Business context and reporting period
The supplied filing is Harmony Merger Corp.’s unaudited Form 10-Q for the quarter ended September 30, 2015—not a filing under the name NextDecade Corp. The entity mismatch should be verified before relying on this summary.
Harmony was a blank-check company seeking a business combination. It reported no operating revenue; its activity was limited to evaluating potential targets. It completed a $115.0 million public offering and a $5.585 million private placement in March 2015.
Key financial metrics
| Metric | Period / date | Reported value |
|---|---|---|
| Revenue | Three and nine months ended September 30, 2015 | None reported |
| Net loss | Three months ended September 30, 2015 | $89,742 |
| Net loss | Nine months ended September 30, 2015 | $190,317 |
| Net loss per share | Three / nine months ended September 30, 2015 | $(0.02) / $(0.05), basic and diluted |
| Interest income | Three / nine months ended September 30, 2015 | $22,574 / $39,726 |
| Cash and cash equivalents outside trust | September 30, 2015 | $379,939 |
| Cash, cash equivalents and securities in trust | September 30, 2015 | $117,339,353 |
| Total assets | September 30, 2015 | $117,885,816 |
| Total liabilities | September 30, 2015 | $4,342,259, including $4,325,000 deferred underwriting fee |
| Common stock subject to possible conversion | September 30, 2015 | $107,974,997, presented as temporary equity |
| Stockholders’ equity | September 30, 2015 | $5,568,560 |
| Operating cash flow | Nine months ended September 30, 2015 | $(378,935) |
| Investing cash flow | Nine months ended September 30, 2015 | $(117,300,000), primarily funds placed in trust |
| Financing cash flow | Nine months ended September 30, 2015 | $118,057,759 |
Margins are not meaningful because the company had no revenue. The filing does not provide a conventional operating-business debt or margin profile; the $50,000 stockholder note reported at year-end 2014 was repaid in April 2015.
Changes versus the prior comparable period
The company’s 2015 balance sheet reflects the March 2015 IPO and private placement, with $117.3 million placed into trust; at December 31, 2014, total assets were $116,885 and cash was $1,115. The 2014 income comparison is from inception through September 30, 2014, not a directly comparable full-year operating period. The filing reports 2015 nine-month net loss of $190,317 versus a $1,095 loss from inception through September 30, 2014.
Outlook, risks and unusual items
- Management said it believed available capital was sufficient for at least the next 12 months, while anticipating use of remaining non-trust funds and trust interest for working capital. It warned that additional financing might be unavailable and operations might need to be curtailed.
- The company had until March 27, 2017 to complete an initial business combination; otherwise it was required to redeem public shares and wind up. No business combination had been completed as of the reporting date.
- Trust funds were principally invested in short-term U.S. Treasury securities. The company considered interest-rate exposure immaterial due to the short maturities; it reported approximately 0.00% to 0.08% Treasury yields for cited maturities.
- Public shareholders had conversion rights, subject to the company’s net tangible asset condition and other restrictions. A redemption by creditors’ claims could reduce the amount returned below the initially stated $10.20 per public share. The CEO’s trust-protection indemnity has exceptions, and the company had not verified his ability to pay.
- Up to $4.325 million of deferred underwriting fees would be payable only upon a successful business combination. The company also paid an affiliate of its CEO $12,500 per month for office and administrative services.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. No off-balance-sheet arrangements were reported.
Most important facts to verify
- Confirm the filing belongs to the intended company: the supplied document identifies Harmony Merger Corp., not NextDecade Corp.
- Confirm whether a business combination was subsequently completed, and the resulting redemption, trust-fund and deferred-underwriting-fee outcomes.
- Assess liquidity available outside the trust and whether additional financing was obtained or needed.
- Review the conversion provisions, creditor-claim exposure, and practical collectability of the CEO’s indemnity.
- Check related-party service arrangements and the treatment of public-share conversion amounts in the company’s capitalization.