(MARK ONE)
2023
47-4257046 | ||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
2001 Westside Parkway | ||||||||
Suite 155 | ||||||||
Alpharetta, | Georgia | 30004 | ||||||
(Address of principal executive offices) | (Zip Code) | |||||||
Registrant's telephone number, including area code: (404) 952-2107 | ||||||||
Not applicable | ||||||||
(Former name, former address and former fiscal year, if changed since last report) |
| ||||||||
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Common Stock, par value $0.001 | PRTH | Nasdaq Global Market |
(Address of principal executive offices)
(347) 491-4240
(Issuer’s telephone number)
Check
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | Smaller reporting company | ☒ | ||||||||||
Emerging growth company |
M I ACQUISITIONS, INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2017
TABLE OF CONTENTS
Page | ||||||
Term | Definition | |||||||
2018 Plan | 2018 Equity Incentive Plan | |||||||
2021 Stock Purchase Plan | Priority Technology Holdings, Inc. 2021 Employee Stock Purchase Plan | |||||||
2021 Share Repurchase Program | Priority Technology Holdings, Inc. 2021 Share Repurchase Program | |||||||
AOCI | Accumulated other comprehensive income/loss | |||||||
AP | Accounts payable | |||||||
ASC | Accounting Standards Codification | |||||||
APIC | Additional paid-in capital | |||||||
Amended Certificate of Designation | Amended and Restated Certificate of Designation of Senior Preferred Stock effective as of June 30, 2023 | |||||||
ASU | Accounting Standards Update | |||||||
B2B | Business-to-business | |||||||
B2C | Business-to-consumer | |||||||
CEO | Chief Executive Officer | |||||||
CFO | Chief Financial Officer | |||||||
Common Stock | The Company's Common Stock, par value $0.001 | |||||||
Credit Agreement | Credit and Guaranty Agreement with Truist Bank dated as of April 27, 2021 (as amended) | |||||||
EAETR | Estimated annual effective tax rate | |||||||
ESPP | Employee Stock Purchase Plan | |||||||
Exchange Act | Securities Exchange Act of 1934 | |||||||
FASB | Financial Accounting Standards Board | |||||||
FDIC | Federal Deposit Insurance Corporation | |||||||
FBO | For the benefit of | |||||||
FI | Financial institution | |||||||
Finxera | Finxera Holdings, Inc. | |||||||
GAAP | U.S. Generally Accepted Accounting Principles | |||||||
IRA | Inflation Reduction Act, enacted by the U.S. Federal Government on August 16, 2022 | |||||||
ISO | Independent sales organization | |||||||
ISV | Independent software vendor | |||||||
LIBOR | London Interbank Offered Rate | |||||||
NCI | Non-controlling interests in consolidated subsidiaries | |||||||
Revolving credit facility | $55.0 million line issued under the Credit Agreement | |||||||
Plastiq | Acquisition of Plastiq, Inc. and certain of its affiliates | |||||||
PRTH | Priority Technology Holdings, Inc. | |||||||
SEC | Securities and Exchange Commission | |||||||
SOFR | Secured Overnight Financing Rate | |||||||
SMB | Small to medium-sized businesses | |||||||
Term facility | $620.0 million senior secured term loan facility issued under the Credit Agreement (including $320.0 million delayed draw facility) | |||||||
M I Acquisitions, Inc.
June 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 17,567 | $ | 18,454 | |||||||
Restricted cash | 12,357 | 10,582 | |||||||||
Accounts receivable, net of allowances of $1,227 and $1,143, respectively | 60,130 | 78,113 | |||||||||
Prepaid expenses and other current assets | 14,608 | 11,832 | |||||||||
Current portion of notes receivable, net of allowance of $0 and $0, respectively | 2,530 | 1,471 | |||||||||
Settlement assets and customer/subscriber account balances | 710,705 | 532,018 | |||||||||
Total current assets | 817,897 | 652,470 | |||||||||
Notes receivable, less current portion | 3,018 | 3,191 | |||||||||
Property, equipment and software, net | 38,984 | 34,687 | |||||||||
Goodwill | 368,740 | 369,337 | |||||||||
Intangible assets, net | 269,428 | 288,794 | |||||||||
Deferred income taxes, net | 26,066 | 16,447 | |||||||||
Other noncurrent assets | 8,147 | 8,437 | |||||||||
Total assets | $ | 1,532,280 | $ | 1,373,363 | |||||||
Liabilities, Redeemable Senior Preferred Stock and Stockholders' Deficit | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | 59,839 | $ | 51,864 | |||||||
Accrued residual commissions | 34,614 | 35,979 | |||||||||
Customer deposits and advance payments | 3,253 | 2,618 | |||||||||
Current portion of long-term debt | 6,200 | 6,200 | |||||||||
Settlement and customer/subscriber account obligations | 710,551 | 533,340 | |||||||||
Total current liabilities | 814,457 | 630,001 | |||||||||
Long-term debt, net of current portion, discounts and debt issuance costs | 589,932 | 598,926 | |||||||||
Other noncurrent liabilities | 11,752 | 11,643 | |||||||||
Total noncurrent liabilities | 601,684 | 610,569 | |||||||||
Total liabilities | 1,416,141 | 1,240,570 | |||||||||
Redeemable senior preferred stock, net of discounts and issuance costs: | |||||||||||
Redeemable senior preferred stock, $0.001 par value; 250,000 shares authorized; 225,000 issued and outstanding at June 30, 2023 and December 31, 2022 | 240,731 | 235,579 | |||||||||
Stockholders' deficit: | |||||||||||
Preferred stock, $0.001; 100,000,000 shares authorized; none issued or outstanding at June 30, 2023 and December 31, 2022 | — | — | |||||||||
Common Stock, $0.001 par value; 1,000,000,000 shares authorized; 79,094,150 and 78,385,685 shares issued at June 30, 2023 and December 31, 2022, respectively; and 76,531,703 and 76,044,629 shares outstanding at June 30, 2023 and December 31, 2022, respectively | 76 | 76 | |||||||||
Treasury stock at cost, 2,562,447 and 2,341,056 shares at June 30, 2023 and December 31, 2022, respectively | (12,577) | (11,559) | |||||||||
Additional paid-in capital | — | 9,650 | |||||||||
Accumulated other comprehensive income | 31 | — | |||||||||
Accumulated deficit | (112,974) | (102,208) | |||||||||
Total stockholders' deficit attributable to stockholders of PRTH | (125,444) | (104,041) | |||||||||
Non-controlling interests in consolidated subsidiaries | 852 | 1,255 | |||||||||
Total stockholders' deficit | (124,592) | (102,786) | |||||||||
Total liabilities, redeemable senior preferred stock and stockholders' deficit | $ | 1,532,280 | $ | 1,373,363 |
September 30, 2017 | December 31, 2016 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 479,382 | $ | 362,535 | ||||
Prepaid expenses and other current assets | 35,322 | 56,241 | ||||||
Total current assets | 514,704 | 418,776 | ||||||
Cash and cash equivalents held in trust | 54,948,047 | 54,731,828 | ||||||
Total Assets | $ | 55,462,751 | $ | 55,150,604 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 474,677 | $ | 111,011 | ||||
Accounts payable - related party | 60,000 | — | ||||||
Offering costs payable | 11,616 | 11,616 | ||||||
Note payable | 27,500 | 27,500 | ||||||
Total Current Liabilities | 573,793 | 150,127 | ||||||
Deferred underwriting fee payable | 1,062,022 | 1,062,022 | ||||||
Total Liabilities | 1,635,815 | 1,212,149 | ||||||
Commitments | ||||||||
Common stock subject to possible conversion (4,718,573 and 4,748,033 shares at conversion value as of September 30, 2017 and December 31, 2016) | 48,826,934 | 48,938,449 | ||||||
Stockholders’ Equity: | ||||||||
Preferred stock, $0.001 par value; 1,000,000 authorized none issued and outstanding | — | — | ||||||
Common stock, $0.001 par value; 30,000,000 shares authorized; 2,340,170 and 2,310,710 shares issued and outstanding (excluding 4,718,573 and 4,748,033 shares subject to possible conversion) at September 30, 2017 and December 31, 2016, respectively | 2,340 | 2,311 | ||||||
Additional paid in capital | 5,227,402 | 5,115,916 | ||||||
Accumulated deficit | (229,740 | ) | (118,221 | ) | ||||
Total Stockholders’ Equity | 5,000,002 | 5,000,006 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 55,462,751 | $ | 55,150,604 |
The accompanying notes are an integral part
M I Acquisitions, Inc.
