Overview
Everi is a leading supplier of 
entertainment and technology solutions for the casino, interactive, and gaming 
industry. With a focus on both customers and players, Everi develops, sells, 
and leases games and gaming machines, gaming systems and services, and is an 
innovator and provider of core financial products and services, self-service 
player loyalty tools and promotion management software, and intelligence and 
regulatory compliance solutions. Everi’s mission is to provide casino operators 
with games that facilitate memorable player experiences, offer secure financial 
transactions for casinos and their patrons, and deliver software applications 
and self-service tools to improve casino operations efficiencies and fulfill 
regulatory compliance requirements. We are divided into two primary business 
segments: Games and FinTech.

Items Impacting Comparability of Results of Operations Our Financial Statements 
included in this report reflect the following transactions and events: •During 
2019, we acquired certain assets of Atrient and MGT and made cash payments of 
$20.0 million and $15.0 million at the closing of each transaction, 
respectively. The acquisitions impacted our results of operations as of and for 
the period ended December 31, 2019. •On January 1, 2018, we adopted ASC 606 
using the modified retrospective method, which resulted in recording an 
immaterial cumulative adjustment in the amount of approximately $4.4 million to 
accumulated deficit as of the adoption date. Our results prior to 2018 were not 
recast to reflect the new revenue recognition standard under the modified 
retrospective method. •During the fourth quarter of 2017, we recorded a $37.2 
million loss on extinguishment of debt consisting of a $26.3 million make-whole 
premium related to the satisfaction and redemption of the 2014 Unsecured Notes 
(defined herein) and approximately $10.9 million for the write-off of related 
unamortized debt issuance costs and fees. An additional $14.6 million loss on 
extinguishment of debt was incurred in the second quarter of 2017 for the 
unamortized deferred financing fees and discounts related to the extinguished 
term loan under the Prior Credit Facility and the redeemed

Refinanced Secured Notes (both defined herein). Repricing of the Term Loan 
Facility (defined herein) during the second quarter of 2018 did not result in a 
material loss on extinguishment of debt. The financial transactions in the 
fourth quarter of 2019, including the Amendment to the Term Loan Facility that 
enabled a repricing of the Term Loan and the partial redemption of the 2017 
Unsecured Notes (defined herein) that occurred in the first quarter of 2020, 
did not result in a material loss on extinguishment of debt in 2019. •The 
income tax benefit was approximately $0.5 million for the year ended December 
31, 2019, as compared to an income tax benefit of approximately $9.7 million 
and $20.2 million for the years ended December 31, 2018 and 2017, respectively. 
The income tax benefit for the year ended December 31, 2019 reflected an 
effective income tax rate of negative 3.3%, which was less than the statutory 
federal rate of 21.0% primarily due to a partial decrease in the valuation 
allowance for deferred tax assets and an increase in a federal research credit. 
The income tax benefit for the year ended December 31, 2018 reflected an 
effective income tax rate of negative 367.0%, which was less than the statutory 
federal rate of 21.0%, primarily due to a partial decrease in the valuation 
allowance for deferred tax assets and an increase in a federal research credit. 
The income tax benefit for the year ended December 31, 2017 reflected an 
effective income tax rate of 28.0%, which was less than the statutory federal 
rate of 35.0%, primarily due to a partial decrease in the carrying value of our 
deferred tax liabilities as a result of the enactment of the 2017 Tax Act, 
offset by an increase in our valuation allowance for deferred tax assets. As a 
result of the above transactions and events, the results of operations and 
earnings per share in the periods covered by our Financial Statements may not 
be directly comparable. Trends and Developments Impacting our Business Our 
strategic planning and forecasting processes include the consideration of 
economic and industry wide trends that may impact our Games and FinTech 
businesses. Below we have identified a number of trends that could have a 
material impact on our business: •Casino gaming is dependent upon discretionary 
consumer spending, which is typically the first type of spending that is 
restrained by consumers when they are uncertain about their jobs and income. 
Global economic uncertainty in the marketplace may have an impact on casino 
gaming, gaming establishment capital budgets, and ultimately the demand for new 
gaming equipment, which impacts both of our segments. •The total North American 
installed slot base was slightly higher in 2019 when compared to 2018 and 2017. 
We expect flat to moderate growth in the forward replacement cycle for slot 
machines, which could have a positive impact on our Games segment, while a 
decrease in demand for new machines associated with new casino openings and 
major expansions will negatively impact the operations of our Games segment. 
•We face continued competition from smaller competitors in the gaming cash 
access market, as well as ongoing competition from larger gaming equipment 
manufacturers and systems providers. This increased competition continues to 
contribute to added pricing pressure for both our Games and FinTech businesses. 
•Transaction processing and related fees have increased in recent years. We 
expect the financial services and payments industry to respond to these 
changes, which may negatively impact our FinTech business in the future. 
•Governmental and regulatory oversight on cash transactions, financial 
services, and payments processing may provide continued motivation for gaming 
establishments to consider additional products and services that facilitate 
regulatory compliance and operational efficiencies. •Casino operators continue 
to broaden their appeal by focusing on investments in non-gaming amenities for 
their facilities, which could impact casino operator’s capital allocations for 
games and payment solution products and services that impact both of our 
operating segments.

Operating Segments

We report our financial performance within two operating segments: (a) Games; 
and (b) FinTech.

Results of Operations Year ended December 31, 2019 compared to the year ended 
December 31, 2018 Total Revenues Total revenues increased by approximately 
$63.7 million, or 14%, to approximately $533.2 million for the year ended 
December 31, 2019, as compared to the prior year period. Games revenues 
increased by approximately $24.1 million, or 9%, to approximately $283.1 
million for the year ended December 31, 2019, as compared to the prior year 
period. This was primarily due to an increase in revenue from gaming operations 
resulting from both a higher average daily win per unit and an increase in the 
installed base of leased gaming machines, as well as an increase in equipment 
revenues due to higher gaming machine unit sales and an increase in our 
interactive revenues. FinTech revenues increased by approximately $39.6 
million, or 19%, to approximately $250.1 million for the year ended December 
31, 2019, as compared to the prior year period. This was primarily due to an 
increase in equipment revenues resulting from higher sales of our equipment and 
information services and other solutions, which included, among other sources, 
revenues of approximately $16.2 million from our player loyalty operations 
acquired during the year, as well as additional cash access services revenues 
associated with higher dollar and transaction volumes.

Costs and Expenses Total costs and expenses increased by approximately $55.5 
million, or 14%, to approximately $439.2 million for the year ended December 
31, 2019, as compared to the same period in the prior year. This was primarily 
due to higher Games and FinTech costs and expenses. Cost of revenues from our 
Games segment increased by approximately $3.9 million, or 6%, to approximately 
$71.9 million for the year ended December 31, 2019, as compared to the prior 
year period. This was primarily due to higher variable costs directly related 
to the increased sales of gaming equipment. Cost of revenues from our FinTech 
segment increased by approximately $14.1 million, or 53%, to approximately 
$40.5 million for the year ended December 31, 2019, as compared to the prior 
year period. This was primarily due to the variable costs associated with the 
higher sales of our equipment and information services solutions, inclusive of 
the addition of the player loyalty business acquired during the year. Operating 
expenses increased by approximately $19.9 million, or 14%, to approximately 
$162.2 million for the year ended December 31, 2019, as compared to the prior 
year period. Our Games segment operating expenses increased primarily due to 
higher payroll and related expenses, advertising costs related to our 
interactive operations, and additional trade show-related expenses. Our FinTech 
segment operating expenses increased primarily associated with the loss 
contingency recorded in connection with the FACTA-related matter and related 
legal fees, the player loyalty operations acquired during the year, and higher 
payroll and related expenses. Research and development increased by 
approximately $12.0 million, or 59%, to approximately $32.5 million for the 
year ended December 31, 2019, as compared to the prior year period. This was 
primarily due to higher payroll and related expenses incurred by our FinTech 
and Games segments. Depreciation increased by approximately $2.0 million, or 
3%, to approximately $63.2 million for the year ended December 31, 2019, as 
compared to the prior year period, which was relatively consistent with the 
prior year. Amortization increased by approximately $3.7 million, or 6%, to 
approximately $68.9 million for the year ended December 31, 2019, as compared 
to the prior year period. The increase was primarily driven by the amortization 
of the intangible assets acquired in connection with the player loyalty 
business for our FinTech segment.

Primarily as a result of the increase in revenue partially offset by the 
increased costs and expenses described above, operating income increased by 
approximately $8.2 million, or 10%, to approximately $94.0 million for the year 
ended December 31, 2019, as compared to the prior year. The operating income 
margin was consistent at 18% for the years ended December 31, 2019 and 2018. 
Interest expense, net of interest income, decreased by approximately $5.2 
million, or 6%, to approximately $77.8 million for the year ended December 31, 
2019, as compared to the prior year period. This was primarily due to higher 
interest income earned during the current reporting period and our lower debt 
balances. Loss on extinguishment of debt of approximately $0.2 million for the 
year ended December 31, 2019 in connection with the repricing of the Term Loan 
Facility completed in December 2019 was comparable to approximately $0.2 
million recorded for the year ended December 31, 2018 related to the Term Loan 
Facility repricing completed in May 2018. Income tax benefit was approximately 
$0.5 million for the year ended December 31, 2019, as compared to an income tax 
benefit of approximately $9.7 million in the prior year period. The income tax 
benefit for the year ended December 31, 2019 reflected an effective income tax 
rate of negative 3.3%, which was less than the statutory federal rate of 21.0%, 
primarily due to a partial decrease in our valuation allowance for deferred tax 
assets and a research credit. The tax benefit for the year ended December 31, 
2018 reflected an effective income tax rate of negative 367.0% which was less 
than the statutory federal rate of 21.0%, primarily due to a partial decrease 
in our valuation allowance for deferred tax assets and a research credit. In 
addition, for the years ended December 31, 2019 and 2018, the partial decrease 
in our valuation allowance was primarily due to the book income as well as net 
operating losses for tax purposes, and the interest deduction limitation 
(deferred tax assets), which can be offset against our indefinite lived 
deferred tax liabilities. Primarily as a result of the foregoing, our net 
income increased by approximately $4.2 million, or 34%, to a net income of 
approximately $16.5 million for the year ended December 31, 2019, as compared 
to the prior year period.

Year ended December 31, 2018 compared to year ended December 31, 2017:

Total Revenues Total revenues increased by approximately $58.8 million, or 14%, 
to approximately $469.5 million for the year ended December 31, 2018, as 
compared to the prior year period as adjusted for the net versus gross 
retrospective impact of ASC 606. This was primarily due to higher Games and 
FinTech revenue. Games revenues increased by approximately $36.8 million, or 
17%, to approximately $259.0 million for the year ended December 31, 2018, as 
compared to the prior year period as adjusted for the net versus gross 
retrospective impact of ASC 606. This was primarily due to an increase in both 
unit sales and average selling prices and an increase in average daily win per 
unit on a higher installed base of leased machines. FinTech revenues increased 
by approximately $22.0 million, or 12%, to approximately $210.5 million for the 
year ended December 31, 2018, as compared to the prior year period as adjusted 
for the net versus gross retrospective impact of ASC 606. This was primarily 
due to higher dollar and transaction volumes from cash access services and 
increased equipment sales. Costs and Expenses Games cost of revenues increased 
by approximately $13.9 million, or 26%, to approximately $68.0 million for the 
year ended December 31, 2018, as compared to the prior year period as adjusted 
for the net versus gross retrospective impact of ASC 606. This was primarily 
due to the costs associated with the additional unit sales and an increase in 
costs related to our leased machines as a result of the increase in revenue. 
FinTech cost of revenues increased by approximately $6.2 million, or 31%, to 
approximately $26.4 million for the year ended December 31, 2018, as compared 
to the prior year period as adjusted for the net versus gross retrospective 
impact of ASC 606. This was primarily due to the costs associated with the 
additional equipment sales. Operating expenses increased by approximately $23.4 
million, or 20%, to approximately $142.3 million for the year ended December 
31, 2018, as compared to the same period in the prior year. This was primarily 
due to higher payroll and related expenses, consulting fees, advertising, 
promotion and trade show costs and software license fees for both our Games and 
FinTech segments. Our Games segment also incurred an increase in costs related 
to inventory disposals and leased assets impairment charges. Research and 
development increased by approximately $1.6 million, or 9%, to approximately 
$20.5 million for the year ended December 31, 2018, as compared to the same 
period in the prior year. This was primarily due to higher payroll and related 
expenses for our Games segment. Depreciation increased by approximately $13.9 
million, or 29%, to approximately $61.2 million for the year ended December 31, 
2018, as compared to the prior year period. This was primarily driven by the 
increase in the installed base of leased gaming machines and adjustments to the 
remaining useful lives of certain of the gaming fixed assets related to our 
Games segment. Amortization decreased by approximately $4.3 million, or 6%, to 
approximately $65.2 million for the year ended December 31, 2018, as compared 
to the prior year period. This was primarily due to assets being fully 
amortized related to both our Games and FinTech segments.

Primarily as a result of the factors described above, operating income 
increased by approximately $4.0 million, or 5%, to approximately $85.8 million 
for the year ended December 31, 2018, as compared to the prior year as adjusted 
for the net versus gross retrospective impact of ASC 606. The operating income 
margin decreased from 20% to 18% for the year ended December 31, 2018, as 
adjusted for the net versus gross retrospective impact of ASC 606. Interest 
expense, net of interest income, decreased by approximately $19.1 million, or 
19%, to approximately $83.0 million for the year ended December 31, 2018, as 
compared to the prior year period. This was primarily due to lower interest 
expense as a result of our debt refinancing transactions in 2017 and an 
additional repricing of our Term Loan Facilities in 2018, partially offset by 
an increase in our cash usage fees in connection with our commercial cash 
arrangements and the impact of the London Interbank Offered Rate (“LIBOR”) 
increases during the past year. Loss on extinguishment of debt was 
approximately $0.2 million for the year ended December 31, 2018 in connection 
with the repricing transaction completed in May 2018 as compared to 
approximately $51.8 million for the year ended December 31, 2017, which 
consisted of approximately $26.3 million make-whole premium related to the 
satisfaction and redemption of the 2014 Unsecured Notes, approximately $10.9 
million for the write-off of related unamortized debt issuance costs and fees 
in the fourth quarter of 2017 and approximately $14.6 million for the 
unamortized deferred financing fees and discounts related to our extinguished 
term loan under the Prior Credit Facility (defined herein) and the redeemed 
Refinanced Secured Notes (defined herein) in the second quarter of 2017. Income 
tax benefit was approximately $9.7 million for the year ended December 31, 
2018, as compared to an income tax benefit of approximately $20.2 million in 
the prior year period. The income tax benefit for the year ended December 31, 
2018 reflected an effective income tax rate of negative 367.0%, which was less 
than the statutory federal rate of 21.0%, primarily due to a partial decrease 
in our valuation allowance for deferred tax assets and a research credit. The 
partial decrease in our valuation allowance is primarily due to the net 
operating loss during the year and the interest deduction limitation (deferred 
tax assets) which can be offset against our indefinite lived deferred tax 
liabilities. The tax benefit for the year ended December 31, 2017 reflected an 
effective income tax rate of 28.0%, which was less than the statutory federal 
rate of 35.0%, primarily due to a decrease in the carrying value of our 
deferred tax liabilities as a result of the enactment of the 2017 Tax Act, 
offset by an increase in the valuation allowance for deferred tax assets. 
Primarily as a result of the foregoing, our net loss decreased by approximately 
$64.3 million, or 124%, to a net income of approximately $12.4 million for the 
year ended December 31, 2018, as compared to the prior year period.

Critical Accounting Policies The preparation of our financial statements in 
conformity with U.S. generally accepted accounting principles (“GAAP”) requires 
us to make estimates and assumptions that affect our reported amounts of assets 
and liabilities, revenues and expenses, and related disclosures of contingent 
assets and liabilities in our Financial Statements. The SEC has defined 
critical accounting policies as those that are most important to the portrayal 
of the financial position and results of operations, and which require 
management to make its most difficult and subjective judgments, often as a 
result of the need to make estimates about matters that are inherently 
uncertain. Based on this definition, we have identified our critical accounting 
policies as those addressed below. We also have other key accounting policies 
that involve the use of estimates, judgments, and assumptions. We believe that 
our estimates and assumptions are reasonable, based upon information presently 
available; however, actual results may differ from these estimates under 
different assumptions or conditions. Goodwill. We had approximately $681.6 
million of goodwill, of which approximately $449.0 million was generated by our 
Games reporting unit, on our Balance Sheets at December 31, 2019 resulting from 
acquisitions of other businesses. We test for impairment annually on a 
reporting unit basis, at the beginning of our fourth fiscal quarter, or more 
often under certain circumstances. Our reporting units are identified as 
operating segments or one level below and we evaluate our reporting units at 
least annually.

