UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON, DC~~

Washington, D.C. 20549

~~FORM~~

Form 10-Q

~~(Mark One)~~

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2020

Commission File Number 001-38136

☒

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

~~For the quarterly period ended September 30, 2017~~

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

Accel Entertainment, Inc.

~~For the transition period from ___________ to ___________~~

~~Commission File Number: 001-38136~~

~~TPG PACE HOLDINGS CORP.~~

(Exact Name of Registrant as Specified in ~~its~~Its Charter)

~~Cayman Islands~~		~~98-1350261~~



Delaware		98-1350261
(State or ~~other jurisdiction~~Other Jurisdiction of ~~incorporation~~ Incorporation or ~~organization)~~ Organization)			(I.R.S. Employer Identification No.)

~~301 Commerce Street, Suite 3300~~ ~~Fort Worth, TX~~ 140 Tower Drive			~~76102~~ 60527
Burr Ridge,	Illinois
(Address of ~~principal executive offices)~~ Principal Executive Offices)			(Zip Code)

(630) 972-2235

(Registrant’s telephone number, including area ~~code: (212) 405-8458~~

code)

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



Title of Each Class	Trading Symbols	Name of Each Exchange on Which Registered
Class A-1 Common Stock, par value $.0001 per share	ACEL	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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ☒ No ☐

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”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☐	☐		Accelerated filer	☐ ☒
Non-accelerated filer	☐		Smaller reporting company		☐
~~Non-accelerated filer~~		☒ ~~(Do not check if a small reporting company)~~		~~Small reporting company~~	☐
				Emerging growth company	☒

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act). Yes ☒☐ No ☐

~~At November 1, 2017,~~☒

As of August 3, 2020, there were ~~45,000,000~~82,348,539 shares outstanding of the registrant’s Class ~~A ordinary shares, $0.0001~~A-1 Common Stock, par value $.0001 per ~~share, and 11,250,000 Class F ordinary shares, $0.0001 par value per share, issued and outstanding.~~

~~Table of Contents~~

share.

			~~Page~~
~~PART I.~~	~~FINANCIAL INFORMATION~~	1
~~Item 1.~~	~~Financial Statements~~	1

ACCEL ENTERTAINMENT, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2020

TABLE OF CONTENTS


		~~Condensed Balance Sheet (unaudited)~~		1
PART I.	FINANCIAL INFORMATION	1
ITEM 1.	FINANCIAL STATEMENTS	1
	Condensed Consolidated Statements of Operations ~~(unaudited)~~ (Unaudited) for the three and six months ended June 30, 2020 and 2019		2 1
	Condensed Consolidated Balance Sheets at June 30, 2020 (Unaudited) and December31, 2019	~~Condensed Statement of Changes in Shareholders’ Equity (unaudited)~~2		3
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and six months ended June 30, 2020 and 2019	3
	Condensed ~~Statement~~Consolidated Statements of Cash Flows ~~(unaudited)~~ (Unaudited) for the six months ended June 30, 2020 and 2019		4
		Notes to the Condensed Consolidated Financial Statements ~~(unaudited)~~ (Unaudited)		5
~~Item~~ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~25		13
~~Item 3.~~		~~Quantitative and Qualitative Disclosures About Market Risk~~		16
~~Item 4.~~ ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	~~Controls and Procedures~~38		16
~~PART II.~~		~~OTHER INFORMATION~~
~~Item 1.~~ ITEM 4.	CONTROLS AND PROCEDURES	~~Legal Proceedings~~39		17
~~Item 1A.~~		~~Risk Factors~~		17
~~Item 2.~~		~~Unregistered Sales of Equity Securities and Use of Proceeds~~		17
~~Item 3.~~ PART II.	OTHER INFORMATION	~~Defaults Upon Senior Securities~~40		18
~~Item 4.~~ ITEM 1.	LEGAL PROCEDINGS	~~Mine Safety Disclosures~~40		18
~~Item 5.~~ ITEM 1A.	RISK FACTORS	~~Other Information~~41		18
~~Item 6.~~ ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	~~Exhibits~~42		19
~~Signatures~~ ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	21 42
ITEM 4.	MINE SAFETY DISCLOSURES	42
ITEM 6.	EXHIBITS	43

SIGNATURES		44

PART ~~I –~~I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

~~Item~~

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



(In thousands, except per share amounts)	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Revenues:
Net video gaming	$	—		$	100,994	$	101,575		$	195,169
Amusement	260			1,348		1,952			2,786
ATM fees and other revenue	119			1,925		2,080			3,737
Total net revenues	379			104,267		105,607			201,692
Operating expenses:
Video gaming expenses	—			66,082		67,980			127,703
General and administrative	10,451			17,476		33,919			33,600
Depreciation and amortization of property and equipment	5,071			6,100		9,938			12,141
Amortization of route and customer acquisition costs and location contracts acquired	5,565			4,624		11,130			8,927
Other expenses, net	3,132			730		4,336			1,346
Total operating expenses	24,219			95,012		127,303			183,717
Operating (loss) income	(23,840		)	9,255		(21,696		)	17,975
Interest expense, net	2,489			3,156		6,738			6,203
(Loss) income before income tax (benefit) expense	(26,329		)	6,099		(28,434		)	11,772
Income tax (benefit) expense	(5,055		)	1,771		(5,194		)	3,449
Net (loss) income	$	(21,274	)	$	4,328	$	(23,240	)	$	8,323
Net (loss) income per common share:
Basic ⁽¹⁾	$	(0.27	)	$	0.07	$	(0.30	)	$	0.14
Diluted ⁽¹⁾	(0.27		)	0.07		(0.30		)	0.13
Weighted average number of shares outstanding:
Basic ⁽¹⁾	78,317			58,605		78,161			57,896
Diluted ⁽¹⁾	78,317			61,904		78,161			61,742

(1) Per share and share amounts for 2019 have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 1. ~~Financial Statements~~

~~TPG Pace~~ ~~Holdings~~ ~~Corp.~~

~~Condensed Balance Sheet~~

~~(unaudited)~~

September 30, 2017

Assets

Current assets:

Cash

$
1,636,543

Prepaid expenses

165,429

Total current assets

1,801,972

Cash held in Trust Account

450,000,000

Total assets

$
451,801,972

Liabilities and Shareholders' Equity

Current liabilities:

Accrued offering costs, formation costs and other expenses

$
1,295,110

Total current liabilities

1,295,110

Deferred underwriting compensation

15,750,000

Total liabilities

17,045,110

Commitments and contingencies

Class A ordinary shares subject to possible redemption; 42,975,686
   shares at September 30, 2017, at a redemption value of $10.00 per share

429,756,860

Shareholders' equity:

Preferred shares, $0.0001 par value; 1,000,000 shares authorized, none issued or
   outstanding

—

Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 2,024,314
   shares issued and outstanding (excluding 42,975,686 shares subject to possible
   redemption) at September 30, 2017

202

Class F ordinary shares, $0.0001 par value; 20,000,000 shares authorized, 11,250,000
   shares issued and outstanding

1,125

Additional paid-in capital

5,217,590

Accumulated deficit

(218,915
)
Total shareholders' equity

5,000,002

Total liabilities and shareholders' equity

$
451,801,972

The accompanying notes are an integral part of these condensed consolidated financial ~~statements.~~

statements

~~TPG Pace Holdings Corp.~~

~~Condensed Statements of Operations~~

~~(unaudited)~~

For the Period

For the Three

from February 14, 2017

Months Ended

(inception) to

September 30, 2017

September 30, 2017

Revenue

$
—

$
—

Formation costs and other expenses

94,400

218,938

Loss from operations

(94,400
)

(218,938
)
Interest income

—

23

Net loss attributable to ordinary shares

$
(94,400
)

$
(218,915
)
Net loss per ordinary share:

Basic and diluted

$
—

$
(0.01
)
Weighted average ordinary shares outstanding:

Basic and diluted

56,369,565

29,320,961

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



(In thousands, except par value and share amounts)	June 30,			December 31,
	2020			2019
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	148,834		$	125,403
Prepaid expenses	3,443			4,151
Income taxes receivable	3,907			3,907
Investment in convertible notes (current)	17,000			11,000
Other current assets	6,637			7,034
Total current assets	179,821			151,495
Property and equipment, net	123,759			119,201
Other assets:
Route and customer acquisition costs, net	16,460			17,399
Location contracts acquired, net	156,624			166,783
Goodwill	34,511			34,511
Investment in convertible notes, less current portion	13,000			19,000
Other assets	1,101			928
	221,696			238,621
Total assets	$	525,276		$	509,317
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of debt	$	18,250		$	15,000
Current portion of route and customer acquisition costs payable	1,675			1,700
Accrued location gaming expense	—			1,323
Accrued state gaming expense	—			7,119
Accounts payable and other accrued expenses	27,278			19,511
Current portion of consideration payable	3,272			10,293
Total current liabilities	50,475			54,946
Long-term liabilities:
Debt, net of current maturities	380,740			334,692
Route and customer acquisition costs payable, less current portion	4,708			4,752
Consideration payable, less current portion	16,541			16,426
Deferred income tax liability	7,781			12,976
Total long-term liabilities	409,770			368,846
Stockholders’ equity :
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2020 and December 31, 2019	—			—
Class A-1 Common Stock, par value $0.0001; 250,000,000 shares authorized; 78,382,405 shares issued and outstanding at June 30, 2020; 76,637,470 shares issued and outstanding at December 31, 2019	8			8
Class A-2 Common Stock, par value $0.0001; 10,000,000 shares authorized; 3,403,363 shares issued and outstanding at June 30, 2020; 4,999,999 shares issued and outstanding at December 31, 2019	1			1
Additional paid-in capital	108,732			105,986
Accumulated deficit	(43,710		)	(20,470		)
Total stockholders' equity	65,031			85,525
Total liabilities and equity	$	525,276		$	509,317

The accompanying notes are an integral part of these condensed consolidated financial ~~statements.~~

statements

~~TPG Pace Holdings Corp.~~

~~Condensed Statement of Changes~~

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)



(In thousands, except shares)	Class A-1			Class A-2				Additional					Total
	Common Stock			Common Stock				Paid-In		Accumulated			Stockholders’
	Shares	Amount		Shares		Amount		Capital		Deficit			Equity
Balance, January 1, 2020	76,637,470	$	8	4,999,999		$	1	$	105,986	$	(20,470	)	$	85,525
Conversion of Class A-2 Common Stock to Class A-1 Common Stock	1,596,636	—		(1,596,636	)	—		—		—			—
Stock-based compensation	—	—		—		—		1,060		—			1,060
Net loss	—	—		—		—		—		(1,966		)	(1,966		)
Balance, March 31, 2020	78,234,106	8		3,403,363		1		107,046		(22,436		)	84,619
Exercise of common stock options	148,299	—		—		—		359		—			359
Stock-based compensation	—	—		—		—		1,327		—			1,327
Net loss	—	—		—		—		—		(21,274		)	(21,274		)
Balance, June 30, 2020	78,382,405	$	8	3,403,363		$	1	$	108,732	$	(43,710	)	$	65,031



(In thousands, except shares)	Class A-1			Additional		Treasury								Total
	Common Stock ⁽¹⁾			Paid-In		Stock ⁽¹⁾					Accumulated			Stockholders’
	Shares	Amount		Capital ⁽¹⁾		Shares		Amount			Deficit			Equity
Balance, January 1, 2019	58,491,281	$	6	$	80,146	(1,311,880	)	$	(5,832	)	$	(17,202	)	$	57,118
Exercise of warrants	495,030	—		334		46,409		227			—			561
Employee stock option compensation	—	—		128		—		—			—			128
Net income	—	—		—		—		—			3,995			3,995
March 31, 2019	58,986,311	6		80,608		(1,265,471	)	(5,605		)	(13,207		)	61,802
Exercise of common stock options	—	—		—		284,608		84			—			84
Exercise of warrants	1,164,093	—		1,205		—		—			—			1,205
Employee stock option compensation	—	—		128		—		—			—			128
Net income	—	—		—		—		—			4,328			4,328
Balance, June 30, 2019	60,150,404	$	6	$	81,941	(980,863	)	$	(5,521	)	$	(8,879	)	$	67,547

(1) Share amounts for 2019 have been retroactively restated to give effect to the reverse capitalization that is discussed in ~~Shareholders’ Equity~~

~~(unaudited)~~

Note 1.

Preferred Shares

Class A Ordinary Shares

Class F Ordinary Shares

Additional

Accumulated

Shareholder's

Shares

Amount

Shares

Amount

Shares

Amount

Paid-In Capital

Deficit

Equity

Balance at February 14, 2017 (inception)

—

$
—

—

$
—

—

$
—

$
—

$
—

$
—

Sale of Class F ordinary shares to
   Sponsor on February 22, 2017 at
   $0.002 per share

—

—

—

—

11,500,000

1,150

23,850

—

25,000

Proceeds from initial public offering
   of Units on June 30, 2017
   at $10.00 per Unit

—

—

45,000,000

4,500

—

—

449,995,500

—

450,000,000

Sale of 7,333,333 Private Placement
   Warrants to Sponsor on
   June 30, 2017 at $1.50 per
   Private Placement Warrant

—

—

—

—

—

—

11,000,000

—

11,000,000

Underwriters discount

—

—

—

—

—

—

(9,000,000
)

—

(9,000,000
)
Deferred offering costs charged
   to additional paid-in capital

—

—

—

—

—

—

(1,299,223
)

—

(1,299,223
)
Deferred underwriting compensation

—

—

—

—

—

—

(15,750,000
)

—

(15,750,000
)
Class F common stock forfeited by
   Sponsor on August 14, 2017

—

—

—

—

(250,000
)

(25
)

25

—

—

Class A ordinary shares subject
   to possible redemption;
   42,975,686 shares at a
   redemption value of $10.00
   per share

—

—

(42,975,686
)

(4,298
)

—

—

(429,752,562
)

—

(429,756,860
)
Net loss attributable to
   ordinary shares

—

—

—

—

—

—

—

(218,915
)

(218,915
)
Balance at September 30, 2017

—

$
—

2,024,314

$
202

11,250,000

$
1,125

$
5,217,590

$
(218,915
)

$
5,000,002

The accompanying notes are an integral part of these condensed consolidated financial ~~statements.~~

statements

~~TPG Pace Holdings Corp.~~

~~Condensed Statement of Cash Flows~~

~~(unaudited)~~

For the Period

from February 14, 2017

(inception) to

September 30, 2017

Cash flows from operating activities:

Net loss attributable to ordinary shares

$
(218,915
)
Changes in operating assets and liabilities:

Prepaid expenses

(165,429
)
Accrued offering costs, formation costs and other expenses

323,987

Net cash used in operating activities

(60,357
)
Cash flows from investing activities:

Proceeds deposited into Trust Account

(450,000,000
)
Net cash used in investing activities

(450,000,000
)
Cash flows from financing activities:

Proceeds from sale of Class F ordinary shares to Sponsor

25,000

Proceeds from sale of Units in initial public offering

450,000,000

Proceeds from sale of Private Placement Warrants to Sponsor

11,000,000

Proceeds of notes payable from Sponsor

300,000

Payment of underwriters discounts

(9,000,000
)
Payment of accrued offering costs

(328,100
)
Repayment of notes payable from Sponsor

(300,000
)
Net cash provided by financing activities

451,696,900

Net change in cash

1,636,543

Cash at beginning of period

—

Cash at end of period

$
1,636,543

Supplemental disclosure of non-cash financing activities:

Accrued offering costs

$
971,123



ACCEL ENTERTAINMENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net (loss) income	$	(23,240	)	$	8,323
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization of property and equipment	9,938			12,141
Amortization of route and customer acquisition costs and location contracts acquired	11,130			8,927
Amortization of debt issuance costs	936			333
Stock-based compensation	2,387			256
Loss (gain) on disposal of property and equipment	93			(47		)
Net loss on write-off of route and customer acquisition costs and route and customer acquisition costs payable	611			171
Remeasurement of contingent consideration	(2,432		)	227
Payments on consideration payable	(1,548		)	—
Accretion of interest on route and customer acquisition costs payable, contingent consideration, and contingent stock consideration	1,078			255
Deferred income taxes	(5,195		)	—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	1,105			(3,360		)
Income taxes receivable	—			(1,050		)
Route and customer acquisition costs	(585		)	(1,271		)
Route and customer acquisition costs payable	(69		)	(714		)
Accounts payable and accrued expenses	(11,319		)	1,973
Other assets	(174		)	(81		)
Net cash (used in) provided by operating activities	(17,284		)	26,083
Cash flows from investing activities:
Purchases of property and equipment	(4,123		)	(10,600		)
Proceeds from the sale of property and equipment	121			52
Net cash used in investing activities	(4,002		)	(10,548		)
Cash flows from financing activities:
Payments on term loan	(6,000		)	(3,125		)
Proceeds from delayed draw term loans	65,000			10,750
Payments on delayed draw term loans	(2,313		)	(4,750		)
Net payments on line of credit	(8,000		)	(12,000		)
Payments for debt issuance costs	(325		)	—
Proceeds from exercise of stock options and warrants	359			1,851
Payments on consideration payable	(4,004		)	(452		)
Payments on capital lease obligation	—			(531		)
Net cash provided by (used in) financing activities	44,717			(8,257		)
Net increase in cash and cash equivalents	23,431			7,278
Cash and cash equivalents:
Beginning of period	125,403			92,229
End of period	$	148,834		$	99,507
Supplemental disclosures of cash flow information:
Cash payments for:
Interest, net of amount of capitalized	$	6,678		$	5,263
Income taxes	$	—		$	1,759
Supplemental schedules of noncash investing and financing activities:
Purchases of property and equipment in accounts payable and accrued liabilities	$	10,586		$	2,186

The accompanying notes are an integral part of these condensed consolidated financial ~~statements.~~

statements

ACCEL ENTERTAINMENT, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

~~TPG Pace Holdings Corp.~~

~~Notes~~

Note 1. Description of Business

Accel Entertainment, Inc.'s (and together with its subsidiaries, the “Company”) wholly owned subsidiary, Accel Entertainment Gaming LLC, is a terminal operator licensed by the State of Illinois Gaming Board since March 15, 2012. Its terminal operator license allows the Company to ~~Condensed Financial Statements~~

~~(unaudited)~~

~~1. Organization~~install and ~~Business Operations~~

~~Organization~~operate video gaming terminals in licensed video gaming locations throughout the State of Illinois as approved by individual municipalities. The Company also operates redemption terminals, which also function as automated teller machines (“ATMs”) at its licensed video gaming locations, and ~~General~~

~~TPG Pace Holdings Corp. (the “Company”)~~amusement equipment at certain locations. The Company is subject to various federal, state and local laws and regulations in addition to gaming regulations. The terminal operator license, which is not transferable or assignable, requires compliance with applicable regulations and the license is renewable annually unless sooner cancelled or terminated.

