—	$	399,643
Cost of revenue (exclusive of depreciation and amortization)		306,192		462		306,654	b, c
Selling, general and administrative expenses (exclusive of depreciation and amortization)		47,420		694		48,114	c
Depreciation and amortization		36,057		(2,373)		33,684	b
Impairment of goodwill and other intangible assets		48,127		—		48,127
Related party expense		1,068		2,596		3,664	c
Operating loss		(39,221)		(1,379)		(40,600)
Other expense (income), net:
Interest expense, net		38,212		787		38,999	a
Sundry expense (income), net		1,689		(784)		905	c
Other expense (income), net		1,783		784		2,567	c
Net loss before income taxes		(80,905)		(2,166)		(83,071)
Income tax (expense) benefit		(3,496)		54		(3,442)
Net loss	$	(84,401)	$	(2,112)	$	(86,513)
Cumulative dividends for Series A Preferred Stock		(914)		—		(914)
Net loss attributable to common stockholders	$	(85,315)	$	(2,112)	$	(87,427)

For the three months ended December 31, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $0.8 million to interest expense for the three months ended December 31, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in an increase of $1.2 million in cost of revenue and a decrease of $2.4 million to depreciation and amortization for the three months ended December 31, 2018.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $2.6 million to related party expense.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction of ASC 842 implementation related deferred rents resulted in a decrease of $0.7 million to cost of revenue. (ii) Correction of non-accrual of legal expenses resulted in an increase of $0.7 million to selling, general and administrative expenses. (iii) Correction to reclassify foreign exchange transaction gain / loss resulted in a decrease of $0.8 million to sundry expense (income), net and an increase of $0.8 million to other expense (loss), net.

The restated quarterly Consolidated Statements of Comprehensive Loss for the first three quarters of fiscal 2019 and each of the quarterly periods in fiscal 2018 are presented below:

Exela Technologies, Inc. and Subsidiaries

Consolidated Statement of Comprehensive Loss

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended March 31, 2019
	As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reference
Net loss	$	(29,907)	$	(2,265)	$	(32,172)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		3,392		—		3,392
Unrealized pension actuarial gains (losses), net of tax		(224)		—		(224)
Total other comprehensive loss, net of tax	$	(26,739)	$	(2,265)	$	(29,004)

For the three months ended March 31, 2019

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the three months ended March 31, 2019 above.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended June 30, 2019						For the Six Months Ended June 30, 2019
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Net loss	$	(34,146)	$	(7,425)	$	(41,571)	$	(64,054)	$	(9,689)	$	(73,743)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(2,288)		—		(2,288)		1,104		—		1,104
Unrealized pension actuarial gains (losses), net of tax		256		—		256		32		—		32
Total other comprehensive loss, net of tax	$	(36,178)	$	(7,425)	$	(43,603)	$	(62,918)	$	(9,689)	$	(72,607)

For the three months and six months ended June 30, 2019

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the three months and six months ended June 30, 2019 above.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended September 30, 2019						For the Nine Months Ended September 30, 2019
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Net loss	$	(133,427)	$	2,138	$	(131,289)	$	(197,479)	$	(7,553)	$	(205,032)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(2,325)		—		(2,325)		(1,221)		—		(1,221)
Unrealized pension actuarial gains (losses), net of tax		291		—		291		323		—		323
Total other comprehensive loss, net of tax	$	(135,461)	$	2,138	$	(133,323)	$	(198,377)	$	(7,553)	$	(205,930)

For the three months and nine months ended September 30, 2019

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the three months and nine months ended September 30, 2019 above.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statement of Comprehensive Loss

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended March 31, 2018
	As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reference
Net loss	$	(23,994)	$	16	$	(23,978)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(268)		—		(268)
Unrealized pension actuarial gains (losses), net of tax		(403)		—		(403)
Total other comprehensive loss, net of tax	$	(24,665)	$	16	$	(24,649)

For the three months ended March 31, 2018

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the three months ended March 31, 2018 above.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended June 30, 2018						For the Six Months Ended June 30, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Net loss	$	(25,182)	$	(5,327)	$	(30,509)	$	(49,175)	$	(5,311)	$	(54,486)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(879)		—		(879)		(1,147)		—		(1,147)
Unrealized pension actuarial gains (losses), net of tax		626		—		626		223		—		223
Total other comprehensive loss, net of tax	$	(25,435)	$	(5,327)	$	(30,762)	$	(50,099)	$	(5,311)	$	(55,410)