Condensed(unaudited) For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 EXPENSES Administration fee - related party $ 30,000 $ 5,667 $ 90,000 $ 5,667 Operating costs 367,033 61,360 714,534 68,624 TOTAL EXPENSES 397,033 67,027 804,534 74,291 OTHER INCOME Extinguishment of debt — 27,500 — 27,500 Settlement income 427,701 — 427,701 — Interest income 121,682 3,145 265,314 3,145 TOTAL OTHER INCOME 549,383 30,645 693,015 30,645 Net income (loss) 152,350 (36,382 ) (111,519 ) (43,646 ) Net income (loss) per shares of common stock – basic and diluted $ 0.02 $ 0.01 $ (0.14 ) $ 0.00 Weighted average shares of common stock outstanding – basic and diluted 2,344,454 1,363,737 2,327,754 1,288,329 The accompanying notes are an integral part and Comprehensive Loss
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues | $ | 182,290 | $ | 166,430 | $ | 367,318 | $ | 319,669 | |||||||||||||||
Operating expenses | |||||||||||||||||||||||
Cost of revenue (excludes depreciation and amortization) | 115,281 | 110,749 | 237,247 | 212,229 | |||||||||||||||||||
Salary and employee benefits | 19,109 | 15,770 | 38,157 | 31,847 | |||||||||||||||||||
Depreciation and amortization | 17,980 | 17,505 | 36,028 | 34,858 | |||||||||||||||||||
Selling, general and administrative | 10,787 | 9,346 | 19,905 | 16,849 | |||||||||||||||||||
Total operating expenses | 163,157 | 153,370 | 331,337 | 295,783 | |||||||||||||||||||
Operating income | 19,133 | 13,060 | 35,981 | 23,886 | |||||||||||||||||||
Other (expense) income | |||||||||||||||||||||||
Interest expense | (17,765) | (12,335) | (35,464) | (23,870) | |||||||||||||||||||
Other income, net | 375 | 29 | 587 | 80 | |||||||||||||||||||
Total other expense, net | (17,390) | (12,306) | (34,877) | (23,790) | |||||||||||||||||||
Income before income taxes | 1,743 | 754 | 1,104 | 96 | |||||||||||||||||||
Income tax expense | 2,355 | 467 | 2,222 | 142 | |||||||||||||||||||
Net (loss) income | (612) | 287 | (1,118) | (46) | |||||||||||||||||||
Less: Dividends and accretion attributable to redeemable senior preferred stockholders | (11,765) | (8,549) | (23,060) | (16,949) | |||||||||||||||||||
Net loss attributable to common stockholders | (12,377) | (8,262) | (24,178) | (16,995) | |||||||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Foreign currency translation adjustments | 7 | — | 31 | — | |||||||||||||||||||
Comprehensive loss | $ | (12,370) | $ | (8,262) | $ | (24,147) | $ | (16,995) | |||||||||||||||
Loss per common share: | |||||||||||||||||||||||
Basic and diluted | $ | (0.16) | $ | (0.11) | $ | (0.31) | $ | (0.22) | |||||||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||||||
Basic and diluted | 78,292 | 78,603 | 78,213 | 78,600 | |||||||||||||||||||
M I Acquisitions, Inc.
Common Stock | Treasury Stock | APIC | AOCI | Accumulated Deficit | Deficit Attributable to Stockholders | NCIs | Total | |||||||||||||||||||||||||
Shares | $ | Shares | $ | |||||||||||||||||||||||||||||
December 31, 2022 | 76,044 | $ | 76 | 2,341 | $ | (11,559) | $ | 9,650 | $ | — | $ | (102,208) | $ | (104,041) | $ | 1,255 | $ | (102,786) | ||||||||||||||
Equity-classified stock-based compensation | — | — | — | — | 1,936 | — | — | 1,936 | — | 1,936 | ||||||||||||||||||||||
ESPP compensation and vesting of stock-based compensation | 517 | — | — | — | 37 | — | — | 37 | — | 37 | ||||||||||||||||||||||
Shares withheld for taxes | (157) | — | 157 | (777) | — | — | — | (777) | — | (777) | ||||||||||||||||||||||
Dividends on redeemable senior preferred stock | — | — | — | — | (10,477) | — | — | (10,477) | — | (10,477) | ||||||||||||||||||||||
Accretion of redeemable senior preferred stock | — | — | — | — | (818) | — | — | (818) | — | (818) | ||||||||||||||||||||||
Adjustment to NCI | — | — | — | — | — | — | — | — | (403) | (403) | ||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 24 | — | 24 | — | 24 | ||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (506) | (506) | — | (506) | ||||||||||||||||||||||
March 31, 2023 | 76,404 | $ | 76 | 2,498 | $ | (12,336) | $ | 328 | $ | 24 | $ | (102,714) | $ | (114,622) | $ | 852 | $ | (113,770) | ||||||||||||||
Equity-classified stock-based compensation | — | — | — | — | 1,746 | — | — | 1,746 | — | 1,746 | ||||||||||||||||||||||
ESPP compensation and vesting of stock-based compensation | 192 | — | — | — | 43 | — | — | 43 | — | 43 | ||||||||||||||||||||||
Shares withheld for taxes | (65) | — | 65 | (241) | — | — | — | (241) | — | (241) | ||||||||||||||||||||||
Dividends on redeemable senior preferred stock | — | — | — | — | (10,934) | — | — | (10,934) | — | (10,934) | ||||||||||||||||||||||
Accretion of redeemable senior preferred stock | — | — | — | — | (831) | — | — | (831) | — | (831) | ||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 7 | — | 7 | — | 7 | ||||||||||||||||||||||
Reclassification of negative additional paid-in capital | — | — | — | — | 9,648 | — | (9,648) | — | — | — | ||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (612) | (612) | — | (612) | ||||||||||||||||||||||
June 30, 2023 | 76,531 | $ | 76 | 2,563 | $ | (12,577) | $ | — | $ | 31 | $ | (112,974) | $ | (125,444) | $ | 852 | $ | (124,592) | ||||||||||||||
Common Stock | Treasury Stock | APIC | AOCI | Accumulated Deficit | Deficit Attributable to Stockholders | NCIs | Total | |||||||||||||||||||||||||
Shares | $ | Shares | $ | |||||||||||||||||||||||||||||
December 31, 2021 | 76,740 | $ | 77 | 720 | $ | (4,091) | $ | 39,835 | $ | — | $ | (100,058) | $ | (64,237) | $ | — | $ | (64,237) | ||||||||||||||
Equity-classified stock-based compensation | — | — | — | — | 1,558 | — | — | 1,558 | — | 1,558 | ||||||||||||||||||||||
Vesting of stock-based compensation | 129 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Share repurchases and shares withheld for taxes | (27) | 1 | 27 | (157) | (1) | — | — | (157) | — | (157) | ||||||||||||||||||||||
Dividends on redeemable senior preferred stock | — | — | — | — | (7,595) | — | — | (7,595) | — | (7,595) | ||||||||||||||||||||||
Accretion of redeemable senior preferred stock | — | — | — | — | (805) | — | — | (805) | — | (805) | ||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (333) | (333) | — | (333) | ||||||||||||||||||||||
March 31, 2022 | 76,842 | $ | 78 | 747 | $ | (4,248) | $ | 32,992 | $ | — | $ | (100,391) | $ | (71,569) | $ | — | $ | (71,569) | ||||||||||||||
Equity-classified stock-based compensation | — | — | — | — | 1,542 | — | — | 1,542 | — | 1,542 | ||||||||||||||||||||||
ESPP compensation and vesting of stock-based compensation | 157 | — | — | — | 57 | — | — | 57 | — | 57 | ||||||||||||||||||||||
Share repurchases and shares withheld for taxes | (431) | — | 431 | (1,922) | — | — | — | (1,922) | — | (1,922) | ||||||||||||||||||||||
Dividends on redeemable senior preferred stock | — | — | — | — | (7,732) | — | — | (7,732) | — | (7,732) | ||||||||||||||||||||||
Accretion of redeemable senior preferred stock | — | — | — | — | (817) | — | — | (817) | — | (817) | ||||||||||||||||||||||
Net income | — | — | — | — | — | — | 287 | 287 | — | 287 | ||||||||||||||||||||||
June 30, 2022 | 76,568 | $ | 78 | 1,178 | $ | (6,170) | $ | 26,042 | $ | — | $ | (100,104) | $ | (80,154) | $ | — | $ | (80,154) | ||||||||||||||
(unaudited)
For the Nine Months | For the Nine Months | |||||||
Ended | Ended | |||||||
September 30, 2017 | September 30, 2016 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net loss | $ | (111,519 | ) | $ | (43,646 | ) | ||
Gain on extinguishment of debt | (27,500 | ) | ||||||
Interest earned on cash and securities held in Trust Account | (265,314 | ) | — | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Accrued interest income | — | (3,145 | ) | |||||
Formation and organization costs paid by related parties | — | 2,537 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | 20,919 | — | ||||||
Accounts payable and accrued expenses | 363,666 | 67,027 | ||||||
Accounts payable - related party | 60,000 | — | ||||||
Net Cash Provided By (Used In) Operating Activities | 67,752 | (4,727 | ) | |||||
Cash Flows From Investing Activities: | ||||||||
Interest released from Trust Account | 71,702 | — | ||||||
Cash deposited into Trust Account | (22,607 | ) | (51,500,000 | ) | ||||
Net Cash Provided By (Used In) Investing Activities | 49,095 | (51,500,000 | ) | |||||
Cash Flows From Financing Activities: | ||||||||
Proceeds from public offering, net of offering costs | — | 48,194,567 | ||||||
Proceeds from insider units | — | 4,025,000 | ||||||
Payments of related party notes | — | (131,720 | ) | |||||
Proceeds from related party advances | — | 55,201 | ||||||
Payments of related party advances | — | (54,230 | ) | |||||
Payments of offering costs | — | (80,040 | ) | |||||
Net Cash Provided By Financing Activities | — | 52,008,778 | ||||||
Net change in cash and cash equivalents | 116,847 | 504,051 | ||||||
Cash and cash equivalents at beginning of period | 362,535 | 5,000 | ||||||
Cash and cash equivalents at end of period | $ | 479,382 | $ | 509,051 | ||||
Supplemental disclosure of non-cash financing activities: | ||||||||
Reclassification of deferred offering costs to equity | $ | — | $ | 258,997 | ||||
Payment of deferred offering costs by issuance of notes and related party notes | $ | — | $ | 15,000 | ||||
Common stock subject to possible conversion | $ | 111,515 | $ | 45,870,695 | ||||
Deferred Underwriting commission | $ | — | $ | 1,000,000 |
Six Months Ended June 30, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||
Net loss | $ | (1,118) | $ | (46) | |||||||||||||||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization of assets | 36,028 | 34,858 | |||||||||||||||||||||
Stock-based compensation | 3,682 | 3,100 | |||||||||||||||||||||
Amortization of debt issuance costs and discounts | 1,826 | 1,719 | |||||||||||||||||||||
Deferred income tax | (9,619) | (3,053) | |||||||||||||||||||||
Change in contingent consideration | 346 | — | |||||||||||||||||||||
Other non-cash items, net | (461) | — | |||||||||||||||||||||
Change in operating assets and liabilities: | |||||||||||||||||||||||
Accounts receivable | 18,066 | (12,015) | |||||||||||||||||||||
Prepaid expenses and other current assets | (3,560) | (4,445) | |||||||||||||||||||||
Income taxes (receivable) payable | 498 | (304) | |||||||||||||||||||||
Notes receivable | (389) | 297 | |||||||||||||||||||||
Accounts payable and other accrued liabilities | 1,306 | 14,792 | |||||||||||||||||||||
Customer deposits and advance payments | 635 | (3,957) | |||||||||||||||||||||
Other assets and liabilities, net | (383) | (612) | |||||||||||||||||||||
Net cash provided by operating activities | 46,857 | 30,334 | |||||||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Additions to property, equipment and software | (9,869) | (6,011) | |||||||||||||||||||||
Notes receivable, net | (498) | (2,750) | |||||||||||||||||||||
Acquisitions of assets and other investing activities | (2,715) | (3,974) | |||||||||||||||||||||
Net cash used in investing activities | (13,082) | (12,735) | |||||||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Repayments of long-term debt | (3,525) | (3,100) | |||||||||||||||||||||
Borrowings under revolving credit facility | 5,000 | 12,000 | |||||||||||||||||||||
Repayments of borrowings under revolving credit facility | (12,000) | (12,500) | |||||||||||||||||||||
Repurchases of common stock and shares withheld for taxes | (1,018) | (2,079) | |||||||||||||||||||||
Dividends paid to redeemable senior preferred stockholders | (17,908) | (7,076) | |||||||||||||||||||||
