Filing summary
Entity mismatch: The supplied filing is for M I Acquisitions, Inc., not Priority Technology Holdings, Inc. It is a Form 10-Q for the quarter ended March 31, 2017; investors should verify the issuer before relying on this summary.
Business context and reporting period
M I Acquisitions was a blank-check company seeking a business combination, with a stated focus on technology, media and telecommunications. It reported no operating revenue and had not commenced operations beyond evaluating potential acquisition candidates. The company identified itself as a shell company and an emerging growth company.
Financial performance and position
| Metric | Q1 2017 / March 31, 2017 | Comparable period / prior year-end |
|---|---|---|
| Revenue | None reported | None reported |
| Expenses | $245,466, including $30,000 in related-party administrative fees | $7,264 in Q1 2016 |
| Interest income | $56,621 | None reported in Q1 2016 |
| Net loss | $188,845; basic and diluted loss per share of $0.08 | $7,264 loss; $0.01 per share in Q1 2016 |
| Operating cash flow | $(306,166) | $(1,767) in Q1 2016 |
| Cash outside trust | $128,071 | $362,535 at December 31, 2016 |
| Trust assets | $54,716,747 | $54,731,828 at December 31, 2016 |
| Total liabilities | $1,216,409, including $27,500 note payable and $1,062,022 deferred underwriting fee | $1,212,149 at December 31, 2016 |
Traditional operating margins are not meaningful because the company had no operating revenue. Cash and working capital outside the trust were limited; management reported approximately $95,000 of working capital. Trust funds were restricted principally for a business combination or liquidation, and trust interest could be withdrawn for taxes.
Material changes versus the prior comparable period
Net loss rose from $7,264 to $188,845, primarily reflecting higher operating costs and a new $30,000 related-party administration fee, partly offset by trust interest income. Operating cash use increased to $306,166. Compared with December 31, 2016, cash outside trust fell by $234,464, while trust assets declined by $15,081.
Outlook, risks and unusual items
- Management stated the company would not generate operating revenue until completing an initial business combination and expected public-company and due-diligence costs to continue.
- The filing says available outside-trust cash may be insufficient to fund operations through the business-combination deadline. Management said additional financing might be needed, but insiders and other potential lenders were not obligated to provide it. The filing identifies substantial doubt about the company’s ability to continue as a going concern.
- The company generally had 18 months from the offering to complete a business combination, with up to three one-month extensions requiring insider deposits into trust. The filing gives differing deadline dates in different passages; the applicable deadline should be verified.
- If no business combination is completed by the deadline, the company must wind up and redeem public shares from the trust, subject to the stated terms. Warrants would expire worthless, and insider/private shares would not participate in the redemption distribution.
- Potential risks include failure to identify or complete a transaction, insufficient financing, trust-account claims by third parties, public-share redemptions that constrain transaction funding, and inability of insiders to satisfy certain indemnity obligations.
- In April 2017, the company and its sponsor agreed to defer payment of the $10,000 monthly administrative service fee. Management reported disclosure controls were effective and no material change in internal control during the quarter.
Most important facts to verify
- Whether this filing is relevant to Priority Technology Holdings, given that the named registrant is M I Acquisitions, Inc.
- The business-combination completion deadline and any extension or trust-funding notices, given inconsistent dates in the filing.
- Current unrestricted cash, expected operating costs, and availability and terms of any additional financing.
- Trust-account balance, restrictions, tax withdrawals, redemption exposure, and the deferred underwriting fee payable at a business-combination closing.
- Whether a business combination was subsequently identified or completed and how that affected public shares, warrants, and liquidity.