Business Context and Reporting Period
This Form 10-Q, filed August 10, 2018, covers the three and six months ended June 30, 2018. The filing identifies the registrant as Thunder Bridge Acquisition, Ltd., a Cayman Islands blank-check company, not Repay Holdings Corp. The filing text therefore does not provide financial information for Repay Holdings Corp.
Thunder Bridge was formed to pursue an initial business combination and had not generated operating revenue. Its activities consisted of formation, its June 2018 public offering, and searching for a target business. The financial statements are unaudited and prepared under U.S. GAAP.
Key Financial Metrics
| Metric | June 30, 2018 / Six Months Ended |
|---|---|
| Total assets | $261.9 million |
| Cash outside trust account | $1.17 million |
| Trust account assets | $260.6 million |
| Total liabilities | $10.0 million |
| Deferred underwriting fee payable | $9.69 million |
| Ordinary shares subject to possible redemption | $247.0 million, representing 24.45 million shares |
| Shareholders’ equity | $5.0 million |
| Net loss | $4,648 |
| Loss from operations | $40,699 |
| Interest income | $6,369 |
| Unrealized gain on marketable securities | $29,682 |
| Net cash used in operating activities | $3,058 |
| Net cash used in investing activities | $260.6 million |
| Net cash provided by financing activities | $261.7 million |
Loss available to ordinary shareholders was $40,639 for the quarter and $40,699 for the six-month period, or $0.01 per basic and diluted share. Revenue and operating margins were not meaningful because the company had no operating business.
The company had no long-term debt, capital leases, or operating lease obligations. Its $277,600 of sponsor loans and advances was fully repaid upon completion of the public offering.
Material Changes Versus the Prior Comparable Period
- Compared with December 31, 2017, total assets increased from $176,330 to $261.9 million, principally due to the June 2018 public offering and related placements.
- Cash and cash equivalents increased from $25,817 to $1.17 million, while $260.6 million was placed in the trust account.
- The company completed the sale of 25.8 million units for gross proceeds of approximately $258.0 million, including the underwriters’ 3.3 million-unit over-allotment.
- The sponsor and Cantor purchased 8.83 million private placement warrants for $8.83 million.
- Deferred underwriting commissions of $9.69 million were recorded as payable and are due only if an initial business combination is completed, subject to the underwriting agreement.
- The company moved from a pre-offering formation stage to an active search for a business-combination target. No comparable prior-period operating revenue or business results were reported.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Management expected existing resources to fund operations through December 21, 2019, the deadline for completing an initial business combination, although it acknowledged that costs could exceed estimates.
- The trust account may be used only in connection with an initial business combination or the redemption of public shares. Public shareholders generally may redeem shares in connection with a proposed transaction.
- If no business combination is completed by December 21, 2019, the company must cease operations, redeem the public shares using the trust account, and liquidate. Founder shares and private placement warrants would not receive liquidation distributions and could expire worthless.
- The target or targets must generally have an aggregate fair market value of at least 80% of the trust account balance, excluding specified amounts, and the resulting company must obtain a controlling interest.
- Management may seek sponsor or affiliate working-capital loans of up to $1.5 million that could be convertible into warrants. No such loans were outstanding at June 30, 2018.
- A contingent forward purchase agreement contemplated a potential $50 million purchase of units at the time of a business combination, but the purchaser’s obligation depended on its consent to the transaction.
- Additional equity or debt financing may be required if redemptions are significant, the forward purchase agreement is not consummated, or transaction costs exceed available cash. Such financing could dilute existing shareholders or increase leverage.
- The company reported no legal proceedings and no material changes to previously disclosed risk factors. Management concluded that disclosure controls and procedures were effective and reported no material changes in internal control over financial reporting.
Important Facts for Investors to Verify
- Registrant identity: Confirm whether the requested company should be Thunder Bridge Acquisition, Ltd. or Repay Holdings Corp.; the supplied filing is not a Repay Holdings Corp. filing.
- Business-combination status: Verify whether Thunder Bridge subsequently completed a transaction, the identity of any target, and the resulting company.
- Trust-account protection: Verify the amount ultimately held in trust, investment terms, redemption activity, and any amounts released for taxes or transaction expenses.
- Deadline and liquidation terms: Verify whether the December 21, 2019 deadline was extended, satisfied, or followed by liquidation.
- Dilution and financing: Review the founder-share conversion terms, public and private warrants, forward purchase agreement, potential working-capital loans, and any subsequent securities issuance.
- Deferred underwriting fees: Confirm whether the $9.69 million liability was ultimately paid upon completion of a business combination.