Filing identity and reporting period
Important: the supplied filing is for 1347 Capital Corp., not Limbach Holdings, Inc. It is a Form 10-Q for the quarter ended June 30, 2015, filed August 12, 2015. The filing describes a blank-check company seeking a business combination; it is not an operating-company report for Limbach.
Business context and financial results
1347 Capital had not begun operations or generated revenue. Its stated acquisition focus was businesses operating in or serving the insurance industry, though it was not limited to a particular sector or geography.
- Revenue: $0 for the three and six months ended June 30, 2015.
- Three-month results: operating loss of $78,292; interest income of $6,978; net loss of $71,314, or $0.04 per share.
- Six-month results: operating loss of $220,600; interest income of $13,162; net loss of $207,438, or $0.11 per share.
- No operating margins are meaningful given the absence of revenue and operating activity.
Liquidity, assets, and obligations
- June 30 cash outside the trust account was $218,519, down from $397,387 at December 31, 2014.
- Trust-account assets were $46,021,710, primarily U.S. Treasury bills ($45,997,287), plus $24,423 cash. Total assets were $46,269,998.
- Current liabilities totaled $193,876, including a $125,000 non-interest-bearing sponsor note payable no later than completion of a business combination.
- Common stock subject to possible redemption was classified as temporary equity at $40,999,990; stockholders’ equity was $5,076,132.
- Six-month cash used in operating activities was $165,706; investing activities used $13,162, and cash declined by $178,868. The filing reports no long-term debt or off-balance-sheet arrangements.
Changes, outlook, and risks
Compared with the prior balance-sheet date, cash outside the trust fell by $178,868 and total assets declined by $208,417. The filing’s prior-period operating comparison is only from inception on April 15, 2014 through June 30, 2014, so it does not provide a comparable prior-year second-quarter operating period.
Management estimated that available outside-trust cash and releasable trust interest would support at least 12 months of operations, assuming no business combination, and anticipated approximately $50,000 of releasable interest. It projected remaining expenses including target-search and diligence costs, audit and SEC reporting, Nasdaq listing, administrative fees, franchise taxes, and general working capital. Management cautioned that lower-than-expected trust interest or higher costs could leave insufficient funds; additional financing might be needed for a transaction or post-combination obligations.
The company was required to complete a business combination within 18 months of the July 2014 offering, with a possible extension to 24 months if it had entered an agreement within the first 18 months. Otherwise, it would liquidate and redeem public shares from the trust, subject to potential third-party claims against trust assets. On July 10, 2015, Nasdaq notified the company that it did not meet the minimum 300-public-holder requirement; the company planned to submit a compliance plan. Management reported effective disclosure controls, no material change in internal control, and no material changes to previously disclosed risk factors.
Key facts for investors to verify
- Confirm the issuer: this filing is 1347 Capital Corp., not Limbach Holdings, Inc.
- Review the business-combination deadline, liquidation terms, and risks to trust-account funds from third-party claims.
- Check the status and outcome of the Nasdaq minimum-public-holders deficiency notice.
- Assess the company’s limited outside-trust cash, projected spending, and reliance on trust interest or possible additional financing.
- Consider the redemption classification of 4,099,999 public shares and the resulting distinction between total assets, temporary equity, and permanent stockholders’ equity.