This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us
that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as may, should, could, would, expect, plan, anticipate, believe,
estimate, continue, or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and
Exchange Commission filings.
General
We were formed on June 26, 2006, to serve as a vehicle to effect a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination with an operating
business in the communications, media or technology industries.
On March 6, 2007, we completed our Public Offering of 12,500,000 Units. On March 9, 2007, we closed the Over-Allotment Option Exercise for 972,400 Units. Each Unit consists of one share of the
Companys common stock, $0.001 par value, and one warrant. Each warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $6.00, or at the holders option via cashless
exercise, during the period commencing the later of the completion of a Business Combination with a target business or March 1, 2008 and expiring on March 1, 2011, unless earlier redeemed. The Public Offering price of each Unit was $8.00, and we
generated gross proceeds of approximately $107.8 million in the Offering and the Over-Allotment Option Exercise. Of the gross proceeds, we deposited approximately $107.5 million into a trust account maintained by JPMorgan Chase Bank, NA, as
trustee, which includes approximately $3.77 million of the deferred underwriting discount and $5.0 million that we received from the issuance and sale of 5,000,000 warrants to Churchill Capital. The underwriters received approximately
$3.77 million as their underwriting discount (excluding the deferred underwriting discount).
The proceeds deposited in the trust account will not be released from the trust account until the earlier of (i) the completion of a Business Combination or (ii) the Companys dissolution
and implementation of a plan for the distribution of the Companys assets except that there may be released to Company from the trust account interest income earned on the trust account balance to pay any income taxes on such interest and up to
$1.35 million of the interest earned on the trust account may be released to the Company to cover a portion of its operating expenses. Except with respect to such interest, unless and until a business combination is consummated, the proceeds
held in the trust account will not be available for Companys use for any purpose, including expenses it may incur related to the investigation and selection of a target business and the negotiation of an agreement to acquire a target business.
These expenses may be paid prior to a business combination only from the proceeds of the Offering and Over-Allotment Option Exercise not held in the trust account (initially $950,000) and $1.35 million of interest earned on the trust
account, net of taxes, which may be released to the Company.
Through September 30, 2007, our efforts have been limited to organizational activities, activities relating to our Public Offering, activities relating to identifying and evaluating prospective acquisition candidates, and
activities relating to general corporate matters. We have neither engaged in any operation nor generated any revenues, other than interest income earned on the proceeds of our private placement and initial public offering. For the three and nine
months ended September 30, 2007, we earned approximately $1,416,650 and $3,166,527, respectively, in interest income of which approximately $954,892 and $2,704,769, respectively, was received and $461,758 was accrued. On June 5,
2007, the Company withdrew approximately $1,250,000 of interest earned on the funds held in the trust account,
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and on September 13, 2007, the Company withdrew a further $1,021,723 of interest earned on the funds held in the trust account. The Company used $968,073 of those withdrawn funds to pay estimated income taxes due
on the interest earned on the trust funds, and released the remaining $1,303,650 of those withdrawn funds to the Company as part of the $1.35 million of interest earned on the trust account which may be released to the Company to cover a
portion of its operating expenses.
As of September 30, 2007, we had approximately $1,683,992 of unrestricted cash available to us for our activities in connection with identifying and conducting due diligence of a suitable business combination, and for
general corporate matters.
For the three and nine months ended September 30, 2007, we paid or incurred an aggregate of approximately $154,328 and $311,133, respectively, in expenses for the following purposes:
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premiums associated with our directors
and officers liability insurance;
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expenses for due diligence and investigation
of prospective target businesses;
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legal and accounting fees relating
to our SEC reporting obligations and general
corporate
matters; and
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miscellaneous expenses.
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We believe that the funds available to us outside of the trust account and the balance of interest anticipated to be earned on the trust to be released to us will be sufficient to allow us to
operate until March 2009, assuming that a business combination is not consummated during that time. Over this period, we anticipate incurring expenses for the following purposes:
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payment of premiums associated
with our directors and officers insurance;
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due diligence and investigation of prospective
target businesses;
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legal and accounting fees relating
to our SEC reporting obligations and general
corporate
matters;
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structuring and negotiating a business combination,
including the making of a down
payment
or the payment for exclusivity or similar fees and expense; and
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other miscellaneous expenses.
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Contractual Obligations and Commitments
The Company is obligated to pay Churchill Capital a monthly fee of $7,500 for general and administrative services including office space, utilities and administrative support during the
period commencing March 1, 2007 until the earlier of (i) the completion of our initial business combination and (ii) our dissolution.
On July 6, 2006, we issued a $240,000 unsecured, non-interest bearing promissory note to Churchill Capital, which note was repaid out of the proceeds of our Public Offering.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices. We are not presently engaged
in and, if a suitable business target is not identified by us prior to the prescribed liquidation date of the trust fund, we may not engage in, any substantive commercial business. Accordingly, we are not and, until such time as we consummate a
business combination, we will not be, exposed to risks associated with foreign exchange rates, commodity prices, equity prices or other market-driven rates or prices. The net proceeds of our initial public offering held in the trust fund may be
invested by the trustee only in
U.S. government securities, within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 having maturities of one hundred and
eighty days or less.
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Item 4. Control and Procedures
Our management carried out an evaluation, with the participation of our Principal Executive and our Chief Financial Officers, of the effectiveness of our disclosure controls and procedures as
of September 30, 2007. Based upon that evaluation, the officers concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities
Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission.
There has not been any change in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the
period ended September 30, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II.
OTHER INFORMATION
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Item 6.
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Exhibits.
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Exhibit
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Number
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Exhibit Description
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31.1
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Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-
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Oxley Act of 2002
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31.2
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Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
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Act of 2002
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32.1
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Certification by Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
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adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
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32.2
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Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
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pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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