four-20220331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________

FORM 10-Q/A

Amendment No. 1

__________________________________________________


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

For the quarterly period ended March 31, 2022


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

For the transition period from to .

Commission file number 001-39313

__________________________________

SHIFT4 PAYMENTS, INC.

(Exact name of registrant as specified in its charter)

__________________________________


Delaware						84-3676340
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
2202 N. Irving Street Allentown, Pennsylvania						18109
(Address of principal executive offices)						(Zip Code)

(888) 276-2108

(Registrant’s telephone number, including area code)

N/A

(Former name, former address, and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share	FOUR	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

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


Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
Emerging growth company	o

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

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

Yes o No x

As of April 29, 2022, there were 53,628,417 shares of the registrant’s Class A common stock, $0.0001 par value per share, outstanding, 26,272,654 shares of the registrant’s Class B common stock, $0.0001 par value per share, outstanding and 4,302,657 shares of the registrant’s Class C common stock, $0.0001 par value per share, outstanding.

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Explanatory Note

This Amendment No. 1 on Form 10-Q/A (as amended, the “Quarterly Report” or the “Quarterly Report on Form 10-Q/A”) amends and restates certain items noted below in the Quarterly Report on Form 10-Q of Shift4 Payments, Inc. (the “Company”) for the three months ended March 31, 2022, as originally filed with the Securities and Exchange Commission (“SEC”) on May 6, 2022 (the “Original Form 10-Q”).

Background and Effect of Restatement

On October 17, 2022, the Audit Committee (“Audit Committee”) of the Board of Directors of the Company, after discussion with management, concluded that the Company’s (i) previously filed Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and (ii) previously filed Quarterly Reports on Form 10-Q for each of the quarterly periods ended September 30, 2021, March 31, 2022 and June 30, 2022 (collectively the “Prior Financial Statements”), and any reports, related earnings releases, investor presentations or similar communications of the Company’s Prior Financial Statements should no longer be relied upon.

The determination resulted from an error in the Prior Financial Statements identified by the Company related to the classification of customer acquisition costs within the Company’s Condensed Consolidated Statements of Cash Flows. Specifically, the Company determined that “Customer acquisition costs” were incorrectly classified within “Investing activities” rather than “Operating activities” in its Condensed Consolidated Statements of Cash Flows. The Company is correcting this misclassification by restating its Condensed Consolidated Statements of Cash Flows through the amendments of the Prior Financial Statements.

The Company determined that the restatement did not have any impact on the Company’s operating performance or reported key performance indicators.

Internal Control Considerations

As a result of this restatement, the Company’s management has re-evaluated the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2022. Management has concluded that the Company’s disclosure controls and procedures were not effective at March 31, 2022 due to a material weakness in internal control over financial reporting. Specifically, there was a lack of an effectively designed control activity related to the classification of customer acquisition costs within the Consolidated Statements of Cash Flows. See additional discussion included in Part I, Item 4. “Controls and Procedures” of this Quarterly Report.

Items Amended in this Quarterly Report on Form 10-Q/A

For the convenience of the reader, this Quarterly Report presents the Original Form 10-Q in its entirety. It includes (i) items that have been amended as a result of the restatement in: Part I, Item 1. “Financial Statements”; Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; Part I, Item 4. “Controls and Procedures”; and Part II, Item 6. “Exhibits”; and in addition to these items amended due to the restatement, updates to certain other information as follows: (ii) certain other conforming changes within Part I, Item 1. “Financial Statements” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; (iii) updates to cross-references throughout the Quarterly Report; and (iv) an updated Signatures page (together, the “Amended Items”). In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is also including with this Quarterly Report currently dated certifications of the Company’s principal executive officer and principal financial officer (included in Part II, Item 6. “Exhibits” and attached as Exhibits 31.1, 31.2, 32.1, and 32.2).

Except for the Amended Items, this Quarterly Report is presented as of the date of the Original Form 10-Q and has not been updated to reflect events occurring subsequent to the filing of the Original Form 10-Q other than the Amended Items and those associated with the restatement of our unaudited condensed consolidated financial statements. Among other things, forward-looking statements made in the Original Form 10-Q have not been revised to reflect events, results or developments that occurred or facts that became known to us after the date of the Original Form 10-Q, other than the Amended Items and those associated with the restatement of our unaudited condensed consolidated financial statements, and such forward-looking statements should be read in conjunction with our filings with the SEC, including those subsequent to the filing of the Original Form 10-Q.

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SHIFT4 PAYMENTS, INC.

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	PART I. FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows (As Restated)	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4	Controls and Procedures	42

	PART II. OTHER INFORMATION
Item 1	Legal Proceedings	43
Item 1A	Risk Factors	43
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3	Defaults Upon Senior Securities	43
Item 4	Mine Safety Disclosures	43
Item 5	Other Information	43
Item 6	Exhibits	44
	Signatures	46

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q/A contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q/A, including, without limitation, statements relating to our future results of operations and financial position, business strategy and plans, objectives of management for future operations, including, among others, statements regarding expected growth, future capital expenditures and debt service obligations, remediation of material weaknesses, and the anticipated impact of COVID-19 on our business are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions though not all forward-looking statements can be identified by such terms or expressions. The forward-looking statements in this Quarterly Report on Form 10-Q/A are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q/A and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to the following:

•the COVID-19 global pandemic has had and is expected to continue to have an adverse effect on our business and results of operations;