The annual evaluation of goodwill requires the use of different assumptions, 
estimates, or judgments in the goodwill impairment testing process, such as: 
the methodology, the estimated future cash flows of our reporting units, the 
discount rate used to present value such cash flows, and the market multiples 
of comparable companies. Management performs its annual forecasting process, 
which, among other factors, includes reviewing recent historical results, 
company-specific variables, and industry trends. This process is generally 
fluid throughout each year and considered in conjunction with the annual 
goodwill impairment evaluation. Changes in forecasted operations can materially 
affect these estimates, which could materially affect our results of 
operations. Our estimates of fair value require significant judgment and are 
based on assumptions we determined to be reasonable; however, they are 
unpredictable and inherently uncertain, including: estimates of future growth 
rates, operating margins, results of operations and financial condition, and 
assumptions about the overall economic climate as well as the competitive 
environment for our reporting units. There can be no assurance that our 
estimates and assumptions made for purposes of our goodwill testing as of the 
time of testing will prove to be accurate predictions of the future. If our 
assumptions regarding business plans, competitive environments, anticipated 
growth rates, or expectations of results of operations and financial condition 
are not correct, we may be required to record goodwill impairment charges in 
future periods, whether in connection with our next annual impairment testing 
process, or earlier, in the event an indicator of impairment is present at such 
time during the year. Recent Accounting Guidance

Liquidity and Capital Resources

Overview

Non-GAAP measure. In order to enhance investor understanding of our cash 
balance, we are providing in this Annual Report on Form 10-K, net cash position 
and net cash available, which are not measures of our financial performance or 
condition in accordance with GAAP. Accordingly, these measures should not be 
considered in isolation, or as a substitute for such information, and should be 
read in conjunction with, our cash and cash equivalents prepared in accordance 
with GAAP. We define (a) net cash position as cash and cash equivalents plus 
settlement receivables less settlement liabilities and (b) net cash available 
as net cash position plus undrawn amounts available under our Revolving Credit 
Facility (defined herein). We present our net cash position to illustrate the 
impact on our cash and cash equivalents of the timing of our receipt of 
payments for settlement receivables and the timing of our payments to customers 
for settlement liabilities.

We present net cash available in connection with our forecasting of cash flows 
and related requirements, both on a short-term and long-term basis.

Issuance of Common Stock In December 2019, we filed with the SEC a registration 
statement for an undetermined amount of common stock, preferred stock, debt 
securities, warrants, and/or units that the Company may offer and sell in one 
or more offerings on terms to be decided at the time of sale, which will expire 
on December 4, 2022. In December 2019, we issued and sold 11,500,000 shares of 
our common stock pursuant to a prospectus supplement under the automatic shelf 
registration statement, for which the aggregate net proceeds of approximately 
$122.4 million were utilized to pay down and reprice a portion of our existing 
indebtedness.

Cash Resources Our cash balance, cash flows, and line of credit are expected to 
be sufficient to meet our recurring operating commitments and to fund our 
planned capital expenditures for the foreseeable future. Cash and cash 
equivalents at December 31, 2019 included cash in non-U.S. jurisdictions of 
approximately $33.8 million. Generally, these funds are available for operating 
and investment purposes within the jurisdiction in which they reside, and we 
can repatriate these foreign funds to the United States, subject to potential 
withholding tax obligations. We expect that cash provided by operating 
activities will be sufficient for our operating and debt servicing needs during 
the foreseeable future. In addition, we have sufficient borrowings available 
under our senior secured revolving credit facility to meet further funding 
requirements. We monitor the financial strength of our lenders on an ongoing 
basis using publicly available information. Based upon our information, we 
believe there is not a likelihood that any of our lenders might not be able to 
honor their commitments under the Credit Agreement (defined below). Our cash 
and cash equivalents were approximately $289.9 million and $297.5 million as of 
December 31, 2019 and 2018, respectively. Our net cash position after 
considering the impact of settlement receivables and settlement liabilities was 
approximately $126.1 million and $45.7 million as of December 31, 2019 and 
2018, respectively. Our net cash available after considering the net cash 
position and undrawn amounts available under our Revolving Credit Facility was 
approximately $161.1 million and $80.7 million as of December 31, 2019 and 
December 31, 2018, respectively.

Cash Flows Cash flows provided by operating activities were approximately $84.9 
million, $294.3 million, and $96.3 million for the years ended December 31, 
2019, 2018, and 2017, respectively. Cash flows provided by operating activities 
decreased by approximately $209.4 million for the year ended December 31, 2019, 
as compared to the prior year period, primarily attributable to the changes in 
working capital associated with settlement receivables and settlement 
liabilities from our FinTech segment. Cash flows provided by operating 
activities increased by approximately $198.0 million for the year ended 
December 31, 2018, as compared to the prior year period. This was primarily 
attributable to the changes in working capital associated with settlement 
receivables and settlement liabilities from our FinTech segment.

Cash flows used in investing activities were approximately $166.3 million, 
$123.4 million, and $109.8 million for the years ended December 31, 2019, 2018, 
and 2017, respectively. Cash flows used in investing activities increased by 
approximately $43.0 million for the year ended December 31, 2019, as compared 
to the prior year period, primarily attributable to the acquisition of certain 
player loyalty related assets for our FinTech segment and an increase in 
capital expenditures. Cash flows used in investing activities increased by 
approximately $13.6 million for the year ended December 31, 2018, as compared 
to the prior year period. This was primarily attributable to an increase in 
capital expenditures, higher placement fee arrangements in our Games segment, 
and decreased sales of fixed assets. Cash flows provided by financing 
activities were approximately $77.6 million, $11,000, and $22.4 million for the 
year ended December 31, 2019, 2018, and 2017 respectively. Cash flows provided 
by financing activities increased by approximately $77.6 million in the year 
ended December 31, 2019, as compared to the prior year period, primarily due to 
issuance and sale of our common stock under the automatic shelf registration 
statement and proceeds from the exercise of stock options, partially offset by 
repayments of our credit facility. Cash flows provided by financing activities 
decreased by approximately $22.4 million in the year ended December 31, 2018, 
as compared to the prior period, primarily attributable to fewer debt 
restructuring activities completed in 2018.

Other Liquidity Needs and Resources We need cash to support our foreign 
operations. Depending on the jurisdiction and the treaty between different 
foreign jurisdictions, our applicable withholding tax rates could vary 
significantly. If we expand our business into new foreign jurisdictions, we 
will rely on treaty-favored cross-border transfers of funds, the cash generated 
by our operations in those foreign jurisdictions, or alternate sources of 
working capital.

Off-Balance Sheet Arrangements We have commercial arrangements with third-party 
vendors to provide cash for certain of our ATMs. For the use of these funds, we 
pay a cash usage fee on either the average daily balance of funds utilized 
multiplied by a contractually defined cash usage rate or the amounts supplied 
multiplied by a contractually defined cash usage rate. These cash usage fees, 
reflected as interest expense within the Statements of Operations, were 
approximately $7.2 million, $7.0 million, and $4.9 million for the years ended 
December 31, 2019, 2018, and 2017, respectively. We are exposed to interest 
rate risk to the extent that the applicable federal funds rate increases. Under 
these agreements, the currency supplied by third-party vendors remain their 
sole property until the funds are dispensed. As these funds are not our assets, 
supplied cash is not reflected on our Balance Sheets. The outstanding balances 
of ATM cash utilized by us from the third-party vendors were approximately 
$292.6 million and $224.7 million as of December 31, 2019 and 2018, 
respectively. Our primary commercial arrangement, the Contract Cash Solutions 
Agreement, as amended, with Wells Fargo Bank, N.A. provides us with cash in the 
maximum amount of $300.0 million with the ability to increase the amount by 
$75.0 million over a 5-day period for special occasions, such as the period 
around New Year’s Day. The agreement currently expires on June 30, 2022 and 
will automatically renew for additional one-year periods unless either party 
provides a 90-day written notice of its intent not to renew. We are responsible 
for any losses of cash in the ATMs under this agreement and we self-insure for 
this risk. We incurred no material losses related to this self-insurance for 
the years ended December 31, 2019, 2018, and 2017.

Effects of Inflation Our monetary assets that primarily consist of cash, 
receivables, inventory, as well as our non-monetary assets that are mostly 
comprised of goodwill and other intangible assets, are not significantly 
affected by inflation. We believe that replacement costs of equipment, 
furniture, and leasehold improvements will not materially affect our 
operations. However, the rate of inflation affects our operating expenses, such 
as those for salaries and benefits, armored carrier expenses, 
telecommunications expenses, and equipment repair and maintenance services, 
which may not be readily recoverable in the financial terms under which we 
provide our Games and FinTech products and services to gaming establishments.

Quantitative and Qualitative Disclosures about Market Risk. In the normal 
course of business, we are exposed to foreign currency exchange risk. We 
operate and conduct business in foreign countries and, as a result, are exposed 
to movements in foreign currency exchange rates. Our exposure to foreign 
currency exchange risk related to our foreign operations is not material to our 
results of operations, cash flows, or financial condition. At present, we do 
not hedge this risk; however, we continue to evaluate such foreign currency 
translation exposure. In the normal course of business, we have commercial 
arrangements with third-party vendors to provide cash for certain of our ATMs. 
Under the terms of these agreements, we pay a monthly cash usage fee based upon 
the target federal funds rate. We are, therefore, exposed to interest rate risk 
to the extent that the applicable federal funds rate increases. The outstanding 
balance of ATM cash utilized by us from third-party vendors was approximately 
$292.6 million as of December 31, 2019; therefore, each 100 basis points 
increase in the target federal funds rate would have approximately a $2.9 
million impact on income before tax over a 12-month period. The Credit 
Facilities bear interest at rates that can vary over time. We have the option 
of having interest on the outstanding amounts under the Credit Facilities paid 
using a base rate or LIBOR. We have historically elected to pay interest based 
on LIBOR, and we expect to continue to do so for various maturities. The 
weighted average interest rate on the Credit Facilities was 5.26% for the year 
ended December 31, 2019. Based upon the outstanding balance on the Credit 
Facilities of approximately $749.0 million as of December 31, 2019, each 100 
basis points increase in the applicable LIBOR would have approximately a $7.5 
million impact on interest expense over a 12-month period. The interest rate 
for the 7.50% Senior Unsecured Notes due 2025 is fixed; therefore, an increase 
in LIBOR rates does not impact the related interest expense. At present, we do 
not hedge the risk related to the changes in the interest rate; however, we 
continue to evaluate such interest rate exposure.

We continue to evaluate the potential impact of the eventual replacement of the 
LIBOR benchmark interest rate, which is set to phase out by the end of 2021. 
Although we are not able to predict what will become a widely accepted 
benchmark in place of LIBOR, or what the exact impact of such a possible 
transition to such benchmark may be on our business, financial condition, and 
results of operations, our current expectation is this transition will not have 
a material impact on our business or results of operations.


EVERI HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND 
COMPREHENSIVE INCOME (LOSS)

BUSINESS Everi Holdings Inc. (“Everi Holdings,” or “Everi”) is a holding 
company, the assets of which are the issued and outstanding shares of capital 
stock of each of Everi Payments Inc. (“Everi FinTech” or “FinTech”) and Everi 
Games Holding Inc., which owns all of the issued and outstanding shares of 
capital stock of Everi Games Inc. (“Everi Games” or “Games”). Unless otherwise 
indicated, the terms the “Company,” “we,” “us,” and “our” refer to Everi 
Holdings together with its consolidated subsidiaries. Everi is a leading 
supplier of entertainment and technology solutions for the casino, interactive, 
and gaming industry. With a focus on both customers and players, Everi 
develops, sells, and leases games and gaming machines, gaming systems and 
services, and is an innovator and provider of core financial products and 
services, self-service player loyalty tools and promotion management software, 
and intelligence and regulatory compliance solutions. Everi’s mission is to 
provide casino operators with games that facilitate memorable player 
experiences, offer secure financial transactions for casinos and their patrons, 
and deliver software applications and self-service tools to improve casino 
operations efficiencies and fulfill regulatory compliance requirements. Everi 
Holdings reports its results of operations within two operating segments: Games 
and FinTech. Everi Games provides gaming operators with gaming technology 
products and services, including: (a) gaming machines, primarily comprising 
Class II and Class III slot machines, including TournEvent® machines, placed 
under participation or fixed-fee lease arrangements or sold to casino 
customers; (b) TournEvent® system software, licenses, and ancillary equipment; 
(c) providing and maintaining the central determinant systems for the video 
lottery terminals (“VLTs”) installed in the State of New York and similar 
technology in certain tribal jurisdictions; (d) business-to-consumer (“B2C”) 
and business-to-business (“B2B”) interactive gaming activities; and (e) 
managing our TournEvent of Champions® national slot tournament. Everi FinTech 
provides gaming operators with financial technology products and services, 
including: (a) services and equipment that facilitate casino patron’s 
self-service access to cash at gaming facilities via Automated Teller Machine 
(“ATM”) cash withdrawals, credit card cash access transactions and 
point-of-sale (“POS”) debit card purchase and cash access transactions; (b) 
check warranty services; (c) self-service player loyalty enrollment and 
marketing equipment, including tools and promotion management software; (d) 
software and services that improve credit decision making, automate cashier 
operations, and enhance patron marketing activities for gaming establishments; 
(e) equipment that provides cash access and other cash handling 
efficiency-related services; and (f) compliance, audit, and data solutions.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation The consolidated financial statements include the 
accounts of the Company. All intercompany transactions and balances have been 
eliminated in consolidation. Business Combinations When we acquire a business, 
we recognize the assets acquired and the liabilities assumed, at their 
acquisition date fair values. Goodwill is measured and recognized as the excess 
of consideration transferred over the net of the acquisition date fair values 
of the assets acquired and the liabilities assumed. Significant estimates and 
assumptions are required to value assets acquired and liabilities assumed at 
the acquisition date as well as contingent consideration, where applicable. 
These estimates are preliminary and typically include the calculation of an 
appropriate discount rate and projection of the cash flows associated with each 
acquired asset over its estimated useful life. As a result, up to one year from 
the acquisition date, the Company may record adjustments to the assets acquired 
and liabilities assumed with the corresponding offset to goodwill (referred to 
as the measurement period). In addition, deferred tax assets, deferred tax 
liabilities, uncertain tax positions, and tax related valuation allowances 
assumed in connection with a business combination are initially estimated as of 
the acquisition date. We reevaluate these items quarterly based upon facts and 
circumstances that existed as of the acquisition date and any adjustments to 
its preliminary estimates are recorded to goodwill, in the period of 
identification, if identified within the measurement period.

Upon the conclusion of the measurement period or final determination of the 
values of assets acquired or liabilities assumed, whichever comes first, any 
subsequent adjustments are recorded to the Statements of Operations. Cash and 
Cash Equivalents Cash and cash equivalents include cash and balances on deposit 
in banks and financial institutions. We consider highly liquid investments with 
maturities of three months or less at the time of purchase to be cash and cash 
equivalents. Such balances generally exceed the federal insurance limits; 
however, we periodically evaluate the creditworthiness of these institutions to 
minimize risk.

ATM Funding Agreements We obtain all of the cash required to operate our ATMs 
through various ATM Funding Agreements. Some gaming establishments provide the 
cash utilized within the ATM (“Site-Funded”). The Site-Funded receivables 
generated for the amount of cash dispensed from transactions performed at our 
ATMs are owned by us and we are liable to the gaming establishment for the face 
amount of the cash dispensed. In our Balance Sheets, the amount of the 
receivable for transactions processed on these ATM transactions is included 
within settlement receivables and the amount due to the gaming establishment 
for the face amount of dispensing transactions is included within settlement 
liabilities. For the non-Site-Funded locations, we enter into commercial 
arrangements with third party vendors to provide us the currency needed for 
normal operating requirements for our ATMs. For the use of these funds, we pay 
a cash usage fee based upon the target federal funds rate. Under these 
agreements, the currency supplied by the third-party vendors remains the sole 
property of these suppliers until cash is dispensed, at which time the 
third-party vendors obtain an interest in the corresponding settlement 
receivable. As the cash is an asset of these suppliers, it is therefore not 
reflected on our Balance Sheets. The usage fee for the cash supplied in these 
ATMs is included as interest expense in the Statements of Operations. Our 
rationale to record cash usage fees as interest expense is primarily due to the 
similar operational characteristics to a revolving line of credit, the fact 
that the fees are calculated on a financial index, and the fees are paid for 
access to a capital resource.

Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts 
related to our trade and other receivables and notes receivable that have been 
determined to have a high risk of uncollectibility. The allowance for doubtful 
accounts represents the Company’s best estimate of the amount of credit losses 
incurred. Management reviews its accounts and notes receivable on a quarterly 
basis to determine if any receivables will potentially be uncollectible. 
Management analyzes historical collection trends and changes in our customer 
payment patterns, concentration, and creditworthiness when evaluating the 
adequacy of our allowance for doubtful accounts. Based on the information 
available, management believes the allowance for doubtful accounts is adequate; 
however, actual write-offs may exceed the recorded allowance. Settlement 
Receivables and Settlement Liabilities We provide cash settlement services to 
gaming establishments related to our cash access services, which involve the 
movement of funds between various parties involved in these types of 
transactions. We receive reimbursement from the patron’s credit or debit card 
issuing financial institution for the amount owed to the gaming establishment 
plus the fee charged to the patron. These activities result in amounts due to 
us at the end of each business day that we generally recover over the next few 
business days, which are classified as settlement receivables on our Balance 
Sheets. In addition, cash settlement services result in amounts due to gaming 
establishments for the cash disbursed to patrons through the issuance of a 
negotiable instrument or through electronic settlement for the face amount 
provided to patrons that we generally remit over the next few business days, 
which are classified as settlement liabilities on our Balance Sheets.

Warranty Receivables If a gaming establishment chooses to have a check 
warranted, it sends a request to our third-party check warranty service 
provider, asking whether it would be willing to accept the risk of cashing the 
check. If the check warranty provider accepts the risk and warrants the check, 
the gaming establishment negotiates the patron’s check by providing cash for 
the face amount of the check. If the check is dishonored by the patron’s bank 
upon presentment, the gaming establishment invokes the warranty, and the check 
warranty service provider purchases the check from the gaming establishment for 
the full check amount and then pursues collection activities on its own. In our 
Central Credit Check Warranty product under our agreement with the third-party 
service provider, we receive all of the check warranty revenue. We are exposed 
to risk for the losses associated with any warranted items that cannot be 
collected from patrons issuing the items. Warranty receivables are defined as 
any amounts paid by the third-party check warranty service provider to gaming 
establishments to purchase dishonored checks. Additionally, we pay a fee to the 
third-party check warranty service provider for its services. The warranty 
receivables amount is recorded in trade and other receivables, net on our 
Balance Sheets. On a monthly basis, the Company evaluates the collectability of 
the outstanding balances and establishes a reserve for the face amount of the 
expected losses on these receivables. The warranty expense associated with this 
reserve is included within cost of revenues (exclusive of depreciation and 
amortization) on our Statements of Operations.

Inventory Our inventory primarily consists of component parts as well as 
finished goods and work-in-progress. The cost of inventory includes cost of 
materials, labor, overhead and freight. The inventory is stated at the lower of 
cost or net realizable value and accounted for using the first in, first out 
method (“FIFO”). Restricted Cash Our restricted cash primarily consists of: (a) 
funds held in connection with certain customer agreements; (b) deposits held in 
connection with a sponsorship agreement; (c) WAP-related restricted funds; and 
(d) Internet-related cash access activities. The following table provides a 
reconciliation of cash, cash equivalents, and restricted cash reported within 
the Balance Sheets that sum to the total of the same such amounts shown in the 
statement of cash flows.

Property and Equipment Property and equipment, which includes leased assets, 
are stated at cost, less accumulated depreciation, and are computed using the 
straight-line method over the lesser of the estimated life of the related 
assets, generally two to five years. Player terminals and related components 
and equipment are included in our rental pool. The rental pool can be further 
delineated as “rental pool – deployed,” which consists of assets deployed at 
customer sites under participation arrangements, and “rental pool – 
undeployed,” which consists of assets held by us that are available for 
customer use. Rental pool – undeployed consists of previously deployed units 
currently back with us to be refurbished awaiting re-deployment. Routine 
maintenance of property, equipment and leased gaming equipment is expensed in 
the period incurred, while major component upgrades are capitalized and 
depreciated over the estimated remaining useful life of the component. Sales 
and retirements of depreciable property are recorded by removing the related 
cost and accumulated depreciation from the accounts. Gains or losses on sales 
and retirements of property are reflected in our Statements of Operations. 
Property, equipment and leased assets are reviewed for impairment whenever 
events or circumstances indicate that their carrying amounts may not be 
recoverable. Impairment is indicated when future cash flows, on an undiscounted 
basis, do not exceed the carrying value of the asset. Placement Fee and 
Development Agreements We enter into placement fee and, to a certain extent, 
development agreements to provide financing for the expansion of existing 
facilities, or for new gaming facilities. Funds provided under placement fee 
agreements are not reimbursed, while funds provided under development 
agreements are reimbursed to us, in whole, or in part. In return, the facility 
dedicates a percentage of its floor space to placement of our player terminals, 
and we receive a fixed percentage of those player terminals’ hold amounts per 
day over the term of the agreement, which is generally from 12 to 83 months. 
Certain of the agreements contain player terminal performance standards that 
could allow the facility to reduce a portion of our guaranteed floor space. In 
addition, certain development agreements allow the facilities to buy out floor 
space after advances that are subject to repayment have been repaid. The 
agreements typically provide for a portion of the amounts retained by the 
gaming facility for their share of the operating profits of the facility to be 
used to repay some or all of the advances recorded as notes receivable.

Goodwill Goodwill represents the excess of the purchase price over the 
identifiable tangible and intangible assets acquired plus liabilities assumed 
arising from business combinations. We test for impairment annually on a 
reporting unit basis, at the beginning of our fourth fiscal quarter and between 
annual tests if events and circumstances indicate it is more likely than not 
that the fair value of a reporting unit is less than its carrying amount. The 
annual impairment test is completed using either: a qualitative “Step 0” 
assessment based on reviewing relevant events and circumstances; or a 
quantitative “Step 1” assessment, which determines the fair value of the 
reporting unit, using both an income approach that discounts future cash flows 
based on the estimated future results of our reporting units and a market 
approach that compares market multiples of comparable companies to determine 
whether or not any impairment exists. If the fair value of a reporting unit is 
less than its carrying amount, we will use the “Step 1” assessment to determine 
the impairment. The annual evaluation of goodwill requires the use of estimates 
about future operating results of each reporting unit to determine its 
estimated fair value. Changes in forecasted operations can materially affect 
these estimates, which could materially affect our results of operations. The 
estimates of fair value require significant judgment and are based on 
assumptions we determined to be reasonable; however, that are unpredictable and 
inherently uncertain, including, estimates of future growth rates, operating 
margins, and assumptions about the overall economic climate as well as the 
competitive environment for our reporting units. There can be no assurance that 
our estimates and assumptions made for purposes of our goodwill testing as of 
the time of testing will prove to be accurate predictions of the future. If our 
assumptions regarding business plans, competitive environments or anticipated 
growth rates are not correct, we may be required to record goodwill impairment 
charges in future periods, whether in connection with our next annual 
impairment testing, or earlier, if an indicator of an impairment is present 
prior to our next annual evaluation. Our reporting units are identified as 
operating segments or one level below. Reporting units must: (a) engage in 
business activities from which they earn revenues and incur expenses; (b) have 
operating results that are regularly reviewed by our segment management to 
ascertain the resources to be allocated to the segment and assess its 
performance; and (c) have discrete financial information available. As of 
December 31, 2019, our reporting units included: Games, Cash Access Services, 
Kiosk Sales and Service, Central Credit Services, Compliance Sales and 
Services, and Player Loyalty Sales and Services.

Other Intangible Assets Other intangible assets are stated at cost, less 
accumulated amortization, and are computed primarily using the straight-line 
method. Other intangible assets consist primarily of: (a) customer contracts 
(rights to provide Games and FinTech services to gaming establishment 
customers), developed technology, trade names and trademarks, and contract 
rights acquired through business combinations; and (b) capitalized software 
development costs. Customer contracts require us to make renewal assumptions, 
which impact the estimated useful lives of such assets. Capitalized software 
development costs require us to make certain judgments as to the stages of 
development and costs eligible for capitalization. Capitalized software costs 
placed in service are amortized over their useful lives, generally not to 
exceed five years. We review intangible assets whenever events or changes in 
circumstances indicate that the carrying amount of an asset may not be 
recoverable. Such events or circumstances include, but are not limited to, a 
significant decrease in the fair value of the underlying business or market 
price of the asset, a significant adverse change in legal factors or business 
climate that could affect the value of an asset, or a current period operating 
or cash flow loss combined with a history of operating or cash flow losses. We 
group intangible assets for impairment analysis at the lowest level for which 
identifiable cash flows are largely independent of the cash flows of other 
assets and liabilities. Recoverability of definite lived intangible assets is 
measured by a comparison of the carrying amount of the asset to future net cash 
flows expected to be generated by the asset, on an undiscounted basis and 
without interest or taxes. Any impairment to be recognized is measured by the 
amount by which the carrying amount of the assets exceeds the fair value of the 
assets. Debt Issuance Costs Debt issuance costs incurred in connection with 
long-term borrowings are capitalized and amortized to interest expense based 
upon the related debt agreements using the straight-line method, which 
approximates the effective interest method. Debt issuance costs related to 
line-of-credit arrangements are included in other assets, non-current, on our 
Balance Sheets. All other debt issuance costs are included as 
contra-liabilities in long-term debt.

Revenue Recognition Overview The Company adopted ASC Topic 606, Revenue from 
Contracts with Customers (“ASC 606”), on January 1, 2018 using the modified 
retrospective method. The reported results for the years ended December 31, 
2019 and 2018 reflect the application of ASC 606, while the reported results 
for the year ended December 31, 2017 were prepared under ASC Topic 605, Revenue 
Recognition (“ASC 605”). In addition, certain of our revenue streams are 
recognized based on the criteria set forth in ASC 842, Leases (“ASC 842”). We 
recognize revenue upon transferring control of goods or services to our 
customers in an amount that reflects the consideration we expect to receive in 
exchange for those goods or services. We enter into contracts with customers 
that include various performance obligations consisting of goods, services, or 
combinations of goods and services. Timing of the transfer of control varies 
based on the nature of the contract. We recognize revenue net of any sales and 
other taxes collected from customers, which are subsequently remitted to 
governmental authorities and are not included in revenues or operating 
expenses. We measure revenue based on the consideration specified in a contract 
with a customer and adjusted, as necessary. We evaluate the composition of our 
revenues to ensure compliance with SEC Regulation S-X Section 210.5-3, which 
requires us to separately present certain categories of revenues that exceed 
the quantitative threshold on our Statements of Operations.

Collectability To assess collectability, we determine whether it is probable 
that we will collect substantially all of the consideration to which we are 
entitled in exchange for the goods and services transferred to the customer in 
accordance with the terms and conditions of the contract. In connection with 
these procedures, we evaluate the customer using internal and external 
information available, including, but not limited to, research and analysis of 
our credit history with the customer. Based on the nature of our transactions 
and historical trends, we determine whether our customers have the ability and 
intention to pay the amounts of consideration when they become due to identify 
potentially significant credit risk exposure.

Contract Combinations - Multiple Promised Goods and Services Our contracts may 
include various performance obligations for promises to transfer multiple goods 
and services to a customer, especially since our Games and FinTech businesses 
may enter into multiple agreements with the same customer that meet the 
criteria to be combined for accounting purposes under ASC 606. When this 
occurs, a Stand-Alone Selling Price (“SSP”) will be determined for each 
performance obligation in the combined arrangement, and the consideration will 
be allocated between the respective performance obligations. The SSP of our 
goods and services is generally determined based on observable prices, an 
adjusted market assessment approach, or an expected cost plus margin approach. 
We utilize a residual approach only when the SSP for performance obligations 
with observable prices has been established and the remaining performance 
obligation in the contract with a customer does not have an observable price as 
it is uncertain or highly variable and, therefore, is not discernible. We use 
our judgment to analyze the nature of the promises made and determine whether 
each is distinct or should be combined with other promises in the contract 
based on the level of integration and interdependency between the individual 
deliverables.

Disaggregation of Revenues We disaggregate revenues based on the nature and 
timing of the cash flows generated by such revenues as presented in “Note 18 — 
Segment Information.”

Outbound Freight Costs, Installation and Training Upon transferring control of 
goods to a customer, the shipping and handling costs in connection with sale 
transactions are generally accounted for as fulfillment costs and included in 
cost of revenues. Our performance of installation and training services 
relating to the sales of gaming equipment and systems and FinTech equipment 
does not modify the software or hardware in those equipment and systems. Such 
installation and training services are generally immaterial in the context of 
the contract; and therefore, such items do not represent a separate performance 
obligation. Costs to Acquire a Contract with a Customer We typically incur 
incremental costs to acquire customer contracts in the form of sales 
commissions; however, because the expected benefit from these contracts is one 
year or less, we expense these amounts as incurred.

Contract Balances Since our contracts may include multiple performance 
obligations, there is often a timing difference between cash collections and 
the satisfaction of such performance obligations and revenue recognition. Such 
arrangements are evaluated to determine whether contract assets and liabilities 
exist. We generally record contract assets when the timing of cash collections 
differs from when revenue is recognized due to contracts containing specific 
performance obligations that are required to be met prior to a customer being 
invoiced. We generally record contract liabilities when cash is collected in 
advance of us satisfying performance obligations, including those that are 
satisfied over a period of time. Balances of our contract assets and contract 
liabilities may fluctuate due to timing of cash collections.

The current portion of contract assets is included within trade and other 
receivables, net and the non-current portion is included within other 
receivables in our Balance Sheets. The current portion of contract liabilities 
is included within accounts payable and accrued expenses, and the non-current 
portion is included within other accrued expenses and liabilities in our 
Balance Sheets. We recognized approximately $14.2 million and $11.4 million in 
revenue that was included in the beginning contract liability balance during 
2019 and 2018, respectively.

Games Revenues Our products and services include electronic gaming devices, 
such as Native American Class II offerings and other electronic bingo products, 
Class III slot machine offerings, VLTs, B2C and B2B interactive gaming 
activities, accounting and central determinant systems, and other back office 
systems. We conduct our Games segment business based on results generated from 
the following major revenue streams: (a) Gaming Operations; (b) Gaming 
Equipment and Systems; and (c) Gaming Other. Gaming Operations We primarily 
provide: (a) leased gaming equipment, both Class II and Class III offerings, on 
a participation or a daily fixed-fee basis, including standard games and 
hardware and premium games and hardware, inclusive of local-area progressive, 
wide-area progressive (“WAP”), and TournEvent® machines; (b) accounting and 
central determinant systems; and (c) interactive gaming activities. We evaluate 
the recognition of lease revenues based on criteria set forth in ASC 842. Under 
these arrangements, we retain ownership of the machines installed at customer 
facilities. We recognize recurring rental income over time based on a 
percentage of the net win per day generated by the leased gaming equipment or a 
daily fixed-fee based on the timing services are provided. Such revenues are 
generated daily and are limited to the lesser of the net win per day generated 
by the leased gaming equipment or the fixed daily fee and the lease payments 
that have been collected from the lessee. Gaming operations revenues generated 
by leased gaming equipment deployed at sites under placement fee agreements 
give rise to contract rights, which are amounts recorded to intangible assets 
for dedicated floor space resulting from such agreements. The gaming operations 
revenues generated by these arrangements are reduced by the accretion of 
contract rights, which represents the related amortization of the contract 
rights recorded in connection with such agreements. Gaming operations lease 
revenues accounted for under ASC 842 are generally short-term in nature with 
payment terms ranging from 30 to 90 days. We recognized $143.2 million, $136.6 
million, and $126.1 million in lease revenues for the years ended December 31, 
2019, 2018, and 2017, respectively. Gaming operations revenues include amounts 
generated by WAP systems, which are recognized under ASC 606. WAP consists of 
linked slot machines located in multiple casino properties that are connected 
to a central system. WAP-based gaming machines have a progressive jackpot 
administered by us that increases with every wager until a player wins the top 
award combination. Casino operators pay us a percentage of the coin-in (the 
total amount wagered), a percentage of net win, or a combination of both for 
services related to the design, assembly, installation, operation, maintenance, 
administration, and marketing of the WAP offering. The gaming operations 
revenues with respect to WAP machines represent a separate performance 
obligation and we transfer control and recognize revenue over time based on a 
percentage of the coin-in, a percentage of net win, or a combination of both, 
based on the timing services are provided. These arrangements are generally 
short-term in nature with a majority of invoices payable within 30 to 90 days. 
Such revenues are presented in the Statements of Operations, net of the jackpot 
expense, which are composed of incremental amounts funded by a portion of 
coin-in from the players. At the time a jackpot is won by a player, an 
additional jackpot expense is recorded in connection with the base seed amount 
required to fund the minimum level as set forth in the WAP arrangements with 
the casino operators. Gaming operations also include revenues generated under 
our arrangement to provide the New York State Gaming Commission (the “NYSGC”) 
with a central determinant monitoring and accounting system for the VLTs in 
operation at licensed State of New York gaming facilities. Pursuant to our 
agreement with the NYSGC, we receive a portion of the network-wide net win 
(generally, cash-in less prizes paid) per day in exchange for provision and 
maintenance of the central determinant system and recognize revenue over time, 
based on the timing services are provided. We also provide the central 
determinant system technology to Native American tribes in other licensed 
jurisdictions, for which we receive a portion of the revenue generated from the 
VLTs connected to the system. These arrangements are generally short-term in 
nature with payments due monthly. Gaming operations revenues include amounts 
generated by our interactive offering comprised of B2C and B2B activities. Our 
B2C operations offer games directly to consumers for play with virtual 
currency, which can be purchased through our web and mobile applications. 
Control transfers, and we recognize revenues from player purchases of virtual 
currency as it is consumed for game play, which is based on a historical data 
analysis. Our B2B operations provide games to our business customers, including 
both regulated real money and social casinos, which offer the games to 
consumers on their apps. Our B2B arrangements primarily provide access to our 
game content, and revenue is recognized over time as the control transfers upon 
our business partners’ daily access to such content based on either a flat fee 
or revenue share arrangements with the social and regulated real money casinos, 
based on the timing services are provided. Gaming Equipment and Systems Gaming 
equipment and systems revenues are derived from the sale of some combination 
of: (a) gaming equipment and player terminals, including TournEvent® machines; 
(b) game content; (c) license fees; and (d) ancillary equipment, such as 
signage and lighting packages. Such arrangements are predominately short-term 
in nature with payment terms ranging from 30 to 180 days, and with certain 
agreements providing for extended payment terms up to 39 months. Each contract 
containing extended payment terms over a period of 12 months is evaluated for 
the presence of a financing component; however, our contracts generally do not 
contain a financing component that has been determined to be significant to the 
contract. Distinct and thus, separately identifiable performance obligations 
for gaming equipment and systems arrangements include gaming equipment, player 
terminals, content, system software, license fees, ancillary equipment, or 
various combinations thereof. Gaming equipment and systems revenues are 
recognized at a point in time when control of the promised goods and services 
transfers to the customer, which is generally upon shipment or delivery 
pursuant to the terms of the contract. The performance obligations are 
generally satisfied at the same time or within a short period of time. Gaming 
Other Gaming other revenues are generated from fees paid by casino customers 
that participate in our TournEvent of Champions® national slot tournament. 
Casinos, in partnership with Everi, host slot tournaments, in which winners of 
the local and regional tournaments throughout the year then participate in a 
national tournament that results in the determination of a final champion. 
Revenues are recognized as earned over a period of time, based on the timing 
services are provided. These arrangements are generally short-term in nature 
with payment terms ranging from 30 to 90 days.