Settlement and customer/subscriber accounts obligations, net | 175,548 | 15,180 | |||||||||||||||||||||
Payment of contingent consideration related to business combination | (1,959) | (1,863) | |||||||||||||||||||||
Net cash provided by financing activities | 144,138 | 562 | |||||||||||||||||||||
Net change in cash and cash equivalents, and restricted cash: | |||||||||||||||||||||||
Net increase in cash and cash equivalents, and restricted cash | 177,913 | 18,161 | |||||||||||||||||||||
Cash and cash equivalents, and restricted cash at beginning of period | 560,610 | 518,093 | |||||||||||||||||||||
Cash and cash equivalents, and restricted cash equivalents at end of period | $ | 738,523 | $ | 536,254 | |||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Reconciliation of cash and cash equivalents, and restricted cash: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 17,567 | $ | 22,162 | |||||||||||||||||||
Restricted cash | 12,357 | 11,717 | |||||||||||||||||||||
Cash and cash equivalents included in settlement assets and customer/subscriber account balances (see Note 4) | 708,599 | 502,375 | |||||||||||||||||||||
Total cash and cash equivalents, and restricted cash | $ | 738,523 | $ | 536,254 | |||||||||||||||||||
Supplemental cash flow information: | |||||||||||||||||||||||
Cash paid for interest | $ | 35,234 | $ | 21,362 | |||||||||||||||||||
Non-cash investing and financing activities: | |||||||||||||||||||||||
Contingent consideration accrual | $ | — | $ | 4,141 | |||||||||||||||||||
Adjustment to value of profit interest units | $ | 596 | $ | — | |||||||||||||||||||
Acquisition of intangible asset | $ | 193 | $ | — | |||||||||||||||||||
Non-cash additions to other noncurrent assets for right-of-use operating leases | $ | — | $ | 67 |
M I Acquisitions, Inc.
Notes to CondensedUnaudited Consolidated Financial Statements
Note 1 — Organization, Plan of Business Operations and Going Concern Consideration
M I Acquisitions, Inc. (the “Company”) was incorporated in Delaware on April 23, 2015 as a blank check company whose objective is to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although include the Company intends to focus its search on target businesses operating in the technology, media and telecommunications industries.
At September 30, 2017, the Company had not yet commenced any operations.For the nine months ended September 30, 2017, the Company’s activity has been limited to the evaluation of business combination candidates, and the Company will not be generating any operating revenues until the closing and completion of an initial business combination.
The registration statement for the Company’s initial public offering was declared effective on September 13, 2016. The Company consummated a public offering of 5,000,000 units (“Units”) on September 19, 2016 (the “Offering”), generating gross proceeds of $50,000,000 and net proceeds of $47,981,581 after deducting $2,018,419 of transaction costs. In addition, the Company generated gross proceeds of $4,025,000 from the private placement of 402,500 units (the “Private Placement”) to certain initial stockholders (“Initial Stockholders”) of the Company. The Units sold pursuant to the Offering and the Private Placement were sold at an offering price of $10.00 per Unit. The Company also incurred additional issuance costs totaling $1,169,032, of which the deferred underwriting fee of $1,062,022 was unpaid as of September 30, 2017.
The underwriters exercised the over-allotment option in part and, on October 14, 2016, the underwriters purchased 310,109 Over-allotment Option Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $3,101,090 and net proceeds of $3,008,057 after deducting $93,033 of transaction costs. On October 14, 2016, simultaneously with the sale of the over-allotment Units, the Company consummated the private sale of an additional 18,607 private Units to one of the initial stockholders, generating gross proceeds of $186,070.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Offering and Private Placement, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination. The Company’s Units, common stock and warrants are listed on the Nasdaq Capital Market (“NASDAQ”). Pursuant to the NASDAQ listing rules, the Company’s initial Business Combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the trust account at the time of the execution of a definitive agreement for such Business Combination, although this may entail simultaneous acquisitions of several target businesses. There is no assurance that the Company will be able to effect a Business Combination successfully.
Following the closing of the Offering and the Private Placement (including the partial exercise of the over-allotment option) an amount of $54,694,127 (or $10.30 per share sold to the public in the Offering included in the Units (“Public Shares”)) from the sale of the Units and Private Units is being held in a trust account (“Trust Account”) at J.P. Morgan Chase Bank maintained by American Stock Transfer & Trust Company, acting as trustee, and may be invested in money market funds meeting the applicable conditions of Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended, and that invest solely in U.S. treasuries or United States bonds, treasuries or notes having a maturity of 180 days or less. The funds in the Trust Account may not be released until the earlier of (i) the consummation of the Company’s initial Business Combination and (ii) the Company’s failure to consummate a Business Combination within the prescribed time. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. However, the interest earned on the Trust Account balance may be released to the Company to pay the Company’s tax obligations. Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The Company’s insiders will agree to be liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for service rendered, contracted for or products sold to the Company. However, they may not be able to satisfy those obligations should they arise. With these exceptions, expenses incurred by the Company may be paid prior to a Business Combination only from the net proceeds of the Proposed Public Offering not held in the Trust Account; provided, however, that in order to meet its working capital needs following the consummation of the Proposed Public Offering, the Company’s Initial Stockholders, officers and directors or their affiliates may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of the Company’s initial Business Combination, without interest, or, at the lender’s discretion, up to $200,000 of the notes may be converted upon consummation of the Company’s Business Combination into additional Private Units at a price of $10.00 per Unit. If the Company does not complete a Business Combination, the loans would not be repaid.
The Company will either seek stockholder approval of any Business Combination at a meeting called for such purpose at which stockholders may seek to convert their shares into their pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, or provide stockholders with the opportunity to sell their shares to the Company by means of a tender offer for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid. The Company will proceed with a Business Combination only if it will have net tangible assets of at least $5,000,001 upon consummation of the Business Combination and, solely if stockholder approval is sought, a majority of the outstanding common sharesaccounts of the Company voted are votedand its majority-owned subsidiaries. All material intercompany balances and transactions have been eliminated in favor of the Business Combination. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 20% or more of the common shares sold in the Offering. Accordingly, all shares purchased by a holder in excess of 20% of the shares sold in the Offering will not be converted to cash.
In connection with any stockholder vote required to approve any Business Combination, the Initial Stockholders agreed (i) to vote any of their respective shares, including the common shares sold to the Initial Stockholders in connection with the organization of the Company (the “Initial Shares”), common shares included in the Private Units sold in the Private Placement, and any common shares which were initially issued in connection with the Offering, whether acquired in or after the effective date of the Offering, in favor of the initial Business Combination and (ii) not to convert such respective shares into a pro rata portion of the Trust Account or seek to sell their shares in connection with any tender offer the Company engages in.
Pursuant to the Company’s amended and restated Certificate of Incorporation if the Company is unable to complete its initial Business Combination within 18 months from the date of the Offering, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining holders of common stock and the Company’s board of directors, dissolve and liquidate. However, if the Company anticipates that it may not be able to consummate its initial Business Combination within 18 months, the Company may extend the period of time to consummate a Business Combination up to three times, each by an additional month (for a total of up to 21 months to complete a Business Combination). Pursuant to the terms of the Company’s amended and restated articles of incorporation and the trust agreement entered into between the Company and American Stock Transfer & Trust Company, in order to extend the time available for the Company to consummate its initial Business Combination, the Company’s insiders or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the trust account $132,753 ($0.025 per unit), up to an aggregate of $398,259, or $0.075 per unit, on or prior to the date of the applicable deadline, for each one month extension. In the event that the Company receives notice from its insiders five days prior to the applicable deadline of their intent to effect an extension, the Company intends to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, the Company intends to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. The Company’s insiders and their affiliates or designees are not obligated to fund the trust account to extend the time for the Company to complete its initial Business Combination. To the extent that some, but not all, of the Company’s insiders, decide to extend the period of time to consummate the initial Business Combination, such insiders (or their affiliates or designees) may deposit the entire $398,259. If the Company is unable to consummate an initial Business Combination and is forced to redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the Trust Account, each holder will receive a pro rata portion of the amount then in the Trust Account less income and franchise tax obligations. Holders of warrants will receive no proceeds in connection with the liquidation. The Initial Stockholders and the holders of Private Units will not participate in any redemption distribution with respect to their initial shares and Private Units, including the common stock included in the Private Units.
To the extent the Company is unable to consummate a business combination, the Company will pay the costs of liquidation from the remaining assets outside of the trust account. If such funds are insufficient, the insiders have agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than $15,000) and have agreed not to seek repayment of such expenses.
