0001558370-24-012224 | 10-Q | XBRL Viewer

Segment and Geographic Area Information (Tables)

6 Months Ended

Jun. 30, 2024

Segment and Geographic Area Information

Schedule of reconciliation of segment profit to net loss before income taxes by segment information


	Three months ended June 30, 2024
	ITPS		HS		LLPS		Total
Revenue	$	156,840	$	62,935	$	25,878	$	245,653
Cost of revenue (exclusive of depreciation and amortization)		129,787		42,573		15,604		187,964
Segment profit		27,053		20,362		10,274		57,689
Selling, general and administrative expenses (exclusive of depreciation and amortization)								41,778
Depreciation and amortization								14,983
Related party expense								3,282
Interest expense, net								23,129
Sundry income, net								(204)
Other income, net								(423)
Net loss before income taxes							$	(24,856)


	Three months ended June 30, 2023
	ITPS		HS		LLPS		Total
Revenue	$	184,990	$	63,608	$	24,340	$	272,938
Cost of revenue (exclusive of depreciation and amortization)		150,035		47,016		15,008		212,059
Segment profit		34,955		16,592		9,332		60,879
Selling, general and administrative expenses (exclusive of depreciation and amortization)								32,026
Depreciation and amortization								14,890
Related party expense								2,739
Interest expense, net								45,092
Debt modification and extinguishment costs (gain), net								(6,785)
Sundry expense, net								1,500
Other income, net								(232)
Net loss before income taxes							$	(28,351)


		Six months ended June 30, 2024
	ITPS		HS		LLPS		Total
Revenue	$	332,980	$	127,787	$	43,697	$	504,464
Cost of revenue (exclusive of depreciation and amortization)		274,199		88,729		27,024		389,952
Segment profit		58,781		39,058		16,673		114,512
Selling, general and administrative expenses (exclusive of depreciation and amortization)								82,632
Depreciation and amortization								28,490
Related party expense								5,673
Interest expense, net								44,217
Sundry expense, net								1,677
Other income, net								(874)
Net loss before income taxes							$	(47,303)


		Six months ended June 30, 2023
	ITPS		HS		LLPS		Total
Revenue	$	378,698	$	126,650	$	41,210	$	546,558
Cost of revenue (exclusive of depreciation and amortization)		308,546		93,752		26,228		428,526
Segment profit		70,152		32,898		14,982		118,032
Selling, general and administrative expenses (exclusive of depreciation and amortization)								76,407
Depreciation and amortization								31,450
Related party expense								5,851
Interest expense, net								89,272
Debt modification and extinguishment costs (gain), net								(15,558)
Sundry expense, net								2,248
Other income, net								(514)
Net loss before income taxes							$	(71,124)

Stockholders' Equity	6 Months Ended
Jun. 30, 2024
Stockholders' Equity
Stockholders' Equity	11. Stockholders’ Equity The following description summarizes the material terms and provisions of the securities that the Company has authorized. Common Stock The Company is authorized to issue 1,600,000,000 shares of Common Stock. Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, the holders of the Company’s Common Stock and Tandem Preferred Stock (that provides a vote to holders of the Company’s Series B Preferred Stock, as described below) possess all voting power for the election of the Company’s board of directors (the “Board”) and all other matters requiring stockholder action and will at all times vote together as one class on all matters submitted to a vote of Exela stockholders. Holders of the Company’s Common Stock are entitled to one vote per share on matters to be voted on by stockholders. Holders of the Company’s Common Stock will be entitled to receive such dividends and other distributions, if any, as may be declared from time to time by the Board in its discretion out of funds legally available therefor and shall share equally on a per share basis in such dividends and distributions. The holders of the Common Stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the Common Stock. As of June 30, 2024, there were 6,365,363 shares of Common Stock outstanding. Share Buyback Program On August 10, 2022, the Board authorized a share buyback program (the “2022 Share Buyback Program”), pursuant to which the Company is permitted to repurchase up to 50,000 shares of Common Stock over the next two-year period. The 2022 Share Buyback Program does not obligate the Company to repurchase any shares of Common Stock. No shares were repurchased under the 2022 Share Buyback Program during the six months ended June 30, 2024 and 2023. As of June 30, 2024, the Company had repurchased and concurrently retired 1,787 shares of Common Stock pursuant to the 2022 Share Buyback Program. The Company records such stock repurchases as a reduction to stockholders’ equity. The Company allocates the excess of the repurchase price over the par value of shares acquired to accumulated deficit and additional paid-in capital. The portion allocated to additional paid-in capital is determined by dividing the number of shares to be retired by the number of shares issued multiplied by the balance of additional paid-in capital as of the retirement date. Series A Preferred Stock The Company is authorized to issue 20,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board. The Company has designated 2,800,000 shares of its authorized preferred stock as Series A Preferred Stock. The rights and preferences of the Series A Preferred Stock are defined in the Certificate of Designations, Preferences, Rights and Limitations of Series A Perpetual Convertible Preferred Stock of the Company, dated July 12, 2017 (the "Series A Certificate of Designations"). At June 30, 2024, the Company had 2,778,111 shares of Series A Preferred Stock outstanding. The par value of the Series A Preferred Stock is $0.0001 per share. Each share of Series A Preferred Stock is convertible at the holder’s option, at any time into the number of shares of Common Stock determined as of the date of conversion using a certain conversion formula that takes into account the amount of Liquidation Preference per share as adjusted for accrued but unpaid dividends, as described below. As of June 30, 2024, after taking into account the effect of the Reverse Stock Split, each outstanding share of Series A Preferred Stock was convertible into 0.000152 shares of Common Stock using this conversion formula. Accordingly, as of June 30, 2024, 424 shares of Common Stock were issuable upon conversion of 2,778,111 shares of outstanding Series A Preferred Stock. Holders of the Series A Preferred Stock are entitled to receive cumulative dividends at a rate per annum of 10% of the dollar amount of per share liquidation preference (plus accumulated but unpaid dividends, the “Series A Liquidation Preference”) per share of Series A Preferred Stock, paid or accrued quarterly in arrears on the 15^th day of each March, June, September and December. From the issue date through June 30, 2024, the amount of all accrued but unpaid dividends on the Series A Preferred Stock have been added to the Series A Liquidation Preference. The Company shall add the amount of all accrued but unpaid dividends on each quarterly dividend payment date to the Series A Liquidation Preference, except to the extent the Company elects to make all or any portion of such payment in cash on or prior to the applicable dividend payment date, in which case, the amount of the accrued but unpaid dividends that is added to the Series A Liquidation Preference shall be reduced on a dollar-for-dollar basis by the amount of any such cash payment. The aggregate Series A Liquidation Preference amount was $44.2 million as of June 30, 2024 (at $8 per share inclusive of accrued dividends as of such date as described below). The Company is not required to make any payment or allowance for unpaid dividends, whether or not in arrears, on converted shares of Series A Preferred Stock or for dividends on the shares of Common Stock issued upon conversion of such shares. The gross dividend accumulation for the three and six months ended June 30, 2024 was $1.1 million and $2.1 million, respectively. The gross dividend accumulation for the three and six months ended June 30, 2023 was $1.0 million and $1.9 million, respectively. As of June 30, 2024, the total accumulated but unpaid dividends on the Series A Preferred Stock since inception on July 12, 2017 was $22.0 million. The per share average of cumulative preferred dividends for the three and six months ended June 30, 2024 was $0.38 and $0.76, respectively. The per share average of cumulative preferred dividends for the three and six months ended June 30, 2023 was $0.35 and $0.69, respectively. In addition, holders of the Series A Preferred Stock will participate in any dividend or distribution of cash or other property paid in respect of the Common Stock pro rata with the holders of the Common Stock (other than certain dividends or distributions that trigger an adjustment to the conversion rate, as described in the Series A Certificate of Designations), as if all shares of Series A Preferred Stock had been converted into Common Stock immediately prior to the date on which such holders of the Common Stock became entitled to such dividend or distribution. Following the occurrence of a "Fundamental Change," as defined in the Series A Certificate of Designations, if the Company does not redeem the Series A Preferred Stock, holders of the Series A Preferred Stock may convert their entire accumulated Series A Liquidation Preference into Common Stock for fifteen days following the effective date of the Fundamental Change based on the greater of (i) the price to be paid (or deemed paid) per share of Common Stock in such transaction or the average closing price of the Common Stock on the 20 consecutive trading days immediately preceding the effective date of the Fundamental Change (or, such lesser number of trading days as shall follow the public announcement of such transaction) and (ii) $0.10. The maximum number of shares of Common Stock issuable upon such conversion will not exceed 85% of the total number of shares of Common Stock outstanding on a fully-diluted basis. Series B Preferred Stock and Tandem Preferred Stock The Company has designated 8,100,000 shares of its authorized preferred stock as Series B Preferred Stock. The rights and preferences of the Series B Preferred Stock are defined in the Certificate of Designations, Preferences, Rights and Limitations of Series B Cumulative Convertible Perpetual Preferred Stock of the Company, dated March 10, 2022 (the "Series B Certificate of Designations"). At June 30, 2024, the Company had 3,029,900 shares of Series B Preferred Stock outstanding. The par value of the Series B Preferred Stock is $0.0001 per share. Each share of Series B Preferred Stock is convertible at the holder’s option, at any time into the number of shares of Common Stock determined as of the date of conversion using a certain conversion formula that takes into account the amount of liquidation preference per share as adjusted for accrued but unpaid dividends, as described below. As of June 30, 2024, after taking into account the effect of the Reverse Stock Split and payment of the accrued dividend, each outstanding share of Series B Preferred Stock was convertible into 0.00555 of one share of Common Stock using this conversion formula. Accordingly, as of June 30, 2024, 16,814 shares of Common Stock were issuable upon conversion of 3,029,900 shares of outstanding Series B Preferred Stock. The shares of Series B Preferred Stock are listed on the Nasdaq under the symbol “XELAP.” Holders of the Series B Preferred Stock are entitled to receive cumulative dividends at a rate per annum of 6% of the dollar amount of per share liquidation preference (plus accumulated but unpaid dividends, the “Series B Liquidation Preference”) per share of Series B Preferred Stock, paid or accrued quarterly in arrears on the last day of each of March, June, September and December. The Company shall add the amount of all accrued but unpaid dividends on each quarterly dividend payment date to the Series B Liquidation Preference, except to the extent the Company elects to make all or any portion of such payment in cash on or prior to the applicable dividend payment date, in which case, the amount of the accrued but unpaid dividends that is added to the Series B Liquidation Preference shall be reduced on a dollar-for-dollar basis by the amount of any such cash payment. The aggregate Series B Liquidation Preference was $84.1 million as of June 30, 2024 (at $25 per share inclusive of accrued dividends as of such date as described below). The Company is not required to make any payment or allowance for unpaid dividends, whether or not in arrears, on converted shares of Series B Preferred Stock or for dividends on the shares of Common Stock issued upon conversion of such shares. The gross dividend accumulation was $1.2 million and $2.5 million for the three and six months ended June 30, 2024, respectively, as reflected on the condensed consolidated statements of operations. The gross dividend accumulation was $1.2 million and $2.3 million for the three and six months ended June 30, 2023, respectively, as reflected on the condensed consolidated statements of operations. As of June 30, 2024, the total accumulated but unpaid dividends on the Series B Preferred Stock since inception on March 23, 2022 was $8.3 million. The per share average of cumulative preferred dividends for the three and six months ended June 30, 2024 was $0.41 and $0.81, respectively. The per share average of cumulative preferred dividends for the three and six months ended June 30, 2023 was $0.39 and $0.77, respectively. In addition, holders of the Series B Preferred Stock will participate in any dividend or distribution of cash or other property paid in respect of the Common Stock pro rata with the holders of the Common Stock (other than certain dividends or distributions that trigger an adjustment to the conversion rate, as described in the Series B Certificate of Designations), as if all shares of Series B Preferred Stock had been converted into Common Stock immediately prior to the date on which such holders of the Common Stock became entitled to such dividend or distribution. Holders of Series B Preferred Stock also have rights to vote for the election of one additional director to serve on the Board, if dividends on Series B Preferred Stock are in arrears for eight or more consecutive quarters, until all unpaid and accumulated dividends on the Series B Preferred Stock have been paid or declared and a sum sufficient for payment is set aside for such payment. On May 17, 2022, the Company issued one share of tandem preferred stock, par value $0.0001 per share (the “Tandem Preferred Stock”), as a dividend on its existing shares of outstanding Series B Preferred Stock. The rights and preferences of the Tandem Preferred Stock are defined in the Certificate of Designations, Preferences, Rights and Limitations of the Tandem Preferred Stock of the Company, dated May 17, 2022 (the "Tandem Certificate of Designations"). Any issuance of Series B Preferred Stock after this date shall be automatically accompanied by an equal number of shares of Tandem Preferred Stock. Tandem Preferred Stock are embedded in the Series B Preferred Stock and they provide voting rights to the existing shares of Series B Preferred Stock. Each share of Series B Preferred Stock disclosed in the condensed consolidated balance sheet, the condensed consolidated statements of stockholders’ deficit and the notes to the condensed consolidated financial statements embeds one share of Tandem Preferred Stock. On all matters submitted to a vote of the stockholders of the Company, the holders of the Series B Preferred Stock through their holdings of Tandem Preferred Stock will be entitled to vote with the holders of the Common Stock as a single class. Each share of Tandem Preferred Stock entitles the holder to one vote per share, subject to adjustment for issuance of any shares of Common Stock pursuant to any dividend or distribution on shares of Common Stock, share split or share combination or other transactions as specified in the Tandem Certificate of Designations. Shares of Tandem Preferred Stock are not entitled to receive dividends of any kind. In the case of a transfer of the underlying Series B Preferred Stock by a holder to any transferee, the Tandem Preferred Stock shall be automatically transferred simultaneously to such transferee without any further action by such Holder. Upon the redemption of a holder’s shares of Series B Preferred Stock or the conversion of shares of Series B Preferred Stock into Common Stock, an equal number of such holder’s shares of Tandem Preferred Stock shall, without any further action required by the holder, be automatically transferred to the Company for cancellation without the payment of any additional consideration by the Company. In the event of any liquidation, winding-up or dissolution of the Company each holder of the Tandem Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders an amount in cash equal to the par value of such Tandem Preferred Stock with respect to each share of Tandem Preferred Stock held by such holder. Special Voting Preferred Stock On October 9, 2023, the Company entered into the Subscription, Voting and Redemption Agreement with GP-HGM LLC, an entity affiliated to the Executive Chairman of the Company, pursuant to which GP-HGM LLC purchased 1,000,000 shares of a new class of preferred stock designated as “Special Voting Stock” for an aggregate purchase price of $100 and agreed to vote all of the shares of Special Voting Stock at the annual meeting of stockholders, held on June 13, 2024 (the “Annual Meeting"), in proportion to the votes cast at the Annual Meeting. Each share of Special Voting Stock was entitled to 20,000 votes per share. The Special Voting Stock were deemed redeemed for an aggregate price of $100 on the first business day following the Annual Meeting. There were no Special Voting Stock outstanding as of June 30, 2024. Warrants At June 30, 2024, there were warrants outstanding to purchase 1,978 shares of the Company’s Common Stock, consisting of 7,913,637 warrants to purchase one-four thousandth of one share of Common Stock from the private placement that was completed in March 2021. Each private placement warrant entitles the holder to purchase one-four thousandth of one share of Common Stock, at an exercise price of $16,000.00 per share and will expire on September 19, 2026. The private placement warrants are not listed or traded as of June 30, 2024, and are not subject to mandatory redemption by the Company.

Stockholders' Equity

6 Months Ended

Jun. 30, 2024

Stockholders' Equity

Stockholders' Equity

11. Stockholders’ Equity

The following description summarizes the material terms and provisions of the securities that the Company has authorized.

Common Stock

The Company is authorized to issue 1,600,000,000 shares of Common Stock. Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, the holders of the Company’s Common Stock and Tandem Preferred Stock (that provides a vote to holders of the Company’s Series B Preferred Stock, as described below) possess all voting power for the election of the Company’s board of directors (the “Board”) and all other matters requiring stockholder action and will at all times vote together as one class on all matters submitted to a vote of Exela stockholders. Holders of the Company’s Common Stock are entitled to one vote per share on matters to be voted on by stockholders. Holders of the Company’s Common Stock will be entitled to receive such dividends and other distributions, if any, as may be declared from time to time by the Board in its discretion out of funds legally available therefor and shall share equally on a per share basis in such dividends and distributions. The holders of the Common Stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the Common Stock. As of June 30, 2024, there were 6,365,363 shares of Common Stock outstanding.

Share Buyback Program

On August 10, 2022, the Board authorized a share buyback program (the “2022 Share Buyback Program”), pursuant to which the Company is permitted to repurchase up to 50,000 shares of Common Stock over the next two-year period. The 2022 Share Buyback Program does not obligate the Company to repurchase any shares of Common Stock. No shares were repurchased under the 2022 Share Buyback Program during the six months ended June 30, 2024 and 2023. As of June 30, 2024, the Company had repurchased and concurrently retired 1,787 shares of Common Stock pursuant to the 2022 Share Buyback Program.

The Company records such stock repurchases as a reduction to stockholders’ equity. The Company allocates the excess of the repurchase price over the par value of shares acquired to accumulated deficit and additional paid-in capital. The portion allocated to additional paid-in capital is determined by dividing the number of shares to be retired by the number of shares issued multiplied by the balance of additional paid-in capital as of the retirement date.

Series A Preferred Stock

The Company is authorized to issue 20,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board. The Company has designated 2,800,000 shares of its authorized preferred stock as Series A Preferred Stock. The rights and preferences of the Series A Preferred Stock are defined in the Certificate of Designations, Preferences, Rights and Limitations of Series A Perpetual Convertible Preferred Stock of the Company, dated July 12, 2017 (the "Series A Certificate of Designations"). At June 30, 2024, the Company had 2,778,111 shares of Series A Preferred Stock outstanding. The par value of the Series A Preferred Stock is $0.0001 per share. Each share of Series A Preferred Stock is convertible at the holder’s option, at any time into the number of shares of Common Stock determined as of the date of conversion using a certain conversion formula that takes into account the amount of Liquidation Preference per share as adjusted for accrued but unpaid dividends, as described below. As of June 30, 2024, after taking into account the effect of the Reverse Stock Split, each outstanding share of Series A Preferred Stock was convertible into 0.000152 shares of Common Stock using this conversion formula. Accordingly, as of June 30, 2024, 424 shares of Common Stock were issuable upon conversion of 2,778,111 shares of outstanding Series A Preferred Stock.

Holders of the Series A Preferred Stock are entitled to receive cumulative dividends at a rate per annum of 10% of the dollar amount of per share liquidation preference (plus accumulated but unpaid dividends, the “Series A Liquidation Preference”) per share of Series A Preferred Stock, paid or accrued quarterly in arrears on the 15^th day of each March, June, September and December. From the issue date through June 30, 2024, the amount of all accrued but

unpaid dividends on the Series A Preferred Stock have been added to the Series A Liquidation Preference. The Company shall add the amount of all accrued but unpaid dividends on each quarterly dividend payment date to the Series A Liquidation Preference, except to the extent the Company elects to make all or any portion of such payment in cash on or prior to the applicable dividend payment date, in which case, the amount of the accrued but unpaid dividends that is added to the Series A Liquidation Preference shall be reduced on a dollar-for-dollar basis by the amount of any such cash payment. The aggregate Series A Liquidation Preference amount was $44.2 million as of June 30, 2024 (at $8 per share inclusive of accrued dividends as of such date as described below). The Company is not required to make any payment or allowance for unpaid dividends, whether or not in arrears, on converted shares of Series A Preferred Stock or for dividends on the shares of Common Stock issued upon conversion of such shares. The gross dividend accumulation for the three and six months ended June 30, 2024 was $1.1 million and $2.1 million, respectively. The gross dividend accumulation for the three and six months ended June 30, 2023 was $1.0 million and $1.9 million, respectively. As of June 30, 2024, the total accumulated but unpaid dividends on the Series A Preferred Stock since inception on July 12, 2017 was $22.0 million. The per share average of cumulative preferred dividends for the three and six months ended June 30, 2024 was $0.38 and $0.76, respectively. The per share average of cumulative preferred dividends for the three and six months ended June 30, 2023 was $0.35 and $0.69, respectively.

In addition, holders of the Series A Preferred Stock will participate in any dividend or distribution of cash or other property paid in respect of the Common Stock pro rata with the holders of the Common Stock (other than certain dividends or distributions that trigger an adjustment to the conversion rate, as described in the Series A Certificate of Designations), as if all shares of Series A Preferred Stock had been converted into Common Stock immediately prior to the date on which such holders of the Common Stock became entitled to such dividend or distribution.

