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EXELA TECHNOLOGIES, INC.

(XELA)
  Report
Delayed Nasdaq  -  04:00 2022-09-30 pm EDT
0.4531 USD   +0.11%
09/28Exela Technologies Secures $8 Million Contract From Unnamed Health Care Customer
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EXELA TECHNOLOGIES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/12/2022 | 04:18pm EDT
You should read the following discussion and analysis together with our
condensed consolidated financial statements and the related notes included
elsewhere in this Form 10-Q. Among other things, the condensed consolidated
financial statements include more detailed information regarding the basis of
presentation for the financial data than included in the following discussion.
Amounts in thousands of United States dollars.

Forward Looking Statements

Certain statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this quarterly
report are not historical facts but are forward-looking statements for purposes
of the safe harbor provisions under The Private Securities Litigation Reform Act
of 1995. Forward-looking statements generally are accompanied by words such as
"may", "should", "would", "plan", "intend", "anticipate", "believe", "estimate",
"predict", "potential", "seem", "seek", "continue", "future", "will", "expect",
"outlook" or other similar words, phrases or expressions. These forward-looking
statements include statements regarding our industry, future events, estimated
or anticipated future results and benefits, future opportunities for Exela, and
other statements that are not historical facts. These statements are based on
the current expectations of Exela management and are not predictions of actual
performance. These statements are subject to a number of risks and uncertainties
regarding Exela's businesses and actual results may differ materially. The
factors that may affect our results include, among others: the impact of
political and economic conditions on the demand for our services; the impact of
the COVID-19 pandemic; the impact of the 2022 network outage, cyber incidents
such as a data or security breach; the impact of competition or alternatives to
our services on our business pricing and other actions by competitors; our
ability to address technological development and change in order to keep pace
with our industry and the industries of our customers; the impact of terrorism,
natural disasters or similar events on our business; the effect of legislative
and regulatory actions in the United States and internationally; the impact of
operational failure due to the unavailability or failure of third-party services
on which we rely; the effect of intellectual property infringement; and other
factors discussed in this quarterly report and our Annual Report on Form 10-K
for the fiscal year ended December 31, 2021 ending December 31, 2021 ("Annual
Report") under the heading "Risk Factors", and otherwise identified or discussed
in this quarterly report. You should consider these factors carefully in
evaluating forward-looking statements and are cautioned not to place undue
reliance on such statements, which speak only as of the date of this quarterly
report. It is impossible for us to predict new events or circumstances that may
arise in the future or how they may affect us. We undertake no obligation to
update forward-looking statements to reflect events or circumstances occurring
after the date of this quarterly report. We are not including the information
provided on any websites that may be referenced herein as part of, or
incorporating such information by reference into, this quarterly report. In
addition, forward-looking statements provide our expectations, plans or
forecasts of future events and views as of the date of this quarterly report. We
anticipate that subsequent events and developments may cause our assessments to
change. These forward-looking statements should not be relied upon as
representing our assessments as of any date subsequent to the date of this
quarterly report.

Overview

Exela Technologies, Inc. ("Exela," the "Company", "we" or "us") is a global
business process automation leader leveraging a global footprint and proprietary
technology to help turn the complex into the simple through user friendly
software platforms and solutions that enable our customers' digital
transformation. We have decades of expertise earned from serving more than 4,000
customers worldwide, including many of the world's largest enterprises and over
60% of the Fortune® 100, in many mission critical environments across multiple
industries, including banking, healthcare, insurance and manufacturing. Our
technology-enabled solutions allow global organizations to address critical
challenges resulting from the massive amounts of data obtained and created
through their daily operations. Our solutions address the life cycle of
transaction processing and enterprise information management, from enabling
payment gateways and data exchanges across multiple systems, to matching inputs
against contracts and handling exceptions, to ultimately depositing payments and
distributing communications. Through cloud-enabled platforms, built on a
configurable stack of automation modules, and approximately 17,000 employees
operating in 21 countries, Exela rapidly deploys integrated technology and
operations as an end-to-end digital journey partner.

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We believe our process expertise, information technology capabilities and
operational insights enable our customers' organizations to more efficiently and
effectively execute transactions, make decisions, drive revenue and
profitability, and communicate critical information to their employees,
customers, partners, and vendors. Our solutions are location agnostic, and we
believe the combination of our hybrid hosted solutions and global work force in
the Americas, EMEA and Asia offers a meaningful differentiation in the
industries we serve and services we provide.

History


We are a former special purpose acquisition company that completed an initial
public offering on January 22, 2015. In July 2017, Exela, formerly known as
Quinpario Acquisition Corp. 2 ("Quinpario"), completed its acquisition of
SourceHOV Holdings, Inc. ("SourceHOV") and Novitex Holdings, Inc. ("Novitex")
pursuant to the business combination agreement dated February 21, 2017 ("Novitex
Business Combination"). In conjunction with the completion of the Novitex
Business Combination, Quinpario was renamed Exela Technologies, Inc.

The Novitex Business Combination was accounted for as a reverse merger for which
SourceHOV was determined to be the accounting acquirer. Outstanding shares of
SourceHOV were converted into our common stock ("Common Stock"), presented as a
recapitalization, and the net assets of Quinpario were acquired at historical
cost, with no goodwill or other intangible assets recorded. The acquisition of
Novitex was treated as a business combination under ASC 805 and was accounted
for using the acquisition method. The strategic combination of SourceHOV and
Novitex formed Exela, which is one of the largest global providers of
information processing solutions based on revenues.

On July 25, 2022, we effected a one-for-twenty reverse split of our issued and
outstanding shares of our Common Stock. At the effective time of the reverse
split, every twenty (20) shares of Common Stock issued and outstanding were
automatically combined into one (1) share of issued and outstanding Common
Stock, without any change in the par value per share. Our Common Stock began
trading on The Nasdaq Capital Market on a Reverse Stock Split-adjusted basis on
July 26, 2022. There was no change in our ticker symbol as a result of the
Reverse Stock Split. All information related to Common Stock, stock options,
restricted stock units, warrants and earnings per share have been retroactively
adjusted to give effect to the Reverse Stock Split for all periods presented.

Our Segments


Our three reportable segments are Information & Transaction Processing Solutions
("ITPS"), Healthcare Solutions ("HS"), and Legal & Loss Prevention Services
("LLPS"). These segments are comprised of significant strategic business units
that align our transaction processing and enterprise information management
products and services with how we manage our business, approach our key markets
and interact with our customers based on their respective industries.

ITPS: Our largest segment, ITPS, 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. Our major customers include many leading
banks, insurance companies, and utilities, as well as hundreds of federal, state
and local government entities. Our ITPS offerings enable companies to increase
availability of working capital, reduce turnaround times for application
processes, increase regulatory compliance and enhance consumer engagement.

HS: HS operates and maintains a consulting and outsourcing business specializing
in both the healthcare provider and payer markets. We serve the top healthcare
insurance payers and hundreds of healthcare providers.

LLPS: Our LLPS segment provides a broad and active array of support services in connection with class action, bankruptcy, labor claims adjudication and employment and other legal matters. Our customer base consists of corporate counsel, government attorneys, and law firms.

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Revenues

ITPS revenues are primarily generated from a transaction based pricing model for
the various types of volumes processed, licensing and maintenance fees for
technology sales, and a mix of fixed management fee and transactional revenue
for document logistics and location services. HS revenues are primarily
generated from a transaction based pricing model for the various types of
volumes processed for healthcare payers and providers. LLPS revenues are
primarily based on time and materials pricing as well as through transactional
services priced on a per item basis.

People

We draw on the business and technical expertise of our talented and diverse global workforce to provide our customers with high-quality services. Our business leaders bring a strong diversity of experience in our industry and a track record of successful performance and execution.