Going Concern
The accompanying condensed financial statementsconsolidation. These Unaudited Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of September 30, 2017, the Company had $479,382 in cash and cash equivalents held outside Trust Account, $265,314 in interest income available from the Company’s investments in the Trust Account to pay its franchise and income tax obligations, and a working capital deficit of $59,089. Further, the Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. The Company’s plans to raise capital or to consummate the initial Business Combination may not be successful. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
Based on the foregoing, the Company may have insufficient funds available to operate its business through the earlier of consummation of a Business Combination or March 19, 2018 (if an extension is not completed). Following the initial Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations. The Company cannot be certain that additional funding will be available on acceptable terms, or at all.
The accompanying condensedaccordance with GAAP for interim financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Note 2 — Significant Accounting Policies
Basis of presentation
The accompanying unaudited condensed financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) andinformation pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interimSEC. The Consolidated Balance Sheet as of December 31, 2022 was derived from the audited financial information andstatements included in the instructions toCompany's Annual Report on Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. The Company has evaluated subsequent events through the issuance of this Form 10-Q. Operating results for the quarter ended September 30, 2017 are not necessarily indicative of the results that may be expected10-K for the year ended December 31, 20172022 but does not include all disclosures required by GAAP for annual financial statements.
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 Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. 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 the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
Marketable securities held in Trust Account
The amounts held in the Trust Account represent substantially all of the proceeds of the Initial Public Offering and are classified as restricted assets since such amounts can only be used by the Company in connection with the consummation of a Business Combination. Except with respect to interest earned on the funds held in the Trust Account that may be released to pay income or other tax obligations, the proceeds will not be released from the Trust Account until the earlier of the completion of a Business Combination or the redemption of 100% of the outstanding public shares if we have not completed a Business Combination in the required time period. As of September 30, 2017, marketable securities held in the Trust Account consisted of $54,948,047 in United States Treasury Bills with an original maturity of six months or less. During the nine monthsyear ended September 30, 2017, the Company withdrew interest income totaling $71,702 to be utilized for payment of tax obligations. Of this amount, $22,607 was returned to the Company for overpayment of its tax obligations and deposited into the Trust Account.
Fair value of financial instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
December 31, 2022.
Concentration
Financial instruments that potentially subjectlosses for any uncollectible amounts.
(in thousands) | |||||
Consideration: | |||||
Cash(1) | $ | 5,026 | |||
Total purchase consideration | 5,026 | ||||
Fair value of class B shares issued in Ovvi (NCI)(3) | 659 | ||||
Total enterprise value of business acquired(3) | $ | 5,685 | |||
Recognized amounts of assets acquired and liabilities assumed: | |||||
Accounts receivable | $ | 110 | |||
Inventory | 142 | ||||
Property, equipment and software, net | 20 | ||||
Goodwill(3) | 3,393 | ||||
Intangible assets(2) | 2,021 | ||||
Other non-current asset | 152 | ||||
Other non-current liability | (153) | ||||
Total enterprise value of business acquired(3) | $ | 5,685 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Revenue Type: | |||||||||||||||||||||||
Merchant card fees | $ | 144,524 | $ | 139,793 | $ | 294,168 | $ | 267,745 | |||||||||||||||
Money transmission services | 23,718 | 17,183 | 45,124 | 33,466 | |||||||||||||||||||
Outsourced services and other services | 10,582 | 6,887 | 21,587 | 13,984 | |||||||||||||||||||
Equipment | 3,466 | 2,567 | 6,439 | 4,474 | |||||||||||||||||||
Total revenues(1),(2) | $ | 182,290 | $ | 166,430 | $ | 367,318 | $ | 319,669 |
Three Months Ended June 30, 2023 | |||||||||||||||||||||||||||||
(in thousands) | Merchant Card Fees | Money Transmission Services | Outsourced and Other Services | Equipment | Total | ||||||||||||||||||||||||
Segment | |||||||||||||||||||||||||||||
SMB Payments | $ | 143,544 | $ | — | $ | 885 | $ | 3,466 | $ | 147,895 | |||||||||||||||||||
B2B Payments | 954 | — | 2,017 | — | 2,971 | ||||||||||||||||||||||||
Enterprise Payments | 26 | 23,718 | 7,680 | — | 31,424 | ||||||||||||||||||||||||
Total revenues | $ | 144,524 | $ | 23,718 | $ | 10,582 | $ | 3,466 | $ | 182,290 |
Six months ended June 30, 2023 | |||||||||||||||||||||||||||||
(in thousands) | Merchant Card Fees | Money Transmission Services | Outsourced and Other Services | Equipment | Total | ||||||||||||||||||||||||
Segment | |||||||||||||||||||||||||||||
SMB Payments | $ | 292,232 | $ | — | $ | 4,157 | $ | 6,439 | $ | 302,828 | |||||||||||||||||||
B2B Payments | 1,881 | — | 3,876 | — | 5,757 | ||||||||||||||||||||||||
Enterprise Payments | 55 | 45,124 | 13,554 | — | 58,733 | ||||||||||||||||||||||||
Total revenues | $ | 294,168 | $ | 45,124 | $ | 21,587 | $ | 6,439 | $ | 367,318 |
Three Months Ended June 30, 2022 | |||||||||||||||||||||||||||||
(in thousands) | Merchant Card Fees | Money Transmission Services | Outsourced and Other Services | Equipment | Total | ||||||||||||||||||||||||
Segment | |||||||||||||||||||||||||||||
SMB Payments | $ | 139,163 | $ | — | $ | 776 | $ | 2,567 | $ | 142,506 | |||||||||||||||||||
B2B Payments | 630 | — | 4,665 | — | 5,295 | ||||||||||||||||||||||||
Enterprise Payments | — | 17,183 | 1,446 | — | 18,629 | ||||||||||||||||||||||||
Total revenues | $ | 139,793 | $ | 17,183 | $ | 6,887 | $ | 2,567 | $ | 166,430 |
Six Months Ended June 30, 2022 | |||||||||||||||||||||||||||||
(in thousands) | Merchant Card Fees | Money Transmission Services | Outsourced and Other Services | Equipment | Total | ||||||||||||||||||||||||
Segment | |||||||||||||||||||||||||||||
SMB Payments | $ | 266,550 | $ | — | $ | 1,441 | $ | 4,474 | $ | 272,465 | |||||||||||||||||||
B2B Payments | 1,195 | — | 10,025 | — | 11,220 | ||||||||||||||||||||||||
Enterprise Payments | — | 33,466 | 2,518 | — | 35,984 | ||||||||||||||||||||||||
Total revenues | $ | 267,745 | $ | 33,466 | $ | 13,984 | $ | 4,474 | $ | 319,669 |
(in thousands) | June 30, 2023 | December 31, 2022 | |||||||||
Settlement Assets: | |||||||||||
Card settlements due from merchants, net of estimated losses | $ | 2,106 | $ | 444 | |||||||
Customer/Subscriber Account Balances: | |||||||||||
Cash and cash equivalents | 708,599 | 531,574 | |||||||||
Total settlement assets and customer/subscriber account balances | $ | 710,705 | $ | 532,018 | |||||||
Settlement and Customer/Subscriber Account Obligations: | |||||||||||
Customer account obligations | $ | 692,630 | $ | 516,086 | |||||||
Subscriber account obligations | 15,969 | 15,488 | |||||||||
Total customer/subscriber account obligations | 708,599 | 531,574 | |||||||||
Due to customers' payees(1) | 1,952 | 1,766 | |||||||||
Total settlement and customer/subscriber account obligations | $ | 710,551 | $ | 533,340 |
(in thousands) | |||||
Twelve months ending June 30, | |||||
2024 | $ | 2,530 | |||
2025 | 1,178 | ||||
2026 | 971 | ||||
2027 | 746 | ||||
After 2027 | 123 | ||||
Total | $ | 5,548 |
(in thousands) | June 30, 2023 | December 31, 2022 | |||||||||||||||||||||
Computer software | $ | 70,203 | $ | 64,197 | |||||||||||||||||||
Equipment | 13,903 | 13,302 | |||||||||||||||||||||
Leasehold improvements | 7,194 | 6,990 | |||||||||||||||||||||
Furniture and fixtures | 2,974 | 2,909 | |||||||||||||||||||||
Property, equipment and software | 94,274 | 87,398 | |||||||||||||||||||||
Less: Accumulated depreciation | (63,976) | (58,409) | |||||||||||||||||||||
Capital work in-progress | 8,686 | 5,698 | |||||||||||||||||||||
Property, equipment and software, net | $ | 38,984 | $ | 34,687 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Depreciation expense | $ | 2,815 | $ | 2,311 | $ | 5,572 | $ | 4,537 | |||||||||||||||
(in thousands) | June 30, 2023 | December 31, 2022 | |||||||||||||||
SMB Payments | $ | 124,028 | $ | 124,625 | |||||||||||||
Enterprise Payments | 244,712 | 244,712 | |||||||||||||||
Total | $ | 368,740 | $ | 369,337 |
(in thousands) | Amount | ||||
Balance at December 31, 2022 | $ | 369,337 | |||
Purchase price adjustment for Ovvi | (597) | ||||
Balance at June 30, 2023 | $ | 368,740 |
June 30, 2023 | Weighted-average Useful Life | ||||||||||||||||||||||
(in thousands, except weighted-average data) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||
Other intangible assets: | |||||||||||||||||||||||
ISO and referral partner relationships | $ | 175,300 | $ | (30,166) | $ | 145,134 | 14.8 | ||||||||||||||||
Residual buyouts | 136,064 | (86,239) | 49,825 | 6.3 | |||||||||||||||||||
Customer relationships | 96,000 | (89,298) | 6,702 | 8.2 | |||||||||||||||||||
Merchant portfolios | 83,350 | (49,281) | 34,069 | 6.5 | |||||||||||||||||||
Technology | 51,156 | (20,474) | 30,682 | 8.9 | |||||||||||||||||||
Trade names | 3,183 | (2,267) | 916 | 11.4 | |||||||||||||||||||
Non-compete agreements | 3,390 | (3,390) | — | 0.0 | |||||||||||||||||||
Money transmission licenses(1) | 2,100 | — | 2,100 | ||||||||||||||||||||
Total | $ | 550,543 | $ | (281,115) | $ | 269,428 | 9.6 |
December 31, 2022 | Weighted-average Useful Life | ||||||||||||||||||||||
(in thousands, except weighted-average data) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||
Other intangible assets: | |||||||||||||||||||||||
ISO and referral partner relationships | $ | 175,300 | $ | (24,021) | $ | 151,279 | 14.8 | ||||||||||||||||
Residual buyouts | 132,325 | (76,316) | 56,009 | 6.6 | |||||||||||||||||||
Customer relationships | 96,000 | (83,298) | 12,702 | 8.2 | |||||||||||||||||||
Merchant portfolios | 76,423 | (43,170) | 33,253 | 6.7 | |||||||||||||||||||
Technology | 50,963 | (18,566) | 32,397 | 8.4 | |||||||||||||||||||
Trade names | 3,183 | (2,129) | 1,054 | 11.6 | |||||||||||||||||||
Non-compete agreements | 3,390 | (3,390) | — | 0.0 | |||||||||||||||||||
Money transmission licenses(1) | 2,100 | — | 2,100 | ||||||||||||||||||||
Total | $ | 539,684 | $ | (250,890) | $ | 288,794 | 9.7 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Amortization expense | $ | 15,165 | $ | 15,194 | $ | 30,456 | $ | 30,321 | |||||||||||||||
(in thousands) | June 30, 2023 | December 31, 2022 | |||||||||
Term facility - matures April 27, 2027, interest rates of 11.23%(1) and 9.82% at June 30, 2023 and December 31, 2022, respectively | $ | 607,175 | $ | 610,700 | |||||||
Revolving credit facility - $55.0 million line as of June 30, 2023 and $40.0 million as of December 31, 2022, matures April 27, 2026, interest rates of 9.94%(2) and 8.82% at June 30, 2023 and December 31, 2022, respectively | 5,500 | 12,500 | |||||||||
Total debt obligations | 612,675 | 623,200 | |||||||||
Less: current portion of long-term debt | (6,200) | (6,200) | |||||||||
Less: unamortized debt discounts and deferred financing costs | (16,543) | (18,074) | |||||||||
Long-term debt, net | $ | 589,932 | $ | 598,926 |
Net Income (Loss) Per Common Share
The Company complies with accountingthe three-month LIBOR and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income (loss) per common shareapplicable margin.
