Filing summary
Issuer and period: The supplied filing is a Form 10-Q for 1347 Capital Corp. for the quarter ended March 31, 2015. This does not match the requested company, Limbach Holdings, Inc. 1347 Capital was a blank-check company seeking a business combination, not an operating business; it reported no operations or revenue. The filing describes a planned focus on businesses operating in or serving the insurance industry.
Financial results and position
- Revenue: $0 for the quarter. There was no operating business, so operating margins are not meaningful.
- Quarterly loss: Net loss was $136,125, or $0.07 per basic and diluted share. General and administrative expense was $142,308; interest income was $6,183.
- Cash flow: Operating cash use was $81,971 and investing cash use was $6,183. No financing cash flow occurred during the quarter. Cash fell by $88,154 to $309,233.
- Liquidity and trust assets: Cash and prepaid expenses outside the trust totaled $360,138. Trust assets were $46,014,732, primarily U.S. Treasury bills ($45,990,310), with $24,422 in cash. Trust funds were generally reserved for a business combination or public-share redemptions.
- Debt and liabilities: Total liabilities were $227,434, including a $125,000 non-interest-bearing note payable to the sponsor, due no later than a business-combination closing. The company reported no long-term debt or off-balance-sheet arrangements.
- Equity and redemptions: Stockholders’ equity was $5,147,446; 4,099,999 public shares, carried at $40,999,990, were classified as subject to possible redemption outside permanent equity. The charter requires at least $5,000,001 in net tangible assets.
Changes versus prior period
The filing does not provide a comparable first-quarter 2014 income statement because the company was incorporated on April 15, 2014. Versus December 31, 2014, cash declined from $397,387 to $309,233, total assets declined from $46,478,415 to $46,374,870, and total liabilities increased from $194,854 to $227,434. The quarter’s $136,125 loss increased the accumulated deficit to $325,880.
Outlook, risks, and notable items
- Management estimated that cash outside the trust and trust interest available for working capital—anticipated at approximately $50,000—would support operations for at least 15 months, assuming no earlier business-combination closing. It forecast approximately $103,000 for target-search and due-diligence costs, $72,000 for audit and SEC reporting, $155,000 for affiliate administrative services, and $29,000 for general working capital.
- The company had 18 months from the July 2014 offering to complete a business combination, extendable to 24 months if it entered a letter of intent or definitive agreement within the initial period. Otherwise, public shares would be redeemed and the rights and warrants would expire worthless.
- Management warned that higher-than-expected transaction costs, lower trust interest, or significant public-share conversions could leave insufficient funds and require additional financing. Issuing equity could dilute shareholders; debt could increase repayment, covenant, and default risks.
- Trust assets may face third-party claims despite intended creditor waivers, potentially reducing public-share redemption proceeds. The filing states the expected redemption amount could be below approximately $10 per share.
- Related-party arrangements include the sponsor loan and a $10,000 monthly affiliate administrative-services fee. A $1,610,000 advisor fee, subject to allocation to other advisors, was payable upon a business-combination closing.
- No legal proceedings or material changes to the risk factors in the 2014 Form 10-K were reported. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the issuer: this filing is for 1347 Capital Corp., not Limbach Holdings, Inc.
- Verify whether and when a business combination was completed, and its effects on trust funds, redemptions, dilution, and the securities outstanding.
- Check the applicable business-combination deadline, available working capital, and any subsequent financing or sponsor loans.
- Review the trust-account protections and claims exposure, as well as the terms and potential costs of the advisor and affiliate arrangements.