•substantial and increasingly intense competition worldwide in the financial services, payments and payment technology industries may adversely affect our overall business and operations;

•potential changes in the competitive landscape, including disintermediation from other participants in the payments chain, could harm our business;

•our ability to anticipate and respond to changing industry trends and the needs and preferences of our merchants and consumers may adversely affect our competitiveness or the demand for our products and services;

•because we rely on third-party vendors to provide products and services, we could be adversely impacted if they fail to fulfill their obligations;

•acquisitions create certain risks and may adversely affect our business, financial condition or results of operations;

•we may not be able to continue to expand our share of the existing payment processing markets or expand into new markets which would inhibit our ability to grow and increase our profitability;

•our services and products must integrate with a variety of operating systems, software, device and web browsers, and our business may be materially and adversely affected if we are unable to ensure that our services interoperate with such operating systems, device, software and web browsers;

•we depend, in part, on our merchant and software partner relationships and strategic partnerships with various institutions to operate and grow our business. If we are unable to maintain these relationships and partnerships, our business may be adversely affected;

•our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets would negatively affect our business, financial condition or results of operations;

•failure to comply with the U.S. Foreign Corrupt Practices Act (“FCPA”) anti-money laundering, economic and trade sanctions regulations, and similar laws could subject us to penalties and other adverse consequences;

•our principal asset is our interest in Shift4 Payments, LLC, and, as a result, we depend on distributions from Shift4 Payments, LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement (“TRA”). Shift4 Payments, LLC’s ability to make such distributions may be subject to various limitations and restrictions;

•our Founder (as defined herein) has significant influence over us, including control over decisions that require the approval of stockholders;

•the potential impact of, and our ability to remediate, material weaknesses in our internal control over financial reporting;

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•the ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations; and

•those factors described in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021, filed on November 8, 2022 (the “2021 Form 10-K/A”) and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q/A.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

You should read this Quarterly Report on Form 10-Q/A and the documents that we reference in this Quarterly Report on Form 10-Q/A completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

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PART I: FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

SHIFT4 PAYMENTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)(in millions, except share and per share amounts)


	March 31, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	1,189.0	$	1,231.5
Accounts receivable, net of allowance for doubtful accounts of $9.5 in 2022 ($8.0 in 2021)	223.0		205.9
Inventory	2.9		3.5
Contract assets (Note 4)	0.3		0.3
Prepaid expenses and other current assets (Note 12)	12.9		12.4
Total current assets	1,428.1		1,453.6
Noncurrent assets
Goodwill (Note 6)	627.0		537.7
Other intangible assets, net (Note 7)	213.0		188.5
Capitalized customer acquisition costs, net (Note 8)	35.3		35.1
Equipment for lease, net (Note 9)	60.0		58.4
Property, plant and equipment, net (Note 10)	18.1		18.4
Right-of-use assets (Note 15)	17.0		18.5
Investments in securities	32.0		30.5

Other noncurrent assets	1.6		1.9
Total noncurrent assets	1,004.0		889.0
Total assets	$	2,432.1	$	2,342.6
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	137.3	$	121.1
Accrued expenses and other current liabilities (Note 12)	95.2		42.9
Deferred revenue (Note 4)	21.9		15.0
Current lease liabilities (Note 15)	4.4		4.8
Total current liabilities	258.8		183.8
Noncurrent liabilities
Long-term debt (Note 11)	1,735.9		1,738.5
Deferred tax liability (Note 14)	0.4		0.3
Noncurrent lease liabilities (Note 15)	16.6		17.9
Other noncurrent liabilities	2.2		2.4
Total noncurrent liabilities	1,755.1		1,759.1
Total liabilities	2,013.9		1,942.9
Commitments and contingencies (Note 17)
Stockholders' equity (Note 18)
Preferred stock, $0.0001 par value, 20,000,000 shares authorized at March 31, 2022 and December 31, 2021, none issued and outstanding	—		—
Class A common stock, $0.0001 par value per share, 300,000,000 shares authorized, 53,618,573 and 51,793,127 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	—		—
Class B common stock, $0.0001 par value per share, 100,000,000 shares authorized, 26,272,654 shares issued and outstanding at both March 31, 2022 and December 31, 2021	—		—
Class C common stock, $0.0001 par value per share, 100,000,000 shares authorized, 4,302,657 and 5,035,181 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	659.6		619.2
Treasury stock, at cost; 679,985 shares and 378,475 shares repurchased at March 31, 2022 and December 31, 2021, respectively	(38.3)		(21.1)
Retained deficit	(332.8)		(325.3)

Total stockholders' equity attributable to Shift4 Payments, Inc.	288.5		272.8
Noncontrolling interests (Note 19)	129.7		126.9
Total stockholders' equity	418.2		399.7
Total liabilities and stockholders' equity	$	2,432.1	$	2,342.6
See accompanying notes to unaudited condensed consolidated financial statements.

