x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF
1934
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF
1934
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Delaware
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20-5013347
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(State
or Other Jurisdiction of
Incorporation
or Organization)
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(IRS
Employer
Identification
No.)
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Large
Accelerated Filer o
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Accelerated
Filer o
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Non-accelerated
filer o
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Smaller
reporting companyx
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(Do
not check if a smaller reporting company)
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Page
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||||
PART
1 --- FINANCIAL INFORMATION
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||||
Item
1.
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Condensed
Financial Statements (unaudited)
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|||
Condensed
Balance Sheets
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2
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|||
Condensed
Statements of Operations
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3
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|||
Condensed
Statements of Stockholders' Equity
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4
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|||
Condensed
Statements of Cash Flows
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5
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|||
Notes
to Condensed Financial Statements
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6
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|||
Item
2.
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Management
Discussion and Analysis of Financial Condition and Results of
Operations
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12
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Item
3.
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Quantitative
and Qualitative Disclosure about Market Risk
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15
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Item
4T.
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Controls
and Procedures
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15
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PART
II --- OTHER INFORMATION
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||||
Item
1.
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Legal
Proceedings
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16
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Item
1A.
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Risk
Factors
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16
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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16
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Item
3.
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Defaults
Upon Senior Securities
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16
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Item
4.
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Submission
of Matters to a Vote of the Security Holders
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16
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Item
5.
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Other
Information
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16
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Item
6.
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Exhibits
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17
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SIGNATURE
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18
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|||
INDEX
TO EXHIBITS
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19
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|||
Certification
by Chief Executive Officer Pursuant to Section 302
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||||
Certification
by Chief Financial Officer Pursuant to Section 302
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||||
Certification
by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
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||||
Certification
by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
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June
30,
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December
31,
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||||||
2008
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2007
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||||||
(Unaudited)
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|
||||||
ASSETS
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|||||||
Current
Assets
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|||||||
Cash
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$
|
863,226
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$
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850,870
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|||
Cash
in Trust
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57,395,837
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57,489,612
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|||||
Prepaid
expense
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50,044
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51,375
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|||||
Other
assets - tax refund
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102,000
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─
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|||||
Total
Current Assets
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58,411,107
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58,391,857
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|||||
Fixed
Assets Net of Depreciation
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6,734
|
4,744
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|||||
TOTAL
ASSETS
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$
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58,417,841
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$
|
58,396,601