Following the occurrence of a "Fundamental Change," as defined in the Series A Certificate of Designations, if the Company does not redeem the Series A Preferred Stock, holders of the Series A Preferred Stock may convert their entire accumulated Series A Liquidation Preference into Common Stock for fifteen days following the effective date of the Fundamental Change based on the greater of (i) the price to be paid (or deemed paid) per share of Common Stock in such transaction or the average closing price of the Common Stock on the 20 consecutive trading days immediately preceding the effective date of the Fundamental Change (or, such lesser number of trading days as shall follow the public announcement of such transaction) and (ii) $0.10. The maximum number of shares of Common Stock issuable upon such conversion will not exceed 85% of the total number of shares of Common Stock outstanding on a fully-diluted basis.

Series B Preferred Stock and Tandem Preferred Stock

The Company has designated 8,100,000 shares of its authorized preferred stock as Series B Preferred Stock. The rights and preferences of the Series B Preferred Stock are defined in the Certificate of Designations, Preferences, Rights and Limitations of Series B Cumulative Convertible Perpetual Preferred Stock of the Company, dated March 10, 2022 (the "Series B Certificate of Designations"). At June 30, 2024, the Company had 3,029,900 shares of Series B Preferred Stock outstanding. The par value of the Series B Preferred Stock is $0.0001 per share. Each share of Series B Preferred Stock is convertible at the holder’s option, at any time into the number of shares of Common Stock determined as of the date of conversion using a certain conversion formula that takes into account the amount of liquidation preference per share as adjusted for accrued but unpaid dividends, as described below. As of June 30, 2024, after taking into account the effect of the Reverse Stock Split and payment of the accrued dividend, each outstanding share of Series B Preferred Stock was convertible into 0.00555 of one share of Common Stock using this conversion formula. Accordingly, as of June 30, 2024, 16,814 shares of Common Stock were issuable upon conversion of 3,029,900 shares of outstanding Series B Preferred Stock. The shares of Series B Preferred Stock are listed on the Nasdaq under the symbol “XELAP.”

Holders of the Series B Preferred Stock are entitled to receive cumulative dividends at a rate per annum of 6% of the dollar amount of per share liquidation preference (plus accumulated but unpaid dividends, the “Series B Liquidation Preference”) per share of Series B Preferred Stock, paid or accrued quarterly in arrears on the last day of each of March, June, September and December. The Company shall add the amount of all accrued but unpaid dividends on each quarterly dividend payment date to the Series B Liquidation Preference, except to the extent the Company elects to make all or any portion of such payment in cash on or prior to the applicable dividend payment date, in which case,

the amount of the accrued but unpaid dividends that is added to the Series B Liquidation Preference shall be reduced on a dollar-for-dollar basis by the amount of any such cash payment. The aggregate Series B Liquidation Preference was $84.1 million as of June 30, 2024 (at $25 per share inclusive of accrued dividends as of such date as described below). The Company is not required to make any payment or allowance for unpaid dividends, whether or not in arrears, on converted shares of Series B Preferred Stock or for dividends on the shares of Common Stock issued upon conversion of such shares. The gross dividend accumulation was $1.2 million and $2.5 million for the three and six months ended June 30, 2024, respectively, as reflected on the condensed consolidated statements of operations. The gross dividend accumulation was $1.2 million and $2.3 million for the three and six months ended June 30, 2023, respectively, as reflected on the condensed consolidated statements of operations. As of June 30, 2024, the total accumulated but unpaid dividends on the Series B Preferred Stock since inception on March 23, 2022 was $8.3 million. The per share average of cumulative preferred dividends for the three and six months ended June 30, 2024 was $0.41 and $0.81, respectively. The per share average of cumulative preferred dividends for the three and six months ended June 30, 2023 was $0.39 and $0.77, respectively.

In addition, holders of the Series B Preferred Stock will participate in any dividend or distribution of cash or other property paid in respect of the Common Stock pro rata with the holders of the Common Stock (other than certain dividends or distributions that trigger an adjustment to the conversion rate, as described in the Series B Certificate of Designations), as if all shares of Series B Preferred Stock had been converted into Common Stock immediately prior to the date on which such holders of the Common Stock became entitled to such dividend or distribution. Holders of Series B Preferred Stock also have rights to vote for the election of one additional director to serve on the Board, if dividends on Series B Preferred Stock are in arrears for eight or more consecutive quarters, until all unpaid and accumulated dividends on the Series B Preferred Stock have been paid or declared and a sum sufficient for payment is set aside for such payment.

On May 17, 2022, the Company issued one share of tandem preferred stock, par value $0.0001 per share (the “Tandem Preferred Stock”), as a dividend on its existing shares of outstanding Series B Preferred Stock. The rights and preferences of the Tandem Preferred Stock are defined in the Certificate of Designations, Preferences, Rights and Limitations of the Tandem Preferred Stock of the Company, dated May 17, 2022 (the "Tandem Certificate of Designations"). Any issuance of Series B Preferred Stock after this date shall be automatically accompanied by an equal number of shares of Tandem Preferred Stock. Tandem Preferred Stock are embedded in the Series B Preferred Stock and they provide voting rights to the existing shares of Series B Preferred Stock. Each share of Series B Preferred Stock disclosed in the condensed consolidated balance sheet, the condensed consolidated statements of stockholders’ deficit and the notes to the condensed consolidated financial statements embeds one share of Tandem Preferred Stock.

On all matters submitted to a vote of the stockholders of the Company, the holders of the Series B Preferred Stock through their holdings of Tandem Preferred Stock will be entitled to vote with the holders of the Common Stock as a single class. Each share of Tandem Preferred Stock entitles the holder to one vote per share, subject to adjustment for issuance of any shares of Common Stock pursuant to any dividend or distribution on shares of Common Stock, share split or share combination or other transactions as specified in the Tandem Certificate of Designations.

Shares of Tandem Preferred Stock are not entitled to receive dividends of any kind. In the case of a transfer of the underlying Series B Preferred Stock by a holder to any transferee, the Tandem Preferred Stock shall be automatically transferred simultaneously to such transferee without any further action by such Holder. Upon the redemption of a holder’s shares of Series B Preferred Stock or the conversion of shares of Series B Preferred Stock into Common Stock, an equal number of such holder’s shares of Tandem Preferred Stock shall, without any further action required by the holder, be automatically transferred to the Company for cancellation without the payment of any additional consideration by the Company. In the event of any liquidation, winding-up or dissolution of the Company each holder of the Tandem Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders an amount in cash equal to the par value of such Tandem Preferred Stock with respect to each share of Tandem Preferred Stock held by such holder.

Special Voting Preferred Stock

On October 9, 2023, the Company entered into the Subscription, Voting and Redemption Agreement with GP-HGM LLC, an entity affiliated to the Executive Chairman of the Company, pursuant to which GP-HGM LLC purchased 1,000,000 shares of a new class of preferred stock designated as “Special Voting Stock” for an aggregate purchase price of $100 and agreed to vote all of the shares of Special Voting Stock at the annual meeting of stockholders, held on June 13, 2024 (the “Annual Meeting"), in proportion to the votes cast at the Annual Meeting. Each share of Special Voting Stock was entitled to 20,000 votes per share. The Special Voting Stock were deemed redeemed for an aggregate price of $100 on the first business day following the Annual Meeting. There were no Special Voting Stock outstanding as of June 30, 2024.

Warrants

At June 30, 2024, there were warrants outstanding to purchase 1,978 shares of the Company’s Common Stock, consisting of 7,913,637 warrants to purchase one-four thousandth of one share of Common Stock from the private placement that was completed in March 2021. Each private placement warrant entitles the holder to purchase one-four thousandth of one share of Common Stock, at an exercise price of $16,000.00 per share and will expire on September 19, 2026. The private placement warrants are not listed or traded as of June 30, 2024, and are not subject to mandatory redemption by the Company.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Long-Term Debt and Credit Facilities - Securitization Facility (Details) - Securitization Facility - USD ($) $ in Millions		3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 17, 2022	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Accounts receivable de-recognized		$ 123.2	$ 122.9	$ 250.5	$ 262.9	$ 522.7
Percentage of face value of accounts receivable	100.00%
Remitted amount		113.4	125.2	249.3	266.5	507.6
Accounts receivable, Unsold, Pledged as collateral		34.0		34.0		$ 41.2
Pre-tax loss		$ 2.6	$ 2.0	$ 4.2	$ 3.9
Amended And Restated Receivables Purchase Agreements
Outstanding borrowings under the facility	$ 150.0

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

General

6 Months Ended

Jun. 30, 2024

General

General

1. General

These condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements as of and for the year ended December 31, 2023 included in the Exela Technologies, Inc. (the “Company” or “Exela”) annual report on Form 10-K for such period (the “2023 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) on April 3, 2024 and available at the SEC’s website at http://www.sec.gov.

The accompanying condensed consolidated financial statements and related notes to the condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and XBP Europe Holdings, Inc. (“XBP Europe”), a publicly traded company that is majority-owned by the Company. The accompanying condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”), as they apply to interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These accounting principles require the Company to use estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from the Company’s estimates.

The condensed consolidated financial statements are unaudited, but include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim period. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.

Going Concern

The Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its obligations as they become due within one year after the date that the financial statements are issued. Management’s evaluation does not initially take into consideration the potential mitigating effects of management’s plans that have not been fully implemented as of the date the financial statements are issued. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

In performing this evaluation, the Company concluded that the following conditions raise substantial doubt about its ability to continue as a going concern:

●

a history of net losses, including net losses of $52.5 million for the six months ended June 30, 2024;

●

net operating cash outflow of $16.9 million for the six months ended June 30, 2024;

●

a working capital deficit of $254.4 million as of June 30, 2024; and

●

an accumulated deficit of $2,134.7 million as of June 30, 2024.

The Company has undertaken and/or completed the following plans and actions to improve its available cash balances, liquidity or cash generated from operations:

●

identified and in the process of executing on cost savings for fiscal year 2024; and

●

issued approximately $764.8 million aggregate principal amount of April 2026 Notes (as defined in Note 5 – Long-Term Debt and Credit Facilities) in exchange for $956.0 million aggregate principal amount of existing 2026 Notes that provide flexibility to pay up to 50% of the interest payments in 2024 using April 2026 Notes instead of cash.

In addition to these actions, management has reviewed the Company's operational plans which include executing on price increases, and projected growth of margins. The Company will have to achieve positive operating cash flows and restore profitability over the next twelve months and otherwise execute its business plan. However, the Company’s ability to execute its operational plans is uncertain and its ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, the Company’s performance and investor sentiment with respect to the Company and its industry, and considering these factors are outside of the Company’s control, substantial doubt about the Company’s ability to continue as a going concern exists. The condensed consolidated financial statements do not, however, include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.

Net Loss per Share

Earnings per share (“EPS”) is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the more dilutive of the two-class method and the if-converted method in the period of earnings. The two class method is an earnings allocation method that determines earnings per share (when there are earnings) for common stock and participating securities. The if-converted method assumes all convertible securities are converted into common stock. Diluted EPS excludes all dilutive potential shares of common stock if their effect is anti-dilutive.

As the Company experienced net losses for the periods presented, the impact of the Company’s Series A Perpetual Convertible Preferred Stock (“Series A Preferred Stock”) and Series B Cumulative Convertible Perpetual Preferred Stock (the “Series B Preferred Stock”), was calculated using the if-converted method. As of June 30, 2024, the outstanding shares of the Company’s Series A Preferred Stock and Series B Preferred Stock, if converted would have resulted in an additional 424 shares and 16,814 shares of the Company’s Common Stock outstanding, respectively, however, they were not included in the computation of diluted loss per share as their effects were anti-dilutive (i.e., if included, would reduce the net loss per share).

Similarly, the Company also did not include the effect of 1,978 and 2,433 shares of Common Stock issuable upon exercise of 7,913,637 and 9,731,819 outstanding warrants as of June 30, 2024 and 2023, respectively, sold in a private placement of securities on March 18, 2021 or the effect of the aggregate number of shares issuable pursuant to outstanding restricted stock units, performance units and options (1,367 and 2,472 as of June 30, 2024 and 2023, respectively) in the calculation of diluted loss per share for the three and six months ended June 30, 2024 and 2023, because their effects were also anti-dilutive.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss attributable to common stockholders (A)	$	(27,986)	$	(33,024)	$	(55,142)	$	(80,567)
Weighted average common shares outstanding – basic and diluted (B)		6,365,356		6,367,969		6,365,356		5,595,352
Loss Per Share:
Basic and diluted (A/B)	$	(4.40)	$	(5.19)	$	(8.66)	$	(14.40)

Merger Agreement

On October 9, 2022, the Company entered into a definitive merger agreement to merge its European business with CF Acquisition Corp. VIII (“CFFE”), a special purpose acquisition company, to form a new publicly-traded company XBP Europe Holdings, Inc. (“XBP Europe”), which is a part of the ITPS segment (as defined in Note 3 – Significant Accounting Policies). The business combination was accounted for as a reverse capitalization in accordance with GAAP. Under this method of accounting, CFFE was treated as the “acquired” company for financial reporting purposes with XBP Europe surviving as a direct wholly-owned subsidiary of CFFE.

Following the closing of the transaction on November 29, 2023, the Company’s European business operates as XBP Europe, and the Company owns 72.3% of the outstanding capital stock of XBP Europe as of June 30, 2024. The noncontrolling stockholders' proportionate share of stockholder’s deficit in XBP Europe of $4.9 million and $3.3 million, as of June 30, 2024 and December 31, 2023, respectively, is reflected as noncontrolling interest in XBP Europe in the accompanying condensed consolidated balance sheets. Beginning on November 30, 2023, XBP Europe shares started trading on the Nasdaq Stock Market under the ticker symbol “XBP” and its warrants started trading on the Nasdaq Stock Market under the ticker symbol “XBPEW”.

Sale of Non-core Assets

On June 8, 2023, the Company completed the sale of its high-speed scanner business, which was a part of its ITPS segment (as defined in Note 3 – Significant Accounting Policies), for a purchase price of approximately $30.1 million. The sale of the high-speed scanner business does not represent a strategic shift that will have a major effect on the Company’s operations and financial results. As a result of this transaction, the Company disposed of $16.5 million of goodwill based on the relative fair value of the high-speed scanner business to the total fair value of the ITPS reporting unit. This transaction resulted in a total pre-tax gain of $7.2 million. Per the terms of the sales agreement, the Company may receive additional cash consideration (“Contingent Consideration”) upon the future occurrence of certain earn out events described in the sales agreement. The Contingent Consideration, if any, will be recognized in the period the earn out event occurs, and the Contingent Consideration is realizable.

Related-Party Transactions (Tables)

6 Months Ended

Jun. 30, 2024

Related-Party Transactions

Schedule of payable and receivable/prepaid balances with affiliates



	June 30, 2024				December 31, 2023
	Receivables and Prepaid Expenses		Payables		Receivables and Prepaid Expenses		Payables
HOV Services, Ltd	$	403	$	—	$	296	$	—
Rule 14		—		3,019		—		1,918
HGM		—		28		—		9
DOW		46		—		—		11
	$	449	$	3,047	$	296	$	1,938

Employee Benefit Plans (Details) $ in Millions	6 Months Ended
Employee Benefit Plans (Details) $ in Millions	Jun. 30, 2024 USD ($)
German Pension Plan
Pension plans
Plan assets	$ 0.0
German Pension Plan \| Minimum
Pension plans
Qualifying period	10 years
German Pension Plan \| Maximum
Pension plans
Defined Benefit Plan, Funding Status [Extensible Enumeration]	us-gaap:UnfundedPlanMember
U.K. Pension Plan \| Minimum
Pension plans
Minimum required years prior to retirement for eligibility	3 years
Asterion Pension Plan \| Minimum
Pension plans
Minimum required years prior to retirement for eligibility	3 years
Norway Pension Plan \| Minimum
Pension plans
Minimum required years prior to retirement for eligibility	3 years

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2024

Significant Accounting Policies

Revenue Recognition

Revenue Recognition

The Company accounts for revenue by first evaluating whether a performance obligation exists. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. Revenue is measured as the amount of consideration the Company expect to receive in exchange for transferring goods or providing services. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. All of the Company’s material sources of revenue are derived from contracts with customers, primarily relating to the provision of business and transaction processing services within each of the Company’s segments. The Company does not have any significant extended payment terms, as payment is received shortly after goods are delivered or services are provided.

Nature of Services

The Company’s primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services, but that are substantially the same, and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. The Company’s obligation to its customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. The Company allocates variable fees to the single performance obligation charged to the distinct service period in which the Company has the contractual right to bill under the contract.

Disaggregation of Revenues

The Company is organized into three segments: Information & Transaction Processing Solutions (“ITPS”), Healthcare Solutions (“HS”), and Legal & Loss Prevention Services (“LLPS”) (See Note 13 – Segment and Geographic Area Information). The following tables disaggregate revenue from contracts by segment and by geographic region for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,
	2024								2023
		ITPS		HS		LLPS		Total		ITPS		HS		LLPS		Total
U.S.A.	$	115,667	$	62,935	$	25,878	$	204,480	$	137,498	$	63,608	$	24,340	$	225,446
EMEA		36,031		—		—		36,031		42,294		—		—		42,294
Other		5,142		—		—		5,142		5,198		—		—		5,198
Total	$	156,840	$	62,935	$	25,878	$	245,653	$	184,990	$	63,608	$	24,340	$	272,938


	Six Months Ended June 30,
	2024								2023
		ITPS		HS		LLPS		Total		ITPS		HS		LLPS		Total
U.S.A.	$	246,388	$	127,787	$	43,697	$	417,872	$	283,523	$	126,650	$	41,210	$	451,383
EMEA		76,077		—		—		76,077		85,072		—		—		85,072
Other		10,515		—		—		10,515		10,103		—		—		10,103
Total	$	332,980	$	127,787	$	43,697	$	504,464	$	378,698	$	126,650	$	41,210	$	546,558

Contract Balances

The following table presents contract assets, contract liabilities and contract costs recognized at June 30, 2024, December 31, 2023 and January 1, 2023:


	June 30,		December 31,		January 1,
	2024		2023		2023
Accounts receivable, net	$	61,501	$	76,893	$	101,616
Deferred revenues		15,166		13,107		17,585
Customer deposits		27,898		23,838		16,955
Costs to obtain and fulfill a contract		1,459		1,400		1,674

The following table describes the changes in the allowance for expected credit losses for the six months ended June 30, 2024 (all related to accounts receivables):


Balance at January 1, 2024 of the allowance for expected credit losses	$	6,628
Provision for expected loss		14,683
Write-off charged against the allowance		(13,872)
Recoveries collected		(594)
Foreign currency exchange rate adjustment		(32)
Balance at June 30, 2024 of the allowance for expected credit losses	$	6,813

Accounts receivable, net includes $23.1 million and $23.9 million as of June 30, 2024 and December 31, 2023, respectively, representing amounts not yet billed to customers. The Company has accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers.

Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where the Company received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers is deferred over the contract term. The Company recognized revenue of $3.4 million and $7.8 million during the three and six months ended June 30, 2024 that had been deferred as of December 31, 2023. The Company recognized revenue of $8.0 million and $14.8 million during the three and six months ended June 30, 2023 that had been deferred as of January 1, 2023. The Company recognized revenue of $17.3 million during the year ended December 31, 2023 that had been deferred as of January 1, 2023.

Costs incurred to obtain and fulfill contracts are deferred and presented as part of intangible assets, net and expensed on a straight-line basis over the estimated benefit period. The Company recognized $0.2 million and $0.2 million of amortization for these costs for the three months ended June 30, 2024 and 2023, respectively, within depreciation and amortization expense in the Company’s condensed consolidated statements of operations. The Company recognized $0.5 million and $0.4 million of amortization for these costs for the six months ended June 30, 2024 and 2023, respectively, within depreciation and amortization expense in the Company’s condensed consolidated statements of operations. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or fulfillment and can be separated into two principal categories: contract commissions and fulfillment costs. Applying the practical expedient in ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred, if the amortization period would have been one year or less. These costs are included in selling, general and administrative expenses. The effect of applying this practical expedient was not material.

Customer deposits consist primarily of amounts received from customers in advance for postage. These advanced postage deposits are used to cover the costs associated with postage, with the corresponding postage revenue being recognized as services are performed.

Performance Obligations

At the inception of each contract, the Company assesses the goods and services promised in its contracts and identify each distinct performance obligation. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of the Company’s business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes.