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SHIFT4 PAYMENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (in millions, except share and per share amounts)


	Three Months Ended March 31,
	2022		2021
Gross revenue	$	401.9	$	239.3
Cost of sales (exclusive of depreciation and amortization expense shown separately below)	(317.3)		(187.5)
General and administrative expenses	(66.2)		(53.5)
Depreciation and amortization expense (a)	(17.3)		(15.4)
Professional fees	(8.7)		(6.2)
Advertising and marketing expenses	(2.7)		(20.1)
Restructuring expenses (Note 5)	—		(0.1)
Transaction-related expenses (Note 11)	(1.4)		—
Loss from operations	(11.7)		(43.5)
Loss on extinguishment of debt	—		(0.2)
Other income, net	0.2		—
Interest expense	(7.9)		(6.5)
Loss before income taxes	(19.4)		(50.2)
Income tax benefit (provision) (Note 14)	6.2		(0.8)
Net loss (b)	(13.2)		(51.0)
Net loss attributable to noncontrolling interests (c)	(5.7)		(18.2)
Net loss attributable to Shift4 Payments, Inc. (d)	$	(7.5)	$	(32.8)

Basic and diluted net loss per share:
Class A net loss per share - basic and diluted	$	(0.13)	$	(0.62)
Class A weighted average common stock outstanding - basic and diluted	52,119,378		42,667,754
Class C net loss per share - basic and diluted	$	(0.13)	$	(0.62)
Class C weighted average common stock outstanding - basic and diluted	4,573,372		10,009,852








(a) Depreciation and amortization expense includes depreciation of equipment under lease of $7.0 million and $4.5 million for the three months ended March 31, 2022 and 2021, respectively.
(b) Net loss is equal to comprehensive loss.
(c) Net loss attributable to noncontrolling interests is equal to comprehensive loss attributable to noncontrolling interests.
(d) Net loss attributable to Shift4 Payments, Inc. is equal to comprehensive loss attributable to Shift4 Payments, Inc.

See accompanying notes to unaudited condensed consolidated financial statements.

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SHIFT4 PAYMENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited) (in millions, except share amounts)


	Class A Common Stock			Class B Common Stock			Class C Common Stock			Additional Paid-In Capital		Treasury Stock			Retained Deficit		Noncontrolling Interests		Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount				Shares	Amount
Balances at December 31, 2021	51,793,127	$	—	26,272,654	$	—	5,035,181	$	—	$	619.2	(378,475)	$	(21.1)	$	(325.3)	$	126.9	$	399.7
Net loss	—	—		—	—		—	—		—		—	—		(7.5)		(5.7)		(13.2)
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with The Giving Block acquisition	785,969	—		—	—		—	—		24.7		—	—		—		11.8		36.5
Repurchases of Class A common stock to treasury stock	—	—		—	—		—	—		4.5		(301,510)	(17.2)		—		(4.5)		(17.2)
Exchange of shares held by Continuing Equity Owners	732,524	—		—	—		(732,524)	—		—		—	—		—		—		—
Equity-based compensation	—	—		—	—		—	—		15.8		—	—		—		—		15.8
Vesting of restricted stock units, net of tax withholding	306,953	—		—	—		—	—		(4.6)		—	—		—		1.2		(3.4)


Balances at March 31, 2022	53,618,573	$	—	26,272,654	$	—	4,302,657	$	—	$	659.6	(679,985)	$	(38.3)	$	(332.8)	$	129.7	$	418.2


	Class A Common Stock			Class B Common Stock			Class C Common Stock			Additional Paid-In Capital		Retained Deficit		Noncontrolling Interests		Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balances at December 31, 2020	39,737,950	$	—	30,625,857	$	—	10,188,852	$	—	$	738.3	$	(278.7)	$	210.4	$	670.0
Net loss	—	—		—	—		—	—		—		(32.8)		(18.2)		(51.0)
Cumulative effect of ASU 2020-06 adoption	—	—		—	—		—	—		(111.5)		1.6		—		(109.9)
Issuance of Class A common stock and fair value of equity-based compensation awards assumed in connection with VenueNext acquisition	325,127	—		—	—		—	—		13.5		—		12.8		26.3
Transfer from Founder of right associated with Inspiration4 seat	—	—		—	—		—	—		1.3		—		0.8		2.1
Exchange of shares held by Searchlight	2,000,000	—		(926,000)	—		(1,074,000)	—		6.3		—		(6.3)		—
Equity-based compensation	—	—		—	—		—	—		14.0		—		—		14.0
Vesting of restricted stock units, net of tax withholding	46,503	—		—	—		—	—		(1.4)		—		(1.0)		(2.4)
Balances at March 31, 2021	42,109,580	$	—	29,699,857	$	—	9,114,852	$	—	$	660.5	$	(309.9)	$	198.5	$	549.1

See accompanying notes to unaudited condensed consolidated financial statements.

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SHIFT4 PAYMENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (in millions)


	Three Months Ended March 31,
	2022		2021
Operating activities	As Restated		As Restated
Net loss	$	(13.2)	$	(51.0)
Adjustment to reconcile net loss to net cash provided by operating activities
Depreciation and amortization	29.1		25.3
Amortization of capitalized financing costs	1.9		1.2
Loss on extinguishment of debt	—		0.2
Deferred income taxes	(6.3)		(0.1)
Provision for bad debts	3.0		6.7
Revaluation of contingent liabilities	—		0.2

Equity-based compensation expense	16.9		14.0
Other noncash items	0.3		0.3
Change in operating assets and liabilities
Accounts receivable	(20.0)		(40.7)