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|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
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|||||||
Current
Liabilities
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|||||||
Accounts
payable and accrued expenses
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$
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37,700
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$
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9,381
|
|||
Due
to stockholder
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85,520
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4,245
|
|||||
Deferred
underwriting fees
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2,133,867
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2,133,867
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|||||
Taxes
payable
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20,950
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79,339
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|||||
Notes
payable to stockholder
|
─
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150,000
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|||||
TOTAL
LIABILITIES
|
2,278,037
|
2,376,832
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|||||
Common
stock, subject to possible redemption, 1,949,335
shares
at
redemption value, and interest subject to possible
redemption
|
11,092,645
|
11,029,265
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|||||
COMMITMENTS
|
|||||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
stock ─ $.0001 par value; 1,000,000 authorized; 0 issued
and outstanding
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─
|
─
|
|||||
Common
stock ─ $.0001 par value; 50,000,000 shares
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|||||||
Common
stock ─ $.0001 par value; 50,000,000 shares authorized; 11,876,555 issued
and outstanding (which include 1,949,335 shares subject to possible
redemption) and 2,500,000 shares, respectively
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1,188
|
1,188
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|||||
Additional
paid-in capital
|
44,074,106
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44,074,106
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|||||
Income
accumulated during the development stage
|
971,865
|
915,210
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|||||
Total
Stockholders' Equity
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45,047,159
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44,990,504
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|||||
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|||||||
TOTAL
LIABILITIES & STOCKHOLDERS' EQUITY
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$
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58,417,841
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$
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58,396,601
|
Period
from
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||||||||||||||||
June
7, 2006
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||||||||||||||||
(inception)
to
|
||||||||||||||||
Three
Months Ended
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Three
Months Ended
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Six
Months Ended
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Six
Months Ended
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June
30, 2008
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||||||||||||
June
30, 2008
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June
30, 2007
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June
30, 2008
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June
30, 2007
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(Cumulative)
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||||||||||||
Interest
Income
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$
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270,550
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$
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509,971
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$
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568,391
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$
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509,984
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$
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2,367,860
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||||||
Formation
and operating costs
|
191,342
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60,653
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448,636
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60,673
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792,085
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|||||||||||
Delaware
franchise tax
|
15,688
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31,040
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31,375
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31,040
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95,322
|
|||||||||||
Income
before provision for income taxes
|
63,520
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418,278
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88,380
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418,271
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1,480,454
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|||||||||||
Provision
for income taxes
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22,745
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169,472
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31,725
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169,472
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508,589
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|||||||||||
Net
income
|
$
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40,775
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$
|
248,806
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$
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56,655
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$
|
248,799
|
$
|
971,865
|
||||||
Net
income per share (basic and diluted)
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$
|
0.00
|
$
|
0.03
|
$
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0.00
|
$
|
0.04
|
$
|
0.12
|
||||||
Weighted
average number of shares outstanding (basic
and diluted)
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11,876,555
|
9,756,471
