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 June 30, 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 June 30, 2022, the registrant had 346,439,294 shares of common stock outstanding.

Payoneer Global Inc.

Form 10-Q

For the Quarter Ended June 30, 2022

Table of Contents

	Page
PART I. FINANCIAL INFORMATION	4
Item 1. Financial Statements (Unaudited)	4
Condensed consolidated balance sheets (Unaudited)	5
Condensed consolidated statements of income (loss) (Unaudited)	6
Condensed consolidated statements of comprehensive income (loss) (Unaudited)	7
Condensed consolidated statements of changes in redeemable preferred stock, redeemable convertible preferred stock and shareholders’ equity (deficit) (Unaudited)	8
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	33
Item 4. Controls and Procedures	34
PART II - OTHER INFORMATION	35
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3. Defaults upon Senior Securities	35
Item 4. Mine Safety Disclosures	35
Item 5. Other Information	35
Item 6. Exhibits	36
Signatures	37

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:

● our financial performance following the reorganization consummated on June 25, 2021 with FTAC Olympus Acquisition Corp. (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 JUNE 30, 2022

TABLE OF CONTENTS

	Page
Condensed consolidated financial statements (unaudited) in U.S. dollars:
Condensed consolidated balance sheets (Unaudited)	5
Condensed consolidated statements of income (loss) (Unaudited)	6
Condensed consolidated statements of comprehensive income (loss) (Unaudited)	7
Condensed consolidated statements of changes in redeemable preferred stock, redeemable convertible preferred stock and shareholders’ equity (Unaudited)	8
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

	June 30,		December 31,
	2022		2021
Assets:
Current assets:
Cash and cash equivalents	$	492,002	$	465,926
Restricted cash		3,102		3,000
Customer funds		5,140,642		4,401,254
Accounts receivable, net		14,334		13,844
CA receivables, net		38,602		53,675
Other current assets		31,206		25,024
Total current assets		5,719,888		4,962,723
Non-current assets:
Property, equipment and software, net		13,414		12,140
Goodwill		19,480		21,127
Intangible assets, net		39,806		37,529
Restricted cash		5,349		5,113
Deferred taxes		3,834		4,900
Investment in associated company		6,635		7,013
Severance pay fund		1,242		1,723
Operating lease right of use assets		19,075		12,943
Other assets		13,564		13,541
Total assets	$	5,842,287	$	5,078,752
Liabilities and shareholders’ equity:
Current liabilities:
Trade payables	$	26,738	$	17,200
Outstanding operating balances		5,140,642		4,401,254
Other payables		73,479		79,374
Total current liabilities		5,240,859		4,497,828
Non-current liabilities:
Long-term debt from related party (refer to Notes 6 and 14 for further information)		14,769		13,665
Warrant liability		15,850		59,877
Other long-term liabilities		27,879		20,309
Total liabilities		5,299,357		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 June 30, 2022 and December 31, 2021.		—		—
Common stock, $0.01 par value, 3,800,000,000 and 3,800,000,000 shares authorized; 346,439,294 and 340,384,157 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively.		3,464		3,404
Additional paid-in capital		611,997		575,470
Accumulated other comprehensive income (loss)		(605)		2,253
Accumulated deficit		(71,926)		(94,054)
Total shareholders’ equity		542,930		487,073
Total liabilities and shareholders’ equity	$	5,842,287	$	5,078,752

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

5

PAYONEER GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

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

	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenues	$	148,190	$	110,927	$	285,148	$	211,533
Transaction costs ($338 and $658 interest expense and fees associated with related party transaction during the three and six months ended June 30, 2022, respectively; refer to Notes 6 and 14 for further information)		26,212		28,521		51,787		48,676
Other operating expenses		35,392		32,010		70,151		58,624
Research and development expenses		26,607		18,541		52,522		35,194
Sales and marketing expenses		36,820		27,702		71,289		50,841
General and administrative expenses		20,192		18,163		38,320		28,680
Depreciation and amortization		5,171		4,351		9,626		9,028
Total operating expenses		150,394		129,288		293,695		231,043
Operating loss		(2,204)		(18,361)		(8,547)		(19,510)
Financial income (expense):
Gain from change in fair value of Warrants		12,831		12,076		44,027		12,076
Other financial expense, net		(4,824)		(2,937)		(7,519)		(3,559)
Financial income (expense), net		8,007		9,139		36,508		8,517
Income (loss) before taxes on income and share of gain (loss) of associated company		5,803		(9,222)		27,961		(10,993)
Taxes on income		1,374		3,197		3,341		4,928
Share in gain (loss) of associated company		(7)		5		13		(1)
Net income (loss)	$	4,422	$	(12,414)	$	24,633	$	(15,922)
Per share data
Net income (loss) per share attributable to common stockholders — Basic earnings (loss) per share	$	0.01	$	(0.63)	$	0.07	$	(0.84)
— Diluted earnings (loss) per share	$	0.01	$	(0.63)	$	0.07	$	(0.84)
Weighted average common shares outstanding — Basic and diluted		345,522,076		66,744,348		345,831,177		58,702,320
Weighted average common shares outstanding — Diluted		366,013,696		66,744,348		369,047,627		58,702,320

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

6

PAYONEER GLOBAL INC.

