Filing summary
Entity and period: The supplied filing is Double Eagle Acquisition Corp.’s unaudited Form 10-Q for the quarter ended June 30, 2017, not a WillScot Holdings Corp. filing. Double Eagle was a blank-check company seeking a business combination; it had no operating-business revenue.
Financial results and position
- Revenue: $0 for the three and six months ended June 30, 2017 and the comparable 2016 periods.
- Quarterly results: Second-quarter 2017 operating expenses were $871,490, versus $127,551 in Q2 2016. Trust interest of $796,023 partially offset expenses, resulting in a net loss of $75,467, compared with net income of $141,204.
- Six-month results: Operating expenses were $1,202,906, versus $405,025 in 2016. Trust interest was $1,322,167, and net income was $119,261, versus $94,460.
- Cash flow: Cash used in investing activities was $1,322,167, reflecting trust income retained in the Trust Account. Operating activities provided $926,594 and sponsor advances provided $230,000. Cash outside the Trust Account fell by $165,573 to $22,490.
- Liquidity and liabilities: The Trust Account held $502.7 million, principally U.S. Treasury securities. Current liabilities were $1.06 million, including $230,000 due on demand to the Sponsor; the company reported a working-capital deficit of approximately $1.02 million. Deferred underwriting compensation of $19.5 million was payable only if a business combination closed.
- Debt and margins: The filing reports no long-term debt and no revenue, so operating margins are not meaningful.
Material changes and outlook
Quarterly operating expenses increased substantially year over year, while trust interest also rose. Management said expenses would continue as it pursued and evaluated acquisition targets, and that additional sponsor or other financing might be needed; the Sponsor was not obligated to provide loans. The company had until September 16, 2017 to complete a business combination. If it failed, it was required to wind up and redeem public shares from the Trust Account. The filing states this deadline and potential liquidation raise substantial doubt about the company’s ability to continue as a going concern. No specific business-combination guidance or forecast was provided.
Risks, contingencies, and other items
- The company was a shell company and had not selected an operating business. Completion of a combination was uncertain; financing, shareholder redemptions, dilution, and transaction costs could affect available funds.
- Public shares were redeemable under specified circumstances, subject to a $5,000,001 minimum net tangible asset requirement. Public and private warrants could expire worthless if no combination occurred.
- The $19.5 million deferred underwriting fee and monthly administrative-service reimbursements were material transaction-related commitments. No legal proceedings were reported.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. The filing reported no material changes to the risk factors in the 2016 Form 10-K.
Investor verification points
- Verify the issuer: this document is for Double Eagle Acquisition Corp., not WillScot Holdings Corp.
- Check whether Double Eagle completed a business combination by the September 16, 2017 deadline and how the trust funds and public shares were ultimately handled.
- Confirm the amount and terms of any subsequent sponsor advances or other financing, given the $22,490 of outside cash and working-capital deficit at quarter-end.
- Review the status of the $19.5 million deferred underwriting fee and any redemptions, dilution, or warrant treatment in a transaction or liquidation.