For the three months and six months ended June 30, 2018

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the three months and six months ended June 30, 2018 above.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended September 30, 2018						For the Nine Months Ended September 30, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Net loss	$	(28,940)	$	134	$	(28,806)	$	(78,116)	$	(5,177)	$	(83,293)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(2,492)		—		(2,492)		(3,639)		—		(3,639)
Unrealized pension actuarial gains (losses), net of tax		140		—		140		363		—		363
Total other comprehensive loss, net of tax	$	(31,292)	$	134	$	(31,158)	$	(81,392)	$	(5,177)	$	(86,569)

For the three months and nine months ended September 30, 2018

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the three months and nine months ended September 30, 2018 above.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statement of Comprehensive Loss

(in thousands of United States dollars)

(Unaudited)


	For the Three Months Ended December 31, 2018
	As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reference
Net loss	$	(84,401)	$	(2,112)	$	(86,513)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(2,733)		167		(2,566)	c
Unrealized pension actuarial gains (losses), net of tax		1,390		—		1,390
Total other comprehensive loss, net of tax	$	(85,744)	$	(1,945)	$	(87,689)

For the three months ended December 31, 2018

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the three months ended December 31, 2018 above.

The $0.2 million decrease to foreign currency translation adjustments is primarily the result of changes in outsourced contract costs for foreign subsidiaries.

The restated Consolidated Statement of Cash Flows for the year-to-date periods of the first three quarters of fiscal 2019 and fiscal 2018 are presented below (dollars in thousands):

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands of United States dollars unless otherwise stated)

(Unaudited)


	For the Three Months Ended March 31, 2019						For the Three Months Ended March 31, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Cash flows from operating activities
Net loss	$	(29,907)	$	(2,265)	$	(32,172)	$	(23,994)	$	16	$	(23,978)
Adjustments to reconcile net loss
Depreciation and amortization		28,020		(1,396)		26,624		38,019		(1,780)		36,239	b
Original issue discount and debt issuance cost amortization		2,852		—		2,852		2,595		—		2,595
Provision for doubtful accounts		800		—		800		481		—		481
Deferred income tax provision		1,076		—		1,076		835		—		835
Share-based compensation expense		2,798		—		2,798		959		—		959
Foreign currency remeasurement		35		—		35		(323)		—		(323)
Loss (gain) on sale of assets		9		45		54		253		26		279	c
Fair value adjustment for interest rate swap		1,677		—		1,677		(3,328)		—		(3,328)
Change in operating assets and liabilities, net effect from acquisitions:
Accounts receivable		(8,742)		—		(8,742)		(10,875)		—		(10,875)
Prepaid expenses and other assets		(632)		—		(632)		(5,567)		—		(5,567)
Accounts payable and accrued liabilities		(33,574)		541		(33,033)		(18,864)		659		(18,205)	c
Related party payables		(1,551)		—		(1,551)		(273)		—		(273)
Additions to outsource contract costs		—		(2,434)		(2,434)		—		(492)		(492)	b
Net cash provided by (used in) operating activities		(37,139)		(5,509)		(42,648)		(20,082)		(1,571)		(21,653)

Cash flows from investing activities
Purchases of property, plant, and equipment		(5,572)		—		(5,572)		(5,957)		—		(5,957)
Additions to internally developed software		(1,879)		—		(1,879)		(1,092)		—		(1,092)
Additions to outsourcing contract costs		(5,561)		5,561		—		(1,596)		1,596		—	b
Proceeds from sale of assets		7		—		7		2		—		2
Net cash provided by (used in) investing activities		(13,005)		5,561		(7,444)		(8,643)		1,596		(7,047)

