Filing summary
Important entity mismatch: The supplied filing is for Capitol Investment Corp. IV, a blank-check company, not Custom Truck One Source, Inc. This summary reflects the filing text provided.
Business context and reporting period
Unaudited Form 10-Q for the quarter ended March 31, 2018. Capitol Investment Corp. IV was formed to pursue a business combination; its activities to date were formation, its August 2017 IPO and searching for a target. It reported itself as a shell company and an emerging growth company.
Financial results and liquidity
- Q1 2018 net income was $955,374, comprising $1,367,437 of Trust Account interest and a $1,181 unrealized gain, less $413,244 of operating costs. Basic and diluted earnings per share were $0.03.
- No operating revenue was reported or expected before a business combination. The filing provides no prior-year quarter comparison for results.
- Cash outside the Trust Account was $745,292 at March 31, 2018, versus $501,925 at December 31, 2017. Trust Account assets were $403,118,618, versus $402,500,000.
- Operating activities used $506,633 of cash; a $750,000 withdrawal from the Trust Account for working capital resulted in a $243,367 net increase in cash.
- Total liabilities were $14,212,862, including a $14,087,500 deferred underwriting fee payable upon a business combination. Shareholders’ equity was $5,000,002. The company reported no long-term debt or off-balance-sheet arrangements.
Changes, outlook and risks
- Compared with December 31, 2017, cash outside the trust rose by $243,367, trust assets increased by $618,618, and total liabilities declined by $51,106. Redeemable Class A shares were recorded as temporary equity at $384,800,244.
- Management said it expected existing outside-trust cash to cover operating needs for the next 12 months, but cautioned that underestimated search, due-diligence or transaction costs could leave insufficient funds. Sponsor-affiliated parties may provide non-interest-bearing loans but are not obligated to do so; up to $1.5 million could be convertible into warrants.
- The company had to complete a business combination by August 21, 2019 or redeem public shares and liquidate. It required a target or targets with collective fair market value of at least 80% of the trust balance under the stated conditions.
- Trust funds may face creditor or bankruptcy claims, potentially reducing shareholder recoveries. If no business combination is completed, public warrants will be worthless. Additional financing may be needed to complete a transaction.
- Commitments include the deferred underwriting fee, affiliate office and administrative services of up to $20,000 monthly, and consulting agreements with $560,000 in aggregate annual fees and $1,090,000 in success fees payable upon a business combination.
- Management reported effective disclosure controls at a reasonable assurance level and no material change in internal control during the quarter. It described short-term Treasury investments as having no material interest-rate risk.
Key facts for investors to verify
- Confirm the intended issuer: this filing names Capitol Investment Corp. IV, not Custom Truck One Source, Inc.
- Review the status and terms of any contemplated business combination, including redemption rights and the August 21, 2019 deadline.
- Assess trust-account protections and possible creditor claims, along with the deferred underwriting fee and other transaction-related commitments.
- Verify the company’s available working capital outside the trust and whether further financing or sponsor loans would be needed.