Filing summary
Registrant mismatch: The supplied filing is FinTech Acquisition Corp. II’s Form 10-Q, not a filing for International Money Express, Inc. It reports the quarter ended June 30, 2017.
Business context and reporting period
FinTech Acquisition Corp. II was a blank-check company formed to pursue a business combination. It had not begun operating or generated significant revenue by June 30, 2017. The filing covers the three and six months ended June 30, 2017; no comparable 2016 results are presented because the company had no activity in those periods.
Financial results and liquidity
- Revenue and margins: No operating revenue. Operating costs were $106,063 for the quarter and $332,819 for the six months; operating losses were the same amounts. Operating margins are not meaningful.
- Net results: Quarterly net income was $124,945, including $340,465 of trust-account interest income and a $109,457 income-tax provision. Six-month net loss was $40,145, with $402,131 of interest income and the same tax provision.
- Cash flow: Six-month operating cash use was $366,555. Investing cash use was $175.0 million, primarily the trust-account deposit; financing cash provided was $175.4 million. Cash outside the trust account increased to $163,746.
- Assets and liquidity: At June 30, cash and marketable securities in the trust account totaled $175.4 million, including approximately $402,000 of interest. Total assets were $175.6 million. Trust funds are primarily reserved for a business combination, redemptions, and specified permitted uses; available operating cash outside the trust was limited.
- Debt and obligations: The company reported no long-term debt or lease obligations. Total liabilities were $9.35 million, including $9.19 million of deferred underwriting fees payable only if a business combination closes, and $25,000 of deferred legal fees. Current liabilities were $134,846.
- Equity: $161.3 million of common stock subject to possible redemption was classified as temporary equity, outside stockholders’ equity. Stockholders’ equity was $5.0 million.
Changes and outlook
The principal change from December 31, 2016 reflects the January 2017 initial public offering and private placement, which raised $175.0 million and $4.2 million, respectively, and funded the trust account. The company had until January 25, 2019 to complete a business combination; otherwise it said it would cease operations and distribute trust funds to public shareholders, subject to the filing’s terms. Management expected continued operating and due-diligence expenses and did not expect operating revenue before a business combination. No specific target or transaction guidance was provided.
Risks, contingencies, and controls
The company stated there was no assurance it would complete a business combination. Public shareholders could redeem shares under specified circumstances; warrants could expire worthless if no transaction is completed. Trust assets may be exposed to third-party claims, and the CEO’s stated protection against certain claims may not be sufficient. The $9.19 million deferred underwriting fee is contingent on closing a transaction. Management reported no material change to previously disclosed risk factors, no legal proceedings, and effective disclosure controls as of June 30, 2017. It reported no material market-risk exposure beyond limited interest-rate risk on permitted trust investments.
Important facts for investors to verify
- Confirm the intended company: this filing identifies FinTech Acquisition Corp. II, not International Money Express, Inc.
- Verify business-combination status and the January 25, 2019 deadline applicable at the time of this filing.
- Review trust-account restrictions, redemption terms, and the contingent underwriting fee.
- Distinguish trust assets from the $163,746 of cash available outside the trust for operating needs.