Cash flows from financing activities
Repurchases of Common Stock		(2,872)		—		(2,872)		—		—		—
Borrowings from other loans		566		6,338		6,904		1,863		—		1,863	c
Net borrowings under factoring arrangement		1,118		—		1,118		—		—		—
Lease terminations		—		(45)		(45)		—		(26)		(26)	c
Cash paid for equity issuance costs		—		—		—		(7,500)		—		(7,500)
Borrowings from senior secured revolving facility		51,000		—		51,000		25,000		—		25,000
Repayments on senior secured revolving facility		(21,000)		—		(21,000)		(25,000)		—		(25,000)
Principal payments on finance lease obligations		(5,077)		—		(5,077)		(4,803)		—		(4,803)
Principal repayments on senior secured term loans and other loans		(4,153)		(6,345)		(10,498)		(2,947)		—		(2,947)	c
Net cash provided by (used in) financing activities		19,582		(52)		19,530		(13,387)		(26)		(13,413)
Effect of exchange rates on cash		(32)		—		(32)		55		—		55
Net increase (decrease) in cash and cash equivalents		(30,594)		—		(30,594)		(42,057)		(1)		(42,058)
Cash, restricted cash, and cash equivalents
Beginning of period		43,854		—		43,854		81,489		—		81,489
End of period	$	13,260	$	—	$	13,260	$	39,432	$	(1)	$	39,431
Supplemental cash flow data:
Income tax payments, net of refunds received	$	1,356	$	—	$	1,356	$	1,053	$	—	$	1,053
Interest paid		60,573		—		60,573		66,192		—		66,192
Noncash investing and financing activities:
Assets acquired through right-of-use arrangements		4,097		—		4,097		4,432		—		4,432
Leasehold improvements funded by lessor		—		—		—		—		—		—
Accrued capital expenditures		809		—		809		1,101		—		1,101

For the three months ended March 31, 2019

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the three months ended March 31, 2019 above.

The misstatements in the outsourcing contract cost adjustment category resulted in a decrease to net cash flows provided by operating activities of $3.8 million ($1.4 million of depreciation and amortization and $2.4 million of additions to outsourcing contract costs), and an increase to net cash flows provided by investing activities of $5.6 million (Additions to outsourcing contract costs) for the three months ended March 31, 2019.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the three months ended March 31, 2019.

For the three months ended March 31, 2018

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the three months ended March 31, 2018 above.

The misstatements in the outsourcing contract cost adjustment category resulted in a decrease to net cash flows provided by operating activities of $2.3 million ($1.8 million of depreciation and amortization and $0.5 million of additions to outsourcing contract costs), and an increase to net cash flows provided by investing activities of $1.6 million (Additions to outsourcing contract costs) for the three months ended March 31, 2018.

The misstatements in the cash flow misclassifications category related to lease terminations resulted in a decrease to net cash flows provided by financing activities of $0.03 million and an increase to net cash flows provided by operating activities of $0.03 million for the year ended December 31, 2018 (Loss on sale of assets and lease terminations).

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the three months ended March 31, 2018.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands of United States dollars unless otherwise stated)

(Unaudited)


	For the Six Months Ended June 30, 2019						For the Six Months Ended June 30, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Cash flows from operating activities
Net loss	$	(64,054)	$	(9,689)	$	(73,743)	$	(49,175)	$	(5,311)	$	(54,486)
Adjustments to reconcile net loss
Depreciation and amortization		55,211		(3,808)		51,403		74,386		(3,404)		70,982	b, c
Original issue discount and debt issuance cost amortization		5,749		—		5,749		5,272		—		5,272
Debt modification and extinguishment costs		1,049		—		1,049		—		—		—
Provision for doubtful accounts		3,334		—		3,334		1,857		—		1,857
Deferred income tax provision		4,623		—		4,623		705		—		705
Share-based compensation expense		5,459		—		5,459		2,895		—		2,895
Foreign currency remeasurement		288		—		288		(1,156)		—		(1,156)
Loss (gain) on sale of assets		(10)		95		85		1,340		55		1,395	c
Fair value adjustment for interest rate swap		4,385		—		4,385		(4,675)		—		(4,675)
Change in operating assets and liabilities, net effect from acquisitions:
Accounts receivable		624		—		624		(19,813)		—		(19,813)
Prepaid expenses and other assets		1,260		—		1,260		(1,603)		—		(1,603)
Accounts payable and accrued liabilities		(14,991)		2,396		(12,595)		40,677		1,361		42,038	c
Related party payables		(7,703)		3,804		(3,899)		(2,458)		5,036		2,578	c
Additions to outsource contract costs		—		(2,860)		(2,860)		—		(1,377)		(1,377)	b
Net cash provided by (used in) operating activities		(4,776)		(10,062)		(14,838)		48,252		(3,640)		44,612