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11,876,555
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5,967,306
|
$
|
7,871,386
|
Income
(deficit)
|
Total
|
|||||||||||||||
Common
Stock
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Additional
|
accumulated
during
|
Stockholders'
|
|||||||||||||
Shares
|
Amount
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paid-in
Capital
|
the
development stage
|
Equity
|
||||||||||||
Issuance
of common stock to founders and insiders on June 7, 2006 at $.01
per
share
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2,500,000
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$
|
250
|
$
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24,750
|
$
|
─
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$
|
25,000
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|||||||
Net
Loss
|
(3,000
|
)
|
(3,000
|
)
|
||||||||||||
Balance
at December 31, 2006
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2,500,000
|
250
|
24,750
|
(3,000
|
)
|
22,000
|
||||||||||
Surrender
and cancellation of 375,000 shares of common stock by initial stockholders
on January 24, 2007
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(375,000
|
)
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(37
|
)
|
37
|
─
|
─
|
|||||||||
Sale
of 3,000,000 private placement warrants to the Chairman of the
Board of
Directors on April 25, 2007
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─
|
─
|
1,500,000
|
─
|
1,500,000
|
|||||||||||
Sale
of 8,500,000 units, net of underwriters discount and offering expenses
(1,699,150 shares subject to possible redemption) on April 25,
207
|
8,500,000
|
850
|
46,407,199
|
─
|
46,408,049
|
|||||||||||
Proceeds
from issuance of underwriter's option
|
─
|
─
|
100
|
─
|
100
|
|||||||||||
Sale
of 1,251,555 units, underwriter's over-allotment option, net of
underwriter's discount (250,185 shares subject to possible redemption)
on
May 9, 2007
|
1,251,555
|
125
|
7,171,285
|
─
|
7,171,410
|
|||||||||||
Proceeds
subject to possible redemption of 1,949,335 shares
|
─
|
─
|
(11,029,265
|
)
|
─
|
(11,029,265
|
)
|
|||||||||
Net
income for the twelve months ended December 31, 2007
|
─
|
─
|
─
|
918,210
|
918,210
|
|||||||||||
Balance
at December 31, 2007
|
11,876,555
|
$
|
1,188
|
$
|
44,074,106
|
$
|
915,210
|
$
|
4,990,504
|
|||||||
Unaudited:
|
||||||||||||||||
Net
income for the six months ended June 30, 2008
|
─
|
─
|
─
|
56,655
|
56,655
|
|||||||||||
Balance
at June 30, 2008
|
11,876,555
|
$
|
1,188
|
$
|
44,074,106
|
$
|
971,865
|
$
|
45,047,159
|
Period
from
|
||||||||||
June
7, 2006
|
||||||||||
(inception)
to
|
||||||||||
Six
Months Ended
|
Six
Months Ended
|
June
30, 2008
|
||||||||
June
30, 2008
|
June
30, 2007
|
(cumulative)
|
||||||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
56,655
|
$
|
248,799
|
$
|
971,865
|
||||
Adjustments
to reconcile net income to net cash used in operating
activities:
|
||||||||||
Depreciation
|
150
|
49
|
350
|
|||||||
Deferred
tax
|
─
|
(21,315
|
)
|
─
|
||||||
Changes
in:
|
||||||||||
Accrued
expense payable
|
28,319
|
9,788
|
37,700
|
|||||||
Tax
payable
|
(160,389
|
)
|
221,027
|
(81,050
|
)
|
|||||
Prepaid
expense
|
(1,331
|
)
|
(13,438
|
)
|
(52,706
|
)
|
||||
Interest
earned on investment held in Trust Account
|
(622,059
|
)
|
(508,631
|
)
|
(2,407,057
|
)
|
||||
Interest
subject to possible redemption
|
63,380
|
─
|
63,380
|
|||||||
Net
cash provided by (used in) operating activities:
|
(635,275
|
)
|
(63,721
|
)
|
(1,467,518
|
)
|
||||
Cash
flows from investing activities:
|
||||||||||
Cash
held in Trust fund
|
─
|
(57,307,802
|
)
|
(57,307,802
|
)
|
|||||
Disbursements
from trust account
|
715,834
|
276,550
|
2,319,022
|
|||||||
Purchase
fixed asset
|
(2,141
|
)
|
(1,529
|
)
|
(7,085
|
)
|
||||
Net
cash provided by (used in) investing activities:
|
713,693
|
(57,032,781
|
)
|
(54,995,865
|
)
|
|||||
Cash
flows from financing activities:
|
||||||||||
Gross
proceeds from issuance of common stock
|
─
|
51,000,000
|
58,534,330
|
|||||||
Gross
proceeds from issuance of warrants
|
─
|
1,500,000
|
1,500,000
|
|||||||
Proceeds
from underwriter's purchase option
|
─
|
100
|
100
|
|||||||
Gross
proceeds from issuance of common stock
|
─
|
7,509,330
|
─
|
|||||||
Proceeds
from stockholder's note payable
|
(150,000
|
)
|
150,000
|
150,000
|
||||||
Increase
in due to stockholder
|
81,275
|
(150,000
|
)
|
(68,725
|
)
|
|||||
Payment
of costs of public offering
|
─
|
(2,663,352
|
)
|
(2,796,004
|
)
|
|||||
Advance
from shareholders
|
2,663
|
1,245
|
6,908
|
|||||||
Net
cash provided by (used in) financing activities:
|
(66,062
|
)
|
57,347,325
|
57,326,609
|
||||||
Net
increase in cash
|
12,356
|
250,821
|
863,226
|
|||||||
Beginning
balance
|
850,870
|
49,349
|
─
|
|||||||
Ending
balance
|
$
|
863,226
|
$
|
300,170
|
$
|
863,226
|
||||
Supplemental
Schedule of Non Cash Financing Activities:
|
||||||||||
Accruals
of offering cost
|
$
|
─
|
$
|
10,000
|
$
|
─
|
||||
Accruals
of deferred underwriters' fees
|
2,133,867
|
2,133,867
|
2,133,867
|
|||||||
Total
|
$
|
2,133,867
|
$
|
2,143,867
|
$
|
2,133,867
|
•
|
Acquisition
costs will be generally expensed as incurred;
|
•
|
Noncontrolling
interests (formerly known as “minority interests” — see SFAS 160
discussion below) will be valued at fair value at the acquisition
date;
|
•
|
Acquired
contingent liabilities will be recorded at fair value at the acquisition
date and subsequently measured at either the higher of such amount
or the
amount determined under existing guidance for non-acquired contingencies;
|
•
|
In-process
research and development will be recorded at fair value as an
indefinite-lived intangible asset at the acquisition date;
|
•
|
Restructuring
costs associated with a business combination will be generally
expensed
subsequent to the acquisition date; and
|
•
|
Changes
in deferred tax asset valuation allowances and income tax uncertainties
after the acquisition date generally will affect income tax expense.
|
Six
Months Ended
|
Six
Months Ended
|
||||||
June
30, 2008
|
June
30, 2007
|
||||||
Current:
|
|||||||
Federal
taxes
|
$
|
29,675
|
$
|
148,446
|
|||
State
taxes
|
2,050
|
42,339
|
|||||
Deferred
taxes
|
(21,315
|
)
|
|||||
Total
provision for income taxes
|
$
|
31,725
|
$
|
169,472
|
•
|
Payment
of the purchase price for the business combination;
|
•
|
Payment
of the non-accountable expense allowance and the deferred portion
of the
underwriting discount due to the underwriters;
|
•
|
Payment
of any finder’s fees or professional fees and costs; and
|
•
|
Payment
of any fees and costs the Company may incur in connection with
any equity
or debt financing relating to the business combination.