Certain of the Company’s contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company estimates its expected costs of satisfying a performance obligation and add an appropriate margin for that distinct good or service. The Company also uses the adjusted market approach whereby it estimates the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, the Company considers the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. Certain of the Company’s software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained.

When evaluating the transaction price, the Company analyzes, on a contract-by-contract basis, all applicable variable consideration. The nature of the Company’s contracts gives rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. The Company estimates these amounts based on the expected amount to be provided to customers and reduce revenues recognized. The Company does not anticipate significant changes to its estimates of variable consideration.

The Company includes reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue.

Transaction Price Allocated to the Remaining Performance Obligations

In accordance with optional exemptions available under GAAP, the Company does not disclose the value of unsatisfied performance obligations for (a) contracts with an original expected length of one year or less, and (b) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of the Company’s contracts. The Company has certain non-cancellable contracts where the Company receives a fixed monthly fee in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of June 30, 2024 in each of the future periods below:


Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations

Remainder of 2024	$	6,152
2025		7,987
2026		4,629
2027		2,554
2028		1,519
2029 and thereafter		—
Total	$	22,841

- Definition

Disclosure of accounting policy for revenue from contract with customer.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Publisher FASB
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+ Details

General (Tables)

6 Months Ended

Jun. 30, 2024

General

Schedule of components of basic and diluted EPS


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss attributable to common stockholders (A)	$	(27,986)	$	(33,024)	$	(55,142)	$	(80,567)
Weighted average common shares outstanding – basic and diluted (B)		6,365,356		6,367,969		6,365,356		5,595,352
Loss Per Share:
Basic and diluted (A/B)	$	(4.40)	$	(5.19)	$	(8.66)	$	(14.40)

Significant Accounting Policies - Disaggregation of Revenues (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) segment	Jun. 30, 2023 USD ($)
Disaggregation of Revenues
Number of segments \| segment			3
Revenue	$ 245,653	$ 272,938	$ 504,464	$ 546,558
United States
Disaggregation of Revenues
Revenue	204,480	225,446	417,872	451,383
EMEA
Disaggregation of Revenues
Revenue	36,031	42,294	76,077	85,072
Other
Disaggregation of Revenues
Revenue	5,142	5,198	10,515	10,103
ITPS
Disaggregation of Revenues
Revenue	156,840	184,990	332,980	378,698
ITPS \| United States
Disaggregation of Revenues
Revenue	115,667	137,498	246,388	283,523
ITPS \| EMEA
Disaggregation of Revenues
Revenue	36,031	42,294	76,077	85,072
ITPS \| Other
Disaggregation of Revenues
Revenue	5,142	5,198	10,515	10,103
HS
Disaggregation of Revenues
Revenue	62,935	63,608	127,787	126,650
HS \| United States
Disaggregation of Revenues
Revenue	62,935	63,608	127,787	126,650
LLPS
Disaggregation of Revenues
Revenue	25,878	24,340	43,697	41,210
LLPS \| United States
Disaggregation of Revenues
Revenue	$ 25,878	$ 24,340	$ 43,697	$ 41,210

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-41

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 270
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-Paragraph 1
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482964/270-10-50-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (ee)
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-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 4: http://fasb.org/us-gaap/role/ref/otherTransitionRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
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-Name Accounting Standards Codification
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-Paragraph 1
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-42

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
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-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-22

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-Topic 280
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-4

+ Details

Intangible Assets and Goodwill - Estimated intangibles amortization expense (Details) $ in Thousands	Jun. 30, 2024 USD ($)
Intangibles amortization expense
Remainder of 2024	$ 15,632
2025	25,927
2026	21,226
2027	17,430
2028	13,778
Thereafter	49,071
Total	$ 143,064

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash flows from operating activities
Net loss	$ (52,478)	$ (76,322)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization	28,490	31,450
Original issue discount, debt premium and debt issuance cost amortization	(20,022)	16,064
Interest on BR Exar AR Facility	(2,558)	(5,066)
Debt modification and extinguishment gain, net		(16,964)
Credit loss expense	14,683	2,865
Deferred income tax provision	757	776
Share-based compensation expense	1,560	314
Unrealized foreign currency (gain) loss	(131)	521
Gain on sale of assets	(533)	(5,831)
Fair value adjustment for private warrants liability of XBP Europe	(40)
Change in operating assets and liabilities
Accounts receivable	6,379	(7,703)
Prepaid expenses and other current assets	(6,842)	6,495
Accounts payable and accrued liabilities	13,427	(639)
Related party payables	955	(403)
Additions to outsource contract costs	(573)	(298)
Net cash provided by (used in) operating activities	(16,926)	(54,741)
Cash flows from investing activities
Purchase of property, plant and equipment	(4,033)	(3,357)
Additions to internally developed software	(1,947)	(1,976)
Proceeds from sale of assets	2,893	29,811
Net cash provided by (used in) investing activities	(3,087)	24,478
Cash flows from financing activities
Proceeds from issuance of Common Stock from at the market offerings		69,260
Cash paid for equity issuance costs from at the market offerings		(2,232)
Payment for fractional shares on reverse stock split		(31)
Borrowings under factoring arrangement and Securitization Facility	496	62,858
Principal repayment on borrowings under factoring arrangement and Securitization Facility	(511)	(63,577)
Cash paid for debt issuance costs	(237)	(6,398)
Principal payments on finance lease obligations	(3,837)	(2,150)
Borrowings from other loans	20,594	4,289
Cash paid for debt repurchases		(11,858)
Proceeds from Second Lien Note		31,500
Repayment of BRCC term loan		(44,775)
Principal repayments on senior secured term loans, BRCC revolver and other loans	(17,763)	(15,441)
Net cash provided by financing activities	3,776	38,561
Effect of exchange rates on cash, restricted cash and cash equivalents	344	145
Net increase (decrease) in cash, restricted cash and cash equivalents	(15,893)	8,443
Cash, restricted cash, and cash equivalents
Beginning of period	67,153	45,067
End of period	51,260	53,510
Supplemental cash flow data:
Income tax payments, net of refunds received	1,978	2,898
Interest paid	38,694	72,608
Noncash investing and financing activities:
Assets acquired through right-of-use arrangements	7,673	405
Accrued PIK interest paid through issuance of PIK Notes	23,342
Waiver and consent fee payable added to outstanding balance of Senior Secured Term Loan	1,000
Accrued capital expenditures	288	2,167
BR EXAR
Cash flows from financing activities
Borrowings under revolving facility	30,614	20,000
Repayments under revolving facility	$ (25,580)	(12,484)
Revolving Credit Facility BRCC Term Loan
Cash flows from financing activities
Borrowings under revolving facility		$ 9,600

Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Measurement

Schedule of fair value of financial instruments


	Carrying		Fair		Fair Value Measurements
As of June 30, 2024	Amount		Value		Level 1		Level 2		Level 3
Recurring assets and liabilities:
Long-term debt	$	1,015,252	$	196,730	$	—	$	196,730	$	—
Current portion of long-term debts		53,723		53,723		—		53,723		—
Private warrants liability of XBP Europe		10		10		—		—		10


	Carrying		Fair		Fair Value Measurements
As of December 31, 2023	Amount		Value		Level 1		Level 2		Level 3
Recurring assets and liabilities:
Long-term debt	$	1,030,580	$	216,213	$	—	$	216,213	$	—
Current portion of long-term debts		30,029		30,029		—		30,029		—
Private warrants liability of XBP Europe		50		50		—		—		50

Schedule of net assets and liabilities classified as Level 3 for reconciliation


	June 30,		December 31,
	2024		2023
Balance at beginning of period	$	50	$	647
Reduction in the fair value of the private warrants liability of XBP Europe		(40)		(597)
Balance at end of period	$	10	$	50

Long-Term Debt and Credit Facilities - Long-Term Debt Outstanding (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023	Jul. 11, 2023
Long-Term Debt and Credit Facilities.
Total debt	$ 1,068,975	$ 1,060,609
Less: Current portion of long-term debt	(53,723)	(30,029)
Long-term debt, net of current maturities	1,015,252	1,030,580
Senior Secured Term Loan
Long-Term Debt and Credit Facilities.
Total debt	37,919	37,921
Unamortized debt issuance costs	2,100	1,600
New Notes
Long-Term Debt and Credit Facilities.
Debt exchange premium	94,600	119,400
Other
Long-Term Debt and Credit Facilities.
Total debt	36,428	21,101
Second Lien Secured Term Loan
Long-Term Debt and Credit Facilities.
Unamortized debt issuance costs	2,600	3,900
Second Lien Secured Term Loan \| New Notes
Long-Term Debt and Credit Facilities.
Total debt	28,934	27,608
BR Exar AR Facility
Long-Term Debt and Credit Facilities.
Total debt	5,022
Debt discount	500
Unamortized debt issuance costs	100
April 2026 Notes
Long-Term Debt and Credit Facilities.
Debt exchange premium			$ 142,300
April 2026 Notes \| New Notes
Long-Term Debt and Credit Facilities.
Total debt	929,791	931,293
Senior Secured Notes Due2026 Member \| Senior secured notes
Long-Term Debt and Credit Facilities.
Total debt	22,985	22,788
Debt discount	800	900
Unamortized debt issuance costs	200	200
BRCC Facility \| New Notes
Long-Term Debt and Credit Facilities.
Total debt	7,896	19,898
Certain revolving credit facilities
Long-Term Debt and Credit Facilities.
Total debt	28,900	12,800
Term loans
Long-Term Debt and Credit Facilities.
Total debt	$ 3,300	$ 3,800

Significant Accounting Policies - changes in the allowance for expected credit losses (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2024 USD ($)
Changes in allowance for expected credit losses
Allowance for expected credit losses, Beginning Balance	$ 6,628
Provision for expected loss	14,683
Write-off charged against the allowance	(13,872)
Recoveries collected	(594)
Foreign currency exchange rate adjustment	(32)
Allowance for expected credit losses, Ending Balance	$ 6,813

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2024	Aug. 13, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	001-36788
Entity Registrant Name	EXELA TECHNOLOGIES, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-1347291
Entity Address, Address Line One	2701 E. Grauwyler Rd.
Entity Address, City or Town	Irving
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75061
City Area Code	844
Local Phone Number	935-2832
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,365,363
Entity Central Index Key	0001620179
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock
Document Information [Line Items]
Title of 12(b) Security	Common Stock, Par Value $0.0001 per share
Trading Symbol	XELA
Security Exchange Name	NASDAQ
6.00% Series B Cumulative Convertible Perpetual Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	6.00% Series B Cumulative Convertible Perpetual Preferred Stock, par value $0.0001 per share
Trading Symbol	XELAP
Security Exchange Name	NASDAQ

Related-Party Transactions - Invoicing Support and Collection Services (Details) - Affiliates - DOW - USD ($)		3 Months Ended	6 Months Ended
	Sep. 01, 2023	Jun. 30, 2024	Jun. 30, 2024
Related-Party Transactions
Amount invoiced per month on insurance billing and denial management for medical bills generated after patients receive treatment	$ 2,000
Revenue		$ 0
Maximum
Related-Party Transactions
Revenue			$ 100,000
For accounts assigned within one year of service
Related-Party Transactions
Percentage of commission charged to collect past-due medical debts from its patients and insurance companies	15.00%
For accounts assigned after one year of service
Related-Party Transactions
Percentage of commission charged to collect past-due medical debts from its patients and insurance companies	25.00%

- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue	$ 245,653	$ 272,938	$ 504,464	$ 546,558
Cost of revenue (exclusive of depreciation and amortization)	187,964	212,059	389,952	428,526
Selling, general and administrative expenses (exclusive of depreciation and amortization)	41,778	32,026	82,632	76,407
Depreciation and amortization	14,983	14,890	28,490	31,450
Operating profit	(2,354)	11,224	(2,283)	4,324
Other expense (income), net:
Interest expense, net	23,129	45,092	44,217	89,272
Debt modification and extinguishment costs (gain), net		(6,785)		(15,558)
Sundry (income) expense, net	(204)	1,500	1,677	2,248
Other income, net	(423)	(232)	(874)	(514)
Loss before income taxes	(24,856)	(28,351)	(47,303)	(71,124)
Income tax expense	(2,049)	(2,535)	(5,175)	(5,198)
Net loss	(26,905)	(30,886)	(52,478)	(76,322)
Net loss attributable to noncontrolling interest in XBP Europe, net of taxes	(1,228)		(1,922)
Net loss attributable to Exela Technologies, Inc.	(25,677)	(30,886)	(50,556)	(76,322)
Net loss attributable to common stockholders	$ (27,986)	$ (33,024)	$ (55,142)	$ (80,567)
Basic (in dollars per share)	$ (4.40)	$ (5.19)	$ (8.66)	$ (14.40)
Diluted (in dollars per share)	$ (4.40)	$ (5.19)	$ (8.66)	$ (14.40)
Series A Preferred Stock
Other expense (income), net:
Cumulative dividends for Preferred Stock	$ (1,067)	$ (967)	$ (2,120)	$ (1,921)
Series B Preferred Stock
Other expense (income), net:
Cumulative dividends for Preferred Stock	(1,242)	(1,171)	(2,466)	(2,324)
Related party
Related party expense	$ 3,282	$ 2,739	$ 5,673	$ 5,851

Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Significant Accounting Policies

Significant Accounting Policies

3. Significant Accounting Policies

The information presented below supplements the Significant Accounting Policies information presented in the 2023 Form 10-K.

Revenue Recognition

Nature of Services

Disaggregation of Revenues


	Three Months Ended June 30,
	2024								2023
		ITPS		HS		LLPS		Total		ITPS		HS		LLPS		Total
U.S.A.	$	115,667	$	62,935	$	25,878	$	204,480	$	137,498	$	63,608	$	24,340	$	225,446
EMEA		36,031		—		—		36,031		42,294		—		—		42,294
Other		5,142		—		—		5,142		5,198		—		—		5,198
Total	$	156,840	$	62,935	$	25,878	$	245,653	$	184,990	$	63,608	$	24,340	$	272,938


	Six Months Ended June 30,
	2024								2023
		ITPS		HS		LLPS		Total		ITPS		HS		LLPS		Total
U.S.A.	$	246,388	$	127,787	$	43,697	$	417,872	$	283,523	$	126,650	$	41,210	$	451,383
EMEA		76,077		—		—		76,077		85,072		—		—		85,072
Other		10,515		—		—		10,515		10,103		—		—		10,103
Total	$	332,980	$	127,787	$	43,697	$	504,464	$	378,698	$	126,650	$	41,210	$	546,558

Contract Balances

The following table presents contract assets, contract liabilities and contract costs recognized at June 30, 2024, December 31, 2023 and January 1, 2023:


	June 30,		December 31,		January 1,
	2024		2023		2023
Accounts receivable, net	$	61,501	$	76,893	$	101,616
Deferred revenues		15,166		13,107		17,585
Customer deposits		27,898		23,838		16,955
Costs to obtain and fulfill a contract		1,459		1,400		1,674

The following table describes the changes in the allowance for expected credit losses for the six months ended June 30, 2024 (all related to accounts receivables):


Balance at January 1, 2024 of the allowance for expected credit losses	$	6,628
Provision for expected loss		14,683
Write-off charged against the allowance		(13,872)
Recoveries collected		(594)
Foreign currency exchange rate adjustment		(32)
Balance at June 30, 2024 of the allowance for expected credit losses	$	6,813

Performance Obligations

The Company includes reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue.

Transaction Price Allocated to the Remaining Performance Obligations


Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations

Remainder of 2024	$	6,152
2025		7,987
2026		4,629
2027		2,554
2028		1,519
2029 and thereafter		—
Total	$	22,841

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2024

Employee Benefit Plans

Schedule of components of the net periodic benefit cost


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Service cost	$	9	$	10	$	19	$	20
Interest cost		739		760		1,482		1,509
Expected return on plan assets		(726)		(676)		(1,455)		(1,343)
Amortization:
Amortization of prior service cost		—		89		—		177
Amortization of net loss		305		391		612		776
Net periodic benefit cost	$	327	$	574	$	658	$	1,139

Long-Term Debt and Credit Facilities : Senior Secured Term Loan,Second Lien Note (Details) $ in Thousands					3 Months Ended	6 Months Ended		12 Months Ended
	Feb. 12, 2024 USD ($)	Jul. 11, 2023 USD ($) installment loan	Jun. 10, 2023 USD ($) installment	Feb. 27, 2023 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Jan. 15, 2024 USD ($)	Jan. 12, 2024 USD ($)	Jul. 15, 2023 USD ($)	Dec. 31, 2022 USD ($)	Mar. 31, 2022 USD ($)	Dec. 07, 2021 USD ($)	Nov. 17, 2021 USD ($)
Long-Term Debt and Credit Facilities.
Total debt						$ 1,068,975		$ 1,060,609
CODI								780,000
Taxable income from CODI								54,000
CODI excluded from taxable income								726,000
Elimination of net operating losses from CODI								$ 624,000
Cash paid for debt repurchases							$ (11,858)
Debt modification and extinguishment costs (gain)					$ 6,785		15,558
Minimum business days elect to have interest on all or a portion of the loans be charged		3 days
Legal fee						237	$ 6,398
BR Exar, LLC \| First RPA
Long-Term Debt and Credit Facilities.
Agreed to sell receivables upon collection of minimum amount	$ 33,700
BR Exar, LLC \| Second RPA
Long-Term Debt and Credit Facilities.
Legal fee	200
BR Exar AR Facility
Long-Term Debt and Credit Facilities.
Total debt						5,022
Outstanding borrowings under the facility						5,600
Debt discount						500
BR Exar AR Facility \| First RPA
Long-Term Debt and Credit Facilities.
Agreed to sell receivables upon collection of minimum amount	28,100
BR receivables purchase agreement
Long-Term Debt and Credit Facilities.
Legal fee	200
Proceeds from the sale of receivables	30,400
Debt discount	$ 3,100
Second Lien Secured Term Loan
Long-Term Debt and Credit Facilities.
Outstanding borrowings under the facility						$ 31,500
Reference Rate Loan
Long-Term Debt and Credit Facilities.
Applicable margin rate		4.00%
Senior Secured Notes Due2023 Member
Long-Term Debt and Credit Facilities.
Interest rate (in percent)					10.00%		10.00%
Write off of previously recognized debt issuance costs							$ 100
2026 notes
Long-Term Debt and Credit Facilities.
Debt instrument face amount exchanged		$ 956,000
July 2026 Notes
Long-Term Debt and Credit Facilities.
Total debt											$ 24,000	$ 980,000
Interest rate (in percent)		11.50%				11.50%						11.50%
Debt instrument, redemption price percentage						100.00%
Debt instrument face amount exchanged		$ 956,000
April 2026 Notes
Long-Term Debt and Credit Facilities.
Debt instrument face amount exchanged		764,800
Amount of premium recorded		142,300
Senior Secured April 2026 Notes
Long-Term Debt and Credit Facilities.
Total debt						$ 835,300
Amount of facility		767,800							$ 23,300		$ 44,100
Debt instrument face amount exchanged		$ 3,000
April 2026 Notes 11.500% First-Priority Senior Secured Notes Due April 2026
Long-Term Debt and Credit Facilities.
Interest rate (in percent)		11.50%
Debt instrument, redemption price percentage		101.00%
Amount of minimum unrestricted cash remaining after the interest payment		$ 15,000
Redemption Price		100.00%
Senior Secured Term Loan
Long-Term Debt and Credit Facilities.
Interest rate (in percent)		10.39%
Amount of facility		$ 40,000								$ 1,000
Number of installments \| installment		9
Monthly installments		$ 500
Adjustment rate on variable rate (in percent)		1.00%
Number of business days prior to the first day of interest period considered for calculation of interest rate		2 days
Period considered for calculation of interest rate		3 months
Maximum number of loans in effect at any given time \| loan		5
Minimum amount of loan may exercise		$ 500,000
Integral multiples of loan for exercise of loan		100,000
Outstanding borrowings under the facility		$ 35,500				40,000
Senior Secured Term Loan \| Federal funds
Long-Term Debt and Credit Facilities.
Applicable margin rate		0.50%
Senior Secured Term Loan \| SOFR
Long-Term Debt and Credit Facilities.
Interest rate (in percent)		11.39%
Adjustment rate on variable rate (in percent)		0.26161%
Deemed rate, if rate less than 4.00%		4.00%
New Notes issued as consideration for the private exchange of 2023 Term Loans
Long-Term Debt and Credit Facilities.
Amount of facility		$ 764,800
Public exchange offer per $1,000 of principal amount		800
Debt instrument, exchange equivalent per principal amount denominator		$ 1,000
BRCC Facility
Long-Term Debt and Credit Facilities.
Interest rate (in percent)															11.50%
Amount of facility														$ 115,000	$ 75,000
Maximum borrowing capacity				$ 35,000									$ 51,000
Default rate (in percent)															13.50%
Debt instrument, repayment made in cash						12,000
Transaction fee				5,000
Borrowings under revolving facility				$ 9,600
BRCC Facility \| SOFR
Long-Term Debt and Credit Facilities.
Applicable margin rate				7.50%
BRCC Revolver
Long-Term Debt and Credit Facilities.
Total debt			$ 3,900			$ 7,900
Number of installments \| installment			2
Monthly installments			$ 2,000
Exchange Notes
Long-Term Debt and Credit Facilities.
Repurchase of principal amount					$ 13,800		13,800
Cash paid for debt repurchases							4,400
Debt modification and extinguishment costs (gain)							9,900
2023 Term Loans
Long-Term Debt and Credit Facilities.
Repurchase of principal amount					$ 15,100		15,100
Cash paid for debt repurchases							8,000
Debt modification and extinguishment costs (gain)							7,100
Write off of previously recognized debt issuance costs							$ 100

