Consolidated Balance Sheets

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


	As of December 31, 2018
	As Previously Reported		Restatement Adjustment		As Restated		Restatement Reference
Assets
Current assets
Cash and cash equivalents	$	25,615	$	10,591	$	36,206		c
Restricted cash		18,239		(10,591)		7,648		c
Accounts receivable, net of allowance for doubtful accounts of $4,359		270,812		—		270,812
Inventories, net		16,220		—		16,220
Prepaid expenses and other current assets		25,015		(78)		24,937		c
Total current assets		355,901		(78)		355,823
Property, plant and equipment, net of accumulated depreciation of $154,060		132,986		—		132,986
Goodwill		708,258		—		708,258
Intangible assets, net		407,021		(12,001)		395,020		b
Deferred income tax assets		16,225		120		16,345		c
Other noncurrent assets		19,391		—		19,391
Total assets	$	1,639,782	$	(11,959)	$	1,627,823

Liabilities and Stockholders' Equity (Deficit)
Liabilities
Current liabilities
Accounts payables	$	99,853	$	—	$	99,853
Related party payables		7,735		7,628		15,363		c
Income tax payable		1,996		—		1,996
Accrued liabilities		66,008		41,347		107,355		a, c
Accrued compensation and benefits		54,583		(2,372)		52,211		c
Accrued interest		49,071		—		49,071
Customer deposits		34,235		—		34,235
Deferred revenue		16,504		—		16,504
Obligation for claim payment		56,002		—		56,002
Current portion of finance lease liabilities		17,498		—		17,498
Current portion of long-term debts		29,237		—		29,237
Total current liabilities		432,722		46,603		479,325
Long-term debt, net of current maturities		1,306,423		—		1,306,423
Finance lease liabilities, net of current portion		26,738		—		26,738
Pension liabilities		25,269		2,372		27,641		c
Deferred income tax liabilities		11,212		2		11,214		c
Long-term income tax liabilities		3,024		—		3,024
Other long-term liabilities		15,400		(683)		14,717		c
Total liabilities		1,820,788		48,294		1,869,082
Commitments and Contingencies (Note 14)

Stockholders' equity (deficit)
Common stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 152,692,140 shares issued and 150,142,955 shares outstanding (including the 4,570,734 shares returned to the Company in the first quarter of 2020 in connection with the Appraisal Action)		15		—		15
Preferred stock, par value of $0.0001 per share; 20,000,000 shares authorized; 4,569,233 shares issued and outstanding		1		—		1
Additional paid in capital		482,018		(36,566)		445,452
Less: Common Stock held in treasury, at cost; 2,549,185 shares		(10,342)		—		(10,342)
Equity-based compensation		41,731		—		41,731
Accumulated deficit		(678,563)		(23,829)		(702,392)
Accumulated other comprehensive loss:
Foreign currency translation adjustment		(6,565)		142		(6,423)
Unrealized pension actuarial losses, net of tax		(9,301)		—		(9,301)
Total accumulated other comprehensive loss		(15,866)		142		(15,724)
Total stockholders’ deficit		(181,006)		(60,253)		(241,259)
Total liabilities and stockholders’ deficit	$	1,639,782	$	(11,959)	$	1,627,823

As of December 31, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $40.6 million to accrued liabilities at December 31, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $12.0 million of decrease to intangible assets, net at December 31, 2018.

(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 $10.6 million in cash and cash equivalents and decrease of $10.6 million to restricted cash. (ii) Reclassification of pension liabilities between long-term and short-term resulted in a decrease of $2.4 million to Accrued compensation and benefits and an increase of $2.4 million to pension liabilities. (iii) Correction of ASC 842 implementation related deferred rents decreased other long-term liabilities by $0.7 million. (iv) Correction of non-accrual of legal expenses related to 2019 resulted in an increase of $0.7 million to accrued liabilities.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