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

U.S. DOLLARS IN THOUSANDS

	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income (loss)	$	4,422	$	(12,414)	$	24,633	$	(15,922)
Other comprehensive income (loss):
Foreign currency translation adjustments		(3,248)		451		(2,858)		(738)
Comprehensive income (loss)	$	1,174	$	(11,963)	$	21,775	$	(16,660)

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

7

PAYONEER GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE PREFERRED STOCK, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (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 April 1, 2021	209,529,798	$	154,800	3,500	$	10,735	49,697,982	$	497	$	84,532	$	2,985	$	(63,575)	$	24,439
Reverse Recapitalization transaction	(209,529,798)		(154,800)	—		—	249,792,546		2,498		189,056		—		—		191,554
PIPE Financing	—		—	—		—	30,000,000		300		279,885		—		—		280,185
Redemption of Redeemable Preferred Stock	—		—	(3,500)		(10,735)	—		—		(29,069)		—		—		(29,069)
Exercise of options	—		—	—		—	8,861,449		89		15,788		—		—		15,877
Stock-based compensation	—		—	—		—	—		—		10,760		—		—		10,760
Other comprehensive loss, net of tax	—		—	—		—	—		—		—		451		—		451
Net loss	—		—	—		—	—		—		—		—		(12,414)		(12,414)
Balance at June 30, 2021	—	$	—	—	$	—	338,351,977	$	3,384	$	550,952	$	3,436	$	(75,989)	$	481,783
Balance at April 1, 2022	—	$	—	—	$	—	342,596,367	$	3,426	$	592,243	$	2,643	$	(76,348)	$	521,964
Exercise of options	—		—	—		—	3,842,927		38		7,593		—		—		7,631
Stock-based compensation	—		—	—		—	—		—		12,161		—		—		12,161
Other comprehensive income, net of tax	—		—	—		—	—		—		—		(3,248)		—		(3,248)
Net income	—		—	—		—	—		—		—		—		4,422		4,422
Balance at June 30, 2022	—	$	—	—	$	—	346,439,294	$	3,464	$	611,997	$	(605)	$	(71,926)	$	542,930

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 (UNAUDITED)

U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA

	Redeemable convertible			Redeemable								Accumulated
	preferred stock			preferred stock			Common Stock			Additional		other
										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
Reverse Recapitalization transaction	(209,529,798)		(154,800)	—		—	249,792,546		2,498		189,056		—		—		191,554
PIPE Financing	—		—	—		—	30,000,000		300		279,885		—		—		280,185
Redemption of Redeemable Preferred Stock	—		—	(3,500)		(10,735)	—		—		(29,069)		—		—		(29,069)
Exercise of options	—		—	—		—	9,951,255		100		16,246		—		—		16,346
Stock-based compensation	—		—	—		—	—		—		15,128		—		—		15,128
Other comprehensive income, net of tax	—		—	—		—	—		—		—		(738)		—		(738)
Net loss	—		—	—		—	—		—		—		—		(15,922)		(15,922)
Balance at June 30, 2021	—	$	—	—	$	—	338,351,977	$	3,384	$	550,952	$	3,436	$	(75,989)	$	481,783
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	—		—	—		—	6,055,137		60		11,252		—		—		11,312
Stock-based compensation	—		—	—		—	—		—		25,275		—		—		25,275
Other comprehensive loss, net of tax	—		—	—		—	—		—		—		(2,858)		—		(2,858)
Net loss	—		—	—		—	—		—		—		—		24,633		24,633
Balance at June 30, 2022	—	$	—	—	$	—	346,439,294	$	3,464	$	611,997	$	(605)	$	(71,926)	$	542,930

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

9

PAYONEER GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. DOLLARS IN THOUSANDS