Stock-Based Compensation - Stock Incentive Plan (Details) - shares	1 Months Ended
	Jun. 30, 2024	Jun. 13, 2024	Dec. 31, 2023	Jun. 27, 2022	Jan. 17, 2018
Exela Stock Incentive Plan
Common stock shares authorized	1,600,000,000		1,600,000,000
2018 Plan
Exela Stock Incentive Plan
Common stock shares authorized				4,462	694
2018 Plan \| Maximum
Exela Stock Incentive Plan
Common stock shares authorized					694
XBP Europe 2024 Stock Incentive Plan
Exela Stock Incentive Plan
Share Based Compensation Number of Shares Authorized		5,520,270
Exela 2024 Stock Incentive Plan
Exela Stock Incentive Plan
Share Based Compensation Number of Shares Authorized		500,000
Number of shares issued	0

General - Going Concern (Details) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
General - Going Concern (Details) - USD ($) $ in Thousands	Jul. 11, 2023	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
General
Net loss		$ 26,905	$ 25,573	$ 30,886	$ 45,436	$ 52,478	$ 76,322
Net operating cash outflow						16,926	$ 54,741
Working capital deficit		254,400				254,400
Accumulated deficit		$ 2,134,670				$ 2,134,670		$ 2,084,114
April 2026 Notes
General
Debt instrument face amount exchanged	$ 764,800
April 2026 Notes \| Maximum
General
Percentage of interest paid in cash	50.00%
July 2026 Notes
General
Debt instrument face amount exchanged	$ 956,000

Significant Accounting Policies - Contract Balances (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) category	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Jan. 01, 2023 USD ($)
Significant Accounting Policies
Accounts receivable, net	$ 61,501		$ 61,501		$ 76,893	$ 101,616
Deferred revenues	15,166		15,166		13,107	17,585
Customer deposits	27,898		27,898		23,838	16,955
Costs to obtain and fulfill a contract	1,459		1,459		1,400	$ 1,674
Unbilled receivables, net	23,100		23,100		23,900
Revenue recognized from deferred revenue	3,400	$ 8,000	7,800	$ 14,800	$ 17,300
Amortization of contract costs	$ 200	$ 200	$ 500	$ 400
Number of principal categories \| category			2
Practical expedient on incremental costs of obtaining contracts			true

Employee Benefit Plans - Tax Effect on Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Amounts in Accumulated Other Comprehensive Loss Expected to be Recognized in Net Periodic Benefit Costs
Net actuarial gain (loss)	$ 0.4	$ (0.2)
Deferred tax benefit	$ 2.0	$ 2.0

Income Taxes

6 Months Ended

Jun. 30, 2024

Income Taxes

Income Taxes

6. Income Taxes

The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision for interim periods, as required under GAAP. The Company recorded an income tax expense of $2.0 million and $2.5 million for the three months ended June 30, 2024 and 2023, respectively. The Company recorded an income tax expense of $5.2 million and $5.2 million for the six months ended June 30, 2024 and 2023, respectively.

The Company expects U.S. consolidated taxable income for the year ended December 31, 2024, primarily due to inability to deduct most interest expense in accordance with Internal Revenue Code (IRC) Section 163(j). Since the enactment of IRC 163(j), the Company has been able to claim net operating loss deductions to eliminate U.S. consolidated tax liabilities. On July 11, 2023, a supplemental indenture was entered into with respect to the July 2026 Notes, which generated significant cancellation of indebtedness income (CODI) for tax purposes, most of which was excluded from taxable income. Under the provisions of IRC Section 108, on January 1, 2024 the Company reduced tax attributes, including all its Exela U.S. consolidated net operating loss carryforwards and tax credits. Accordingly, in 2024 the Company will generate current U.S consolidated tax liabilities, which is reflected in the income tax expense for the three and six months ended June 30, 2024.

The Company's ETR of (8.2)% and (10.9)% for the three and six months ended June 30, 2024 differed from the expected U.S. statutory tax rate of 21.0% and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s deferred tax assets on U.S. disallowed interest expense carryforwards under the provisions of The Tax Cuts and Jobs Act (“TCJA”).

For the three and six months ended June 30, 2023, the Company's ETR of (8.9)% and (7.3)% differed from the expected U.S. statutory tax rate of 21.0% and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s deferred tax assets on U.S. disallowed interest expense carryforwards under the provisions of the TCJA.

As of June 30, 2024, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2023.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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-Name Accounting Standards Codification
-Section 50
-Paragraph 12
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-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 740
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/1943274/2147477891/740-270-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Section 50
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-URI https://asc.fasb.org/1943274/2147482685/740-10-50-14

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/1943274/2147482685/740-10-50-21

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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-URI https://asc.fasb.org/1943274/2147482685/740-10-50-17

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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-Name Accounting Standards Codification
-Section 50
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482603/740-30-50-2

+ Details

Condensed Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands	Common Stock	Preferred Stock Series A Preferred Stock	Preferred Stock Series B Preferred Stock	Treasury Stock	Additional Paid in Capital	Foreign currency translation adjustment	Unrealized Pension Actuarial Losses, net of tax	Accumulated Deficit	Non-Controlling Interest in XBP Europe	Total
Beginning balance at Dec. 31, 2022	$ 162	$ 1		$ (10,949)	$ 1,159,577	$ (4,788)	$ (3,583)	$ (1,948,009)		$ (807,589)
Beginning balance (in shares) at Dec. 31, 2022	1,393,276	2,778,111	3,029,900	612
Increase (Decrease) in Stockholders' Equity (Deficit)
Net loss								(45,436)		(45,436)
Equity-based compensation expense					111					111
Foreign currency translation adjustment						(2,105)				(2,105)
Net realized pension actuarial gains (losses), net of tax							(89)			(89)
Issuance of Common Stock	$ 99				66,929					67,028
Issuance of Common Stock (in shares)	4,977,744
Ending balance at Mar. 31, 2023	$ 261	$ 1		$ (10,949)	1,226,617	(6,893)	(3,672)	(1,993,445)		(788,080)
Ending balance (in shares) at Mar. 31, 2023	6,371,020	2,778,111	3,029,900	612
Beginning balance at Dec. 31, 2022	$ 162	$ 1		$ (10,949)	1,159,577	(4,788)	(3,583)	(1,948,009)		(807,589)
Beginning balance (in shares) at Dec. 31, 2022	1,393,276	2,778,111	3,029,900	612
Increase (Decrease) in Stockholders' Equity (Deficit)
Net loss										(76,322)
Ending balance at Jun. 30, 2023	$ 261	$ 1		$ (10,949)	1,226,789	(4,992)	(3,788)	(2,024,331)		(817,009)
Ending balance (in shares) at Jun. 30, 2023	6,365,353	2,778,111	3,029,900	612
Beginning balance at Mar. 31, 2023	$ 261	$ 1		$ (10,949)	1,226,617	(6,893)	(3,672)	(1,993,445)		(788,080)
Beginning balance (in shares) at Mar. 31, 2023	6,371,020	2,778,111	3,029,900	612
Increase (Decrease) in Stockholders' Equity (Deficit)
Net loss								(30,886)		(30,886)
Equity-based compensation expense					203					203
Foreign currency translation adjustment						1,901				1,901
Net realized pension actuarial gains (losses), net of tax							(116)			(116)
Payment for fractional shares on reverse stock split					(31)					(31)
Payment for fractional shares on reverse stock split (in shares)	(5,667)
Ending balance at Jun. 30, 2023	$ 261	$ 1		$ (10,949)	1,226,789	(4,992)	(3,788)	(2,024,331)		(817,009)
Ending balance (in shares) at Jun. 30, 2023	6,365,353	2,778,111	3,029,900	612
Beginning balance at Dec. 31, 2023	$ 261	$ 1			1,236,171	(7,648)	(174)	(2,084,114)	$ (3,332)	(858,835)
Beginning balance (in shares) at Dec. 31, 2023	6,365,355	2,778,111	3,029,900
Increase (Decrease) in Stockholders' Equity (Deficit)
Net loss								(24,879)	(694)	(25,573)
Equity-based compensation expense					1,183					1,183
Foreign currency translation adjustment						1,226			77	1,303
Net realized pension actuarial gains (losses), net of tax							211		79	290
Ending balance at Mar. 31, 2024	$ 261	$ 1			1,237,354	(6,422)	37	(2,108,993)	(3,870)	(881,632)
Ending balance (in shares) at Mar. 31, 2024	6,365,355	2,778,111	3,029,900
Beginning balance at Dec. 31, 2023	$ 261	$ 1			1,236,171	(7,648)	(174)	(2,084,114)	(3,332)	(858,835)
Beginning balance (in shares) at Dec. 31, 2023	6,365,355	2,778,111	3,029,900
Increase (Decrease) in Stockholders' Equity (Deficit)
Net loss										(52,478)
Ending balance at Jun. 30, 2024	$ 261	$ 1			1,237,687	(7,282)	215	(2,134,670)	(4,946)	(908,734)
Ending balance (in shares) at Jun. 30, 2024	6,365,363	2,778,111	3,029,900
Beginning balance at Mar. 31, 2024	$ 261	$ 1			1,237,354	(6,422)	37	(2,108,993)	(3,870)	(881,632)
Beginning balance (in shares) at Mar. 31, 2024	6,365,355	2,778,111	3,029,900
Increase (Decrease) in Stockholders' Equity (Deficit)
Net loss								(25,677)	(1,228)	(26,905)
Equity-based compensation expense					333				44	377
Foreign currency translation adjustment						(860)			40	(820)
Net realized pension actuarial gains (losses), net of tax							178		68	246
RSUs vested (in shares)	8
Ending balance at Jun. 30, 2024	$ 261	$ 1			$ 1,237,687	$ (7,282)	$ 215	$ (2,134,670)	$ (4,946)	$ (908,734)
Ending balance (in shares) at Jun. 30, 2024	6,365,363	2,778,111	3,029,900

Subsequent Events (Details) - USD ($) $ in Thousands	1 Months Ended
Subsequent Events (Details) - USD ($) $ in Thousands	Aug. 14, 2024	Jun. 30, 2024	Dec. 31, 2023
Subsequent Events
Total debt		$ 1,068,975	$ 1,060,609
Subsequent Events \| BR Exar, LLC
Subsequent Events
Repayments under revolving facility	$ 7,100
Total debt	8,900
Subsequent Events \| Seventh Amendment To The Receivables Purchase Agreement \| BR Exar, LLC
Subsequent Events
Agreed to sell receivables upon collection of minimum amount	10,500
Proceeds from the sale of receivables	9,500
Subsequent Events \| BRCC Facility
Subsequent Events
Repayments under revolving facility	2,000
Total debt	$ 5,900

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

General - Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Net loss per share
Number of anti-dilutive shares excluded from computation of diluted loss per share			1,367	2,472
Warrants outstanding	1,978		1,978
Net loss attributable to common stockholders	$ (27,986)	$ (33,024)	$ (55,142)	$ (80,567)
Weighted average common shares outstanding - basic (in shares)	6,365,356	6,367,969	6,365,356	5,595,352
Weighted average common shares outstanding - diluted (in shares)	6,365,355	6,367,969	6,365,355	5,595,352
Basic (in dollars per share)	$ (4.40)	$ (5.19)	$ (8.66)	$ (14.40)
Diluted (in dollars per share)	$ (4.40)	$ (5.19)	$ (8.66)	$ (14.40)
Series A Preferred Stock
Net loss per share
Number of anti-dilutive shares excluded from computation of diluted loss per share			424
Series B Preferred Stock
Net loss per share
Number of anti-dilutive shares excluded from computation of diluted loss per share			16,814
Warrant
Net loss per share
Number of anti-dilutive shares excluded from computation of diluted loss per share			1,978	2,433
Warrants outstanding	7,913,637	9,731,819	7,913,637	9,731,819

Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2024

Significant Accounting Policies

Schedule of disaggregated revenue from contracts by geographic region and by segment


	Three Months Ended June 30,
	2024								2023
		ITPS		HS		LLPS		Total		ITPS		HS		LLPS		Total
U.S.A.	$	115,667	$	62,935	$	25,878	$	204,480	$	137,498	$	63,608	$	24,340	$	225,446
EMEA		36,031		—		—		36,031		42,294		—		—		42,294
Other		5,142		—		—		5,142		5,198		—		—		5,198
Total	$	156,840	$	62,935	$	25,878	$	245,653	$	184,990	$	63,608	$	24,340	$	272,938


	Six Months Ended June 30,
	2024								2023
		ITPS		HS		LLPS		Total		ITPS		HS		LLPS		Total
U.S.A.	$	246,388	$	127,787	$	43,697	$	417,872	$	283,523	$	126,650	$	41,210	$	451,383
EMEA		76,077		—		—		76,077		85,072		—		—		85,072
Other		10,515		—		—		10,515		10,103		—		—		10,103
Total	$	332,980	$	127,787	$	43,697	$	504,464	$	378,698	$	126,650	$	41,210	$	546,558

Schedule of contract balances


	June 30,		December 31,		January 1,
	2024		2023		2023
Accounts receivable, net	$	61,501	$	76,893	$	101,616
Deferred revenues		15,166		13,107		17,585
Customer deposits		27,898		23,838		16,955
Costs to obtain and fulfill a contract		1,459		1,400		1,674

Schedule of changes in the allowance for expected credit losses

The following table describes the changes in the allowance for expected credit losses for the six months ended June 30, 2024 (all related to accounts receivables):


Balance at January 1, 2024 of the allowance for expected credit losses	$	6,628
Provision for expected loss		14,683
Write-off charged against the allowance		(13,872)
Recoveries collected		(594)
Foreign currency exchange rate adjustment		(32)
Balance at June 30, 2024 of the allowance for expected credit losses	$	6,813

Schedule of estimated remaining fixed consideration for unsatisfied performance obligations


Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations

Remainder of 2024	$	6,152
2025		7,987
2026		4,629
2027		2,554
2028		1,519
2029 and thereafter		—
Total	$	22,841

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (25,677)	$ (30,886)	$ (50,556)	$ (76,322)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/1943274/2147483443/250-10-50-6

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Stockholders' Equity - Preferred Stock (Details) $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended
	May 17, 2022 Vote $ / shares shares	Jun. 30, 2024 USD ($) $ / shares shares	Jun. 30, 2023 USD ($) $ / shares	Jun. 30, 2024 USD ($) director item $ / shares shares	Jun. 30, 2023 USD ($) $ / shares	Dec. 31, 2023 $ / shares shares	Jul. 12, 2017 USD ($)
Preferred Stock
Preferred stock, shares authorized \| shares		20,000,000		20,000,000		20,000,000
Preferred Stock, par value (in dollars per share) \| $ / shares		$ 0.0001		$ 0.0001		$ 0.0001
Dividends, Preferred Stock \| $		$ 1.2	$ 1.2	$ 2.5	$ 2.3
Series A Preferred Stock
Preferred Stock
Preferred stock, shares authorized \| shares		2,800,000		2,800,000
Preferred stock, shares outstanding \| shares		2,778,111		2,778,111		2,778,111
Preferred Stock, par value (in dollars per share) \| $ / shares		$ 0.0001		$ 0.0001
Preferred Stock, cumulative dividends rate (in percentage)				10.00%
Liquidation preference stock amount \| $		$ 44.2		$ 44.2
Liquidation preference (in dollars per share) \| $ / shares		$ 8		$ 8
Accumulated preferred stock, Dividends \| $		$ 1.1	$ 1.0	$ 2.1	$ 1.9
Additional common stock issuable upon conversion of remaining convertible shares \| shares		424		424
Cumulative accrued but unpaid dividends \| $							$ 22.0
Per share average of cumulative preferred dividends (in dollars per share) \| $ / shares		$ 0.38	$ 0.35	$ 0.76	$ 0.69
Reverse stock split				0.000152
Series B Preferred Stock
Preferred Stock
Preferred stock, shares authorized \| shares		8,100,000		8,100,000
Preferred stock, shares outstanding \| shares		3,029,900		3,029,900		3,029,900
Preferred Stock, par value (in dollars per share) \| $ / shares		$ 0.0001		$ 0.0001
Liquidation preference stock amount \| $		$ 84.1		$ 84.1
Liquidation preference (in dollars per share) \| $ / shares		$ 25		$ 25
Conversion of Series A Preferred stock to common shares \| shares				3,029,900
Conversion of shares (in shares) \| shares				16,814
Cumulative accrued but unpaid dividends \| $		$ 8.3		$ 8.3
Per share average of cumulative preferred dividends (in dollars per share) \| $ / shares			$ 0.39		$ 0.77
Per share average of cumulative preferred dividends (in dollars per share) \| $ / shares		$ 0.41		$ 0.81
Reverse stock split				0.00555
Preferred stock cumulative dividend				6.00%
Number of directors \| director				1
Number of directors in arrears \| item				8
Tandom Preferred Stock
Preferred Stock
Preferred Stock, par value (in dollars per share) \| $ / shares	$ 0.0001
Number of vote per share entitled to each share of Tandem Preferred stock \| shares	1
Number of vote per share entitled to each share of Tandem Preferred stock \| Vote	1

Related-Party Transactions

6 Months Ended

Jun. 30, 2024

Related-Party Transactions

Related-Party Transactions

12. Related-Party Transactions

Relationship with HandsOn Global Management

The Company incurred reimbursable travel expenses to HOVS LLC and HandsOn Fund 4 I, LLC (collectively, and together with certain of their affiliated entities managed by HandsOn Global Management LLC, including such entity, “HGM”) of $0 for each of the three months ended June 30, 2024 and 2023, and $0 and less than $0.1 million for the six months ended June 30, 2024 and 2023, respectively. Certain members of the Company’s Board and management, including the Company’s Executive Chairman and Interim Chief Financial Officer, (Par Chadha, Matthew Brown, Sharon Chadha, Ron Cogburn, and James Reynolds) are or have been affiliated with HGM. The Company’s Executive Chairman, Par Chadha and his wife, Sharon Chadha, are currently affiliated with HGM. Messrs. Cogburn and Reynolds were affiliated with HGM until 2020, and Mr. Brown was affiliated with HGM until 2017.

Pursuant to a master agreement dated January 1, 2015 between Rule 14, LLC and a subsidiary of the Company, the Company incurs marketing fees to Rule 14, LLC, a portfolio company of HGM. Similarly, the Company is party to ten master agreements with entities affiliated with HGM’s managed funds, each of which were entered into during 2015 and 2016. Each master agreement provides the Company with use of certain technology and includes a reseller arrangement pursuant to which the Company is entitled to sell these services to third parties. Any revenue earned by the Company in such third-party sales is shared 75%/25% with each of HGM’s venture affiliates in favor of the Company. The brands Zuma, Athena, Peri, BancMate, Spring, Jet, Teletype, CourtQ and Rewardio are part of the HGM managed funds. The Company has the license to use and resell such brands, as described therein. The Company incurred fees relating to these agreements of $2.4 million and $2.1 million for the three months ended June 30, 2024 and 2023, respectively, and $4.1 million and $4.5 million for the six months ended June 30, 2024 and 2023, respectively. The Company earned no revenue from third-party sales under the reseller arrangement for the three and six months ended June 30, 2024 and 2023.