Prepaid expenses and other assets	0.6		1.1
Inventory	1.7		0.1
Capitalized customer acquisition costs	(6.3)		(5.4)
Accounts payable	15.4		28.0
Accrued expenses and other current liabilities	3.1		6.4
Right-of-use assets and lease liabilities, net	(0.1)		—
Deferred revenue	4.7		6.6
Net cash provided by (used in) operating activities	30.8		(7.1)
Investing activities
Acquisitions, net of cash acquired	(12.6)		(40.6)
Acquisition of equipment to be leased	(9.9)		(10.4)
Capitalized software development costs	(8.0)		(3.6)
Residual commission buyouts	(4.6)		(0.8)
Investments in securities	(1.5)		(16.0)
Acquisition of property, plant and equipment	(1.0)		(0.7)
Net cash used in investing activities	(37.6)		(72.1)
Financing activities
Repurchases of Class A common stock to treasury stock	(18.7)		—
Payments for withholding tax related to vesting of restricted stock units	(12.2)		(2.4)
Deferred financing costs	(4.8)		(0.4)
Repayment of debt	—		(0.9)
Net cash used in financing activities	(35.7)		(3.7)
Change in cash and cash equivalents	(42.5)		(82.9)
Cash and cash equivalents
Beginning of period	1,231.5		927.8
End of period	$	1,189.0	$	844.9

Supplemental cash flows information and noncash activities are further described in Note 22.
See accompanying notes to unaudited condensed consolidated financial statements.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

1.Organization, Basis of Presentation and Significant Accounting Policies

Organization

Shift4 Payments, Inc., (“Shift4 Payments”) (“the Company”), was incorporated in Delaware on November 5, 2019 in order to carry on the business of Shift4 Payments, LLC and its consolidated subsidiaries. The Company is a leading provider of integrated payment processing and technology solutions. Through the Shift4 Model, the Company offers software providers a single integration to an end-to-end payments offering, a powerful gateway and a robust suite of technology solutions (including cloud enablement, business intelligence, analytics, and mobile) to enhance the value of their software suites and simplify payment acceptance. The Company provides for its merchants a seamless customer experience at scale, rather than simply acting as one of multiple providers they rely on to operate their businesses. The Shift4 Model is built to serve a range of merchants from small-to-medium-sized businesses to large and complex enterprises across numerous verticals, including food and beverage, hospitality, stadiums and arenas, gaming, specialty retail, non-profits and eCommerce. This includes the Company’s point of sale (“POS”) software offerings, as well as over 425 additional software integrations in virtually every industry.

Basis of Presentation

The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. As such, these financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2021 Condensed Consolidated Balance Sheet was derived from audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the fiscal year ended December 31, 2021, as disclosed in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021 (the “2021 Form 10-K/A”).

The unaudited condensed consolidated financial statements include the accounts of Shift4 Payments, Inc. and its wholly-owned subsidiaries. Shift4 Payments, Inc. consolidates the financial results of Shift4 Payments, LLC, which is considered a variable interest entity (“VIE”). Shift4 Payments, Inc. is the primary beneficiary and sole managing member of Shift4 Payments, LLC and has decision making authority that significantly affects the economic performance of the entity. As a result, the Company consolidates Shift4 Payments, LLC, and reports a noncontrolling interest representing the economic interest in Shift4 Payments, LLC held by certain affiliates of Rook and Searchlight Capital Partners (“Searchlight”) (together, the “Continuing Equity Owners”).

All intercompany balances and transactions have been eliminated in consolidation.

The assets and liabilities of Shift4 Payments, LLC represent substantially all of the consolidated assets and liabilities of Shift4 Payments, Inc. with the exception of certain cash balances, contingent consideration for earnout liabilities for The Giving Block, and the aggregate principal amount of $690.0 million of 2025 Convertible Notes and $632.5 million of 2027 Convertible Notes that are held by Shift4 Payments, Inc. directly. As of both March 31, 2022 and December 31, 2021, $9.8 million of cash was held by Shift4 Payments, Inc. As of March 31, 2022, the earnout liabilities for The Giving Block were $59.2 million. Shift4 Payments, Inc., which was established November 5, 2019, has not had any material operations on a standalone basis since its inception, and all of the operations of the Company are carried out by Shift4 Payments, LLC and its subsidiaries.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

Change in Presentation of Condensed Consolidated Statements of Operations

The Company has changed the presentation of its Condensed Consolidated Statements of Operations to remove the “Gross profit” line item and update the “Cost of sales” line item to indicate it is exclusive of depreciation and amortization expense shown separately for the three months ended March 31, 2022 and 2021. The Company has also changed the presentation of the disclosure in Note 23 to remove the reconciliation between “Gross revenue” and “Gross profit.”

Liquidity and Management’s Plan

As of March 31, 2022, the Company had $1,772.5 million outstanding under its credit facilities and was in compliance with the financial covenants under its debt agreements. The Company expects to be in compliance for at least 12 months following issuance of these unaudited condensed consolidated financial statements. See Note 11 for further information on the Company’s debt obligations.