FinTech Revenues Cash Access Services Cash access services revenues are 
generally comprised of the following distinct performance obligations: cash 
advance, ATM, and check services. We do not control the cash advance and ATM 
services provided to a customer and, therefore, we are acting as an agent whose 
performance obligation is to arrange for the provision of these services. Our 
cash access services involve the movement of funds between the various parties 
associated with cash access transactions and give rise to settlement 
receivables and settlement liabilities, both of which are settled in days 
following the transaction. Cash advance revenues are primarily comprised of 
transaction fees assessed to gaming patrons in connection with credit card cash 
access and POS debit card cash access transactions. Such fees are primarily 
based on a combination of a fixed amount plus a percentage of the face amount 
of the credit card cash access or POS debit card cash access transaction 
amount. In connection with these types of transactions, we report certain 
direct costs incurred as reductions to revenues on a net basis, which generally 
include: (a) commission expenses payable to casino operators; (b) interchange 
fees payable to the network associations; and (c) processing and related costs 
payable to other third-party partners.

ATM revenues are primarily comprised of transaction fees in the form of 
cardholder surcharges assessed to gaming patrons in connection with ATM cash 
withdrawals at the time the transactions are authorized and reverse interchange 
fees paid to us by the patrons’ issuing banks. The cardholder surcharges 
assessed to gaming patrons in connection with ATM cash withdrawals are 
currently a fixed dollar amount and not a percentage of the transaction amount. 
In connection with these types of transactions, we report certain direct costs 
incurred as reductions to revenues on a net basis, which generally include: (a) 
commission expenses payable to casino operators; (b) interchange fees payable 
to the network associations; and (c) processing and related costs payable to 
other third-party partners. Check services revenues are principally comprised 
of check warranty revenues and are generally based upon a percentage of the 
face amount of checks warranted. These fees are paid to us by gaming 
establishments. For cash access services arrangements, since the customer 
simultaneously receives and consumes the benefits as the performance 
obligations occur, we recognize revenues as earned over a period of time using 
an output method depicting the transfer of control to the customer based on 
variable consideration, such as volume of transactions processed with 
variability generally resolved in the reporting period.

Equipment Equipment revenues are derived from the sale of our cash access and 
loyalty kiosks and related equipment and are accounted for under ASC 606, 
unless such transactions meet definition of a sales type or direct financing 
lease which are accounted for under ASC 842. Revenues are recognized at a point 
in time when control of the promised goods and services transfers to the 
customer generally upon shipment or delivery pursuant to the terms of the 
contract. The sales contracts are generally short-term in nature with payment 
terms ranging from 30 to 90 days, while certain agreements provide for extended 
payment terms of up to 60 months. Each contract containing extended payment 
terms over a period of 12 months is evaluated for the presence of a financing 
component; however, our contracts generally do not contain a financing 
component that has been determined to be significant to the contract. The cash 
access kiosk and related equipment sales contracts accounted for under ASC 842 
were approximately $2.6 million in aggregate revenue for the year ended 
December 31, 2019. We did not have any cash access kiosk and related equipment 
sales transactions that qualified for sales type lease accounting treatment in 
2018 or 2017. Information Services and Other Information services and other 
revenues include amounts derived from our cash access, loyalty kiosk, 
compliance, and loyalty related revenue streams from the sale of: (a) software 
licenses, software subscriptions, professional services, and certain other 
ancillary fees; (b) service-related fees associated with the sale, 
installation, training, and maintenance of equipment directly to our customers 
under contracts, which are generally short-term in nature with payment terms 
ranging from 30 to 90 days, secured by the related equipment; (c) credit 
worthiness-related software subscription services that are based upon either a 
flat monthly unlimited usage fee or a variable fee structure driven by the 
volume of patron credit histories generated; and (d) ancillary marketing, 
database, and Internet-based gaming-related activities. Our software represents 
a functional right-to-use license, and the revenues are recognized as earned at 
a point in time. Subscription services are recognized over a period of time 
using an input method based on time elapsed as we transfer the control ratably 
by providing a stand-ready service. Professional services, training, and other 
revenues are recognized over a period of time as services are provided, thereby 
reflecting the transfer of control to the customer.

Cost of Revenues (Exclusive of Depreciation and Amortization) The cost of 
revenues (exclusive of depreciation and amortization) represents the direct 
costs required to perform revenue generating transactions. The costs included 
within cost of revenues (exclusive of depreciation and amortization) are 
inventory and related costs associated with the sale of our fully integrated 
kiosks, electronic gaming machines and system sale, check cashing warranties, 
field service, and network operations personnel. Advertising, Marketing, and 
Promotional Costs We expense advertising, marketing, and promotional costs as 
incurred. Total advertising, marketing, and promotional costs, included in 
operating expenses in the Statements of Operations, were $5.0 million, $3.4 
million, and $1.1 million for the years ended December 31, 2019, 2018, and 
2017, respectively. Research and Development Costs We conduct research and 
development activities for both our Games and FinTech segments. Our Gaming 
research and development activities are primarily to develop gaming systems, 
game engines, casino data management systems, central determination and other 
electronic bingo-outcome determination systems, video lottery outcome 
determination systems, gaming platforms and gaming content, and to enhance our 
existing product lines. Our FinTech research and development activities are 
primarily to develop: (a) payments products, systems, and related capabilities 
such as security, encryption, and business rule engines that deliver 
differentiated patron experiences and integrate with our other products; (b) 
compliance products that increase efficiencies, profitability, enhance 
employee/patron relationships, and meet regulatory reporting requirements; and 
(c) loyalty products, systems, and features that attract, engage, and retain 
patrons in more intuitive and contextual ways than our competition. Research 
and development costs consist primarily of salaries and benefits, consulting 
fees, certification and testing fees. Once the technological feasibility has 
been established, the project is capitalized until it becomes available for 
general release. Research and development costs were $32.5 million, $20.5 
million, and $18.9 million for the years ended December 31, 2019, 2018, and 
2017, respectively. Income Taxes We are subject to income taxes in the United 
States as well as various states and foreign jurisdictions in which we operate. 
Due to the 2017 Tax Act, there is no U.S. federal tax on cash repatriation from 
foreign subsidiaries; however, we could be subject to foreign withholding tax 
and U.S. state income taxes. The 2017 Tax Act also subjects our foreign 
subsidiary earnings to the Global Intangible Low-Taxed Income (“GILTI”) tax 
provisions. Some items of income and expense are not reported in tax returns 
and our Financial Statements in the same year. The tax effect of such temporary 
differences is reported as deferred income taxes. Our deferred tax assets and 
liabilities are recognized for the expected future tax consequences of events 
that have been included in our Financial Statements or income tax returns. 
Deferred tax assets and liabilities are determined based upon differences 
between financial statement carrying amounts of existing assets and their 
respective tax bases using enacted tax rates expected to apply to taxable 
income in years in which those temporary differences are expected to be 
recovered or settled. The effect on the income tax provision or benefit and 
deferred tax assets and liabilities for a change in rates is recognized in the 
Statements of Operations in the period that includes the enactment date. When 
measuring deferred tax assets, certain estimates and assumptions are required 
to assess whether a valuation allowance should be established by evaluating 
both positive and negative factors in accordance with accounting guidance. This 
evaluation requires that we exercise judgment in determining the relative 
significance of each factor. The assessment of the valuation allowance involves 
significant estimates regarding future taxable income and when it is 
recognized, the amount and timing of taxable differences, the reversal of 
temporary differences and the implementation of tax-planning strategies. A 
valuation allowance is established based on the weight of available evidence, 
including both positive and negative indicators, if it is more likely than not 
that a portion, or all, of the deferred tax assets will not be realized. 
Greater weight is given to evidence that is objectively verifiable, most 
notably historical results. If we report a cumulative loss from continuing 
operations before income taxes for a reasonable period of time, this form of 
negative evidence is difficult to overcome. Therefore, we include certain 
aspects of our historical results in our forecasts of future taxable income, as 
we do not have the ability to solely rely on forecasted improvements in 
earnings to recover deferred tax assets. When we report a cumulative loss 
position, to the extent our results of operations improve, such that we have 
the ability to overcome the more likely than not accounting standard, we may be 
able to reverse the valuation allowance in the applicable period of 
determination. In addition, we rely on deferred tax liabilities in our 
assessment of the realizability of deferred tax assets if the temporary timing 
difference is anticipated to reverse

in the same period and jurisdiction and the deferred tax liabilities are of the 
same character as the temporary differences giving rise to the deferred tax 
assets. We also follow generally accepted accounting principles (“GAAP”) to 
account for uncertainty in income taxes as recognized in our Financial 
Statements. The accounting standard creates a single model to address 
uncertainty in income tax positions and prescribes the minimum recognition 
threshold a tax position is required to meet before being recognized in our 
Financial Statements. The standard also provides guidance on derecognition, 
measurement, classification, interest and penalties, accounting in interim 
periods, disclosure, and transition. Under this standard, we may recognize tax 
benefits from an uncertain position only if it is more likely than not that the 
position will be sustained upon examination by taxing authorities based on the 
technical merits of the issue. The amount recognized is the largest benefit 
that we believe has greater than a 50% likelihood of being realized upon 
settlement. Actual income taxes paid may vary from estimates depending upon 
changes in income tax laws, actual results of operations, and the final audit 
of tax returns by taxing authorities. Tax assessments may arise several years 
after tax returns have been filed. Employee Benefits Plan The Company provides 
a 401(k) Plan that allows employees to defer up to the lesser of the Internal 
Revenue Code prescribed maximum amount or 100% of their income on a pre-tax 
basis through contributions to the plan. As a benefit to employees, the Company 
matches a percentage of these employee contributions (as defined in the plan 
document). Expenses related to the matching portion of the contributions to the 
401(k) Plan were $2.6 million, $2.2 million, and $2.3 million for the years 
ended December 31, 2019, 2018, and 2017, respectively. Fair Values of Financial 
Instruments The fair value of a financial instrument represents the amount at 
which the instrument could be exchanged in a current transaction between 
willing parties, other than in a forced or liquidation sale. Fair value 
estimates are made at a specific point in time, based upon relevant market 
information about the financial instrument. The carrying amount of cash and 
cash equivalents, settlement receivables, short-term trade and other 
receivables, settlement liabilities, accounts payable, and accrued expenses 
approximate fair value due to the short-term maturities of these instruments. 
The fair value of the long-term trade and loans receivable is estimated by 
discounting expected future cash flows using current interest rates at which 
similar loans would be made to borrowers with similar credit ratings and 
remaining maturities. As of December 31, 2019 and December 31, 2018, the fair 
value of notes receivable, net, approximated the carrying value due to 
contractual terms of trade and loans receivable generally being under 24 
months. The fair value of our borrowings is estimated based on various inputs 
to determine a market price, such as: market demand and supply, size of 
tranche, maturity, and similar instruments trading in more active markets.

The term loan and senior unsecured notes were reported at fair value using 
Level 2 inputs based on quoted market prices for these securities. Foreign 
Currency Translation Foreign currency denominated assets and liabilities for 
those foreign entities for which the local currency is the functional currency 
are translated into U.S. dollars based on exchange rates prevailing at the end 
of each year. Revenues and expenses are translated at average exchange rates 
during the year. The effects of foreign exchange gains and losses arising from 
these translations are included as a component of other comprehensive income on 
the Statements of Operations. Translation adjustments on intercompany balances 
of a long-term investment nature are recorded as a component of accumulated 
other comprehensive loss on our Balance Sheets.

Use of Estimates We have made estimates and judgments affecting the amounts 
reported in these financial statements and the accompanying notes in conformity 
with GAAP. The actual results may differ from these estimates. Earnings 
Applicable to Common Stock Basic earnings per share is calculated by dividing 
net income by the weighted average number of common shares outstanding for the 
period. Diluted earnings per share reflect the effect of potential common stock 
resulting from assumed stock option exercises and vesting of restricted stock 
unless it is anti-dilutive. To the extent we report a net loss from continuing 
operations in a particular period, no potential dilution from the application 
of the treasury stock method would be applicable. Stock-Based Compensation 
Stock-based compensation results in a cost that is measured at fair value on 
the grant date of an award. Generally, we issue grants that are classified as 
equity awards. However, if we issue grants that are considered liability 
awards, they are remeasured at fair value at the end of each reporting period 
until settlement with changes being recognized as stock-based compensation cost 
and a corresponding adjustment recorded to the liability, either immediately or 
during the remaining service period depending on the vested status of the 
award. Generally, with respect to stock option award granted under our plans, 
they expire 10 years from the date of grant with the exercise price based on 
the closing market price of our common stock on the date of the grant. Our 
time-based stock option awards are measured at fair value on the grant date 
using the Black Scholes model. Our restricted stock awards, restricted stock 
units, and performance-based stock units are measured at fair value based on 
the closing stock price on the grant date. The stock-based compensation cost is 
recognized on a straight-line basis over the vesting period of the awards. Our 
market-based option awards granted in 2017 under our 2014 Plan (defined herein) 
and 2012 Plan (defined herein) vest at a rate of 25% per year on each of the 
first four anniversaries of the grant date, provided that as of the vesting 
date for each vesting tranche, the closing price of the Company’s shares on the 
New York Stock Exchange is at least a specified price hurdle, defined as a 25% 
premium for 2017 to the closing stock price on the grant date. If the price 
hurdle is not met as of the vesting date for a vesting tranche, then the vested 
tranche shall vest and become vested shares on the last day of a period of 30 
consecutive trading days during which the closing price is at least the price 
hurdle. The market-based option awards are measured at fair value on the grant 
date using a lattice model based on the median time horizon from the date of 
grant for these options to the vesting date for those paths that achieved the 
target threshold(s). The stock-based compensation cost is recognized on a 
straight-line basis over the median vesting periods calculated under such 
valuation model. Forfeiture amounts are estimated at the grant date for stock 
awards and are updated periodically based on actual results, to the extent they 
differ from the estimates. Acquisition-Related Costs We recognize a liability 
for acquisition-related costs when the expense is incurred. Acquisition-related 
costs include, but are not limited to: financial advisory, legal and debt fees; 
accounting, consulting, and professional fees associated with due diligence, 
valuation, and integration; severance; and other related costs and adjustments. 
Reclassification of Prior Year Balances Reclassifications were made to the 
prior-period Financial Statements to conform to the current period 
presentation, except for the adoption impact of the application of ASC 606 
utilizing the modified retrospective transition method. Recent Accounting 
Guidance Recently Adopted Accounting Guidance On January 1, 2019, we adopted 
ASU No. 2018-07, which expands the scope of Topic 718, Compensation — Stock 
Compensation (which currently only includes share-based payments to employees) 
to include share-based payments issued to non-employees for goods or services. 
Consequently, the accounting for share-based payments to non-employees and 
employees are substantially aligned. The adoption of this ASU did not have a 
material impact on our Financial Statements.

