Filing identity and reporting period
The supplied filing is Hennessy Capital Acquisition Corp.’s unaudited Form 10-Q for the quarter ended June 30, 2014, filed August 14, 2014—not a Blue Bird Corp. filing. The company was a blank-check acquisition company and had not begun operating activities. Its reported activity related to its IPO, formation, and search for a business combination.
Financial results and liquidity
- Revenue: $0 for the three and six months ended June 30, 2014, and from inception through June 30, 2014.
- Profit and expenses: Net loss was $390,000 for the quarter and $521,000 for the six-month and inception-to-date periods. General and administrative expenses were $394,000 for the quarter and $525,000 for the six-month period; $4,000 of trust-account interest partly offset expenses.
- Per-share loss: $0.11 for the quarter and $0.15 for the six-month period, basic and diluted.
- Cash flow: Operating cash use was $326,000 for the six months. Investing cash use was $115.004 million, primarily the deposit of IPO proceeds into the trust. Financing provided $116.146 million. Cash outside the trust increased to $818,000.
- Assets and liquidity: Total assets were $115.882 million, including $115.004 million held in the trust and $818,000 in cash outside it. The trust held U.S. Treasury bills yielding 0.0%–0.46%.
- Liabilities and equity: Total liabilities were $3.994 million, including $3.738 million of deferred underwriting compensation payable only upon a business combination. There was no long-term debt. Stockholders’ equity was $5.0 million; $106.888 million of redeemable shares was classified outside permanent equity.
- Margins: Not meaningful because the company had no revenue or operating business.
Material changes and comparisons
The filing provides no prior-year comparable operating period. Compared with December 31, 2013, cash rose from $2,000 to $818,000 and total assets from $348,000 to $115.882 million, principally reflecting the January 2014 IPO and trust funding. The six-month results equal the inception-to-date results because the company was incorporated in September 2013 and incurred its reported loss during this period. Management said quarterly costs increased with professional and consulting fees and travel related to evaluating acquisition candidates.
Outlook, risks, and unusual items
- The company intended to use IPO and private-placement proceeds, potentially alongside stock or debt, to acquire a business. It said it believed funds were sufficient to complete a transaction within the applicable deadline, but gave no specific target or forecast.
- It had 21 months from the January 23, 2014 IPO closing to complete a business combination, extendable to 24 months if it had signed a qualifying agreement within 21 months. If unsuccessful, it must wind up and redeem public shares under the stated terms.
- Public shareholders could redeem shares in connection with a transaction or liquidation, subject to a minimum net tangible assets requirement of $5,000,001. At June 30, 10,688,897 public shares were classified as redeemable at approximately $10 per share.
- Management noted there was no assurance of completing a business combination. Trust assets were invested in short-term U.S. Treasuries, and management considered interest-rate risk immaterial at quarter-end.
- The company paid an affiliate $10,000 per month for administrative services. It reported no legal proceedings, no material changes to previously disclosed risk factors, and effective disclosure controls.
- Management reported no subsequent events requiring adjustment or disclosure.
Important facts to verify
- Confirm the intended issuer: the provided filing is for Hennessy Capital Acquisition Corp., not Blue Bird Corp.
- Verify the business-combination deadline and any qualifying agreement that could extend it to 24 months.
- Check trust-account balance, permitted uses, redemption terms, and the deferred underwriting fee payable upon a completed transaction.
- Review the acquisition-search spending and related-party administrative-services payments, and confirm whether a transaction was ultimately completed.