Business context and reporting period
The supplied filing is Capitol Acquisition Corp. II’s unaudited Form 10-Q for the quarter ended June 30, 2013—not a filing identified in its text as Lindblad Expeditions Holdings, Inc. Capitol was a development-stage blank-check company searching for a business combination; it reported no specific target under consideration.
Financial results and liquidity
- Revenue: $0 for both the three and six months ended June 30, 2013.
- Net loss: $195,625 for the second quarter, versus $0 in the 2012 quarter; $200,025 for the first half, versus $568 in the 2012 first half. Second-quarter operating costs were $201,678, partially offset by $6,053 of interest income.
- Margins: Not meaningful because the company had no revenue.
- Cash and trust: At June 30, cash outside the trust was $842,697; restricted trust assets were $200,000,054. Current assets were $948,571 and current liabilities were $174,770.
- Cash flow: First-half operating cash use was $144,549. Financing provided $200,984,723, principally from the offering and sponsor warrants; $200,000,054 was placed in the trust.
- Debt: No note payable remained at quarter-end; the $150,000 related-party note was repaid when the offering closed. Total stockholders’ equity was $12,805,107.
Material changes versus the prior comparable period
The May 15, 2013 initial public offering of 20 million units at $10 each, together with a $5.6 million private placement of sponsor warrants, substantially increased cash and trust assets. Operating costs and net losses rose from minimal prior-year levels as the company began public-company and target-search activities.
Outlook, risks and unusual items
- Management expected no operating revenue until a business combination and anticipated higher public-company compliance and due-diligence expenses. It expected only modest trust interest in the low-rate environment; no forecasted earnings or transaction guidance was provided.
- The company could use up to $1.75 million of trust interest, net of applicable taxes, for working capital, but had released none by June 30. Trust funds were restricted to qualifying short-term U.S. government investments.
- The company had until February 15, 2015 to complete a business combination, extendable to May 15, 2015 if it had entered into a qualifying agreement or letter of intent by the earlier deadline. Failure to complete a transaction would trigger liquidation and distribution of trust funds to public shareholders.
- Risks included not finding or completing a transaction, insufficient interest or outside cash to fund the search, and third-party claims against trust assets. Management noted officers had agreed to cover certain claims in specified circumstances, but their ability to do so was not assured.
- Potential costs included an $8 million deferred underwriting commission payable only upon a completed business combination, consulting fees of $330,000 annually plus transaction success fees, and office and administrative costs. The filing reported no off-balance-sheet arrangements.
Important facts to verify
- Confirm the issuer: the filing text names Capitol Acquisition Corp. II, whereas the request identifies Lindblad Expeditions Holdings, Inc.
- Verify the trust balance, redemption terms, and restrictions on accessing trust funds.
- Track the business-combination deadline, any target or agreement, and related redemption or liquidation outcomes.
- Confirm transaction-related fees and whether the company’s available funds were sufficient to support the search.