Certain operating companies lease their operating facilities from HOV RE, LLC and HOV Services Limited, which are affiliates under common control with HGM. The rental expense for these operating leases was less than $0.1 million for each of the three months ended June 30, 2024 and 2023, and $0.1 million for each of the six months ended June 30, 2024 and 2023. In addition, HOV Services, Ltd. provides the Company data capture and technology services. The expense recognized for these services was approximately $0.7 million and $0.5 million for the three months ended June 30, 2024 and 2023, respectively, and $1.2 million and $0.8 million for the six months ended June 30, 2024 and 2023, respectively. These expenses are included in cost of revenue in the condensed consolidated statements of operations.

Subscription, Voting and Redemption Agreement

At the Annual Meeting, stockholders were asked to approve an amendment to the Series B Certificate of Designations to allow the Company to have the ability to (a) pay dividends in shares of Common Stock, (b) pay less than all of the accrued dividends, and (c) pay dividends on any date designated by the Company’s Board for the payment of dividends. The proposal did not pass, and the Special Voting Stock were deemed redeemed for an aggregate price of $100 on the first business day following the Annual Meeting. There were no Special Voting Stock outstanding as of June 30, 2024.

Invoicing Support and Collection Services

On September 1, 2023, the Company, through one of its subsidiaries, entered into a Master Services Agreement with Doctors of Waikiki LLP (the “DOW”), which is an affiliate under common control with HGM, where the Company could provide services under one or more statement(s) of work (each, a “SOW”) to DOW. Each SOW, together with the terms of this Agreement, shall be deemed a separate contract that is effective as of date set forth in the SOW. The Company, acting under the first statement of work (SOW-1), provides collection services to DOW to collect past-due medical debts from its patients and insurance companies for which the Company receives a commission of 15% for accounts assigned within one year of the service date and 25% for accounts assigned after one year. Under the second statement of work (SOW-2), the Company manages DOW's insurance billing and denial management for medical bills generated after patients receive treatment from DOW for which the Company invoices $2,000 per month for each full-time employee assigned to the project. For the three and six months ended June 30, 2024, the Company has recognized $0 and less than $0.1 million of income, respectively, under these two SOWs.

Payable and Receivable/Prepaid Balances with Affiliates

Payable and receivable/prepaid balances with affiliates as of June 30, 2024 and December 31, 2023 were as follows:



	June 30, 2024				December 31, 2023
	Receivables and Prepaid Expenses		Payables		Receivables and Prepaid Expenses		Payables
HOV Services, Ltd	$	403	$	—	$	296	$	—
Rule 14		—		3,019		—		1,918
HGM		—		28		—		9
DOW		46		—		—		11
	$	449	$	3,047	$	296	$	1,938

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2024

Intangible Assets and Goodwill

Intangible Assets and Goodwill

4. Intangible Assets and Goodwill

Intangible Assets

Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and consists of the following:


	June 30, 2024
	Gross Carrying		Accumulated		Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,679	$	(393,065)	$	114,614
Developed technology		88,553		(88,382)		171
Trade names (b)		5,300		—		5,300
Outsource contract costs		18,272		(16,813)		1,459
Internally developed software		57,670		(47,791)		9,879
Purchased software		26,749		(9,808)		16,941
Intangibles, net	$	704,223	$	(555,859)	$	148,364


	December 31, 2023
	Gross Carrying		Accumulated		Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,930	$	(380,580)	$	127,350
Developed technology		88,554		(88,085)		469
Patent		15		(14)		1
Trade names (b)		5,300		—		5,300
Outsource contract costs		17,734		(16,334)		1,400
Internally developed software		56,066		(43,499)		12,567
Purchased software		26,749		(8,916)		17,833
Intangibles, net	$	702,348	$	(537,428)	$	164,920

(a)	Amounts include intangible assets acquired in business combinations and asset acquisitions.

(b)	The carrying amount of trade names for 2024 and 2023 is net of accumulated impairment losses of $44.1 million. Carrying amount of $5.3 million as at June 30, 2024 represents indefinite-lived intangible assets.

Aggregate amortization expense related to intangible assets was $9.9 million and $19.0 million for the three and six months ended June 30, 2024, respectively. Aggregate amortization expense related to intangible assets was $10.0 million and $21.0 million for the three and six months ended June 30, 2023, respectively.

Estimated intangibles amortization expense for the next five years and thereafter consists of the following:


	Estimated
	Amortization
	Expense
Remainder of 2024	$	15,632
2025		25,927
2026		21,226
2027		17,430
2028		13,778
Thereafter		49,071
Total	$	143,064

Goodwill

The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approaches the markets and interacts with customers. The Company is organized into three segments: ITPS, HS, and LLPS (See Note 13 – Segment and Geographic Area Information).

Goodwill by reporting segment consists of the following:


	Balances as at January 1, 2024 (a)			Additions		Deletions			Impairments		Currency Translation Adjustments		Balances as at June 30, 2024 (a)
ITPS	$	64,801	$	—	$	—		$	—	$	(98)	$	64,703
HS		86,786		—		—			—		—		86,786
LLPS		18,865		—		—			—		—		18,865
Total	$	170,452	$	—	$	—		$	—	$	(98)	$	170,354

	Balances as at January 1, 2023 (a)			Additions		Deletions			Impairments		Currency Translation Adjustments		Balances as at December 31, 2023 (a)
ITPS	$	81,151	$	—	$	(16,500)	(b)	$	—	$	150	$	64,801
HS		86,786		—		—			—		—		86,786
LLPS		18,865		—		—			—		—		18,865
Total	$	186,802	$	—	$	(16,500)		$	—	$	150	$	170,452

(a)	The goodwill amount for all periods presented is net of accumulated impairment amounts. Accumulated impairment relating to ITPS was $487.7 million as at June 30, 2024 and December 31, 2023. Accumulated impairment relating to LLPS was $243.4 million as at June 30, 2024 and December 31, 2023.

(b)	The deletion in goodwill is due to derecognition of allocated goodwill on sale of the high-speed scanner business in the second quarter of 2023. Refer to Note 1—General.

Intangible Assets and Goodwill (Tables)

6 Months Ended

Jun. 30, 2024

Intangible Assets and Goodwill

Schedule of intangible assets


	June 30, 2024
	Gross Carrying		Accumulated		Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,679	$	(393,065)	$	114,614
Developed technology		88,553		(88,382)		171
Trade names (b)		5,300		—		5,300
Outsource contract costs		18,272		(16,813)		1,459
Internally developed software		57,670		(47,791)		9,879
Purchased software		26,749		(9,808)		16,941
Intangibles, net	$	704,223	$	(555,859)	$	148,364


	December 31, 2023
	Gross Carrying		Accumulated		Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,930	$	(380,580)	$	127,350
Developed technology		88,554		(88,085)		469
Patent		15		(14)		1
Trade names (b)		5,300		—		5,300
Outsource contract costs		17,734		(16,334)		1,400
Internally developed software		56,066		(43,499)		12,567
Purchased software		26,749		(8,916)		17,833
Intangibles, net	$	702,348	$	(537,428)	$	164,920

(a)	Amounts include intangible assets acquired in business combinations and asset acquisitions.

(b)	The carrying amount of trade names for 2024 and 2023 is net of accumulated impairment losses of $44.1 million. Carrying amount of $5.3 million as at June 30, 2024 represents indefinite-lived intangible assets.

Schedule of estimated intangibles amortization expense


	Estimated
	Amortization
	Expense
Remainder of 2024	$	15,632
2025		25,927
2026		21,226
2027		17,430
2028		13,778
Thereafter		49,071
Total	$	143,064

Schedule of goodwill by reporting segment


	Balances as at January 1, 2024 (a)			Additions		Deletions			Impairments		Currency Translation Adjustments		Balances as at June 30, 2024 (a)
ITPS	$	64,801	$	—	$	—		$	—	$	(98)	$	64,703
HS		86,786		—		—			—		—		86,786
LLPS		18,865		—		—			—		—		18,865
Total	$	170,452	$	—	$	—		$	—	$	(98)	$	170,354

	Balances as at January 1, 2023 (a)			Additions		Deletions			Impairments		Currency Translation Adjustments		Balances as at December 31, 2023 (a)
ITPS	$	81,151	$	—	$	(16,500)	(b)	$	—	$	150	$	64,801
HS		86,786		—		—			—		—		86,786
LLPS		18,865		—		—			—		—		18,865
Total	$	186,802	$	—	$	(16,500)		$	—	$	150	$	170,452

(a)	The goodwill amount for all periods presented is net of accumulated impairment amounts. Accumulated impairment relating to ITPS was $487.7 million as at June 30, 2024 and December 31, 2023. Accumulated impairment relating to LLPS was $243.4 million as at June 30, 2024 and December 31, 2023.

(b)	The deletion in goodwill is due to derecognition of allocated goodwill on sale of the high-speed scanner business in the second quarter of 2023. Refer to Note 1—General.

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/1943274/2147482548/350-20-55-24

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+ Details

Long-Term Debt and Credit Facilities (Tables)

6 Months Ended

Jun. 30, 2024

Long-Term Debt and Credit Facilities

Schedule of outstanding long-term debt instruments



	June 30,		December 31,
	2024		2023
Other (a)	$	36,428	$	21,101
Secured borrowings under BR Exar AR Facility (b)		5,022		—
Senior secured term loan maturing January 14, 2026 (c)		37,919		37,921
July 2026 Notes maturing July 15, 2026 (d)		22,985		22,788
April 2026 Notes maturing April 15, 2026 (e)		929,791		931,293
Secured borrowings under BRCC Facility matured on June 10, 2023		7,896		19,898
Second lien note maturing June 17, 2025 (f)		28,934		27,608
Total debt		1,068,975		1,060,609
Less: Current portion of long-term debt		(53,723)		(30,029)
Long-term debt, net of current maturities	$	1,015,252	$	1,030,580

(a)

Other debt represents outstanding loan balances associated with various hardware and software purchases, and maintenance and leasehold improvements, along with other loans and receivables factoring arrangements entered into by subsidiaries of the Company. Other debt includes $28.9 million and $12.8 million of outstanding balances under certain revolving credit facilities of XBP Europe as of June 30, 2024 and December 31, 2023, respectively, and $3.3 million and $3.8 million of outstanding term loans of XBP Europe as of June 30, 2024 and December 31, 2023, respectively.

(b)	Net of unamortized net original issue discount of $0.5 million and less than $0.1 million of debt issuance as of June 30, 2024.

(c)	Net of unamortized debt issuance costs of $2.1 million as of June 30, 2024 and unamortized debt issuance costs of $1.6 million as of December 31, 2023.

(d)	Net of unamortized net original issue discount of $0.8 million and debt issuance costs of $0.2 million as of June 30, 2024; and unamortized net original issue discount of $0.9 million and debt issuance costs of $0.2 million as of December 31, 2023.

(e)	Inclusive of unamortized net debt exchange premium of $94.6 million and $119.4 million as of June 30, 2024 and December 31, 2023, respectively.

(f)	Net of unamortized debt issuance costs of $2.6 million and $3.9 million as of June 30, 2024 and December 31, 2023, respectively.

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(22))
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+ Details

Stock-Based Compensation - Summary of activity for the Market Performance RSUs (Details) - Market Performance Units - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Number of Units
Balance at the beginning of the period	2,125
Forfeited	(1,062)
Balance at the end of the period	1,063	2,125
Weighted Average Grant Date Fair Value
Balance at the beginning of the period	$ 1,820
Forfeited	1,760
Balance at the end of the period	$ 1,880	$ 1,820
Weighted Average Period Over Which Expected to be Recognized
Weighted average remaining contractual life (in years)	11 months 23 days	11 months 23 days

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Accounts receivable, allowance for doubtful accounts	$ 6,813	$ 6,628
Accumulated depreciation	$ 216,695	$ 213,142
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock shares authorized	1,600,000,000	1,600,000,000
Common stock, shares issued	6,365,363	6,365,355
Common stock, shares outstanding	6,365,363	6,365,355
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	20,000,000	20,000,000
Series A Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.0001
Preferred stock, shares authorized	2,800,000
Preferred stock, shares issued	2,778,111	2,778,111
Preferred stock, shares outstanding	2,778,111	2,778,111
Series B Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.0001
Preferred stock, shares authorized	8,100,000
Preferred stock, shares issued	3,029,900	3,029,900
Preferred stock, shares outstanding	3,029,900	3,029,900

Intangible Assets and Goodwill - Intangibles (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Intangibles
Gross Carrying Amount	$ 704,223		$ 704,223		$ 702,348
Accumulated Amortization	(555,859)		(555,859)		(537,428)
Intangible Asset, net	148,364		148,364		164,920
Carrying amount of indefinite-lived trade names which are not amortizable	5,300		5,300
Aggregated amortization expense	9,900	$ 10,000	19,000	$ 21,000
Customer relationships
Intangibles
Gross Carrying Amount	507,679		507,679		507,930
Accumulated Amortization	(393,065)		(393,065)		(380,580)
Intangible Asset, net	114,614		114,614		127,350
Developed technology
Intangibles
Gross Carrying Amount	88,553		88,553		88,554
Accumulated Amortization	(88,382)		(88,382)		(88,085)
Intangible Asset, net	171		171		469
Patent
Intangibles
Gross Carrying Amount					15
Accumulated Amortization					(14)
Intangible Asset, net					1
Trade names
Intangibles
Gross Carrying Amount	5,300		5,300		5,300
Intangible Asset, net	5,300		5,300		5,300
Accumulated impairment losses	44,100		44,100		44,100
Outsource contract costs
Intangibles
Gross Carrying Amount	18,272		18,272		17,734
Accumulated Amortization	(16,813)		(16,813)		(16,334)
Intangible Asset, net	1,459		1,459		1,400
Internally developed software
Intangibles
Gross Carrying Amount	57,670		57,670		56,066
Accumulated Amortization	(47,791)		(47,791)		(43,499)
Intangible Asset, net	9,879		9,879		12,567
Purchased software
Intangibles
Gross Carrying Amount	26,749		26,749		26,749
Accumulated Amortization	(9,808)		(9,808)		(8,916)
Intangible Asset, net	$ 16,941		$ 16,941		$ 17,833

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Taxes
Income tax expense	$ 2,049	$ 2,535	$ 5,175	$ 5,198
Annual effective tax rate	(8.20%)	(8.90%)	(10.90%)	(7.30%)
Statutory tax rate			21.00%	21.00%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 270
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (i)
-Publisher FASB
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+ Details

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2024

Stock-Based Compensation

Summary of activity for the market performances of RSU


				Remaining Service
		Weighted		Period Over
	Number	Average		Which Expected
	of Units	Fair Value		to be Recognized
Outstanding Balance as of December 31, 2023	2,125	$	1,820	0.98
Granted	—		—
Forfeited	(1,062)		1,760
Vested	—		—
Outstanding Balance as of June 30, 2024	1,063	$	1,880	0.98

2018 Plan

Stock-Based Compensation

Summary of the status of restricted stock units


				Average
		Weighted		Remaining
	Number	Average Grant		Contractual Life
	of Units	Date Fair Value		(Years)
Outstanding Balance as of December 31, 2023	8	$	6,600.00	—
Granted	—		—
Forfeited	—		—
Vested	(8)		6,600.00
Outstanding Balance as of June 30, 2024	—	$	—	—

Schedule of stock option activity


						Average
		Weighted		Weighted		Remaining
		Average Grant		Average		Vesting Period
	Outstanding	Date Fair Value		Exercise Price		(Years)
Outstanding Balance as of December 31, 2023	313	$	22,224	$	46,485	0.02
Granted	—		—
Exercised	—		—
Forfeited	(8)		36,260
Expired	—		—
Outstanding Balance as of June 30, 2024 (1)	305	$	22,044	$	45,995	0.01

(1) 297 of the outstanding options are exercisable as of June 30, 2024.

XBP Europe 2024 Stock Incentive Plan

Stock-Based Compensation

Summary of the status of restricted stock units


				Average
		Weighted		Remaining
	Number	Average Grant		Contractual Life
	of Units	Date Fair Value		(Years)
Granted	3,325,329	$	1.24
Forfeited	—		—
Vested	—		—
Outstanding Balance as of June 30, 2024	3,325,329	$	1.24	2.70

Schedule of stock option activity


						Average
		Weighted		Weighted		Remaining
		Average Grant		Average		Vesting Period
	Outstanding	Date Fair Value		Exercise Price		(Years)
Granted	95,000	$	0.58	$
Exercised	—		—
Forfeited	—		—
Expired	—		—
Outstanding Balance as of June 30, 2024 (1)	95,000	$	0.58	$	1.31	3.84

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

General - Merger Agreement and Sale of Non-core Assets (Details) - USD ($) $ in Thousands	Jun. 08, 2023	Jun. 30, 2024	Dec. 31, 2023	Nov. 29, 2023
Noncontrolling interest in XBP Europe		$ (4,946)	$ (3,332)
XBP Europe, Inc
Ownership percentage on acquisition				72.30%
Disposed of by sale not discontinued operations \| SourceHOV
Purchase price	$ 30,100
Disposed of goodwill	16,500
Pre-tax gain	$ 7,200

- Definition

Amount of equity (deficit) attributable to noncontrolling interest. Excludes temporary equity.

+ References

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+ Details

Stockholders' Equity - Share Buyback Program (Details) - 2022 Share Buyback Program - shares		6 Months Ended
	Aug. 10, 2022	Jun. 30, 2024	Jun. 30, 2023
Share Buyback Program
Authorized amount (in shares)	50,000
Term of share buyback program	2 years
Shares repurchased (in shares)		0	0
Common Stock repurchased and retired (in shares)		1,787

- Definition

Number of shares that have been repurchased during the period and have not been retired and are not held in treasury. Some state laws may govern the circumstances under which an entity may acquire its own stock and prescribe the accounting treatment therefore. This element is used when state law does not recognize treasury stock.

+ References + Details

New Accounting Pronouncements

6 Months Ended

Jun. 30, 2024

New Accounting Pronouncements

New Accounting Pronouncements

2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Effective January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) No. 2023-01, Leases (Topic 842): Common Control Arrangements that clarifies the accounting for leasehold improvements associated with common control leases by requiring that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term), as long as the lessee controls the use of the underlying asset through a lease. Additionally, leasehold improvements associated with common control leases should be accounted for as a transfer between entities under common control through an adjustment to equity, if, and when, the lessee no longer controls the use of the underlying asset. The adoption had no impact on the Company’s consolidated results of operations, cash flows, financial position or disclosures.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires retrospective disclosure of significant segment expenses and other segment items on an annual and interim basis. Additionally, it requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”). This ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that adopting this standard will have on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that adopting this standard will have on its consolidated financial statements.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Section 65
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+ Details

Employee Benefit Plans - Pension Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Net periodic benefit cost
Employer contributions			$ 200	$ 1,200
Pension
Net periodic benefit cost
Service cost	$ 9	$ 10	19	20
Interest cost	$ 739	$ 760	$ 1,482	$ 1,509
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Interest Cost, Statement of Income or Comprehensive Income [Extensible Enumeration]	Interest Income (Expense), Nonoperating, Net	Interest Income (Expense), Nonoperating, Net	Interest Income (Expense), Nonoperating, Net	Interest Income (Expense), Nonoperating, Net
Expected return on plan assets	$ (726)	$ (676)	$ (1,455)	$ (1,343)
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Expected Return (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)
Amortization of prior service cost		$ 89		$ 177
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Amortization of Prior Service Cost (Credit), Statement of Income or Comprehensive Income [Extensible Enumeration]	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)
Amortization of net loss	$ 305	$ 391	$ 612	$ 776
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)
Net periodic benefit cost	$ 327	$ 574	$ 658	$ 1,139

Segment and Geographic Area Information

6 Months Ended

Jun. 30, 2024

Segment and Geographic Area Information

Segment and Geographic Area Information

13. Segment and Geographic Area Information

ITPS: The ITPS segment provides a wide range of solutions and services designed to aid businesses in information capture, processing, decisioning and distribution to customers primarily in the financial services, commercial, public sector and legal industries.

HS: The HS segment operates and maintains an outsourcing business specializing in both the healthcare provider and payer markets.

LLPS: The LLPS segment provides a broad array of support services in connection with class action settlement administration, claims adjudication, labor, employment and other legal matters.

The chief operating decision maker reviews segment profit to evaluate operating segment performance and determine how to allocate resources to operating segments. “Segment profit” is defined as revenue less cost of revenue (exclusive of depreciation and amortization). The Company does not allocate selling, general, and administrative expenses, depreciation and amortization, interest expense, net and sundry expenses (income), net. The Company manages assets on a total company basis, not by operating segment, and therefore asset information and capital expenditures by operating segments are not presented. A reconciliation of segment profit to net loss before income taxes is presented below.


