Business context and reporting period
Important issuer mismatch: The supplied filing is for Capitol Investment Corp. IV, not Custom Truck One Source, Inc. It is a Cayman Islands blank-check company (SPAC), formed May 1, 2017 to pursue a business combination; it does not report Custom Truck One Source’s operating results. This 10-K covers the period from inception through December 31, 2017 and was filed March 27, 2018.
Capitol completed its $402.5 million IPO on August 21, 2017 and had been searching for a target. No business combination had been completed by year-end. The filing presents no comparable prior-year period because the company was newly formed.
Financial performance, cash flow and liquidity
| Metric | Period or date | Reported amount |
|---|---|---|
| Operating revenue | Inception through Dec. 31, 2017 | None reported; the company states it would not generate operating revenue before a business combination |
| Operating costs and net loss | Inception through Dec. 31, 2017 | $777,471 |
| Basic and diluted loss per share | Inception through Dec. 31, 2017 | $0.07 |
| Net cash used in operating activities | Inception through Dec. 31, 2017 | $707,918 |
| Cash outside trust | Dec. 31, 2017 | $501,925 |
| Cash in trust account | Dec. 31, 2017 | $402,500,000 |
| Total assets / total liabilities | Dec. 31, 2017 | $403,108,840 / $14,263,968 |
| Shares subject to possible redemption | Dec. 31, 2017 | $383,844,870 |
| Shareholders’ equity | Dec. 31, 2017 | $5,000,002 |
Investing cash flow was a $402.5 million outflow to fund the trust; financing cash flow was $403.7 million. Profit margins are not meaningful for this pre-combination SPAC. The filing reports no long-term debt or off-balance-sheet arrangements. It records a $14.1 million deferred underwriting fee payable upon a completed business combination, in addition to $176,468 of current liabilities.
Changes versus the prior comparable period
No prior-year comparison is provided. In the unaudited quarterly summary, operating costs and net loss rose from $167,016 in the three months ended September 30, 2017 to $605,405 in the three months ended December 31, 2017. These are the company’s first reporting-period results, not a year-over-year comparison.
Outlook, risks and unusual items
- Management expected available funds outside the trust, together with permitted trust interest withdrawals, to cover operations for the next 12 months, but cautioned that its cost estimates might prove insufficient. Sponsors and affiliates could lend funds but were not obligated to do so.
- The company had until August 21, 2019 to complete a business combination. If unsuccessful, it generally must cease operations and redeem public shares; warrants would expire worthless. Public-share redemption is subject to conditions, including a $5,000,001 minimum net tangible asset requirement and potential creditor claims.
- The trust held $402.5 million, initially equivalent to $10 per public share. The filing warns that creditor or bankruptcy claims could reduce funds available to shareholders; sponsor indemnification is not assured.
- Management reported no completed transaction or target-specific guidance. It cited competition for targets, redemption-related financing constraints, potential dilution or debt, conflicts of interest, and the risk of failing to complete a transaction as key uncertainties.
- Related-party and transaction costs include a $20,000 monthly administrative-services fee to affiliates, $100,000 of consulting fees paid through year-end, and three consulting arrangements with aggregate annual fees of $560,000 and success fees of $1.09 million upon a business combination. Deferred underwriting fees are also contingent on a completed transaction.
- The independent auditor issued an unqualified opinion on the financial statements. Management stated disclosure controls were effective at a reasonable-assurance level; the filing did not include management’s internal-control assessment or an auditor attestation due to the new-public-company transition period.
Most important facts to verify
- Confirm the intended issuer: this filing is Capitol Investment Corp. IV, not Custom Truck One Source, Inc.
- For a summary of Custom Truck One Source, obtain that company’s own 10-K for the requested period; this document cannot establish its revenue, earnings, debt, liquidity, or outlook.
- If analyzing Capitol, verify subsequent filings for whether it completed a business combination, and review the trust balance, redemption activity, and transaction financing.
- Review the terms and amounts of related-party consulting arrangements, deferred underwriting fees, and any subsequent working-capital loans.