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Interest expense(1),(2) | $ | 17,765 | $ | 12,335 | $ | 35,464 | $ | 23,870 | |||||||||||||||
(in thousands) | June 30, 2023 | December 31, 2022 | |||||||||
Redeemable senior preferred stock | $ | 225,000 | $ | 225,000 | |||||||
Accumulated unpaid dividend | 34,342 | 25,498 | |||||||||
Dividend payable | — | 5,341 | |||||||||
Redemption value | 259,342 | 255,839 | |||||||||
Less: unamortized discounts and issuance costs | (18,611) | (20,260) | |||||||||
Redeemable senior preferred stock, net of discounts and issuance costs: | $ | 240,731 | $ | 235,579 |
(in thousands) | Shares | Amount | |||||||||
December 31, 2022 | 225 | $ | 235,579 | ||||||||
Payment of cash portion of dividend and ticking fee outstanding at December 31, 2022 | — | (5,341) | |||||||||
Unpaid dividend on redeemable senior preferred stock | — | 4,383 | |||||||||
Accretion of discounts and issuance costs | — | 818 | |||||||||
March 31, 2023 | 225 | 235,439 | |||||||||
Unpaid dividend on redeemable senior preferred stock | — | 4,461 | |||||||||
Accretion of discounts and issuance costs | — | 831 | |||||||||
June 30, 2023 | 225 | $ | 240,731 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Dividends paid in cash | $ | 6,473 | $ | 3,571 | $ | 12,567 | $ | 7,076 | |||||||||||||||
Accumulated dividends accrued as part of the carrying value of redeemable senior preferred stock | 4,461 | 4,161 | 8,844 | 8,251 | |||||||||||||||||||
Dividends declared | $ | 10,934 | $ | 7,732 | $ | 21,411 | $ | 15,327 |
Reconciliationthree and six months ended June 30, 2023, was 135.1% and 201.3%, respectively, compared to a consolidated effective income tax rate of net income (loss) per common share
The Company’s net income is adjusted61.9% and 147.9% for the portionthree and six months ended June 30, 2022, respectively. The effective rates differed from the statutory rate of income that is attributable21.0% primarily due to common stock subject to redemption, as these shares only participatean increase in the valuation allowance against certain business interest carryover deferred tax assets.
Three Months Ended September 30, | Three Months Ended September 30, | |||||||
2017 | 2016 | |||||||
Net income (loss) | $ | 152,350 | $ | (36,382 | ) | |||
Less: Income attributable to common shares subject to redemption | (108,127 | ) | 47,084 | |||||
Adjusted net income (loss) | $ | 44,223 | $ | 10,702 | ||||
Weighted average shares outstanding, basic and diluted | 2,344,454 | 1,363,737 | ||||||
Basic and diluted net income (loss) per common share | $ | 0.02 | $ | 0.01 |
Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||
2017 | 2016 | |||||||
Net loss | $ | (111,519 | ) | $ | (43,646 | ) | ||
Less: Income attributable to common shares subject to redemption | (210,500 | ) | 47,084 | |||||
Adjusted net income (loss) | $ | (322,019 | ) | $ | 3,438 | |||
Weighted average shares outstanding, basic and diluted | 2,327,754 | 1,288,329 | ||||||
Basic and diluted net loss per common share | $ | (0.14 | ) | $ | 0.00 |
Common stock subject to possible conversion
The Company accounts for its common stock subject to possible conversion inexisting deferred tax assets. In accordance with the guidance enumerated inprovisions of ASC 480 “Distinguishing Liabilities from Equity”. Common stock subject to mandatory conversion is classified as a liability instrument and is measured at fair value. Conditionally convertible common stock (including common shares that feature conversion rights that are either within the control of the holder or subject to conversion upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain conversion rights that are considered by740,
Income Taxes
The Company accounts for income taxes under ASC 740 “Income Taxes”. ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requiresprovide a valuation allowance to be establishedagainst deferred income tax assets when it is more"more likely than notnot" that some portion or all or a portion of the deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company is required to file income tax returns in the United States (federal) and in various state and local jurisdictions.
The Company’s policy for recording interest and penalties associated with audits iscontinues to record such expense as a component of income taxfull valuation allowance against non-deductible interest expense. There were no amounts accrued for penalties or interest as of or during the period from January 1, 2017 through September 30, 2017. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.
Related Parties
The Company follows subtopic ASC 850-10 for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20, the related parties include: (a.) affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act); (b.) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c.) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d.) principal owners of the Company; (e.) management of the Company; (f.) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g.) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a.) the nature of the relationship(s) involved; (b.) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c.) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d.) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Settlement Income
During the three and nine months ended September 30, 2017, the Company received $427,701 from an entity with which the Company was negotiating a business combination pursuant to a Letter of Intent originally executed in February 2017. During quarter ended June 30, 2017, the Letter of Intent expired. The amount received was approximately the amount of the expenses the Company incurred in pursuing that business combination transaction.
Subsequent Events
The Company’s management reviewed all material events that have occurred after the balance sheet date through the date which these financial statements were issued.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
Note 3 — Initial Public Offering
On September 19, 2016, the Company sold 5,000,000 Units at a price of $10.00 per Unit generating gross proceeds of $50,000,000 and net proceeds of $47,981,581 after deducting $2,018,419 of transaction costs. In addition, the Company granted the Underwriter the option to purchase an additional 750,000 Units solely to cover over allotments, if any, pursuant to a 45-day over-allotment option granted to the Underwriter. The underwriters exercised the over-allotment option in part and, on October 14, 2016, the underwriters purchased 310,109 Over-allotment Option Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $3,101,090 and net proceeds of $3,008,057 after deducting $93,033 of transaction costs.
Each Unit consists of one share of common stock in the Company, and one Warrant (“Warrant”). Each Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share commencing on the later of 30 days after the Company’s completion of its initial Business Combination or September 14, 2017, and expiring five years from the completion of the Company’s initial Business Combination. The Company may redeem the Warrants at a price of $0.01 per Warrant upon 30 days’ notice, only in the event that the last sale price of the common shares is at least $16.00 per share for any 20 trading days within a 30-trading day period (“30-Day Trading Period”) ending on the third day prior to the date on which notice of redemption is given, provided there is a current registration statement in effect with respect to the common shares underlying such Warrants during the 30 day redemption period. If the Company redeems the Warrants as described above, management will have the option to require all holders that wish to exercise Warrants to do so on a “cashless basis.” In accordance with the warrant agreement relating to the Warrants to be sold and issued in the Offering the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Warrants. If a registration statement is not effective within 90 days following the consummation of a Business Combination, Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act of 1933, as amended. In the event that a registration statement is not effective at the time of exercise or no exemption is available for a cashless exercise, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and in no event (whether in the case of a registration statement being effective or otherwise) will the Company be required to net cash settle the Warrant exercise. If an initial Business Combination is not consummated, the Warrants will expire and will be worthless.
Note 4 — Private Units
Simultaneously with the Offering, the Initial Shareholders of the Company purchased an aggregate of 421,107 Private Units at $10.00 per Private Unit (for an aggregate purchase price of $4,211,070) from the Company. All of the proceeds received from these purchases were placed in the Trust Account.
