UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to                  .

Payoneer Global Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-40547	86-1778671
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)
	150 W 30th St New York, New York, 10001
	(Address of principal executive offices, including zip code)
	(212) 600-9272
Registrant’s Telephone Number, Including Area Code
N/A
(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	PAYO	The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of common stock, $0.01 par value, at an exercise price of $11.50 per share	PAYOW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☐
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of March 31, 2022, the registrant had 342,596,367 shares of common stock outstanding.

Payoneer Global Inc.

Form 10-Q

For the Quarter Ended March 31, 2022

Table of Contents

	Page
PART I. FINANCIAL INFORMATION	4
Item 1. Financial Statements (Unaudited)	4
Condensed consolidated balance sheets (Unaudited)	6
Condensed consolidated statements of income (loss) (Unaudited)	7
Condensed consolidated statements of comprehensive income (loss) (Unaudited)	8
Condensed consolidated statements of changes in redeemable preferred stock, redeemable convertible preferred stock and shareholders’ equity (deficit) (Unaudited)	9
Condensed consolidated statements of cash flows (Unaudited)	10
Notes to the condensed consolidated financial statements (Unaudited)	12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk	32
Item 4. Controls and Procedures	33
PART II - OTHER INFORMATION	34
Item 1. Legal Proceedings	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3. Defaults upon Senior Securities	34
Item 4. Mine Safety Disclosures	34
Item 5. Other Information	34
Item 6. Exhibits	35
Signatures	36

2

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the information incorporated herein by reference, contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “anticipate,” “appear,” “approximate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would” and other similar words and expressions (or the negative version of such words or expressions) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of Payoneer’s management and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” discussed and identified in public filings made with the U.S. Securities and Exchange Commission (the “SEC”) by Payoneer, and the following:

● the expected benefits of the reorganization consummated on June 25, 2021 with FTAC Olympus Acquisition Corp. (the “Reorganization”);

● our financial performance following the Reorganization;

● the impact of the COVID-19 pandemic on our business and the actions we may take in response thereto;

● geopolitical and other economic and political conditions or events (such as the continuing armed conflict between Russia and Ukraine);

● the effect of legal, tax and regulatory changes; and

● the outcome of any known and unknown litigation and regulatory proceedings.

Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of Payoneer prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

All subsequent written and oral forward-looking statements concerning the Reorganization or other matters addressed in this Quarterly Report on Form 10-Q and attributable to Payoneer or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q. Except to the extent required by applicable law or regulation, Payoneer undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Current Report on Form 10-Q or to reflect the occurrence of unanticipated events.

3

PART I. FINANCIAL INFORMATION

PAYONEER GLOBAL INC.

QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 2022

TABLE OF CONTENTS

	Page
Condensed consolidated financial statements (unaudited) in U.S. dollars:
Condensed consolidated balance sheets (Unaudited)	6
Condensed consolidated statements of income (loss) (Unaudited)	7
Condensed consolidated statements of comprehensive income (loss) (Unaudited)	8
Condensed consolidated statements of changes in redeemable preferred stock, redeemable convertible preferred stock and shareholders’ equity (deficit) (Unaudited)	9
Condensed consolidated statements of cash flows (Unaudited)	10
Notes to condensed consolidated financial statements (Unaudited)	12

4

PAYONEER GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA

	March 31,		December 31,
	2022		2021
Assets:
Current assets:
Cash and cash equivalents	$	465,734	$	465,926
Restricted cash		3,088		3,000
Customer funds		4,630,553		4,401,254
Accounts receivable, net		14,325		13,844
CA receivables, net		42,520		53,675
Other current assets		29,317		25,024
Total current assets		5,185,537		4,962,723
Non-current assets:
Property, equipment and software, net		12,977		12,140
Goodwill		21,241		21,127
Intangible assets, net		39,600		37,529
Restricted cash		5,367		5,113
Deferred taxes		3,377		4,900
Investment in associated company		7,019		7,013
Severance pay fund		1,677		1,723
Operating lease right of use assets		17,865		12,943
Other assets		13,192		13,541
Total assets	$	5,307,852	$	5,078,752
Liabilities and shareholders’ equity:
Current liabilities:
Trade payables	$	17,376	$	17,200
Outstanding operating balances		4,630,553		4,401,254
Other payables		68,420		79,374
Total current liabilities		4,716,349		4,497,828
Non-current liabilities:
Long-term debt from related party (refer to Notes 6 and 14 for further information)		14,296		13,665
Warrant liability		28,681		59,877
Other long-term liabilities		26,562		20,309
Total liabilities		4,785,888		4,591,679
Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred stock, $0.01 par value, 380,000,000 shares authorized; no shares were issued and outstanding at March 31, 2022 and December 31, 2021.		—		—
Common stock, $0.01 par value, 3,800,000,000 and 3,800,000,000 shares authorized; 342,596,367 and 340,384,157 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively.		3,426		3,404
Additional paid-in capital		592,243		575,470
Accumulated other comprehensive income		2,643		2,253
Accumulated deficit		(76,348)		(94,054)
Total shareholders’ equity		521,964		487,073
Total liabilities and shareholders’ equity	$	5,307,852	$	5,078,752

The accompanying notes are an integral part of the condensed consolidated financial statements (Unaudited).