On January 1, 2019, we adopted ASU No. 2018-02, which provides an option to 
reclassify stranded tax effects within accumulated other comprehensive income 
to retained earnings in each period in which the effect of the change in the 
U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act of 2017 (or 
portion thereof) is recorded. The adoption of this ASU did not have a material 
impact on our Financial Statements. On January 1, 2019, we adopted the new 
lease accounting guidance, ASC 842. The guidance establishes a right-of-use 
(“ROU”) model that requires a lessee to record a lease ROU asset and a lease 
liability on the balance sheet for all leases with terms longer than 12 months. 
We made an accounting policy election where leases that are 12 months or less 
and do not include an option to purchase the underlying asset are not recorded 
on the balance sheet, similar to the operating lease accounting under ASC 840. 
We adopted the guidance using a modified retrospective approach utilizing the 
transition relief expedient method, whereby we continue to apply existing lease 
guidance during the comparative periods and apply the new lease requirements 
through a cumulative-effect adjustment in the period of adoption, rather than 
in the earliest period presented without adjusting historical financial 
statements. We elected the package of practical expedients permitted under the 
transition guidance within the new guidance that allowed us to carry forward 
the historical lease classification. Information related to leases as of 
December 31, 2019 is presented under Topic 842, while prior period amounts are 
not adjusted and continue to be reported under legacy guidance in Topic 840. 
The most significant impact was the recognition of ROU assets and lease 
liabilities for operating leases, while our accounting for finance leases 
remained substantially unchanged.

Recent Accounting Guidance Not Yet Adopted In December 2019, the FASB issued 
ASU No. 2019-12 simplifying the accounting for income taxes by removing 
specific exceptions to the general principles in Topic 740. It also improves 
consistent application of and simplifies GAAP for other areas of Topic 740 by 
clarifying and amending existing guidance. The new standard is effective for 
fiscal years beginning after December 15, 2020, including interim periods 
within those fiscal years. We are currently evaluating the impact of adopting 
this guidance on our Financial Statements. In August 2018, the FASB issued ASU 
No. 2018-15, which aligns the requirements for capitalizing implementation 
costs incurred in a hosting arrangement that is a service contract with the 
requirements for capitalizing implementation costs incurred to develop or 
obtain internal-use software (and hosting arrangements that include an internal 
use software license). The new standard is effective for fiscal years beginning 
after December 15, 2019, including interim periods within those fiscal years. 
We are currently evaluating the impact of adopting this guidance on our 
Financial Statements; however, we do not expect it to be material. In June 
2016, the FASB issued ASU No. 2016-13, which provides updated guidance on how 
an entity should measure credit losses on financial instruments. Subsequently, 
in November 2018 the FASB issued ASU No. 2018-19, which clarified that 
receivables arising from operating leases are not within the scope of Subtopic 
326-20, but should rather be accounted for in accordance with ASC 842. The new 
standard and related amendments are effective for fiscal years beginning after 
December 15, 2019, including interim periods within those fiscal years. This 
guidance is expected to be applied using a modified retrospective approach for 
the cumulative-effect adjustment to retained earnings as of the beginning of 
the first reporting period in which the guidance is effective. This guidance 
replaces the current incurred loss measurement methodology with a current 
expected credit loss measurement methodology over the lifetime of the 
receivables. This guidance primarily impacts our trade and other receivables, 
including those related to revenues from contracts with customers that may 
contain contract assets with respect to performance obligations that are 
satisfied for which the customers have not yet been invoiced. We have completed 
our assessment of the anticipated impact of adopting this guidance from a 
segment management perspective, and our operations are not expected to be 
significantly impacted, both for short- and long-term accounts receivable: (a) 
Our FinTech business acts as a merchant of record for settlement transactions 
for our cash access related customers wherein cash is held by the Company; 
therefore, we generally have the ability to withhold the necessary funds from 
customers to satisfy the outstanding receivables associated with equipment, 
information and other products and services; and (b) Our Games business sells 
electronic gaming machines (“EGMs”) to gaming establishments on a relatively 
short-term basis and collections are reasonably certain based on historical 
experience. Furthermore, the material portion of long-term loans receivables 
balance is fully collaterized, and therefore, does not represent a risk of 
credit loss. We intend to adopt this guidance using a modified retrospective 
approach, however, we do not anticipate there being an adjustment to record in 
connection with implementing this guidance. As of December 31, 2019, other than 
what has been described above, we do not anticipate recently issued accounting 
guidance to have a significant impact on our consolidated financial statements.

LEASES We determine if a contract is, or contains, a lease at the inception, or 
modification, of a contract based on whether the contract conveys the right to 
control the use of an identified asset for a period of time in exchange for 
consideration. Control over the use of an asset is predicated upon the notion 
that a lessee has both the right to (a) obtain substantially all of the 
economic benefit from the use of the asset; and (b) direct the use of the 
asset. Operating lease ROU assets and liabilities are recognized based on the 
present value of minimum lease payments over the expected lease term at 
commencement date. Lease expense is recognized on a straight-line basis over 
the expected lease term. Our lease arrangements have both lease and non-lease 
components, and we have elected the practical expedient to account for the 
lease and non-lease elements as a single lease. Certain of our lease 
arrangements contain options to renew with terms that generally have the 
ability to extend the lease term to a range of approximately 1 to 15 years. The 
exercise of lease renewal options is generally at our sole discretion. The 
expected lease terms include options to extend or terminate the lease when it 
is reasonably certain that we will exercise such option. The depreciable life 
of leased assets and leasehold improvements are limited by the expected term of 
such assets, unless there is a transfer of title or purchase option reasonably 
certain to be exercised. Lessee We enter into operating lease agreements for 
real estate purposes that generally consist of buildings for office space and 
warehouses for manufacturing purposes. Certain of our lease agreements consist 
of rental payments that are periodically adjusted for inflation. Our lease 
agreements do not contain material residual value guarantees or material 
restrictive covenants. Our lease agreements do not generally provide explicit 
rates of interest; therefore, we use our incremental collateralized borrowing 
rate, which is based on a fully collateralized and fully amortizing loan with a 
maturity date the same as the length of the lease that is based on the 
information available at the commencement date to determine the present value 
of lease payments. Leases with an expected term of 12 months or less 
(short-term) are not accounted for on our Balance Sheets.

The amounts include approximately $13.6 million of operating lease ROU assets 
obtained in exchange for existing lease obligations due to the adoption of ASC 
842 (net of operating lease terminations occurring in 2019 in the amount of 
approximately $0.5 million), and approximately $2.5 million of operating lease 
ROU assets obtained in exchange for new lease obligations entered into during 
the year ended December 31, 2019. The amounts exclude amortization for the 
period.

Other information related to lease terms and discount rates is as follows:

Lessor We generate lease revenues primarily from our gaming operations 
activities, and the majority of our leases are month-to-month leases. Under 
these arrangements, we retain ownership of the EGMs installed at customer 
facilities. We receive recurring revenues based on a percentage of the net win 
per day generated by the leased gaming equipment or a fixed daily fee. Such 
revenues are generated daily and are limited to the lesser of the net win per 
day generated by the leased gaming equipment or the fixed daily fee and the 
lease payments that have been collected from the lessee. Certain of our leases 
have terms and conditions with options for a lessee to purchase the underlying 
assets. Refer to “Note 2 — Basis of Presentation and Summary of Significant 
Accounting Policies” for further discussion of lease revenues. The cost of 
property and equipment the Company is leasing to third-parties as of December 
31, 2019 is approximately $196.6 million, which includes accumulated 
depreciation of approximately $106.9 million. In addition, we generated lease 
revenue from sales-type leases in the FinTech segment in the amount of 
approximately $2.6 million for the year ended December 31, 2019. Our interest 
income recognized in connection with sales-type leases is immaterial.

BUSINESS COMBINATIONS The following is a summary of business combinations 
completed during the year ended December 31, 2019. Atrient, Inc. On March 8, 
2019, we acquired certain assets of Atrient, Inc. (“Atrient,” the “Seller”), a 
privately held company that develops and distributes hardware and software 
applications to gaming operators to enhance gaming patron loyalty, pursuant to 
an asset purchase agreement. This acquisition includes existing contracts with 
gaming operators, technology, and intellectual property that allow us to 
provide gaming operators with self-service enrollment, player loyalty and 
marketing equipment, a mobile application to offer a gaming operator’s patrons 
additional flexibility in accessing casino promotions, and a marketing platform 
that manages and delivers a gaming operator’s marketing programs through these 
patron interfaces. This acquisition expands our financial technology solutions 
offerings within our FinTech segment. Under the terms of the asset purchase 
agreement, we paid the Seller $20.0 million at the closing of the transaction 
and will pay an additional $10.0 million one year following the closing and 
another $10.0 million two years following the date of closing. In addition, we 
expect that an additional $10.0 million in contingent consideration will be 
earned by the Seller based upon the achievement of certain revenue targets over 
the first two years post-closing. We expect the total consideration for this 
acquisition, inclusive of the contingent consideration, to be approximately 
$50.0 million.

Cash consideration is comprised of a short-term component that is recorded in 
accounts payable and accrued expenses and a long-term component payable within 
two years recorded in other accrued expenses and liabilities of our Balance 
Sheets. The contingent consideration is comprised of a long-term component 
recorded in other accrued expenses and liabilities of our Balance Sheets. The 
transaction was recorded using the acquisition method of accounting, which 
requires, among other things, that the assets acquired and liabilities assumed 
are recognized at their respective fair values as of the closing date of the 
transaction. The excess of the fair value of the purchase consideration over 
those fair value amounts was recorded as goodwill, which will be amortized over 
a period of 15 years for tax purposes. The goodwill recognized is primarily 
attributable to the income potential from the expansion of our footprint in the 
gaming space by enhancing our existing financial technology solution portfolio 
to add new touch-points for gaming patrons at customer locations and a new 
player loyalty and marketing-focused business line, assembled workforce, among 
other strategic benefits.

The information below summarizes the amounts of identifiable assets acquired 
and liabilities assumed, which reflects an adjustment of approximately $0.3 
million from the preliminary allocation completed as of the closing date of the 
transaction. The adjustment related to Receivables acquired of approximately 
$1.8 million were short-term in nature and considered to be collectible, and 
therefore, the carrying amounts of these assets were determined to represent 
their fair values. Inventory acquired of approximately $1.3 million consisted 
of raw materials and finished goods and was fair valued based on the estimated 
net realizable value of these assets. Property and equipment acquired were not 
material in size or scope, and the carrying amounts of these assets represented 
their fair values. The operating lease ROU assets of approximately $0.2 
million, which are included in other assets in our Balance Sheets, were 
recorded at their fair values based on the present value of future lease 
payments discounted. Other intangible assets acquired of approximately $14.2 
million were comprised of customer contracts and developed technology. The fair 
value of customer contracts of approximately $9.2 million was determined by 
applying the income approach utilizing the excess earnings methodology using 
Level 3 inputs in the hierarchy with a discount rate utilized of 17%. The fair 
value of developed technology of approximately $5.0 million was determined by 
applying the income approach utilizing the relief from royalty methodology 
using Level 3 inputs with a royalty rate of 15% and a discount rate utilized of 
18%.

The financial results included in our Statements of Operations since the 
acquisition date and for the year ended December 31, 2019 reflected revenues of 
approximately $16.0 million and net income of approximately $3.9 million. We 
incurred acquisition-related costs of approximately $0.2 million for the year 
ended December 31, 2019.

Micro Gaming Technologies, Inc. On December 24, 2019, we acquired certain 
assets of Micro Gaming Technologies, Inc. (“MGT”), a privately held company 
that develops and distributes kiosks and software applications to gaming 
patrons to enhance patron loyalty, in an asset purchase agreement. The acquired 
assets consist of existing contracts with gaming operators, technology, and 
intellectual property intended to allow us to provide gaming operators with 
self-service patron loyalty functionality delivered through stand-alone kiosk 
equipment and a marketing platform that manages and delivers gaming operators 
marketing programs through these patron interfaces. This acquisition further 
expands our financial technology player loyalty offerings within our FinTech 
segment. Under the terms of the asset purchase agreement, we paid MGT $15.0 
million at the closing of the transaction and we will remit an additional $5.0 
million by April 1, 2020 with a final payment of $5.0 million two years 
following the date of closing. We expect the total consideration for this 
acquisition to be approximately $25.0 million. The acquisition did not have a 
significant impact on our results of operations or financial condition.

Cash consideration is comprised of a short-term component that is recorded in 
accounts payable and accrued expenses and a long-term component payable within 
two years recorded in other accrued expenses and liabilities of our Balance 
Sheets. The transaction was recorded using the acquisition method of 
accounting, as described above, and the goodwill will be amortized over a 
period of 15 years for tax purposes. The goodwill recognized is primarily 
attributable to the income potential from further expansion of our footprint in 
the gaming space and from enhancement of our financial technology player 
loyalty offerings and marketing-focused business line, assembled workforce, 
among other strategic benefits. The estimates and assumptions incorporated 
included the projected timing and amount of future cash flows and discount 
rates reflecting risk inherent in the future cash flows. The estimated fair 
values of assets acquired and liabilities assumed and resulting goodwill are 
subject to adjustment as the Company finalizes its purchase price accounting. 
The significant items for which a final fair value has not been determined 
include, but are not limited to: the valuation and estimated useful lives of 
intangible assets, contract liabilities, including deferred and unearned 
revenues, and deferred income taxes. We do not expect our fair value 
determinations to materially change; however, there may be differences between 
the amounts recorded at the closing date of the transaction and the final fair 
value analysis, which we expect to complete no later than the fourth quarter of 
2020.

Receivables acquired of approximately $2.8 million were short-term in nature 
and considered to be collectible, and therefore, the carrying amounts of these 
assets were determined to represent their fair values. We did not acquire a 
material amount of inventory. Property and equipment and other assets acquired 
were not material in size or scope, and the carrying amounts of these assets 
represented their fair values.

Other intangible assets acquired of approximately $16.6 million were comprised 
of customer contracts, developed technology, and non-compete agreements. The 
fair value of customer contracts of approximately $11.6 million was determined 
by applying the income approach utilizing the excess earnings methodology using 
Level 3 inputs with a discount rate utilized of 23%. The fair value of 
developed technology of approximately $4.4 million was determined by applying 
the income approach utilizing the relief from royalty methodology with a 
royalty rate of 15% and a discount rate utilized of 24%. The fair value of 
non-compete agreements of approximately $0.6 million was determined by applying 
the income approach utilizing the with and without methodology with a discount 
rate of 23%.

Total other intangible assets $ 16,600 The financial results included in our 
Statements of Operations since the acquisition date and for the year ended 
December 31, 2019 reflected revenues of approximately $0.2 million and a net 
result that was break even. We incurred MGT acquisition-related costs of 
approximately $0.1 million for the year ended December 31, 2019. The unaudited 
pro forma financial data with respect to the revenue and earnings on a 
consolidated basis as if the Atrient and MGT acquisitions occurred on January 
1, 2018 included revenues of approximately $550.8 million and $496.6 million 
and net income of approximately $16.4 million and $13.0 million for the years 
ended December 31, 2019 and 2018, respectively.

FUNDING AGREEMENTS Commercial Cash Arrangements We have commercial arrangements 
with third-party vendors to provide cash for certain of our ATMs. For the use 
of these funds, we pay a cash usage fee on either the average daily balance of 
funds utilized multiplied by a contractually defined cash usage rate or the 
amounts supplied multiplied by a contractually defined cash usage rate. These 
cash usage fees, reflected as interest expense within the Statements of 
Operations, were $7.2 million, $7.0 million, and $4.9 million for the years 
ended December 31, 2019, 2018, and 2017, respectively. We are exposed to 
interest rate risk to the extent that the applicable rates increase. Under 
these agreements, the currency supplied by third party vendors remain their 
sole property until the funds are dispensed. As these funds are not our assets, 
supplied cash is not reflected in our Balance Sheets. The outstanding balances 
of ATM cash utilized by us from the third parties were approximately $292.6 
million and $224.7 million as of December 31, 2019 and 2018, respectively. Our 
primary commercial arrangement, the Contract Cash Solutions Agreement, as 
amended, is with Wells Fargo, N.A. (“Wells Fargo”). Wells Fargo provides us 
with cash in the maximum amount of $300 million with the ability to increase 
the amount by $75 million over a 5-day period for holidays, such as the period 
around New Year’s Day. The term of the agreement expires on June 30, 2022 and 
will automatically renew for additional one-year periods unless either party 
provides a 90-day written notice of its intent not to renew. We are responsible 
for losses of cash in the ATMs under this agreement, and we self-insure for 
this type of risk. There were no material losses for the years ended December 
31, 2019, 2018, and 2017. Site-Funded ATMs We operate ATMs at certain 
customers’ gaming establishments where the gaming establishment provides the 
cash required for the ATMs’ operational needs. We are required to reimburse the 
customer for the amount of cash dispensed from these site-funded ATMs. The 
site-funded ATM liability included within settlement liabilities in the 
accompanying Balance Sheets was approximately $157.3 million and $249.6 million 
as of December 31, 2019 and 2018, respectively. Everi-Funded ATMs We enter into 
agreements with international customers for certain of our ATMs whereby we 
provide the cash required to operate the ATMs. We supplied approximately $5.5 
million and $4.8 million of our cash for these ATMs at December 31, 2019 and 
2018, respectively, which represents an outstanding balance under such 
agreements at the end of the period. Such amounts are reported within 
settlement receivables line on our Balance Sheets.