	Three months ended June 30, 2024
	ITPS		HS		LLPS		Total
Revenue	$	156,840	$	62,935	$	25,878	$	245,653
Cost of revenue (exclusive of depreciation and amortization)		129,787		42,573		15,604		187,964
Segment profit		27,053		20,362		10,274		57,689
Selling, general and administrative expenses (exclusive of depreciation and amortization)								41,778
Depreciation and amortization								14,983
Related party expense								3,282
Interest expense, net								23,129
Sundry income, net								(204)
Other income, net								(423)
Net loss before income taxes							$	(24,856)


	Three months ended June 30, 2023
	ITPS		HS		LLPS		Total
Revenue	$	184,990	$	63,608	$	24,340	$	272,938
Cost of revenue (exclusive of depreciation and amortization)		150,035		47,016		15,008		212,059
Segment profit		34,955		16,592		9,332		60,879
Selling, general and administrative expenses (exclusive of depreciation and amortization)								32,026
Depreciation and amortization								14,890
Related party expense								2,739
Interest expense, net								45,092
Debt modification and extinguishment costs (gain), net								(6,785)
Sundry expense, net								1,500
Other income, net								(232)
Net loss before income taxes							$	(28,351)


		Six months ended June 30, 2024
	ITPS		HS		LLPS		Total
Revenue	$	332,980	$	127,787	$	43,697	$	504,464
Cost of revenue (exclusive of depreciation and amortization)		274,199		88,729		27,024		389,952
Segment profit		58,781		39,058		16,673		114,512
Selling, general and administrative expenses (exclusive of depreciation and amortization)								82,632
Depreciation and amortization								28,490
Related party expense								5,673
Interest expense, net								44,217
Sundry expense, net								1,677
Other income, net								(874)
Net loss before income taxes							$	(47,303)


		Six months ended June 30, 2023
	ITPS		HS		LLPS		Total
Revenue	$	378,698	$	126,650	$	41,210	$	546,558
Cost of revenue (exclusive of depreciation and amortization)		308,546		93,752		26,228		428,526
Segment profit		70,152		32,898		14,982		118,032
Selling, general and administrative expenses (exclusive of depreciation and amortization)								76,407
Depreciation and amortization								31,450
Related party expense								5,851
Interest expense, net								89,272
Debt modification and extinguishment costs (gain), net								(15,558)
Sundry expense, net								2,248
Other income, net								(514)
Net loss before income taxes							$	(71,124)

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

Subsequent Events

6 Months Ended

Jun. 30, 2024

Subsequent Events.

Subsequent Events

14. Subsequent Events

BR Exar AR Facility Amendment

During July 1, 2024 through August 14, 2024, certain of the Company’s subsidiaries entered into two (2) additional amendments to the BR Exar AR Facility (the “Amendments”), pursuant to which they agreed to sell certain existing and future receivables to BREL until such time as BREL shall have collected $10.5 million, net of any costs, expenses or other amounts paid to or owing to the buyer under the agreement. The Company received an aggregate of $9.5 million in net proceeds under the Amendments.

Repayments on BRCC Facility and BR Exar AR Facility

During July 1, 2024 through August 14, 2024, the Company repaid $2.0 million of outstanding principal amount under the BRCC Revolver. Accordingly, the amount outstanding under the BRCC Revolver is $5.9 million, as of August 14, 2024.

During July 1, 2024 through August 14, 2024, the Company repaid approximately $7.1 million of outstanding principal amount under the BR Exar AR Facility. Accordingly, the amount outstanding under the BR Exar AR Facility is approximately $8.9 million, as of August 14, 2024.

Potential Spin-off

On July 1, 2024, the Company announced that its Board has authorized the Company to consider a spin-off of its wholly-owned subsidiary Exela Technologies BPA, LLC (the holding company for the Company’s business process automation business which includes our HS and LLPS segments and part of our ITPS segment, and collectively with all of its subsidiaries, the “BPA Business”). In the event the spin-off is effected, Exela will distribute all of the shares of common stock held by it of a holding company (“Holdco”) owning the BPA Business, pro rata determined on an as coverted fully diluted basis, to Exela’s stockholders and warrantholders. As a result, if the spin-off is consummated, Exela’s stockholders and warrantholders prior to the spin-off will become the stockholders of Holdco after the spin-off. The announcement of the potential spin-off did not have any impact to the Company’s condensed consolidated financial statements or segment reporting.

The spin-off, if it occurs, may be deemed a "Fundamental Change" under the Series A Certificate of Designations, and thus could provide Series A Preferred Stockholders with special conversion rights that could substantially dilute the existing holders of Common Stock, as described above. At this time, there can be no assurance that the spin-off will be consummated, and the Company has not yet completed its analysis of whether the spin-off, if consummated, would constitute a Fundamental Change.

Related-Party Transactions - Subscription, Voting and Redemption Agreement (Details) - Special Voting Preferred Stock - GP-HGM LLC	Oct. 09, 2023 Vote $ / shares shares	Jun. 30, 2024 shares
Related Party Transaction [Line Items]
Shares issued \| shares	1,000,000
Common stock issued price \| $ / shares	$ 100
Number of votes per share \| Vote	20,000
Special Voting Stock for an aggregate price \| $ / shares	$ 100
Preferred stock, shares outstanding \| shares		0

Fair Value Measurement

6 Months Ended

Jun. 30, 2024

Fair Value Measurement

Fair Value Measurement

9. Fair Value Measurement

Assets and Liabilities Measured at Fair Value

The carrying amount of assets and liabilities including current portion of other debt approximated their fair value as of June 30, 2024 and December 31, 2023, due to the relative short maturity of these instruments. Management estimates the fair values of the July 2026 Notes and the April 2026 Notes at approximately 20.0% and 15.5%, respectively, of the respective principal balances outstanding as of June 30, 2024. Management estimated the fair values of the July 2026 Notes and the April 2026 Notes at approximately 24.0% and 16.5%, respectively, of the respective principal balance outstanding as of December 31, 2023. The fair values of secured borrowings under the Company’s securitization facility, BRCC Facility, Second Lien Note and Senior Secured Term Loan are equal to the respective carrying values. Other debt represents the Company’s outstanding loan balances associated with various hardware, software purchases, maintenance and leasehold improvements along with loans and receivables factoring arrangement

entered into by subsidiaries of the Company and as such, the cost incurred would approximate fair value. Property and equipment, intangible assets, capital lease obligations, and goodwill are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the respective asset is written down to its fair value.

The Company determined the fair value of its long-term debt and current portion of long-term debts using Level 2 inputs, including any recent issuance of the debt, the Company’s credit rating, and the current market rate.

The Company determined the fair value of private warrants liability of XBP Europe included in the other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 under Level 3 fair value measurement using the Black-Scholes option pricing model.

The following table provides the carrying amounts and estimated fair values of the Company’s financial instruments as of June 30, 2024 and December 31, 2023:


	Carrying		Fair		Fair Value Measurements
As of June 30, 2024	Amount		Value		Level 1		Level 2		Level 3
Recurring assets and liabilities:
Long-term debt	$	1,015,252	$	196,730	$	—	$	196,730	$	—
Current portion of long-term debts		53,723		53,723		—		53,723		—
Private warrants liability of XBP Europe		10		10		—		—		10


	Carrying		Fair		Fair Value Measurements
As of December 31, 2023	Amount		Value		Level 1		Level 2		Level 3
Recurring assets and liabilities:
Long-term debt	$	1,030,580	$	216,213	$	—	$	216,213	$	—
Current portion of long-term debts		30,029		30,029		—		30,029		—
Private warrants liability of XBP Europe		50		50		—		—		50

The significant unobservable inputs used in the fair value of the private warrants liability of XBP Europe are assumptions related to the inputs of exercise price, fair value of the underlying XBP Europe common stock, risk-free interest rate, expected term, expected volatility, and expected dividend yield. Significant increases (decreases) in the discount rate would have resulted in a lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information would have resulted in a higher (lower) fair value measurement. For all significant unobservable inputs used in the fair value measurement of the Level 3 liabilities, a change in one of the inputs would not necessarily result in a directionally similar change in the fair value.

The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3 for which a reconciliation is required:


	June 30,		December 31,
	2024		2023
Balance at beginning of period	$	50	$	647
Reduction in the fair value of the private warrants liability of XBP Europe		(40)		(597)
Balance at end of period	$	10	$	50

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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+ Details

Stockholders' Equity - Warrants (Details)	Jun. 30, 2024 $ / shares shares
Warrants
Warrants outstanding	1,978
Private Placement
Warrants
Warrants sold	7,913,637
Exercise price of warrant per one Common Stock (in US$ per share) \| $ / shares	$ 16,000.00
Warrant \| Private Placement
Warrants
Number of securities called by each warrant or right	1

Segment and Geographic Area Information - Revenue by segment information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) segment	Jun. 30, 2023 USD ($)
Segment information
Number of segments \| segment			3
Revenue	$ 245,653	$ 272,938	$ 504,464	$ 546,558
Cost of revenue (exclusive of depreciation and amortization)	187,964	212,059	389,952	428,526
Segment profit	57,689	60,879	114,512	118,032
Selling, general and administrative expenses (exclusive of depreciation and amortization)	41,778	32,026	82,632	76,407
Depreciation and amortization	14,983	14,890	28,490	31,450
Related party expense	3,282	2,739	5,673	5,851
Interest expense, net	23,129	45,092	44,217	89,272
Debt modification and extinguishment costs (gain), net		(6,785)		(15,558)
Sundry expense, net	(204)	1,500	1,677	2,248
Other income, net	(423)	(232)	(874)	(514)
Loss before income taxes	(24,856)	(28,351)	(47,303)	(71,124)
I T P S Segment
Segment information
Revenue	156,840	184,990	332,980	378,698
Cost of revenue (exclusive of depreciation and amortization)	129,787	150,035	274,199	308,546
Segment profit	27,053	34,955	58,781	70,152
H S Segment
Segment information
Revenue	62,935	63,608	127,787	126,650
Cost of revenue (exclusive of depreciation and amortization)	42,573	47,016	88,729	93,752
Segment profit	20,362	16,592	39,058	32,898
L L P S Segment
Segment information
Revenue	25,878	24,340	43,697	41,210
Cost of revenue (exclusive of depreciation and amortization)	15,604	15,008	27,024	26,228
Segment profit	$ 10,274	$ 9,332	$ 16,673	$ 14,982

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Condensed Consolidated Statements of Comprehensive Loss
Net loss	$ (26,905)	$ (30,886)	$ (52,478)	$ (76,322)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	(820)	1,901	483	(204)
Unrealized pension actuarial gains (losses), net of tax	246	(116)	536	(205)
Total other comprehensive gain (loss), net of tax	(574)	1,785	1,019	(409)
Comprehensive loss	(27,479)	(29,101)	(51,459)	(76,731)
Comprehensive loss attributable to noncontrolling interest in XBP Europe, net of tax	(1,120)		(1,658)
Comprehensive loss attributable to Exela Technologies, Inc., net of tax	$ (26,359)	$ (29,101)	$ (49,801)	$ (76,731)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

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- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

Amount after tax, before reclassification adjustments of gain (loss) on foreign currency translation adjustments, foreign currency transactions designated and effective as economic hedges of a net investment in a foreign entity and intra-entity foreign currency transactions that are of a long-term-investment nature.

+ References + Details

- Definition

Amount before tax, after reclassification adjustments of other comprehensive income (loss).

+ References + Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

Stockholders' Equity - Special Voting Preferred Stock (Details) - Special Voting Preferred Stock - GP-HGM LLC	Oct. 09, 2023 Vote $ / shares shares	Jun. 30, 2024 shares
Related Party Transaction [Line Items]
Shares issued \| shares	1,000,000
Stock issue price per share \| $ / shares	$ 100
Number of votes per share \| Vote	20,000
Redemption price \| $ / shares	$ 100
Preferred stock, shares outstanding \| shares		0

Fair Value Measurement - Net assets and liabilities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at the beginning of period	$ 50	$ 647
Reduction in the fair value of the private warrants liability of XBP Europe	$ (40)	$ (597)
Fair Value, Net Derivative Asset (Liability), Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Fair Value Adjustment of Warrants	Fair Value Adjustment of Warrants
Balance at the end of period	$ 10	$ 50

Stock-Based Compensation - Options (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 13, 2024	Jan. 18, 2018	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
2018 Plan \| Selling, general and administrative expense
Unrecognized compensation expense
Compensation expense			$ 0.1	$ 0.1	$ 1.0	$ 0.1
XBP Europe 2024 Stock Incentive Plan \| Selling, general and administrative expense
Unrecognized compensation expense
Compensation expense			$ 0.2		$ 0.2
Employee Stock Option [Member] \| 2018 Plan
Stock-based compensation
Minimum fair market value per share of underlying stock used to determine option grant price, as a percent		100.00%
Expiration of stock options		10 years
Outstanding
Outstanding Balance at beginning of the year (in shares)					313
Exercised (in shares)					297
Forfeited (in shares)					(8)
Outstanding Balance at the end of the year (in shares)			305		305		313
Weighted average Grant Date fair Value
Outstanding balance at the beginning of the period					$ 22,224
Forfeited					36,260
Outstanding balance at the end of the period			$ 22,044		22,044		$ 22,224
Weighted Average Exercise Price
Outstanding Balance at the beginning of the year					46,485
Outstanding Balance at the end of the year (in shares)			$ 45,995		$ 45,995		$ 46,485
Additional information
Average Remaining Vesting Period					3 days		7 days
Employee Stock Option [Member] \| 2018 Plan \| Minimum
Stock-based compensation
Vesting period		2 years
Employee Stock Option [Member] \| 2018 Plan \| Maximum
Stock-based compensation
Vesting period		4 years
Unrecognized compensation expense
Unrecognized compensation expense			$ 0.1		$ 0.1
Employee Stock Option [Member] \| XBP Europe 2024 Stock Incentive Plan
Stock-based compensation
Minimum fair market value per share of underlying stock used to determine option grant price, as a percent	100.00%
Expiration of stock options	10 years
Vesting period	4 years
Outstanding
Granted (in shares)					95,000
Exercised (in shares)					0
Outstanding Balance at the end of the year (in shares)			95,000		95,000
Weighted average Grant Date fair Value
Granted					$ 0.58
Outstanding balance at the end of the period			$ 0.58		0.58
Weighted Average Exercise Price
Outstanding Balance at the end of the year (in shares)			$ 1.31		$ 1.31
Additional information
Average Remaining Vesting Period					3 years 10 months 2 days
Unrecognized compensation expense
Unrecognized compensation expense			$ 4.0		$ 4.0

Intangible Assets and Goodwill - Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Goodwill
Beginning of Year Balance	$ 170,452	$ 186,802
Deletions		(16,500)
Currency Translation Adjustments	(98)	150
End of Year Balance	170,354	170,452
ITPS
Goodwill
Beginning of Year Balance	64,801	81,151
Deletions		(16,500)
Currency Translation Adjustments	(98)	150
End of Year Balance	64,703	64,801
Accumulated impairment losses	487,700	487,700
HS
Goodwill
Beginning of Year Balance	86,786	86,786
End of Year Balance	86,786	86,786
LLPS
Goodwill
Beginning of Year Balance	18,865	18,865
End of Year Balance	18,865	18,865
Accumulated impairment losses	$ 243,400	$ 243,400

- Definition

Amount, after accumulated impairment loss, of asset representing future economic benefit arising from other asset acquired in business combination or from joint venture formation or both, that is not individually identified and separately recognized.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 49
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-49

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 24
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482548/350-20-55-24

Reference 3: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 100
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-100

Reference 4: http://www.xbrl.org/2003/role/exampleRef
-Topic 852
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481372/852-10-55-10

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 210
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(15))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480566/210-10-S99-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 45
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482598/350-20-45-1

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
-SubTopic 210
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03(10)(1))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478546/942-210-S99-1

+ Details

Stock-Based Compensation - Restricted Stock Unit (Details) - RSU's	6 Months Ended
	Jun. 30, 2024 $ / shares shares
2018 Plan
Number of Units
Balance at the beginning of the period \| shares	8
Vested \| shares	(8)
Balance at the end of the period \| shares
Weighted Average Grant Date Fair Value
Balance at the beginning of the period \| $ / shares	$ 6,600.00
Vested \| $ / shares	$ 6,600.00
Balance at the end of the period \| $ / shares
2018 Plan \| Minimum
Stock-Based Compensation
Vesting period	1 year
2018 Plan \| Maximum
Stock-Based Compensation
Vesting period	2 years
XBP Europe 2024 Stock Incentive Plan
Number of Units
Granted \| shares	3,325,329
Balance at the end of the period \| shares	3,325,329
Weighted Average Grant Date Fair Value
Granted \| $ / shares	$ 1.24
Balance at the end of the period \| $ / shares	$ 1.24
Average Remaining Contractual Life (Years)
Weighted average remaining contractual life (in years)	2 years 8 months 12 days

Related-Party Transactions - Payable and Receivable/Prepaid Balances with Affiliates (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Affiliates
Related-Party Transactions
Payables	$ 3,047	$ 1,938
Receivables and Prepaid Expenses	449	296
Affiliates \| HOV Services, Ltd
Related-Party Transactions
Receivables and Prepaid Expenses	403	296
Affiliates \| Rule 14
Related-Party Transactions
Payables	3,019	1,918
Affiliates \| HGM
Related-Party Transactions
Payables	28	9
Affiliates \| DOW
Related-Party Transactions
Payables		11
Receivables and Prepaid Expenses	46
Related party
Related-Party Transactions
Payables	3,047	1,938
Receivables and Prepaid Expenses	$ 449	$ 296

Significant Accounting Policies - Performance Obligations (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2024 USD ($)
Significant Accounting Policies
Contracts with an original expected length	true
Remainder of 2024	$ 6,152
2025	7,987
2026	4,629
2027	2,554
2028	1,519
Total	$ 22,841

Employee Benefit Plans

6 Months Ended

Jun. 30, 2024

Employee Benefit Plans

Employee Benefit Plans

7. Employee Benefit Plans

German Pension Plan

The Company’s subsidiary in Germany provides pension benefits to certain retirees. Employees eligible for participation include all employees who started working for the Company or its predecessors prior to September 30, 1987 and have finished a qualifying period of at least 10 years. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. The German pension plan is an unfunded plan and therefore has no plan assets. No new employees are registered under this plan and the participants who are already eligible to receive benefits under this plan are no longer employees of the Company.

U.K. Pension Plan

The Company’s subsidiary in the United Kingdom provides pension benefits to certain retirees and eligible dependents. Employees eligible for participation include all full-time regular employees who were more than three years from retirement prior to October 2001. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is

calculated based on actual salary of the participants as at the earlier of two dates, the participants leaving the Company or December 31, 2015.

Norway Pension Plan

The Company’s subsidiary in Norway provides pension benefits to eligible retirees and eligible dependents. Employees eligible for participation include all employees who were more than three years from retirement prior to March 2018. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the later of two dates, the participants leaving the Company or April 30, 2018.

Asterion Pension Plan

In April 2018, through its acquisition of Asterion International Group, the Company became obligated to provide pension benefits to eligible retirees and eligible dependents of Asterion. Employees eligible for participation include all full-time regular employees who were more than three years from retirement prior to July 2003. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the earlier of two dates, the participants leaving the Company or April 10, 2018.

Tax Effect on Accumulated Other Comprehensive Loss

As of June 30, 2024 and December 31, 2023 the Company recorded actuarial gain of $0.4 million and actuarial losses of $0.2 million in accumulated other comprehensive loss on the condensed consolidated balance sheets, respectively, which is net of a deferred tax benefit of $2.0 million for each period.

Pension Expense

The components of the net periodic benefit cost are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Service cost	$	9	$	10	$	19	$	20
Interest cost		739		760		1,482		1,509
Expected return on plan assets		(726)		(676)		(1,455)		(1,343)
Amortization:
Amortization of prior service cost		—		89		—		177
Amortization of net loss		305		391		612		776
Net periodic benefit cost	$	327	$	574	$	658	$	1,139

The Company records pension interest cost within interest expense, net. Expected return on plan assets, amortization of prior service costs, and amortization of net losses are recorded within other expense (income), net. Service cost is recorded within cost of revenue.