The Private Units are identical to the Units sold in the Offering except the Warrants included in the Private Units will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. Additionally, the holders of the Private Units have agreed (A) to vote the shares underlying their Private Units in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the Company’s amended and restated certificate of incorporation with respect to the Company’s pre-Business Combination activities prior to the consummation of such a Business Combination unless the Company provides dissenting Public Stockholders with the opportunity to convert their public shares in connection with any such vote, (C) not to convert any shares underlying the Private Units into the right to receive cash from the Trust Account in connection with a stockholder vote to approve an initial Business Combination or a vote to amend the provisions of the Company’s amended and restated certificate of incorporation relating to shareholders’ rights or pre-Business Combination activity or sell their shares to the Company in connection with a tender offer the Company engages in and (D) that the shares underlying the Private Units shall not participate in any liquidating distribution upon winding up if a Business Combination is not consummated. The purchasers have also agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of an initial Business Combination.
Note 5 — Notes Payable
On July 1, 2015, the Company issued a $55,000 principal amount unsecured promissory note. The note was non-interest bearing and was payable on the consummation of the Offering. On September 26, 2016, the Company amended the agreement with lender and outstanding balance was amended to $27,500. The note is now due upon completion of an initial business combination. Due to the short-term nature of the note, the fair value of the note approximates the carrying amount.
Note 6 — Commitments
Underwriting Agreement
The Company entered into an agreement with the underwriters of the Offering (“Underwriting Agreement”). The Underwriting Agreement required the Company to pay an underwriting discount of 3.0% of the gross proceeds of the Offering as an underwriting discount and incur a deferred underwriting discount of up to 2.0% for an aggregate underwriting discount of 5.0% of the gross proceeds of the Offering, in each case as set forth in the Underwriting Agreement. The Company will paycontinue to evaluate the deferred underwriting fee at the closingrealizability of the Business Combination. The underwriters also purchased an interest in M SPAC Holdings I LLC, an entity controlled by the Company’s insiders, which entitles it to a beneficial interest in 63,184 insider shares.
The Underwriting Agreement granted Chardan Capital Markets, LLC a right of first refusal, for a period of thirty-six months from the closing of the Offering, to act as lead investment banker, lead book-runner, and/or lead placement agent with 33% of the economics or 25% if three investment banks are involved in the transaction, for any public or private equity and debt offerings during such period.
The Underwriting Agreement will provide that the Company will pay Chardan Capital Markets, LLC a warrant solicitation fee of five percent (5%) of the exercise price of each public warrant exercised during the period commencing on the later of 12 months from the closing of the Proposed Public Offering or 30 days after the completion of the Company’s initial business combination including warrants acquired by security holders in the open market. The warrant solicitation fee will be payable in cash. There is no limitation on the maximum warrant solicitation fee payable to Chardan Capital Markets, LLC except to the extent it is limited by the number of warrants outstanding.
Purchase Option
The Company sold to the underwriters, for $100, a unit purchase option to purchase up to a total of 300,000 units exercisable at $12.00 per unit (or an aggregate exercise price of $3,600,000) commencing on the later of the consummation of a Business Combination and six months from September 13, 2016. The unit purchase option expires five years from September 13, 2016. The units issuable upon exercise of this option are identical to the Units being offered in the Offering. The Company has agreed to grant to the holders of the unit purchase option, demand and “piggy back” registration rights for periods of five and seven years, respectively, from September 13, 2016, including securities directly and indirectly issuable upon exercise of the unit purchase option.
The Company accounts for the fair value of the unit purchase option, inclusive of the receipt of a $100 cash payment, as an expense of the Offering resulting in a charge directly to stockholders’ equity. The Company estimates that the fair value of this unit purchase option was approximately $2,695,000 (or $8.98 per unit) using a Black-Scholes option-pricing model. The fair value of the unit purchase option to be granted to the placement agent is estimated as of the date of grant using the following assumptions: (1) expected volatility of 149%, (2) risk-free interest rate of 1.22% and (3) expected life of five years. The unit purchase option may be exercised for cash ornet deferred tax asset on a “cashless”quarterly basis atand, as a result, the holder’s option (exceptvaluation allowance may change in the case of a forced cashless exercise upon the Company’s redemption of the Warrants, as described in Note 3), such that the holder may use the appreciated value of the unit purchase option (the difference between the exercise prices of the unit purchase option and the underlying Warrants and the market price of the Units and underlying common stock) to exercise the unit purchase option without the payment of any cash. The Company will have no obligation to net cash settle the exercise of the unit purchase option or the Warrants underlying the unit purchase option. The holder of the unit purchase option will not be entitled to exercise the unit purchase option or the Warrants underlying the unit purchase option unless a registration statement covering the securities underlying the unit purchase option is effective or an exemption from registration is available. If the holder is unable to exercise the unit purchase option or underlying Warrants, the unit purchase option or Warrants, as applicable, will expire worthless.
Registration Rights
The Initial Stockholders are entitled to registration rights with respect to their initial shares and the purchasers of the Private Units will be entitled to registration rights with respect to the Private Units (and underlying securities), pursuant to an agreement signed on September 13, 2016. The holders of the majority of the initial shares are entitled to demand that the Company register these shares at any time commencing three months prior to the first anniversary of the consummation of a Business Combination. The holders of the Private Units (or underlying securities) are entitled to demand that the Company register these securities at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of a Business Combination.
Administrative Service Fee
The Company, commencing on September 13, 2016, has agreed to pay an affiliate of the Company’s executive officers a monthly fee of $10,000 for general and administrative services due on the first of each month. During the three months ended September 30, 2017 and 2016, the Company incurred administrative fees of $30,000 and $5,667, respectively. During the nine months ended September 30, 2017 and 2016, the Company incurred administrative fees of $90,000 and $5,667, respectively.
In April 2017, the Company and its Sponsor have agreed to defer payment of the monthly administrative service fee until a future date which has yet to be determined by the Sponsor.
Note 7 — Stockholder’s Equity
Preferred Stock
periods.
Directors. As of SeptemberJune 30, 2017, there are no preferred shares2023 and December 31, 2022, the Company has not issued or outstanding.
Common Stock
Amended and Restated Certificate of Incorporation
The Company’s Certificate of Incorporation was amended in connection with the Offering to reduce the Company’s authorizedany shares of common stock from 50,000,000preferred stock.
2.0 million shares of its outstanding Common Stock for a total of up to $10.0 million. Under the terms of this plan, the Company may purchase shares through open market purchases, unsolicited or solicited privately negotiated transactions, or in another manner so long as it complies with applicable rules and regulations. The Company is authorizedhas not repurchased any shares under the share repurchase program for the three and six months ended June 30, 2023.
June 30, 2023 | December 31, 2022 | ||||||||||
in thousands, except share data, which is in whole units | |||||||||||
Number of shares purchased(1) | — | 1,309,374 | |||||||||
Average price paid per share | $ | — | $ | 4.42 | |||||||
Total Investment(1) | $ | — | $ | 5,791 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Stock-based compensation expense | $ | 1,746 | $ | 1,542 | 3,682 | $ | 3,100 | ||||||||||||||||
On April 23, 2015, 1,437,500up to 6,685,696 shares of the Company’s common stock were sold toCompany's Common Stock. On March 17, 2022, the Initial Stockholders at a priceCompany's Board of approximately $0.02 per share for an aggregate of $25,000. This number includes an aggregate of up to 187,500 shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. All of these shares will be placed in escrow until (1) with respect to 50% of the shares, the earlier of six months after the date of the consummation of an initial Business Combination and the date on which the closing price of the Company’s common stock equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the Company’s initial business combination and (2) with respect to the remaining 50% of the insider shares, six months after the date of the consummation of an initial Business Combination, or earlier, in either case, if, subsequent to an initial Business Combination, the Company consummates a liquidation, merger, share exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares for cash, securities or other property. On November 11, 2016, 109,973 Founders’ shares were forfeited and cancelled.
As of September 30, 2017 and December 31, 2016, there were 2,340,170 and 2,310,710 common shares issued and outstanding, which excludes 4,718,573 and 4,748,033 shares subject to possible conversion, respectively.
The Company’s insiders have agreed (A) to vote their insider shares, private shares and any public shares acquired in or after the Offering in favor of any proposed Business Combination, (B) not to propose, or vote in favor of,Directors unanimously approved an amendment to the Company’s certificate2018 Plan, which was subsequently approved by our shareholders, to increase the number of incorporationshares authorized for issuance under the plan by 2,500,000 shares, resulting in 9,185,696 shares of the Company's Common Stock authorized for issuance under the plan.