The Company operates 11,108 and 8,082 video gaming terminals across 2,335 and 1,762 locations in the State of Illinois as of June 30, 2020 and 2019, respectively.

On November 20, 2019, the Company consummated a business combination which was ~~incorporated~~accounted for as a ~~Cayman Islands exempted company~~reverse recapitalization. For more details on ~~February 14, 2017 (“Inception”). The Company was formed~~the reverse recapitalization, see Note 3 to the Company's Consolidated Financial Statements as presented in its Annual Report on Form 10-K for the ~~purpose~~year ended December 31, 2019. As a result of ~~effecting a merger,~~the reverse recapitalization, all references to numbers of common shares and per common share ~~exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).~~ data for 2019 in these condensed consolidated financial statements and related notes have been retroactively adjusted to account for the effect of the reverse recapitalization.

The Company is an “emerging growth ~~company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by~~company” under the Jumpstart Our Business Startups Act of 2012 ~~(the “JOBS Act”). The Company’s sponsor is TPG Pace II Sponsor, LLC, a Cayman Islands limited liability company (the “Sponsor”), which is an affiliate of TPG Global, LLC.~~

All activity for the period from Inception to September 30, 2017 relates to the Company’s formation and the initial public offering of units, each consisting of one of the Company’s Class A ordinary shares and one-third of one warrant to purchase one Class A ordinary share (the “Public Offering”), and the identification and evaluation of prospective acquisition targets for a Business Combination. The Company will not generate operating revenues prior to the completion of the Business Combination and will generate non-operating income in the form of interest income on Permitted Investments (as defined below) from the proceeds derived from the Public Offering. The Company has selected December 31st as its fiscal year end.

~~Financing~~

~~The registration statement for the Company’s Public Offering was declared effective by the United States Securities and Exchange Commission (the “SEC”~~(“JOBS Act”) on June 27, 2017. The Public Offering closed on June 30, 2017 (the “Close Date”). The Sponsor purchased an aggregate of 7,333,333 warrants at a purchase price of $1.50 per warrant, or $11,000,000 in the aggregate, in a private placement on the Close Date (the “Private Placement”). The warrants are included in additional paid-in capital at the balance sheet.

The Company intends to finance a Business Combination with proceeds from its $450,000,000 Public Offering (see Note 3) and $11,000,000 Private Placement (see Note 4). At the Close Date, proceeds of $450,000,000, net of underwriting discounts of $9,000,000 and funds designated for operational use of $2,000,000, were deposited in a trust account with Continental Stock Transfer and Trust Company acting as trustee (the “Trust Account”) as described below.

~~The Trust Account~~

Prior to January 2018, funds held in the Trust Account will not be invested and will be held in a non-interest bearing account. Beginning January 2018, funds held in the Trust Account will be invested only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations (collectively, “Permitted Investments”).

Funds will remain in the Trust Account except for the withdrawal of interest earned on the funds that may be released to the Company to fund working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes. The proceeds from the Public Offering will not be released from the Trust Account until the earliest of (i) the completion of the Business Combination, (ii) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the amended and restated memorandum and articles of association to modify the substance and timing of the Company’s obligation to redeem 100% of the public shares if the Company does not complete the Business Combination within 24 months from the Close Date, or 27 months from the Close Date if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date and (iii) the redemption of all of the Company’s public shares if it is unable to complete the Business Combination within 24 months from the Close Date, or 27 months from the Close Date if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date, subject to applicable law.

Of the remaining proceeds of $2,000,000 held outside the Trust Account, $300,000 was used to repay the loan from the Sponsor, with the remainder available to pay offering costs, business, legal and accounting due diligence on prospective acquisitions, listing fees and continuing general and administrative expenses.

~~Business Combination~~

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a Business Combination with (or acquisition of) a target business. As used herein, the target business must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the Company signing a definitive agreement.

After signing a definitive agreement for a Business Combination, the Company will provide the public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares either (i) in connection with a shareholder meeting to approve the Business Combination or (ii) by means of a tender offer. Each public shareholder may elect to redeem their shares irrespective of whether they vote for or against the Business Combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior tofollowing the consummation of the ~~Business Combination, including interest earned~~reverse recapitalization. The Company has elected to use this extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The Company will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, (b) in which Accel has total annual gross revenue of at least $1.0 billion or (c) in which Accel is deemed to be a large accelerated filer, which means the market value of Class A-1 Shares that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Accel has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Impact of COVID-19 on the ~~funds held in~~Condensed Consolidated Financial Statements

In response to the ~~Trust Account~~COVID-19 outbreak, the Illinois Gaming Board (“IGB”) made the decision to shut down all video gaming terminals (“VGTs”) across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ~~not previously released~~ultimately extended the shutdown through June 30, 2020. The temporary shutdown of Illinois video gaming impacted all of the gaming days during the three months ended June 30, 2020 and 106 of the 182 gaming days (or 58% of gaming days) during the six months ended June 30, 2020. In light of these events and their effect on the Company’s employees and licensed establishment partners, the Company took action to position the Company to ~~fund~~help mitigate the effects of the temporary cessation of operations by, among other things, furloughing approximately 90% of its ~~working capital requirements, subject~~employees and deferring certain payments to ~~an annual limit~~major vendors. Additionally, members of ~~$750,000, and/or~~the Company's senior management decided to ~~pay taxes, divided by~~voluntarily forgo their base salaries until the ~~number~~resumption of ~~then outstanding public shares, subject to the limitations described herein. The amount~~video gaming operations. Beginning in ~~the Trust Account is initially anticipated to be approximately $10.00 per public share. The per-share amount~~early June, the Company will distribute to investors who properly redeem their shares will not be reduced by any deferred underwriting commissions payable to underwriters. The decision as to whether the Company will seek shareholder approvalstarted reinstating employees from furlough in anticipation of ~~the Business Combination or will allow shareholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based~~resuming operations on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek shareholder approval under the law or stock exchange listing requirements. If the Company seeks shareholder approval, it will complete its Business Combination only if a majority of the outstanding Class A ordinary shares voted are voted in favor of the Business Combination. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001, after payment of the deferred underwriting commission. In such an instance, the Company would not proceed with the redemption of its public shares and the related Business Combination, and instead may search for an alternate Business Combination.

The Company has 24 months from the Close Date, or 27 months from the Close Date if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date, to complete its Business Combination. If the Company does not complete a Business Combination within this period, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds in the Trust Account and not previously released to the Company to fund its working capital requirements, subject to an annual limit of $750,000, and/or to pay its taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. The Company’s Sponsor and four independent directors (collectively, “Initial Shareholders”) and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to their Founder Shares (as defined in Note 4) if the Company fails to complete the Business Combination within 24 months from the Close Date, or 27 months from the Close Date if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date. However, if the initial shareholders acquire public shares after the Close Date, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if the Company fails to complete the Business Combination within the allotted 24-month time period, or 27 months from the Close Date if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date.

The underwriters have agreed to waive their rights to any deferred underwriting commission held in the Trust Account in the event the Company does not complete the Business Combination and those amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Company’s public shares.

If the Company fails to complete the Business Combination, the redemption of the Company’s public shares will reduce the book value of the shares held by the Initial Shareholders, who will be the only remaining shareholders after such redemptions.

If the Company holds a shareholder vote or there is a tender offer for shares in connection with a Business Combination, a public shareholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including

July 1, 2020.

~~interest earned on the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes.~~ As a result ~~such ordinary shares~~of these developments, the Company's revenues, results of operations and cash flows have been materially affected, and the Company expects it to continue for at least as long as COVID-19 is a threat to the public health. The situation is rapidly changing and additional impacts to the business may arise that the Company is not aware of currently.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

The Company incurred non-recurring, one-time expenses of $1.3 million and $1.9 million for the three and six months ended June 30, 2020, respectively, for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown. These costs are ~~recorded at their redemption~~included within other expenses, net. The Company also spent $1.4 million in capital costs related to the purchase of IGB-mandated spacers for its VGTs to promote social distancing requirements within the gaming area and incurred operating expenses of $0.3 million related to cleaning, disinfecting and sanitizing supplies.

As part of the Company's analysis of the financial reporting impacts of the COVID-19 outbreak, and corollary response in the State of Illinois, including the temporary shutdown of our gaming operations, the Company evaluated its goodwill and long-lived assets for potential impairment triggers as of June 30, 2020. As a result of this analysis, no impairment losses were recorded. The Company will continue to monitor its assets for potential impairment losses in future periods. While the IGB has announced the resumption of all video gaming activities effective July 1st, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events. If this were to occur, the Company could recognize impairment losses which could be material.

The Company also engaged a 3rd party valuation firm to assist in determining the fair value of its investment in convertible notes as of June 30, 2020. The valuation concluded that the carrying amount ~~and classified~~of the investment in the convertible notes approximates the fair value in all material respects, as ~~temporary equity on the balance sheet, in accordance with ASC 480, “Distinguishing Liabilities from Equity.”~~

of June 30, 2020.

Note 2. Summary of Significant Accounting Policies

Basis of ~~Presentation~~

presentation and preparation: The ~~accompanying unaudited interim~~ condensed consolidated financial statements ~~have been~~and accompanying notes were prepared in ~~accordance~~conformity with U.S. generally accepted accounting principles ~~generally accepted in the United States of America~~ (“~~U.S.~~ GAAP”) and ~~pursuant to~~ the ~~accounting and disclosure~~ rules and regulations of the ~~SEC,~~Securities and ~~reflect all adjustments, consisting only~~Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of ~~normal recurring adjustments, which are,~~the Company and of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, ~~at September 30, 2017 and the~~ results of operations and cash flows for the dates and periods presented. ~~Certain information~~These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and ~~disclosures normally~~the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In preparing our condensed consolidated financial statements, ~~prepared~~we applied the same significant accounting policies as described in ~~accordance with U.S. GAAP have been omitted pursuant~~Note 2 to ~~such rules and regulations.~~the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Any significant changes to those accounting policies are discussed below. Interim results are not necessarily indicative of results for a full year.

Adopted accounting pronouncements:In May 2014, the ~~full year or any future periods.~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-19”), Revenue from Contracts with Customers (Topic 606), which amends the existing revenue recognition guidance and creates a new topic for Revenue from Contracts with Customers. The accompanying unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the final Prospectus dated June 27, 2017 filed by the Company with the SEC and the audited balance sheet and notes thereto included in the Current Report on Form 8-K dated June 30, 2017 filed by the Company with the SEC.

~~Emerging Growth Company~~

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Actguidance provides that ~~a company can elect~~an entity should recognize revenue to ~~opt out~~depict the transfer of promised goods or services to customers in an amount that reflects the ~~extended transition period~~consideration to which the entity expects to be entitled in exchange for those goods and ~~comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable.~~services. This guidance also substantially revises required interim and annual disclosures. The ~~Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the~~ Company, as an emerging growth company, ~~can adopt~~elected to use the non-public effective date and adopted the standard in the fourth quarter of 2019 for the annual period ended December 31, 2019. The Company also elected the modified retrospective adoption approach and applied the standard to all contracts open as of January 1, 2019. The Company's quarterly financial statements and disclosure for the first six months of 2019 reflect the previous accounting standard of FASB Accounting Standards Codification (“ASC”) 605, Revenue Recognition, and will not be restated for the adoption of Topic 606. The cumulative impact of the new ~~or revised~~revenue standard atfor fiscal year 2019 was recorded in the ~~time private companies adopt~~fourth quarter of 2019 and reflects the ~~new or revised standard.~~

~~Cash~~

~~Cash and cash equivalents include cash on hand and on deposit at banking institutions~~adjustment as ~~well as all highly liquid short-term investments with original maturities of 90 days or less. The Company did not have cash equivalents at September 30, 2017.~~

~~Concentration of Credit Risk~~

~~Financial instruments that potentially subject~~if the Company ~~to concentrations~~adopted the standard as of ~~credit risk consist~~January 1, 2019. The timing and amount of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

~~Financial Instruments~~

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet due to their short-term nature.

~~Fair Value Measurement~~

~~ASC 820 establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs is impacted~~revenue recognized by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements).

Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value.

~~The three levels of the fair value hierarchy under ASC 820 are as follows:~~

~~Level I—Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used.~~

Level II—Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level III—Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation.

In some cases, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment. Assessing the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the perceived risk of that investment.

~~Redeemable Ordinary Shares~~

All 45,000,000 Class A ordinary shares sold as part of the Units in the Public Offering contain a redemption feature as discussed above. In accordance with ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Although the Company did not ~~specify~~change upon the adoption of the new standard, however the Company's accounting for route acquisition costs was impacted. ASC 340-40, Other Assets and Deferred Costs - Contracts With Customers (“ASC 340-40”), issued

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

in conjunction with ASU 2014-09, provides updated guidance around accounting for the incremental costs of obtaining a ~~maximum redemption threshold, its charter provides~~contract with a customer and for the costs incurred to fulfill a contract with a customer. ASC 340-40 states that an entity should amortize contract cost assets “on a systemic basis that is consistent with the transfer to the customer of the good or services to which the asset relates”, which typically corresponds to the period in ~~no event~~which revenue will be recognized. The Company chose straight-line amortization of the contracts as it ~~redeem its Class A ordinary shares~~felt that best depicted when revenue would be recognized and when customers are visiting the gaming establishments. When determining the appropriate amortization period under ASC 340-40, the Company evaluated the impact of any renewal clauses that are likely to be exercised. The Company focused on whether commissions paid for renewals were commensurate with commissions paid on the original contract. The Company determined the renewal commissions were not commensurate and the amortization period should include expected renewals. As such, the period over which route and customer acquisition costs are amortized was extended to include expected renewals which resulted in an ~~amount that would cause its net tangible assets,~~increase to the average life to 12.4 years.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or ~~total shareholders’ equity, to fall below $5,000,001. Accordingly, at September 30, 2017, 42,975,686~~amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company early adopted the new standard in Q2 2020 (effective January 1, 2020) on a prospective basis. The adoption of the ~~Company’s 45,000,000 Class A ordinary shares were classified outside of permanent equity at their redemption value.~~

new standard will not have a material impact on the Company's full year effective tax rate.

Use of ~~Estimates~~

estimates: The preparation of condensed consolidated financial statements ~~in conformity with U.S. GAAP~~ requires ~~the Company’s~~ management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, ~~and~~(ii) disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~Offering Costs~~

Estimates used by the Company include, among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, the valuation of level 3 investments, contingencies, and the expected term of share-based compensation awards and stock price volatility when computing share-based compensation expense. The Company ~~complies~~also estimated stock prices prior to the reverse recapitalization discussed in Note 1 when computing share-based compensation expense. Actual results may differ from those estimates.

Change in estimate: During the first quarter of 2020, the Company conducted a review of its estimate of depreciable lives for its video gaming terminals and equipment. As a result of this review, the Company extended the useful lives of its video gaming terminals and equipment from 7 to 10 years as the equipment is lasting longer than originally estimated. The Company has many video gaming terminals and equipment that were purchased when the Company started operations that are still being used today. The impact of this change in estimate for the three and six months ended June 30, 2020, was as follows (in thousands):



	Three months ended		Six months ended
	June 30, 2020		June 30, 2020
Decrease to depreciation expense	$	1,898	$	4,511
Decrease to net loss	$	1,533	$	3,687
Decrease to loss per share	$	0.02	$	0.05

Segment information: The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM assesses the Company’s performance and allocates resources based on consolidated results, and this is the only discrete financial information that is regularly reviewed by the CODM.

Cash and cash equivalents: Cash and cash equivalents include bank deposit accounts; term bank deposit accounts; uncollected cash in the Company’s video gaming terminals, ATMs, and redemption terminals; and cash in Company vaults.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company maintains its cash in accounts which may at times exceed Federal Deposit Insurance Corporation insured limits. The Company has not experienced any losses in such accounts.

Property and equipment: Property and equipment are stated at cost or fair value at the date of acquisition. Maintenance and repairs are charged to expense as incurred. Major additions, replacements and improvements are capitalized. Spare parts are included in other current assets when acquired and are expensed when used to repair equipment. Depreciation has been computed using the straight-line method over the following estimated useful lives:



	Years
Video gaming terminals and equipment	10
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3-5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15-29

Leasehold improvements are amortized over the shorter of the useful life or the lease.

Development costs directly associated with the ~~requirements~~acquisition, development and construction of ~~ASC 340-10-S99-1~~a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress. Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

Stock-based compensation: The Company grants common stock options and/or restricted stock units to certain employees and ~~SEC Staff Accounting Bulletin Topic 5A “Expenses~~officers. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of ~~Offering”~~the award, and is recognized as general and administrative expense over the employee’s requisite service period.

Recent accounting pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company's fiscal year beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, unless the Company ~~incurred offering costs of $1,299,223~~disqualifies as an emerging growth company, in ~~connection with~~which case earlier adoption may be required. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the ~~Public Offering. These costs, together with the underwriter discount and Deferred Discount, totaling $24,750,000, were charged to additional paid-in capital upon completion~~beginning of the ~~Public Offering.~~

~~Net Loss per Ordinary Share~~

earliest comparative period presented in the financial statements, with certain practical expedients available. The Company ~~complies with accounting~~is assessing impact of the standard on its condensed consolidated financial statements.

