Business context and reporting period
Important entity discrepancy: The supplied filing is for FinTech Acquisition Corp. II, not International Money Express, Inc. This summary reflects the filing’s named registrant. It is an unaudited Form 10-Q for the quarter and nine months ended September 30, 2017.
FinTech Acquisition Corp. II was a blank-check company seeking a business combination; it had not commenced operating activities or generated operating revenue. It reported that it had until January 25, 2019 to complete a business combination.
Financial results and position
| Metric | Three months ended September 30, 2017 | Nine months ended September 30, 2017 |
|---|---|---|
| Operating revenue | None | None |
| Operating costs | $162,040 | $494,859 |
| Trust-account interest income | $456,224 | $858,355 |
| Income before taxes | $294,184 | $363,496 |
| Income tax provision | $155,116 | $264,573 |
| Net income | $139,068 | $98,923 |
At September 30, 2017, total assets were $175.98 million, including $175.86 million in cash and marketable securities held in trust and $74,873 of cash outside the trust. Total liabilities were $9.57 million, comprising $9.19 million of deferred underwriting fees, $356,318 of current liabilities and $25,000 of deferred legal fees. The underwriting fees are payable only upon a completed business combination. The balance sheet also showed $161.41 million of common stock subject to possible redemption and $5.00 million of stockholders’ equity.
Cash used in operating activities for the nine months was $455,428; investing cash use was $175.0 million, primarily the deposit into the trust. Financing cash provided was $175.45 million. The company reported no long-term debt, lease obligations or off-balance-sheet financing arrangements. Traditional operating margins are not meaningful because the company had no operating revenue.
Material changes versus the prior comparable period
For the three and nine months ended September 30, 2016, the company reported a net loss of $871 in each period and $871 of operating costs, with no interest income. The 2017 net income reflects interest earned on trust assets following the January 2017 IPO, rather than revenue from business operations. The 2017 balance sheet reflects the IPO and trust funding; the December 31, 2016 balance sheet showed $470,536 of assets and $449,344 of liabilities.
Outlook, risks and unusual items
- Management expected to incur public-company and business-combination search and due-diligence expenses, and did not expect operating revenue before a business combination.
- The company had $175.0 million of IPO proceeds placed in trust; trust funds were restricted principally to a business combination, redemptions, taxes and permitted expenses. Public shareholders could redeem shares in connection with a business combination, subject to the filing’s terms.
- If no business combination is completed by January 25, 2019, the company must cease operations and distribute trust assets to public shareholders, subject to the stated terms. The filing cautions that trust assets may be subject to third-party claims and that liquidation proceeds could be below the IPO price per unit.
- Completion was uncertain. The target must meet the stated Nasdaq fair-value threshold, and the company must acquire control sufficient to avoid investment-company registration. Sponsor working-capital loans of up to $1.1 million were available under specified terms; none were outstanding at quarter-end.
- The $9.19 million deferred underwriting fee and $25,000 deferred legal fee are contingent on a business combination or, for the legal fee, dissolution. Warrants could expire worthless if no combination is completed.
- Management reported effective disclosure controls at the reasonable-assurance level and no material changes in internal control during the quarter. It reported no legal proceedings and no material changes to the previously disclosed risk factors.
Important facts for investors to verify
- Confirm the intended company: the provided filing identifies FinTech Acquisition Corp. II, not International Money Express, Inc.
- Verify any business-combination developments and the status of the January 25, 2019 deadline using subsequent filings.
- Review redemption, trust-account, deferred-fee and warrant terms, including the potential effects of third-party claims and liquidation.
- Distinguish interest-driven net income from operating performance: the company reported no operating revenue.
- Check the full filing and related IPO prospectus for risk factors and transaction terms; the interim financial statements are unaudited.