6

PAYONEER GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA

	Three months ended
	March 31,
	2022		2021
Revenues	$	136,958	$	100,606
Transaction costs ($320 interest expense and fees associated with related party transaction during the three months ended March 31, 2022, refer to Notes 6 and 14 for further information)		25,575		20,155
Other operating expenses		34,759		26,614
Research and development expenses		25,915		16,653
Sales and marketing expenses		34,469		23,139
General and administrative expenses		18,128		10,517
Depreciation and amortization		4,455		4,677
Total operating expenses		143,301		101,755
Operating loss		(6,343)		(1,149)
Financial income (expense):
Gain from change in fair value of Warrants		31,196		—
Other financial expense, net		(2,695)		(622)
Financial income (expense), net		28,501		(622)
Income (loss) before taxes on income and share of gain (loss) of associated company		22,158		(1,771)
Taxes on income		1,967		1,731
Share in gain (loss) of associated company		20		(6)
Net income (loss)	$	20,211	$	(3,508)
Per share data
Net income (loss) per share attributable to common stockholders — Basic earnings (loss) per share	$	0.06	$	(0.16)
— Diluted earnings (loss) per share	$	0.06	$	(0.16)
Weighted average common shares outstanding — Basic		342,324,722		54,868,825
Weighted average common shares outstanding — Diluted		365,992,174		54,868,825

The accompanying notes are an integral part of the condensed consolidated financial statements (Unaudited).

7

PAYONEER GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

	Three months ended
	March 31,
	2022		2021
Net income (loss)	$	20,211	$	(3,508)
Other comprehensive income (loss):
Foreign currency translation adjustments		390		(1,189)
Comprehensive income (loss)	$	20,601	$	(4,697)

The accompanying notes are an integral part of the condensed consolidated financial statements (Unaudited).

8

PAYONEER GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE PREFERRED STOCK, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)

U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA

												Accumulated
	Redeemable convertible			Redeemable						Additional		other
	preferred stock			preferred stock			Common Stock			paid-in		comprehensive		Accumulated
	Shares	Amount		Share	Amount		Shares	Amount		capital		income (loss)		deficit		Total
Balance at January 1, 2021	209,529,798	$	154,800	3,500	$	10,735	48,608,176	$	486	$	79,706	$	4,174	$	(60,067)	$	24,299
Exercise of options	—		—	—		—	579,684		5		464		—		—		469
Stock-based compensation	—		—	—		—	—		—		4,368		—		—		4,368
Other comprehensive loss, net of tax	—		—	—		—	—		—		—		(1,189)		—		(1,189)
Net loss	—		—	—		—	—		—		—		—		(3,508)		(3,508)
Balance at March 31, 2021	209,529,798	$	154,800	3,500	$	10,735	49,187,860	$	491	$	84,538	$	2,985	$	(63,575)	$	24,439
Balance at January 1, 2022	—	$	—	—	$	—	340,384,157	$	3,404	$	575,470	$	2,253	$	(94,054)	$	487,073
Adoption of new accounting standard (Note 2d)	—		—	—		—	—		—		—		—		(2,505)		(2,505)
Exercise of options	—		—	—		—	2,212,210		22		3,659		—		—		3,681
Stock-based compensation	—		—	—		—	—		—		13,114		—		—		13,114
Other comprehensive income, net of tax	—		—	—		—	—		—		—		390		—		390
Net income	—		—	—		—	—		—		—		—		20,211		20,211
Balance at March 31, 2022	—	$	—	—	$	—	342,596,367	$	3,426	$	592,243	$	2,643	$	(76,348)	$	521,964

The accompanying notes are an integral part of the consolidated financial statements (Unaudited).

