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Business Combinations | 6 Months Ended
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Jun. 30, 2020
Business Combinations [Abstract] |
Business Combinations | 5. Business Combinations APS Payments On October 14, 2019, the Company acquired substantially all of the assets of APS Payments (“APS”) for $30.5 million in cash. In addition to the $30.5 million cash consideration, which includes the net working capital adjustment settled in the three months ended June 30, 2020, the APS selling equity holders may be entitled to a total of $30.0 million in three separate cash earnout payments (“APS Earnout”), dependent on the achievement of certain growth targets. The asset purchase agreement between Repay and APS contains customary representations, warranties and covenants by Repay and the former owners of APS, as well as a customary post-closing adjustment provision relating to working capital and similar items. The following summarizes the preliminary purchase consideration paid to the selling members of APS:
Cash consideration |  | $ | 30,465,454 |
Contingent consideration (1) |  |  | 18,580,549 |
Total purchase price |  | $ | 49,046,003 |
(1) | Reflects the fair value of APS Earnout, to be paid to the selling members of APS, pursuant to the asset purchase agreement between APS and Repay Holdings, LLC (“APS Purchase Agreement”). The selling members of APS will have the contingent earnout right to receive a payment of up to $30.0 million in three separate payments, dependent on the achievement of certain growth targets, as defined in the APS Purchase Agreement, for the period commencing on October 12, 2019 and ending on December 31, 2020. On April 6, 2020, the Company paid the first APS Earnout payment of $14.3 million. As of June 30, 2020, the remaining APS Earnout was adjusted to $5.0 million, net of the first payment, which resulted in a $0.7 million adjustment included in the change in fair value of contingent consideration in the unaudited interim consolidated statement of operations for the three and six months ended June 30, 2020.
The Company recorded a preliminary allocation of the purchase price to APS Payments’ tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the October 11, 2019 closing date. The preliminary purchase price allocation is as follows:
Cash and cash equivalents |  | $ | - |
Accounts receivable |  |  | 1,963,177 |
Prepaid expenses and other current assets |  |  | 67,158 |
Total current assets |  |  | 2,030,335 |
Property, plant and equipment, net |  |  | 159,553 |
Restricted cash |  |  | 549,978 |
Identifiable intangible assets |  |  | 21,500,000 |
Total identifiable assets acquired |  |  | 24,239,866 |
Accounts payable |  |  | (1,101,706 | )
Accrued expenses |  |  | (19,018 | )
Net identifiable assets acquired |  |  | 23,119,142 |
Goodwill |  |  | 25,926,861 |
Total purchase price |  | $ | 49,046,003 |
The preliminary values allocated to identifiable intangible assets and their estimated useful lives are as follows:
|  | Fair Value |  |  | Useful life
Identifiable intangible assets |  | (in millions) |  |  | (in years)
Non-compete agreements |  | $ | 0.5 |  |  | 5
Trade names |  |  | 0.5 |  |  | Indefinite
Merchant relationships |  |  | 20.5 |  |  | 9
|  | $ | 21.5 |  |  |
Goodwill of $25.9 million, represents the excess of the gross consideration transferred over the fair value of the underlying net tangible and identifiable intangible assets acquired. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill. Intangible assets not recognized apart from goodwill consist primarily of the strong market position and the assembled workforce of APS Payments. Ventanex Upon closing the Ventanex acquisition, the Company acquired all of the ownership interests of CDT Technologies, LTD d/b/a Ventanex (“Ventanex”). Ventanex is an integrated payment solutions provider to consumer finance (including mortgage servicers) and business-to-business (“B2B”) healthcare verticals. The mortgage loan servicer and B2B healthcare verticals represent a material expansion of our existing focus. Ventanex’s focus on mortgage payments allowed the Company to expand its personal loan business. Further, the Ventanex acquisition accelerated the Company’s entry into the healthcare payments vertical. Under the terms of the securities purchase agreement between Repay Holdings, LLC and the direct and indirect owners of CDT Technologies, LTD. (“Ventanex Purchase Agreement”), the aggregate consideration paid at closing by the Company was approximately $36 million in cash. In addition to the closing consideration, the Ventanex Purchase Agreement contains a performance-based earnout (the “Ventanex Earnout Payment”), which was based on future results of the acquired business and could result in an additional payment to the former owners of Ventanex of up to $14 million. The Ventanex acquisition was financed with a combination of cash on hand and committed borrowing capacity under the Company’s existing credit facility. The Ventanex Purchase Agreement contains customary representations, warranties and covenants by Repay and the former owners of Ventanex, as well as a customary post-closing adjustment provision relating to working capital and similar items. The following summarizes the preliminary purchase consideration paid to the selling members of Ventanex:
Cash consideration |  | $ | 36,000,000 |
Contingent consideration (1) |  |  | 10,800,000 |
Total purchase price |  | $ | 46,800,000 |
(1) | Reflects the fair value of the Ventanex Earnout Payment, the contingent consideration to be paid to the selling members of Ventanex, pursuant to the Ventanex Purchase Agreement as of February 10, 2020. The selling partners of Ventanex will have the contingent earn-out right to receive a payment of up to $14.0 million dependent upon the Gross Profit, as defined in the Ventanex Purchase Agreement, for the years ended December 31, 2020 and 2021.