(in thousands) | Contingent Consideration Liabilities | ||||
December 31, 2022 | $ | 8,079 | |||
Addition of contingent consideration (related to asset acquisition) | 2,100 | ||||
Accretion of contingent consideration | 113 | ||||
Fair value adjustments due to changes in estimates of future payments | 116 | ||||
Payment of contingent consideration | (4,059) | ||||
March 31, 2023 | 6,349 | ||||
Addition of contingent consideration due to resolution of contingency | 7,000 | ||||
Adjustment for receivable due to residual shortfall | (2,053) | ||||
Accretion of discount on contingent consideration | 117 | ||||
June 30, 2023 | $ | 11,413 |
(in thousands) | Fair Value Hierarchy | June 30, 2023 | December 31, 2022 | ||||||||||||||
Contingent consideration, current portion | Level 3 | $ | 9,413 | $ | 6,079 | ||||||||||||
Contingent consideration, noncurrent portion | Level 3 | 2,000 | 2,000 | ||||||||||||||
Total contingent consideration | $ | 11,413 | $ | 8,079 |
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
SMB Payments | $ | 147,895 | $ | 142,506 | $ | 302,828 | $ | 272,465 | |||||||||||||||
B2B Payments | 2,971 | 5,295 | 5,757 | 11,220 | |||||||||||||||||||
Enterprise Payments | 31,424 | 18,629 | 58,733 | 35,984 | |||||||||||||||||||
Consolidated revenues | $ | 182,290 | $ | 166,430 | $ | 367,318 | $ | 319,669 | |||||||||||||||
Depreciation and amortization: | |||||||||||||||||||||||
SMB Payments | $ | 10,769 | $ | 10,980 | $ | 21,615 | $ | 21,804 | |||||||||||||||
B2B Payments | 127 | 73 | 252 | 146 | |||||||||||||||||||
Enterprise Payments | 6,713 | 6,199 | 13,403 | 12,396 | |||||||||||||||||||
Corporate | 371 | 253 | 758 | 512 | |||||||||||||||||||
Consolidated depreciation and amortization | $ | 17,980 | $ | 17,505 | $ | 36,028 | $ | 34,858 | |||||||||||||||
Operating (loss) income: | |||||||||||||||||||||||
SMB Payments | $ | 11,542 | $ | 13,995 | $ | 23,553 | $ | 26,481 | |||||||||||||||
B2B Payments | (19) | 663 | (868) | 1,072 | |||||||||||||||||||
Enterprise Payments | 16,079 | 5,698 | 28,742 | 10,192 | |||||||||||||||||||
Corporate | (8,469) | (7,296) | (15,446) | (13,859) | |||||||||||||||||||
Consolidated operating income | $ | 19,133 | $ | 13,060 | $ | 35,981 | $ | 23,886 |
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Total operating income of reportable segments | $ | 27,602 | $ | 20,356 | $ | 51,427 | $ | 37,745 | |||||||||||||||
Corporate | (8,469) | (7,296) | (15,446) | (13,859) | |||||||||||||||||||
Interest expense | (17,765) | (12,335) | (35,464) | (23,870) | |||||||||||||||||||
Other income, net | 375 | 29 | 587 | 80 | |||||||||||||||||||
Income tax benefit (expense) | (2,355) | (467) | (2,222) | (142) | |||||||||||||||||||
Net (loss) income | $ | (612) | $ | 287 | $ | (1,118) | $ | (46) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in thousands except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net (loss) income | $ | (612) | $ | 287 | $ | (1,118) | $ | (46) | |||||||||||||||
Less: Dividends and accretion attributable to redeemable senior preferred stockholders | (11,765) | (8,549) | (23,060) | (16,949) | |||||||||||||||||||
Net loss attributable to common stockholders | $ | (12,377) | $ | (8,262) | $ | (24,178) | $ | (16,995) | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Basic and diluted: | |||||||||||||||||||||||
Weighted-average common shares outstanding(1) | 78,292 | 78,603 | 78,213 | 78,600 | |||||||||||||||||||
Loss per common share | $ | (0.16) | $ | (0.11) | $ | (0.31) | $ | (0.22) | |||||||||||||||
Six Months Ended June 30, | |||||||||||
(in thousands) | 2023 | 2022 | |||||||||
Outstanding warrants on Common Stock(1) | 3,557 | 3,557 | |||||||||
Outstanding options and warrants issued to adviser(2) | 600 | 600 | |||||||||
Restricted stock awards(3) | 1,018 | 2,045 | |||||||||
Outstanding stock option awards(3) | 919 | 1,172 | |||||||||
Total | 6,094 | 7,374 |
Management’sManagement's Discussion and Analysis.Forward-Looking StatementsThis Quarterly Report on Form 10-Q includes forward-looking statements. We have based these forward-looking statements on our current expectationsAnalysis of Financial Condition and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levelsResults of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to “we”, “us”, “our” or the “Company” are to M I Acquisitions Inc., except where the context requires otherwise. Operationscondensed financial statementsAudited Consolidated Financial Statements and related notes theretoNotes and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Certain amounts in this section may not add mathematically due to rounding.report.OverviewWe were formedQuarterly Report on April 23, 2015Form 10-Q and our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more target businesses. Our efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although we intend to focus on target businesses operating in the technology, media and telecommunications industries. We intend to utilize cash derived from the proceeds of our public offering in effecting our initial business combination.We presently have no revenue, have had losses since inception from incurring formation costs and have had no operations other than the active solicitation of a target business with which to complete a business combination. We have relied upon the sale of our securities and loans from our officers and directors to fund our operations.On September 19, 2016, we consummated our initial public offering (the “Offering”) of 5,000,000 units (the “Units”). Each Unit consists of one share of common stock (“Common Stock”), and one warrant (“Public Warrant”) to purchase one share of Common Stock at an exercise price of $11.50 per share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $50,000,000. We granted the underwriters a 45-day option to purchase up to 750,000 additional Units to cover over-allotments, if any. Simultaneously with the consummation of the Offering, we consummated the private placement (“Private Placement”) of 402,500 units (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $4,025,000. The underwriters exercised the over-allotment option in part and, on October 14, 2016, the underwriters purchased 310,109 over-allotment option Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $3,101,090. On October 14, 2016, simultaneously with the sale of the Over-Allotment Units, we consummated the private sale of an additional 18,607 Private Units to one of the initial stockholders, generating gross proceeds of $186,070. The remainder of the over-allotment option expired unexercised.As of November 13, 2017, a total of $54,990,849 was held in the trust account established for the benefit of the Company’s public shareholders, which includes approximately $296,726 in interest income available from the Company’s investments in the Trust Account to pay its income tax obligations.Our management has broad discretion with respect to the specific application of the net proceeds of the initial public offering and the private placement, although substantially all of the net proceeds are intended to be applied generally towards consummating a business combination.Results of OperationsOur entire activity from inception up to September 19, 2016 was in preparation for the Offering. Since the Offering, our activity has been limited to the evaluation of business combination candidates, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We expect to generate small amounts of non-operating income in the form of interest income on cash and cash equivalents. Interest income is not expected to be significant in view of current low interest rates on risk-free investments (treasury securities). We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. Our expenses have increased substantially since closing the Offering. For the three and nine monthsyear ended September 30, 2017, we had a net income and net loss of $152,350 and $(111,519), respectively. During the three and nine months ended September 30, 2017, we incurred $367,033 and $714,534, respectively, of general and administrative expenses and $30,000 and $90,000, respectively, of administrative fees paid to a related party. For the three and nine months ended September 30, 2017, these expenses were offset by other income totaling $549,383 and $693,015. respectively. December 31, 2022.SeptemberJune 30, 2017, other income2023, our consolidated revenue of $182.3 million increased by $15.9 million, or 9.6%, from $166.4 million for the three months ended June 30, 2022. This overall increase was comprised ofmainly driven by increases in merchant card fee rates, offset by merchant bankcard volume decreases in our SMB Payments segment, an increase in new enrollments and higher interest income in our Enterprise Payments segment. These increases were partially offset by a decrease in revenue in B2B Payments segment due to wind down of $121,682 and settlement income of $427,701, which we received from an entity that decided that it no longer wished to engage in a transaction with us. The settlement income received was approximately the amount of the expenses we incurred pursuing that transaction. certain managed services programs.ninesix months ended SeptemberJune 30, 2017, other income2023, our consolidated revenue of $367.3 million increased by $47.6 million, or 14.9%, from $319.7 million for the six months ended June 30, 2022. The overall increase was comprised ofdriven by increases in merchant card fee rates, increased merchant bankcard volume, offset by a decrease in certain fee based revenue in our SMB Payments segment and an increase in new enrollments and higher interest income in our Enterprise Payments segment. These increases were partially offset by a decrease in revenue in B2B Payments segment due to wind down of $265,314 and settlement income of $427,701.certain managed services programs.