9

PAYONEER GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

	Three months ended
	March 31,
	2022		2021
Cash Flows from Operating Activities
Net income (loss)	$	20,211	$	(3,508)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		4,455		4,677
Deferred taxes		1,523		1,054
Stock-based compensation expenses		13,114		4,368
Share in loss (gain) of associated company		(20)		6
Gain from change in fair value of Warrants		(31,196)		-
Foreign currency re-measurement loss		77		856
Changes in operating assets and liabilities:
Other current assets		(4,622)		(8,215)
Trade payables		176		(4,099)
Deferred revenue		(160)		(165)
Accounts receivables		(481)		13,110
CA extended to customers		(67,706)		(104,357)
CA collected from customers		76,356		98,420
Other payables		(10,794)		(13,320)
Other long-term liabilities		(1,050)		(1,507)
Operating lease right-of-use assets		2,381		2,352
Other assets		108		(6,140)
Net cash provided by (used in) operating activities		2,372		(16,468)
Cash Flows from Investing Activities
Purchase of property, equipment and software		(2,690)		(797)
Capitalization of internal use software		(3,812)		(3,351)
Severance pay fund (contributions) distributions, net		46		(213)
Customer funds in transit, net		34,409		(3,673)
Net cash provided by (used in) investing activities		27,953		(8,034)
Cash Flows from Financing Activities
Exercise of options		3,681		469
Outstanding operating balances		229,299		(22,040)
Proceeds from related party facility, net		631		-
Proceeds from long-term debt, net		-		24,001
Net cash provided by financing activities		233,611		2,430
Effect of exchange rate changes on cash and cash equivalents		(78)		(899)
Net change in cash, cash equivalents, restricted cash and customer funds		263,858		(22,971)
Cash, cash equivalents, restricted cash and customer funds at beginning of the period		4,838,433		3,413,289
Cash, cash equivalents, restricted cash and customer funds at end of the period	$	5,102,291	$	3,390,318

The accompanying notes are an integral part of the condensed consolidated financial statements (Unaudited).

10

PAYONEER GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) – (CONTINUED)

U.S. DOLLARS IN THOUSANDS

The below table reconciles cash, cash equivalents, restricted cash and customer funds as reported in the consolidated balance sheets to the total of the same amounts shown in the consolidated statements of cash flows:

	As of March 31,
	2022		2021
Cash and cash equivalents	$	465,734	$	104,676
Restricted cash		8,455		32,645
Customer funds(1)		4,628,102		3,252,997
Total cash, cash equivalents, restricted cash and customer funds shown in the consolidated statements of cash flows	$	5,102,291	$	3,390,318

⁽¹⁾Excludes $2,451 and $71,687 of customer funds in transit as of March 31, 2022 and 2021, respectively.

The accompanying notes are an integral part of the consolidated financial statements (Unaudited).

11

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 1 – GENERAL OVERVIEW

Unless otherwise noted herein, “we”, “us”, “our”, “Payoneer”, and the “Company” refer to Payoneer Inc. for the period prior to the Closing Date and to Payoneer Global Inc. for the period thereafter.

On the Closing Date, and in connection with the closing of the Reverse Recapitalization, New Starship became the combined company and changed its name to Payoneer Global Inc. (the “Company”). Legacy Payoneer was deemed the accounting acquirer in the Reverse Recapitalization based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805. This determination was primarily based on Legacy Payoneer’s stockholders prior to the Reverse Recapitalization having a majority of the voting interests in the combined company, Legacy Payoneer’s operations comprising the ongoing operations of the combined company, Legacy Payoneer’s board of directors comprising a majority of the board of directors of the combined company, Legacy Payoneer’s senior management comprising the senior management of the combined company and the assets and revenue of Legacy Payoneer were greater than those of FTOC. As FTOC does not meet the definition of a “business” for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Legacy Payoneer issuing stock for the net assets of FTOC, accompanied by a recapitalization. The net assets of FTOC are stated at historical cost, with no goodwill or other intangible assets recorded.

While FTOC was the legal acquirer in the Reverse Recapitalization because Legacy Payoneer was deemed the accounting acquirer, the historical financial statements of Legacy Payoneer became the historical financial statements of the combined company upon the consummation of the Reverse Recapitalization. As a result, the financial statements included in this report reflect (i) the historical operating results of Legacy Payoneer prior to the Reverse Recapitalization; (ii) the combined results of the Company and Legacy Payoneer following the closing of the Reverse Recapitalization; (iii) the assets and liabilities of Legacy Payoneer at their historical cost; and (iv) the Company’s equity structure for all periods presented.

In accordance with guidance applicable to these circumstances, the equity structure has been retroactively adjusted in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock, $0.01 par value per share issued to Legacy Payoneer’s stockholders in connection with the Reverse Recapitalization transaction. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Payoneer redeemable convertible preferred stock and common stock prior to the Reverse Recapitalization have been retroactively restated as shares reflecting the exchange ratio established pursuant to the Reorganization Agreement. In conjunction with the Reverse Recapitalization, the Company’s Common Stock underwent a 1-for-1.88 conversion. Note that the consolidated financial statements give retroactive effect as though the conversion of the Company’s Common Stock occurred for all periods presented, without any change in the par value per share.