Pre-funded Cash Access Agreements Due to regulatory requirements in certain 
jurisdictions, some international gaming establishments require pre-funding of 
cash to cover the outstanding settlement amounts in order for us to provide 
cash access services to their properties. We enter into agreements with these 
gaming operators for which we supply our cash access services to their 
properties. Under these agreements, we maintain sole discretion to either 
continue or cease operations as well as discretion over the amounts pre-funded 
to the properties and may request amounts to be refunded to us, with 
appropriate notice to the operator, at any time. The initial pre-funded amounts 
and subsequent amounts from the settlement of transactions are deposited into a 
bank account that is to be used exclusively for cash access services, and we 
maintain the right to monitor the transaction activity in that account. The 
total amount of pre-funded cash outstanding was approximately $6.3 million and 
$6.1 million at December 31, 2019 and 2018, respectively, and is included in 
prepaid expenses and other assets line on our Balance Sheets.

TRADE AND OTHER RECEIVABLES Trade and other receivables represent short-term 
credit granted to customers and long-term loans receivable in connection with 
our Games and FinTech equipment and compliance products. Trade and loans 
receivables generally do not require collateral. The balance of trade and loans 
receivables consists of outstanding balances owed to us by gaming 
establishments. Other receivables include income tax receivables and other 
miscellaneous receivables.

PREPAID AND OTHER ASSETS Prepaid expenses and other assets include the balance 
of prepaid expenses, deposits, debt issuance costs on our Revolving Credit 
Facility (defined herein), restricted cash, operating lease ROU assets, and 
other assets. The current portion of these assets is included in prepaid 
expenses and other assets and the non-current portion is included in other 
assets, both of which are contained within the Balance Sheets.

GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Goodwill represents the excess of 
the purchase price over the identifiable tangible and intangible assets 
acquired plus liabilities assumed arising from business combinations. Refer to 
“Note 2 — Basis of Presentation and Summary of Significant Accounting Policies” 
for a description of how we account for goodwill, and how we measure goodwill 
for impairment.

Goodwill Testing For the goodwill impairment test conducted in 2019, we 
utilized the “Step 1” approach, which required a comparison of the carrying 
amount of each reporting unit to its estimated fair value. To estimate the fair 
value of our reporting units, we used a combination of an income valuation 
approach and a market valuation approach. The income valuation approach is 
based on a discounted cash flow (“DCF”) analysis. This method involves 
estimating the after-tax net cash flows attributable to a reporting unit and 
then discounting the after-tax net cash flows to a present value using a 
risk-adjusted discount rate. Assumptions used in the DCF require the exercise 
of significant judgment, including, but not limited to: appropriate discount 
rates and terminal values, growth rates and the amount and timing of expected 
future cash flows. The projected cash flows are based on our most recent annual 
budget and projected years thereafter. Our budgets and projected after tax net 
cash flows are based on estimates of future growth rates. We believe our 
assumptions are consistent with the plans and estimates used to manage the 
underlying businesses. The discount rates, which are intended to reflect the 
risks inherent in future after tax net cash flow projections used in the DCF 
are based on estimates of the weighted average cost of capital (“WACC”) of 
market participants relative to each respective reporting unit. The market 
valuation approach considers comparable market data based on multiples of 
revenue or earnings before interest, taxes, depreciation, and amortization 
(“EBITDA”). If the fair value of a reporting unit is less than its carrying 
amount, an impairment charge equal to the amount by which the carrying amount 
of goodwill for the reporting unit exceeds the fair value of that goodwill is 
recorded.

We had approximately $681.6 million and $640.5 million of goodwill on our 
Balance Sheets as of December 31, 2019 and 2018, respectively, resulting from 
acquisitions of other businesses. In connection with our annual goodwill 
impairment testing process for 2019 and 2018, we determined that no impairment 
adjustments were necessary. The fair value exceeded the carrying amount for 
each of the reporting units.

For the year ended December 31, 2019, the Company had $24.4 million in other 
intangible assets that had not yet been placed into service. Placement fees and 
amounts advanced in excess of those to be reimbursed by the customer for real 
property and land improvements are allocated to intangible assets and are 
generally amortized over the term of the contract, which is recorded as a 
reduction of revenue generated from the facility. In the past we have, and in 
the future, we may, by mutual agreement, amend the agreements to reduce our 
floor space at these facilities. Any proceeds received for the reduction of 
floor space are first applied against the intangible asset for that particular 
placement fee agreement, if any, and the remaining net book value of the 
intangible asset is prospectively amortized on a straight-line method over its 
remaining estimated useful life. We paid approximately $17.7 million, $22.7 
million, and $13.3 million in placement fees for the years ended December 31, 
2019, 2018, and 2017, respectively. The payments made in 2019 and 2018 included 
approximately $0.6 million and $2.1 million of imputed interest, respectively.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Refinancing and Repricing Activities On May 9, 2017 (the “Closing Date”), Everi 
FinTech, as borrower, and Everi Holdings entered into a credit agreement with 
the lenders party thereto and Jefferies Finance LLC, as administrative agent, 
collateral agent, swing line lender, letter of credit issuer, sole lead 
arranger and sole book manager (amended as described below, the “Credit 
Agreement”). The Credit Agreement provides for: (a) a $35.0 million, five-year 
senior secured revolving credit facility (the “Revolving Credit Facility”); and 
(b) an $820.0 million, seven-year senior secured term loan facility (the “Term 
Loan Facility,” and together with the Revolving Credit Facility, the “Credit 
Facilities”). The fees associated with the Credit Facilities included discounts 
of approximately $4.1 million and debt issuance costs of approximately $15.5 
million. All borrowings under the Revolving Credit Facility are subject to the 
satisfaction of customary conditions, including the absence of defaults and the 
accuracy of representations and warranties. The proceeds from the Term Loan 
Facility incurred on the Closing Date were used to: (a) refinance: (i) Everi 
FinTech’s existing credit facility with an outstanding balance of approximately 
$462.3 million with Bank of America, N.A., as administrative agent, collateral 
agent, swing line lender and letter of credit issuer, Deutsche Bank Securities 
Inc., as syndication agent, and Merrill Lynch, Pierce, Fenner & Smith 
Incorporated and Deutsche Bank Securities Inc., as joint lead arrangers and 
joint book managers (the “Prior Credit Facility”); and (ii) Everi FinTech’s 
7.25% Senior Secured Notes due 2021 in the aggregate original principal amount 
of $335.0 million (the “Refinanced Secured Notes”); and (b) pay related 
transaction fees and expenses. In connection with the refinancing, we recorded 
a non-cash charge of approximately $14.6 million during the second quarter of 
2017 related to the unamortized deferred financing fees and discounts related 
to the extinguished term loan under the Prior Credit Facility and the redeemed 
Refinanced Secured Notes. No prepayment penalties were incurred. On November 
13, 2017 (the “Repricing Closing Date”), we entered into an amendment to the 
Credit Agreement (the “First Amendment”) which, among other things, reduced the 
interest rate on the approximately $818.0 million then-outstanding balance of 
the Term Loan Facility; however, it did not change the maturity dates for the 
Term Loan Facility or the Revolving Credit Facility or the financial covenants 
or other debt repayments terms set forth in the Credit Agreement. We expensed 
approximately $3.0 million of third-party debt issuance costs and fees 
associated with the repricing of the Term Loan Facility in connection with the 
debt modification. On May 17, 2018, we entered into a Second Amendment (the 
“Second Amendment”) to the Credit Agreement, which reduced the interest rate on 
the $813.9 million outstanding balance of the senior secured term loan under 
the Credit Agreement by 50 basis points to LIBOR + 3.00% from LIBOR + 3.50% 
with the LIBOR floor unchanged at 1.00%. The senior secured term loan under the 
Credit Agreement will be subject to a prepayment premium of 1.00% of the 
principal amount repaid for any voluntary prepayment or mandatory prepayment 
with proceeds of debt that has a lower effective yield than the repriced term 
loan or any amendment to the repriced term loan that reduces the interest rate 
thereon, in each case, to the extent occurring within six months of the 
effective date of the Second Amendment. No changes were made to the maturity 
date, financial covenants, or other debt repayment terms. We expensed 
approximately $1.3 million of third-party debt issuance costs and fees 
associated with the repricing of the Term Loan Facility in connection with the 
debt modification.

On December 12, 2019, we entered into a third amendment (the “Third Amendment”) 
to the Credit Agreement, which provided, among other things: (a) a reduction in 
the interest rate by 25 basis points to LIBOR + 2.75% from LIBOR + 3.00%; and 
(b) the addition of a prepayment premium applicable to the repriced Term Loan 
Facility of 1.00% of the principal amount thereof that is repaid in respect of 
(i) any voluntary prepayment or mandatory prepayment with proceeds of debt that 
has a lower effective yield than the repriced Term Loan Facility or (ii) any 
amendment to the repriced Term Loan Facility that reduces the interest rate 
thereon, in each case, to the extent occurring within six months after the 
effective date of the Third Amendment. The maturity date for the Credit 
Agreement remains May 9, 2024, and no changes were made to the financial 
covenants or other debt repayment terms. We expensed approximately $0.7 million 
of third-party debt issuance costs and fees associated with the repricing of 
the Term Loan Facility in connection with the debt modification. Credit 
Facilities The Term Loan Facility matures seven years after the Closing Date 
and the Revolving Credit Facility matures five years after the Closing Date. 
The Revolving Credit Facility is available for general corporate purposes, 
including permitted acquisitions, working capital, and the issuance of letters 
of credit. The interest rate per annum applicable to loans under the Revolving 
Credit Facility is, at Everi FinTech’s option, the base rate or the Eurodollar 
Rate (defined to be the London Interbank Offered Rate or a comparable or 
successor rate) (the “Eurodollar Rate”) plus, in each case, an applicable 
margin. The interest rate per annum applicable to the Term Loan Facility also 
is, at Everi FinTech’s option, the base rate or the Eurodollar Rate plus, in 
each case, an applicable margin. The Eurodollar Rate is reset at the beginning 
of each selected interest period based on the Eurodollar Rate then in effect; 
provided that, if the Eurodollar Rate is below zero, then such rate will be 
equal to zero plus the applicable margin. The base rate is a fluctuating 
interest rate equal to the highest of: (a) the prime lending rate announced by 
the administrative agent; (b) the federal funds effective rate from time to 
time plus 0.50%; and (c) the Eurodollar Rate (after taking account of any 
applicable floor) applicable for an interest period of one month plus 1.00%. 
Prior to the effectiveness of the First Amendment on the Repricing Closing 
Date, the applicable margins for both the Revolving Credit Facility and the 
Term Loan Facility were: (a) 4.50% in respect of Eurodollar Rate loans and (ii) 
3.50% in respect of base rate loans. The applicable margins for the Term Loan 
Facility from and after the effectiveness of the First Amendment on the 
Repricing Closing Date through the effectiveness of the Second Amendment were: 
(a) 3.50% in respect of Eurodollar Rate loans and (b) 2.50% in respect of base 
rate loans. The applicable margins for the Term Loan Facility from and after 
the effectiveness of the Second Amendment are: (a) 3.00% in respect of 
Eurodollar Rate loans and (b) 2.00% in respect of base rate loans. The 
applicable margins for the Term Loan Facility from and after the effectiveness 
of the Third Amendment are: (a) 2.75% in respect of Eurodollar Rate loans and 
(b) 1.75% in respect of base rate loans. Voluntary prepayments of the term loan 
and the revolving loans and voluntary reductions in the unused commitments are 
permitted in whole, or in part, in minimum amounts as set forth in the Credit 
Agreement governing the Credit Facilities, with prior notice, however, without 
premium or penalty, except that certain refinancings of the term loans within 
six months after the Repricing Closing Date will be subject to a prepayment 
premium of 1.00% of the principal amount repaid. Subject to certain exceptions, 
the obligations under the Credit Facilities are secured by substantially all of 
the present and subsequently acquired assets of each of Everi FinTech, Everi 
Holdings, and the subsidiary guarantors party thereto including: (a) a 
perfected first priority pledge of all the capital stock of Everi FinTech and 
each domestic direct, wholly owned material restricted subsidiary held by Everi 
Holdings, Everi FinTech, or any such subsidiary guarantor; and (b) a perfected 
first priority security interest in substantially all other tangible and 
intangible assets of Everi Holdings, Everi FinTech, and such subsidiary 
guarantors (including, but not limited to, accounts receivable, inventory, 
equipment, general intangibles, investment property, real property, 
intellectual property, and the proceeds of the foregoing). Subject to certain 
exceptions, the Credit Facilities are unconditionally guaranteed by Everi 
Holdings and such subsidiary guarantors. The Credit Agreement governing the 
Credit Facilities contains certain covenants that, among other things, limit 
Everi Holdings’ ability, and the ability of certain of its subsidiaries, to 
incur additional indebtedness, sell assets, or consolidate or merge with or 
into other companies, pay dividends or repurchase or redeem capital stock, make 
certain investments, issue capital stock of subsidiaries, incur liens, prepay, 
redeem or repurchase subordinated debt, and enter into certain types of 
transactions with its affiliates. The Credit Agreement governing the Credit 
Facilities also requires Everi Holdings, together with its subsidiaries, to 
comply with a consolidated secured leverage ratio. At December 31, 2019, our 
consolidated secured leverage ratio was 2.71 to 1.00, with a maximum allowable 
ratio of 4.50 to 1.00. Our maximum consolidated secured leverage will be 
reduced to 4.25 to 1.00 as of December 31, 2020, and 4.00 to 1.00 as of 
December 31, 2021 and each December 31 thereafter.

