Business context and reporting period
Important issuer discrepancy: The supplied metadata names Nextdecade Corp, but the filing is Harmony Merger Corp.’s Form 10-Q for the quarter ended June 30, 2015. This summary reflects the filing text, not Nextdecade Corp.
Harmony was a blank-check company formed to pursue a business combination and had no operating revenue or business operations beyond evaluating acquisition candidates. It completed its IPO and private placement on March 27, 2015. The filing identifies the company as a shell company.
Financial performance and position
- Quarter ended June 30, 2015: Net loss was $92,384, or $0.02 per basic and diluted share. Operating costs were $109,511, partly offset by $17,127 of interest income.
- Six months ended June 30, 2015: Net loss was $100,576, or $0.03 per share; operating costs were $117,727 and interest income was $17,151. The comparable 2014 inception-period loss was $542; periods are not directly comparable.
- Revenue and margins: No revenue was reported; profit margins are not meaningful for this pre-combination company.
- Cash and liquidity at June 30: Operating cash was $479,086, while $117.3 million was held in trust, primarily in U.S. Treasury bills. Total assets were $118.0 million. Trust funds were generally restricted pending a business combination or liquidation.
- Cash flow, six months: Operating activities used $279,788; investing activities used $117.3 million for the trust account; financing activities provided $118.1 million. Ending operating cash was $479,086.
- Liabilities: Total liabilities were $4.38 million, including a $4.325 million deferred underwriting fee payable only if a business combination is completed. Current liabilities were $58,509; the $50,000 stockholder note outstanding at year-end was repaid in April.
Changes, outlook, risks and unusual items
The main change from December 31, 2014 was completion of the $115 million public offering and $5.585 million private placement, with $117.3 million placed in trust. Cash increased from $1,115 to $479,086, and total assets increased from $116,885 to $118.0 million.
Management expected to use available non-trust funds and permitted trust interest for acquisition search and working capital, and said it would not generate operating revenue before a business combination. It anticipated needing all remaining funds outside trust and potentially trust interest; additional financing might be needed, but no shareholder, officer or director was obligated to provide it. The filing’s text introduces an estimated-cost breakdown but does not provide clear values. No acquisition-specific guidance or target was disclosed.
The company was required to complete a business combination by March 27, 2017 or redeem public shares and proceed toward liquidation. A transaction required, among other conditions, sufficient shareholder approval and at least $5,000,001 in net tangible assets after conversions. If conversion levels are too high, a transaction may not proceed. Trust assets could also be exposed to creditor or bankruptcy claims, potentially reducing redemption proceeds below $10.20 per public share; the CEO’s related indemnity may not be collectible. Warrants would be worthless if the company liquidated. The company reported no off-balance-sheet arrangements and no material change in internal control; management considered disclosure controls effective.
Important facts to verify
- Confirm the filing issuer: the supplied filing is for Harmony Merger Corp., not Nextdecade Corp.
- Verify the acquisition-search status and whether any business combination was later announced or completed.
- Check unrestricted cash, projected operating costs, and financing needs; the filing’s cost estimates are not clear in the supplied text.
- Review trust-account protections, creditor claims, conversion thresholds, liquidation deadline, and deferred underwriting fees.
- Assess warrant terms and dilution exposure if a business combination is completed.