Cash flows from investing activities
Purchases of property, plant, and equipment		(9,072)		—		(9,072)		(10,244)		—		(10,244)
Additions to internally developed software		(4,007)		—		(4,007)		(2,115)		—		(2,115)
Additions to outsourcing contract costs		(10,440)		10,440		—		(3,695)		3,695		—	b
Proceeds from sale of assets		20		—		20		1,014		—		1,014
Cash paid in acquisition, net of cash received		(5,000)		—		(5,000)		(4,145)		—		(4,145)
Net cash provided by (used in) investing activities		(28,499)		10,440		(18,059)		(19,185)		3,695		(15,490)

Cash flows from financing activities
Third party debt modification and extinguishment costs		355		(355)		—		—		—		—	c
Repurchases of Common Stock		(3,480)		—		(3,480)		(3,479)		—		(3,479)
Borrowings from other loans		1,544		12,548		14,092		2,152		—		2,152	c
Net borrowings under factoring arrangement		2,426		—		2,426		—		—		—
Proceeds from senior secured term loans		29,850		—		29,850		—		—		—
Lease terminations		—		(95)		(95)		—		(56)		(56)	c
Cash paid for debt issuance costs		(362)		355		(7)		—		—		—	c
Cash paid for equity issuance costs		—		—		—		(7,500)		—		(7,500)
Borrowings from senior secured revolving facility		68,000		—		68,000		30,000		—		30,000
Repayments on senior secured revolving facility		(68,000)		—		(68,000)		(30,000)		—		(30,000)
Principal payments on finance lease obligations		(9,180)		—		(9,180)		(8,404)		—		(8,404)
Principal repayments on senior secured term loans and other loans		(8,417)		(12,831)		(21,248)		(6,043)		—		(6,043)	c
Net cash provided by (used in) financing activities		12,736		(378)		12,358		(23,274)		(56)		(23,330)
Effect of exchange rates on cash		111		—		111		(410)		—		(410)
Net increase (decrease) in cash and cash equivalents		(20,428)		—		(20,428)		5,383		(1)		5,382
Cash, restricted cash, and cash equivalents
Beginning of period		43,854		—		43,854		81,489		—		81,489
End of period	$	23,426	$	—	$	23,426	$	86,872	$	(1)	$	86,871
Supplemental cash flow data:
Income tax payments, net of refunds received	$	5,181	$	—	$	5,181	$	3,864	$	—	$	3,864
Interest paid		71,240		(29)		71,211		76,353		—		76,353	c
Noncash investing and financing activities:
Assets acquired through right-of-use arrangements		6,778		—		6,778		7,787		—		7,787
Leasehold improvements funded by lessor		—		—		—		1,540		—		1,540
Accrued capital expenditures		1,083		—		1,083		1,144		—		1,144

For the six months ended June 30, 2019

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the six months ended June 30, 2019 above.

The misstatements in the outsourcing contract cost adjustment category resulted in a decrease to net cash flows provided by operating activities of $6.7 million ($3.8 million of depreciation and amortization and $2.9 million of additions to outsourcing contract costs), and an increase to net cash flows provided by investing activities of $10.4 million (Additions to outsourcing contract costs) for the six months ended June 30, 2019.

The misstatements in the cash flow misclassifications category related to (i) Lease terminations resulted in a decrease to net cash flows provided by financing activities of $0.1 million and an increase to net cash flows provided by operating activities of $0.1 million for the year ended December 31, 2018. (Loss on sale of assets and lease terminations), (ii) Grossing up of borrowing and pay downs of a working capital loan on a foreign subsidiary resulting in an increase of $12.5 million of borrowings from other loans and a decrease of $12.8 million of principal repayments on other loans, both of which were neutral and within net cash provided by financing, and (iii) Cash flow classification adjustment related to incorrect interpretation of ASU 2016-15 (Classification of Certain Receipts and Cash Payments) in 2018 resulted in a line item classification change within cash flows provided by financing activities (Decrease of $0.4 million of Third party debt modification and extinguishment costs and an increase of $0.4 million of cash paid for debt issuance costs).