We were in compliance with the covenants and terms of the Credit Facilities as 
of December 31, 2019. Events of default under the Credit Agreement governing 
the Credit Facilities include customary events such as a cross-default 
provision with respect to other material debt. In addition, an event of default 
will occur if Everi Holdings undergoes a change of control. This is defined to 
include the case where Everi Holdings ceases to own 100% of the equity 
interests of Everi FinTech, or where any person or group acquires a percentage 
of the economic or voting interests of Everi Holdings’ capital stock of 35% or 
more (determined on a fully diluted basis). Interest is due in arrears on each 
interest payment date applicable thereto and at such other times as may be 
specified in the Credit Agreement. As to any loan other than a base rate loan, 
the interest payment dates shall be the last day of each interest period 
applicable to such loan and the maturity date (provided, however, that if any 
interest period for a Eurodollar Rate loan exceeds three months, the respective 
dates that fall every three months after the beginning of such interest period 
shall also be interest payment dates). As to any base rate loan, the interest 
payment dates shall be last business day of each March, June, September and 
December and the maturity date. For the year ended December 31, 2019, the Term 
Loan Facility had an applicable weighted average interest rate of 5.26%. At 
December 31, 2019, we had approximately $749.0 million of borrowings 
outstanding under the Term Loan Facility and no borrowings outstanding under 
the Revolving Credit Facility. We had $35.0 million of additional borrowing 
availability under the Revolving Credit Facility as of December 31, 2019. 
Refinanced Senior Secured Notes In connection with entering into the Credit 
Agreement, on May 9, 2017, Everi FinTech redeemed in full all outstanding 
Refinanced Secured Notes in the aggregate principal amount of $335.0 million 
plus accrued and unpaid interest. As a result of the redemption, the Company 
recorded non-cash charges in the amount of approximately $1.7 million, which 
consisted of unamortized deferred financing fees of $0.2 million and discounts 
of $1.5 million, which were included in the total $14.6 million non-cash 
charge. Upon the issuance of the Refinanced Secured Notes on April 15, 2015, 
the Company issued to CPPIB Credit Investments III Inc. a warrant to acquire 
700,000 shares of Holdings’ common stock, with an exercise price equal to $9.88 
per share, representing a 30% premium to the volume-weighted average price of 
Holdings’ common stock for the ten trading days prior to the issuance of the 
warrant. Upon issuance, the warrant was valued at approximately $2.2 million 
during the quarter ended June 30, 2015 using a modified Black-Scholes model and 
was accounted for as a debt discount, of which the unamortized portion was 
subsequently written off upon redemption of the Refinanced Secured Notes. The 
warrant was not impacted by the May 9, 2017 redemption of the Refinanced 
Secured Notes and expires on the sixth anniversary of the date of issuance. The 
number of shares issuable pursuant to the warrant and the warrant exercise 
price are subject to adjustment for stock splits, reverse stock splits, stock 
dividends, mergers and certain other events. Senior Unsecured Notes In December 
2014, we issued $350.0 million in aggregate principal amount of 10.0% Senior 
Unsecured Notes due 2022 (the “2014 Unsecured Notes”) under an indenture, dated 
December 19, 2014, between Everi FinTech (as successor issuer), and Deutsche 
Bank Trust Company Americas, as trustee (as supplemented, the “2014 Notes 
Indenture”). The fees associated with the 2014 Unsecured Notes included 
original issue discounts of approximately $3.8 million and debt issuance costs 
of approximately $14.0 million. In December 2015, we completed an exchange 
offer in which all of the unregistered 2014 Unsecured Notes were exchanged for 
a like amount of 2014 Unsecured Notes that had been registered under the 
Securities Act. In December 2017, we issued $375.0 million in aggregate 
principal amount of 7.50% Senior Unsecured Notes due 2025 (the “2017 Unsecured 
Notes”) under an indenture, dated December 5, 2017, among Everi FinTech (as 
issuer), Everi Holdings and certain of its direct and indirect domestic 
subsidiaries as guarantors, and Deutsche Bank Trust Company Americas, as 
trustee (the “2017 Notes Indenture”). Interest on the 2017 Unsecured Notes 
accrues at a rate of 7.50% per annum and is payable semi-annually in arrears on 
each June 15 and December 15, commencing on June 15, 2018. The 2017 Unsecured 
Notes will mature on December 15, 2025. We incurred approximately $6.1 million 
of debt issuance costs and fees associated with the refinancing of our 2017 
Unsecured Notes. On December 5, 2017, together with the issuance of the 2017 
Unsecured Notes, Everi FinTech satisfied and discharged the 2014 Notes 
Indenture relating to the 2014 Unsecured Notes. To effect the satisfaction and 
discharge, Everi FinTech issued an unconditional notice of redemption to 
Deutsche Bank Trust Company Americas, as trustee, of the redemption in full on 
January 15, 2018 (the “Redemption Date”) of all outstanding 2014 Unsecured 
Notes under the terms of the 2014 Notes Indenture. In addition, using the 
proceeds from the sale of the 2017 Unsecured Notes and cash on hand, Everi 
FinTech irrevocably deposited with the trustee funds sufficient to pay the 
redemption price of the 2014 Unsecured Notes of 107.5% of the principal amount 
thereof, plus accrued and unpaid interest to, but not including, the Redemption 
Date (the “Redemption Price”), and irrevocably instructed the trustee to apply 
the deposited money toward payment of the Redemption Price for the 2014 
Unsecured Notes on the Redemption Date. Upon the trustee’s receipt of such 
funds and instructions, along with an officer’s certificate of Everi FinTech 
and an opinion of counsel certifying and opining that all conditions under the 
2014 Notes Indenture to the satisfaction and discharge of the 2014 Notes 
Indenture had been satisfied, the 2014 Notes Indenture was satisfied and 
discharged, and all of the obligations of Everi FinTech and the guarantors 
under the 2014 Notes Indenture ceased to be of further effect, as of December 
5, 2017 (subject to certain exceptions). The 2014 Unsecured Notes were 
thereafter redeemed on the Redemption Date. In connection with the issuance of 
the 2017 Unsecured Notes and the redemption of the 2014 Unsecured Notes, we 
incurred a $37.2 million loss on extinguishment of debt consisting of a $26.3 
million make-whole premium related to the satisfaction and redemption of the 
2014 Unsecured Notes and approximately $10.9 million for the write-off of 
related unamortized debt issuance costs and fees. On December 5, 2019, Everi 
FinTech issued a consent solicitation statement (the “Consent Solicitation”) 
seeking consent from holders of the 2017 Unsecured Notes to modify the 
definition of “Public Equity Offering” in the 2017 Notes Indenture. In 
connection with the Consent Solicitation, on December 5, 2019, Everi FinTech 
issued a conditional notice of redemption with respect to $84.5 million in 
aggregate principal amount of the 2017 Unsecured Notes. The redemption was 
conditioned upon: (a) the issuance by the Company of common stock in a 
registered equity offering; and (b) the execution of a supplemental indenture 
reflecting the proposed terms contained in the Consent Solicitation. The 
redemption was subsequently completed on January 6, 2020. The registered equity 
offering closed on December 10, 2019, and the Company received the requisite 
number of consents in response to the Consent Solicitation on December 12, 
2019. As a result, a first supplemental indenture was entered into, dated 
December 13, 2019, by and among Everi FinTech, the Company, certain of its 
wholly owned subsidiaries, as guarantors, and Deutsche Bank Trust Company 
Americas, as trustee, to modify the 2017 Notes Indenture to include public 
equity offerings by parent companies of Everi FinTech, including the Company, 
as Public Equity Offerings for purposes of the 2017 Notes Indenture (the “First 
Supplemental Indenture”). No other changes were made to the terms and 
conditions of the 2017 Notes Indenture. We were in compliance with the terms of 
the 2017 Unsecured Notes as of December 31, 2019.

13. COMMITMENTS AND CONTINGENCIES We are involved in various legal proceedings 
in the ordinary course of our business. While we believe resolution of the 
claims brought against us, both individually and in aggregate, will not have a 
material adverse impact on our financial condition or results of operations, 
litigation of this nature is inherently unpredictable. Our views on these legal 
proceedings, including those described below, may change in the future. We 
intend to vigorously defend against these actions, and ultimately believe we 
should prevail.

Legal Contingencies We evaluate matters and record an accrual for legal 
contingencies when it is both probable that a liability has been incurred and 
the amount or range of the loss may be reasonably estimated. We evaluate legal 
contingencies at least quarterly and, as appropriate, establish new accruals or 
adjust existing accruals to reflect: (a) the facts and circumstances known to 
us at the time, including information regarding negotiations, settlements, 
rulings, and other relevant events and developments; (b) the advice and 
analyses of counsel; and (c) the assumptions and judgment of management. Legal 
costs associated with such proceedings are expensed as incurred. Due to the 
inherent uncertainty of legal proceedings as a result of the procedural, 
factual, and legal issues involved, the outcomes of our legal contingencies 
could result in losses in excess of amounts we have accrued. We accrued 
approximately $14.0 million for the legal contingencies as of December 31, 2019 
in connection with FACTA-related matters based on settlement negotiations with 
various parties. We expect to recover within the next year approximately $7.7 
million of the amount accrued at December 31, 2019 from our insurance 
providers, for which we recorded an insurance settlement receivable included 
within trade and other receivables, net on our Balance Sheets as of December 
31, 2019, as recovery is deemed to be probable. As a result, we recorded 
approximately $6.3 million as a loss contingency in operating expenses on our 
Statements of Operations for the year ended December 31, 2019. We did not have 
legal matters that were accrued as of December 31, 2018. FACTA-related matters: 
Geraldine Donahue, et. al. v. Everi FinTech, et. al. (“Donahue”), is a putative 
class action matter filed on December 12, 2018, in Cook County, Illinois. The 
original defendant was dismissed and the Company was substituted as defendant 
on April 22, 2019. Plaintiff, on behalf of himself and others similarly 
situated, alleges that Everi FinTech and the Company have violated certain 
provisions of FACTA. Plaintiff seeks an award of statutory damages, attorney’s 
fees, and costs. The parties have reached an agreement in principle for 
settlement of this matter, which will include settlement and resolution of all 
the FACTA-related matters pending against the Company and Everi FinTech. The 
settlement requires court approval, which the parties are in the process of 
working to obtain. Oneeb Rehman, et. al. v. Everi FinTech and Everi Holdings, 
is a putative class action matter pending in the U.S. District Court for the 
Southern District of Florida, Ft. Lauderdale Division filed on October 16, 
2018. The original defendant was dismissed and the Company was substituted as 
defendant on April 22, 2019. Plaintiff, on behalf of himself and others 
similarly situated, alleges that Everi FinTech and the Company have violated 
certain provisions of FACTA. Plaintiff seeks an award of statutory damages, 
attorney’s fees, and costs. This matter is encompassed in the settlement of the 
Donahue matter, and will be dismissed upon court approval of the settlement in 
Donahue. Mat Jessop, et. al. v. Penn National Gaming, Inc., is a putative class 
action matter filed on October 15, 2018, pending in the U.S. District Court for 
the Middle District of Florida, Orlando Division. Everi FinTech was added as a 
defendant on December 21, 2018. Penn National Gaming, Inc. (“Penn National”) 
was dismissed by the Court with prejudice on October 28, 2019, leaving only 
claims against Everi FinTech. Plaintiff, on behalf of himself and others 
similarly situated, alleges that Everi FinTech has been unjustly enriched 
through the charging of service fees for transactions conducted at Penn 
National facilities. Plaintiff seeks injunctive relief against both parties, 
and an award of statutory damages, attorney’s fees, and costs. This matter is 
encompassed in the settlement of the Donahue matter, and will be dismissed upon 
court approval of the settlement in Donahue. NRT matter: NRT Technology Corp., 
et. al. v. Everi Holdings Inc., et. al., is a civil action filed on April 30, 
2019 against the Company and Everi FinTech in the United States District Court 
for the District of Delaware alleging monopolization of the market for 
unmanned, integrated kiosks in violation of federal antitrust laws, fraudulent 
procurement of patents on functionality related to such unmanned, integrated 
kiosks and sham litigation related to prior litigation brought by Everi FinTech 
(operating as Global Cash Access Inc.) against the plaintiffs. Plaintiffs seek 
compensatory damages, trebled damages and injunctive and declaratory relief. We 
are currently unable to determine the probability of the outcome of this legal 
matter or estimate the range of reasonably possible loss, if any.

SHAREHOLDERS’ EQUITY Preferred Stock. Our amended and restated certificate of 
incorporation, as amended, allows our Board of Directors, without further 
action by stockholders, to issue up to 50,000,000 shares of preferred stock in 
one or more series and to fix the designations, powers, preferences, privileges 
and relative participating, optional, or special rights as well as the 
qualifications, limitations or restrictions of the preferred stock, including 
dividend rights, conversion rights, voting rights, terms of redemption and 
liquidation preferences. As of December 31, 2019 and 2018, we had no shares of 
preferred stock outstanding. Common Stock. Subject to the preferences that may 
apply to shares of preferred stock that may be outstanding at the time, the 
holders of outstanding shares of common stock are entitled to receive dividends 
out of assets legally available at the times and in the amounts as our Board of 
Directors may from time to time determine. All dividends are non-cumulative. In 
the event of the liquidation, dissolution or winding up of Everi, the holders 
of common stock are entitled to share ratably in all assets remaining after the 
payment of liabilities, subject to the prior distribution rights of preferred 
stock, if any, then outstanding. Each stockholder is entitled to one vote for 
each share of common stock held on all matters submitted to a vote of 
stockholders. Cumulative voting for the election of directors is not provided 
for. The common stock is not entitled to preemptive rights and is not subject 
to conversion or redemption. There are no sinking fund provisions applicable to 
the common stock. Each outstanding share of common stock is fully paid and 
non-assessable. As of December 31, 2019 and 2018, we had 109,492,754 and 
95,099,532 shares of common stock issued, respectively. Treasury Stock. 
Employees may direct us to withhold vested shares of restricted stock to 
satisfy the minimum statutory withholding requirements applicable to their 
restricted stock vesting. We repurchased or withheld from restricted stock 
awards 95,734 and 17,552 shares of common stock at an aggregate purchase price 
of approximately $1.1 million and $0.1 million for the years ended December 31, 
2019 and 2018, respectively, to satisfy the minimum applicable tax withholding 
obligations related to the vesting of such restricted stock awards. Issuance of 
Common Stock. In December 2019, we filed with the Securities and Exchange 
Commission a registration statement for an undetermined amount of common stock, 
preferred stock, debt securities, warrants, and/or units that the Company may 
offer and sell in one or more offerings on terms to be decided at the time of 
sale, which will expire on December 4, 2022. In December 2019, we issued and 
sold 11,500,000 shares of our common stock pursuant to a prospectus supplement 
under the automatic shelf registration statement and used the aggregate net 
proceeds of approximately $122.4 million to pay down a portion of Term Loan 
Facility and to redeem a portion of the 2017 Unsecured Notes.

WEIGHTED AVERAGE SHARES OF COMMON STOCK

The potential dilution excludes the weighted average effect of equity awards to 
purchase approximately 0.5 million and 7.5 million shares of common stock for 
the years ended December 31, 2019 and 2018, as the application of the treasury 
stock method, as required, makes them anti-dilutive. The Company was in a net 
loss position for the year ended December 31, 2017; therefore, no potential 
dilution from the application of the treasury stock method was applicable. 
Equity awards to purchase approximately 16.0 million shares of common stock for 
the year ended December 31, 2017 were excluded from the computation of diluted 
net loss per share, as their effect would have been anti-dilutive.

SHARE-BASED COMPENSATION Equity Incentive Awards Our 2014 Equity Incentive Plan 
(as amended and restated effective May 22, 2018, the “Amended and Restated 2014 
Plan”) and our 2012 Equity Incentive Plan (as amended, the “2012 Plan”) are 
used to attract and retain key personnel to provide additional incentives to 
employees, directors, and consultants, and to promote the success of our 
business. Our equity incentive plans are administered by the Compensation 
Committee of our Board of Directors, which has the authority to select 
individuals who are to receive equity incentive awards and to specify the terms 
and conditions of grants of such awards, including, but not limited to the 
vesting provisions and exercise prices, as applicable. Generally, we grant the 
following types of awards: (a) time-based options; (b) market-based options; 
(c) time-based restricted stock; and (d) restricted stock units (“RSUs”) with 
either time- or performance-based criteria. We estimate forfeiture amounts 
based on historical patterns. There are approximately 2.7 million awards of our 
common stock available for future equity grants under our existing equity 
incentive plans.

Stock Options Our time-based stock options granted under our equity plans 
generally vest at a rate of 25% per year on each of the first four 
anniversaries of the grant dates, and expire after a ten-year period. Our 
market-based options granted in 2017 under our 2014 Plan and 2012 Plan vest at 
a rate of 25% per year on each of the first four anniversaries of the grant 
date, provided that as of the vesting date for each vesting tranche, the 
closing price of the Company’s shares on the New York Stock Exchange is at 
least a specified price hurdle, defined as a 25% premium for 2017 to the 
closing stock price on the grant date. If the price hurdle is not met as of the 
vesting date for a vesting tranche, the vested tranche shall vest and become 
vested shares on the last day of a period of 30 consecutive trading days during 
which the closing price is at least the price hurdle. These options expire 
after a ten-year period. There were no market-based or time-based option awards 
granted during the year ended December 31, 2019. There were no market-based 
option awards granted during the year ended December 31, 2018. There were 
market-based and time-based option awards granted during the year ended 
December 31, 2017.