The rapid spread of COVID-19 resulted in governmental authorities throughout the United States and the rest of the world implementing a variety of containment measures with the objective of slowing the spread of the virus, including travel restrictions, shelter-in-place orders and business shutdowns or other restrictions. The COVID-19 pandemic and these containment measures have had, and could continue to have, a significant impact on the Company’s business. While the Company has experienced year-over-year growth in its gross revenues and end-to-end payment volumes, end-to-end payment volumes in certain merchant categories, particularly those associated with international travel and corporate travel are running lower than pre-COVID-19 pandemic levels. The ultimate impact that the COVID-19 pandemic and any variants will have on the Company’s consolidated results of operations in future periods remains uncertain. The Company will continue to evaluate the nature and extent of these potential impacts to its business, consolidated results of operations and liquidity.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates inherent in the preparation of the accompanying unaudited condensed consolidated financial statements include estimates of fair value of acquired assets and liabilities through business combinations, fair value of contingent liabilities related to earnout payments, fair value of debt instruments, allowance for doubtful accounts, income taxes, investments in securities and noncontrolling interests. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ from these estimates.

Additionally, the full impact of the COVID-19 pandemic is unknown and cannot be reasonably estimated. However, the Company has made accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, the unaudited condensed consolidated financial statements may be materially affected.

Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2 to Shift4 Payments, Inc.’s consolidated financial statements as of and for the years ended December 31, 2021 and 2020 in the 2021 Form 10-K/A. There have been no significant changes to these policies which have had a material impact on the Company’s unaudited condensed consolidated financial statements and related notes during the three months ended March 31, 2022.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

Recent Accounting Pronouncements

Accounting Pronouncements Adopted

In February 2016, the FASB issued ASC 842 with amendments in 2018 and 2019. This accounting guidance requires a lessee to record assets and liabilities on the balance sheet for the rights and obligations arising from leases with terms of more than 12 months. On January 1, 2021, the Company adopted ASC 842 using the modified retrospective method, reflecting the adoption in the Company's annual results for the period ended December 31, 2021. Prior period amounts were not adjusted and continue to be reported in accordance with historic accounting under previous lease guidance, ASC Topic 840, Leases (“ASC 840”). The Company elected to use the package of practical expedients permitted under the transition guidance. The Company did not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases. For lease agreements where the Company is a lessee that include lease and non-lease components, the Company elected to use the practical expedient on all leases entered into or modified after January 1, 2021 to combine lease and non-lease components for all classes of assets. Additionally, the Company elected to not record on the balance sheet leases with a term of twelve months or less. Upon adoption, the Company recorded right-of-use assets of $21.4 million and lease liabilities of $25.7 million. The adoption of ASC 842 did not result in a material impact to the consolidated statements of operations or cash flows. See Note 15 for ASC 842-related disclosures.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13: Financial Instruments—Credit Losses (Topic 326), which changes the impairment model for most financial assets, including accounts receivable, and replaces the existing incurred loss impairment model with a current expected credit loss (“CECL”) methodology, which will result in more timely recognition of credit losses. The Company adopted ASU 2016-13 on a modified retrospective basis on December 31, 2021, reflecting the adoption as of January 1, 2021 in the Company's annual results for the period ended December 31, 2021 and interim periods beginning January 1, 2022. The adoption of ASU 2016-13 did not result in a material impact on the Company’s unaudited condensed consolidated financial statements and disclosures.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires an acquirer to account for revenue contracts acquired in a business combination in accordance with ASC 606, as if it had originated the contracts. Prior to ASU 2021-08, an acquirer generally recognized assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts, at fair value on the acquisition date. The Company adopted ASU 2021-08 in the third quarter of 2021 and retrospectively applied the ASU to its acquisitions that occurred in 2021. The adoption of ASU 2021-08 resulted in an increase to “Deferred revenue” of $5.7 million, of which $1.8 million was recognized as an increase to “Gross revenue” for the fiscal year ended December 31, 2021.

In July 2021, the FASB issued ASU 2021-05, Lessors —Certain Leases with Variable Lease Payments, to amend lessor accounting for certain leases with variable lease payments that do not depend on a reference index or a rate and would have resulted in the recognition of a loss at lease commencement if classified as a sales-type or a direct financing lease. ASU 2021-05 amends the classification requirements of such leases for lessors to require operating lease classification. The Company adopted ASU 2021-05 on a retrospective basis effective January 1, 2022. The adoption did not have a significant impact on the Company’s unaudited condensed consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to certain criteria, that reference the London Interbank Offered Rate (“LIBOR”), or another reference rate that is expected to be discontinued. Companies may elect to apply these amendments through December 31, 2022. The Company is currently evaluating whether we will elect the optional expedients, as well as evaluating the impact of ASU 2020-04 on the Company’s unaudited condensed consolidated financial statements.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

2.Restatement of Previously Issued Condensed Consolidated Financial Statements

In October 2022, it was determined that there was an error in the Company’s original Quarterly Report on Form 10-Q for the three months ended March 31, 2022 related to the classification of customer acquisition costs within the Company’s Condensed Consolidated Statements of Cash Flows. Specifically, the Company determined that “Customer acquisition costs” were incorrectly classified within “Investing activities” rather than “Operating activities” in its Condensed Consolidated Statements of Cash Flows. The Company is correcting this misclassification by restating its Condensed Consolidated Statements of Cash Flows through the amendment of its Quarterly Report on Form 10-Q.