The Company recorded a preliminary allocation of the purchase price to Ventanex’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the February 10, 2020 closing date. The preliminary purchase price allocation is as follows:
Cash and cash equivalents |  | $ | 50,663 |
Accounts receivable |  |  | 1,376,539 |
Prepaid expenses and other current assets |  |  | 180,514 |
Total current assets |  |  | 1,607,716 |
Property, plant and equipment, net |  |  | 137,833 |
Restricted cash |  |  | 428,313 |
Identifiable intangible assets |  |  | 29,690,000 |
Total identifiable assets acquired |  |  | 31,863,862 |
Accounts payable |  |  | (152,035 | )
Accrued expenses |  |  | (373,159 | )
Net identifiable assets acquired |  |  | 31,338,668 |
Goodwill |  |  | 15,461,332 |
Total purchase price |  | $ | 46,800,000 |
The preliminary values allocated to identifiable intangible assets and their estimated useful lives are as follows:
|  | Fair Value |  |  | Useful life
Identifiable intangible assets |  | (in millions) |  |  | (in years)
Non-compete agreements |  | $ | 0.1 |  |  | 5
Trade names |  |  | 0.5 |  |  | Indefinite
Developed technology |  |  | 4.4 |  |  | 3
Merchant relationships |  |  | 24.7 |  |  | 10
|  | $ | 29.7 |  |  |
Goodwill of $15.5 million, represents the excess of the gross consideration transferred over the fair value of the underlying net tangible and identifiable intangible assets acquired. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill. Intangible assets not recognized apart from goodwill consist primarily of the strong market position and the assembled workforce of Ventanex. The Company incurred transaction expenses of $1.0 million and $1.0 million for the three and six months ended June 30, 2020, respectively, related to the Ventanex acquisition. Ventanex has contributed $4.4 million to revenue and $0.0 million in net income to the Company’s unaudited interim consolidated statement of operations, from February 10, 2020 through June 30, 2020. APS contributed $3.3 million to revenue and $0.0 million in net income to the Company’s unaudited interim consolidated statement of operations for the three months ended June 30, 2020. APS contributed $6.9 million to revenue and $0.7 million in net income to the Company’s unaudited interim consolidated statement of operations for the six months ended June 30, 2020. Pro Forma Financial Information (Unaudited) The supplemental condensed consolidated results of the Company on an unaudited pro forma basis give effect to the TriSource, APS and Ventanex acquisitions as if the transactions had occurred on January 1, 2019. The unaudited pro forma information reflects adjustments for the issuance of the Company’s common stock, debt incurred in connection with the transactions, the impact of the fair value of intangible assets acquired and related amortization and other adjustments the Company believes are reasonable for the pro forma presentation. In addition, the pro forma earnings exclude acquisition-related costs.
|  | Pro Forma Three Months Ended June 30, 2020 |  |  | Pro Forma Six Months Ended June 30, 2020 |  |  | Pro Forma Three Months Ended June 30, 2019 |  |  | Pro Forma Six Months Ended June 30, 2019 |
Revenue |  | $ | 36,500,525 |  |  | $ | 78,256,837 |  |  | $ | 29,582,615 |  |  | $ | 63,916,655 |
Net loss |  |  | (16,486,773 | ) |  |  | (21,071,965 | ) |  |  | (7,140,070 | ) |  |  | (15,068,420 | )
Net loss attributable to non-controlling interests |  |  | (3,885,984 | ) |  |  | (6,084,209 | ) |  |  | (3,528,354 | ) |  |  | (6,148,671 | )
Net loss attributable to the Company |  |  | (12,600,789 | ) |  |  | (14,987,756 | ) |  |  | (3,611,716 | ) |  |  | (8,919,749 | )
Loss per Class A share - basic and diluted |  | $ | (0.30 | ) |  | $ | (0.38 | ) |  | $ | (0.09 | ) |  | $ | (0.22 | )

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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