LINDBLAD EXPEDITIONS HOLDINGS, INC. quarterly report, Q1 FY2013

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

  1. Confirm the issuer: the supplied document is for Capitol Acquisition Corp. II, not Lindblad Expeditions Holdings, Inc.
  2. Reconcile the filing’s differing descriptions of IPO net proceeds and the amount placed in trust.
  3. Verify post-IPO share counts and forfeiture provisions, including shares subject to over-allotment and stock-price conditions.
  4. Review the business-combination deadline, redemption rights, trust protections, and potential third-party claims.