The following tables summarize the impact of these adjustments for the periods presented:


	Three Months Ended March 31, 2022
	As Reported		Adjustments		As Restated
Net cash provided by operating activities	$	37.1	$	(6.3)	$	30.8
Net cash used in investing activities	(43.9)		6.3		(37.6)
Net cash used in financing activities	(35.7)		—		(35.7)
Change in cash and cash equivalents	$	(42.5)	$	—	$	(42.5)

	Three Months Ended March 31, 2021
	As Reported		Adjustments		As Restated
Net cash used in operating activities	$	(1.7)	$	(5.4)	$	(7.1)
Net cash used in investing activities	(77.5)		5.4		(72.1)
Net cash used in financing activities	(3.7)		—		(3.7)
Change in cash and cash equivalents	$	(82.9)	$	—	$	(82.9)

3.Acquisitions

Each of the following acquisitions was accounted for as a business combination using the acquisition method of accounting. The respective purchase prices were allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill and represents the future economic benefits arising from other assets acquired, which cannot be individually identified or separately recognized. Under the acquisition method of accounting for business combinations, if there are changes to acquired deferred tax balances, valuation allowances or liabilities related to uncertain tax positions during the measurement period, and they are related to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement-period adjustment, with the offset recorded to goodwill.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

The Giving Block

On February 28, 2022, the Company acquired The Giving Block, Inc. (“The Giving Block”) for $106.9 million of estimated total purchase consideration, net of cash acquired. The Giving Block is a cryptocurrency donation marketplace that the Company expects to accelerate its growth in the non-profit sector with significant cross-sell potential. Total purchase consideration was as follows:


Cash	$	16.8
Shares of Class A common stock (a)	36.4
RSUs granted for fair value of equity-based compensation awards (b)	0.1
Contingent consideration (c)	57.8
Total purchase consideration	111.1
Less: cash acquired	(4.2)
Total purchase consideration, net of cash acquired	$	106.9

(a) Total purchase consideration includes 785,969 shares of common stock.
(b) The Company assumed all equity awards held by continuing employees. The portion of the fair value of the equity-based compensation awards associated with prior service of The Giving Block employees represents a component of the total consideration as presented above and was valued based on the fair value of The Giving Block awards on February 28, 2022, the acquisition date.
(c) The Company agreed to an earnout due to the former shareholders of The Giving Block in April 2023, calculated as a multiple of revenue earned by The Giving Block from March 1, 2022 to February 28, 2023, not to exceed $246.0 million. The earnout will be paid 75% in a combination of RSUs and shares of the Company’s Class A common stock and 25% in cash. The fair value of the earnout was included in the initial purchase consideration and will be revalued quarterly until the end of the earnout period as a fair value adjustment within “General and administrative expenses” in the Company’s unaudited Condensed Consolidated Statements of Operations. As of March 31, 2022, the fair value of the earnout included in the purchase consideration was $57.8 million, which is recognized in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets. In addition, a portion of the earnout due in April 2023 is considered post-acquisition compensation expense and will be accrued throughout the earnout period within “General and administrative expenses” on the Company’s unaudited Condensed Consolidated Statements of Operations. As of March 31, 2022, $1.4 million was included in “Accrued expenses and other current liabilities” on the Company’s unaudited Condensed Consolidated Balance Sheets.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

The following table summarizes the fair value assigned to the assets acquired and liabilities assumed at the acquisition date. These amounts reflect various preliminary fair value estimates and assumptions, and are subject to change within the measurement period as valuations are finalized. The primary areas of preliminary purchase price allocation subject to change relate to the valuation of contingent consideration, accounts receivable, accrued expenses, other current liabilities assumed and residual goodwill.


Accounts receivable	$	0.1
Other intangible assets	26.0
Goodwill (a)	89.3
Deferred revenue	(2.1)
Deferred tax liability	(6.4)
Net assets acquired	$	106.9
(a) Goodwill is not deductible for tax purposes.

In the three months ended March 31, 2022, the Company incurred expenses in connection with The Giving Block acquisition of $2.2 million. These expenses are included in “Professional fees” in the Company's unaudited Condensed Consolidated Statements of Operations.

The fair values of intangible assets were estimated using inputs classified as Level 3 under the income approach using either the relief-from-royalty method (developed technology and trade name), the with or without method (donor relationships) or the multi-period excess earnings method (customer relationships). The contingent liability arising from the expected earnout payment included in purchase consideration was measured on the acquisition date using a Monte Carlo simulation in a risk-neutral framework, calibrated to Management's revenue forecasts. The transaction was not taxable for income tax purposes. The weighted average life of developed technology, the trade name, donor relationships and customer relationships is 8 years, 15 years, 5 years and 15 years, respectively. The goodwill arising from the acquisition largely consisted of revenue synergies associated with a larger total addressable market and the ability to cross-sell existing customers, new customers and technology capabilities.

The Giving Block acquisition did not have a material impact on the Company’s unaudited condensed consolidated financial statements. Accordingly, revenue and expenses related to the acquisition and pro forma financial information have not been presented.

Postec

The Company completed the acquisition of Postec, Inc. (“Postec”) on September 1, 2021, by acquiring 100% of its membership interests for $14.3 million in cash, net of cash acquired. The purchase was funded with cash on hand. This acquisition enables the boarding of the vendor’s customers on the Company’s end-to-end acquiring solution and empowers the Company’s distribution partners to sign the vendor’s customer accounts and leverage the combined expertise to handle all aspects of installation, service, and support, similar to the hospitality technology vendor acquired in October 2020.

