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Repay (RPAY) - 2019 Q1 - Quarterly Report
Repay Repay (US:RPAY)2019-05-15 20:19

PART I – FINANCIAL INFORMATION Item 1. Financial Statements The financial statements for the quarter ended March 31, 2019, show total assets of approximately $265 million, primarily held in the Trust Account, with a net income of $517,612 driven by non-operating gains Condensed Consolidated Balance Sheets Presents the company's financial position as of March 31, 2019, highlighting total assets of $265 million and liabilities, with a significant portion of shares subject to redemption Balance Sheet Highlights (as of March 31, 2019 vs. December 31, 2018) | Metric | March 31, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $159,379 | $108,818 | | Cash and marketable securities held in Trust Account | $264,776,505 | $263,254,659 | | Total Assets | $265,024,959 | $263,494,089 | | Total current liabilities | $1,334,005 | $320,747 | | Deferred underwriting fee payable | $9,690,000 | $9,690,000 | | Total Liabilities | $11,024,005 | $10,010,747 | | Ordinary shares subject to possible redemption | $249,000,953 | $248,483,332 | | Total Shareholders' Equity | $5,000,001 | $5,000,010 | Condensed Consolidated Statements of Operations Details the company's financial performance for the three months ended March 31, 2019, showing a net income of $517,612 primarily from non-operating gains Statement of Operations (For the Three Months Ended March 31) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Formation costs and other operating expenses | $(1,004,234) | $(60) | | Loss from operations | $(1,004,234) | $(60) | | Interest income | $201,253 | - | | Unrealized gains on marketable securities | $1,320,593 | - | | Net income (loss) | $517,612 | $(60) | | Basic and diluted loss available to ordinary shares | $(0.12) | $(0.00) | Condensed Consolidated Statement of Changes in Shareholders' Equity Outlines changes in shareholders' equity for the three months ended March 31, 2019, reflecting stability at $5.0 million despite net income - For the three months ended March 31, 2019, Total Shareholders' Equity remained stable at approximately $5.0 million. The net income of $517,612 was offset by a corresponding change in the value of ordinary shares subject to possible redemption17 Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows for the three months ended March 31, 2019, indicating negative operating cash flow offset by financing activities Cash Flow Summary (For the Three Months Ended March 31, 2019) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash used in operating activities | $(266,305) | | Net cash provided by financing activities | $316,866 | | Net change in cash and cash equivalents | $50,561 | | Cash and cash equivalents at beginning of period | $108,818 | | Cash and cash equivalents at end of period | $159,379 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations of the company's accounting policies, significant transactions, and financial position, including its blank check status and proposed merger - The Company is a blank check company formed to effect a Business Combination and has until December 21, 2019, to do so, or it will be required to liquidate2234 - On January 21, 2019, the Company entered into a Merger Agreement with Repay. The agreement was subsequently amended on May 9, 2019, to, among other things, reduce the merger consideration to $580.65 million and arrange for a $135 million PIPE investment94103107 - As part of the amended merger transaction, the Company is proposing a Warrant Amendment that would make each warrant exercisable for one-quarter of a share and provide a $1.50 cash payment per warrant. This requires approval from 65% of public warrantholders116119121 - The Company's Sponsor has provided a promissory note for up to $600,000 for working capital, of which $316,866 was advanced as of March 31, 2019. These conditions raise substantial doubt about the company's ability to continue as a going concern if the business combination is not completed607337 Management's Discussion and Analysis of Financial Condition and Results of Operations The company is a blank check company with its primary activity focused on completing its proposed business combination with Repay, reporting net income from trust account investments while facing a working capital deficit - The company entered into a definitive Merger Agreement with Repay on January 21, 2019, and subsequently amended the agreement on May 9, 2019. The amendments reduced the base merger consideration from $600 million to $580.65 million and introduced a $135 million PIPE investment127132134 - For Q1 2019, the company had a net income of $517,612, a significant change from a net loss of $60 in Q1 2018. This income was generated from the Trust Account and was not from operations, which incurred a loss of $1,085,551143 - As of March 31, 2019, the company had only $159,379 in cash outside the Trust Account and a working capital deficit of $1,085,551. It is funding its operations through advances from its Sponsor, with $316,866 borrowed under a promissory note149150 - Management has expressed substantial doubt about the company's ability to continue as a going concern due to its limited funds and working capital deficit, should the proposed business combination fail151 Quantitative and Qualitative Disclosures About Market Risk The company's market risk is limited to interest rate risk on short-term U.S. government treasury investments held in its Trust Account, with no material exposure due to their short maturities - The net proceeds from the IPO and private placement warrants are held in a Trust Account and invested in short-term U.S. government treasury obligations169 - The company has not engaged in any hedging activities and does not expect to. The short-term nature of its investments minimizes material exposure to interest rate risk168169 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2019, concluding they were effective with no material changes to internal controls over financial reporting - An evaluation of disclosure controls and procedures as of March 31, 2019, led the CEO and CFO to conclude they were effective171 - No material changes to the company's internal control over financial reporting occurred during the most recently completed fiscal quarter172 PART II – OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - There are no legal proceedings to report174 Risk Factors There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2018, with additional risks related to its proposed business combination disclosed in its Registration Statement on Form S-4 - No material changes have occurred to the risk factors previously disclosed in the 2018 Form 10-K175 - Investors are directed to the Registration Statement on Form S-4 for risks associated with the proposed business combination175 Unregistered Sales of Equity Securities and Use of Proceeds The company details the proceeds from its Public Offering in June 2018, which generated total gross proceeds of approximately $258 million, with $260.6 million placed in the Trust Account and $1.17 million retained for operating expenses - The company's Public Offering and over-allotment exercise generated total gross proceeds of approximately $258 million ($225 million + $33 million)176177 - Net proceeds of $260,580,000 were placed in the Trust Account, while approximately $1,169,015 was retained for working capital180 Defaults Upon Senior Securities The company reports no defaults upon senior securities - None181 Mine Safety Disclosures This item is not applicable to the company - Not Applicable182 Other Information The company reports no other information - None182 Exhibits The report lists several exhibits filed, primarily related to the proposed business combination with Repay, including amendments to the Merger Agreement and forms for the PIPE investment and Warrant Agreement amendment - Key exhibits filed include the Second Amendment to the Agreement and Plan of Merger and the form of Subscription Agreement for the PIPE Investment, both dated May 9, 2019184