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Accel Entertainment, Inc. and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period as calculated using the treasury stock method. At September 30, 2017,Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Note 3. Investment in Convertible Notes

On July 19, 2019, the Company ~~had outstanding warrants~~entered into an agreement to purchase up to ~~22,333,333 Class A ordinary shares.~~ $30.0 million in convertible promissory notes from another terminal operator that bear interest at 3% per annum. The ~~weighted average~~Company has the option of ~~these shares was excluded from~~converting the ~~calculation of diluted net loss per ordinary share since the exercise~~notes to common stock of the ~~warrants is contingent upon~~terminal operator prior to the ~~occurrence of future events.~~maturity date. At ~~September 30, 2017,~~closing, the Company ~~did~~purchased a $5.0 million note which is subordinated to the terminal operator’s credit facility and matures six months following the satisfaction of administrative conditions.

On October 11, 2019, the Company purchased an additional $25.0 million note which is also subordinated to the terminal operator’s credit facility and, beginning on July 1, 2020, the balance of this note, if not ~~have any dilutive securities or other~~previously converted, will be payable in equal $1,000,000 monthly installments until all principal has been repaid in full.

On July 30, 2020, the Company and the terminal operator entered into an amendment to the original note agreement. See Note 17 for further information.

The carrying amount of the investment in the convertible notes approximates the fair value, in all material respects, as of June 30, 2020. For more information on how the Company determined the fair value of the convertible notes, see Note 10.

Note 4. Property and Equipment

Property and equipment consists of the following at June 30, 2020 and December 31, 2019 (in thousands):



	June 30, 2020			December 31, 2019
Video game terminals and equipment	$	176,453		$	166,850
Amusement and other equipment	19,115			16,417
Office equipment and furniture	1,590			1,540
Computer equipment and software	9,405			8,715
Leasehold improvements	1,507			44
Vehicles	10,254			9,304
Buildings and improvements	10,757			12,075
Land	911			911
Construction in progress	1,025			768
Total property and equipment	231,017			216,624
Less accumulated depreciation and amortization	(107,258		)	(97,423		)
Property and equipment, net	$	123,759		$	119,201

Depreciation and amortization of property and equipment amounted to $5.1 million and $9.9 million for the three and six months ended June 30, 2020, respectively. In comparison, depreciation and amortization of property and equipment amounted to $6.1 million and $12.1 million for the three and six months ended June 30, 2019, respectively

Note 5. Route and Customer Acquisition Costs

The Company enters into contracts with third parties and licensed video gaming locations throughout the State of Illinois which allow the Company to install and operate video gaming terminals. When video gaming operations commence, payments are due monthly. Gross payments due, based on the number of live locations, are approximately $6.8 million and $7.4 million as of June 30, 2020 and December 31, 2019, respectively. Payments are due over varying terms of the individual agreements and are discounted at the Company’s incremental borrowing rate associated with its long-term debt at the time the contract is acquired. The net present value of payments due is $6.4 million and $6.5 million as of June 30, 2020 and December 31, 2019, respectively, of which

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

approximately $1.7 million and $1.7 million is included in current liabilities in the accompanying condensed consolidated balance sheets as of June 30, 2020and December 31, 2019, respectively. The route and customer acquisition cost asset is comprised of payments made on the contracts of $18.6 million and $18.7 million as of June 30, 2020 and December 31, 2019, respectively. The Company has upfront payments of commissions paid to the third parties for the acquisition of the customer contracts that ~~could, potentially, be exercised~~are subject to a claw back provision if the customer cancels the contract prior to completion. The payments subject to a claw back are $2.1 million and $2.2 million as of June 30, 2020 and December 31, 2019, respectively.

Route and customer acquisition costs consist of the following at June 30, 2020 and December 31, 2019 (in thousands):



	June 30, 2020			December 31, 2019
Cost	$	28,167		$	28,501
Accumulated amortization	(11,707		)	(11,102		)
Route and customer acquisition costs, net	$	16,460		$	17,399

Amortization expense of route and customer acquisition costs was $0.5 million and $0.9 million for the three and six months ended June 30, 2020, respectively. In comparison, amortization expense of route and customer acquisition costs was $0.6 million and $1.3 million for the three and six months ended June 30, 2019, respectively. As previously mentioned, the Company's current year amortization expense is lower due to the adoption of ASC Topic 606 as the amortization period over which route and customer acquisition costs was extended to include expected renewals.

Note 6. Location Contracts Acquired

Location contract assets acquired in business acquisitions are recorded at acquisition at fair value based on an income approach. Location contracts acquired consist of the following at June 30, 2020 and December 31, 2019 (in thousands):



	June 30, 2020			December 31, 2019
Cost	$	204,353		$	204,353
Accumulated amortization	(47,729		)	(37,570		)
Location contracts acquired, net	$	156,624		$	166,783

Amortization expense of location contracts acquired was $5.1 million and $10.2 million, during the three and six months ended June 30, 2020, respectively. In comparison, amortization expense of location contracts acquired was $4.0 million and $7.6 million, during the three and six months ended June 30, 2019, respectively.

Note 7. Goodwill

On September 16, 2019, the Company acquired Grand River Jackpot which was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill of $34.5 million as of June 30, 2020 and December 31, 2019, of which $28.7 million is deductible for tax purposes.

As previously discussed in Note 1, the Company evaluated its goodwill for potential impairment triggers as of June 30, 2020. As a result of this analysis, no impairment losses were recorded.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Note 8. Debt

The Company’s debt as of June 30, 2020 and December 31, 2019, consisted of the following (in thousands):



	June 30, 2020			December 31, 2019
2019 Senior Secured Credit Facility:
Revolving credit facility	$	50,500		$	58,500
Term Loan	234,000			240,000
Delayed Draw Term Loan (DDTL)	122,688			60,000
Total debt	407,188			358,500
Less: Debt issuance costs	(8,198		)	(8,808		)
Total debt, net of debt issuance costs	398,990			349,692
Less: Current maturities	(18,250		)	(15,000		)
Total debt, net of current maturities	$	380,740		$	334,692

2019 Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes from time to time, the Company entered into a credit agreement (the “Credit Agreement”) as borrower, the Company and its wholly-owned domestic subsidiaries, as a guarantor, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

$100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

$240.0 million initial term loan facility and

$125.0 million additional term loan facility.

As a result of the COVID-19 pandemic and the temporary shutdown of its operations by the IGB, the Company borrowed $65 million on its delayed draw term loan in March 2020 to increase its cash position and help preserve its financial flexibility.

As of June 30, 2020, there remained approximately $49.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by the Company and its wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or ~~converted into ordinary shares and then share in the earnings~~acquired wholly-owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the ~~treasury stock method. As~~Credit Agreement.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a ~~result, diluted net loss~~rate per ~~ordinary share is~~annum equal to either (a) the ~~same as basic net loss per ordinary share~~adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each applicable Lender, 12 months or any period shorter than 1 month or (ii) the ~~period.~~

~~Income Taxes~~

~~Under ASC 740, “Income Taxes,” deferred tax assets and liabilities are recognized for~~Agent, a shorter period necessary to ensure that the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the periodend of the ~~enactment date. Valuation allowances are established~~relevant interest period would coincide with any required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when itLIBOR is ~~more likely than not that some or all~~no longer available. As of June 30, 2020, the weighted-average interest rate was approximately 3.3%.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Interest is payable quarterly in arrears for ABR loans, at the end of the ~~deferred tax assets will~~applicable interest period for LIBOR loans (but not ~~be realized.~~

~~ASC 740 prescribes a recognition threshold~~less frequently than quarterly) and ~~a measurement attribute for~~upon the ~~financial statement recognition and measurement~~prepayment or maturity of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the ~~payment of interest and penalties at September 30, 2017.~~underlying loans. The Company is ~~currently not aware~~required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, the Company is required to pay an upfront fee with respect to any ~~issues under review that could result in significant payments, accruals or material deviation from its position.~~

~~There is currently no taxation imposed on income by~~funded additional term loans.

The applicable LIBOR and ABR margins and the ~~Government~~commitment fee rate are calculated based upon the first lien net leverage ratio of the ~~Cayman Islands. In accordance with federal income tax regulations, income taxes are not levied~~Company and its restricted subsidiaries on a consolidated basis, as defined in the ~~Company, but rather on~~Credit Agreement. Until the ~~individual owners.~~

~~Recent Accounting Pronouncements~~

~~Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on~~delivery of the ~~Company’s~~initial financial ~~statements.~~

~~3. Public Offering~~

~~In its Public Offering,~~statements under the ~~Company sold 45,000,000 units~~Credit Agreement, the revolving loans and term loans bear interest, at ~~a price of $10.00 per unit. Each unit consists of one Class A ordinary share~~the option of the Company, at ~~$0.0001~~either (a) ABR plus a margin of 1.25% or (b) LIBOR plus a margin of 2.25%.

The additional term loan facility is available for borrowings until November 13, 2020. Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, the Company may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires the Company and certain of its affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires the Company to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of the Company for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.

If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

The Company was in compliance with all debt covenants as of June 30, 2020. Given the Company's assumptions about the future impact of COVID-19 on the gaming industry, which could be materially different due to the inherent uncertainties of future restrictions on the industry, the Company expects to remain in compliance with all debt covenants for the next 12 months. However, given the uncertainty of COVID-19 and the resulting potential impact to the gaming industry and our future assumptions, as well as to provide additional financial flexibility, the Company and the other parties thereto amended the Credit Agreement on August 4, 2020 to provide a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

Prior Credit Facility

The Company's Prior Credit Facility was a senior secured first lien credit facility, as amended, that consisted of a $125.0 million term loan, a contract draw loan facility of $170.0 million and a revolving credit facility of $85.0 million. The Company’s prior credit facility was with a syndicated group of banks with CIBC Bank USA, as administrative agent for the lenders. Included in the revolving credit facility and contract draw loan were swing line sub-facilities of $5.0 million each.

The Prior Credit Facility was paid off with the proceeds from the 2019 Senior Secured Credit Facility.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Note 9. Business and Asset Acquisitions

2019 Business Acquisition

Grand River Jackpot

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, LLC and subsidiaries (“Grand River”), a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River. Grand River had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled$113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents 2 installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded by the Company’s credit facilities. In light of the temporary suspension of gaming by the IGB due to the COVID-19 pandemic, the Company reversed its contingent liability for the previously mentioned $2.5 million installment payment due 30 days following the one-year anniversary of the acquisition closing date in the first quarter of 2020 as it is unlikely the performance measures for the period will be reached.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Company's purchase price allocation was finalized in the first quarter of 2020 and the Grand River acquisition resulted in goodwill of $34.5 million as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes.

The condensed consolidated statements of operations include $12.3 million of revenue and $0.8 million of net income attributable to operations of Grand River for the six months ended June 30, 2020.

2019 Asset Acquisition

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing which was recorded in consideration payable. The asset acquisition costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bore interest at 5% and was paid in full in March 2020.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for thethree and six months ended June 30, 2019 as if the acquisition of Grand River had occurred as of January 1, 2018, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquiree prior to the acquisition date and are not necessarily indicative of what Company’s operating results would have been had the acquisition actually taken place as of January 1, 2019. This unaudited pro forma information does not project revenues and net income post acquisition (in thousands).



	Three months ended		Six months ended
	June 30, 2019		June 30, 2019
Revenues	$	119,427	$	231,902
Net income	5,542		10,711

Consideration Payable

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. The contingent consideration accrued is measured at fair value on a recurring basis.

Current and long-term portions of consideration payable consist of the following at June 30, 2020 and December 31, 2019 (in thousands):



	June 30, 2020				December 31, 2019
	Current		Long-Term		Current		Long-Term
TAV	$	494	$	3,546	$	490	$	3,497
Abraham	26		—		55		—
Fair Share Gaming	1,221		474		1,057		899
Family Amusement	395		2,787		293		2,815
Skyhigh	762		4,212		763		3,948
G3	294		99		2,952		154
Grand River	—		5,423		2,304		5,113
IGS	80		—		2,379		—
Total	$	3,272	$	16,541	$	10,293	$	16,426

Note 10. Fair Value Measurements

ASC Topic 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and the corresponding disclosure requirements around fair value measurements. This topic applies to all financial instruments that are being measured and reported on a fair value basis.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the various methods including market, income and cost approaches are used. Based on these approaches, certain assumptions are utilized that the market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. Valuation techniques are utilized that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, it is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

quality and reliability of the information used to determine fair values. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

Convertible promissory notes

In valuing it's convertible promissory notes at June 30, 2020 and December 31, 2019, the Company utilized a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The binomial lattice trees are constructed using a methodology that assigns up and downward movement factors and probabilities based on rates of return, volatility, and time. It allows for the optional conversion features of the convertible promissory notes to be captured by determining whether conversion or continuing to hold is the most economically advantageous to the holder. Upon conversion, future values in the equity component are subject to only the risk-free rate, while the cash-only component associated with continuing to hold the debt instrument is subject to the selected risk-adjusted discount rate. Solving backwards through the trees associated with the equity component and the trees associated with the debt component yields an aggregate discounted value for each. The sum of these values yields the indicated fair value of the convertible promissory notes.

The discount rate is the risk-adjusted discount rate that is implied by the rate that allows the discounted cash flows with all terms and conditions modeled to equal the total cash consideration. As such, after modeling the features of convertible promissory notes as of the issuance date using the lattice model framework outlined above, the Company solved for the discount rate that resulted in a value for the note equal to the total cash consideration. The valuation of the Company's convertible promissory notes is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation.

For interim periods, the Company evaluates the underlying assumptions used in the latest valuation and determines whether there have been any significant changes to those assumptions based on current events to determine if a revaluation is necessary. Based on the economic impacts of COVID-19, the Company engaged a 3rd party valuation firm to assist in determining the fair value of its investment in convertible notes as of June 30, 2020. The valuation concluded that the carrying amount of the investment in the convertible notes approximates the fair value in all material respects, as of June 30, 2020.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Contingent consideration

The following tables summarize the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):



			Fair Value Measurement at Reporting Date Using
	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	12,591	$	—	$	—	$	12,591



			Fair Value Measurement at Reporting Date Using
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	17,327	$	—	$	—	$	17,327

The Company uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a recurring basis. The significant assumptions in the Company's cash flow analysis includes the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of locations that “go live” with the Company during the contingent consideration period. A hypothetical 1% increase in the applicable discount rate would decrease other expenses, net by approximately $0.2 million while a hypothetical 1% decrease in the applicable discount rate would increase other expenses, net by approximately $0.2 million.

Changes in the fair value of contingent consideration liabilities are classified within other expenses, net on the accompanying condensed consolidated statements of operations.

Note 11. Stockholders’ Equity

As discussed in Note 1, on November 20, 2019, the Company, consummated a reverse recapitalization.Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the shares issued and outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted. Pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, the Company authorized and has available for issuance the following shares and classes of capital stock, each with a par value of $0.0001 per share: i) 1,000,000 shares of preferred stock; ii) 250,000,000 shares of Class A-1 Common Stock, ii) 10,000,000 shares of Class A-2 Common Stock.

Class A-1 Common Stock

The holders of the Class A-1 Common Stock are entitled to one vote for each share. The holders of Class A-1 Common Stock are entitled to receive dividends or other distributions when and ~~one-third~~if declared from time to time and share equally on a per share basis in such dividends and distributions subject to such rights of ~~one warrant (a “Unit”~~the holders of preferred stock.

Class A-2 Common Stock

The holders of the Class A-2 Common Stock do not have voting rights and are not entitled to receive or participate in any dividends or distributions when and if declared from time to time.

5,000,000 shares of Class A-2 Common Stock were issued with other consideration in conjunction with the reverse recapitalization, subject to the conditions set forth in a restricted stock agreement, which sets forth the terms upon which the Class

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

A-2 Shares will be exchanged for an equal number of validly issued, fully paid and non-assessable Class A-1 Shares. The exchange of Class A-2 Shares for Class A-1 Shares will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

•

Tranche I, equal to 1,666,666 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the EBITDA for the last twelve months (“LTM EBITDA”) of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $132 million or (ii) the closing sale price of Class A-1 Shares on the New York Stock Exchange (“NYSE”) equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period;

Tranche II, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $14.00 for at least twenty trading days in any consecutive thirty trading day period; and

Tranche III, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $16.00 for at least twenty trading days in any consecutive thirty trading day period.

The Restricted Stock Agreement further provides that holders of Class A-2 Shares are not required to exchange such shares for Class A-1 Shares if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 Shares, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 Shares. However, notwithstanding the limitation described in the previous sentence, if and when a holder of Class A-2 Shares has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 Shares in excess of 4.99%, then the Class A-2 Shares held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 Shares without regard to the limitation.

On January 14, 2020, the market condition for the conversion of Tranche I was satisfied. However, as discussed above, no shareholder is permitted to own more than 4.99% of the issued and outstanding Class A-1 Shares after the conversion unless obtaining required gaming approvals from the applicable gaming authorities. In connection with the conversion, no gaming approvals were obtained. As a result, only 1,596,636 of the 1,666,667 Class A-2 shares were converted into Class A-1 shares.

Warrants

On January 31, 2013, the Company issued 253,575 warrants to certain individual shareholders as compensation for providing a personal guaranty for a revolving loan agreement. The warrants granted their holders the right to purchase the Company’s Class A-1 Common Shares at the price of $17.80 per share anytime from January 31, 2013 through January 30, 2020. The warrants were classified as an equity instrument. As of June 30, 2020 and 2019, there were 0 and 91,350 warrants outstanding. All warrants were exercised prior to the reverse recapitalization.