	Six months ended
	June 30,
	2022		2021
Cash Flows from Operating Activities
Net income (loss)	$	24,633	$	(15,922)
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		9,626		9,028
Deferred taxes		1,066		344
Stock-based compensation expenses		25,275		15,128
Share in loss (gain) of associated company		(13)		1
Gain from change in fair value of Warrants		(44,027)		(12,076)
Transaction costs allocated to Warrants		—		5,087
Foreign currency re-measurement loss		2,491		861
Changes in operating assets and liabilities:
Other current assets		(6,650)		(8,311)
Trade payables		9,538		(468)
Deferred revenue		24		1,862
Accounts receivables		(490)		5,560
CA extended to customers		(109,422)		(189,927)
CA collected from customers		121,990		206,796
Other payables		(6,318)		1,407
Other long-term liabilities		(3,695)		(3,582)
Operating lease right-of-use assets		5,134		4,676
Other assets		(288)		(3,768)
Net cash provided by operating activities		28,874		16,696
Cash Flows from Investing Activities
Purchase of property, equipment and software		(5,093)		(2,044)
Capitalization of internal use software		(7,772)		(6,646)
Severance pay fund (contributions) distributions, net		481		(423)
Customer funds in transit, net		(22,139)		9,396
Net cash provided by (used in) investing activities		(34,523)		283
Cash Flows from Financing Activities
Exercise of options		11,312		16,346
Outstanding operating balances, net		739,388		287,486
Proceeds from Reverse Recapitalization, net		—		108,643
Proceeds from PIPE financing, net		—		280,185
Proceeds from related party facility, net		1,103		-
Repayment of long-term debt		—		(40,025)
Net cash provided by financing activities		751,803		652,635
Effect of exchange rate changes on cash and cash equivalents		(2,491)		(871)
Net change in cash, cash equivalents, restricted cash and customer funds		743,663		668,743
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	$	5,582,096	$	4,082,032

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 June 30,
	2022		2021
Cash and cash equivalents	$	492,002	$	498,706
Restricted cash		8,451		7,733
Customer funds(1)		5,081,643		3,575,593
Total cash, cash equivalents, restricted cash and customer funds shown in the consolidated statements of cash flows	$	5,582,096	$	4,082,032

⁽¹⁾Excludes $58,999 and $58,618 of customer funds in transit as of June 30, 2022 and 2021, respectively.

Supplemental schedule about Reverse Recapitalization

Cash held by FTOC and cash related to FTOC trust, net of redemptions	$	574,961
Less cash consideration paid to Legacy Payoneer Shareholders		398,201
Less cash paid associated with transaction costs allocated to Reverse Recapitalization		68,117
Reverse Recapitalization financing		108,643
Cash related to PIPE		300,000
Less cash paid associated with transaction costs allocated to PIPE		19,815
PIPE financing		280,185
Net contributions from Reverse Recapitalization and PIPE financing	$	388,828

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

11

PAYONEER GLOBAL INC.

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 (as defined below) and to Payoneer Global Inc. for the period thereafter.

On June 25, 2021 (the “Closing Date”), FTAC Olympus Acquisition Corporation (“FTOC”), consummated the previously announced merger pursuant to the Agreement and Plan of Reorganization (the “Reorganization Agreement”), dated February 3, 2021, as amended, by and among FTOC, Payoneer Inc. (“Legacy Payoneer”), New Starship Parent Inc., a Delaware corporation (“New Starship”), Starship Merger Sub I Inc., a Delaware corporation and a direct, wholly owned subsidiary of New Starship (“First Merger Sub”), Starship Merger Sub II Inc., a Delaware corporation and a direct, wholly owned subsidiary of New Starship (“Second Merger Sub”). Pursuant to the terms of the Reorganization Agreement, a transaction between FTOC and Legacy Payoneer was effected through the merger of First Merger Sub with and into FTOC and through a merger of Second Merger Sub with and into Legacy Payoneer (the “Reverse Recapitalization”). 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 condensed 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.

Beginning 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 half of 2022, global travel and tourism started to return and some travel restrictions were lifted, positively impacting our travel customer base. In addition, in the first half of 2022, the U.S. Federal Reserve raised the benchmark interest rate by 100 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.

12

PAYONEER GLOBAL INC.

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, Belarus, and certain territories in Ukraine, including 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 and six months ended June 30, 2022, Russia and Belarus, combined, accounted for less than 3% of our revenue for each such period, while together with Ukraine, all three countries accounted for slightly less than 10% of our revenue for each such period. There was immaterial impact on revenue from Ukraine, Russia and Belarus during the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 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 condensed 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 June 30, 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 Payoneer Global Inc. and Legacy Payoneer and its subsidiaries.

b.    Accounting principles:

The condensed 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 CA losses.

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PAYONEER GLOBAL INC.

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 six months ended June 30, 2022 and 2021, the Company has purchased and collected the following principal amounts associated with CAs:

	June 30,
	2022		2021
Beginning CA receivables, gross	$	56,101	$	67,682
CA extended to customers		109,713		193,567
Change in revenue receivables		44		117
CA collected from customers		(122,034)		(206,014)
Charge-offs, net of recoveries		(1,349)		(354)
Ending CA receivables, gross	$	42,475	$	54,998
Allowance for CA losses		(3,873)		(5,772)
CA receivables, net	$	38,602	$	49,226

The outstanding gross balance at June 30, 2022 consists of the following current and overdue amounts:

			1‑30 days	30‑60	60‑90	Above 90
Total		Current	overdue	overdue	overdue	overdue
$	42,475	39,158	1,065	721	236	1,295

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<