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the six months ended June 30, 2019.

For the six months ended June 30, 2018

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the six months ended June 30, 2018 above.

The misstatements in the outsourcing contract cost adjustment category resulted in a decrease to net cash flows provided by operating activities of $4.8 million ($3.4 million of depreciation and amortization and $1.4 million of additions to outsourcing contract costs), and an increase to net cash flows provided by investing activities of $3.7 million (Additions to outsourcing contract costs) for the six months ended June 30, 2018.

The misstatements in the cash flow misclassifications category related to lease terminations resulted in a decrease to net cash flows provided by financing activities of $0.06 million and an increase to net cash flows provided by operating activities of $0.06 million for the six months ended June 30, 2018.

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the six months ended June 30, 2018.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands of United States dollars unless otherwise stated)

(Unaudited)


	For the Nine Months Ended September 30, 2019						For the Nine Months Ended September 30, 2018
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Cash flows from operating activities
Net loss	$	(197,479)	$	(7,553)	$	(205,032)	$	(78,116)	$	(5,177)	$	(83,293)
Adjustments to reconcile net loss
Depreciation and amortization		82,326		(5,844)		76,482		109,428		(5,035)		104,393	b
Original issue discount and debt issuance cost amortization		8,730		—		8,730		8,062		—		8,062
Impairment of goodwill and other intangible assets		99,682		(2,524)		97,158		—		—		—	c
Debt modification and extinguishment costs		1,049		—		1,049		—		103		103
Provision for doubtful accounts		4,402		—		4,402		2,470		—		2,470
Deferred income tax provision		1,632		—		1,632		(3,689)		—		(3,689)
Share-based compensation expense		6,903		—		6,903		4,516		—		4,516
Foreign currency remeasurement		(173)		—		(173)		(2,040)		—		(2,040)
Loss (gain) on sale of assets		(191)		314		123		1,835		213		2,048	c
Fair value adjustment for interest rate swap		4,965		—		4,965		(5,456)		—		(5,456)
Change in operating assets and liabilities, net effect from acquisitions:
Accounts receivable		3,501		—		3,501		(6,374)		—		(6,374)
Prepaid expenses and other assets		2,377		—		2,377		(5,770)		—		(5,770)
Accounts payable and accrued liabilities		(43,861)		2,715		(41,146)		(23,457)		2,109		(21,348)	c
Related party payables		(7,502)		2,304		(5,198)		(3,689)		5,036		1,347	c
Additions to outsource contract costs		—		(3,130)		(3,130)		—		(2,360)		(2,360)	b
Net cash provided by (used in) operating activities		(33,639)		(13,718)		(47,357)		(2,280)		(5,111)		(7,391)

Cash flows from investing activities
Purchases of property, plant, and equipment		(10,797)		—		(10,797)		(14,077)		—		(14,077)
Additions to internally developed software		(5,074)		—		(5,074)		(3,080)		—		(3,080)
Additions to outsourcing contract costs		(14,304)		14,304		—		(5,427)		5,427		—	b
Proceeds from sale of assets		360		—		360		1,095		—		1,095
Cash paid in acquisition, net of cash received		(5,000)		—		(5,000)		(6,513)		—		(6,513)
Net cash provided by (used in) investing activities		(34,815)		14,304		(20,511)		(28,002)		5,427		(22,575)