Employer Contributions

The Company’s funding of employer contributions is based on governmental requirements and differs from those methods used to recognize pension expense. The Company made contributions of $0.2 million and $1.2 million to its pension plans during the six months ended June 30, 2024 and 2023, respectively. The Company has plans to fund the pension plans with the required contributions for 2024 based on current plan provisions.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 70
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480794/715-70-50-1

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 17
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480482/715-20-55-17

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(iv)(03)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(i)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (q)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (l)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/715/tableOfContent

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(iii)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (o)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (p)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (r)(1)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (r)(2)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480126/715-20-S99-2

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 60
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480266/715-60-50-3

+ Details

Related-Party Transactions - Relationship with HandsOn Global Management (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) agreement	Jun. 30, 2023 USD ($)	Dec. 31, 2016
Related-Party Transactions
Amount of related party transaction	$ 3,282,000	$ 2,739,000	$ 5,673,000	$ 5,851,000
Affiliate of largest stockholder
Related-Party Transactions
Rental expenses			100,000	100,000
Affiliate of largest stockholder \| Maximum
Related-Party Transactions
Rental expenses	100,000	100,000
HOV Services, Ltd \| Data Capture And Technology Services \| Cost of revenue
Related-Party Transactions
Amount of related party transaction	700,000	500,000	1,200,000	800,000
HGM \| Travel Expense
Related-Party Transactions
Amount of related party transaction	0	0	$ 0
HGM \| Travel Expense \| Maximum
Related-Party Transactions
Amount of related party transaction				100,000
HGM \| Master Service Agreement
Related-Party Transactions
Number of master agreements \| agreement			10
SourceHOV \| Master Service Agreement
Related-Party Transactions
Revenue share percentage					75.00%
SourceHOV \| Entities affiliated with HGM managed funds
Related-Party Transactions
Revenue share percentage					25.00%
SourceHOV \| Entities affiliated with HGM managed funds \| Master Service Agreement
Related-Party Transactions
Related party expense	$ 2,400,000	$ 2,100,000	$ 4,100,000	$ 4,500,000

Stock-Based Compensation - Market Performance Units (Details) - Market Performance Units - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended
	Sep. 14, 2021	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of the awards		$ 1,880		$ 1,880		$ 1,820
Unrecognized compensation expense		$ 0.4		$ 0.4
Compensation expense		$ 0.2	$ 0.2	$ 0.4	$ 0.4
Share Price (Equal to or Less than $8,000.00 per share)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage				0.00%
Share Price		$ 8,000		$ 8,000
Tranche 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	50.00%
Share Price	$ 40,000
Number of consecutive trading days	60 days
Number of non-consecutive trading days	90 days
Number of trading days under arrangement	180 days
Fair value of the awards		5,920		5,920
Modification date fair value		1,760		1,760
Tranche 1 \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share Price		8,000		$ 8,000
Tranche 2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	50.00%
Share Price	$ 80,000
Number of consecutive trading days	60 days
Number of non-consecutive trading days	90 days
Number of trading days under arrangement	180 days
Consideration for forfeited unearned shares				$ 0.0
Fair value of the awards		6,040		$ 6,040
Modification date fair value		1,880		1,880
Tranche 2 \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share Price		80,000		$ 80,000
Tranche 2 \| Share Price (Equal to or Greater than $80,000.00 per share)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage				100.00%
Share Price		$ 80,000		$ 80,000

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 30,327	$ 23,341
Restricted cash	20,933	43,812
Accounts receivable, net of allowance for credit losses of $6,813 and $6,628, respectively	61,501	76,893
Inventories, net	13,251	11,502
Prepaid expenses and other current assets	30,140	25,364
Total current assets	156,601	181,208
Property, plant and equipment, net of accumulated depreciation of $216,695 and $213,142, respectively	58,448	58,366
Operating lease right-of-use assets, net	31,421	33,874
Goodwill	170,354	170,452
Intangible assets, net	148,364	164,920
Deferred income tax assets	2,990	3,043
Other noncurrent assets	19,775	24,474
Total assets	587,953	636,337
Current liabilities
Current portion of long-term debt	53,723	30,029
Accounts payable	68,628	61,109
Income tax payable	4,211	2,080
Accrued liabilities	57,611	63,699
Accrued compensation and benefits	71,192	65,012
Accrued interest	55,776	52,389
Customer deposits	27,898	23,838
Deferred revenue	14,018	12,099
Obligation for claim payment	38,913	66,988
Current portion of finance lease liabilities	6,422	4,856
Current portion of operating lease liabilities	9,590	10,845
Total current liabilities	411,029	394,882
Long-term debt, net of current maturities	1,015,252	1,030,580
Finance lease liabilities, net of current portion	8,203	5,953
Pension liabilities, net	12,879	13,192
Deferred income tax liabilities	12,516	11,692
Long-term income tax liabilities	6,511	6,359
Operating lease liabilities, net of current portion	24,676	26,703
Other long-term liabilities	5,621	5,811
Total liabilities	1,496,687	1,495,172
Commitments and Contingencies (Note 8)
Stockholders' deficit
Common Stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 6,365,363 shares issued and outstanding at June 30, 2024 and 6,365,355,shares issued and outstanding at December 31, 2023	261	261
Preferred stock
Additional paid in capital	1,237,687	1,236,171
Accumulated deficit	(2,134,670)	(2,084,114)
Accumulated other comprehensive loss:
Foreign currency translation adjustment	(7,282)	(7,648)
Unrealized pension actuarial gains (losses), net of tax	215	(174)
Total accumulated other comprehensive loss	(7,067)	(7,822)
Total stockholders' deficit attributable to Exela Technologies, Inc.	(903,788)	(855,503)
Noncontrolling interest in XBP Europe	(4,946)	(3,332)
Total stockholders' deficit	(908,734)	(858,835)
Total liabilities and stockholders' deficit	587,953	636,337
Series A Preferred Stock
Stockholders' deficit
Preferred stock	1	1
Series B Preferred Stock
Stockholders' deficit
Preferred stock
Related party
Current assets
Related party receivables and prepaid expenses	449	296
Current liabilities
Related party payables	$ 3,047	$ 1,938

Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies

Commitments and Contingencies

8. Commitments and Contingencies

Contract Claim

On October 24, 2018, HOV Services, Inc., a subsidiary of the Company (“HOV Services”), filed a lawsuit against ASG Technologies Group, Inc. (“ASG”) that sought to terminate the renewal of licensing agreement between the parties. HOV Services alleged that the licensing agreement was renewed under duress and brought claims against ASG under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq., the Stored Communications Act, 18 U.S.C. § 2701 et seq., and various common law doctrines. ASG subsequently brought counterclaims asserting breach of contract and other allegations. On February 27, 2024, a judge granted ASG’s motion for directed verdict on its breach of contract claim and awarded ASG $2.5 million in damages plus interest. On February 29, 2024, the jury found in favor of ASG on all remaining claims and awarded ASG damages in the amount of approximately $0.7 million plus interest, for a total award of approximately $4.7 million in the case. As of June 30, 2024 and December 31, 2023, the Company accrued $4.7 million for this matter included in accrued liabilities on the condensed consolidated balance sheets, but has not discharged the amount due under this case.

Business Interruption Insurance Claim

During the second half of 2022, the Company experienced a network security incident (the “2022 Network Outage”) impacting certain of the Company’s operational and information technology systems. As a result of the 2022 Network Outage, the Company experienced lost revenue and incurred certain incremental costs. On August 29, 2023, the Company submitted a claim to its insurers for $44.6 million in covered losses related to the 2022 Network Outage (the “August 2023 Claim”). During the year 2023, the Company received insurance proceeds of $10.8 million in respect of business interruption claims from its underlying and first excess carriers. The August 2023 Claim is currently under review by two additional insurers (collectively, the “Second Excess Insurers”), which the Company expects to provide the next layer of coverage under applicable policies. On April 17, 2024, the Company commenced an action against the Second Excess Insurers seeking a declaratory judgment and alleging breach of contract and bad faith for failing to pay out their share of losses connected to the August 2023 Claim. On August 9, 2024, the Company settled its claim against one of the Second Excess Insurers for $3.6 million. At this time, it is not practicable to render an opinion regarding the outcome of this matter with respect to the remaining Second Excess Insurer; however, the Company believes it has meritorious claims and plans to vigorously assert them.

Contract-Related Contingencies

The Company has certain contingent obligations that arise in the ordinary course of providing services to its customers. These contingencies are generally the result of contracts that require the Company to comply with certain performance measurements or the delivery of certain services to customers by a specified deadline. The Company believes the adjustments to the transaction price, if any, under these contract provisions will not result in a significant revenue reversal or have a material adverse effect on the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations or condensed consolidated statements of cash flows.

Commitments and Contingencies (Details) - USD ($) $ in Millions	Aug. 09, 2024	Feb. 29, 2024	Feb. 27, 2024	Aug. 29, 2023	Jun. 30, 2024	Dec. 31, 2023
Network Security Incident
Commitments and Contingencies
Estimated insurance recoveries				$ 44.6
Insurance proceeds				$ 10.8
Subsequent Events \| Network Security Incident
Commitments and Contingencies
Insurance proceeds	$ 3.6
Breach Of Contract \| ASG Technologies Group
Commitments and Contingencies
Amount awarded		$ 0.7	$ 2.5
Amount awarded including interest		$ 4.7
Accrued liability					$ 4.7	$ 4.7

Fair Value Measurement (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
2026 notes
Assets and liabilities measured at fair value
Fair value percentage	20.00%	24.00%
New Notes
Assets and liabilities measured at fair value
Fair value percentage	15.50%	16.50%
Carrying Amount \| XBP Europe, Inc \| Private Warrants
Carrying amounts and estimated fair values of financial instruments
Private warrants liability of XBP Europe	$ 10	$ 50
Carrying Amount \| Recurring assets and liabilities
Carrying amounts and estimated fair values of financial instruments
Long-term debt	1,015,252	1,030,580
Current portion of long-term debts	53,723	30,029
Fair Value \| XBP Europe, Inc \| Private Warrants
Carrying amounts and estimated fair values of financial instruments
Private warrants liability of XBP Europe	10	50
Fair Value \| Level 3 \| XBP Europe, Inc \| Private Warrants
Carrying amounts and estimated fair values of financial instruments
Private warrants liability of XBP Europe	10	50
Fair Value \| Recurring assets and liabilities
Carrying amounts and estimated fair values of financial instruments
Long-term debt	196,730	216,213
Current portion of long-term debts	53,723	30,029
Fair Value \| Recurring assets and liabilities \| Level 2
Carrying amounts and estimated fair values of financial instruments
Long-term debt	196,730	216,213
Current portion of long-term debts	$ 53,723	$ 30,029

Stockholders' Equity - Common Stock (Details)	6 Months Ended
Stockholders' Equity - Common Stock (Details)	Jun. 30, 2024 Vote shares	Dec. 31, 2023 shares
Common Stock
Common Stock, shares authorized	1,600,000,000	1,600,000,000
Number of voting rights entitled for each share of Common Stock held \| Vote	1
Common stock, shares outstanding	6,365,363	6,365,355

Long-Term Debt and Credit Facilities

6 Months Ended

Jun. 30, 2024

Long-Term Debt and Credit Facilities

Long-Term Debt and Credit Facilities

5. Long-Term Debt and Credit Facilities

July 2026 Notes

As of January 1, 2023, there was outstanding $980.0 million aggregate principal amount of 11.5% First-Priority Senior Secured Notes scheduled to mature July 15, 2026 (the “July 2026 Notes”) issued by Exela Intermediate LLC and Exela Finance Inc. (together, the “Issuers”), wholly-owned subsidiaries of the Company. The July 2026 Notes are guaranteed by nearly all U.S. subsidiaries of Exela Intermediate LLC. The July 2026 Notes bear interest at a rate of 11.5% per year. The Company is required to pay interest on the July 2026 Notes on January 15 and July 15 of each year, and commenced making such interest payments on July 15, 2022. The Issuers may redeem the July 2026 Notes in whole or in part from time to time, at a redemption price of 100%, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

On July 11, 2023, the Issuers, certain guarantors and U.S. Bank Trust Company, National Association, as trustee, entered into an indenture (the “April 2026 Notes Indenture”) governing the 11.5% First-Priority Senior Secured Notes scheduled to mature July 15, 2026 (the “April 2026 Notes”), and the Issuers issued approximately $764.8 million aggregate principal amount of the April 2026 Notes as consideration for the exchange of $956.0 million aggregate principal amount of the Issuers’ existing July 2026 Notes pursuant to a public exchange offer (the “2023 Exchange”), which was equivalent to issuing $800 of the April 2026 Notes per $1,000 principal amount of the existing July 2026 Notes. The Company performed an assessment of the 2023 Exchange and determined that it met the criteria to be accounted for as a troubled debt restructuring under GAAP. The undiscounted cash flows associated with the April 2026 Notes issued were compared to the carrying value of the exchanged July 2026 Notes and since the undiscounted cash flows of the April 2026 Notes exceeded the carrying value of the exchanged July 2026 Notes, the carrying value of the April 2026 Notes was established at the carrying value of the exchanged July 2026 Notes and the Company established new effective interest rates based on the carrying value of the exchanged July 2026 Notes prior to the 2023 Exchange. The difference between the principal amount of the issued April 2026 Notes and their carrying value was recorded as a premium and is included in long-term debt on the Company’s condensed consolidated balance sheets. The Company

recorded a premium of $142.3 million on the notes exchange, which will be reduced as contractual interest payments are made on the April 2026 Notes.

On July 11, 2023, the Company entered into a seventh supplemental indenture to the indenture governing the July 2026 Notes which eliminated substantially all of the restrictive covenants, eliminated certain events of default, modified covenants regarding mergers and consolidations and modified or eliminated certain other provisions, including certain provisions relating to future guarantors and defeasance, contained in the July 2026 Notes Indenture and the July 2026 Notes. In addition, all of the collateral securing the July 2026 Notes was released pursuant to the seventh supplemental indenture.

The July 11, 2023 transaction resulted in cancellation of debt income (“CODI”) for tax purposes. Absent an exception, a debtor recognizes CODI upon discharge of its outstanding indebtedness for an amount of consideration that is less than the outstanding debt. The Internal Revenue Code of 1986, as amended, (the “Code”), provides that a debtor may wholly or partially exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of CODI excluded from taxable income. Pursuant to the U.S. tax rules, the Company computes the final CODI calculation based on the tax basis as of the last day of the fiscal tax year (i.e., December 31, 2023) which includes the date in which the debt transaction occurred. For the year ended December 31, 2023, the Company generated CODI in the amount of $780.0 million, of which $54.0 million was included in the fiscal year 2023 taxable income and $726.0 million was excluded from taxable income, resulting in the elimination of $624.0 million gross federal and state net operating losses.

As a result of the 2023 Exchange and periodic repurchases, $24.0 million aggregate principal amount of the July 2026 Notes maturing July 15, 2026 remained outstanding as of June 30, 2024.

Senior Secured April 2026 Notes

On July 11, 2023, the Issuers issued approximately $767.8 million aggregate principal amount of the April 2026 Notes under the April 2026 Notes Indenture, which includes the April 2026 Notes issued pursuant to the 2023 Exchange (as described above) and $3.0 million issued in exchange of other indebtedness. The April 2026 Notes are scheduled to mature on April 15, 2026.

Interest on the April 2026 Notes will accrue at 11.5% per annum and will be paid semi-annually, in arrears, on January 15 and July 15 of each year, beginning July 15, 2023. Interest will be payable in cash or in kind by issuing additional April 2026 Notes (or increasing the principal amount of the outstanding April 2026 Notes) (“PIK Interest”) as described below: (A) for the July 15, 2023 interest payment date, such interest was paid in kind as PIK Interest, (B) for each interest payment date from and including the January 15, 2024 interest payment date through and including the July 15, 2024 interest payment date, such interest shall be paid in cash in an amount equal to (i) 50% of such interest plus (ii) an amount not to exceed an amount that, pro forma for such payment, would leave the issuers with Unrestricted Cash (as defined in the April 2026 Notes Indenture) of at least $15.0 million, with the remaining interest paid in kind as PIK Interest, and (C) for interest payment dates falling on or after January 15, 2025, such interest shall be paid in cash.

On July 15, 2023, the Company issued $44.1 million in aggregate principal amount of the April 2026 Notes as a payment for PIK Interest that would otherwise have been due to holders of the July 2026 Notes that participated in the Public Exchange on July 15, 2023. On January 15, 2024, the Company issued $23.3 million in aggregate principal amount of the April 2026 Notes as a payment for PIK Interest due on January 15, 2024 in respect of the April 2026 Notes. $835.3 million aggregate principal amount of the April 2026 Notes remained outstanding as of June 30, 2024.

The Issuers’ obligations under the April 2026 Notes and the April 2026 Notes Indenture are irrevocably and unconditionally guaranteed, jointly and severally, by the same guarantors (the “Guarantors”) that guarantee the July 2026 Notes (other than certain guarantors that have ceased to have operations or assets) and by certain of the Issuers’ other affiliates (the “Affiliated Guarantors”). The April 2026 Notes and the related guarantees are first-priority senior secured obligations of the Issuers, the Guarantors and Affiliated Guarantors.

The issuers may redeem the April 2026 Notes at their option, in whole at any time or in part from time to time, at a redemption price of 100%, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption

date. In addition, the April 2026 Notes will be mandatorily redeemable in part upon the sale of certain assets that constitute additional credit support.

The April 2026 Notes Indenture contains covenants that limit the Issuers’ and the Affiliated Guarantors and their respective subsidiaries’ ability to, among other things, (i) incur or guarantee additional indebtedness, (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (iii) make investments, (iv) consummate certain asset sales, (v) engage in certain transactions with affiliates, (vi) grant or assume certain liens and (vii) consolidate, merge or transfer all or substantially all of their assets. These covenants are subject to a number of important limitations and exceptions. In addition, upon the occurrence of specified change of control events, the Issuers must offer to repurchase the April 2026 Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date. The April 2026 Notes Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all of the then outstanding April 2026 Notes to be due and payable immediately.

Repurchases

In July 2021 the Company commenced a debt buyback program to repurchase senior secured indebtedness, which is ongoing.

During the six months ended June 30, 2023, the Company repurchased $13.8 million principal amount of the Issuers’ 10.0% First Priority Senior Secured Notes due 2023 (“2023 Notes”) for a net cash consideration of $4.4 million. The gain on early extinguishment of debt during the six months ended June 30, 2023 totaled $9.9 million and is inclusive of less than $0.1 million write off of original issue discount and debt issuance costs, respectively. During the six months ended June 30, 2023, the Company repurchased $15.1 million principal amount of the term loans outstanding under its credit agreement (“2023 Term Loan”) for net cash consideration of $8.0 million. The gain on early extinguishment of debt during the six months ended June 30, 2023 totaled $7.1 million and is inclusive of less than $0.1 million write off of original issue discount and debt issuance costs, respectively. Gain on the early extinguishment of debt during the six months ended June 30, 2023 is reported within debt modification and extinguishment costs (gain), net within the Company’s condensed consolidated statements of operations.

BRCC Facility

On November 17, 2021, GP2 XCV, LLC, a subsidiary of the Company (“GP2 XCV”), entered into a borrowing facility with B. Riley Commercial Capital, LLC (which was subsequently assigned to BRF Finance Co., LLC (“BRF Finance”)) pursuant to which such subsidiary was able to borrow an original principal amount of $75.0 million, which was later increased to $115.0 million as of December 7, 2021 (as the same may be amended from time to time, the “BRCC Term Loan”). On March 31, 2022, GP2 XCV and B. Riley Commercial Capital, LLC amended this facility to permit GP2 XCV to borrow up to $51.0 million under a separate revolving loan (the “BRCC Revolver”, collectively with the BRCC Term Loan, the “BRCC Facility”).

The BRCC Facility is secured by a lien on all the assets of GP2 XCV and by a pledge of the equity of GP2 XCV. GP2 XCV is a bankruptcy-remote entity and as such its assets are not available to other creditors of the Company or any of its subsidiaries other than GP2 XCV. Interest under the BRCC Facility accrues at a rate of 11.5% per annum (13.5% per annum default rate) and is payable quarterly on the last business day of each March, June, September and December. The purpose of BRCC Term Loan was to fund certain repurchases of the secured indebtedness and to provide funding for certain debt exchange transactions. The purpose of BRCC Revolver is to fund general corporate purposes.

The BRCC Facility matured on June 10, 2023. As of December 31, 2023, the Company had fully repaid the outstanding balance under the BRCC Term Loan. During the six months ended June 30, 2024, the Company repaid $12.0 million of outstanding principal amount under the BRCC Revolver. As of June 30, 2024, there remained borrowings of $7.9 million outstanding under the BRCC Revolver. The outstanding principal amount under the BRCC Revolver is payable in two (2) monthly installments of $2.0 million in July 2024 and August 2024, with the remaining outstanding principal balance of $3.9 million payable on September 30, 2024.

