Business context and reporting period
The supplied filing is Capitol Acquisition Corp. II’s Form 10-Q for the quarter ended March 31, 2013—not a filing for Lindblad Expeditions Holdings, Inc. It describes a development-stage blank-check company formed to pursue a business combination; it had not commenced operations and had no revenue at quarter-end.
Financial results and liquidity
- Quarter ended March 31, 2013: formation and operating costs and net loss were $4,400, compared with a $568 net loss in Q1 2012. Basic and diluted loss per share were each reported as $(0.00).
- Cash flow: operating cash use was $1,550 in Q1 2013 versus $168 in Q1 2012. Cash declined by $1,530 during the quarter, ending at $1,047.
- Balance sheet at March 31, 2013: total assets were $211,336, including $210,289 of deferred offering costs. Current liabilities were $197,981, including a $150,000 related-party note, $6,906 due to a related party, and $41,075 of accounts payable and accrued expenses. Stockholders’ equity was $13,355.
- No revenue or operating margins were reported. The filing does not provide a meaningful operating margin measure for this pre-operating company.
Changes and subsequent events
The Q1 net loss increased from $568 in 2012 to $4,400 in 2013. After quarter-end, the company completed its IPO on May 15, 2013, selling 20 million units at $10 each, and raised $5.6 million through a private placement of sponsor warrants. The $150,000 related-party note and $6,906 advance were repaid at the IPO closing. The filing says $200 million was placed in trust. It reports net IPO proceeds of $194.4 million in one passage, but elsewhere reports total net proceeds of $200,969,525, including the private placement; these figures are presented on differing bases and are not clearly reconciled.
Outlook, risks, and other matters
- Management was searching for a target and said it had no specific transaction under consideration. Substantially all trust and offering proceeds were intended for a business combination; management had broad discretion over their use.
- 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 before the initial deadline. Failure to complete a transaction would trigger liquidation and pro rata distribution of trust funds to public shareholders.
- There is no assurance a business combination will be completed. Trust funds may be exposed to third-party claims despite efforts to obtain waivers; the filing also notes uncertainty about officers’ ability to satisfy certain indemnification obligations.
- Management expected public-company compliance and due-diligence costs to rise and expected only small amounts of interest income. Following the IPO, trust funds were to be invested in short-term U.S. Treasury securities or qualifying money-market funds.
- Disclosure controls were reported effective as of quarter-end; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Confirm the issuer: the supplied document is for Capitol Acquisition Corp. II, not Lindblad Expeditions Holdings, Inc.
- Reconcile the filing’s differing descriptions of IPO net proceeds and the amount placed in trust.
- Verify post-IPO share counts and forfeiture provisions, including shares subject to over-allotment and stock-price conditions.
- Review the business-combination deadline, redemption rights, trust protections, and potential third-party claims.