7,333,326 warrants to purchase shares of Class A-1 Common Stock were issued with other consideration prior to the reverse recapitalization (the “2019 Warrants”). As a part of the reverse recapitalization, 2,444,437 2019 Warrants were canceled and reissued under the same terms and conditions to Accel legacy shareholders. Each ~~whole~~ warrant expires five years from issuance and entitles the holder to purchase one Class ~~A ordinary share~~A-1 Share at aan exercise price of $11.50 per share, ~~(a “Warrant”). Only whole Warrants may be exercised and no fractional Warrants will be issued upon separation of~~subject to adjustments substantially similar to those applicable to the ~~Units and only whole Warrants may be traded. The Warrants will become exercisable on the later of~~other outstanding warrants, at any time 30 days after the ~~completion~~consummation of the ~~Business Combination or 12 months from~~reverse recapitalization.

The 2019 Warrants may be redeemed, at the ~~Close Date, and will expire five years after the completion~~option of the ~~Business Combination or earlier upon redemption or liquidation. Alternatively, if the~~ Company, ~~does not complete a Business Combination within 24 months~~ninety (90) days after the Close Date, or 27 months from the Close Date if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date, the Warrants will expire at the end of such period. If the Company is unablethey are first exercisable and prior to deliver registered Class A ordinary shares to the holder upon exercise of Warrants issued in connection with the 45,000,000 Units during the exercise period, the Warrants will expire worthless, except to the extent that they may be exercised on a cashless basis in the circumstances described in the agreement governing the Warrants.

~~Once the Warrants become exercisable, the Company may redeem the outstanding Warrants in whole, but not in part,~~their expiration, at a price equal to a number of ~~$0.01 per Warrant upon a minimum~~Class A-1 Stock determined by reference to the table below, based on the redemption

Table of ~~30 days’ prior written notice~~Contents

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

date (calculated for purposes of ~~redemption,~~the table as the period to expiration of the 2019 Warrants) and ~~only~~the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the ~~event~~2019 Warrant Agreement) provided that the last ~~sale~~sales price of the Company’s public shares equals or exceeds $18.00 per share for any 20 trading days within the 30-trading day period ending on the third trading day before the Company sends the notice of redemption to the Warrant holders. Additionally, 90 days after the Warrants become exercisable, the Company may redeem the outstanding Warrants in whole, but not in part, for Class ~~A ordinary shares~~A-1 Stock reported has been at a price based on the redemption date and “fair market value” of the Company’s Class A ordinary shares upon a minimum of 30 days’ prior written notice of redemption, and only in the event that the last sale price of the Company’s Class A ordinary shares equals or exceedsleast $10.00 per share, on the trade date prior to the date on which the Company sends the notice of redemption to the Warrant holders. The “fair market value” of the Company’s Class A ordinary shares shall mean the average reported last sale price of the Company’s Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which ~~the~~ notice of the redemption is sent to the Warrant holders. The Company has agreed to use its best efforts to file a registration statement for the Class A ordinary shares issuable upon exercise of the Warrants under the Securities Act as soon as practicable, but in no event later than 15 business days following the completion of a Business Combination.

The Company paid an underwriting discount of 2.00% of the gross proceeds of the Public Offering, or $9,000,000, to the underwriters at the Close Date, with an additional fee (the “Deferred Discount”) of 3.50% of the gross proceeds of the Public Offering, or $15,750,000, payable upon the Company’s completion of a Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes a Business Combination. The underwriters are not entitled to receive any of the interest earned on Trust Account funds that would be used to pay the Deferred Discount. The Deferred Discount has been recorded as a deferred liability on the balance sheet at September 30, 2017 as management has deemed the consummation of a Business Combination to be probable.

~~4. Related Party Transactions~~

~~Founder Shares~~

On February 22, 2017, the Sponsor purchased an aggregate of 11,500,000 Company’s Class F ordinary shares (the “Founder Shares”) for an aggregate purchase price of $25,000, or approximately $0.002 per share. Prior to the Sponsor’s initial investment in the Company of $25,000, the Company had no assets. The purchase price of the Founder Shares was determined by dividing the amount of cash contributed to the Company by the number of Founder Shares issued by the Company.

On June 19, 2017, the Sponsor transferred 40,000 Founder Shares to each of the Company’s five independent directors at their original purchase price. On August 14, 2017, the Sponsor forfeited 250,000 Founder Shares on the expiration of the underwriters’ over-allotment option. At September 30, 2017, the Sponsor and the Company’s five independent directors (the “Initial Shareholders”) held, collectively, 11,250,000 Founder Shares.

~~The Founder Shares are identical to the Class A ordinary shares included in the Units sold in the Public Offering except that:~~

~~only holders of the Founder Shares have the right to vote on the election of directors prior to the Business Combination~~

~~the Founder Shares are~~given, subject to certain ~~transfer restrictions, as described in more detail below;~~

the Initial Shareholders and the Company’s officers and directors entered into a letter agreement with the Company, pursuant to which they have agreed (i) to waive their redemption rights with respect to their Founder Shares and public shares in connection with the completionterms of the ~~Business Combination and (ii)~~2019 Warrant Agreement.

In 2017, 15,000,000 warrants to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete the Business Combination within 24 months from the Close Date. If the Company submits the Business Combination to the public shareholders for a vote, the Initial Shareholders have agreed, pursuant to such letter agreement, to vote their Founder Shares and any publicpurchase shares ~~purchased during or after the Public Offering in favor~~ of ~~the Business Combination; and~~

~~the Founder Shares are automatically convertible into~~ Class ~~A ordinary shares at the time of the Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights.~~

Additionally, the Initial Shareholders agree not to transfer, assign or sell any of their respective Founder Shares until the earlier of (i) one year after the completion of the Business Combination or (ii) subsequent to the Business Combination, if the last sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination and (iii) the date following the completion of the Business Combination on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the Company’s public shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property (the “Lock Up Period”).

~~Private Placement Warrants~~

On the Close Date, the Sponsor purchased from the Company an aggregate of 7,333,333 private placement warrants at a price of $1.50 per warrant, or approximately $11,000,000, in a private placement that occurred in conjunction with the completion of the A-1 Common Stock were issued (“Public ~~Offering (the “Private Placement~~ Warrants”). Each ~~Private Placement Warrant~~warrant expires five years from issuance and entitles the holder to purchase one Class ~~A ordinary share~~A-1 Share at an exercise price of $11.50 per share, subject to ~~adjustment. A portion of~~adjustments substantially similar to those applicable to the purchase price of the Private Placement Warrants was placed in the Trust Account. The Private Placement Warrants will not be redeemable by the Company so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Warrants. The Sponsor, or its permitted transferees, will have the option to exercise the Private Placement Warrants on a cashless basis. The Private Placement Warrants will not be transferable, assignable or salable untiloutstanding warrants, at any time 30 days after the ~~completion~~consummation of the ~~Business Combination.~~

Ifreverse recapitalization.

The Public Warrants may be redeemed for cash at the option of the Company, ~~does~~at any time while they are exercisable and prior to their expiration, at the price of $0.01 per Public Warrant, provided that the last sales price of the Class A-1 Stock reported has been at least $18.00 per share, on each of twenty (20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

The Public Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the Public Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the Public Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

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Notes to Condensed Consolidated Financial Statements — (Continued)



Redemption Date	Fair Market Value of Class A-1 shares
(period to expiration of the New Accel Warrants)		$10	$11	$12	$13	$14	$15	$16	$17	$18
57 months		0.257	0.277	0.294	0.310	0.324	0.337	0.348	0.358	0.365
54 months		0.252	0.272	0.291	0.307	0.322	0.335	0.347	0.357	0.365
51 months		0.246	0.268	0.287	0.304	0.320	0.333	0.346	0.357	0.365
48 months		0.241	0.263	0.283	0.301	0.317	0.332	0.344	0.356	0.365
45 months		0.235	0.258	0.279	0.298	0.315	0.330	0.343	0.356	0.365
42 months		0.228	0.252	0.274	0.294	0.312	0.328	0.342	0.355	0.364
39 months		0.221	0.246	0.269	0.290	0.309	0.325	0.340	0.354	0.364
36 months		0.213	0.239	0.263	0.285	0.305	0.323	0.339	0.353	0.364
33 months		0.205	0.232	0.257	0.280	0.301	0.320	0.337	0.352	0.364
30 months		0.196	0.224	0.250	0.274	0.297	0.316	0.335	0.351	0.364
27 months		0.185	0.214	0.242	0.268	0.291	0.313	0.332	0.350	0.364
24 months		0.173	0.204	0.233	0.260	0.285	0.308	0.329	0.348	0.364
21 months		0.161	0.193	0.223	0.252	0.279	0.304	0.326	0.347	0.364
18 months		0.146	0.179	0.211	0.242	0.271	0.298	0.322	0.345	0.363
15 months		0.130	0.164	0.197	0.230	0.262	0.291	0.317	0.342	0.363
12 months		0.111	0.146	0.181	0.216	0.250	0.282	0.312	0.339	0.363
9 months		0.090	0.125	0.162	0.199	0.237	0.272	0.305	0.336	0.362
6 months		0.065	0.099	0.137	0.178	0.219	0.259	0.296	0.331	0.362
3 months		0.034	0.065	0.104	0.150	0.197	0.243	0.286	0.326	0.361
0 months		—	—	0.042	0.115	0.179	0.233	0.281	0.323	0.361

The exact Fair Market Value and Redemption Date (as defined) may not ~~complete~~be set forth in the ~~Business Combination within 24 months from the Close Date, or 27 months from the Close Date~~table above, in which case, if the Fair Market Value is between two values in the table or the Redemption Date is between two redemption dates in the table, the number of Class A-1 Stock to be issued for each Public Warrant redeemed will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower Fair Market Values and the earlier and later redemption dates, as applicable, based on a 365-day year.

On June 16, 2020, the Company ~~has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months~~announced that it would redeem all of the ~~Close Date, the proceeds from the sale of the Private Placement~~outstanding Public Warrants ~~will be used~~ to ~~fund the redemption~~purchase shares of the Company’s ~~public~~Class A-1 common stock, that were originally issued under the Warrant Agreement, at a redemption exchange rate equal to 0.250 shares ~~(subject~~of Class A-1 Common Stock per Public Warrant that remain outstanding at 5:00 p.m. New York City time on

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Notes to Condensed Consolidated Financial Statements — (Continued)

July 16, 2020. The 2019 Warrants to purchase Class A-1 Common Stock are not subject to this redemption. See Note 17 for further information on the redemption.

Note 12. Stock-based Compensation

The Company grants various types of stock-based awards. Stock compensation awards granted are valued on the date of grant and are expensed over the required service period. The Company previously adopted the 2011 Equity Incentive Plan of Accel Entertainment, Inc., and the 2016 Equity Incentive Plan of Accel Entertainment, Inc.

In conjunction with the closing of the reverse recapitalization, the Accel Entertainment, Inc. Long Term Incentive Plan (the “LTIP”) was adopted. The LTIP provides for grants of a variety of awards to employees and non-employees for providing services to the ~~requirements~~Company, including, but not limited to: incentive stock options qualified as such under U.S. federal income tax laws, stock options that do not qualify as incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash incentive awards, and other stock-based awards. The Company has reserved, and in January 2020 registered, a total of ~~applicable law) and~~6,000,000 shares of Class A-1 common stock for issuance pursuant to the ~~Private Placement Warrants will expire worthless.~~

~~Registration Rights~~

~~Holders~~LTIP, subject to certain adjustments set forth therein. The term of any options to be granted are for a maximum of 10 years from the grant date. The exercise price of stock options shall not be less than 100% of the ~~Founder Shares and Private Placement Warrants are entitled to registration rights pursuant to a registration rights agreement signed~~fair market value per share of common stock on the ~~effective date~~grant date.

Under the LTIP, the Company granted 1.2 million options to eligible officers and employees of the ~~Public Offering. The holders~~Company during the first quarter of ~~these securities are entitled to make up to three demands that~~2020, which shall vest over a period of 5 years. No additional options were granted during the second quarter of 2020. During the six months ended June 30, 2020, the Company ~~register such securities.~~also issued 1.3 million restricted stock units (“RSUs”) to board of directors and certain employees, which shall vest over a period of 5 years for employees and a period of 6 months to 1 year for board of directors. The estimated grant date fair value of the options and RSUs granted during six months ended June 30, 2020 totaled $20.2 million.

Stock-based compensation expense, which pertains to the Company’s stock options and other equity awards, was $1.3 million and $2.4 million for the three and six months ended June 30, 2020, respectively. In ~~addition,~~comparison, stock-based compensation expense was $0.1 million and $0.3 million for the ~~holders have certain “piggy-back” registration rights with respect~~three and six months ended June 30, 2019, respectively. Stock-based compensation expense is included within general and administrative expenses in the condensed consolidated statements of operations.

Note 13. Income Taxes

The Company recognized an income tax benefit of $5.1 million and $5.2 million during the three and six months ended June 30, 2020, respectively. In comparison, the Company recognized income tax expense of $1.8 million and $3.4 million during the three and six months ended June 30, 2019, respectively.

The Company calculates its (benefit from) provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pretax book income or loss. The effective tax rate (income taxes as a percentage of income before income taxes) was 19.2% and 18.3% for the three and six months ended June 30, 2020, respectively. In comparison, the effective tax rate was 29.0% and 29.3% for the three and six months ended June 30, 2019, respectively. The Company’s effective income tax rate can vary from period to period depending on, among other ~~registration statements filed~~factors, the business mix of our earnings; the amount of permanent tax adjustments and discrete items. The tax rate in 2020 is also impacted by the forecast of a net loss for the year, but has unfavorable permanent tax adjustments which are causing the expected tax rate to decrease, year over year for the three and six months ended June 30, 2020.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law and authorizes more than $2 trillion to battle COVID-19 and its economic effects, including immediate cash relief for individual citizens, loan programs for small business, support for hospitals and other medical providers, and various types of economic relief for impacted businesses and industries. The Company ~~subsequent to its completion~~believes it is eligible for certain credits of the ~~Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415~~relief programs under the ~~Securities Act. However,~~CARES Act and is in the ~~registration rights agreement provides that that Company will not permit any registration statement filed under~~process of gathering the ~~Securities Act to become effective until termination of the applicable Lock Up Period.~~required information. The Company will ~~bear~~continue to monitor the ~~expenses incurred in connection with the filing of~~situation and evaluate any ~~such registration statements.~~

~~Indemnity~~

~~The Sponsor has agreed that it will be liable to~~additional future legislation.

Note 14. Commitments and Contingencies

Lawsuits and claims are filed against the Company ~~if and~~from time to the extent any claims by a vendor (other than the Company’s independent auditors) for services rendered or products sold to the Company, or a prospective target business with which the Company discussed entering into a transaction agreement, reduces the amount of fundstime in the ~~Trust Account~~ordinary course of business, including related to, ~~below (i) $10.00 per public share~~employee matters, employment of professional and non-compete clauses and agreements. Other than settled matters explained as follows, these actions are in various stages, and no judgments or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to fund the Company’s working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations anddecisions have been rendered. Management, after reviewing matters with legal counsel, believes that the ~~Sponsor’s only assets are securities~~outcome of such matters will not have a material adverse effect on the Company’s financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the ~~Company~~contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of the Company’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and ~~therefore,~~operate VGTs within a number of establishments, including the ~~Sponsor may not be able to satisfy those obligations. The Company has not asked the Sponsor to reserve for such eventuality as~~Defendant Establishments. Under agreements with Rowell, the Company ~~believes~~agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with the ~~likelihood~~Company. In late August and early September 2012, each of the ~~Sponsor having to indemnify the Trust Account is limited because the Company will endeavor to have all vendors and prospective target businesses as well as other entities execute~~Defendant Establishments signed separate location agreements with the Company, ~~waiving any~~purporting to grant it the exclusive right ~~title, interest or claim~~to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of ~~any kind in or~~the assignment of such rights to ~~monies held~~J&J, the Defendant Establishments were not yet licensed by the Illinois Gaming Board (“IGB”).

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against the Company, Rowell, and other parties in the ~~Trust Account.~~

~~Related Party Note Payable~~

Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that the Company aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, the Company filed a motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied the Company’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. The Company was granted leave to intervene in all of the declaratory judgments. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon the Company’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment inWild, affirming

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between ~~Inception~~May 2017 and September 2017, both the Company and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the ~~Close Date,~~validity of the use agreements. Those petitions have been fully briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. The Company does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to the Company obtaining new locations.

On October 7, 2019, the Company filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with the Company. The Company alleged that Mr. Rowell and a competitor were working together to interfere with the Company’s ~~Sponsor loaned~~customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against the Company ~~$300,000~~alleging that he had not received certain equity interests in ~~unsecured promissory notes.~~the Company to which he was allegedly entitled under his agreement. The ~~funds were used~~Company intends to ~~pay up front expenses associated~~defend itself against the allegations. The Company does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against the Company. The lawsuit alleges that a current employee of the Company violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with the ~~Public Offering. These notes were non-interest bearing~~Company, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. The Company is in the process of defending this lawsuit, and ~~were repaid in full~~has not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

Note 15. Related-Party Transactions

Subsequent to the ~~Sponsor at~~Company's acquisition of certain assets of Fair Share Gaming, LLC (“Fair Share”) and G3 Gaming, LLC (“G3”), the ~~Close Date.~~

~~Administrative Services Agreement~~

Onsellers became employees of the Company. Consideration payable to the Fair Share seller was $1.7 million and $2.0 million as of June 30, ~~2017,~~2020 and December 31, 2019, respectively. Payments to the Fair Share seller under the acquisition agreement were $0.2 million and $0.4 million during the six months ended June 30, 2020 and 2019, respectively. Consideration payable to the G3 sellers was $0.4 million and $3.1 million as of June 30, 2020 and December 31, 2019, respectively. Payments to the G3 seller under the acquisition agreement were $2.5 million during the six months ended June 30, 2020. There were 0 payments to the G3 seller during the six months ended June 30, 2019. Subsequent to the Fair Share acquisition, the seller of Fair Share joined the Company’s Board of Directors.