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


	For the Year Ended December 31, 2018						For the Year Ended December 31, 2017
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Revenue	$	1,586,222	$	—	$	1,586,222	$	1,152,324	$	(6,433)	$	1,145,891	c
Cost of revenue (exclusive of depreciation and amortization)		1,209,874		3,529		1,213,403		829,143		(1,599)		827,544	b, c
Selling, general and administrative expenses (exclusive of depreciation and amortization)		184,651		257		184,908		220,955		—		220,955	c
Depreciation and amortization		145,485		(7,408)		138,077		98,890		—		98,890	b
Impairment of goodwill and other intangible assets		48,127		—		48,127		69,437		—		69,437
Related party expense		4,334		8,069		12,403		33,431		—		33,431	c
Operating loss		(6,249)		(4,447)		(10,696)		(99,532)		(4,834)		(104,366)
Other expense (income), net:
Interest expense, net		153,095		2,896		155,991		128,489		1,187		129,676	a
Debt modification and extinguishment costs		1,067		—		1,067		35,512		—		35,512
Sundry expense (income), net		(3,271)		—		(3,271)		2,295		—		2,295
Other expense (income), net		(3,030)		—		(3,030)		(1,297)		—		(1,297)
Net loss before income taxes		(154,110)		(7,343)		(161,453)		(264,531)		(6,021)		(270,552)
Income tax (expense) benefit		(8,407)		54		(8,353)		60,246		822		61,068
Net loss	$	(162,517)	$	(7,289)	$	(169,806)	$	(204,285)	$	(5,199)	$	(209,484)
Dividend equivalent on Series A Preferred Stock related to beneficial conversion feature		—		—		—		(16,375)		—		(16,375)
Cumulative dividends for Series A Preferred Stock		(3,655)		—		(3,655)		(2,489)		—		(2,489)	c
Net loss attributable to common stockholders	$	(166,172)	$	(7,289)	$	(173,461)	$	(223,149)	$	(5,199)	$	(228,348)
Loss per share:
Basic and diluted	$	(1.09)	$	(0.08)	$	(1.17)	$	(2.08)	$	(0.10)	$	(2.18)

For the year ended December 31, 2018

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $2.9 million to interest expense for the year ended December 31, 2018.

(b)

Outsourced Contract Cost Adjustments: The correction of this misstatement resulted in $4.2 million of increase to cost of revenue and a decrease of $7.4 million to depreciation and amortization for the year ended December 31, 2018.

(c)

Other Misstatement Adjustments:

Expense Reimbursement Adjustments: The correction of this misstatement resulted in an increase of $8.1 million to related party.

Other Adjustments - Corrections to other misstatements were as follows: (i) Correction of ASC 842 implementation related deferred rents decreased cost of revenue by $0.7 million. (ii) Correction of non-accrual of legal expenses related to 2019 resulted in an increase of $0.3 million to selling, general and administrative expenses.

For the year ended December 31, 2017

(a)

Appraisal Action Liability Adjustments: The correction of this misstatement resulted in an increase of $1.2 million to interest expense for the year ended December 31, 2018.

(c)

Other Misstatement Adjustments:

Revenue Recognition Adjustments: The correction of this misstatement resulted in a decrease of $6.4 million to revenue and a decrease of $1.6 million to cost of revenue for the year ended December 31, 2017.

Other Adjustments - Corrections to other misstatements were as follows: (i) The correction of all misstatements resulted in an increase of $0.8 million to income tax expense.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(in thousands of United States dollars)


	For the Year Ended December 31, 2018						For the Year Ended December 31, 2017
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Net loss	$	(162,517)	$	(7,289)	$	(169,806)	$	(204,285)	$	(5,199)	$	(209,484)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(6,371)		167		(6,204)		3,353		(25)		3,328	c
Unrealized pension actuarial gains (losses), net of tax		1,753		—		1,753		1,285		—		1,285
Total other comprehensive loss, net of tax	$	(167,135)	$	(7,122)	$	(174,257)	$	(199,647)	$	(5,224)	$	(204,871)

For the year ended December 31, 2018

The $2.1 million decrease to net income was primarily driven by the misstatements in the Appraisal Action liability adjustments, outsourced contract adjustments, expense reimbursement adjustments and other adjustments. See additional descriptions of the net income impacts in the consolidated statement of operations for the year ended December 31, 2018 section above.

For the year ended December 31, 2017

The $5.2 million decrease to net income was primarily driven by the misstatements in the Appraisal Action liability adjustments, revenue recognition adjustments and other adjustments. See additional descriptions of the net income impacts in the consolidated statement of operations for the year ended December 31, 2017 section above.

Exela Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands of United States dollars)