The fair values of our market-based options were determined as of the date of 
grant using a lattice-based option valuation model with the following 
assumptions (we did not grant market-based option awards subsequent to December 
31, 2017):

As stated above, we had no options granted for the year ended December 31, 
2019. There were 20,000 and 4.3 million options granted for the years ended 
December 31, 2018 and 2017, respectively. The weighted average grant date fair 
value per share of the options granted was $4.15 and $1.98 for the years ended 
December 31, 2018 and 2017, respectively. The total intrinsic value of options 
exercised was $9.1 million, $6.5 million, and $5.3 million for the years ended 
December 31, 2019, 2018, and 2017, respectively. There was approximately $1.4 
million in unrecognized compensation expense related to options expected to 
vest as of December 31, 2019. This cost was expected to be recognized on a 
straight-line basis over a weighted average period of 1.0 year. We recorded 
approximately $2.4 million in non-cash compensation expense related to options 
granted that were expected to vest as of December 31, 2019. We received 
approximately $15.7 million in cash proceeds from the exercise of options 
during 2019. There was approximately $3.4 million and $7.9 million in 
unrecognized compensation expense related to options expected to vest as of 
December 31, 2018 and 2017, respectively. This cost was expected to be 
recognized on a straight-line basis over a weighted average period of 2.8 years 
and 3.5 years for the years ended December 31, 2018 and 2017, respectively. We 
recorded approximately $5.1 million and $6.0 million in non-cash compensation 
expense related to options granted that were expected to vest as of December 
31, 2018 and 2017, respectively. We received approximately $9.6 million and 
$10.9 million in cash proceeds from the exercise of options during 2018 and 
2017, respectively. Restricted Stock Awards

There were no shares of restricted stock granted for the years ended December 
31, 2019 and 2018, and 50,000 shares of restricted stock granted for the year 
ended December 31, 2017. The total fair value of restricted stock vested was 
approximately $0.1 million, $0.5 million, and $0.4 million for the years ended 
December 31, 2019, 2018, and 2017, respectively. There was no remaining 
unrecognized compensation expense related to shares of restricted stock 
expected to vest as of December 31, 2019. There were 8,330 shares of restricted 
stock that vested during 2019, and we recorded $48,203 in non-cash compensation 
expense related to the restricted stock granted that was expected to vest. 
There was $31,952 and approximately $0.5 million in unrecognized compensation 
expense related to shares of restricted stock expected to vest as of December 
31, 2018 and 2017, respectively. This cost was expected to be recognized on a 
straight-line basis over a weighted average period of 0.3 years and 1.1 years, 
respectively. There were 65,501 shares and 56,578 shares of restricted stock 
that vested during 2018 and 2017, respectively, and we recorded approximately 
$0.4 million in non-cash compensation expense related to the restricted stock 
granted that was expected to vest during 2018 and 2017. Restricted Stock Units 
The fair value of each RSU grant is based on the market value of our common 
stock at the time of grant. The time-based RSUs granted during 2019 vest at a 
rate of either 25% per year on each of the first four anniversaries of the 
grant dates or 100% at the end the 2 years following the grant date. The 
performance-based RSUs granted during 2019 will be evaluated by the 
Compensation Committee of our Board of Directors after a performance period, 
beginning on the date of grant through December 31, 2021, based on certain 
revenue and free cash flow growth rate metrics, with achievement of each 
measure to be determined independently of one another. If the performance 
criteria of the metrics are approved, the eligible awards will become vested on 
the third anniversary of the grant dates. The time-based RSUs granted during 
2019 to independent members of our Board of Directors vest in equal 
installments on each of the first three anniversary dates of the grant date and 
settle on the earliest of the following events: (a) May 1, 2029 or November 4, 
2019; (b) death; (c) the occurrence of a Change in Control (as defined in the 
Amended and Restated 2014 Plan), subject to qualifying conditions; or (d) the 
date that is six months following the separation from service, subject to 
qualifying conditions. The performance-based RSUs granted during 2018 will be 
evaluated by the Compensation Committee of our Board of Directors after a 
performance period, beginning on the date of grant through December 31, 2020, 
based on certain revenue and Adjusted EBITDA growth rate metrics, with 
achievement of each measure to be determined independently of one another. If 
the performance criteria of the metrics are approved, the eligible awards will 
become vested on the third anniversary of the grant dates. The time-based RSUs 
granted during 2018 to independent members of our Board of Directors vest in 
equal installments on each of the first three anniversary dates of the grant 
date and settle on the earliest of the following events: (a) March 7, 2028; (b) 
death; (c) the occurrence of a Change in Control (as defined in the Amended and 
Restated 2014 Plan), subject to qualifying conditions; or (d) the date that is 
six months following the separation from service, subject to qualifying 
conditions.

There were approximately 2.0 million shares of RSU awards granted during the 
year ended December 31, 2019. There were approximately 0.3 million RSUs that 
vested during the year ended December 31, 2019. There was approximately $14.1 
million in unrecognized compensation expense related to RSU awards expected to 
vest as of December 31, 2019. This cost is expected to be recognized on a 
straight-line basis over a weighted average period of 2.5 years. We recorded 
approximately $5.7 million in non-cash compensation expense related to RSU 
awards for the year ended December 31, 2019. There was approximately 1.9 
million and no shares of RSU granted for the years ended December 31, 2018 and 
2017, respectively. There were no RSUs that vested during the years ended 
December 31, 2018 and 2017. There was approximately $6.7 million and no 
unrecognized compensation expense related to RSU awards expected to vest as of 
December 31, 2018 and 2017, respectively. The unrecognized compensation expense 
related to RSU awards expected to vest as of December 31, 2018 was expected to 
be recognized on a straight-line basis over a weighted average period of 3.0 
years. We recorded approximately $1.8 million in non-cash compensation expense 
related to RSU awards for the year ended December 31, 2018. In February 2020, 
the Compensation Committee of our Board of Directors authorized an award of 
RSUs to be granted to key members of management during the quarter ending March 
31, 2020 based on the results of operations for the year ended December 31, 
2019. The award met the definition of a liability-classified award with 2019 
being the service period. As a result, the Company recorded compensation cost 
and corresponding share-based liability of approximately $1.7 million 
representing the fair value of the award at December 31, 2019 measured using 
the same valuation technique as for our equity-classified awards. The award is 
expected to be fully vested six months from the grant date and will be settled 
in shares of common stock.

INCOME TAXES

Deferred income taxes, net $ (26,401) $ (27,867) $ (38,207) The 2017 Tax Act 
was enacted on December 22, 2017. The 2017 Tax Act made significant changes to 
the federal tax law, including a reduction in the federal income tax rate from 
35% to 21% effective January 1, 2018, stricter limits on deduction of interest, 
an 80% taxable income limitation on the use of a post-2017 net operating loss 
(“NOL”), and a one-time transition tax on previously deferred earnings of 
certain foreign subsidiaries. As a result of our initial analysis of the 2017 
Tax Act and existing implementation guidance, we remeasured our deferred tax 
assets and liabilities, which resulted in approximately a $22.5 million 
reduction in our income tax expense in 2017. We computed our transition tax 
liability of approximately $1.3 million due to the 2017 Tax Act, net of 
associated foreign tax credits, which was completely offset by additional 
foreign tax credits carried forward. Any remaining foreign tax credits not 
utilized by the transition tax were fully offset by a valuation allowance. On 
December 22, 2017, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 
118”), which provided guidance on accounting for the tax effects of the 2017 
Tax Act. In accordance with the SAB 118 guidance, some of the income tax 
effects recorded in 2017 and through December 22, 2018 were provisional, 
including the one-time transition tax, the effect on our valuation allowance 
including the stricter limits on interest deductions, the GILTI provisions of 
the 2017 Tax Act, and the remeasurement of our deferred tax assets and 
liabilities. During 2018, we recognized insignificant adjustments to the 
provisional amounts recorded at December 31, 2017 and included these 
adjustments as a component of income tax expense from continuing operations. As 
of December 31, 2019, we had excess cash in our United Kingdom (the “UK”) 
subsidiary of approximately $3.0 million, which is not needed to fund the UK 
operations. Thus, we have decided to repatriate this amount which did not 
require the provision of any associated withholding or other taxes. The rest of 
our unrepatriated earnings were approximately $19.0 million as of December 31, 
2019. These earnings are considered permanently reinvested, as it is 
management’s intention to reinvest these foreign earnings in foreign 
operations. We project sufficient cash flow, or borrowings available under our 
Credit Facilities in the U.S.; therefore, we do not need to repatriate our 
remaining foreign earnings to finance U.S. operations at this time. Due to the 
2017 Tax Act, there is no U.S. federal tax on cash repatriation from foreign 
subsidiaries, however, it could be subject to foreign withholding and other 
taxes. The 2017 Tax Act subjects a U.S. corporation to current tax on the GILTI 
earned by certain foreign subsidiaries and a base erosion anti-avoidance tax 
(“BEAT”). Our foreign subsidiaries’ earnings for the periods after December 31, 
2017 have been subject to U.S. federal income tax via the newly enacted GILTI 
provision. We have elected to recognize the taxes on GILTI and BEAT as a period 
expense in the period the taxes are incurred.

Deferred tax assets arise primarily because expenses have been recorded in 
historical financial statement periods that will not become deductible for 
income taxes until future tax years. We record a valuation allowance to reduce 
the book value of our deferred tax assets to amounts that are estimated on a 
more likely than not basis to be realized. This assessment requires judgment 
and is performed on the basis of the weight of all available evidence, both 
positive and negative, with greater weight placed on information that is 
objectively verifiable such as historical performance. We evaluated negative 
evidence noting that we reported cumulative net losses for the three-year 
periods ended as of December 31, 2019, 2018, and 2017. Pursuant to accounting 
guidance, a cumulative loss in recent years is a significant piece of negative 
evidence that must be considered and is difficult to overcome without 
sufficient objectively verifiable, positive evidence. As such, certain aspects 
of our historical results were included in our forecasted taxable income. 
Although our forecast of future taxable income was a positive indicator, since 
this form of evidence was not objectively verifiable, its weight was not 
sufficient to overcome the negative evidence. However, based on our current 
year activity and the changes in the 2017 Tax Act, we decreased our valuation 
allowance for deferred tax assets by approximately $1.6 million during 2019. 
The decrease in our valuation allowance was primarily due to the book income 
during the year, as well as the current year NOL, and the interest deduction 
limitation (deferred tax assets) which can be offset against our indefinite 
lived deferred tax liabilities. The ultimate realization of deferred tax assets 
depends on having sufficient taxable income in the future years when the tax 
deductions associated with the deferred tax assets become deductible. The 
establishment of a valuation allowance does not impact cash, nor does it 
preclude us from using our tax credits, loss carry-forwards and other deferred 
tax assets in the future.

For 2017, the amount was recorded as a result of our adoption of ASU No. 
2016-09 effective January 1, 2017. For 2018, the amount was recorded as a 
result of our adoption of ASC 606 effective January 1, 2018. We had 
approximately $402.8 million, or $84.6 million, tax effected, of accumulated 
federal NOLs as of December 31, 2019, which may be carried forward and applied 
to offset taxable income for 20 years and will expire starting in 2025 (for 
losses incurred prior to 2018). NOLs incurred after 2017 of approximately $44.8 
million, or $9.4 million, tax effected, are carried forward indefinitely to 
offset taxable income. We had approximately $11.5 million, tax effected, of 
federal research and development credit carry-forwards and approximately $0.5 
million, tax effected, of foreign tax credit carry-forwards as of December 31, 
2019. The research and development credits are limited to a 20 year 
carry-forward period and will expire starting in 2029. The foreign tax credits 
may be carried forward 10 years and will expire in 2020, if not utilized. Our 
alternative minimum tax credits of approximately $0.1 million at December 31, 
2019 are expected to be refunded over the next four years in accordance with 
the 2017 Tax Act. We also have a receivable for approximately $0.1 million 
related to alternative minimum tax credits for which a refund is expected to be 
requested on our federal tax return for the year ended December 31, 2019. As of 
December 31, 2019, approximately $44.9 million of our valuation allowance 
relates to federal NOL carry-forwards and credits that we estimate are not more 
likely than not to be realized. We had tax effected state NOL carry-forwards of 
approximately $13.0 million as of December 31, 2019, which will expire between 
2020 and 2039. The determination and utilization of these state NOL 
carry-forwards are dependent upon apportionment percentages and other 
respective state laws, which may change from year to year. As of December 31, 
2019, approximately $6.5 million of our valuation allowance relates to certain 
state NOL carry-forwards that we estimate are not more likely than not to be 
realized. The remaining valuation allowance of approximately $0.1 million 
relates to foreign NOLs.

We analyzed filing positions in the federal, state, and foreign jurisdictions 
in which we are required to file income tax returns, as well as the open tax 
years in these jurisdictions. As of December 31, 2019, we recorded 
approximately $1.4 million of unrecognized tax benefits, all of which would 
impact our effective tax rate, if recognized. We do not anticipate that our 
unrecognized tax benefits will materially change within the next 12 months. The 
Company has not accrued any penalties and interest for its unrecognized tax 
benefits. Other than the unrecognized tax benefit recorded, we believe that our 
income tax filing positions and deductions will be sustained upon audit, and we 
do not anticipate other adjustments that will result in a material change to 
our financial position. We may, from time to time, be assessed interest or 
penalties by tax jurisdictions, although any such assessments historically have 
been minimal and immaterial to our financial results. Our policy for recording 
interest and penalties associated with audits and unrecognized tax benefits is 
to record such items as a component of income tax in our Statements of 
Operations. We are subject to taxation in the U.S. and various states and 
foreign jurisdictions. We have a number of federal and state income tax years 
still open for examination as a result of our net operating loss 
carry-forwards. Accordingly, we are subject to examination for both U.S. 
federal and some of the state tax returns for the years 2005 to present. For 
the remaining state, local, and foreign jurisdictions, with some exceptions, we 
are no longer subject to examination by tax authorities for years before 2016.

SEGMENT INFORMATION Operating segments are components of an enterprise about 
which separate financial information is available that is evaluated regularly 
by the chief operating decision-making group (the “CODM”). Our CODM consists of 
the Chief Executive Officer and the Chief Financial Officer. Our CODM allocates 
resources and measures profitability based on our operating segments, which are 
managed and reviewed separately, as each represents products and services that 
can be sold separately to our customers. Our segments are monitored by 
management for performance against our internal forecasts. We have reported our 
financial performance based on our segments in both the current and prior 
periods. Our CODM determined that our operating segments for conducting 
business are: (a) Games and (b) FinTech: •The Games segment provides solutions 
directly to gaming establishments to offer their patrons gaming entertainment- 
related experiences including: leased gaming equipment; sales of gaming 
equipment; gaming systems; interactive solutions; and ancillary products and 
services. •The FinTech segment provides solutions directly to gaming 
establishments to offer their patrons cash access-related services and 
products, including: access to cash at gaming facilities via ATM cash 
withdrawals; credit card cash access transactions and POS debit card cash 
access transactions; check warranty services; kiosks for cash access and other 
services; self-service enrollment, player loyalty and marketing equipment; 
maintenance services; compliance, audit, and data software; casino credit data 
and reporting services, and other ancillary offerings. Corporate overhead 
expenses have been allocated to the segments either through specific 
identification or based on a reasonable methodology. In addition, we record 
depreciation and amortization expenses to the business segments. Our business 
is predominantly domestic with no specific regional concentrations and no 
significant assets in foreign locations.

On January 1, 2018, we adopted ASC 606 and our results prior to 2018 were not 
recast to reflect the new revenue recognition standard under the modified 
retrospective method. We previously reported costs and expenses related to our 
cash access services as a cost of revenues. Under ASC 606, such costs are 
reflected as reductions to cash access services revenues on a net basis of 
presentation.

20. SUBSEQUENT EVENTS On January 6, 2020, Everi FinTech completed a partial 
redemption payment of approximately $84.5 million of aggregate principal with 
respect to the 2017 Unsecured Notes. The total outstanding balance of the 2017 
Unsecured Notes following the partial redemption was approximately $290.5 
million. In February 2020, our Board of Directors authorized and approved a new 
share repurchase program granting us the authority to repurchase an amount not 
to exceed $10.0 million of outstanding Company common stock with no minimum 
number of shares that the Company is required to repurchase. This new 
repurchase program will commence in the first quarter of 2020 and authorizes us 
to buy our common stock from time to time in open market transactions, block 
trades or in private transactions in accordance with trading plans established 
in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 
1934, as amended, or by a combination of such methods, including compliance 
with the Company’s finance agreements. The share repurchase program is subject 
to available liquidity, general market and economic conditions, alternate uses 
for the capital and other factors, and may be suspended or discontinued at any 
time without prior notice.

Controls and Procedures. Evaluation of Disclosure Controls and Procedures The 
Company’s management, including its Chief Executive Officer and Chief Financial 
Officer, have evaluated the effectiveness of the Company’s disclosure controls 
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under 
the Exchange Act) as of the end of the reporting period covered by this Form 
10-K. Based on such evaluation, the Chief Executive Officer and Chief Financial 
Officer have concluded that, as of the end of the period covered by this report 
on Form 10-K, the Company’s disclosure controls and procedures are effective 
such that information required to be disclosed by the Company in the reports 
that it files or submits under the Exchange Act is (a) recorded, processed, 
summarized and reported within the time periods specified in the SEC’s rules 
and forms, and (b) accumulated and communicated to the Company’s management, 
including its Chief Executive Officer and Chief Financial Officer, as 
appropriate to allow timely decisions regarding required disclosures. 
Management’s Report of Internal Control over Financial Reporting The Company’s 
management, including its Chief Executive Officer and Chief Financial Officer, 
is responsible for establishing and maintaining adequate internal control over 
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the 
Exchange Act. The Company’s internal control over financial reporting is 
designed to provide reasonable assurance regarding the reliability of financial 
reporting and the preparation of financial statements for external purposes in 
accordance with U.S. generally accepted accounting principles (“GAAP”). Because 
of inherent limitations, internal control over financial reporting may not 
prevent or detect misstatements. Also, controls may become inadequate because 
of changes in conditions, or the degree of compliance with policies or 
procedures may deteriorate. Management assessed the effectiveness of internal 
control over financial reporting as of December 31, 2019, utilizing the 
criteria described in the “Internal Control — Integrated Framework (2013)” 
issued by the Committee of Sponsoring Organizations of the Treadway Commission. 
Management’s assessment included evaluation of elements such as the design and 
operating effectiveness of key financial reporting controls, process 
documentation, accounting policies, and our overall control environment. Based 
on this assessment, management has concluded that our internal control over 
financial reporting was effective at a reasonable assurance level as of 
December 31, 2019. Our independent registered public accounting firm, BDO USA, 
LLP, independently assessed the effectiveness of the Company’s internal control 
over financial reporting, as stated in the firm’s attestation report, which is 
included within Part II, Item 8 of this Form 10-K.