The Company ~~entered into an agreement~~engaged Much Shelist, P.C. (“Much Shelist”), as its legal counsel for general legal and business matters. An attorney at Much Shelist is a related party to ~~pay $20,000 a month for office space, administrative and support services to an affiliate of the Sponsor, and will terminate the agreement upon the earlier of a Business Combination or the liquidation~~management of the Company. For ~~both~~the six months ended June 30, 2020 and 2019, Accel paid Much Shelist $0.1 million, and $0.2 million, respectively. These payments were included in general and administrative expenses within the condensed consolidated statements of operations.

Note 16. Earnings Per Share

As a result of the previously mentioned reverse recapitalization in Note 1, the Company has retrospectively adjusted the weighted average shares outstanding for the three and six months ended June 30, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted.

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Notes to Condensed Consolidated Financial Statements — (Continued)

The components of basic and diluted earning per share (“EPS”) were as follows for the three and six months ended June 30 (in thousands, except per share amounts):



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Net (loss) income	$	(21,274	)	$	4,328	$	(23,240	)	$	8,323

Basic weighted average outstanding shares of common stock	78,317			58,605		78,161			57,896
Dilutive effect of stock-based awards for common stock	—			1,120		—			1,117
Dilutive effect of stockholder notes receivable for common stock	—			917		—			948
Dilutive effect of warrants for common stock	—			1,263		—			1,781
Diluted weighted average outstanding shares of common stock	78,317			61,904		78,161			61,742

Earnings (loss) per share:
Basic	$	(0.27	)	$	0.07	$	(0.30	)	$	0.14
Diluted	$	(0.27	)	$	0.07	$	(0.30	)	$	0.13

Since the Company was in a net loss position for the three and six months ended June 30, 2020, there is no difference between basic and dilutive weighted average common stock outstanding.

Anti-dilutive stock-based awards, Class A-2 shares, and warrants excluded from the calculations of diluted EPS were 5,401,791, and 5,715,823 for the three and six months ended June 30, 2020, respectively.

Note 17. Subsequent Events

On July 14, 2020, the Company announced that it had commenced an exchange offer (the "Offer") to all holders of its outstanding warrants to receive 0.250 shares of Class A-1 Common Stock in exchange for each warrant tendered pursuant to the Offer. The Offer will be open until 11:59 p.m., Eastern Standard Time, on August 11, 2020, or such later time and date to which the Company may extend. On July 16, 2020, the Company consummated the redemption of its Public Warrants. The Company exchanged each Public Warrant for 0.250 shares of the Company’s Class A-1 Common Stock and issued 3,784,416 shares of its Class A-1 Common Stock in exchange for the Public Warrants at settlement of the redemption.

On July 22, 2020, the Company received written notice from the New York Stock Exchange (the “NYSE”) that the NYSE suspended trading in, and has determined to commence proceedings to delist, the Company’s Public Warrants to purchase shares of the Company’s Class A-1 Common Stock (ticker symbol ACEL.WS) from the NYSE. The delisting is a result of the failure to of the Public Warrants to comply with the continued listing standard set forth in Section 802.01D of the NYSE Listed Company Manual which requires the Company to maintain at least 100 public holders of a listed security.

On July, 22, 2020 (the “Closing Date”), the Company completed its previously announced acquisition of Tom’s Amusement Company, Inc., a southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The total purchase price was approximately $3.6 million, of which the Company paid $2.1 million in cash at closing. The remaining $1.5 million of contingent consideration payables are to be paid in cash on the 18-month and 24-month anniversaries of the Closing Date. The amount of each payment is $750,000 multiplied by a performance ratio. In addition, the Georgia Lottery Corporation approved Accel's operating subsidiary, Bulldog Gaming, LLC, as a Master Licensee.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

On July 30, 2020, the Company and the terminal operator entered into the Omnibus Amendment (the “Amendment”) to the original agreement to purchase convertible promissory notes from another terminal operator. The Amendment, among other things, extends the maturity date of the $5.0 million convertible note and the beginning of the payback period for the $25.0 million convertible note until December 31, 2020.

On August 4, 2020, the Company and the other parties thereto entered into Amendment No. 1 to its Credit Agreement. The amendment, among other things, provides a waiver of financial covenant breach for the periods ended September 30, ~~2017 and the period from Inception to September 30, 2017, the Company incurred expenses of $60,000 under this agreement.~~

~~Private Aircraft Travel~~

~~The Company reimburses affiliates for reasonable travel related expenses incurred while conducting business on behalf~~2020 through March 31, 2021 of the ~~Company, including~~First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the use of private aircraft. The Company did not incur any private aircraft expenses for the three months ended September 30, 2017. During the period from Inception to September 30, 2017, travel related reimbursements for private aircraft use were $49,285. Private aircraft services are provided by independent third parties, coordinated by an affiliate of the Company and billed to the Company at cost.

~~5. Cash Held in Trust Account~~

Gross proceeds of $450,000,000 and $11,000,000 from the Public Offering and the sale of the Private Placement Warrants, respectively, less underwriting discounts of $9,000,000; and funds of $2,000,000 designated to pay the Company’s accrued formation and offering costs, ongoing administrative and acquisition search costs, plus repay notes payable of $300,000 to the Sponsor at the Close Date were placed in the Trust Account at the Close Date. At September 30, 2017, the balance of funds held in the Trust Account was $450,000,000.

Credit Agreement).

~~6. Deferred Underwriting Compensation~~

~~The Company is committed to pay~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the Deferred Discount of 3.50% of the gross proceeds of the Public Offering, or $15,750,000, to the underwriters upon the Company’s completion of a Business Combination. The underwriters are not entitled to receive any of the interest earned on Trust Account funds that would be used to pay the Deferred Discount, and no Deferred Discount is payable to the underwriters if a Business Combination is not completed within 24 months after the Close Date, or 27 months from the Close Date if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date.

~~7. Shareholders’ Equity~~

~~Class A Ordinary Shares~~

The Company is currently authorized to issue 200,000,000 Class A ordinary shares. Depending on the terms of a potential Business Combination, the Company may be required to increase the number of authorized Class A ordinary shares at the same time as its shareholders vote on the Business Combination to the extent the Company seeks shareholder approval in connection with its Business Combination. Holders of Class A ordinary shares are entitled to one vote for each share with the exception that only holders of Class F ordinary shares have the right to vote on the election of directors prior to the completion of a Business Combination, subject to adjustment as provided in the Company’s amended and restated memorandum and articles of association. At September 30, 2017, there were 45,000,000 Class A ordinary shares issued and outstanding, of which 42,975,686 shares were subject to possible redemption and are classified outside of shareholders’ equity at the balance sheet.

~~Class F Ordinary Shares~~

~~The Company is currently authorized to issue 20,000,000 Class F ordinary shares. At September 30, 2017, there were 11,250,000 Class F ordinary shares (Founder Shares) issued and outstanding.~~

~~Preferred Shares~~

The Company is authorized to issue 1,000,000 preferred shares. The Company’s board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The board of directors will be able to, without stockholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects. At September 30, 2017, there were no preferred shares issued or outstanding.

~~Dividend Policy~~

The Company has not paid and does not intend to pay any cash dividends on its ordinary shares prior to the completion of the Business Combination. Additionally, the Company’s board of directors does not contemplate or anticipate declaring any stock dividends in the foreseeable future.

~~8. Subsequent Events~~

Management has performed an evaluation of subsequent events through November 8, 2017, the date the unaudited interim condensed financial statements were issued, noting no subsequent events which require adjustment or disclosure.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

~~References to the “Company,” “our,” “us” or “we” refer to TPG Pace Holdings Corp. The~~ following discussion and analysis of ~~the Company’s~~our financial condition and results of operations ~~should be read~~ in conjunction with ~~the~~our unaudited condensed consolidated financial statements and the related notes ~~thereto contained elsewhere~~and other financial information included in this Quarterly Report on Form 10-Q. ~~Certain information contained in the~~This discussion and analysis ~~set forth below includes~~contains forward-looking statements that involve risks and uncertainties.

~~Special Note Regarding Forward-Looking Statements~~

~~All statements other than statements of historical fact~~ Our actual results could differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q ~~including, without limitation, statements under this~~and our Annual Report on Form 10-K for the year ended December 31, 2019. This discussion and analysis should also be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations,” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used~~Operations”, set forth in ~~this Quarterly~~our Annual Report on Form ~~10-Q, words~~10-K for the year ended December 31, 2019.

Company Overview

We are a leading distributed gaming operator in the United States on an Adjusted EBITDA basis, and a preferred partner for local business owners in the Illinois market. Our business consists of the installation, maintenance and operation of video gaming terminals (“VGTs”), redemption devices that disburse winnings and contain automated teller machine (“ATM”) functionality, and other amusement devices in authorized non-casino locations such as ~~“anticipate,~~restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores, which are referred to collectively as “licensed establishments.” ~~“believe,” “estimate,” “expect,” “intend”~~We also operate stand-alone ATMs in gaming and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplatednon-gaming locations. Accel has been licensed by the ~~forward-looking statements~~Illinois Gaming Board (“IGB”) since 2012 and holds a conditional license from the Pennsylvania Gaming Control Board. In July 2020, the Georgia Lottery Corporation approved one of our consolidated subsidiaries as a Master Licensee. We operate 11,108video gaming terminals across2,335 locations in the State of Illinois as of June 30, 2020.

Our gaming-as-a-service platform provides local businesses with a turnkey, capital efficient gaming solution. We own all of our VGT equipment and manage the entire operating process for our licensed establishment partners. We also offer our licensed establishment partners VGT solutions that appeal to players who patronize those businesses. We devote significant resources to licensed establishment partner retention, and seek to provide prompt, personalized player service and support, which we believe is unparalleled among other distributed gaming operators. Dedicated relationship managers assist licensed establishment partners with regulatory applications and compliance onboarding, train licensed establishment partners on how to engage with players and potential players, monitor individual gaming areas for compliance, cleanliness and comfort and recommend potential changes to improve both player gaming experience and overall revenue for each licensed establishment. We also provide weekly gaming revenue reports to our licensed establishment partners and analyze and compare gaming results within individual licensed establishment partners. This information is used to determine an optimal selection of games, layouts and other ideas to generate foot traffic for our licensed establishment partners with the goal of generating increased gaming revenue. Further, our in-house collections and security personnel provide highly secure cash transportation and vault management services. Our best-in-class technicians ensure minimal downtime through proactive service and routine maintenance.

In addition to our VGT business, we also install, operate and service redemption devices that have ATM functionality, stand-alone ATMs and amusement devices, including jukeboxes, dartboards, pool tables, pinball machines and other related entertainment equipment. These operations provide a complementary source of lead generation for our VGT business by offering a “one-stop” source of additional equipment for its licensed establishment partners.

Impact of COVID-19

The COVID-19 outbreak is having a significant impact on global markets as a result of ~~certain~~supply chain and production disruptions, workforce restrictions, travel restrictions, reduced consumer spending and sentiment, amongst other factors, ~~detailed~~which are, individually or in ~~our filings with~~the aggregate, negatively affecting the financial performance, liquidity and cash flow projections of many companies in the United States ~~Securities~~ and ~~Exchange Commission (“SEC”). All subsequent written or oral forward-looking statements attributable~~abroad.

In response to the COVID19 outbreak, the IGB made the decision to shut down all VGTs across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. As a result, we borrowed $65 million

on our delayed draw term loan in March 2020 to increase our cash position and help preserve our financial flexibility. The temporary shutdown of Illinois video gaming impacted 106 of the 182 gaming days (or 58% of gaming days) during the first half of 2020. In light of these events and their effect on Accel’s employees and licensed establishment partners, we took action to reduce our monthly cash expenses down to $2-$3 million during the shutdown to position us ~~or persons acting on~~to help mitigate the ~~Company’s behalf are qualified~~effects of the temporary cessation of operations by, among other things, furloughing approximately 90% of our employees and deferring certain payments to major vendors. Additionally, members of our senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in ~~their entirety by this paragraph.~~

~~Overview~~

~~We are~~early June, we started reinstating employees from furlough in order to properly resume operations.

As a ~~blank check company incorporated as a Cayman Islands exempted company on February 14, 2017 (“Inception”)~~result of these developments, our revenues, results of operations and ~~formed for~~cash flows have been materially affected. The situation is rapidly changing and additional impacts to the ~~purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar~~ business ~~combination with one or more target businesses (“Business Combination”). We have reviewed,~~ and ~~continue to review, a number of opportunities to enter into a Business Combination with an operating business, but~~financial results may arise that we are not ~~able~~aware of currently.

In close consultation with the Illinois Department of Public Health and the governor, the IGB issued resumption protocols to guide casino and terminal operators in their resumption planning. Based on those protocols, we provided a Pandemic Resumption Plan to the IGB to guide our operations upon the resumption of gaming on July 1, at 9:00 a.m. Our plan included working with our licensed establishment partners to, among other things:

•Follow social distancing requirements within the gaming area by moving the gaming equipment or installing spacers that meet IGB guidelines;

•determine how personal protective equipment usage requirements will be observed and enforced;

•develop procedures and schedules for cleaning, disinfecting and sanitizing the establishment as well the gaming area, including the VGTs; and

•proper signage to remind patrons of social distancing requirements, proper hand washing, use of sanitizers, use of personal protective equipment, and to stay at home if feeling sick.

Accel supports these measures to protect the safety of our fellow Illinois citizens, as the health and safety of players and licensed partner establishments is of paramount importance to us. We have been in constant contact with our licensed partner establishments to keep them aware of current developments, and have been working with them through this ~~time whether we will complete~~plan. As a ~~Business Combination with any~~result, by day 3 of the ~~target businesses~~relaunch, more than 90% of Accel’s locations were live and less than 3% of Accel's VGTs were down due to resumption protocols.

We have incurred non-recurring, one-time expenses of $1.3 million and $1.9 million for the three and six months ended June 30, 2020, respectively, for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown. These costs are included within other expenses, net. We also spent $1.4 million in capital costs related to the purchase of IGB-mandated spacers for our VGTs to promote social distancing requirements within the gaming area and incurred operating expenses of $0.3 million related to cleaning, disinfecting and sanitizing supplies.

While the IGB has announced the resumption of all video gaming activities effective July 1st, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events.

Components of Performance

Revenues

Net video gaming. Net video gaming revenue represents net cash received from gaming activities, which is the difference between gaming wins and losses. Net video gaming revenue includes the amounts earned by the licensed establishments and is recognized at the time of gaming play.

Amusement. Amusement revenue represents amounts collected from amusement devices operated at various licensed establishments and is recognized at the point the amusement device is used.

ATM fees and other revenue. ATM fees and other revenue represents fees charged for the withdrawal of funds from Accel’s redemption devices and stand-alone ATMs and is recognized at the time of the ATM transaction.

Operating Expenses

Video gaming expenses. Gaming expenses consist of (i) a 33% tax on net video gaming revenue (such tax increased from 30% beginning on July 1, 2019 and will increase to 34% beginning on July 1, 2020) that is payable to the IGB, (ii) an administrative fee (0.8513% currently) payable to Scientific Games International, the third-party contracted by IGB to maintain the central system to which all VGTs across Illinois are connected and (iii) establishment revenue share, which is defined as 50% of gross gaming revenue after subtracting the tax and administrative fee.

General and administrative. General and administrative expenses consist of operating expense and general and administrative (“G&A”) expense. Operating expense includes payroll and related expense for service technicians, route technicians, route security, and preventative maintenance personnel. Operating expense also includes vehicle fuel and maintenance, ATM and amusement commissions and fees, and non-capitalizable parts expenses. Operating expenses are generally proportionate to the number of licensed establishments and VGTs. G&A expense includes payroll and related expense for account managers, business development managers, marketing, and other corporate personnel. In addition, G&A includes marketing, information technology, insurance, rent and professional fees.

Depreciation and amortization of property and equipment. Depreciation is computed using the straight-line method over the estimated useful lives of the individual assets. Leasehold improvements are amortized over the shorter of the useful life or the lease.

Amortization of route and customer acquisition costs and location contracts acquired. Route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and licensed video gaming establishments throughout the State of Illinois which allow Accel to install and operate video gaming terminals. The route and customer acquisition costs and route and customer acquisition costs payable are recorded at the net present value of the future payments using a discount rate equal to Accel’s incremental borrowing rate associated with its long-term debt. Route and customer acquisition costs are amortized on a straight-line basis beginning on the date the location goes live and amortized over the estimated life of the contract, including expected renewals.

Location contracts acquired in a business combination are recorded at fair value and then amortized as an intangible asset on a straight-line basis over the expected useful life of 10 years.

Interest expense, net

Interest expense, net consists of interest on Accel’s current and prior credit facilities, amortization of financing fees, and accretion of interest on route and customer acquisition costs payable. Interest on the current credit facility is payable monthly on unpaid balances at the variable per annum LIBOR rate plus an applicable margin, as defined under the terms of the credit facility, ranging from 1.75% to 2.75% depending on the first lien net leverage ratio. Interest on our prior credit facility was payable monthly on unpaid balances at the variable per annum LIBOR rate plus an applicable margin, as defined under the terms of the prior credit facility, ranging from 1.70% to 2.50% depending on the ratio of total net debt to EBITDA. Interest expense, net also consists of interest income on convertible promissory notes from another terminal operator that bear interest at 3% per annum.

Income tax (benefit) expense

Income tax (benefit) expense consists mainly of taxes (receivable) payable to national, state and local authorities. Deferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities.