	For the Year Ended December 31, 2018						For the Year Ended December 31, 2017
	As Previously		Restatement				As Previously		Restatement				Restatement
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated		Reference
Cash flows from operating activities
Net loss	$	(162,517)	$	(7,289)		(169,806)	$	(204,285)	$	(5,199)		(209,484)
Adjustments to reconcile net loss						—						—
Depreciation and amortization		145,485		(7,408)		138,077		98,890		—		98,890	b
Fees paid in stock		—		—		—		23,875		4,698		28,573	c
HGM contract termination fee paid in stock		—		—		—		10,000		—		10,000
Original issue discount and debt issuance cost amortization		10,913		—		10,913		12,280		—		12,280
Debt modification and extinguishment costs		—		103		103		—		34,459		34,459	c
Impairment of goodwill and other intangible assets		48,127		—		48,127		69,437		—		69,437
Provision for doubtful accounts		2,767		—		2,767		500		—		500
Deferred income tax provision		3,352		(132)		3,220		(66,723)		(822)		(67,545)	c
Share-based compensation expense		7,647		—		7,647		6,743		—		6,743
Foreign currency remeasurement		(1,180)		—		(1,180)		1,382		—		1,382
Loss (gain) on sale of assets		2,095		592		2,687		399		157		556	c
Fair value adjustment for interest rate swap		(2,540)		—		(2,540)		(1,297)		—		(1,297)
Change in operating assets and liabilities, net of effect from acquisitions
Accounts receivable		(19,319)		—		(19,319)		(4,832)		—		(4,832)
Prepaid expenses and other assets		(2,820)		—		(2,820)		2,628		(1,599)		1,029	c
Accounts payable and accrued liabilities		5,157		3,658		8,815		69,551		7,620		77,171	c
Related party payables		(6,710)		7,628		918		4,907		—		4,907	c
Additions to outsource contract costs		—		(4,009)		(4,009)		—		(10,992)		(10,992)	b
Net cash provided by (used in) operating activities		30,457		(6,857)		23,600		23,455		28,322		51,777

Cash flows from investing activities
Purchase of property, plant and equipment		(20,072)		—		(20,072)		(14,440)		—		(14,440)
Additions to internally developed software		(7,438)		—		(7,438)		(7,843)		—		(7,843)
Additions to outsourcing contract costs		(7,552)		7,552		—		(10,992)		10,992		—	b
Cash acquired in Quinpario reverse merger		—		—		—		91		—		91
Cash paid in acquisition, net of cash received		(34,810)		—		(34,810)		(423,797)		—		(423,797)
Proceeds from sale of assets		3,568		—		3,568		4,607		—		4,607
Net cash provided by (used in) investing activities		(66,304)		7,552		(58,752)		(452,374)		10,992		(441,382)

Cash flows from financing activities
Change in bank overdraft		—		—		—		(210)		—		(210)
Loss on extinguishment of debt		1,067		(1,067)		—		35,512		(35,512)		—	c
Proceeds from issuance of stock		—		—		—		204,417		—		204,417
Cash received from Quinpario		—		—		—		27,031		(4,698)		22,333	c
Repurchases of Common Stock		(7,221)		—		(7,221)		(249)		—		(249)
Contribution from Shareholders		—		—		—		20,548		—		20,548
Cash paid for equity issuance costs		(7,500)		—		(7,500)		(149)		—		(149)
Lease terminations		—		(592)		(592)		—		(157)		(157)	c
Retirement of previous credit facilities		—		—		—		(1,055,736)		—		(1,055,736)
Cash paid for debt issuance costs		(1,094)		964		(130)		(39,837)		1,053		(38,784)	c
Principal payments on finance lease obligations		(16,068)		—		(16,068)		(11,361)		—		(11,361)
Borrowings from senior secured revolving facility		30,000		—		30,000		72,600		—		72,600
Repayments on senior secured revolving facility		(30,000)		—		(30,000)		(72,500)		—		(72,500)
Proceeds from issuance of notes		—		—		—		977,500		—		977,500
Proceeds from senior secured term loans		30,000		—		30,000		343,000		—		343,000
Borrowings from other loans		11,557		—		11,557		3,116		—		3,116
Principal repayments on senior secured term loans and other loans		(12,651)		—		(12,651)		(27,955)		—		(27,955)
Net cash provided by (used in) financing activities		(1,910)		(695)		(2,605)		475,727		(39,314)		436,413
Effect of exchange rates on cash		122		—		122		429		—		429
Net decrease in cash and cash equivalents		(37,635)		—		(37,635)		47,237		—		47,237
Cash, restricted cash, and cash equivalents
Beginning of period		81,489		—		81,489		34,252		—		34,252
End of period	$	43,854	$	—	$	43,854	$	81,489	$	—	$	81,489

Supplemental cash flow data:
Income tax payments, net of refunds received	$	7,827	$	—	$	7,827	$	5,711	$	—	$	5,711
Interest paid		146,076		—		146,076		69,622		—		69,622
Noncash investing and financing activities:
Assets acquired through right-of-use arrangements		14,920		—		14,920		6,973		—		6,973
Leasehold improvements funded by lessor		1,565		—		1,565		146		—		146
Issuance of Common Stock as consideration for Novitex		—		—		—		244,800		—		244,800
Accrued capital expenditures		2,820		—		2,820		1,621		—		1,621
Dividend equivalent on Series A Preferred Stock		—		—		—		16,375		—		16,375
Liability assumed of Quinpario		—		—		—		4,672		26		4,698