Filing identity and reporting period
Important identity discrepancy: The supplied 10-Q is for B. Riley Principal Merger Corp., a blank-check company, for the quarter ended September 30, 2019. It does not appear to be an Alta Equipment Group Inc. filing; verify the intended issuer before relying on this summary.
The company was formed to pursue an initial business combination and reported no operating revenue. Its activity was limited to evaluating prospective acquisition targets after its April 2019 public offering.
Financial results and liquidity
- Quarter ended September 30, 2019: Interest income was $793,333; operating costs were $202,634; income before taxes was $590,699; income tax expense was $123,900; and net income was $466,799. The comparable 2018 quarter reported no income or expenses.
- Nine months ended September 30, 2019: Interest income was $1,654,180; operating costs were $321,058; income before taxes was $1,333,122; income tax expense was $280,000; and net income was $1,053,122. The comparable 2018 period reported a net loss of $800.
- Per-share results: The statements report basic and diluted loss per share of $0.03 for the quarter and $0.05 for the nine months, despite positive net income. The filing explains that income attributable to redeemable shares is excluded from the common-share calculation; adjusted net loss attributable to the remaining shares was $134,468 and $190,670, respectively.
- Cash flows: Nine-month operating cash outflow was $126,593. The company deposited $143.75 million in its trust account and reported $144.81 million of net cash from financing activities, including public and private offering proceeds.
- September 30, 2019 balance sheet: Cash outside the trust was $983,342; trust investments were $145,401,525; current liabilities were $629,171; and stockholders’ equity was $5,000,009. Working capital was $877,703, excluding specified income and franchise tax payables that management expected to pay from trust interest.
- Debt and liquidity: No long-term debt or lease obligations were reported. The $67,950 related-party note was repaid in April 2019. Trust assets are generally restricted until a business combination, specified redemptions, or liquidation.
- Margins: Not meaningful because the company reported no operating revenue.
Material changes, outlook, and risks
- The company completed a $143.75 million public offering, fully exercised the underwriters’ overallotment, and raised additional private-placement proceeds in April 2019. The trust balance grew to $145.4 million by September 30, principally through interest.
- No specific acquisition target, business-combination guidance, or operating forecast is provided. Management said it expected available funds to cover operating needs, but cautioned that underestimated search, diligence, or transaction costs could leave insufficient funds. Additional financing might be needed to complete a transaction or address substantial shareholder redemptions.
- The company had 18 months from the April 11, 2019 offering closing to complete a business combination or redeem public shares and liquidate, subject to the filing’s terms. An affiliate separately agreed to purchase $25 million of forward-purchase units at the transaction closing.
- The NYSE notified the company in August 2019 that it was below the minimum of 300 public stockholders. It submitted a compliance plan; the exchange committee was reviewing it. Rejection could lead to suspension and delisting procedures. The securities continued trading during the cure period with a noncompliance indicator.
- Other relevant risks include failure to complete a business combination within the deadline, creditor claims against trust funds, redemption-related funding needs, and the possibility that warrants expire worthless if no business combination is completed. The filing reported no material change to previously disclosed risk factors and no legal proceedings.
- Management reported disclosure controls as effective, but the evaluation is described as of March 31, 2019; the filing also says there was no material change in internal control over financial reporting during the latest quarter. The stated evaluation date should be checked.
Investor verification checklist
- Confirm whether this B. Riley Principal Merger Corp. filing—not an Alta Equipment Group filing—is the intended document.
- Verify the reporting issuer, period, and the source of the apparent discrepancy between positive net income and reported loss per share.
- Check the NYSE committee’s decision on the public-stockholder compliance plan and any subsequent listing status.
- Confirm the business-combination deadline, any later transaction developments, redemption terms, and availability of the $25 million forward-purchase commitment.
- Assess usable cash outside the trust, ongoing operating costs, tax payments, and potential financing needs; most reported cash was restricted in the trust account.