Starting in January 2020, the COVID-19 pandemic impacted our teams, customers, and supply chains. Starting in March 2020, due to broader travel restrictions, global travel and tourism slowed, negatively impacting our travel customer base. Furthermore, the Federal Reserve cut interest rates to zero in mid-March 2020, negatively impacting our interest income revenues associated with underlying customer accounts. In the first three months of 2022, global travel and tourism started to return and some travel restrictions were lifted, positively impacting our travel customer base. In addition, in mid-March 2022, the U.S. Federal Reserve raised the benchmark interest rate by 25 basis points to combat rising inflation concerns, positively impacting our interest income revenues associated with underlying customer accounts. Despite the recent acceleration of travel and interest rate increases, uncertainties remain around the current trajectory of travel growth and other macroeconomic factors.

Despite the global travel slowdown and interest rate cuts, and wavering consumer confidence, the COVID-19 pandemic driven shift in buying patterns from brick and mortar to e-commerce, led to an acceleration of digital commerce that created tailwinds which further strengthened our role in the global economy. Shelter-in-place orders, social distancing measures and travel restrictions following the extraordinary spread of COVID-19 fundamentally shifted commerce and the way buyers and sellers transact, accelerating digitalization and e-commerce trends.

12

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 1 – GENERAL OVERVIEW (continued)

During early 2022, a geopolitical and armed conflict between Ukraine and Russia culminated in several countries, including the US, imposing economic sanctions on Russia and certain territories in Ukraine and on certain Russian and Belarussian banks and entities. Payoneer provides services to customers in Ukraine and in jurisdictions that are or may be impacted by these economic sanctions. We are continually acting to comply with the imposed sanctions. In addition, we reduced our payment services to Russia and Belarus customers. At this time, it is difficult to assess the impact the conflict in Ukraine, the related economic sanctions and the reduction in services to Russia and Belarus customers may have on our results of operations. For the three months ended March 31, 2022, Russia and Belarus, combined, accounted for less than 3% of our revenue, while together with Ukraine, all three countries accounted for slightly less than 10% of our revenue. There was immaterial impact on revenue from Ukraine, Russia and Belarus during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. Continuation or escalation of the conflict may have a material effect on our results of operations.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

a.    Principles of consolidation and basis of presentation:

The accompanying consolidated financial statements include the accounts of Payoneer Global Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Investments in an entity where we have the ability to exercise significant influence, but not control, over the investee are accounted for using the equity method of accounting. For such investments, our share of the investee’s results of operations is shown within Share in losses of associated company on our condensed consolidated statements of income and our investment balance as an investment in associated company on our condensed consolidated balance sheets.

The consolidated interim financial information herein is unaudited; however, such information reflects all adjustments (consisting of normal, recurring adjustments and except for the Reverse Recapitalization), which are, in the opinion of management, necessary for a fair statement of results for the interim period. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year. The year-end condensed balance sheet data was derived from audited financial statements for the year ended December 31, 2021 but does not include all disclosures required by accounting principles generally accepted in the United States of America. These unaudited financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto of Legacy Payoneer and its subsidiaries.

b.    Accounting principles:

The consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America (hereafter - U.S. GAAP).

c.    Use of estimates in the preparation of financial statements:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include, but are not limited to, share-based compensation, revenue recognition, valuation allowance on deferred taxes, contingencies, transaction loss provision and allowance for doubtful accounts on capital advances.

13

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)

d.    Capital Advance (CA) receivable, net:

The Company enters into transactions with pre-qualified sellers in which the Company purchases a designated amount of future receivables for an upfront cash purchase price.

During the three months ended March 31, 2022 and 2021, the Company has purchased and collected the following principal amounts associated with CAs:

	March 31,
	2022		2021
Beginning CA receivables, gross	$	56,101	$	67,682
CA extended to customers		68,281		103,754
Change in revenue receivables		(4)		119
CA collected from customers		(76,352)		(97,638)
Charge-offs, net of recoveries		(1,101)		(292)
Ending CA receivables, gross	$	46,925	$	73,625
Allowance for CA losses		(4,405)		(1,593)
CA receivables, net	$	42,520	$	72,032

The outstanding gross balance at March 31, 2022 consists of the following current and overdue amounts:

			1‑30 days	30‑60	60‑90	Above 90
Total		Current	overdue	overdue	overdue	overdue
$	46,925	44,627	916	359	81	942

The outstanding gross balance at December 31, 2021 consists of the following current and overdue amounts:

			1‑30 days	30‑60	60‑90	Above 90
Total		Current	overdue	overdue	overdue	overdue
$	56,101	53,150	964	704	163	1,120

The following are current and overdue balances from above that are segregated into the timing of expected collections at March 31, 2022:

			Due in less	Due in 30‑60	Due in 60‑90	Due in more
Total		Overdue	than 30 days	days	days	than 90 days
$	46,925	2,298	10,773	9,126	14,890	9,838

The following are current and overdue balances from above that are segregated into the timing of expected collections at December 31, 2021:

			Due in less	Due in 30‑60	Due in 60‑90	Due in more
Total		Overdue	than 30 days	days	days	than 90 days
$	56,101	2,951	9,511	12,457	23,008	8,174

14

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)

d.    Capital Advance (CA) receivable, net (continued):

Beginning in 2022, allowance for CA losses is primarily based on expectations of credit losses based on historical lifetime loss data as well as macroeconomic forecasts applied to the portfolio, which is segmented by programs. Loss rates are generated using historical loss data for each portfolio and are applied to segments of each portfolio. We then apply macroeconomic factors such as market unemployment rate, current and forecasted GDP, S&P yield and inflation rate, which are sourced externally, using a single scenario that we believe is most appropriate to the economic conditions applicable to a particular period. Expected credit loss, inclusive of historical loss data and macroeconomic factors, are applied to the principal amount of our CA receivables. 

Prior to 2022, the Company had implemented a risk-based methodology that was used to estimate future losses based on historical loss experience as well as the qualitative judgment when historical loss data was not available. For product offerings with sufficient historical loss experience, the Company developed loss estimates based on receivable balance attributes such as account payment status, percentage of collections per day, and length of time from advance to collection. Based on these attributes, a historical loss rate is applied to calculate the allowance for CA losses. For product offerings that did not have significant historical loss data to develop a historical loss percentage, the Company estimated losses by evaluating portfolio factors such as average balance outstanding by customer as well as creating specific identification provisions for known collection risks.

As of March 31, 2022, the Company applied a range of loss rates to the CA portfolio of 0.7% to 1.61% for the allowance for CA losses. As of March 31, 2021, the Company applied a range of loss rates to the CA portfolio of 0.75% to 3.81%.

Below is a rollforward for the allowance for CA losses (“ALCAL”) for the three months ended March 31, 2022 and 2021:

	March 31,
	2022		2021
Beginning balance	$	2,426	$	1,587
Adjustment for adoption of new accounting standard		2,505		—
Provisions		1,812		1,595
Recoveries		(1,237)		(1,268)
Charge-offs		(1,101)		(321)
Ending balance	$	4,405	$	1,593

e.    Revenue:

Entity-wide disclosure

We determine operating segments based on how our Chief Operating Decision Maker (“CODM”) manages the business, makes operating decisions around the allocation of resources, and evaluates operating performance. Our CODM is our Chief Executive Officer, who reviews our operating results on a consolidated basis. We operate in one segment and have one reportable segment. Based on the information provided to and reviewed by our CODM, we believe that the nature, amount, timing, and uncertainty of our revenue and cash flows and how they are affected by economic factors are most appropriately depicted through our primary geographical markets.

15

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)

e.    Revenue (continued):

The following table presents our revenue disaggregated by primary geographical market where revenues are attributable to the country in which the billing address of the customer is located.

	Three months ended March 31,
	2022		2021
Primary geographical markets
Greater China(1)	$	43,041	$	39,614
United States		19,782		8,053
All other countries(2)		74,135		52,939
Total revenues	$	136,958	$	100,606

(1) Greater China is inclusive of Mainland China, Hong Kong and Taiwan

(2) No single country included in the other countries’ category generated more than 10% of total revenue

The company did not have any customers during the three months ended March 31, 2022 and 2021 that individually contributed greater than 10% of revenue.

Disaggregation of revenue

The following table presents revenue recognized from contracts with customers as well as revenue from other sources, consisting primarily of interest income:

	Three months ended March 31,
	2022		2021
Revenue recognized at a point in time	$	125,943	$	97,343
Revenue recognized over time		10,156		2,734
Revenue from contracts with customers		136,099		100,077
Revenue from other sources		859		529
Total revenues	$	136,958	$	100,606

Customer acquisition costs

The Company recognizes an asset for incremental costs to obtain a contract such as sales commissions and other customer incentives. The asset is amortized on a systematic basis over the expected customer relationship period, which is estimated to be 1.8 years and is consistent with the pattern of recognition of the associated revenue.

The Company periodically reviews these deferred customer acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. There were no impairment losses recorded during the periods presented. The following table represents a rollforward of deferred customer acquisition costs:

	March 31,
	2022		2021
Opening balance	$	11,366	$	8,976
Additions to deferred customer acquisition costs		3,555		2,628
Amortization of deferred customer acquisition costs		(2,749)		(2,089)
Ending balance	$	12,172	$	9,515

16

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)

f.    Recently issued accounting pronouncements:

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time the Company no longer meets the definition of EGC. The adoption dates referenced below reflect this election, except for permitted early adoption upon the Company’s election. The Company may become a large accelerated filer on the last day of its fiscal year 2022 and, should it happen, the company will no longer qualify as an EGC. The anticipated adoption dates of standards issued, but not yet adopted will be revised to reflect this change in status.