Pending Finaro Acquisition

On March 1, 2022, the Company entered into a definitive agreement to acquire Credorax, Inc. d/b/a Finaro (“Finaro”) for approximately $200.0 million in cash on hand, $325.0 million in shares of the Company’s Class A common stock and a performance-based earnout of up to $50.0 million in the Company’s Class A common stock. Consummation of the merger is subject to regulatory approvals, which the Company expects to receive in the fourth quarter of 2022. Finaro is a cross-border eCommerce platform and bank specializing in solving complex payment problems for multi-national merchants that the Company believes will accelerate its growth in international markets. In the three months ended March 31, 2022, the Company incurred expenses in connection with the Finaro acquisition of $3.6 million. These expenses are included in “Professional fees” in the Company's unaudited Condensed Consolidated Statements of Operations.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

4.Revenue

ASC 606, Revenue from Contracts with Customers (“ASC 606”)

Under ASC 606, the Company has three separate performance obligations under its recurring software as a service agreements (“SaaS”) arrangements for point-of-sale systems provided to merchants: (1) point-of-sale software, (2) lease of hardware and (3) other support services.

Disaggregated Revenue

Based on similar operational characteristics, the Company’s revenue from contracts with customers is disaggregated as follows:


	Three Months Ended March 31,
	2022		2021
Payments-based revenue	$	371.5	$	215.9
Subscription and other revenues	30.4		23.4
Total	$	401.9	$	239.3

Based on similar economic characteristics, the Company’s revenue from contracts with customers is disaggregated as follows:


	Three Months Ended March 31,
	2022		2021
Over-time revenue	$	392.0	$	230.2
Point-in-time revenue	9.9		9.1
Total	$	401.9	$	239.3

Contract Assets

Contract assets were as follows:


	March 31, 2022		December 31, 2021
Contract assets, net - beginning of period	$	0.3	$	—
Less: Contract assets, net - beginning of the period, current	(0.3)		—
Contract assets, net - beginning of period, noncurrent	—		—
Contract assets, net - end of period	0.3		0.3
Less: Contract assets, net - end of the period, current	(0.3)		(0.3)
Contract assets, net - end of period, noncurrent	$	0.3	$	—

There was no allowance for contract assets as of March 31, 2022 and December 31, 2021.

Contract Liabilities

The Company charges merchants for various post-contract license support/service fees and annual regulatory compliance fees. These fees typically relate to a period of one year. The Company recognizes the revenue on a straight-line basis over its respective period. As of March 31, 2022 and December 31, 2021, the Company had deferred revenue of $24.1 million and $17.4 million, respectively. The change in the contract liabilities was primarily the result of a timing difference between payment from the customer and the Company’s satisfaction of each performance obligation.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

The following reflects the amounts the Company recognized as annual service fees and regulatory compliance fees within “Gross revenue” in the Company's unaudited Condensed Consolidated Statements of Operations and the amount of such fees that was included in deferred revenue at the beginning of the respective period:


	Three Months Ended March 31,
	2022		2021
Annual service fees and regulatory compliance fees	$	9.6	$	4.4
Amount of these fees included in deferred revenue at beginning of period	4.9		2.1

Accounts Receivable

The change in the Company’s allowance for doubtful accounts was as follows:


	March 31, 2022		March 31, 2021
Beginning balance	$	8.0	$	5.7
Additions to expense (a)	3.0		6.7
Write-offs, net of recoveries and other adjustments	(1.5)		(0.3)
Ending balance	$	9.5	$	12.1

(a) For the three months ended March 31, 2021, includes a $5.2 million allowance on chargebacks from a single merchant, which is included in “Cost of Sales” on the unaudited Condensed Consolidated Statements of Operations.

5.Restructuring

The following table summarizes the changes in the Company’s restructuring accrual:


Balance at December 31, 2021	$	1.5
Severance payments	(0.4)

Balance at March 31, 2022	$	1.1

The current portion of the restructuring accrual of $1.1 million and $1.5 million at March 31, 2022 and December 31, 2021, respectively, is included within “Accrued expenses and other current liabilities” on the Company's unaudited Condensed Consolidated Balance Sheets and is expected to be paid in 2022.

6.Goodwill

The changes in the carrying amount of goodwill were as follows:


Balance at December 31, 2021	$	537.7
The Giving Block Acquisition (Note 3)	89.3
Balance at March 31, 2022	$	627.0

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

7.Other Intangible Assets, Net

Other intangible assets, net consisted of the following:


	Weighted Average Amortization Period (in years)	March 31, 2022
		Carrying Value		Accumulated Amortization		Net Carrying Value
Merchant relationships	8	$	214.1	$	140.8	$	73.3
Acquired technology	9	116.2		58.2		58.0
Trademarks and trade names	17	29.3		4.1		25.2
Capitalized software development costs	4	51.7		10.8		40.9
Residual commission buyouts (a)	3	23.6		8.0		15.6

Total intangible assets		$	434.9	$	221.9	$	213.0


	Weighted Average Amortization Period (in years)	December 31, 2021
		Carrying Value		Accumulated Amortization		Net Carrying Value
Merchant relationships	8	$	200.1	$	133.7	$	66.4
Acquired technology	9	113.2		54.9		58.3
Trademarks and trade names	18	20.3		3.8		16.5
Capitalized software development costs	4	42.6		9.1		33.5
Residual commission buyouts (a)	3	20.3		6.5		13.8
Total intangible assets		$	396.5	$	208.0	$	188.5

(a) Residual commission buyouts include contingent payments of $4.4 million and $4.2 million as of March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022, the estimated amortization expense for intangible assets for each of the five succeeding years and thereafter is as follows:


2022 (remaining nine months)	$	37.5
2023	41.6
2024	36.4
2025	27.1
2026	20.9
Thereafter	49.5
Total	$	213.0

Amounts charged to expense in the Company's unaudited Condensed Consolidated Statements of Operations for amortization of intangible assets were as follows:


	Three Months Ended March 31,
	2022		2021
Depreciation and amortization expense	$	9.3	$	10.1
Cost of sales	5.4		4.5
Total	$	14.7	$	14.6

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

8.Capitalized Customer Acquisition Costs, Net

Capitalized customer acquisition costs, net were $35.3 million and $35.1 million at March 31, 2022 and December 31, 2021, respectively. This consisted of upfront processing bonuses with a gross carrying value of $70.5 million and $69.1 million less accumulated amortization of $35.2 million and $34.0 million at March 31, 2022 and December 31, 2021, respectively.

Capitalized customer acquisition costs had a weighted average amortization period of three years at both March 31, 2022 and December 31, 2021. Amortization expense for capitalized customer acquisition costs was $6.1 million and $5.0 million for the three months ended March 31, 2022 and 2021, respectively, and was included in “Cost of sales” in the Company's unaudited Condensed Consolidated Statements of Operations.

As of March 31, 2022, the estimated future amortization expense for capitalized customer acquisition costs is as follows:


2022 (remaining nine months)	$	15.4
2023	14.0
2024	5.7
2025	0.2
Total	$	35.3

9.Equipment for Lease, Net

Equipment for lease, net consisted of the following:


	Weighted Average Depreciation Period (in years)	March 31, 2022
		Carrying Value		Accumulated Depreciation		Net Carrying Value
Equipment under lease	3	$	79.4	$	29.6	$	49.8
Equipment held for lease (a)	N/A	10.2		—		10.2
Total equipment for lease		$	89.6	$	29.6	$	60.0


	Weighted Average Depreciation Period (in years)	December 31, 2021
		Carrying Value		Accumulated Depreciation		Net Carrying Value
Equipment under lease	3	$	72.9	$	24.2	$	48.7
Equipment held for lease (a)	N/A	9.7		—		9.7
Total equipment for lease, net		$	82.6	$	24.2	$	58.4

(a) Represents equipment that was not yet initially deployed to a merchant and, accordingly, is not being depreciated.

The amount charged to “Depreciation and amortization expense” in the Company's unaudited Condensed Consolidated Statements of Operations for depreciation of equipment under lease was $7.0 million and $4.5 million for the three months ended March 31, 2022 and 2021, respectively.

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

10.Property, Plant and Equipment, Net

Property, plant and equipment, net consisted of the following:


	March 31, 2022		December 31, 2021
Equipment	$	11.2	$	10.5
Capitalized software	5.2		5.1
Leasehold improvements	9.1		9.1
Furniture and fixtures	1.9		2.0
Vehicles	0.3		0.3
Total property, plant and equipment, gross	27.7		27.0
Less: Accumulated depreciation	(9.6)		(8.6)
Total property, plant and equipment, net	$	18.1	$	18.4

Amounts charged to expense in the Company's unaudited Condensed Consolidated Statements of Operations for depreciation of property, plant and equipment were as follows:


	Three Months Ended March 31,
	2022		2021
Depreciation and amortization expense	$	1.0	$	0.8
Cost of sales	0.3		0.4
Total depreciation expense	$	1.3	$	1.2

11.Debt

The Company’s outstanding debt consisted of the following:


	Maturity	Effective interest rate	March 31, 2022		December 31, 2021
Convertible Notes due 2025 (2025 Convertible Notes)	December 15, 2025	0.48%	$	690.0	$	690.0
Convertible Notes due 2027 (2027 Convertible Notes)	August 1, 2027	0.89%	632.5		632.5
Senior Notes due 2026 (2026 Senior Notes)	November 1, 2026	5.125%	450.0		450.0
Total borrowings			1,772.5		1,772.5
Less: Unamortized capitalized financing costs			(36.6)		(34.0)
Total long-term debt			$	1,735.9	$	1,738.5

Amortization of capitalized financing fees is included in “Interest expense” in the Company's unaudited Condensed Consolidated Statements of Operations. Amortization expense for capitalized financing fees was $1.9 million and $1.2 million for the three months ended March 31, 2022 and 2021, respectively.

Future principal payments

As of March 31, 2022, future principal payments associated with the Company's long-term debt were as follows:


2025	$	690.0
2026	450.0
2027	632.5
Total	$	1,772.5

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SHIFT4 PAYMENTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited) (in millions, except share, unit and per unit amounts)

Convertible Notes due 2025

The net carrying amount of the Convertible Senior Notes due 2025 (“2025 Convertible Notes”) was as follows:


	March 31, 2022		December 31, 2021
Principal outstanding	$	690.0	$	690.0
Unamortized debt issuance costs	(12.2)		(13.0)
Net carrying value	$	677.8	$	677.0

Convertible Notes due 2027

The net carrying amount of the 0.50% Convertible Senior Notes due 2027 (“2027 Convertible Notes”) was as follows:


	March 31, 2022		December 31, 2021
Principal outstanding	$	632.5	$	632.5
Unamortized debt issuance costs	(13.2)		(13.8)
Net carrying value	$	619.3