Senior Secured Term Loan

On July 11, 2023, Exela Intermediate LLC and Exela Finance Inc., wholly-owned subsidiaries of the Company, entered into a financing agreement with certain lenders and Blue Torch Finance LLC, as administrative agent, pursuant to which the lenders extended a $40.0 million term loan (“Senior Secured Term Loan”). On the same date, the Company used proceeds of this term loan to repay a corresponding amount of its existing debt. On January 12, 2024, $1.0 million of certain waiver and consent fee payable by subsidiaries of the Company under the term of Senior Secured Term Loan were added to outstanding balance of the Senior Secured Term Loan.

The Senior Secured Term Loan shall be, at the option of the Company, either a Reference Rate Loan, or a Secured Overnight Financing Rate (“SOFR”) Loan. Each portion of the Senior Secured Term Loan that is a Reference Rate Loan bears interest on the principal amount outstanding from the date of the Senior Secured Term Loan until repaid, at a rate per annum equal to the Reference Rate plus the Applicable Margin. “Reference Rate” for any period means the greatest of (i) 4.00% per annum, (ii) the federal funds rate plus 0.50% per annum, (iii) the Adjusted Term SOFR (which rate shall be calculated based upon an interest period of 1 month and shall be determined on a daily basis) plus 1.00% per annum, and (iv) the rate last quoted by the Wall Street Journal as the "Prime Rate" in the United States. “Applicable Margin,” with respect to the interest rate of (a) any Reference Rate Loan is 10.39% per annum, and (b) any SOFR Rate Loan is 11.39% per annum. SOFR Rate Loans shall bear interest on the principal amount outstanding, at a rate per annum equal to the Adjusted Term SOFR rate for the Interest Period in effect for the Term Loan plus Applicable Margin. “Adjusted Term SOFR” means the rate per annum equal to Term SOFR for such calculation, plus 0.26161%. “Term SOFR,” for calculation with respect to a SOFR Rate Loan, is the per annum forward-looking term rate based on secured overnight financing rate for a tenor comparable to the applicable interest period on the day that is two business days prior to the first day of such interest period. However, with respect to a Reference Rate Loan, “Term SOFR” means the per annum forward-looking term rate based on secured overnight financing rate for a tenor of three months on the day that is two business days prior to such day. If Term SOFR as so determined shall ever be less than 4.00%, then Term SOFR shall be deemed to be 4.00%.

The Company may, at any time, elect to have interest on all or a portion of the loans be charged at a rate of interest based upon Term SOFR (the “SOFR Option”) by notifying the administrative agent at least three (3) business days prior to the proposed change. Such notice needs to be provided in the case of the continuation of a SOFR Rate Loan as a SOFR Rate Loan on the last day of the then current interest period. The Company shall have not more than 5 SOFR Rate Loans in effect at any given time, and only may exercise the SOFR Option for SOFR Rate Loans of at least $500,000 and integral multiples of $100,000 in excess thereof.

As of June 30, 2024, there were borrowings of $40.0 million outstanding under the Senior Secured Term Loan. The outstanding principal amount of the Senior Secured Term Loan shall be repaid in nine (9) equal quarterly installments of $0.5 million commencing July 1, 2024, with the remaining outstanding principal amount of $35.5 million payable at maturity along with accrued and unpaid interest. The maturity date of the Senior Secured Term Loan is January 14, 2026.

The Company may, at any time, prepay the principal of the Senior Secured Term Loan. Each prepayment shall be accompanied by the payment of accrued interest and the applicable premium, if any. Each prepayment shall be applied against the remaining installments of principal due on the Senior Secured Term Loan in the inverse order of maturity. The applicable premium shall be payable in the form of a make-whole amount if prepayment is made within one year of the borrowing date (the “First Period”). If optional prepayment is made after the year one anniversary of the borrowing date to the date of the two-year anniversary (the “Second Period”), the applicable premium shall be an amount equal to 1% times the amount of the principal amount of the Senior Secured Term Loan being paid on such date. The applicable premium shall be zero in case of prepayment after the date of the two-year anniversary of the borrowing date. Further, during the Second Period, if the prepayment is because of an event of default or termination of contract for any reason, the applicable premium shall be 1% times the aggregate principal amount of the Senior Secured Term Loan outstanding on such date.

The Senior Secured Term Loan contains customary events of default, affirmative and negative covenants, including limitation on the Company’s and certain of its subsidiaries’ ability to create, incur or allow certain liens; enter

into sale and lease-back transactions; make any restricted payments; undergo fundamental changes, as well as certain financial covenants. The Company was in compliance with all financial covenants as of June 30, 2024.

Securitization Facility

On June 17, 2022, the Company entered into an amended and restated receivables purchase agreement (as amended, the “Amended Receivables Purchase Agreement”) under an existing $150.0 million securitization facility (the “Securitization Facility”) among certain of the Company’s subsidiaries, Exela Receivables 3, LLC (the “Securitization Borrower”), Exela Receivables 3 Holdco, LLC (the “Securitization Parent SPE,” and together with the Securitization Borrower, the “SPEs”) and certain global financial institutions (“Purchasers”). The Amended Receivables Purchase Agreement extended the term of the Securitization Facility such that the SPEs may sell certain accounts receivable to the Purchasers until June 17, 2025. Under the Amended Receivables Purchase Agreement, transfers of accounts receivable from the SPEs are treated as sales and are accounted for as a reduction in accounts receivable, because the agreement transfers effective control over and risk related to the accounts receivable to the Purchasers. The Company and related subsidiaries have no continuing involvement in the transferred accounts receivable, other than collection and administrative responsibilities, and, once sold, the accounts receivable are no longer available to satisfy creditors of the Company, the operating subsidiaries of the Company that agreed to sell receivables in connection with the Securitization Facility (the “Securitization Originators”), or any other relevant subsidiaries.

The sales of accounts receivable under the Amended Receivables Purchase Agreement are transacted at 100% of the face value of the relevant accounts receivable, resulting in derecognition of the accounts receivable from the Company’s condensed consolidated balance sheet. The Company de-recognized $522.7 million of accounts receivable under this agreement during the year ended December 31, 2023. The amount remitted to the Purchasers during fiscal year 2023 was $507.6 million. The Company de-recognized $123.2 million and $250.5 million of accounts receivable under this agreement during the three and six months ended June 30, 2024, respectively. The Company de-recognized $122.9 million and $262.9 million of accounts receivable under this agreement during the three and six months ended June 30, 2023, respectively. The amount remitted to the Purchasers during the three and six months ended June 30, 2024 was $113.4 million and $249.3 million, respectively. The amount remitted to the Purchasers during the three and six months ended June 30, 2023 was $125.2 and $266.5 million, respectively. Unsold accounts receivable of $34.0 million and $41.2 million were pledged by the SPEs as collateral to the Purchasers as of June 30, 2024 and December 31, 2023, respectively. These pledged accounts receivables are included in accounts receivable, net in the condensed consolidated balance sheets. The program resulted in a pre-tax loss of $2.6 million and $4.2 million for the three and six months ended June 30, 2024, respectively. The program resulted in a pre-tax loss of $2.0 million and $3.9 million for the three and six months ended June 30, 2023, respectively.

The fair value of the sold accounts receivable approximated their book value due to their short-term nature. Sold accounts receivable are presented as a change in receivables within operating activities in the condensed consolidated statements of cash flows.

BR Exar AR Facility

On February 12, 2024, certain of the Company’s subsidiaries entered into a receivables purchase agreement with BR Exar, LLC (“BREL”), an affiliate of B. Riley Commercial Capital, LLC (as subsequently amended on February 29, 2024, March 29, 2024, March 31, 2024, April 24, 2024, May 24, 2024 and June 25, 2024, the “BR Exar AR Facility”). The Company received an aggregate of $30.4 million, net of legal and other fees of $0.2 million, under the BR Exar AR Facility. Under the terms of the BR Exar AR Facility, certain of the Company’s subsidiaries agreed to sell certain existing receivables and all of their future receivables to BREL until such time as BREL shall have collected $33.7 million, net of any costs, expenses or other amounts paid to or owing to the buyer under the agreement. BREL collected $28.1 million under the BR Exar AR Facility during the period from February 2024 to June 2024. As of June 30, 2024, there was a $5.6 million outstanding balance under the BR Exar AR Facility.

Under the BR Exar AR Facility, transfers of accounts receivable from certain of the Company’s subsidiaries are treated as secured borrowings under ASC 860, Transfers and Servicing and are not accounted for as a reduction in accounts receivable because the agreements do not transfer effective control over and risk related to the accounts

receivable to BREL. Accordingly, the Company treated total of $0.2 million of legal fee and other expense incurred under the BR Exar AR Facility as debt issuances cost and $3.1 million of difference between the net proceeds received by the Company and total amount collected by BREL under the BR Exar AR Facility as original issue discount. Debt issuance cost and original issue discount relating to the BR Exar AR Facility are included in interest expense, net in the condensed consolidated statements of operations for the three and six months ended June 30, 2024.

Second Lien Note

On February 27, 2023, the SPEs and B. Riley Commercial Capital, LLC entered into a new Secured Promissory Note (which was subsequently assigned to BRF Finance) pursuant to which B. Riley Commercial Capital, LLC agreed to lend up to $35.0 million secured by a second lien pledge of the Securitization Borrower (the “Second Lien Note”). The Second Lien Note is scheduled to mature on June 17, 2025 and bears interest at a per annum rate of one-month Term SOFR plus 7.5%. The SPEs are party to the Amended Receivables Purchase Agreement, thus the transactions necessitated amendments to that agreement and related documents to permit the addition of subordinated debt and additional borrowing capacity into that transaction structure, in addition to providing for a $5.0 million fee to the lenders for facilitating the transaction. In connection with the above-described facility, the Company also amended the BRCC Term Loan and BRCC Revolver to provide for $9.6 million of borrowing capacity, which was drawn as described above.

As of June 30, 2024, there were borrowings of $31.5 million outstanding under the Second Lien Note payable at maturity.

Long-Term Debt Outstanding

As of June 30, 2024 and December 31, 2023, the following long-term debt instruments were outstanding:



	June 30,		December 31,
	2024		2023
Other (a)	$	36,428	$	21,101
Secured borrowings under BR Exar AR Facility (b)		5,022		—
Senior secured term loan maturing January 14, 2026 (c)		37,919		37,921
July 2026 Notes maturing July 15, 2026 (d)		22,985		22,788
April 2026 Notes maturing April 15, 2026 (e)		929,791		931,293
Secured borrowings under BRCC Facility matured on June 10, 2023		7,896		19,898
Second lien note maturing June 17, 2025 (f)		28,934		27,608
Total debt		1,068,975		1,060,609
Less: Current portion of long-term debt		(53,723)		(30,029)
Long-term debt, net of current maturities	$	1,015,252	$	1,030,580

(a)

(b)	Net of unamortized net original issue discount of $0.5 million and less than $0.1 million of debt issuance as of June 30, 2024.

(c)	Net of unamortized debt issuance costs of $2.1 million as of June 30, 2024 and unamortized debt issuance costs of $1.6 million as of December 31, 2023.

(d)	Net of unamortized net original issue discount of $0.8 million and debt issuance costs of $0.2 million as of June 30, 2024; and unamortized net original issue discount of $0.9 million and debt issuance costs of $0.2 million as of December 31, 2023.

(e)	Inclusive of unamortized net debt exchange premium of $94.6 million and $119.4 million as of June 30, 2024 and December 31, 2023, respectively.

(f)	Net of unamortized debt issuance costs of $2.6 million and $3.9 million as of June 30, 2024 and December 31, 2023, respectively.

Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Stock-Based Compensation

Stock-Based Compensation

10. Stock-Based Compensation

Exela 2018 Stock Incentive Plan

On January 17, 2018, Exela’s 2018 Stock Incentive Plan (the “2018 Plan”) became effective. The 2018 Plan provides for the grant of incentive and nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, and other stock-based compensation to eligible participants. The Company was initially authorized to issue up to 694 shares of Common Stock under the 2018 Plan. On June 27, 2022, the shareholders of the Company approved the Company’s Amended and Restated 2018 Stock Incentive Plan increasing the number of shares of Common Stock reserved for issuance from an original 694 shares to 4,462.

Exela 2024 Stock Incentive Plan

On June 13, 2024, Exela’s 2024 Stock Incentive Plan (the “2024 Plan”) became effective. Under the 2024 Plan, subject to adjustment for certain changes in capitalization or other corporate events, Exela is authorized to issue up to 500,000 shares of Common Stock pursuant to equity-based awards, which may be granted to eligible participants in furtherance of Exela’s broader compensation strategy and philosophy. Awards granted under the 2024 Plan will be granted upon terms approved by Exela’s Compensation Committee and set forth in an award agreement or other evidence of an award. As of June 30, 2024, there were no awards and no shares of Common Stock issued under the 2024 Plan.

Restricted Stock Unit granted under the 2018 Plan

Restricted stock unit awards generally vest ratably over a one to two year period. Restricted stock units are subject to forfeiture if employment or service terminates prior to vesting and are expensed ratably over the vesting period.

A summary of restricted stock unit activities under the 2018 Plan for the six months ended June 30, 2024 is summarized in the following table:


				Average
		Weighted		Remaining
	Number	Average Grant		Contractual Life
	of Units	Date Fair Value		(Years)
Outstanding Balance as of December 31, 2023	8	$	6,600.00	—
Granted	—		—
Forfeited	—		—
Vested	(8)		6,600.00
Outstanding Balance as of June 30, 2024	—	$	—	—

Options granted under the 2018 Plan

Under the 2018 Plan, stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying stock at the grant date. The vesting period for each option award is established on the grant date, and the options generally expire 10 years from the grant date. Options granted under the 2018 Plan generally require no less than a two or four year ratable vesting period. Stock option activity for the six months ended June 30, 2024 is summarized in the following table:


						Average
		Weighted		Weighted		Remaining
		Average Grant		Average		Vesting Period
	Outstanding	Date Fair Value		Exercise Price		(Years)
Outstanding Balance as of December 31, 2023	313	$	22,224	$	46,485	0.02
Granted	—		—
Exercised	—		—
Forfeited	(8)		36,260
Expired	—		—
Outstanding Balance as of June 30, 2024 (1)	305	$	22,044	$	45,995	0.01

(1) 297 of the outstanding options are exercisable as of June 30, 2024.

As of June 30, 2024, there was less than $0.1 million of total unrecognized compensation expense related to non-vested stock option awards under the 2018 Plan, which will be recognized over the respective service period. Stock-based compensation expense is recorded within selling, general, and administrative expenses. The Company incurred total compensation expense of less than $0.1 million and $1.0 million related to restricted stock unit awards and stock option awards under the 2018 Plan for the three and six months ended June 30, 2024, respectively. The Company recorded net reversal of compensation expense of less than $0.1 million and $0.1 million related to stock option awards under the 2018 Plan for the three and six months ended June 30, 2023, respectively, due to forfeiture of options.

XBP Europe 2024 Stock Incentive Plan

On June 13, 2024, the stockholders of XBP Europe approved and adopted XBP Europe’s 2024 Stock Incentive Plan (the “XBP 2024 Equity Plan”) at XBP Europe’s 2024 Annual Meeting of Stockholders. Under the XBP 2024 Equity Plan, subject to adjustment for certain changes in capitalization or other corporate events, XBP Europe is authorized to issue up to 5,520,270 shares of common stock pursuant to equity-based awards, which may be granted to eligible participants in furtherance of XBP Europe’s broader compensation strategy and philosophy. Awards granted under the 2024 Equity Plan will be granted upon terms approved by XBP Europe’s Compensation Committee and set forth in an award agreement or other evidence of an award. As of June 30, 2024, there were no shares of XBP Europe’s common stock issued under the XBP 2024 Equity Plan. However, restricted stock unit and stock options were issued under the XBP 2024 Equity Plan.

Restricted Stock Unit granted under the XBP 2024 Equity Plan

Restricted stock unit awards generally vest ratably over a less than a year to three year period. Restricted stock units are subject to forfeiture if employment or service terminates prior to vesting and are expensed ratably over the vesting period.

A summary of restricted stock unit activities under the XBP 2024 Equity Plan for the six months ended June 30, 2024 is summarized in the following table:


				Average
		Weighted		Remaining
	Number	Average Grant		Contractual Life
	of Units	Date Fair Value		(Years)
Granted	3,325,329	$	1.24
Forfeited	—		—
Vested	—		—
Outstanding Balance as of June 30, 2024	3,325,329	$	1.24	2.70

Options granted under the XBP 2024 Equity Plan

Under the XBP 2024 Equity Plan, stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying stock at the grant date. The vesting period for each option award is established on the grant date, and the options generally expire ten (10) years from the grant date. Stock options granted under the XBP 2024 Equity Plan generally require no less than a four (4) year ratable vesting period. Stock option activity for the six months ended June 30, 2024 is summarized in the following table:


						Average
		Weighted		Weighted		Remaining
		Average Grant		Average		Vesting Period
	Outstanding	Date Fair Value		Exercise Price		(Years)
Granted	95,000	$	0.58	$
Exercised	—		—
Forfeited	—		—
Expired	—		—
Outstanding Balance as of June 30, 2024 (1)	95,000	$	0.58	$	1.31	3.84

(1)	None of the outstanding options are exercisable as of June 30, 2024.

As of June 30, 2024, there was $4.0 million of total unrecognized compensation expense related to non-vested restricted stock unit awards and stock option awards issued by XBP Europe under the XBP 2024 Equity Plan, which will be recognized over the respective service period. Stock-based compensation expense is recorded within selling, general, and administrative expenses. The Company recorded total compensation expense of $0.2 million related to restricted

stock unit awards and stock option awards issued by XBP Europe under the XBP 2024 Equity Plan for the three and six months ended June 30, 2024.

Market Performance Units

On September 14, 2021, the Company granted its Executive Chairman performance units with a market performance condition, which are notional units representing the right to receive one share of Common Stock (or the cash value of one share of Common Stock). At the election of the compensation committee of the Company, these performance units might be settled in cash or in shares of Common Stock.

Fifty percent of the performance units covered by the award will vest if, at any time during the period commencing September 14, 2021 and ending June 30, 2024, the volume weighted average of the reported closing price of the Common Stock is $40,000 per share or greater on (x) 60 consecutive trading days or (y) 90 non-consecutive trading days in any 180 day period (the “Tranche 1”). In addition, the remaining 50% of the performance units will vest if, at any time during the period commencing September 14, 2021 and ending June 30, 2025, the volume weighted average of the reported closing prices of the Common Stock is $80,000 per share or greater on (x) 60 consecutive trading days or (y) 90 non-consecutive trading days in any 180 day period (the “Tranche 2”). Any Tranche 1 and Tranche 2 units that are not earned by June 30, 2024 and June 30, 2025, respectively, will be forfeited for no consideration and will no longer be eligible to vest. Tranche 1 was not earned as of June 30, 2024 and accordingly, was forfeited for no consideration. In addition, if a change in control occurs prior to the applicable expiration date, if the performance units are assumed by the acquirer, the units will remain outstanding and eligible to vest based solely on his continued service to the Company. If in connection with such change in control the performance units are not assumed by an acquirer, a number of performance units will vest based on the per share price paid in the transaction, with 0% vesting if the per share price is equal to or less than $8,000 per share, and 100% of the Tranche 2 vesting if the per share price is equal to or greater than $80,000, and a number of Tranche 2 vesting determined based on a straight line interpolation if the share price is between $8,000 and $80,000, respectively. The Executive Chairman will remain eligible to earn his performance units so long as he remains engaged with the Company in any capacity, including as a non-employee director.

The fair value of the awards was determined to be $5,920 and $6,040 per unit for Tranche 1 and Tranche 2, respectively, on the grant date by application of the Monte Carlo simulation model. On December 31, 2021, the modification date fair value of the awards was determined to be $1,760 and $1,880 per unit for Tranche 1 and Tranche 2, respectively, by application of the Monte Carlo simulation model.

The following table summarizes the activity for the market performance restricted stock units for the six months ended June 30, 2024:


				Remaining Service
		Weighted		Period Over
	Number	Average		Which Expected
	of Units	Fair Value		to be Recognized
Outstanding Balance as of December 31, 2023	2,125	$	1,820	0.98
Granted	—		—
Forfeited	(1,062)		1,760
Vested	—		—
Outstanding Balance as of June 30, 2024	1,063	$	1,880	0.98

As of June 30, 2024, there was approximately $0.4 million of unrecognized compensation expense related to non-vested performance unit awards, which will be recognized over the requisite service period. The Company recognized $0.2 million and $0.4 million of compensation expense associated with the performance unit award for the three and six months ended June 30, 2024, respectively. The Company recorded total compensation expense of $0.2 million and $0.4 million associated with the performance unit award for the three and six months ended June 30, 2023, respectively.