Financial Accounting Standards Board (“FASB”) standards adopted during 2022

In 2016, the FASB issued new guidance on the measurement of credit losses on financial instruments. Credit losses on loans, trade and other receivables, held-to-maturity debt securities and other instruments will reflect the Company’s current estimate of the expected credit losses (“CECL”). CECL requires loss estimates for the remaining estimated life of the financial instrument using historical experience, current conditions, and reasonable and supportable forecasts. Generally, the Company expected that CECL will result in the earlier recognition of allowances for losses compared to the current approach of estimating probable incurred losses. The Company is required to apply the provisions of this guidance as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company early adopted the new guidance effective January 1, 2022. For additional information, refer to Note 2d.

In 2020, the FASB issued guidance simplifying the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. In addition to other changes, this standard amends ASC 470-20, “Debt with Conversion and Other Options,” by removing the accounting models for instruments with beneficial conversion features and cash conversion features. The standard also amends ASC 260, “Earnings Per Share” addressing the impacts of these instruments. The guidance is effective for the fiscal year beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company early adopted this guidance effective January 1, 2022 and the impact of the adoption on the Consolidated financial statements was immaterial

FASB Standards issued, but not adopted as of March 31, 2022

In 2020, the FASB issued amended guidance that provides transition relief for the accounting impact of reference rate reform. For a limited duration, this guidance provides optional expedients and exceptions for applying GAAP to certain contract modifications, hedging relationships, and other transactions that will be impacted by a reference rate expected to be discontinued due to reference rate reform. The amended guidance is effective through December 31, 2022. The Company does not expect reference rate reform to have a material impact on the Company’s financial statements.

NOTE 3 - OTHER CURRENT ASSETS

Composition of other current assets, grouped by major classifications, is as follows:

	March 31,		December 31,
	2022		2021
Prepaid expenses	$	12,884	$	9,598
Income receivable		6,960		9,825
Prepaid income taxes		5,917		2,789
Other		3,556		2,812
Total other current assets	$	29,317	$	25,024

17

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 4 – PROPERTY, EQUIPMENT AND SOFTWARE, NET

Composition of property, equipment and software, grouped by major classifications, is as follows:

	March 31,		December 31,
	2022		2021
Computers, software and peripheral equipment	$	34,943	$	32,379
Leasehold improvements		8,926		8,920
Furniture and office equipment		4,194		4,074
Property, equipment and software		48,063		45,373
Accumulated depreciation		(35,086)		(33,233)
Property, equipment and software, net	$	12,977	$	12,140

Depreciation expense for the three months ended March 31, 2022 and 2021 were $1,916 and $1,759, respectively.

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The following table presents goodwill balances and adjustments to those balances during the three months ended March 31, 2022:

	December 31,		Goodwill	Translation	March 31,
	2021		Acquired	Adjustments	2022
Total goodwill	$	21,127	—	114	$	21,241

Intangible assets, net

Composition of intangible assets, grouped by major classifications, is as follows:

	March 31,		December 31,
	2022		2021
Internal use software	$	59,594	$	55,164
Developed technology		14,852		15,259
Intangible assets		74,446		70,423
Accumulated amortization		(34,846)		(32,894)
Intangible assets, net	$	39,600	$	37,529

Amortization expense for the three months ended March 31, 2022 and 2021 were $2,539 and $2,804 respectively. No impairment was recognized during the three months ended March 31, 2022. During the three months ended March 31, 2021 the Company recognized impairment of internal use of software in the amount of $114, due to the abandonment of specific projects.

18

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 6 – DEBT

On October 28, 2021, Payoneer Early Payments Inc. (“PEPI”), a wholly-owned second tier subsidiary of the Company and its subsidiary (the “Borrower”) entered into a Receivables and Loan Security Agreement (the “Warehouse Facility”) with Viola Credit VI, L.P., Viola Credit Alternative Lending FNX SPV, L.P. (the “Lenders”) and Viola Credit Alternative Lending Management 2018 L.P. (collectively, the “Parties”) for the purpose of external financing of Capital Advance activity. The Company notes that the Lenders are related parties through the Company’s Board of Directors’ chairman’s ownership interest in the Lender. Refer to Note 14 for further information regarding related party considerations.