|
•
|
approximately
$200,000 for legal, accounting and other expenses attendant to
the
structuring and negotiating of a business combination;
|
•
|
approximately
$300,000 for the due diligence and investigation of a target business;
|
•
|
approximately
$115,000 in legal and accounting fees relating to our SEC reporting
obligations;
|
•
|
approximately
$120,000 in fees relating to our office space and certain general
and
administrative services;
|
•
|
approximately
$240,000 for travel, general working capital that will be used
for
miscellaneous expenses and reserves, including for director and
officer
liability insurance premiums, deposits, down payments and/or funding
of a
“no shop” provision in connection with a prospective business transaction
and for international travel with respect to negotiating and finalizing
a
business combination; and
|
•
|
approximately
$75,000 for a reserve for liquidation expenses.
|
Number
|
|
Description
|
3.1
|
|
Amended
and Restated Certificate of Incorporation**
|
3.2
|
|
Amended
and Restated Bylaws**
|
4.1
|
|
Specimen
Unit Certificate**
|
4.2
|
|
Specimen
Common Stock Certificate**
|
4.3
|
|
Specimen
Warrant Certificate**
|
4.5
|
|
Form
of Warrant Agreement between American Stock Transfer & Trust Company
and the Registrant**
|
4.6
|
|
Form
of Underwriters’ Purchase Option**
|
10.1(a)
|
|
Letter
Agreement among the Registrant, Ferris, Baker Watts, Incorporated
and Jack
Kang**
|
10.1(b)
|
|
Letter
Agreement among the Registrant, Ferris, Baker Watts, Incorporated
and
Alwin Tan**
|
10.1(c)
|
|
Letter
Agreement among the Registrant, Ferris, Baker Watts, Incorporated
and
Steven Wang**
|
10.1(d)
|
|
Letter
Agreement among the Registrant, Ferris, Baker Watts, Incorporated
and Mark
Tan**
|
10.1(e)
|
|
Letter
Agreement among the Registrant, Ferris, Baker Watts, Incorporated
and
Larry Liou**
|
10.1(f)
|
|
Letter
Agreement among the Registrant, Ferris, Baker Watts, Incorporated
and
James Ma**
|
10.1(g)
|
|
Letter
Agreement among the Registrant, Ferris, Baker Watts, Incorporated
and
Stanley Chang**
|
10.1(h)
|
|
Letter
Agreement among the Registrant, Ferris, Baker Watts, Incorporated
and Ron
Harrod**
|
10.2
|
|
Form
of Investment Management Trust Agreement between American Stock Transfer
& Trust Company and the Registrant**
|
10.3
|
|
Form
of Stock Escrow Agreement between the Registrant, American Stock
Transfer
& Trust Company and the Initial Stockholders**
|
10.4
|
|
Form
of Letter Agreement between NCIL and the Registrant regarding
administrative support**
|
10.5
|
|
Advance
Agreement between the Registrant and Jack Kang**
|
10.6
|
|
Form
of Registration Rights Agreement among the Registrant, the Initial
Stockholders and Ferris, Baker Watts, Incorporated**
|
10.7
|
|
Warrants
Placement Agreement**
|
10.8
|
|
Form
of Letter Agreement between the Registrant, Jack Kang and Ferris,
Baker
Watts, Incorporated**
|
31.1
|
|
Certification
by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002*
|
31.2
|
|
Certification
by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002*
|
32.1
|
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002*
|
32.2
|
|
Certification
by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002*
|
*
Filed
herewith
|
||
**
Incorporated by reference to the exhibits of the same number filed
with
the Registrant’s Registration Statement on Form S-1 or amendments thereto
(File No. 333-135705)
|
CHINA
HEALTHCARE ACQUISITION CORP.
|
||
|
|
|
Date:
August 12, 2008
|
By: | /s/ Alwin Tan |
Alwin Tan |
||
Chief
Executive Officer and President
|
By: | /s/ Steven Wang | |
Steven Wang |
||
Vice
President and Treasurer
Chief
Financial Officer
|
Number
|
|
Description
|
31.1
|
|
Certification
by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
31.2
|
|
Certification
by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
32.1
|
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
|
Certification
by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|