ForThe following table presents our revenues by type for the three and ninesix months ended SeptemberJune 30, 2016, we had a net loss of $36,3822023 and $43,646, respectively. During2022:
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
2023 | 2022 | $ Change | 2023 | 2022 | $ Change | ||||||||||||||||||||||||||||||
Revenue Type: | |||||||||||||||||||||||||||||||||||
Merchant card fees | $ | 144,524 | $ | 139,793 | $ | 4,731 | $ | 294,168 | $ | 267,745 | $ | 26,423 | |||||||||||||||||||||||
Money transmission services | 23,718 | 17,183 | 6,535 | 45,124 | 33,466 | 11,658 | |||||||||||||||||||||||||||||
Outsourced services and other services | 10,582 | 6,887 | 3,695 | 21,587 | 13,984 | 7,603 | |||||||||||||||||||||||||||||
Equipment | 3,466 | 2,567 | 899 | 6,439 | 4,474 | 1,965 | |||||||||||||||||||||||||||||
Total revenues | $ | 182,290 | $ | 166,430 | $ | 15,860 | $ | 367,318 | $ | 319,669 | $ | 47,649 |
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
2023 | 2022 | $ Change | 2023 | 2022 | $ Change | ||||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Cost of services (excludes depreciation and amortization) | $ | 115,281 | $ | 110,749 | $ | 4,532 | $ | 237,247 | $ | 212,229 | $ | 25,018 | |||||||||||||||||||||||
Salary and employee benefits | 19,109 | 15,770 | 3,339 | 38,157 | 31,847 | 6,310 | |||||||||||||||||||||||||||||
Depreciation and amortization | 17,980 | 17,505 | 475 | 36,028 | 34,858 | 1,170 | |||||||||||||||||||||||||||||
Selling, general and administrative | 10,787 | 9,346 | 1,441 | 19,904 | 16,849 | 3,055 | |||||||||||||||||||||||||||||
Total operating expenses | $ | 163,157 | $ | 153,370 | $ | 9,787 | $ | 331,336 | $ | 295,783 | $ | 35,553 |
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
2023 | 2022 | $ Change | 2023 | 2022 | $ Change | ||||||||||||||||||||||||||||||
Other (expense) income | |||||||||||||||||||||||||||||||||||
Interest expense | $ | (17,765) | $ | (12,335) | $ | (5,430) | $ | (35,464) | $ | (23,870) | $ | (11,594) | |||||||||||||||||||||||
Other income, net | 375 | 29 | 346 | 587 | 80 | 507 | |||||||||||||||||||||||||||||
Total other expense, net | $ | (17,390) | $ | (12,306) | $ | (5,084) | $ | (34,877) | $ | (23,790) | $ | (11,087) |
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
2023 | 2022 | $ Change | 2023 | 2022 | $ Change | ||||||||||||||||||||||||||||||
Income before income taxes | $ | 1,743 | $ | 754 | $ | 989 | $ | 1,105 | $ | 96 | $ | 1,009 | |||||||||||||||||||||||
Income tax expense | $ | 2,355 | $ | 467 | $ | 1,888 | $ | 2,222 | $ | 142 | $ | 2,080 | |||||||||||||||||||||||
Effective tax rate | 135.1 | % | 61.9 | % | 201.2 | % | 147.9 | % |
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
2023 | 2022 | $ Change | 2023 | 2022 | $ Change | ||||||||||||||||||||||||||||||
Revenue | $ | 147,895 | $ | 142,506 | $ | 5,389 | $ | 302,828 | $ | 272,465 | $ | 30,363 | |||||||||||||||||||||||
Operating expenses | 136,353 | 128,511 | 7,842 | 279,275 | 245,984 | 33,291 | |||||||||||||||||||||||||||||
Operating income | $ | 11,542 | $ | 13,995 | $ | (2,453) | $ | 23,553 | $ | 26,481 | $ | (2,928) | |||||||||||||||||||||||
Operating margin | 7.8 | % | 9.8 | % | 7.8 | % | 9.7 | % | |||||||||||||||||||||||||||
Depreciation and amortization | $ | 10,769 | $ | 10,980 | $ | (211) | $ | 21,615 | $ | 21,804 | $ | (189) | |||||||||||||||||||||||
Key Indicators: | |||||||||||||||||||||||||||||||||||
Merchant bankcard processing dollar value | $ | 15,111,781 | $ | 15,402,560 | $ | (290,779) | $ | 30,332,495 | $ | 29,479,407 | $ | 853,088 | |||||||||||||||||||||||
Merchant bankcard transaction count | $ | 180,343 | $ | 164,341 | $ | 16,002 | $ | 343,749 | $ | 310,289 | $ | 33,460 |
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
2023 | 2022 | $ Change | 2023 | 2022 | $ Change | ||||||||||||||||||||||||||||||
Revenue | $ | 2,971 | $ | 5,295 | $ | (2,324) | $ | 5,757 | $ | 11,220 | $ | (5,463) | |||||||||||||||||||||||
Operating expenses | 2,990 | 4,632 | (1,642) | 6,625 | 10,148 | (3,523) | |||||||||||||||||||||||||||||
Operating (loss) income | $ | (19) | $ | 663 | $ | (682) | $ | (868) | $ | 1,072 | $ | (1,940) | |||||||||||||||||||||||
Operating margin | (0.6) | % | 12.5 | % | (15.1) | % | 9.6 | % | |||||||||||||||||||||||||||
Depreciation and amortization | $ | 127 | $ | 73 | $ | 54 | $ | 252 | $ | 146 | $ | 106 | |||||||||||||||||||||||
Key Indicators: | |||||||||||||||||||||||||||||||||||
B2B issuing dollar volume | $ | 216,358 | $ | 214,085 | $ | 2,273 | $ | 414,904 | $ | 383,580 | $ | 31,324 | |||||||||||||||||||||||
B2B issuing transaction count | 282,000 | 247 | $ | 35 | 562 | 435 | 127 |
(in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
2023 | 2022 | $ Change | 2023 | 2022 | $ Change | ||||||||||||||||||||||||||||||
Revenue | $ | 31,424 | $ | 18,629 | $ | 12,795 | $ | 58,733 | $ | 35,984 | $ | 22,749 | |||||||||||||||||||||||
Operating expenses | 15,345 | 12,931 | 2,414 | 29,991 | 25,792 | 4,199 | |||||||||||||||||||||||||||||
Operating income | $ | 16,079 | $ | 5,698 | $ | 10,381 | $ | 28,742 | $ | 10,192 | $ | 18,550 | |||||||||||||||||||||||
Operating margin | 51.2 | % | 30.6 | % | 48.9 | % | 28.3 | % | |||||||||||||||||||||||||||
Depreciation and amortization | $ | 6,713 | $ | 6,199 | $ | 514 | $ | 13,403 | $ | 12,396 | $ | 1,007 | |||||||||||||||||||||||
Key Indicators: | |||||||||||||||||||||||||||||||||||
Average billed clients | 387,384 | 342,789 | 44,595 | 520,028 | 354,473 | 165,555 | |||||||||||||||||||||||||||||
Average new enrollments | 53,374 | 28,251 | 25,123 | 49,661 | 25,846 | 23,815 |
Six Months Ended June 30, | |||||||||||||||||
(in thousands) | 2023 | 2022 | |||||||||||||||
Net cash provided by (used in): | |||||||||||||||||
Operating activities | $ | 46,857 | $ | 30,334 | |||||||||||||
Investing activities | (13,082) | (12,735) | |||||||||||||||
Financing activities | 144,138 | 562 | |||||||||||||||
Net increase in cash and cash equivalents and restricted cash | $ | 177,913 | $ | 18,161 |
Liquidity and Capital Resources
As of September2021 through June 30, 2017, we had cash outside our trust account of $479,382.
Our liquidity needs have been satisfied to date through the Offering, the receipt of $25,000 from the sale of the insider shares and loans from insiders and a related party and an unrelated party in an aggregate amount of $186,720. During the nine months2022; 2) 6.00:1.00 at each fiscal quarter ended September 30, 2017, we withdrew interest income totaling $71,702 to be utilized for payment2022 through June 30, 2023; and 3) 5.50:1.00 at each fiscal quarter ended September 30, 2023 each fiscal quarter thereafter. As of tax obligations. In addition, we received $427,701 from a companyJune 30, 2023, the Total Net Leverage Ratio was not applicable and the Company was in compliance with which we were negotiating a business combination after it decided that it no longer wished to engage in a transaction with us. The amount received was approximately the amount of the expenses we incurred in pursuing that transaction.
We intend to use substantially all of the net proceeds of the Offering, including the funds heldcovenants in the trust account,Credit Agreement.
aboutAbout Market RiskAsSeptember 30, 2017, we wereour Annual Report on Form 10-K for the year ended December 31, 2022. Our exposures to market risk have not subject to any market or interest rate risk. Following the consummation of the Offering, the net proceeds of the Offering, including amounts in the trust account, may only be invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.changed materially since December 31, 2022.
disclosures.Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our of the end of the fiscal quarter ended September 30, 2017, as such term is defined in Rules 13a-15(e) and 15d-15(e) underof the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective.Disclosure controls and procedures areAct, designed to ensureprovide reasonable assurance that information required to be disclosed by usthe Company in ourreports that it files or submits under the Exchange Act reports is recorded, processed, summarized andor reported within the time periods specified in the SEC’sSEC rules and forms,regulations and that such information is accumulated and communicated to our management, including our principal executive officer and(CEO), our principal financial officer or persons performing similar functions,(CFO) and, as appropriate, to allow timely decisions regarding required disclosure.washave been no changechanges in ourthe Company's internal control over financial reporting that occurred during the fiscal quarter of 2017 covered by this Quarterly Report on Form 10-Qthree and six months ended June 30, 2023 that hashave materially affected, or isare reasonably likely to materially affect, ourthe Company's internal control over financial reporting.
from RegisteredOn September 19, 2016, we consummated our initial public offering (the “Offering”) and Use of 5,000,000 units (the “Units”). Each Unit consistsProceedsone shareEquity Securitiescommon stock (“Common Stock”), and one warrant (“Public Warrant”) to purchase one share ofits Common Stock at an exercise priceduring the three months ended June 30, 2023 were as follows:Period Average Price Paid per Share Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs April 1-30, 2023 64,616 $ 3.66 — 690,626 May 1-31, 2023 — $ — — 690,626 June 1-30, 2023 — — 690,626 Total 64,616 $ 3.66 — $11.50 per share. The Units were sold at an offering pricerestricted stock awards, which was determined based on the fair market value on the vesting date.$10.00 per Unit, generating gross proceedsDirectors approved a stock repurchase program for the purchase of $50,000,000. We granted the underwriters a 45-day option to purchase up to 750,000 additional Units to cover over-allotments, if any. Simultaneously with the consummation2.0 million of the Offering, we consummated the private placement (“Private Placement”) of 402,500 units (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $4,025,000.Company's Common Stock outstanding for up to $10.0 million. The underwriters exercised the over-allotment option in part and, on October 14, 2016, the underwriters purchased 310,109 over-allotment option Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $3,101,090. On October 14, 2016, simultaneously with the sale of the Over-Allotment Units, we consummated the private sale of an additional 18,607 Private Units to one of the initial stockholders, generating gross proceeds of $186,070. The remainder of the over-allotment option expired unexercised.The Private Units are identical to the units sold in the Offering except the warrants included in the Private Units will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. The holders of the Private Units have agreed (A) to vote their private shares and any public shares acquired by them in favor of any proposed business combination, (B)Company did not to propose, or vote in favor of, an amendment to our certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by March 13, 2018 (or June 13, 2018, as applicable), unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment 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 held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares, (C) not to convertrepurchase any shares (includingunder the private shares) intoshare repurchase program during the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisionsfirst quarter of our certificate2023.2 of this Form 10-Q. 5. Other Information
Exhibits.Exhibits101.INS * 101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH * 101.SCHXBRL Taxonomy Extension Schema Document 101.CAL * 101.CALXBRL Taxonomy Extension Calculation Linkbase Document 101.LAB * XBRL Taxonomy Extension Label Linkbase Document 101.DEF101.PRE *XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF * XBRL Taxonomy Extension Definition Linkbase Document 101.LABXBRL Taxonomy Extension Label Linkbase Document101.PREXBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith.
In accordance withM I ACQUISITIONS, INC.August 10, 2023 By:Joshua SasonJoshua SasonThomas C. Priore
and Chairmanexecutive officer)Executive Officer)August 10, 2023 By:Marc ManuelMarc ManuelTimothy M. O'Leary financial and accounting officer)Financial Officer)Date: November 14, 2017 16