As of June 30, 2022, we had approximately 17,000 employees globally, with 53%
located in Americas and EMEA, and the remainder located primarily in India, the
Philippines and China.

Costs associated with our employees represent the most significant expense for
our business. We incurred personnel costs of $136.6 million and $125.8 million
for the three months ended June 30, 2022 and 2021, respectively. We incurred
personnel costs of $269.6 million and $265.3 million for the six months ended
June 30, 2022 and 2021, respectively. The majority of our personnel costs are
variable and incurred only while we are providing our services.

Key Performance Indicators

We use a variety of operational and financial measures to assess our performance. Among the measures considered by our management are the following:


 ? Revenue by segment;


 ? EBITDA; and


 ? Adjusted EBITDA


Revenue by segment

We analyze our revenue by comparing actual monthly revenue to internal
projections and prior periods across our operating segments in order to assess
performance, identify potential areas for improvement, and determine whether our
segments are meeting management's expectations.

EBITDA and Adjusted EBITDA


We view EBITDA and Adjusted EBITDA as important indicators of performance of our
consolidated operations. We define EBITDA as net income, plus taxes, interest
expense, and depreciation and amortization. We define Adjusted EBITDA as EBITDA
plus optimization and restructuring charges, including severance and retention
expenses; transaction and integration costs; other non-cash charges, including
non-cash compensation, (gain) or loss from sale or disposal of assets, and
impairment charges; and management fees and expenses. See "-Other Financial
Information (Non-GAAP Financial Measures)" for more information and a
reconciliation of EBITDA and Adjusted EBITDA to net loss, the most directly
comparable financial measure calculated and presented in accordance with GAAP.

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Results of Operations

Three Months Ended June 30, 2022 compared to Three Months Ended June 30, 2021:

                                          Three Months Ended June 30,
                                            2022                2021            Change       % Change
Revenue:
ITPS                                   $       190,005     $       217,260    $ (27,255)       (12.54)%
HS                                              56,390              56,204           186          0.33%
LLPS                                            20,375              19,545           830          4.25%
Total revenue                                  266,770             293,009      (26,239)        (8.96)%
Cost of revenue (exclusive of
depreciation and amortization):
ITPS                                           156,704             156,669            35          0.02%
HS                                              45,719              38,973         6,746         17.31%
LLPS                                            14,854              13,438         1,416         10.54%
Total cost of revenues                         217,277             209,080         8,197          3.92%
Selling, general and administrative
expenses (exclusive of depreciation
and amortization)                               50,195              36,390        13,805         37.94%
Depreciation and amortization                   17,993              19,420       (1,427)        (7.35)%
Related party expense                            2,186               2,748         (562)       (20.45)%
Operating profit (loss)                       (20,881)              25,371      (46,252)      (182.30)%
Interest expense, net                           42,271              42,867         (596)        (1.39)%
Debt modification and
extinguishment costs (gain), net                 8,117                   - 
       8,117        100.00%
Sundry income, net                               (741)               (787)            46        (5.84)%
Other expense, net                               7,375                 651         6,724       1032.87%
Net loss before income taxes                  (77,903)            (17,360)      (60,543)        348.75%
Income tax expense                             (1,296)             (2,007)           711       (35.43)%
Net loss                               $      (79,199)     $      (19,367)    $ (59,832)        308.94%


Revenue

For the three months ended June 30, 2022, our revenue on a consolidated basis
decreased by $26.2 million, or 9.0%, to $266.8 million as compared to $293.0
million for the three months ended June 30, 2021. We experienced revenue decline
in our ITPS segment of $27.3 million and revenue increases in our HS and LLPS
segments of $0.2 million and $0.8 million respectively. Our ITPS, HS, and LLPS
segments constituted 71.2%, 21.1%, and 7.6% of total revenue, respectively,
compared to 74.1%, 19.2%, and 6.7% for the three months ended June 30, 2021. The
revenue changes by reporting segment were as follows:

ITPS- For the three months ended June 30, 2022, revenue attributable to our ITPS
segment decreased by $27.3 million, or 12.5% compared to the same period in the
prior year. The majority of this revenue decline is attributable to exiting
contracts and statements of work with certain customers that we believe was
unpredictable, non-recurring and were not a strategic fit to Company's long-term
success or unlikely to achieve the Company's long-term target margins
("transition revenue"). In addition, staffing shortages and a network outage
(described in Note 1 of the condensed consolidated financial statements)
impacted revenue during the quarter. ITPS segment revenue was also impacted
adversely by $6.2 million attributable to the depreciation of the Euro and U.K.
pound sterling against the U.S. dollar during the three months ended June 30,
2022, compared to the three months ended June 30, 2021.

HS- For the three months ended June 30, 2022, revenue attributable to our HS
segment increased by $0.2 million, or 0.3% compared to the same period in the
prior year primarily driven by higher volumes from our healthcare payer
customers.

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LLPS- For the three months ended June 30, 2022, revenue attributable to our LLPS
segment increased by $0.8 million, or 4.2% compared to the same period in the
prior year primarily due to an increase in project based engagements in legal
claims administration services.

Cost of Revenue


For the three months ended June 30, 2022, our direct costs increased by $8.2
million, or 3.9%, compared to the three months ended June 30, 2021. Costs in our
ITPS segment remained flat despite a 12.5% revenue decrease primarily due to
cost inflation and idle production costs due to the network outage. HS segment
costs increased by $6.7 million, or 17.3% primarily due to increases in
employee-related cost on account of higher headcount (bench costs) to meet our
customer forecasts and due to idle production costs due to the network outage.
LLPS segment cost of revenue increased by $1.4 million, or 10.5%.

The increase in cost of revenues on a consolidated basis was primarily due to an
increase in employee-related costs of $5.0 million, higher infrastructure and
maintenance costs of $2.6 million, higher operating costs of $2.9 million and
lower pass through costs of $2.5 million.

Cost of revenue as a percentage of revenue for the three months ended June 30, 2022 was 81.4% compared to the 71.4% for the same period in the prior year.

Selling, General and Administrative Expenses


SG&A expenses increased by $13.8 million, or 37.9%, to $50.2 million for the
three months ended June 30, 2022, compared to $36.4 million for the three months
ended June 30, 2021. The increase was primarily attributable to higher employee
related costs by $6.6 million, higher legal and professional fees of $4.8
million, higher infrastructure and other costs of $3.1 million, higher travel
costs of $0.5 million offset by lower other SG&A expenses of $1.3 million. SG&A
expenses increased as a percentage of revenues to 18.8% for the three months
ended June 30, 2022 as compared to 12.4% for the three months ended June 30,
2021.

Depreciation & Amortization

Total depreciation and amortization expense was $18.0 million and $19.4 million
for the three months ended June 30, 2022 and 2021, respectively. The decrease in
total depreciation and amortization expense by $1.4 million was primarily due to
a reduction in depreciation expense as a result of the expiration of the lives
of assets acquired in prior periods and decrease in intangibles amortization
expense due to end of useful lives for certain intangible assets during the
three months ended June 30, 2022 compared to the three months ended June 30,
2021.

Related Party Expenses

Related party expense was $2.2 million and $2.7 million for the three months ended June 30, 2022 and 2021, respectively.

Interest Expense

Interest expense was $42.3 million and $42.9 million for the three months ended June 30, 2022 and 2021, respectively.

Sundry Income, net

The net change in sundry income of less than $0.1 million over the prior year period was primarily attributable to exchange rate fluctuations on foreign currency transactions.

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Other Expense, net

Other expense, net was $7.4 million for the three months ended June 30, 2022
compared to other expense, net of 0.7 million for the three months ended June
30, 2021. We remeasured our true-up guarantee obligation under the Revolver
Exchange as of June 30, 2022 and accrued an additional net $7.4 million of
true-up liability based on the market price for the 2026 Notes in Other expense,
net.