Results of Operations

The following table summarizes Accel’s results of operations on a consolidated basis for the three months ended June 30, 2020and2019:



(in thousands, except %'s)	Three Months Ended June 30,					Increase / (Decrease)
	2020			2019		Change ($)			Change (%)
Revenues:
Net video gaming	$	—		$	100,994	$	(100,994	)	(100.0	)%
Amusement	260			1,348		(1,088		)	(80.7	)%
ATM fees and other revenue	119			1,925		(1,806		)	(93.8	)%
Total revenues	379			104,267		(103,888		)	(99.6	)%
Operating expenses:
Video gaming expenses	—			66,082		(66,082		)	(100.0	)%
General and administrative	10,451			17,476		(7,025		)	(40.2	)%
Depreciation and amortization of property and equipment	5,071			6,100		(1,029		)	(16.9	)%
Amortization of route and customer acquisition costs and location contracts acquired	5,565			4,624		941			20.4	%
Other expenses, net	3,132			730		2,402			329.0	%
Total operating expenses	24,219			95,012		(70,793		)	(74.5	)%
Operating (loss) income	(23,840		)	9,255		(33,095		)	(357.6	)%
Interest expense, net	2,489			3,156		(667		)	(21.1	)%
(Loss) income before income tax (benefit) expense	(26,329		)	6,099		(32,428		)	(531.7	)%
Income tax (benefit) expense	(5,055		)	1,771		(6,826		)	(385.4	)%
Net (loss) income	$	(21,274	)	$	4,328	$	(25,602	)	(591.5	)%

Revenues

Total revenues for the three months ended June 30, 2020 were $0.4 million, a decrease of $103.9 million, or 99.6%, compared to the prior year period. This decline was driven by a decrease in net video gaming revenue of $101.0 million, or 100.0%, a decrease in amusement revenue of $1.1 million, or 80.7% and a decrease in ATM fees and other revenue of $1.8 million, or 93.8%. The decrease in revenue is attributable to the shutdown of Illinois video gaming due to the COVID-19 outbreak which resulted in no gaming days for the three months ended June 30, 2020.

Video gaming expenses

Total video gaming expenses for the three months ended June 30, 2020 decreased $66.1 million, or 100.0%, compared to the prior year period attributable to the shutdown of Illinois video gaming due to the COVID-19 outbreak.

General and administrative

Total general and administrative expenses for the three months ended June 30, 2020 were $10.5 million, a decrease of $7.0 million, or 40.2%, compared to the prior year period. The decrease was attributable to a reduction to our monthly cash expenses during the IGB mandated shutdown which included furloughing approximately 90% of our employees.

Depreciation and amortization of property and equipment

Depreciation and amortization of property and equipment for the three months ended June 30, 2020 was $5.1 million, a decrease of $1.0 million, or 16.9%, compared to the prior year period. The decrease in depreciation and amortization is the result of a change in estimate in which we ~~have reviewed~~extended the useful lives of our video gaming terminals and equipment from 7 to 10 years. The impact of this change in estimate for the second quarter of 2020 was a net decrease in depreciation expense of $1.9 million. Partially offsetting this decrease was an increased number of licensed establishments and VGTs.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the three months ended June 30, 2020 was $5.6 million, an increase of $0.9 million, or ~~with any other target business.~~

~~We intend~~20.4%, compared to ~~consummate a Business Combination using cash~~the prior year period. The increase is primarily attributable to our business and asset acquisitions and their related performance, partially offset by the favorable impact from the ~~proceeds~~adoption of ~~our initial public offering (the “Public Offering”) that closed on~~Topic 606 which increased the period over which route and customer acquisition costs are amortized to include expected renewals.

Other expenses, net

Other expenses, net for the three months ended June 30, ~~2017 (the “Close Date”)~~2020 were $3.1 million, an increase of $2.4 million, or 329.0%, compared to the prior year period. Included in Other expenses, net for the three months ended June 30, 2020 were non-recurring, one-time expenses of $1.3 million for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown.

Interest expense, net

Interest expense, net for the three months ended June 30, 2020 was $2.5 million, a decrease of $0.7 million, or 21.1%, compared to the prior year period primarily due to lower rates and interest income on the private placement of warrants to purchase our Class A ordinary shares (“Private Placement Warrants”) that occurred at the Close Date, and from additional issuances of, if any, our capital stock and our debt, or a combination of cash, stock and debt.

~~At September 30, 2017, we held cash of $1,636,543, current liabilities of $1,295,110 and deferred underwriting compensation of $15,750,000. Further, we expect to continue to incur significant costs~~convertible notes, partially offset by an increase in ~~the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.~~

~~Results of Operations~~

borrowings. For the three months ended ~~September~~June 30, ~~2017~~2020, the weighted average interest rate was approximately 2.7% compared to a rate of approximately 4.6% for the prior year period.

Income tax (benefit) expense

Income tax benefit for the three months ended June 30, 2020 was $5.1 million, a decrease of $6.8 million, or 385.4%, compared to the prior year period which had income tax expense of $1.8 million. The effective tax rate for the three months ended June 30, 2020 was 19.2% compared to 29.0% in the prior year period. The lower tax rate in the second quarter of 2020 was due to permanent differences related to stock options, transaction costs and executive compensation.

The following table summarizes Accel’s results of operations on a consolidated basis for thesix months ended June 30, 2020and2019:



(in thousands, except %'s)	Six Months Ended June 30,					Increase / (Decrease)
	2020			2019		Change ($)			Change (%)
Revenues:
Net video gaming	$	101,575		$	195,169	$	(93,594	)	(48.0	)%
Amusement	1,952			2,786		(834		)	(29.9	)%
ATM fees and other revenue	2,080			3,737		(1,657		)	(44.3	)%
Total revenues	105,607			201,692		(96,085		)	(47.6	)%
Operating expenses:
Video gaming expenses	67,980			127,703		(59,723		)	(46.8	)%
General and administrative	33,919			33,600		319			0.9	%
Depreciation and amortization of property and equipment	9,938			12,141		(2,203		)	(18.1	)%
Amortization of route and customer acquisition costs and location contracts acquired	11,130			8,927		2,203			24.7	%
Other expenses, net	4,336			1,346		2,990			222.1	%
Total operating expenses	127,303			183,717		(56,414		)	(30.7	)%
Operating (loss) income	(21,696		)	17,975		(39,671		)	(220.7	)%
Interest expense, net	6,738			6,203		535			8.6	%
(Loss) income before income tax (benefit) expense	(28,434		)	11,772		(40,206		)	(341.5	)%
Income tax (benefit) expense	(5,194		)	3,449		(8,643		)	(250.6	)%
Net (loss) income	$	(23,240	)	$	8,323	$	(31,563	)	(379.2	)%

Revenues

Total revenues for the ~~period from Inception~~six months ended June 30, 2020 were $105.6 million, a decrease of $96.1 million, or 47.6%, compared to ~~September 30, 2017, we incurred~~the prior year period. This decline was driven by a decrease in net ~~losses~~video gaming revenue of ~~$94,400~~$93.6 million, or 48.0%, a decrease in amusement revenue of $0.8 million, or 29.9% and ~~$218,915, respectively. Our business activities~~a decrease in ATM fees and other revenue of $1.7 million, or 44.3%. The decrease in net video gaming revenue is largely attributable to the temporary shutdown of Illinois video gaming since ~~our Public Offering have consisted solely of identifying and evaluating prospective acquisition targets for a Business Combination.~~

~~Liquidity and Capital Resources~~

On February 22, 2017, TPG Pace II Sponsor LLC (the “Sponsor”) purchased an aggregate of 11,500,000 Class F ordinary shares (the “Founder Shares”) for an aggregate purchase price of $25,000, or approximately $0.002 per share. On June 19, 2017, our Sponsor transferred 40,000 Class F ordinary sharesMarch 16, 2020, due to ~~each of our five independent directors at their original purchase price.~~ ~~On August 14, 2017, our Sponsor forfeited 250,000 Founder Shares on~~ the ~~expiration~~COVID-19 outbreak which impacted 106 of the ~~underwriters’ over-allotment option.~~ At182 gaming days (or 58% of gaming days) in the first half of 2020, partially offset by the acquisition of Grand River Jackpot on September ~~30, 2017, our Sponsor~~16, 2019, which collectively contributed $12.3 million in net video gaming revenue. Excluding Grand River Jackpot, net video gaming revenue decreased in the first half of 2020 by $105.9 million, or 54.3%, compared to the prior period, largely attributable to the previously mentioned temporary shutdown of Illinois video gaming due to the COVID-19 outbreak, partially offset by an increase in the number of licensed establishments and ~~five independent directors (collectively,~~VGTs.

Video gaming expenses

Total video gaming expenses for the ~~“Initial Shareholders”) held, collectively, 11,250,000 Founder Shares.~~

Onsix months ended June 30, ~~2017, we consummated the Public Offering~~2020 were $68.0 million, a decrease of ~~45,000,000 Units (which included the purchase of 5,000,000 Units subject~~$59.7 million, or 46.8%, compared to the ~~underwriters’ 6,000,000 Unit over-allotment option) at~~prior year period. The components of video gaming expenses as a ~~price~~percentage of ~~$10.00 per Unit generating gross proceeds~~revenue of ~~$450,000,000 before underwriting discounts and expenses. Each “Unit” consists~~64.4% for the six months ended June 30, 2020 was slightly higher than the 63.3% for the six months ended June 30, 2019 due to the increase in the gaming tax from 30% to 33% on July 1, 2019. The decrease of ~~one Class A ordinary share and one-third of one warrant (a “Unit”). Each whole warrant entitles~~$59.7 million was the ~~holder to purchase one Class A ordinary share at a price of $11.50 per share (a “Warrant”). Only whole Warrants may be exercised and no fractional Warrants will be issued upon separation~~result of the ~~Units and only whole Warrants may be traded. Prior~~previously mentioned temporary shutdown of Illinois video gaming due to the Close Date, we completed the private sale of an aggregate of 7,333,000 Private Placement Warrants, each exercisable to purchase one Class A ordinary share for $11.50 per share, to our Sponsor, at a price of $1.50 per Private Placement Warrant.

~~We received gross proceeds from the Public Offering~~COVID-19 outbreak.

General and the sale of the Private Placement Warrants of $450,000,000 and $11,000,000, respectively, for an aggregate of $461,000,000. $450,000,000 of the gross proceeds were deposited in a trust account with Continental Stock Transfer and Trust Company (the “Trust Account”). At the Close Date, the remaining $11,000,000 was held outside of the Trust Account, of which $9,000,000 was used to pay underwriting discounts and $300,000 was used to repay notes payable to our Sponsor, with the balance reserved to pay accrued offering and formation costs, business, legal and accounting due diligence on prospective acquisitions and continuingadministrative

Total general and administrative ~~expenses. In~~expenses for the ~~future,~~six months ended June 30, 2020 were $33.9 million, an increase of $0.3 million, or 0.9%, compared to the prior year period. We experienced higher costs related to professional fees and stock-based compensation, partially offset by a ~~portion~~reduction in our monthly cash expenses during the IGB mandated shutdown which included furloughing approximately 90% of our employees.

Depreciation and amortization of property and equipment

Depreciation and amortization of property and equipment for the six months ended June 30, 2020 was $9.9 million, a decrease of $2.2 million, or 18.1%, compared to the prior year period. The decrease in depreciation and amortization is the result of a change in estimate in which we extended the useful lives of our video gaming terminals and equipment from 7 to 10 years. The impact of this change in estimate for the first half of 2020 was a net decrease in depreciation expense of $4.5 million. Partially offsetting this decrease was an increased number of licensed establishments and VGTs. Depreciation and amortization as a percentage of revenue was 9.4% for the six months ended June 30, 2020 compared to 6.0% for the prior year period.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the six months ended June 30, 2020 was $11.1 million, an increase of $2.2 million, or 24.7%, compared to the prior year period. The increase is primarily attributable to our business and asset acquisitions and their related performance, partially offset by the favorable impact from the adoption of Topic 606 which increased the period over which route and customer acquisition costs are amortized to include expected renewals. Amortization of route and customer acquisition costs and location contracts acquired as a percentage of revenue was 10.5% for the six months ended June 30, 2020 compared to 4.4% for the prior year period.

Other expenses, net

Other expenses, net for the six months ended June 30, 2020 were $4.3 million, an increase of $3.0 million, or 222.1%, compared to the prior year period. Included in Other expenses, net for the six months ended June 30, 2020 were non-recurring, one-time expenses of $1.9 million for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown as well as additional non-recurring costs related to public company registration statements, partially offset by a favorable revaluation of consideration payable in connection with gaming acquisitions.

Interest expense, net

Interest expense, net for the six months ended June 30, 2020 was $6.7 million, an increase of $0.5 million, or 8.6%, compared to the prior year period primarily due to an increase in borrowings, partially offset by lower rates and interest income on the ~~funds held~~convertible notes. For the six months ended June 30, 2020, the weighted average interest rate was approximately 3.3% compared to a rate of approximately 4.6% for the prior year period.

Income tax (benefit) expense

Income tax benefit for the six months ended June 30, 2020 was $5.2 million, a decrease of $8.6 million, or 250.6%, compared to the prior year period which had income tax expense of $3.4 million. The effective tax rate for the six months ended June 30, 2020 was 18.3% compared to 29.3% in the ~~Trust Account~~prior year period. The lower tax rate in the first half of 2020 was due to permanent differences related to stock options, transaction costs and executive compensation.

Key Business Metrics

Accel uses a variety of statistical data and comparative information commonly used in the gaming industry to monitor the performance of the business, none of which are prepared in accordance with GAAP, and therefore should not be viewed as indicators of operational performance. Accel’s management uses this information for financial planning, strategic planning and employee compensation decisions. The key indicators include:

•Number of licensed establishments;

•Number of VGTs;

•Average remaining contract term (years); and

•Hold-per-day.

Number of licensed establishments

The number of licensed establishments is calculated based on data provided by Scientific Games, a contractor of the IGB. Terminal operator portal data is updated at the end of each gaming day and includes licensed establishments that may be ~~released~~temporarily closed but still connected to usthe central system. Accel utilizes this metric to ~~pay tax obligations.~~

~~At September 30, 2017, we had cash held outside~~continually monitor growth from organic openings, purchased licensed establishments, and competitor conversions. Competitor conversions occur when a licensed establishment chooses to change terminal operators.

Number of ~~the Trust Account~~video game terminals (VGTs)

The number of ~~$1,636,543,~~VGTs in operation is based on Scientific Games terminal operator portal data which is ~~available to fund our working capital requirements.~~

~~At September 30, 2017, we had current liabilities~~updated at the end of ~~$1,295,110, largely due to costs associated with our formation~~each gaming day and ~~Public Offering. We were able to begin identifying and evaluating potential Business Combinations following the Close Date and we therefore expect to incur additional expenses, which~~includes VGTs that may be ~~significant. We expect some portion~~temporarily shut off but still connected to the central system. Accel utilizes this metric to continually monitor growth from existing licensed establishments, organic openings, purchased licensed establishments, and competitor conversions.

Average remaining contract term

Average remaining contract term is calculated by determining the average expiration date of ~~these expenses to be paid upon consummation~~all outstanding contracts with Accel’s current licensed establishment partners, and then subtracting the applicable measurement date. The IGB limited the length of ~~a Business Combination. We may, however, need to raise additional funds in order to meet the expenditures required for operating our business prior~~contracts entered into after February 2, 2018 to a ~~Business Combination. We may request loans from our Sponsor, affiliates~~maximum of ~~our Sponsor or certain of our executive officers~~eight years with no automatic renewals.

Hold-per-day

Hold-per-day is calculated by dividing the difference between cash deposited in all VGTs and ~~directors~~tickets issued to fund our working capital requirements prior to completing a Business Combination. We may use working capital to repay such loans. Additional funds could also be raised through a private offering of debt or equity. There can be no assurance that we will be able to raise such funds.

~~We may also need to obtain additional financing either to complete a Business Combination or because we become obligated to redeem a significant~~players by the average number of ~~our Class A ordinary shares upon completion of a Business Combination,~~VGTs in ~~which case we may issue additional securities or incur debt in connection with such Business Combination.~~

~~We have 24 months from~~operation during the ~~Close Date, or 27 months from~~period being measured, and then dividing the Close Date if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date, to complete our Business Combination. If we do not complete a Business Combination within this period, we shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregatecalculated amount then on deposit in the Trust Account, including interest earned on the funds in the Trust Account and not previously released to us to fund its working capital requirements, subject to an annual limit of $750,000, and/or to pay our taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of operating days in such period.

The following table sets forth information with respect to Accel’s licensed establishments, number of VGTs, and average remaining contract term as of June 30, respectively:



	As of June 30,		Increase / (Decrease)
	2020	2019	Change $		Change %
Licensed establishments	2,335	1,762	573		32.5	%
Video gaming terminals	11,108	8,082	3,026		37.4	%
Average remaining contract term (years) ⁽¹⁾	6.8	7.4	(0.6	)	(8.1	)%

(1) Excluding the Grand River Jackpot acquisition, the Average remaining contract life was 7.0 years as of June 30, 2020.

The following table sets forth information with respect to Accel’s hold-per-day for the three and six months ended June 30, respectively:



	June 30				Increase / (Decrease)
	2020		2019		Change $			Change %
Hold-per-day - for the three months ended⁽¹⁾	$	—	$	139	$	(139	)	(100.0	)%
Hold-per-day - for the six months ended ⁽²⁾	$	124	$	137	$	(13	)	(9.5	)%

(1) There were no gaming days for the three months ended June 30, 2020, due to the IGB mandated COVID-19 shutdown.

(2) Excluding the Grand River Jackpot acquisition, Hold-per-day was $132 for the six months ended June 30, 2020. Hold per day for the six months ended June 30, 2020 is computed based on 76-eligible days of gaming (excludes 106 non-gaming days due to the IGB mandated COVID-19 shutdown).

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted net income are non-GAAP financial measures and are key metrics used to monitor ongoing core operations. Management of Accel believes Adjusted EBITDA and Adjusted net income enhance the understanding of Accel’s underlying drivers of profitability and trends in Accel’s business and facilitate company-to-company and period-to-period comparisons, because these non-GAAP financial measures exclude the effects of certain non-cash items or represent certain nonrecurring items that are unrelated to core performance. Management of Accel also believe that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate Accel’s ability to fund capital expenditures, service debt obligations and meet working capital requirements.