Cash flows from financing activities
Third party debt modification and extinguishment costs		355		(355)		—		1,067		(1,067)		—	c
Repurchases of Common Stock		(3,480)		—		(3,480)		(4,899)		—		(4,899)
Borrowings from other loans		1,728		19,802		21,530		3,068		—		3,068	c
Net borrowings under factoring arrangement		(494)		—		(494)		—		—		—
Cash paid for withholding taxes on vested RSUs		(223)		—		(223)		—		—		—
Proceeds from senior secured term loans		29,850		—		29,850		30,000		—		30,000
Lease terminations		—		(314)		(314)		—		(213)		(213)	c
Cash paid for debt issuance costs		(362)		355		(7)		(1,094)		964		(130)	c
Cash paid for equity issuance costs		—		—		—		(7,500)		—		(7,500)
Borrowings from senior secured revolving facility		130,500		—		130,500		30,000		—		30,000
Repayments on senior secured revolving facility		(91,500)		—		(91,500)		(30,000)		—		(30,000)
Principal payments on finance lease obligations		(13,598)		—		(13,598)		(12,594)		—		(12,594)
Principal repayments on senior secured term loans and other loans		(12,922)		(20,074)		(32,996)		(9,053)		—		(9,053)	c
Net cash provided by (used in) financing activities		39,854		(586)		39,268		(1,005)		(316)		(1,321)
Effect of exchange rates on cash		(29)		—		(29)		(555)		—		(555)
Net increase (decrease) in cash and cash equivalents		(28,629)		—		(28,629)		(31,842)		—		(31,842)
Cash, restricted cash, and cash equivalents
Beginning of period		43,854		—		43,854		81,489		—		81,489
End of period	$	15,225	$	—	$	15,225	$	49,647	$	—	$	49,647
Supplemental cash flow data:
Income tax payments, net of refunds received	$	6,981	$	—	$	6,981	$	5,296	$	—	$	5,296
Interest paid		131,773		(29)		131,744		136,396		—		136,396	c
Noncash investing and financing activities:
Assets acquired through right-of-use arrangements		9,352		—		9,352		9,318		—		9,318
Leasehold improvements funded by lessor		—		—		—		1,565		—		1,565
Accrued capital expenditures		1,083		1,305		2,388		1,994		—		1,994	c

For the nine months ended September 30, 2019

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the nine months ended September 30, 2019 above.

The misstatements in the outsourcing contract cost adjustment category resulted in a decrease to net cash flows provided by operating activities of $8.9 million ($5.8 million of depreciation and amortization and $3.1 million of additions to outsourcing contract costs), and an increase to net cash flows provided by investing activities of $14.3 million (Additions to outsourcing contract costs) for the nine months ended September 30, 2019.

The misstatements in the cash flow misclassifications category related to (i) Lease terminations resulted in a decrease to net cash flows provided by financing activities of $0.3 million and an increase to net cash flows provided by operating activities of $0.3 million for the year ended December 31, 2018. (Loss on sale of assets and lease terminations), (ii) Grossing up of borrowing and pay downs of a working capital loan on a foreign subsidiary resulting in an increase of $19.8 million of borrowings from other loans and a decrease of $20.1 million of principal repayments on other loans, both of which were within net cash provided by financing, and (iii) Cash flow classification adjustment related to incorrect interpretation of ASU 2016-15 (Classification of Certain Receipts and Cash Payments) in 2018 resulted in a line item classification change within cash flows provided by financing activities (Decrease of $0.4 million of Third party debt modification and extinguishment costs and an increase of $0.4 million of cash paid for debt issuance costs).

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the nine months ended September 30, 2019.

For the nine months ended September 30, 2018

Refer to descriptions of the adjustments and their impact on net loss in the Consolidated Statement of Operations section for the nine months ended September 30, 2018 above.

The misstatements in the outsourcing contract cost adjustment category resulted in a decrease to net cash flows provided by operating activities of $7.4 million ($5.0 million of depreciation and amortization and $2.4 million of additions to outsourcing contract costs), and an increase to net cash flows provided by investing activities of $5.4 million (Additions to outsourcing contract costs) for the nine months ended September 30, 2018.

The misstatements in the cash flow misclassifications category related to (i) Lease terminations resulted in a decrease to net cash flows provided by financing activities of $0.2 million and an increase to net cash flows provided by operating activities of $0.2 million for the year ended December 31, 2018 (Loss on sale of assets and lease terminations), (ii) Cash flow classification adjustment related to incorrect interpretation of ASU 2016-15 (Classification of Certain Receipts and Cash Payments) in 2018 resulted in a net increase to cash flows provided by operating activities of $0.1 million, a decrease to net cash flows provided by financing activities of $0.1 million for the year ended December 31, 2018. (Increase of $0.1 million to Debt modification and extinguishment costs, a decrease of $1.1 million to third party debt modification and extinguishment costs and an increase of $1.0 million to cash paid for debt issuance costs)

No other misstatements impacted the classifications between net operating, net investing, or net financing cash flow activities for the nine months ended September 30, 2018.