Income Tax Expense

We had an income tax expense of $1.3 million for the three months ended June 30,
2022 compared with an income tax expense of $2.0 million for the three months
ended June 30, 2021. The change in income taxes was primarily attributable to
our change in judgment in 2022 related to the realizability of deferred tax
assets in certain state and foreign jurisdictions.

Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021:
                                         Six Months Ended June 30,
                                            2022              2021         Change       % Change
Revenue:
ITPS                                   $       395,012     $  449,135    $ (54,123)       (12.05)%
HS                                             112,986        107,297         5,689          5.30%
LLPS                                            38,170         36,633         1,537          4.20%
Total revenue                                  546,168        593,065      (46,897)        (7.91)%
Cost of revenue (exclusive of
depreciation and amortization):
ITPS                                           320,290        342,171      (21,881)        (6.39)%
HS                                              92,450         74,791        17,659         23.61%
LLPS                                            28,041         24,705         3,336         13.50%
Total cost of revenues                         440,781        441,667         (886)        (0.20)%
Selling, general and administrative
expenses (exclusive of depreciation
and amortization)                               93,235         78,275        14,960         19.11%
Depreciation and amortization                   36,205         39,019       (2,814)        (7.21)%
Related party expense                            4,173          4,455         (282)        (6.33)%
Operating profit (loss)                       (28,226)         29,649      (57,875)      (195.20)%
Interest expense, net                           82,031         85,998       (3,967)        (4.61)%
Debt modification and
extinguishment costs (gain), net                 9,001              -      
  9,001        100.00%
Sundry income, net                               (434)          (574)           140       (24.39)%
Other expense, net                              13,534            803        12,731       1585.43%
Net loss before income taxes                 (132,358)       (56,578)     
(75,780)        133.94%
Income tax expense                             (3,797)        (1,989)       (1,808)         90.90%
Net loss                               $     (136,155)     $ (58,567)    $ (77,588)        132.48%


Revenue
For the six months ended June 30, 2022, our revenue on a consolidated basis
decreased by $46.9 million, or 7.9%, to $546.2 million from $593.1 million for
the six months ended June 30, 2021. We experienced revenue decline in ITPS
segment and revenue growth in HS and LLPS segments. Our ITPS, HS, and LLPS
segments constituted 72.3%, 20.7%, and 7.0% of total revenue, respectively, for
the six months ended June 30, 2022, compared to 75.7%, 18.1%, and 6.2%,
respectively, for the six months ended June 30, 2021. The revenue changes by
reporting segment were as follows:

ITPS- For the six months ended June 30, 2022, revenue attributable to our ITPS
segment decreased by $54.1 million, or 12.1% compared to the same period in the
prior year. The majority of this revenue decline is attributable to exiting
contracts and statements of work from certain customers with revenue that we
believe was unpredictable, non-

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recurring and were not a strategic fit to Company's long-term success or
unlikely to achieve the Company's long-term target margins ("transition
revenue"). In addition, staffing shortages during the six months ended June 30,
2022 and a network outage during the three months ended June 30,2022 impacted
revenue during the period. ITPS segment revenue was also impacted adversely by
$9.9 million attributable to the depreciation of the Euro and U.K. pound
sterling against the U.S. dollar during the six months ended June 30, 2022,
compared to the six months ended June 30, 2021

HS- For the six months ended June 30, 2022, revenue attributable to our HS
segment increased by $5.7 million, or 5.3% compared to the same period in the
prior year primarily due to higher volumes from our new and existing healthcare
customers.

LLPS- For the six months ended June 30, 2022, revenue attributable to our LLPS
segment increased by $1.5 million, or 4.2% compared to the same period in the
prior year primarily due to an increase in project based engagements in legal
claims administration services.

Cost of Revenue


For the six months ended June 30, 2022, our cost of revenue decreased by $0.9
million, or 0.2%, compared to the six months ended June 30, 2021. Costs in our
ITPS segment decreased by $21.9 million, or 6.4%, primarily attributable to the
corresponding decline in revenues. HS segment costs increased by $17.7 million,
or 23.6% primarily due to increases in employee-related cost on account of
higher headcount (bench costs) to meet our customer forecasts. LLPS segment cost
of revenue increased by $3.3 million, or 13.5%. Higher costs due to inflationary
pressure during the six months ended June 30, 2022 and idle production costs due
to network outage in June impacted both ITPS and HS segments during the six
months ended June 30, 2022.

The decrease in cost of revenues on a consolidated basis was primarily due to a
decrease in employee-related costs of $2.8 million and lower pass through costs
of $4.4 million offset by higher infrastructure and maintenance costs of $1.0
million and higher other operating costs of $5.4 million.

Cost of revenue for the six months ended June 30, 2022 was 80.7% of revenue compared to the 74.5% for the comparable same period in the prior year.

Selling, General and Administrative Expenses

SG&A expenses increased $15 million, or 19.1%, to $93.2 million for the six
months ended June 30, 2022, compared to $78.3 million for the six months ended
June 30, 2021. The increase was primarily attributable to higher employee
related costs by $8.2 million, higher travel costs of $1.2 million, higher
infrastructure, maintenance and operating costs of $3.4 million, higher legal
and professional fees of $3.4 million offset by lower other SG&A expenses of
$1.3 million. SG&A expenses increased as a percentage of revenues to 17.1% for
the six months ended June 30, 2022 as compared to 13.2% for the six months
ended
June 30, 2021.

Depreciation & Amortization

Total depreciation and amortization expense was $36.2 million and $39.0 million
for the six months ended June 30, 2022 and 2021, respectively. The decrease in
total depreciation and amortization expense by $2.8 million was primarily due to
a reduction in depreciation expense as a result of the expiration of the lives
of assets acquired in prior periods and decrease in intangibles amortization
expense due to end of useful lives for certain intangible assets during the six
months ended June 30, 2022 compared to the six months ended June 30, 2021.

Related Party Expenses

Related party expense was $4.2 million for the six months ended June 30, 2022 compared to $4.5 million for the six months ended June 30, 2021.

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Interest Expense

Interest expense was $82.0 million for the six months ended June 30, 2022 compared to $86.0 million for the six months ended June 30, 2021.

Debt modification and extinguishment costs (gain), net


The Company recorded a debt extinguishment cost of $9.0 million in connection
with partial prepayment of $50.0 million in cash on $100.0 million senior
secured revolving facility maturing July 12, 2022 during the six months ended
June 30, 2022 and the exit fee paid on the partial prepayment of BRCC Term Loan
was treated as a debt extinguishment cost.

Sundry Income, net

The decrease in income by $0.1 million over the prior year period was primarily attributable to exchange rate fluctuations on foreign currency transactions.

Other Expense, net

Other expense, net was $13.5 million for the six months ended June 30, 2022
compared to other expense, net of 0.8 million for the six months ended June 30,
2021. We remeasured our true-up guarantee obligation under the Revolver Exchange
as of June 30, 2022 and accrued $13.5 million of true-up liability based on the
market price for the 2026 Notes in Other expense, net.

Income Tax Expense

The Company recorded income tax expense of $3.8 million for the six months ended
June 30, 2022 and an income tax expense of $2.0 million for the six months ended
June 30, 2021. The tax expense for the six months ended June 30, 2022 is higher
than the six months ended June 30, 2021 largely due to year-over-year increase
in profitability in non-US jurisdictions.

Other Financial Information (Non-GAAP Financial Measures)

We view EBITDA and Adjusted EBITDA as important indicators of performance. We
define EBITDA as net income, plus taxes, interest expense, and depreciation and
amortization. We define Adjusted EBITDA as EBITDA plus optimization and
restructuring charges, including severance and retention expenses; transaction
and integration costs; other non-cash charges, including non-cash compensation,
(gain) or loss from sale or disposal of assets, and impairment charges; and
management fees and expenses.