Adjusted net (loss) income and Adjusted EBITDA



(in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net (loss) income	$	(21,274	)	$	4,328		$	(23,240	)	$	8,323
Adjustments:
Amortization of route and customer acquisition costs and location contracts acquired⁽¹⁾	5,565			4,624			11,130			8,927
Stock-based compensation⁽²⁾	1,327			128			2,387			256
Other expenses, net⁽³⁾	3,132			754			4,336			1,370
Tax effect of adjustments⁽⁴⁾	(2,343		)	(2,311		)	(2,015		)	(3,805		)
Adjusted net (loss) income	$	(13,593	)	$	7,523		$	(7,402	)	$	15,071
Depreciation and amortization of property and equipment	5,071			6,100			9,938			12,141
Interest expense, net	2,489			3,156			6,738			6,203
Income tax (benefit) expense	(2,712		)	4,082			(3,179		)	7,254
Adjusted EBITDA	$	(8,745	)	$	20,861		$	6,095		$	40,669

(1)

Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments,

which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired.


(2)	Stock-based compensation consists of options, restricted stock units and warrants.


(3)	Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania and lobbying efforts in Missouri, (iii) non-recurring expenses and (iv) non-recurring costs associated with COVID-19.


(4)	Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations.

Adjusted EBITDA for the three months ended June 30, 2020,was a loss of $8.7 million, a decrease of $29.6 million, or 141.9%, compared to the prior year period. Adjusted EBITDA for thesix months ended June 30, 2020, was $6.1 million, a decrease of $34.6 million, or 85.0%, compared to prior year period. Both the three and six month periods ended June 30, 2020, were lower primarily due to the impact of the previously mentioned temporary shutdown of video gaming in the state of Illinois due to the COVID-19 outbreak.

Liquidity and Capital Resources

Accel believes that its cash and cash equivalents, cash flows from operations and borrowing availability under its senior secured credit facility will be sufficient to meet its capital requirements for the next twelve months. Accel’s primary short-term cash needs are paying operating expenses, servicing outstanding ~~public shares, which redemption will completely extinguish public shareholders’ rights~~indebtedness and funding near term acquisitions. As of June 30, 2020, Accel had $148.8 million in cash and cash equivalents.

In response to the decision by the IGB to shut down all VGTs across the State of Illinois due to the COVID-19 outbreak, we took action to reduce our projected monthly cash expenses down to $2-$3 million during the shutdown to position us to help mitigate the effects of the temporary cessation of operations. The actions taken include furloughing approximately 90% our employees and deferring certain payments to major vendors. Additionally, members of our management team decided to voluntarily forgo their salaries until the resumption of video gaming operations. We also borrowed $65 million on our delayed draw term loan in March 2020 to increase our cash position and help preserve our financial flexibility.

2019 Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes, we entered into a credit agreement (the “Credit Agreement”) as ~~shareholders (including~~borrower, Accel and our wholly-owned domestic subsidiaries, as a guarantor, the ~~right~~banks, financial institutions and other lending institutions from time to ~~receive further liquidation distributions, if any)~~time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

$100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

$240.0 million initial term loan facility and

$125.0 million additional term loan facility.

As of June 30, 2020, there remained approximately $49.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by Accel and our wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or acquired wholly-owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the Credit Agreement.

Borrowings under the Credit Agreement bear interest, at Accel’s option, at a rate per annum equal to either (a) the adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each

applicable ~~law,~~Lender, 12 months or any period shorter than 1 month or (ii) the Agent, a shorter period necessary to ensure that the end of the relevant interest period would coincide with any required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available. As of June 30, 2020, the weighted-average interest rate was approximately 3.33%.

Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for LIBOR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans. Accel is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, we are required to pay an upfront fee with respect to any funded additional term loans.

The applicable LIBOR and ABR margins and the commitment fee rate are calculated based upon the first lien net leverage ratio of Accel and its restricted subsidiaries on a consolidated basis, as ~~promptly as reasonably possible following such redemption,~~defined in the Credit Agreement. Until the delivery of the initial financial statements under the Credit Agreement, the revolving loans and term loans bear interest, at the option of Accel, at either (a) ABR plus a margin of 1.25% or (b) LIBOR plus a margin of 2.25%.

The additional term loan facility is available for borrowings until the first anniversary of November 13, 2019 (“the Closing Date”). Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, we may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires Accel and certain of its affiliates obligated under the ~~approval~~Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires Accel to maintain (a) a ratio of ~~the remaining shareholders~~consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and ~~the board~~(b) a ratio of ~~directors, dissolve and liquidate, subject~~consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, ~~to our obligations under Cayman Islands law to provide~~tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of Accel for ~~claims of creditors and the requirements of other applicable law. The Initial Shareholders and our officers and directors~~which financial statements have ~~entered into a letter agreement with us,~~been delivered pursuant to ~~which they have waived their rights~~the Credit Agreement, subject to ~~liquidating distributions from~~customary “equity cure” rights.

If an event of default (as such term is defined in the ~~Trust Account with respect to their Founder Shares if we fail to complete~~Credit Agreement) occurs, the Business Combination within 24 months from the Close Date, or 27 months from the Close Date if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date. However, if the Initial Shareholders acquire public shares after the Close Date, they willlenders would be entitled to ~~liquidating distributions~~take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

Accel was in compliance with all debt covenants as of June 30, 2020. Given our assumptions about the future impact of COVID-19 on the gaming industry, which could be materially different due to the inherent uncertainties of future restrictions on the industry, we expect to meet our cash obligations as well as remain in compliance with the debt covenants in our credit facility for the next 12 months. However, given the uncertainty of COVID-19 and the resulting potential impact to the gaming industry and our future assumptions, as well as to provide additional financial flexibility, we and the other parties thereto amended the Credit Agreement on August 4, 2020 to provide a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

Prior Credit Facility

Accel’s Prior Credit Facility was a senior secured first lien credit facility, as amended, that consisted of a $125.0 million term loan, a contract draw loan facility of $170.0 million and a revolving credit facility of $85.0 million. Accel’s prior credit facility was

with a syndicated group of banks with CIBC Bank USA, as administrative agent for the lenders. Included in the revolving credit facility and contract draw loan were swing line sub-facilities of $5.0 million each.

The Prior Credit Facility was paid off with the proceeds from the ~~Trust Account~~2019 Senior Secured Credit Facility.

Cash Flows

The following table summarizes Accel’s net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with ~~respect~~our condensed consolidated financial statements and the notes thereto included in this filing:



(in thousands)	Six Months Ended June 30,
	2020			2019
Net cash (used in) provided by operating activities	$	(17,284	)	$	26,083
Net cash used in investing activities	(4,002		)	(10,548		)
Net cash provided by (used in) financing activities	44,717			(8,257		)

Net cash (used in) provided by operating activities

For thesix months ended June 30, 2020, net cash used in operating activities was$17.3 million, a decrease of $43.4 million over the comparable period. In addition to ~~such public shares if~~our decrease in net income, we ~~fail~~had $1.5 million in payments on contingent consideration and experienced a decrease in working capital adjustments.

Net cash used in investing activities

For the six months ended June 30, 2020, net cash used in investing activities was $4.0 million, a decrease of $6.5 million over the comparable period and was primarily attributable to ~~complete~~less cash used to purchase property and equipment.

Net cash provided by (used in) financing activities

Cash from financing activities is primarily used to fund acquisitions, purchases of property and equipment, and for working capital requirements.

For the ~~Business Combination within~~six months ended June 30, 2020, net cash provided by financing activities was $44.7 million, an increase of $53.0 million over the ~~allotted 24-month time period, or 27~~comparable period. The increase was primarily due to an increase in net borrowings on Accel’s credit facility, partially offset by higher payments on consideration payable.

Critical Accounting Policies and Estimates

In preparing our condensed consolidated financial statements, we applied the same critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2019 that affect judgments and estimates of amounts recorded for certain assets, liabilities, revenues, and expenses.

Change in Estimate

During the first quarter of 2020, we conducted a review of our estimates of depreciable lives for our video gaming terminals and equipment. As a result of this review, we extended the useful lives of our video gaming terminals and equipment from 7 to 10 as the equipment is lasting longer than originally estimated. We have many video gaming terminals and equipment that were purchased when we started operations that are still being used today. The impact of this change in estimate for the three and six months ~~from the Close Date if we have executed~~ended June 30, 2020, was a ~~letter~~net decrease in depreciation expense of ~~intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date.~~

~~We intend to use substantially all of the funds held in the Trust Account, including earned interest (which interest shall be~~$1.9 million and $4.5 million, and $1.5 million and $3.7 million net of taxes payable) to consummate a Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to consummate a Business Combination, the remaining proceeds held in the Trust Account after completion of the Business Combination and redemptions of Class A ordinary shares, if any, will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategy.

tax, respectively.

Off-Balance Sheet ~~Financing~~ Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.

~~Contractual Obligations~~

We do not have any ~~long-term debt,~~off balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital ~~lease~~expenditures or capital resources that is material to investors.

Contractual Obligations

The following table sets forth Accel’s obligations ~~operating lease obligations or long-term liabilities other than an administrative agreement~~and commitments to ~~pay~~make future payments under contracts and contingent commitments as of June 30, 2020 (in thousands):



	Less than 1 Year		Due in 1 to 3 years		Due in 3 to 5 years		Due in over 5 years		Total
Credit facility principal payments⁽¹⁾	$	18,250	$	36,500	$	352,438	$	—	$	407,188
Interest payments on credit facility⁽²⁾	10,110		18,873		11,612		—		40,595
Operating lease obligations⁽³⁾	273		246		65		—		584
Total contractual obligations	$	28,633	$	55,619	$	364,115	$	—	$	448,367

(1)Term Loans require quarterly principal payments of 1.25% of the outstanding loan amounts on the Closing Date.

(2) Interest payable monthly ~~recurring expenses of $20,000 for~~on unpaid balances at variable per annum LIBOR rate plus applicable margin.

(3) Represents leased office space ~~administrative~~under agreements expiring between January 2020 through December 2023.

Route acquisition costs payable

Accel enters into contracts with third parties and ~~support services~~licensed establishments throughout the State of Illinois which allow Accel to ~~an affiliate of our Sponsor. The agreement terminates upon the earlier~~install and operate VGTs. Payments are due over varying terms of the ~~completion~~individual agreements and are discounted at Accel’s incremental borrowing cost at the time the contract is acquired. As of June 30, 2020 and December 31, 2019, route acquisition costs payable was $6.4 million and $6.5 million, respectively. The cost payable is included on Accel’s balance sheets as a ~~Business Combination or the liquidation~~liability as its deemed to be both probable and estimable based on all available information; however, contractual payments are contingent upon continued future operations of the ~~Company.~~

~~Critical Accounting Policies~~

licensed establishments including ongoing compliance with licensing requirements.

Consideration payable

Consideration payable consists of amounts payable related to certain business acquisitions as well as contingent consideration for future licensed establishment performance related to certain business acquisitions. The ~~preparation~~contingent consideration is measured at fair value on a recurring basis. Accel uses a discounted cash flow analysis to determine the value of ~~financial statements~~contingent consideration upon acquisition and ~~related disclosures in conformity with accounting principles generally accepted~~updates this estimate on a recurring basis. The significant assumptions in the ~~United States requires our management~~cash flow analysis include the probability adjusted projected revenues after state taxes, a discount rate as applicable to ~~make estimates~~each acquisition, and ~~assumptions that affect~~ the ~~reported amounts~~estimated number of ~~assets and liabilities, disclosure~~licensed establishments at which Accel commences operations during the contingent consideration period. The changes in the fair value of contingent ~~assets~~consideration are recognized within Accel’s condensed consolidated statements of operations in other expenses, net. As of June 30, 2020 and ~~liabilities at~~December 31, 2019, the ~~date~~consideration payable balance was $19.8 million and $26.7 million, respectively.

Seasonality

Accel’s results of operations can fluctuate due to seasonal trends and other factors. For example, the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:

~~Offering Costs~~

We comply with the requirements of Accounting Standards Codification (“ASC”) 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering.” We incurred offering costs in connection with our Public Offering of $1,299,223, primarily consisting of accounting and legal services, securities registration expenses and exchange listing fees. These costs, along with paid and deferred underwriter discounts totaling $24,750,000, were charged to additional paid-in capital at the Close Date.

~~Redeemable Ordinary Shares~~

~~The 45,000,000 Class A ordinary shares sold as part of the Units~~gross revenue per machine per day is typically lower in the ~~Public Offering contain a redemption feature under which holders of the Class A ordinary shares~~summer when players will typically spend less time indoors at licensed establishment partners, and higher in cold weather between February and April, when players will typically spend more time indoors at licensed establishment partners. Holidays, vacation seasons, and sporting events may ~~redeem all or a portion of their public shares upon completion of our Business Combination for an amount in cash equal~~also cause Accel’s results to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination (including interest, net of taxes payable). In accordance with ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), redemption provisions not solely within our control require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of an entity’s equity instruments, are excluded from the provisions of ASC 480. Although we did not specify a maximum redemption threshold, our amended and restated memorandum and articles of association provide that in no event will we redeem our Class A ordinary shares in an amount that would cause our net tangible assets, or total shareholders’ equity, to fall below $5,000,001. Accordingly, at September 30, 2017, 42,975,686 of our 45,000,000 Class A ordinary shares were classified outside of permanent equity.

~~Net Loss per Ordinary Share~~

We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period as calculated using the treasury stock method. At September 30, 2017, we had outstanding warrants to purchase up to 22,333,333 Class A ordinary shares. The weighted average of these shares was excluded from the calculation of diluted net loss per ordinary share since the exercise of the warrants is contingent upon the occurrence of future events. At September 30, 2017, we did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into ordinary shares and then share in our earnings under the treasury stock method. As a result, diluted net loss per ordinary share is the same as basic net loss per ordinary share for the period.

~~Recent Accounting Pronouncements~~

~~Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the our financial statements.~~

fluctuate.

~~Item~~

ITEM 3. ~~Quantitative~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact Accel’s financial position due to adverse changes in financial market prices and ~~Qualitative Disclosures About~~rates. Market ~~Risk.~~

~~To date, our efforts have been limited~~risk exposure is primarily the result of fluctuations in interest rates as well as, to ~~organizational activities and activities relating~~a lesser extent, inflation.

Interest rate risk

Accel is exposed to the Public Offering and the identification and evaluation of prospective acquisition targets for a Business Combination. We have neither engaged in any operations nor generated any revenues. As the net proceeds from our Public Offering and the sale of the Private Placement Warrants heldinterest rate risk in the ~~Trust Account~~ordinary course of its business. Accel’s borrowings under its senior secured credit facility were $407.2 million as of June 30, 2020. If the underlying interest rates were to increase by 1.0%, or 100 basis points, the increase in interest expense on Accel’s floating rate debt would negatively impact Accel’s future earnings and cash flows by approximately $4.1 million annually, assuming the balance outstanding under Accel’s credit facility remained at $407.2 million. Cash and cash equivalents are ~~currently~~ held in cash ~~we do~~vaults, highly liquid, checking and money market accounts, VGTs, redemption terminals, ATMs, and amusement equipment. As a result, these amounts are not materially affected by changes in interest rates.

Inflation Risk

Accel does not believe ~~there will be any~~that inflation has had a material ~~exposure to interest rate risk.~~

~~At September 30, 2017, $450,000,000 was held~~effect on its results of operations, cash flows and financial condition in the ~~Trust Account for the purposes of consummating~~last three years. Inflation may become a Business Combination. If we complete a Business Combination within 24 months after the Close Date, or 27 months from the Close Date if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months of the Close Date, fundsgreater risk in the ~~Trust Account will be used to pay for the Business Combination, redemptions~~event of ~~Class A ordinary shares, if any, the deferred underwriting compensation of $15,750,000~~changes in current economic conditions and ~~accrued expenses related to the Business Combination. Any funds remaining will be made available to us to provide working capital to finance our operations.~~

~~We have not engaged in any hedging activities since our Inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.~~

governmental fiscal policy.

~~Item~~

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and ~~Procedures.~~

~~Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under~~Procedures

In connection with the ~~Securities Exchange Act~~filing of ~~1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within~~this Form 10-Q for the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, includingquarter ended June 30, 2020, our Chief Executive Officer (“CEO”, serving as our Principal Executive Officer) and our Chief Financial Officer ~~to allow timely decisions regarding required disclosure.~~

~~As required by Rules 13a-15 and 15d-15 under the Exchange Act,~~(“CFO”, serving as our ~~Chief Executive Officer and Chief~~Principal Financial ~~Officer carried out~~Officer) conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures ~~as of September 30, 2017. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures~~ (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange ~~Act)~~Act of 1934, as amended (“Exchange Act”)). As a result of this evaluation, our CEO and CFO concluded that those material weaknesses previously identified in Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2019 were ~~effective.~~

~~During~~still present as of June 30, 2020 (the “Evaluation Date”). Based on those material weaknesses, and the ~~most recently completed fiscal~~evaluation of our disclosure controls and procedures, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of the Evaluation Date.

Notwithstanding the identified material weaknesses, management believes that the condensed consolidated financial statements included in this Form 10-Q fairly present in all material respects our financial condition, results of operations, and cash flows as of June 30, 2020.

Changes in Internal Control Over Financial Reporting

There were no changes during the quarter ~~there has been no change~~ended June 30, 2020 in our internal control over financial reporting that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial ~~reporting.~~

reporting other than the material weaknesses previously identified and disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

PART II - O~~THER~~OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Lawsuits and claims are filed against Accel from time to time in the ordinary course of business, including related to employee matters, employment agreements and non-compete clauses and agreements. Other than settled matters explained as follows, these actions are in various stages, and no judgments or decisions have been rendered. Management, after reviewing matters with legal counsel, believes that the outcome of such matters are not expected to have a material adverse effect on our financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of Accel’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and operate VGTs within a number of establishments, including the Defendant Establishments. Under agreements with Rowell, Accel agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with Accel. In late August and early September 2012, each of the Defendant Establishments signed separate location agreements with Accel, purporting to grant it the exclusive right to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of the assignment of such rights to J&J, the Defendant Establishments were not yet licensed by the IGB.

