Filing summary
Important identity discrepancy: The supplied filing is Capitol Acquisition Corp. II’s Form 10-K for the fiscal year ended December 31, 2013, not a filing by Lindblad Expeditions Holdings, Inc. The summary below describes the filing text provided and should not be attributed to Lindblad.
Business context and reporting period
Capitol Acquisition Corp. II was a development-stage blank-check company formed to pursue a business combination. It reported no operating business and said it was actively searching for a target, with no specific transaction under consideration. The filing covers the year ended December 31, 2013; it also presents unaudited fourth-quarter results. The company completed its IPO in May 2013.
Financial and operating metrics
| Metric | FY 2013 | FY 2012 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $748,654 | $4,768 |
| Net loss | $721,020 | $4,768 |
| Operating cash flow | $(595,647) | $(3,512) |
- Fourth-quarter 2013 net loss was $248,250; operating loss was $250,814. Revenue was zero.
- At December 31, 2013, the balance sheet showed $312,298 in cash, $9,973 in marketable securities, and $200.0 million of restricted trust funds. An additional $33,561 of trust-account interest was classified as available for working capital and taxes.
- Total assets were $200.4 million; current liabilities were $197,043, including $180,000 of accrued franchise tax. The company reported no long-term debt or other long-term liabilities.
- Stockholders’ equity was $12.2 million. Of 25 million shares outstanding, 18,798,215 were classified as subject to possible redemption, at a recorded value of approximately $188.0 million.
- The company raised $200 million through the public offering and $5.6 million through a private placement of sponsor warrants. The filing states that $200 million was deposited in trust. Deferred underwriting commissions of 4% of the offering proceeds were payable only upon a completed business combination.
Changes versus the prior comparable period
- Operating expenses rose substantially from the low 2012 base, primarily reflecting public-company, professional, office, and target-search costs after the May 2013 IPO.
- Net loss increased to $721,020 from $4,768. The company had interest income of $37,894 in 2013, partly offset by $10,260 of interest expense; no comparable interest income was reported for 2012.
- Cash and trust assets increased following the IPO and private placement. The company remained pre-revenue and continued to use cash to fund its search and operating costs.
Outlook, risks, contingencies, and unusual items
- Management said available resources were expected to meet needs through December 31, 2014. The filing describes committed loans of up to $615,000 from the CEO and CFO; up to $500,000 could be converted into warrants. Additional insider funding was possible but not required.
- The company had until February 15, 2015 to complete a business combination, with an extension to May 15, 2015 if it had entered into a qualifying agreement by February 15 but had not closed. If it failed to complete a transaction, public shares were to be redeemed from the trust, subject to taxes, creditor claims, and applicable law; warrants would expire worthless.
- Public shareholders could seek conversion of shares in connection with a proposed transaction, subject to a 10% per-holder/group limit. A transaction required majority approval of shares voted and at least $5 million of net tangible assets at closing.
- Management cited low trust-account yields—the effective annualized rate on Treasury bills was approximately 0.07%—as a constraint on working capital. The company could use up to approximately $1.75 million of trust interest for working capital, net of taxes.
- A disclosed potential Securities Act contingency relates to a May 9, 2013 IPO-pricing press release. The company said it did not believe it violated the Act and would contest a claim, but a court finding of violation could require repurchase of IPO units at the original price plus statutory interest through May 9, 2014.
- Key risks include failure to find or close a target before the deadline, target-search competition, dilution from securities issued for a transaction or warrant exercise, trust-account claims or bankruptcy exposure, and conflicts arising from insider ownership and other business interests.
- The filing reports no legal proceedings, no off-balance-sheet arrangements, and effective disclosure controls and internal control over financial reporting as of year-end. The auditor issued an unqualified opinion on the financial statements; it did not audit internal-control effectiveness.
Investor verification priorities
- Confirm the issuer and filing identity: the supplied document names Capitol Acquisition Corp. II, not Lindblad Expeditions Holdings, Inc.
- Verify the current status and outcome of the business-combination search, the applicable deadline, and any later transactions or amendments.
- Reconcile the trust balance, available interest, deferred underwriting commission, and redemption-share figures against the audited statements and subsequent filings.
- Check whether insider loans were drawn, repaid, or converted, and whether any additional financing or material dilution occurred.
- Review the status and resolution of the disclosed Securities Act risk and any claims that could affect trust proceeds or public-share redemptions.