We present EBITDA and Adjusted EBITDA because we believe they provide useful
information regarding the factors and trends affecting our business in addition
to measures calculated under GAAP. Additionally, our credit agreement requires
us to comply with certain EBITDA related metrics.

Note Regarding Non-GAAP Financial Measures


EBITDA and Adjusted EBITDA are not financial measures presented in accordance
with GAAP. We believe that the presentation of these non GAAP financial measures
will provide useful information to investors in assessing our financial
performance and results of operations as our Board of Directors (the "Board")
and management use EBITDA and Adjusted EBITDA to assess our financial
performance, because it allows them to compare our operating performance on a
consistent basis across periods by removing the effects of our capital structure
(such as varying levels of interest expense), asset base (such as depreciation
and amortization) and items outside the control of our management team. Net loss
is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. Our
non GAAP financial measures should not be considered as alternatives to the most
directly comparable GAAP financial measure. Each of these non GAAP financial
measures has important limitations as analytical tools because they exclude
some
but

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not all items that affect the most directly comparable GAAP financial measures.
These non GAAP financial measures are not required to be uniformly applied, are
not audited and should not be considered in isolation or as substitutes for
results prepared in accordance with GAAP. Because EBITDA and Adjusted EBITDA may
be defined differently by other companies in our industry, our definitions of
these non GAAP financial measures may not be comparable to similarly titled
measures of other companies, thereby diminishing their utility.

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021

The following table presents a reconciliation of EBITDA and Adjusted EBITDA to
our net loss, the most directly comparable GAAP measure, for the three months
ended June 30, 2022 and 2021.

                                                                  Three Months Ended June 30,
                                                                    2022                2021
Net Loss                                                       $      (79,199)     $      (19,367)
Taxes                                                                    1,296               2,007
Interest expense                                                        42,271              42,867
Depreciation and amortization                                           17,993              19,420
EBITDA                                                                (17,639)              44,927
Optimization and restructuring expenses (1)                              6,570               4,928
Transaction and integration costs (2)                                    8,622               1,350
Non-cash equity compensation (3)                                           528                 593
Other charges including non-cash (4)                                    24,797                 379
Loss/(Gain) on sale of assets (5)                                          636             (2,138)
Loss/(Gain) on business disposals (6)                                        -               1,296
Debt modification and extinguishment costs (gain), net                   8,117                   -
Contract costs (7)                                                       4,826                 502
Litigation reserve                                                           -               (925)
Adjusted EBITDA                                                $        36,457     $        50,912

Adjustment represents net salary and benefits associated with positions,

current vendor expenses and existing lease contracts that are part of the

1. on-going savings and productivity improvement initiatives in process

transformation, customer transformation and post-merger or acquisition

integration.

2. Represents costs incurred related to transactions for completed or

contemplated transactions during the period.

3. Represents the non-cash charges related to restricted stock units and options

that vested under the 2018 Stock Incentive Plan.

Represents fair value adjustments to deferred revenue and deferred rent

4. accounts established as part of purchase accounting and other non-cash

charges. Other charges include severance, retention bonus, facility

consolidation and other transition costs.

5. Represents a loss/(gain) recognized on the disposal of property, plant, and

equipment and other assets.

6. Represents a loss/(gain) recognized on the disposal of noncore-business

assets.



 7. Represents costs incurred on new projects, contract start-up costs and project
    ramp costs.


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Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

The following table presents a reconciliation of EBITDA and Adjusted EBITDA to our net loss, the most directly comparable GAAP measure, for the six months ended June 30, 2022 and 2021.

                                                               Six Months Ended June 30,
                                                                  2022              2021
Net Loss                                                     $     (136,155)     $ (58,567)
Taxes                                                                  3,797          1,989
Interest expense                                                      82,031         85,998
Depreciation and amortization                                         36,205         39,019
EBITDA                                                              (14,122)         68,439
Optimization and restructuring expenses (1)                           13,407         10,295
Transaction and integration costs (2)                                 12,327          5,998
Non-cash equity compensation (3)                                         845            980
Other charges including non-cash (4)                                  38,030         12,406
Loss/(Gain) on sale of assets (5)                                        522        (2,440)
Loss/(Gain) on business disposals (6)                                      -          1,296
Debt modification and extinguishment costs (gain), net                 9,001              -
Loss/(Gain) on derivative instruments (7)                                 
-          (125)
Contract costs (8)                                                    12,577          1,454
Litigation reserve                                                         -          (925)
Adjusted EBITDA                                              $        72,587     $   97,378

Adjustment represents net salary and benefits associated with positions,

current vendor expenses and existing lease contracts that are part of the

1. on-going savings and productivity improvement initiatives in process

transformation, customer transformation and post-merger or acquisition

integration.

2. Represents costs incurred related to transactions for completed or

contemplated transactions during the period.

3. Represents the non-cash charges related to restricted stock units and options

that vested during the year under the 2018 Stock Incentive Plan.

Represents fair value adjustments to deferred revenue and deferred rent

4. accounts established as part of purchase accounting and other non-cash

charges. Other charges include severance, retention bonus, facility

consolidation and other transition costs.

5. Represents a loss/(gain) recognized on the disposal of property, plant, and

equipment and other assets.

6. Represents a loss/(gain) recognized on the disposal of noncore-business

assets.

7. Represents the impact of changes in the fair value of an interest rate swap

entered into during the fourth quarter of 2017.

8. Represents costs incurred on new projects, contract start-up costs and project

ramp costs.

Liquidity and Capital Resources

Overview


Under ASC Subtopic 205-40, Presentation of Financial Statements-Going Concern
("ASC 205-40"), the Company has the responsibility to evaluate whether
conditions and/or events raise substantial doubt about its ability to meet its
future financial obligations as they become due within one year after the date
that the financial statements are issued. The following conditions raised
substantial doubt about our ability to continue as a going concern: a history of
net losses, net operating cash outflows, working capital deficits and
significant cash payments for interest on our long-term debt. The Company has
undertaken and completed several plans and actions to improve our available cash
balances, liquidity or cash generated from operations, over the twelve month
period from the date these financial statements are issued. Going concern
matters are more fully discussed in Note 1, General.

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At June 30, 2022, cash and cash equivalents totaled $93.2 million including
restricted cash of $42.9 million. We also had borrowing capacity of up to $51.0
million under our BRCC Revolver which, the Company anticipates, will become
fully available in the course of 2022, of which $12.5 million was drawn by the
Company as of June 30, 2022.

Liquidity is the ability of an enterprise to generate adequate amounts of cash
to meet its needs for cash requirements. As of June 30, 2022, our working
capital deficit amounted to $290.3 million an increase of $70.3 million as
compared to working capital deficit of $220.0 million as of December 31, 2021.
This increase in working capital deficit is primarily a result of decreases in
accounts receivables due to sale of accounts receivables and increases in
accrued interest, accounts payable, and obligation for claim payment.

In the ordinary course of business, we enter into contracts and commitments that
obligate us to make payments in the future. These obligations include
borrowings, interest obligations, purchase commitments, operating and finance
lease commitments, employee benefit payments and taxes. Specifically, $68.8
million of BRCC Term Loan and $12.5 million outstanding under the BRCC Revolver
both mature in June 2023. Also, maturing in July 2023 are $22.8 million
aggregate principal amount of the 2023 Notes and $82.9 million aggregate
principal amount of the Term Loans. The Company's Term Loans also require us to
make periodic principal repayments. In addition, we are carrying a net accrued
liability of $26.0 million for the true-up obligation for the Revolver Exchange
which we expect to settle over the next twelve months. See Note 5 - Long-Term
Debt and Credit Facilities, Note 7 - Employee Benefit Plans, and Note 8-
Commitments and Contingencies to our condensed consolidated financial statements
herein for further information on material cash requirements from known
contractual and other obligations.

We currently expect to spend approximately $15.0 to $20.0 million on total
capital expenditures over the next twelve months. We will continue to evaluate
additional capital expenditure needs that may arise due to changes in the
business model. Our future cash requirements will depend on many factors,
including our rate of revenue growth, our investments in strategic initiatives,
applications or technologies, operation centers and acquisition of complementary
businesses, which may require the use of significant cash resources and/or
additional financing.

As of June 30, 2022 and in comparison to December 31, 2021, the Company has
reduced debt by $149.8 million, including liabilities accrued for the Appraisal
Action. With an objective to increase free cash flows and in order to maintain
sufficient liquidity to support profitable growth, the Company is pursuing
further reduction in debt and repricing of existing debt. The Company will
continue to pursue the sale of certain non-core businesses that are not central
to the Company's long-term strategic vision and invest in acquisition of
businesses that enhance the value proposition. The Company also plans to take
further action to raise additional funds in the debt and equity capital markets.
Based on our experience with the at-the-market programs and our knowledge of the
Company and the financial market, we believe that we will be able to raise those
additional funds. There can be no assurances, however, that any of these
initiatives will be consummated or will achieve its desired result.

On March 26, 2020, the Delaware Court of Chancery entered a judgment against one
of our subsidiaries in the amount of $57.7 million inclusive of costs and
interest arising out of the petition for appraisal pursuant to 8 Del. C. § 262
in the Delaware Court of Chancery, captioned Manichaean Capital, LLC, et al. v.
SourceHOV Holdings, Inc., C.A. No. 2017 0673 JRS (pursuant to which former
stockholders of SourceHOV sought, among other things, a determination of the
fair value of their 10,304 SourceHOV shares at the time of the Novitex Business
Combination) (the "Appraisal Action"). On December 31, 2021, we agreed to settle
the Appraisal Action along with a separate case brought by the same plaintiffs
for $63.4 million. Accordingly as of December 31, 2021, the Company accrued a
liability of $63.4 million for these matters, of which $47.1 million had been
paid as of June 30, 2022, with no amount remaining to be paid as of the date of
this report.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act
("CARES Act") was enacted in response to the COVID-19 pandemic. The CARES Act,
among other things, includes provisions relating to refundable payroll tax
credits, deferment of employer side social security payments, net operating loss
carryback periods, alternative minimum tax credit refunds, modifications to the
net interest deduction limitations and technical corrections to tax depreciation
methods for qualified improvement property. The Company has implemented
favorable provisions of the CARES Act, including the refundable payroll tax
credits and the deferment of employer social security payments. At the end of
2021, the Company paid a portion of the deferred employer social security due as
per IRS guidance. The

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remaining balance of deferred employer social security taxes will be paid by the
end of fiscal 2022. The Company has utilized recently enacted COVID-19 relief
measures in various European jurisdictions, including permitted deferrals of
certain payroll, social security and value added taxes. At the end of 2021, the
Company paid a portion of these deferred payroll taxes, social security and
value added taxes. The remaining balance of deferred payroll taxes, social
security and value added taxes will be paid by the end of fiscal 2022 as per
deferment timeline.

On December 17, 2020, certain subsidiaries of the Company entered into a $145.0
million securitization facility with a five year term (the "Securitization
Facility"). On December 17, 2020 the Company made the initial borrowing of
approximately $92.0 million under the Securitization Facility and used a portion
of the proceeds to repay previous securitization facility, which terminated on
such date. The Company used the remaining proceeds for general corporate
purposes. On June 17, 2022, the Company repaid in full the loans outstanding
under the Securitization Facility. The aggregate outstanding principal amount of
loans under the Securitization Facility as of such date was approximately $91.9
million.

On March 15, 2021, the Company, entered into a securities purchase agreement
with certain accredited institutional investors pursuant to which the Company
issued and sold to ten accredited institutional investors in a private placement
an aggregate of 486,591 unregistered shares of the Company's Common Stock at a
price of $55.0 per share and an equal number of warrants, generating gross
proceeds to the Company of $26.8 million. Cantor Fitzgerald acted as underwriter
in connection with such sale of unregistered securities and received a placement
fee of 5.5% of gross proceeds in connection with such service. In selling the
shares without registration, the Company relied on exemptions from registration
available under Section 4(a)(2) of the Securities Act of 1933 and Rule 506
promulgated thereunder. Each private placement warrant entitles the holder to
purchase one share of Common Stock, will be exercisable at an exercise price of
$80.00 per share beginning on September 19, 2021 and will expire on September
19, 2026.

On May 27, 2021, the Company entered into an At Market Issuance Sales Agreement
("First ATM Agreement") with B. Riley Securities, Inc. ("B. Riley") and Cantor
Fitzgerald & Co. ("Cantor"), as distribution agents under which the Company may
offer and sell shares of the Company's Common Stock from time to time through
the Distribution Agents, acting as sales agent or principal. On September 30,
2021, the Company entered into a second At Market Issuance Sales Agreement with
B. Riley, BNP Paribas Securities Corp., Cantor, Mizuho Securities USA LLC and
Needham & Company, LLC, as distribution agents (together with the First ATM
Agreement, the "ATM Agreement").

Sales of the shares of Common Stock under the ATM Agreement, will be in "at the
market offerings" as defined in Rule 415 under the Securities Act, including,
without limitation, sales made directly on or through the Nasdaq or on any other
existing trading market for the Common Stock, as applicable, or to or through a
market maker or any other method permitted by law, including, without
limitation, negotiated transactions and block trades. Shares of Common Stock
sold under the ATM Agreement are offered pursuant to the Company's Registration
Statement on Form S-3 (File No. 333-255707), filed with the SEC on May 3, 2021,
and declared effective on May 12, 2021 (the "2021

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Registration Statement"), and the prospectus dated May 12, 2021 included in the
2021 Registration Statement and the related prospectus supplements for sales of
shares of Common Stock as follows:

                                                        Weighted
                                           Number of     Average
                                              Shares   Price Per    Gross      Net
Supplement                    Period            Sold       Share Proceeds Proceeds
Prospectus supplement dated   May 28,      2,471,185     $40.164    $99.3    $95.7
May 27, 2021 with an          2021                                million  million
aggregate offering price of   through
up to $100.0 million ("Common July 1,
ATM Program-1")               2021
Prospectus supplement dated   June 30,     2,879,023     $52.069   $149.9   $144.4
June 30, 2021 with an         2021                                million  million
aggregate offering price of   through
up to $150.0 million ("Common September
ATM Program-2")               2, 2021
Prospectus supplement dated   October 6,  16,743,797     $14.931   $250.0   $241.0
September 30, 2021 with an    2021                                million  million
aggregate offering price of   through
up to $250.0 million ("Common March 31,
ATM Program-3")               2022
Prospectus supplement dated   May 24,     18,189,580      $3.199    $58.2    $56.4
May 23, 2022 with an          2022                                million  million
aggregate offering price of   through
up to $250.0 million ("Common June 30,
ATM Program-4")               2022


On June 17, 2022, the Company entered into an amended and restated receivables
purchase agreement (the "Amended Receivables Purchase Agreement") under its
accounts receivable securitization facility among certain of the Company's
subsidiaries, its wholly-owned, "bankruptcy remote" special purpose subsidiaries
("SPEs") and certain global financial institutions ("Purchasers"). The Amended
Receivables Purchase Agreement extends the term of the securitization facility
such that the SPE may sell certain receivables 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. On
June 17, 2022, the Company sold $85.0 million of its accounts receivable and
used the whole proceeds from this sale to repay part of the borrowings from the
Securitization Facility (as discussed above).



Cash Flows

The following table summarizes our cash flows for the periods indicated:


                                                              Six Months 

Ended June 30,

                                                           2022          2021         Change
Net cash provided by (used in) operating activities     $   26,140    $ (45,988)    $   72,128
Net cash used in investing activities                     (12,246)          (66)      (12,180)
Net cash provided by financing activities                   31,627        23,662         7,965
Subtotal                                                    45,521      (22,392)        67,913
Effect of exchange rates on cash                             (404)         

(53) (351) Net increase (decrease) in cash and cash equivalents 45,117 (22,445) 67,562

Analysis of Cash Flow Changes between the six months ended June 30, 2022 and June 30, 2021

Operating Activities-The increase of $72.3 million in net cash provided by
operating activities for the six months ended June 30, 2022 was primarily due to
sale of accounts receivable, cash inflow from accounts payable and accrued
liabilities and reduction in cash outflow for interest payments. This cash
inflow is despite $45.5 million payment for the Appraisal Action made during the
six months ended June 30, 2022. This increase in cash provided by operating
activities was partially offset by lower cash provided by lower revenue and
higher cash outflow on employees-related investments on account of higher
headcount (bench costs) to meet our customer forecasts.

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Investing Activities-The increase of $12.4 million in net cash used in investing
activities for the six months ended June 30, 2022 was primarily due to higher
additions to property, plant and equipment, patents and development of internal
software in 2022 offset by cash proceeds received from asset sales. Property
additions were primarily related to a purchase of the Company's Irish
headquarters in Dublin, Ireland.

Financing Activities- Cash provided by financing activities during the six
months ended June 30, 2022 was $31.6 million, primarily as a result of $170.9
million of net proceeds from equity offerings and $51.0 million of net proceeds
from the issuance of 2026 Notes offset by repayments of our senior secured
revolving facility, Securitization Facility and BRCC Facility of $188.1 million.

Cash provided by financing activities during the six months ended June 30, 2021
was $23.7 million, primarily as a result of $42.4 million of net proceeds from
equity offerings and $7.8 million borrowings from senior secured revolving
facility and other loans offset by $20.8 million of repayments on our loans and
$5.6 million of finance lease obligation payments.

Indebtedness


In connection with the Novitex Business Combination, we acquired debt facilities
and issued notes totaling $1.4 billion. Proceeds from the indebtedness were used
to pay off credit facilities existing immediately before the Novitex Business
Combination.

Senior Credit Facilities

On July 12, 2017, subsidiaries of the Company entered into a First Lien Credit
Agreement with Royal Bank of Canada, Credit Suisse AG, Cayman Islands Branch,
Natixis, New York Branch and KKR Corporate Lending LLC (the "Credit Agreement")
providing Exela Intermediate LLC, a wholly owned subsidiary of the Company, upon
the terms and subject to the conditions set forth in the Credit Agreement, (i) a
$350.0 million senior secured term loan maturing July 12, 2023 with an original
issue discount of $7.0 million, and (ii) a $100.0 million senior secured
revolving facility that matured on July 12, 2022 (the "Revolving Credit
Facility").

On July 13, 2018, we were able to refinance the $343.4 million of term loans
then outstanding under the Credit Agreement (the "Repricing Term Loans") and
borrowed an additional $30.0 million pursuant to incremental term loans (the
"2018 Incremental Term Loans"). The proceeds of the 2018 Incremental Term Loans
were used by the Company for general corporate purposes and to pay related fees
and expenses.

On April 16, 2019, subsidiaries of the Company borrowed a further $30.0 million
pursuant to incremental term loans (the "2019 Incremental Term Loans", and,
together with the 2018 Incremental Terms Loans and Repricing Term Loans, the
"Term Loans"). The proceeds of the 2019 Incremental Term Loans were used to
replace cash spent for acquisitions, pay related fees, expenses and related
borrowings for general corporate purposes.

The Term Loans bear interest at a rate per annum of, at the borrower's option,
either (a) a LIBOR rate determined by reference to the costs of funds for
Eurodollar deposits for the interest period relevant to such borrowing, adjusted
for certain additional costs, subject to a 1.0% floor, or (b) a base rate
determined by reference to the highest of (i) the federal funds rate plus 0.5%,
(ii) the prime rate and (iii) the one-month adjusted LIBOR plus 1.0%, in each
case plus an applicable margin of 6.5% for LIBOR loans and 5.5% for base rate
loans. The Term Loans will mature on July 12, 2023. As of June 30, 2022, the
interest rate applicable for the first lien senior secured term loan was 7.5%.

The Term Loans are jointly and severally, irrevocably and unconditionally guaranteed by the nearly all of Company's U.S. subsidiaries, as a primary obligors and not merely as a sureties.


The borrower may voluntarily repay the Term Loans at any time, without
prepayment premium or penalty, subject to customary "breakage" costs with
respect to LIBOR rate loans. Other than as described above, the terms,
conditions and covenants applicable to the Incremental Term Loans are consistent
with the terms, conditions and covenants that were applicable to the Repricing
Term Loans under the Credit Agreement.

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On May 18, 2020, we amended the Credit Agreement to, among other things, extend
the time for delivery of its audited financial statements for the year ended
December 31, 2019 and its financial statements for the quarter ended March 31,
2020. Pursuant to the amendment, we also agreed to amend the Credit Agreement
to, among other things: restrict the borrower and its subsidiaries' ability to
designate or invest in unrestricted subsidiaries; incur certain debt; create
certain liens; make certain investments; pay certain dividends or other
distributions on account of its equity interests; make certain asset sales or
other dispositions (or utilize the proceeds of certain asset sales to reinvest
in the business); or enter into certain affiliate transactions pursuant to the
negative covenants under the Credit Agreement. In addition, pursuant to the
amendment, the borrower under the Credit Agreement was required to maintain
minimum Liquidity (as defined in the amendment) of $35.0 million.

On December 9, 2021, in a separate transaction referred to here as the "Private
Exchange" (as distinguished from the "Public Exchange" described below),
subsidiaries of the Company agreed with three (3) of their Term Loan lenders to
exchange $212.1 million of Term Loans under the Credit Agreement for $84.3
million in cash and in $127.8 million principal amount of new 11.500%
First-Priority Senior Secured Notes due 2026 (the "2026 Notes"). In connection
with the Private Exchange, the exchanging lenders provided consents to amend the
Credit Agreement to (i) eliminate all affirmative covenants, (ii) eliminate all
negative covenants and (iii) eliminate certain events of default (other than
events of default relating to payment obligations).

As a result of the Private Exchange, repurchases (as discussed below) and periodic principal repayments, $82.9 million aggregate principal amount of the Term Loans maturing July 12, 2023 remains outstanding as of June 30, 2022.

Revolving Credit Facility; Letters of Credit


As of December 31, 2021, our $100 million Revolving Credit Facility was fully
drawn taking into account letters of credit issued thereunder. As of December
31, 2021, there were outstanding irrevocable letters of credit totaling
approximately $0.5 million under the Revolving Credit Facility.

On March 7, 2022, subsidiaries of the Company entered into a Revolving Loan
Exchange and Prepayment Agreement with Royal Bank of Canada, Credit Suisse AG,
Cayman Islands Branch, KKR Corporate Lending LLC, Granite State Capital Master
Fund LP, Credit Suisse Loan Funding LLC and Revolvercap Partners Fund LP
exchanging $100.0 million of outstanding Revolving Credit Facility owed by Exela
Intermediate LLC, upon the terms and subject to the conditions set forth in the
Revolver Exchange agreement, for (i) $50.0 million in cash, and (ii) $50.0
million of 2026 Notes (such exchange, the "Revolver Exchange" and such 2026
Notes, the "Exchange Notes").

The Exchange Notes are subject to a guarantee in the form of a true-up mechanism
whereby the Company is responsible to make a payment to the holders of the
Exchange Notes to true-up the shortfall below certain agreed thresholds if
holders of the Exchange Notes sell their notes at a price below that threshold
during agreed periods in 2022. As of June 30, 2022, there was a net accrued
liability of $26.0 million for the true-up obligation included in Accrued
liabilities on the condensed consolidated balance sheet after adjusting $5.0
million of true-up advance paid for this liability during the second quarter of
2022.

Senior Secured 2023 Notes

Upon the closing of the Novitex Business Combination on July 12, 2017,
subsidiaries of the Company issued $1.0 billion in aggregate principal amount of
10.0% First Priority Senior Secured Notes due 2023 (the "2023 Notes"). The 2023
Notes bear interest at a rate of 10.0% per year. We pay interest on the 2023
Notes on January 15 and July 15 of each year, commencing on January 15, 2018.
The 2023 Notes are jointly and severally, irrevocably and unconditionally
guaranteed by the nearly all of Company's U.S. subsidiaries, on a senior basis,
as a primary obligors and not merely as a sureties. The 2023 Notes mature on
July 15, 2023.

On October 27, 2021, we launched an offer to exchange (the "Public Exchange") up
to $225.0 million in cash and new 11.500% First-Priority Senior Secured Notes
due 2026 (the "2026 Notes") issued by subsidiaries of the Company's for the
outstanding 2023 Notes. The Public Exchange was for $900 in cash per $1,000
principal amount of 2023 Notes tendered subject to proration. The maximum amount
of cash to be paid was $225.0 million and the offer was

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not subject to any minimum participation condition. In case of oversubscription
to the cash offer, tendered 2023 Notes would be accepted for cash on a pro rata
basis (as a single class). The balance of any tendered 2023 Notes not accepted
for cash would be exchanged into 2026 Notes on the basis of $1,000 principal
amount of new 2026 Notes for each $1,000 principal amount of outstanding 2023
Notes tendered.

As of the expiration time of the Public Exchange, $912,660,000 aggregate
principal amount, or approximately 91.3%, of the 2023 Notes had been validly
tendered pursuant to the Public Exchange. On December 9, 2021, upon the
settlement of the Public Exchange, $662,660,000 aggregate principal amount of
the 2026 Notes were issued and an aggregate $225.0 million in cash (plus accrued
but unpaid interest) was paid to participating holders in respect of the validly
tendered 2023 Notes.

As a result of the Public Exchange and repurchases (as discussed below), $22.8
million aggregate principal amount of the 2023 Notes remains outstanding as of
June 30, 2022.

In conjunction with the Public Exchange, we also solicited consents to amend
certain provisions in the indenture governing the 2023 Notes ("Notes
Amendments"). On December 1, 2021, on receipt of the requisite consents to the
Notes Amendments, the Company, and Wilmington Trust, National Association, as
trustee (the "2023 Notes Trustee"), entered into a third supplemental indenture
(the "Third Supplemental Indenture") to the indenture, dated as of July 12, 2017
(as amended and supplemented by (i) the first supplemental indenture, dated as
of July 12, 2017 and (ii) the second supplemental indenture, dated as of May 20,
2020, the "2023 Notes Indenture") governing the outstanding 2023 Notes. The
Third Supplemental Indenture amends the 2023 Notes Indenture and the 2023 Notes
to eliminate substantially all of the restrictive covenants, eliminate certain
events of default, modify covenants regarding mergers and consolidations and
modify or eliminate certain other provisions, including certain provisions
relating to future guarantors and defeasance, contained in the 2023 Notes
Indenture and the 2023 Notes. In addition, all of the collateral securing the
2023 Notes was released pursuant to the Third Supplemental Indenture.

Senior Secured 2026 Notes

As of December 31, 2021, subsidiaries of the Company had $795.0 million aggregate principal amount of the 2026 Notes outstanding including $790.5 million in aggregate principal amount issued under the Public Exchange and Private Exchange transactions described above.

During the six months ended June 30, 2022, subsidiaries of the Company sold
$84.5 million in aggregate of principal amount of the 2026 Notes generating net
proceeds of $51.0 million. On March 18, 2022, the subsidiaries of the Company
issued $50.0 million of the 2026 Notes to satisfy the exchange obligation under
the Revolver Exchange. The 2026 Notes are guaranteed by certain subsidiaries of
the Company. The 2026 Notes bear interest at a rate of 11.5% per year. We will
pay interest on the 2026 Notes on January 15 and July 15 of each year,
commencing on July 15, 2022. The 2026 Notes mature on July 12, 2026.

On or after December 1, 2022, we may redeem the 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. In
addition, prior to December 1, 2022, we may redeem the 2026 Notes in whole or in
part from time to time, at a redemption price equal to 100% of the principal
amount of the 2026 Notes redeemed, plus the Applicable Premium as of, and
accrued and unpaid interest, if any, to, but excluding, the applicable
redemption date. "Applicable Premium" means, with respect to any 2026 Note on
any applicable redemption date, as determined by us, the greater of: (1) 1% of
the then outstanding principal amount of the 2026 Note; and (2) the excess of:
(a) the present value at such redemption date of (i) the redemption price of the
2026 Note, at December 1, 2022 plus (ii) all required interest payments due on
the 2026 Note through December 1, 2022 (excluding accrued but unpaid interest),
computed using a discount rate equal to the treasury rate as of such redemption
date plus 50 basis points; over (b) the then outstanding principal amount of the
2026 Note.

As of June 30, 2022, subsidiaries of the Company had $48.2 million and $30.0
million of principal amount of 2026 Notes placed as collateral (the "Collateral
Notes") for the remaining payment obligation under the Appraisal Action
settlement and the true-up obligation under the Revolver Exchange, respectively.

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$929.5 million aggregate principal amount of 2026 Notes were outstanding as of June 30, 2022.


Repurchases

In July 2021 we commenced a debt buyback program to repurchase 2023 Notes and
senior secured term loans under the Credit Agreement, which remains in place.
During the year ended December 31, 2021, we repurchased $64.5 million of the
outstanding principal amount of our 2023 Notes for a net cash consideration of
$48.4 million. During the year ended December 31, 2021, we also repurchased
$40.0 million of outstanding principal amount of Term Loans for a net cash
consideration of $22.8 million. These repurchases resulted in an early
extinguishment of the repurchased 2023 Notes and senior secured term loans. The
Company did not repurchase any senior secured term loans, 2023 Notes or 2026
Notes during the six months ended June 30, 2022.

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 pursuant
to which the Company 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 June 30,
2022, GP2 XCV entered into an amendment to the borrowing facility with B. Riley
Commercial Capital, LLC pursuant to which the Company will be able to borrow up
to $51.0 million under a separate revolving loan (the "BRCC Revolver",
collectively with 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. The BRCC Facility will mature on June 10,
2023. However, the BRCC Revolver is subject to certain automatic maturity
extensions of six months, unless B. Riley Commercial Capital, LLC or the Company
notifies the other party about its election not to extend. In such event, the
outstanding principal amount of the BRCC Revolver as of the maturity shall be
due and payable in 12 equal installments on the last business day of each
calendar month thereafter. Interest under the BRCC Facility accrues at a rate of
11.5% per annum 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 Term Loan under the Credit Agreement and to provide funding for
the Public Exchange transaction and Private Exchange transaction described
above. The purpose of BRCC Revolver is to fund general corporate purposes.

During the six months ended June 30, 2022, we repaid $46.2 million of
outstanding principal amount under the BRCC Term Loan along with $1.4 million of
exit fees. As of June 30, 2022, there were borrowings of $68.8 million and $12.5
million outstanding under the BRCC Term Loan and BRCC Revolver, respectively,
maturing June 10, 2023. There was no availability under the BRCC Revolver as of
June 30, 2022.

Securitization Facility

On December 17, 2020, certain subsidiaries of Company closed on Securitization
Facility with a five year term. The Securitization Facility provided for an
initial funding of approximately $92.0 million supported by the receivables
portion of the borrowing base and, subject to contribution, a further funding of
approximately $53.0 million supported by inventory and intellectual property. On
December 17, 2020 we made the initial borrowing of approximately $92.0 million
under the Securitization Facility and used a portion of the proceeds to repay
$83.0 million of the aggregate outstanding principal amount of loans as of
December 17, 2020 under a previous $160.0 million accounts receivable
securitization facility ("A/R Facility") and used the remaining proceeds for
general corporate purposes.

The documentation for the Securitization Facility included (i) a Loan and
Security Agreement (the "Securitization Loan Agreement"), dated as of December
10, 2020, by and among Exela Receivables 3, LLC (the "Securitization Borrower"),
a wholly-owned indirect subsidiary of the Company, the lenders (each, a
"Securitization Lender" and collectively the "Securitization Lenders"), Alter
Domus (US), LLC, as administrative agent (the "Securitization Administrative
Agent") and the Company, as initial servicer, pursuant to which the
Securitization

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Lenders will make loans to the Securitization Borrower to be used to purchase
receivables and related assets from the Securitization Parent SPE (as defined
below), (ii) a First Tier Receivables Purchase and Sale Agreement (the, dated as
of December 17, 2020, by and among Exela Receivables 3 Holdco, LLC (the
"Securitization Parent SPE"), a wholly-owned indirect subsidiary of the Company,
and certain other indirect, wholly-owned subsidiaries of the Company listed
therein (collectively, the "Securitization Originators"), and the Company, as
initial servicer, pursuant to which each Securitization Originator has sold or
contributed and will sell or contribute to the Securitization Parent SPE certain
receivables and related assets in consideration for a combination of cash and
equity in the Securitization Parent SPE, (iii) a Second Tier Receivables
Purchase and Sale Agreement, dated as of December 17, 2020, by and among, the
Securitization Borrower, the Securitization Parent SPE and the Company, as
initial servicer, pursuant to which Securitization Parent SPE has sold or
contributed and will sell or contribute to the Securitization Borrower certain
receivables and related assets in consideration for a combination of cash and
equity in the Securitization Borrower, (iv) the Sub-Servicing Agreement, dated
as of December 17, 2020, by and among the Company and each Securitization
Originator, (v) the Pledge and Guaranty, dated as of the December 10, 2020,
between the Securitization Parent SPE and the Administrative Agent, and (vi) the
Performance Guaranty, dated as of December 17, 2020, between the Company, as
performance guarantor, and the Securitization Administrative Agent (and together
with all other certificates, instruments, UCC financing statements, reports,
notices, agreements and documents executed or delivered in connection with the
Securitization Loan Agreement, the "Securitization Agreements"). On April 11,
2021, the Company amended the Securitization Loan Agreement and agreed to, among
other things, extend the option to contribute inventory and intellectual
property to the borrowing base from April 10, 2021 to September 30, 2021 (which
did not occur).

The Securitization Borrower, the Company, the Securitization Parent SPE and the
Securitization Originators provide customary representations and covenants under
the Securitization Agreements. The Securitization Loan Agreement provides for
certain events of default upon the occurrence of which the Securitization
Administrative Agent may declare the facility's termination date to have
occurred and declare the outstanding Securitization Loan and all other
obligations of the Securitization Borrower to be immediately due and payable,
however the Securitization Facility does not include an ongoing liquidity
covenant like the A/R Facility and aligns reporting obligations with the
Company's other material indebtedness agreements.

The Securitization Borrower and Securitization Parent SPE were formed in
December 2020, and are consolidated into the Company's financial statements. The
Securitization Borrower and Securitization Parent SPE are bankruptcy remote
entities and as such their assets are not available to creditors of the Company
or any of its subsidiaries. Each loan under the Securitization Facility bears
interest on the unpaid principal amount as follows: (i) if a Base Rate Loan, at
a rate per annum equal to (x) the greatest of (a) the Prime Rate in effect on
such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50%
and (c) the Adjusted LIBOR Rate (as defined in the Securitization Loan
Agreement) plus 1.00%, plus (y) 8.75%; or (ii) if a LIBOR Rate Loan, at the
Adjusted LIBOR Rate plus 9.75%.

On June 17, 2022, the Company repaid in full the loans outstanding under the
Securitization Facility. The aggregate outstanding principal amount of loans
under the Securitization Facility as of such date was approximately $91.9
million. The early termination of the Securitization Facility triggered a
prepayment premium of $2.7 million and required payment of approximately $0.5
million and $1.3 million in respect of accrued interest and fees, respectively.
All obligations under the Securitization Facility (other than contingent
indemnification obligations that expressly survive termination) terminated upon
repayment. The Securitization Facility was replaced by the Amended Receivables
Purchase Agreement described below.

On June 17, 2022, the Company entered into an amended and restated receivables
purchase agreement (the "Amended Receivables Purchase Agreement") under its
accounts receivable securitization facility among certain of the Company's
subsidiaries, its wholly-owned, "bankruptcy remote" special purpose subsidiaries
("SPEs") and certain global financial institutions ("Purchasers"). The Amended
Receivables Purchase Agreement extends the term of the securitization facility
such that the SPE may sell certain receivables 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 or the related subsidiaries. On

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Table of Contents


June 17, 2022, the Company sold $85.0 million of its accounts receivable and
used the whole proceeds from this sale to repay part of the borrowings from the
Securitization Facility (as discussed above). These sales were 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 $85.0 million of accounts
receivable under this agreement through June 30, 2022. Unsold accounts
receivable of $46.0 million were pledged by the SPEs as collateral to the
Purchasers as of June 30, 2022.

Potential Future Transactions


We may, from time to time explore and evaluate possible strategic transactions,
which may include joint ventures, as well as business combinations or the
acquisition or disposition of assets. In order to pursue certain of these
opportunities, additional funds will likely be required. Subject to applicable
contractual restrictions, to obtain such financing, we may seek to use cash on
hand, borrowings under our revolving credit facilities, or we may seek to raise
additional debt or equity financing through private placements or through
underwritten offerings. There can be no assurance that we will enter into
additional strategic transactions or alliances, nor do we know if we will be
able to obtain the necessary financing for transactions that require additional
funds on favorable terms, if at all. In addition, pursuant to the Registration
Rights Agreement that we entered into in connection with the closing of the
Novitex Business Combination, certain of our stockholders may have the right to
demand underwritten offerings of our Common Stock. We may from time to time in
the future explore, with certain of those stockholders the possibility of an
underwritten public offering of our Common Stock held by those stockholders.
There can be no assurance as to whether or when an offering may be commenced or
completed, or as to the actual size or terms of the offering.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2022 1 133 M - -
Net income 2022 -216 M - -
Net Debt 2022 965 M - -
P/E ratio 2022 -0,17x
Yield 2022 -
Capitalization 29,4 M 29,4 M -
EV / Sales 2022 0,88x
EV / Sales 2023 0,84x
Nbr of Employees 17 000
Free-Float 99,5%
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Managers and Directors
Shrikant Sortur Chief Financial Officer
Parvinder S. Chadha Executive Chairman
Sriram Ramanathan Chief Technology officer
John H. Rexford Independent Director
Martin P. Akins Independent Director
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