In accordance with the Warehouse Facility agreement, the Lender will make available to the Company an initial committed amount of $25,000, which may be increased at the request of the Company, and with the consent of the Lenders, in $25,000 increments up to $100,000. The associated borrowings will be secured by the assets of the Borrower, which consist primarily of merchant cash advances as well as a pledge of the equity of the Borrower. The recourse under the Warehouse Facility agreement is limited to Borrower's assets, and no other Payoneer entity guarantees repayment by the Borrower.

The Warehouse Facility agreement stipulates a borrowing base calculated at an advance rate of 80% out of the eligible portfolio outstanding receivables balance and that borrowings under the facility bear interest as follows: greater of 0.25% or LIBOR plus:

● 9.00% per annum if the commitment amount is $25,000;

● 7.75% per annum if the commitment amount is $50,000;

● 7.50% per annum if the commitment amount is $75,000;

● 7.00% per annum if the commitment amount is $100,000.

The revolving period of the facility is 36 months from the closing date and the maturity date is 42 months from the date the Warehouse Facility agreement was entered into.

The Company recorded expenses included in transaction cost in the total amount of $320 for the three months ended March 31, 2022. As of March 31, 2022, the outstanding associated balance was $14,296 with $116 of accrued expenses. As of December 31, 2021, the outstanding associated balance was $13,665 with $128 of accrued expenses.

The Warehouse Facility agreement includes certain affirmative and negative covenants that must be maintained by the Company and include certain financial measures such as minimum tangible equity and minimum unrestricted cash at the Company level. As of March 31, 2022 and December 31, 2021, the Company was in compliance with all applicable covenants.

As of March 31, 2022 and December 31, 2021, the fair value of the debt approximates the book value due to the short time span between initiation and balance sheet date with the outstanding balance classified as Level 3 in the fair value leveling hierarchy as the inputs into the valuation are not observable.

NOTE 7 - OTHER PAYABLES

Composition of other payables, grouped by major classifications, is as follows:

	March 31,		December 31,
	2022		2021
Employee related compensation	$	36,181	$	47,007
Commissions payable		10,993		10,712
Accrued expenses		10,546		10,661
Lease liability		8,751		9,290
Other		1,949		1,704
Total other payables	$	68,420	$	79,374

19

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 8 – COMMITMENTS AND CONTINGENCIES

The Company’s business is subject to various laws and regulations in the United States and other countries from where the Company operates. Any regulatory action, tax or legal challenge against the Company for noncompliance with any regulatory or legal requirement could result in significant fines, penalties, or other enforcement actions, increased costs of doing business through adverse judgment or settlement, reputational harm, the diversion of significant amounts of management time and operational resources, and could require changes in compliance requirements or limits on the Company’s ability to expand its product offerings, or otherwise harm or have a material adverse effect on the Company’s business.

On September 28, 2021, the National Banking and Securities Commission (CNBV) and the Bank of Mexico revoked the banking license of a banking entity utilized by the Company due to the banking entity not meeting applicable capital requirements. As a result, the Company is unable to withdraw funds from the banking entity. The Company has reserved $2,250 for potential losses related to the inaccessible funds above the recovered amount. The Company applied for and recovered the maximum statutory reimbursement through the deposit insurance provided by Mexican Institute for the Protection of Banking Services (IPAB), totaling $140. The Company has made a claim in liquidation for the remaining funds; however, the percentage of the deposit that will be recovered in liquidation is not known at this time.

From time to time, the Company is involved in other disputes or regulatory inquiries that arise in the ordinary course of business. These may include suits by our customers (individually or as class actions) alleging, among other things, acting unfairly and/or not in conformity regarding pricing, rules or agreements, improper disclosure of our prices, rules, or policies or that our practices, prices, rules, policies, or customer agreements violate applicable law.

In addition to these types of disputes and regulatory inquiries, the operations of the Company are also subject to regulatory and/or legal review and/or challenges that tend to reflect the increasing global regulatory focus to which the industry in which the Company operates is subject and, when taken as a whole with other regulatory and legislative action, such actions could result in the imposition of costly new compliance burdens on the Company and may lead to increased costs and decreased transaction volume and revenue.

Any claims or regulatory actions against the Company, whether meritorious or not, could be time consuming, result in costly litigation, settlement payments, damage awards (including statutory damages for certain causes of action in certain jurisdictions), fines, penalties, injunctive relief, or increased costs of doing business through adverse judgment or settlement, require the Company to change our business practices, require significant amounts of management time, result in the diversion of operational resources, or otherwise harm the business.

20

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 9 – WARRANTS

The Company has warrants that are exercisable for shares of the Company’s common stock. Warrants may only be exercised for a whole number of shares at an exercise price of $11.50. These warrants expire on June 25, 2026. At March 31, 2022, there were 25,158,086 warrants outstanding with a corresponding liability valued at $28,681. The warrants are considered to be a Level 1 fair value measurement due to the observability of the inputs. Note that 723,333 Placement Warrants were forfeited at the close of the Reverse Recapitalization transaction.