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against Accel, Rowell, and other parties in the Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that Accel aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, Accel filed a motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied Accel’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. Accel was granted leave to intervene in all of the declaratory judgements. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon Accel’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment inWild, affirming the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between May 2017 and September 2017, both Accel and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the validity of the use agreements. Those petitions have been fully briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. Accel does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to Accel obtaining new locations.

On October 7, 2019, Accel filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with Accel. Accel alleged that Mr. Rowell and a competitor were working together to interfere with Accel’s customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against Accel alleging that he had not received certain equity interests in Accel to which he was allegedly entitled under his agreement. Accel intends to defend itself against the allegations. Accel does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against Accel. The lawsuit alleges that a current employee violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with Accel, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. We are in the process of defending this lawsuit, and have not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

~~Item 1. Legal Proceedings.~~

~~None.~~

~~Item~~

ITEM 1A. ~~Risk Factors.~~

~~Factors that~~RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2019 and our condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q in analyzing an investment in our common stock. If any such risks occur, our business, financial condition, and results of operations would likely suffer, the trading price of our common stock would decline, and you could lose all or part of your investment. In addition, the risk factors and uncertainties could cause our actual results to differ materially from those projected in our forward-looking statements, whether made in this report ~~are any of the risks disclosed in our final Prospectus, dated June 27, 2017, which was filed~~or other documents we file with the SEC, or our annual report to stockholders, future press releases, or orally, whether in presentations, responses to questions, or otherwise. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially adversely affect our business, financial condition, or results of operations.

In addition to the Risk Factors described under Part I - Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, the following additional risk factor should be considered in connection with an investment in our common stock, and should be deemed to update or replace, as applicable, other Risk Factors, as applicable.

The outbreak and spread of the novel coronavirus disease known as COVID-19 has had, and could continue to have, an adverse impact on our business, operations and financial condition for an extended period of time.

On March 11, 2020 the World Health Organization declared the novel coronavirus disease ("COVID-19") a global pandemic and recommended containment and mitigation measures worldwide. The global and national impact of COVID-19 could be immense and the length of the pandemic and its ultimate economic and human toll cannot yet be determined.

On March 16, 2020, the IGB issued an order requiring the suspension of all video gaming operations at all licensed video gaming establishments of any kind in Illinois (the “IGB Closure Order”). Additionally, on March 21, 2020, Illinois Governor J.B. Pritzker issued an executive order (the "Illinois Executive Order") requiring the closure of all “non-essential” businesses and also requiring all individuals living within the State of Illinois to “stay at home” other than in the case of limited exceptions. The IGB Closure Order and the Illinois Executive Order were each extended multiple times. The Illinois Executive Order was canceled on June ~~28, 2017. Any~~26, 2020 as non essential businesses were allowed to open at limited capacities. In response to the cancellation of ~~these factors could result~~the Illinois Executive Order, the IGB allowed video gaming operations to resume on July 1, 2020. The mandated complete shutdown of our licensed establishment partners’ gaming operations and our VGTs by the IGB Closure Order substantially and adversely impacted our business, operations and financial condition. In addition, we have been, and will continue to be further, negatively impacted by related developments, including heightened governmental regulations and travel advisories, recommendations by the U.S. Department of State and the Centers for Disease Control and Prevention, and travel bans and restrictions, each of which has impacted, and is expected to continue to significantly impact, travel of customers to our licensed establishment partners.

stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events. It is unknowable at this time how quickly customers will return to our licensed establishment partners, which may be a function of continued concerns over safety and/or depressed consumer sentiment due to adverse economic conditions, including job losses. Demand for the video gaming and non-gaming services provided by our licensed establishment partners may remain weak for a significant length of time and we cannot predict if and when such demand will return to pre-outbreak demand, if at all. We also cannot predict whether all of our licensed establishment partners will re-open and continue operating, or if they do, whether they will choose to renew their contracts with Accel at pre-outbreak levels or at all. Certain of our licensed establishment partners may go out of business. We may be adversely impacted as a result of the adverse impact our licensed establishment partners suffer.

While our operations workforce returns to support our business, we continue to allow office employees to work from home, which, if continued, may have a substantial impact on employee attendance and productivity, may cause employee turnover, disrupt access to facilities, equipment, networks, corporate systems, books and records and may add additional expenses and strain on our business. Now that the IGB Closure and Illinois Executive Orders are lifted and our operations resume, we may experience difficulties in resuming our operations to pre-closure levels, and our ability to serve our clients may be disrupted or inconsistent with pre-closure service, all or any of which could have a material adverse effect on our ~~results~~business, operations and financial condition.

Further, our business may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of COVID-19.

Additionally, given the existing impact of COVID-19 on our business, operations orand financial ~~condition. Additional risk factors not presently known~~condition and potential future impact, we can make no assurances that we will be able to ussuccessfully pursue expansion of gaming operations into new jurisdictions or that ~~we currently deem immaterial~~such jurisdictions will pass laws and regulations allowing VGT gaming, the opening of new licensed establishments, the addition of new VGTs and amusement machines in existing licensed establishments or the acquisition of other terminal operators.

There may ~~also impair~~be other adverse consequences to our business, operations and financial condition from the spread of COVID-19 that we have not considered. We have never previously experienced a complete cessation of our business operations, and as a consequence, our ability to predict the impact of such a cessation on our business and future prospects is inherently uncertain. We can offer no assurances that the effects of COVID-19 are temporary or ~~results~~that any losses that are incurred as a result of ~~operations.~~

these uncertainties will be regained if and when this crisis has passed. As ~~of the date of this Quarterly Report~~a result, COVID-19 may continue to have an adverse impact on ~~Form 10-Q, there have been no material changes to the risk factors disclosed in~~ our final Prospectus, dated June 27, 2017, which was filed with the SEC on June 28, 2017. However, we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

~~Item 2. Unregistered Sales of Equity Securities~~business, operations and ~~Use of Proceeds.~~

~~Unregistered Sales~~

~~On February 22, 2017, our Sponsor purchased an aggregate of 11,500,000 Founder Shares~~financial condition for an ~~aggregate purchase price~~extended period of $25,000, or approximately $0.002 per share. On June 19, 2017, our Sponsor transferred 40,000 Founder to each of our five independent directors at their original purchase price. On August 14, 2017, our Sponsor forfeited 250,000 Founder Shares on the expiration of the underwriters’ over-allotment option. At September 30, 2017, our Sponsor and our five independent directors held, collectively, 11,250,000 Founder Shares.

On the Close Date, we completed the private sale of an aggregate of 7,333,000 Private Placement Warrants, each exercisable to purchase one Class A ordinary share for $11.50 per share, to our Sponsor, at a price of $1.50 per Private Placement Warrant, generating proceeds, before expenses, of $11,000,000. The Private Placement Warrants are substantially similar to the Warrants underlying the Units issued in the Public Offering, except that if held by our Sponsor or its permitted transferees, they (i) may be exercised for cash or on a cashless basis and (ii) are not subject to being called for redemption. If the Private Placement Warrants are held by holders other than our Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by us and exercisable by the holders on the same basis as the Warrants.

The sales of the above securities by the Company were deemed to be exempt from registration under the Securities Act, in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.

~~Use of Proceeds~~

On June 27, 2017, our registration statement on Form S-1 (File No. 333-218575) was declared effective by the SEC for the Public Offering pursuant to which we sold an aggregate of 45,000,000 Units at an offering price to the public of $10.00 per Unit for an aggregate offering price of $450,000,000, with each Unit consisting of one Class A ordinary share and one-third of one Warrant. Each whole Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share. Only whole Warrants may be exercised and no fractional Warrants will be issued upon separation of the Units and only whole Warrants may be traded. Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC acted as underwriters. Our Public Offering did not terminate before all of the securities registered in our registration statement were sold. The Public Offering was consummated on June 30, 2017.

Net proceeds of $450,000,000 from the Public Offering and the sale of the Private Placement Warrants, including deferred underwriting discounts of $15,750,000, are held in the Trust Account at September 30, 2017. We paid $9,000,000 in underwriting discounts and incurred offering costs of $1,299,223 related to the Public Offering. In addition, the underwriters agreed to defer $15,750,000 in underwriting discounts, which amount will be payable when and if a Business Combination is consummated. We also repaid $300,000 in non-interest bearing loans made to us by our Sponsor to cover expenses related to the Public Offering. No payments were made by us to directors, officers or persons owning ten percent or more of our ordinary shares or to their associates, or to our affiliates. There has been no material change in the planned use of proceeds from the Public Offering as described in our final Prospectus, dated June 27, 2017, which was filed with the SEC on June 28, 2017.

time.

ITEM 2. UNREGISTERED SALES OF SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

~~Item 3. Defaults Upon Senior Securities.~~

~~None.~~

~~Item~~

ITEM 4. ~~Mine Safety Disclosures.~~

MINE SAFETY DISCLOSURES

Not applicable.

~~Item 5. Other Information.~~

~~None.~~

~~Item~~

ITEM 6. E~~xhibits.~~

~~The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.~~

EXHIBITS

~~Exhibit~~ ~~Number~~		~~Description~~
3.1*
Exhibit No.	Exhibit

3.3	~~Amended and Restated Memorandum and Articles of Association (incorporated herein~~Bylaws Amendment (Incorporated by reference to Exhibit ~~3.1 filed with~~3.3 to the ~~Registrant’s Quarterly Report on Form 10-Q filed by the Registrant on August 10, 2017 (File No. 001-38136)).~~
4.1*	~~Specimen Unit Certificate (incorporated herein by reference to Exhibit 4.1 filed with the Registrant’s Form S-1 filed by the Registrant on June 7, 2017 (File No. 333-218575)).~~
4.2*	~~Specimen Class A Ordinary Share Certificate (incorporated herein by reference to Exhibit 4.2 filed with the Registrant’s Form S-1 filed by the Registrant on June 7, 2017 (File No. 333-218575)).~~
4.3*	~~Specimen Warrants Certificate (incorporated herein by reference to Exhibit 4.3 filed with the Registrant’s Form S-1 filed by the Registrant on June 7, 2017 (File No. 333-218575)).~~
4.4*	Warrant Agreement, dated as of June 27, 2017, between the Company and Continental Stock Transfer & Trust Company, as warrant agent (incorporated herein by reference to Exhibit 4.4 filed with the Registrant’sCompany's Current Report on Form 8-K ~~filed by the Registrant on June 30, 2017 (File No. 001-38136)).~~dated May 6, 2020
10.1*
10.19 *	~~Letter~~Tender and Exchange Agreement dated June 27, 2017, among the Company, its officers and directors and TPG Pace II Sponsor, LLC (incorporated herein by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).18, 2020
10.2*	Investment Management Trust Agreement, effective as of June 27, 2017, between the Company and Continental Stock Transfer & Trust Company, as trustee (incorporated herein by reference to Exhibit 10.2 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.3* 31.1	Registration Rights Agreement, dated as of June 27, 2017, among the Company, TPG Pace II Sponsor, LLC and certain other security holders named therein (incorporated herein by reference to Exhibit 10.3 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.4*	Administrative Services Agreement, dated June 27, 2017, between the Company and TPG Global, LLC (incorporated herein by reference to Exhibit 10.4 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.5*	Private Placement Warrants Purchase Agreement, effective as of June 27, 2017, between the Company and TPG Pace II Sponsor, LLC (incorporated herein by reference to Exhibit 10.5 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.6*	Indemnity Agreement, dated as of June 27, 2017, between the Company and David Bonderman (incorporated herein by reference to Exhibit 10.6 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.7*	Indemnity Agreement, dated as of June 27, 2017, between the Company and Chad Leat (incorporated herein by reference to Exhibit 10.7 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.8*	Indemnity Agreement, dated as of June 27, 2017, between the Company and Kathleen Philips (incorporated herein by reference to Exhibit 10.8 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.9*	Indemnity Agreement, dated as of June 27, 2017, between the Company and Robert Suss (incorporated herein by reference to Exhibit 10.9 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.10*	Indemnity Agreement, dated as of June 27, 2017, between the Company and Paul Walsh (incorporated herein by reference to Exhibit 10.10 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.11*	Indemnity Agreement, dated as of June 27, 2017, between the Company and Kneeland Youngblood (incorporated herein by reference to Exhibit 10.11 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.12*	Indemnity Agreement, dated as of June 27, 2017, between the Company and Karl Peterson (incorporated herein by reference to Exhibit 10.12 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.13*	Indemnity Agreement, dated as of June 27, 2017, between the Company and Martin Davidson (incorporated herein by reference to Exhibit 10.13 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).
10.14*	Indemnity Agreement, dated as of June 27, 2017, between the Company and Eduardo Tamraz (incorporated herein by reference to Exhibit 10.14 filed with the Registrant’s Current Report on Form 8-K filed by the Registrant on June 30, 2017 (File No. 001-38136)).

~~Exhibit~~ ~~Number~~		~~Description~~
31.1**		Certification of ~~Chief~~Principal Executive Officer ~~Pursuant~~pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) ~~under the Securities~~

31.2		Certification of Principal Financial Officer pursuant to Exchange Act ~~of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
31.2**		~~Certification of Chief Financial Officer Pursuant to~~ Rules 13a-14(a) and 15d-14(a) ~~under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
32.1**
32.1		Section 1350 Certification of ~~Chief~~Principal Executive Officer ~~Pursuant to 18 U.S.C.~~

32.2		Section 1350 ~~as Adopted Pursuant to Section 906~~Certification of ~~the Sarbanes-Oxley Act of 2002.~~Principal Financial Officer
32.2**		~~Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
101.INS** 101.INS		XBRL Instance Document
101.SCH**
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL**
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE**
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Inline XBRL File (included in Exhibit 101)

*	~~Incorporated herein by reference as indicated.~~
*	Filed herewith.


**	~~Filed herewith.~~ Indicates management contract or compensation plan or agreement.

S~~IGNATURES~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

				~~TPG PACE HOLDINGS CORP.~~

~~Date: November 8, 2017~~			~~By:~~	~~/s/ Karl Peterson~~ ACCEL ENTERTAINMENT, INC.
			~~Karl Peterson~~
Date: August 5, 2020	By:		~~Chief Executive Officer (Principal Executive Officer)~~ /s/ Brian Carroll

~~Date: November 8, 2017~~		~~By:~~	~~/s/ Martin Davidson~~
			~~Martin Davidson~~
			Brian Carroll Chief Financial Officer ~~(Principal Financial and Accounting Officer)~~

	September 30, 2017
Assets
Current assets:
Cash	$	1,636,543
Prepaid expenses		165,429
Total current assets		1,801,972
Cash held in Trust Account		450,000,000
Total assets	$	451,801,972
Liabilities and Shareholders' Equity
Current liabilities:
Accrued offering costs, formation costs and other expenses	$	1,295,110
Total current liabilities		1,295,110
Deferred underwriting compensation		15,750,000
Total liabilities		17,045,110
Commitments and contingencies
Class A ordinary shares subject to possible redemption; 42,975,686 shares at September 30, 2017, at a redemption value of $10.00 per share		429,756,860
Shareholders' equity:
Preferred shares, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding		—
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 2,024,314 shares issued and outstanding (excluding 42,975,686 shares subject to possible redemption) at September 30, 2017		202
Class F ordinary shares, $0.0001 par value; 20,000,000 shares authorized, 11,250,000 shares issued and outstanding		1,125
Additional paid-in capital		5,217,590
Accumulated deficit		(218,915	)
Total shareholders' equity		5,000,002
Total liabilities and shareholders' equity	$	451,801,972

				For the Period
	For the Three			from February 14, 2017
	Months Ended			(inception) to
	September 30, 2017			September 30, 2017
Revenue	$	—		$	—
Formation costs and other expenses		94,400			218,938
Loss from operations		(94,400	)		(218,938	)
Interest income		—			23
Net loss attributable to ordinary shares	$	(94,400	)	$	(218,915	)
Net loss per ordinary share:
Basic and diluted	$	—		$	(0.01	)
Weighted average ordinary shares outstanding:
Basic and diluted		56,369,565			29,320,961

	Preferred Shares				Class A Ordinary Shares						Class F Ordinary Shares						Additional			Accumulated			Shareholder's
	Shares		Amount		Shares			Amount			Shares			Amount			Paid-In Capital			Deficit			Equity
Balance at February 14, 2017 (inception)		—	$	—		—		$	—			—		$	—		$	—		$	—		$	—
Sale of Class F ordinary shares to Sponsor on February 22, 2017 at $0.002 per share		—		—		—			—			11,500,000			1,150			23,850			—			25,000
Proceeds from initial public offering of Units on June 30, 2017 at $10.00 per Unit		—		—		45,000,000			4,500			—			—			449,995,500			—			450,000,000
Sale of 7,333,333 Private Placement Warrants to Sponsor on June 30, 2017 at $1.50 per Private Placement Warrant		—		—		—			—			—			—			11,000,000			—			11,000,000
Underwriters discount		—		—		—			—			—			—			(9,000,000	)		—			(9,000,000	)
Deferred offering costs charged to additional paid-in capital		—		—		—			—			—			—			(1,299,223	)		—			(1,299,223	)
Deferred underwriting compensation		—		—		—			—			—			—			(15,750,000	)		—			(15,750,000	)
Class F common stock forfeited by Sponsor on August 14, 2017		—		—		—			—			(250,000	)		(25	)		25			—			—
Class A ordinary shares subject to possible redemption; 42,975,686 shares at a redemption value of $10.00 per share		—		—		(42,975,686	)		(4,298	)		—			—			(429,752,562	)		—			(429,756,860	)
Net loss attributable to ordinary shares		—		—		—			—			—			—			—			(218,915	)		(218,915	)
Balance at September 30, 2017		—	$	—		2,024,314		$	202			11,250,000		$	1,125		$	5,217,590		$	(218,915	)	$	5,000,002