The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the consolidated statement of operations. The following table presents the changes in the fair value of warrant liabilities:

	Warrant
	Liability
Fair value as of December 31, 2021	$	59,877
Change in fair value		(31,196)
Fair value as of March 31, 2022	$	28,681

In September 2015, the Company issued equity classified private warrants to purchase shares of Common Stock to a non-employee in association with a commercial services agreement. The exercise price of the private warrants is $1.79 per share and expire 10 years from issuance. At December 31, 2021 and 2020, 1,792,944 private warrants were outstanding, out of which 1,080,707 were vested. The Company did not recognize additional expenses related to the private warrants in 2021 and 2020.

21

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 10 – STOCK-BASED COMPENSATION

Stock Options and RSUs

The following table summarizes the options to purchase shares of common stock activity under our equity incentive plans for the three months ended March 31, 2022:

	Options
Outstanding at December 31, 2021	44,940,169
Granted	—
Exercised	(1,935,844)
Expired	—
Forfeited	(763,984)
Outstanding at March 31, 2022	42,240,341
Exercisable at March 31, 2022	31,023,032

The weighted average exercise price of the options outstanding as of March 31, 2022 was $4.14 per share.

The following table summarizes the RSUs activity under our equity incentive plans as of March 31, 2022:

	Units
Outstanding December 31, 2021	9,725,027
Awarded	12,626,426
Vested	(276,366)
Forfeited	(377,996)
Outstanding March 31, 2022	21,697,091

In the three months ended March 31, 2022, the Company granted options and RSUs that vest over a three and a half or four-year period from the grant date.

In the three months ended March 31, 2022, 12,626,426 RSUs were granted.

The impact on our results of operations of recording stock-based compensation expense under the Company’s equity incentive plans were as follows:

	Three Months Ended
	March 31,
	2022		2021
Other operating expenses	$	2,937	$	1,199
Research and development expenses		2,144		899
Sales and marketing expenses		3,700		1,040
General and administrative expenses		4,127		1,159
Total stock-based compensation	$	12,908	$	4,297

22

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 11 - TRANSACTION COSTS

Composition of transaction costs, grouped by major classifications, is as follows:

	Three Months Ended
	March 31,
	2022		2021
Bank and processor fees	$	19,746	$	17,554
Network fees		3,416		(718)
Capital advance costs		942		587
Chargebacks and operational losses		501		1,164
Card costs		431		394
Other		539		1,174
Total transaction costs	$	25,575	$	20,155

NOTE 12 - INCOME TAXES

The Company had an effective tax rate of 9% for the three months ended March 31, 2022 compared to effective tax rate of 98% for the three months ended March 31, 2021. The difference between the Company’s effective tax rate and the U.S. federal statutory rate was due to the result of foreign income taxed at different rates and the provision for a full valuation allowance in respect of tax benefits from carry forward tax losses due to the uncertainty of the realization of such tax benefits.

NOTE 13 – NET EARNINGS (LOSS) PER SHARE

The Company computes net loss per share using the two-class method required for participating securities. The two-class method requires income available to ordinary shareholders for the period to be allocated between shares of Common Stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company considers any issued and outstanding convertible preferred shares to be participating securities as the holders of the convertible preferred shares, as the case may be, would be entitled to dividends that would be distributed to the holders of ordinary shares, on a pro-rata basis assuming conversion of all convertible preferred shares into ordinary shares. These participating securities do not contractually require the holders of such shares to participate in the Company’s losses. As such, net loss for the period ended March 31, 2021 presented was not allocated to the Company’s participating securities. This was applied for the three -month period ended March 31, 2021. The participating securities were converted in the Company's shares of common stock in June 2021.

The Company’s basic net loss per share is calculated by dividing net loss attributable to ordinary shareholders by the weighted-average number of shares of ordinary shares outstanding for the period, without consideration of potentially dilutive securities. The diluted net loss per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury share method or the if-converted method based on the nature of such securities. Diluted net loss per share is the same as basic net loss per share in periods when the effects of potentially dilutive shares of ordinary shares are anti-dilutive. The earn-out shares (as such term is defined in the Reorganization Agreement) which were subject to the occurrence of certain conditions, were excluded from the diluted net loss per share calculation for the three -month period ended March 31, 2022, because the earn-out shares conditions were not met at the end of the reporting period.

23

PAYONEER GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

NOTE 13 – NET EARNINGS (LOSS) PER SHARE (continued)

Basic and diluted net loss per share attributable to common stockholders was calculated as follows:

	Three Months Ended
	March 31,
	2022	2021
Numerator: