Ultimate Escapes (ULEIQ) 10-Q 2009 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2009

¨ Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from _____________ to _____________

Commission File Number 333-144028

SECURE AMERICA ACQUISITION CORPORATION

(Exact Name of Small Business Issuer as Specified in Its Charter)

Delaware	26-0188408
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1005 North Glebe Road, Suite 550
Arlington, Virginia 22201
(Address of Principal Executive Office)
(703) 528-7073
(Issuer's Telephone Number, Including Area Code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x   No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x   No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange. (Check one):

Large Accelerated Filer  ¨ Accelerated Filer  ¨

Non-Accelerated Filer  ¨ (Do not check if a smaller reporting company)  Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  x    No  ¨

As of August 10, 2009, 12,500,000 shares of common stock, par value $.0001 per share, were issued and outstanding.

Transitional Small Business Disclosure Format (check one):        Yes  ¨    No  x

SECURE AMERICA ACQUISITION CORPORATION

INDEX TO FORM 10-Q

		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Balance Sheets as of June 30, 2009 (unaudited) and as of December 31, 2008	1
	Condensed Statements of Operations (unaudited) for the three and six month periods ended June 30, 2009, the three and six month periods ended June 30, 2008, and for the period from May 14, 2007 (date of inception) to June 30, 2009	2
	Condensed Statement of Stockholders’ Equity for the period from May 14, 2007 (date of inception) to June 30, 2009 (unaudited)	3
	Condensed Statements of Cash Flows (unaudited) for the six months ended June 30, 2009, the six months ended June 30, 2008, and the period from May 14, 2007 (date of inception) to June 30, 2009	4
	Notes to Condensed Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4T.	Controls and Procedures	17
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Submission of Matters to a Vote of Security Holders	18
Item 5.	Other Information	18
Item 6.	Exhibits	18
SIGNATURES		19

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

CONDENSED BALANCE SHEETS

	June 30, 2009 (unaudited)		December 31, 2008
Assets
Current assets:
Cash	$	125,317	$	207,803
Investments held in Trust Fund		79,431,708		79,330,205
Prepaid expenses		30,304		25,148
Prepaid income tax		9,330		-
Total current assets		79,596,659		79,563,156
Deferred acquisition costs		-		105,000
Deferred tax asset		208,810		133,909
Total assets	$	79,805,469	$	79,802,065
Liabilities and Stockholders’ Equity
Current liabilities:
Accrued expenses	$	131,634	$	45,882
Accounts payable		17,328		4,774
Income taxes payable		-		15,670
Deferred interest on investments held in Trust Fund		69,511		37,261
Deferred underwriters’ discounts and commissions		3,200,000		3,200,000
Total  current liabilities		3,418,473		3,303,587
Common subject to possible conversion, 2,999,999 shares		22,799,992		22,799,992
Commitment
Stockholders' equity
Preferred stock, $.0001 par value, Authorized 1,000,000 shares; none issued and outstanding		-		-
Common stock, $.0001 par value, Authorized 50,000,000 shares; 12,500,000 shares issued and outstanding (including 2,999,999 shares subject to possible conversion)		1,250		1, 250
Additional paid-in capital		52,985,665		52,985,665
Income accumulated during the development stage		600,089		711,571
Total stockholders' equity		53,587,004		53,698,486
Total liabilities and stockholders' equity	$	79,805,469	$	79,802,065

See Notes to Unaudited Condensed Financial Statements.

1

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

	For the Three Months Ended June 30, 2009			For the Six Months Ended June 30, 2009			For the Three Months Ended June 30, 2008		For the Six Months Ended June 30, 2008		For the Period May 14, 2007 (inception) to June 30, 2009
Income:
Net interest Income	$	33,507		$	100,257		$	335,573	$	894,755	$	1,919,043
Total Income		33,507			100,257			335,573		894,755		1,919,043
Expenses:
Formation and operating costs		94,766			286,640			258,828		391,307		930,268
Net income (loss) for the period before income taxes		(61,259	)		(186,383	)		76,745		503,448		988,775
State and federal income tax expense (benefit)		(24,619	)		(74,901	)		30,812		194,448		388,686
Net income (loss) for the period	$	(36,640	)	$	(111,482	)	$	45,933	$	309,000	$	600,089
Weighted average number of shares outstanding – basic and diluted		12,500,000			12,500,000			12,500,000		12,500,000		10,343,389
Net income (loss) per share – basic and diluted	$	(.00	)	$	(.01	)	$	.00	$	.02	$	.06

See Notes to Unaudited Condensed Financial Statements.

2

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY

For the period from May 14, 2007 (inception) to June 30, 2009

					Addition			Income (Deficit) Accumulated During the
	Common Stock				Paid-in			Development			Stockholders’
	Shares		Amount		capital			Stage			Equity
Common shares issued May 14, 2004 at $.01 per share		2,500,000	$	250	$	24,750			-		$	25,000
Common shares issued October 29, 2007, par value $0.0001, net of underwriters’ discount and offering expenses (includes 2,999,999 shares subject to possible conversion)		10,000,000		1,000		73,685,907			-			73,686,907
Proceeds from private placement of Founder Warrants		-		-		2,075,000			-			2,075,000
Proceeds subject to possible conversion of 2,999,999 shares		-		-		(22,799,992	)		-			( 22,799,992	)
Net Income		-		-		-			278,743			278,743
Balance at December 31, 2007		12,500,000		1,250		52,985,665			278,743			53,265,658
Net Income		-		-		-			432,828			432,828
Balance at December 31, 2008		12,500,000		1,250		52,985,665			711,571			53,698,486
Unaudited:
Net loss		-		-		-			(111,482	)		(111,482	)
Balance at June 30, 2009		12,500,000	$	1,250	$	52,985,665		$	600,089		$	53,587,004

See Notes to Unaudited Condensed Financial Statements.

3

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

	For the period January 1, 2009 to June 30,2009			For the period January 1, 2008 to June 30,2008			For the period May 14, 2007 (inception) to June 30, 2009
Cash flows from operating activities
Net income (loss)	$	(111,482	)	$	309,000		$	600,089
Adjustments to reconcile net loss to net cash used in operating activities:
Interest income on U.S. government securities money market		(132,503	)		(894,750	)		(1,988,534	)
Deferred income taxes		(74,901	)		(65,164	)		(208,810	)
Write off of deferred acquisition costs		105,000						263,138
Decrease (increase) in prepaid expenses		(5,156	)		37,706			(30,304	)
Increase (decrease) in accounts payable		12,554			(1,101	)		17,328
Increase in accrued expenses		85,752			35,234			131,634
Increase (decrease) in income taxes payable		(25,000	)		(265,388	)		(9,330	)
Increase in deferred interest on investments held in trust account		32,250			-			69,511
Net cash used in operating activities		(113,486	)		(844,463	)		(1,155,278	)
Cash flows from investing activities
Investments deposited in trust account		-			-			(79,200,000	)
Interest drawn from trust account		31,000			1,045,000			1,756,826
Payment of deferred acquisition costs		-			(100,000	)		(263,138	)
Net cash provided by (used in) investing activities		31,000			945,000			(77,706,312	)
Cash flows from financing activities
Gross proceeds of public offering		-			-			80,000,000
Proceeds from private placement of Founder Warrants		-			-			2,075,000
Proceeds from notes payable, stockholder		-			-			215,000
Payment of note payable, stockholder		-			(50,000	)		(215,000	)
Proceeds from sale of shares of common stock		-			-			25,000
Payment of costs related to proposed offering		-			(31,904	)		(3,113,093	)
Net cash (used in) provided by financing activities		-			(81,904	)		78,986,907
Net increase (decrease) in cash		(82,486	)		18,633			125,317
Cash at beginning of the period		207,803			6,867			-
Cash at the end of the period	$	125,317		$	25,500		$	125,317
Non cash investing activities:
Accrual of deferred underwriters’ discounts and commissions	$	-		$	-		$	3,200,000
Supplemental schedule of cash flows information:
Cash paid during the period for income taxes	$	25,000		$	525,000		$	606,826

See Notes to Unaudited Condensed Financial Statements.

4

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. Basis of Presentation

The financial statements of Secure America Acquisition Corporation (the “Company”) at June 30, 2009, for the three and six month periods ended June 30, 2009 and 2008, and for the period from May 14, 2007 (date of inception) to June 30, 2009 (cumulative) are unaudited. In the opinion of management, all adjustments (consisting of normal accruals) have been made that are necessary to present fairly the financial position of the Company as of June 30, 2009 and the results of its operations and its cash flows for the three and six month periods ended June 30, 2009, for the three and six month periods ended June 30, 2008, and for the period from May 14, 2007 (date of inception) to June 30, 2009 (cumulative). Management of the Company has reviewed subsequent events through August 14, 2009. Operating results for the interim periods are not necessarily indicative of the results to be expected for a full fiscal year. The December 31, 2008 balance sheet and the statement of stockholders’ equity for the period from May 14, 2007 (date of inception) to December 31, 2008 have been derived from audited financial statements.

The statements and related notes have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles may be omitted pursuant to such rules and regulations. See the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 for additional disclosures relating to the Company’s financial statements and accounting principles.

2. Organization and Business Operations

The Company was incorporated in Delaware on May 14, 2007 as a blank check company for the purposes of acquiring, or acquiring control of, through a merger, capital stock exchange, asset acquisition or other similar business combination, one or more domestic or international operating businesses (“Business Combination”). The Company’s efforts in identifying a prospective target business will be limited to the homeland security industry, but not businesses that design, build or maintain mission-critical facilities.

5

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

2. Organization and Business Operations – (continued)

The registration statement for the Company’s initial public offering (“Offering”) was declared effective October 23, 2007. The Company consummated the Offering on October 29, 2007, issuing 10,000,000 Units at a price of $8.00 per Unit, which started trading separately on January 18, 2008. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Offering, although substantially all of the net proceeds of the Offering are intended to be generally applied toward consummating a business combination with an operating business (“Business Combination”). There is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the Offering, management placed $7.92 per Unit sold in the Offering, or $79,200,000 into a trust account (“Trust Account”) and invested these proceeds in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 until the earlier of (i) the consummation of its first Business Combination and (ii) liquidation of the Company. The investments in the Trust Account have been accounted for as trading securities and are recorded at their market value of approximately $79,431,708 at June 30, 2009. The placing of funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, providers of financing, prospective target businesses or other entities it engages, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account, there is no guarantee that they will execute such agreements. Two of the Company’s affiliates have agreed that they will be liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors, providers of financing, service providers or other entities that are owed money by the Company for services rendered to or contracted for or products sold to the Company. There can be no assurance that they will be able to satisfy those obligations. The net proceeds not held in the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Additionally, an aggregate of $1,000,000 of interest earned on the Trust Account balance was released to the Company to fund working capital requirements and additional funds may be released to fund tax obligations. An additional $150,000 of interest earned (net of taxes) on the Trust Account balance was released to the Company to repay a loan made to the Company by Secure America Acquisition Holdings, LLC. The reconciliation of investments held in trust as of June 30, 2009 is as follows:

Contribution to trust	$	79,200,000
Interest income received		1,988,534
Withdrawals to fund loan repayments		(150,000	)
Withdrawals to fund income taxes		(606,826	)
Withdrawals to fund operations (a)		(1,000,000	)
Total investments held in trust	$	79,431,708

(a)     amount is limited to $1,000,000.

6

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

2. Organization and Business Operations – (continued)

The Company, after signing a definitive agreement for the acquisition of a target business, is required to submit such transaction for stockholder approval. In the event that stockholders owning 30% or more of the shares sold in the Offering vote against the Business Combination and exercise their conversion rights described below, the Business Combination will not be consummated. All of the Company’s stockholders prior to the Offering (“Founders”), have agreed to vote their 2,500,000 founding shares of common stock in accordance with the vote of the majority of the shares voted by all other stockholders of the Company (“Public Stockholders”) with respect to any Business Combination. After consummation of a Business Combination, these voting safeguards will no longer be applicable.

With respect to a Business Combination which is approved and consummated, any Public Stockholder who voted against the Business Combination may demand that the Company convert his or her shares. The per share conversion price will equal the amount in the Trust Account, calculated as of two business days prior to the consummation of the proposed Business Combination, divided by the number of shares of common stock held by Public Stockholders at the consummation of the Offering. Accordingly, Public Stockholders holding 2,999,999 shares sold in the Offering may seek conversion of their shares in the event of a Business Combination. Accordingly, a portion of the proceeds of the Offering (29.999% of the amounts placed in the Trust Account other than those related to deferred underwriters’ discounts and commissions as described in Note 3) have been classified as common stock subject to possible conversion in the accompanying balance sheets and a portion (29.99%) of the interest earned on the Trust Account, after deducting the amounts permitted to be utilized for tax obligations, loan repayment and working capital purposes has been recorded as deferred interest in the accompanying balance sheets. Such Public Stockholders are entitled to receive their per share interest in the Trust Account (after the deduction of the permissible withdrawals of interest for working capital, income taxes , and loan repayment described above)computed without regard to the shares of common stock held by the Founders prior to the consummation of the Offering.

On the effective date of the Offering (“Effective Date”), the Company’s Certificate of Incorporation was amended (i) to provide that the Company will continue in existence only until 24 months from the Effective Date of the Offering and (ii) to increase the number of authorized shares to 50,000,000. If the Company has not completed a Business Combination by such date, its corporate existence will cease and it will dissolve and liquidate. This factor, as well as the Company's limited liquidity, raises substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that may result from the outcome of this uncertainty. In the event of liquidation, it is likely that the per share value of the residual assets remaining available for distribution (including Trust Fund assets) will be less than the initial public offering price per share in the Offering (assuming no value is attributed to the warrants contained in the units to be offered in the Offering discussed in Note 3).

Income (loss) Per Share — Income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period.

The effect of the 10,000,000 outstanding warrants included in the units issued in connection with the Offering and the 2,075,000 outstanding warrants issued in connection with the private placement has not been considered in the diluted income per share calculation since such warrants are contingently exercisable.

7

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Fair Value of Financial Instruments - The fair values of the Company’s assets and liabilities that qualify as financial instruments under SFAS No. 107 “Disclosures about Fair Value of Financial Instruments,” approximate their carrying amounts presented in the balance sheet based upon the short-term nature of the account at June 30, 2009.

2. Organization and Business Operations – (continued)

New Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141(R), Business Combinations (“SFAS 141R”) which establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree.  SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.  Upon adoption of SFAS 141R on January 1, 2009, the Company expensed acquisition costs of $106,313 which were previously capitalized.  SFAS 141R will have an impact to the Company for any acquisitions on or after January 1, 2009.

In December 2007, the FASB released SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. 51 (“SFAS 160”), which establishes accounting and reporting standards for the ownership interests in subsidiaries held by parties other than the parent and for the deconsolidation of a subsidiary.  SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interest of the parent and the interests of the non-controlling owners. SFAS 160 was adopted January 1, 2009.  SFAS 160 may have a material impact to the Company for any acquisitions on or after January 1, 2009.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements.  SFAS 157 does not require any new fair value measurements; rather, it applies under other accounting pronouncements that require or permit fair value measurements.  The provisions of SFAS 157 are to be applied prospectively as of the beginning of the fiscal year in which it is initially applied, with any transition adjustment recognized as a cumulative-effect adjustment to the opening balance of retained earnings.  The provisions of SFAS 157 are effective for fiscal years beginning after November 15, 2007.  The Company adopted the provisions of SFAS 157 for the fiscal year beginning January 1, 2008, except for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis for which delayed application was permitted until the Company’s fiscal year beginning January 1, 2009.  The Company’s adoption of the remaining provisions of SFAS 157 on January 1, 2009 did not have a material effect on the Company’s financial statements.

8

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

In June 2008, the FASB ratified EITF Issue No. 07-5, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” (“EITF 07-5”).  EITF 07-5 provides guidance on how to determine if certain instruments or embedded features are considered indexed to our own stock, including instruments similar to our convertible notes and warrants to purchase our stock.  EITF 07-5 requires companies to use a two-step approach to evaluate an instrument’s contingent exercise provisions and settlement provisions in determining whether the instrument is considered to be indexed to its own stock and exempt from the application of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”.  Although EITF 07-5 is effective for fiscal years beginning after December 15, 2008, any outstanding instrument at the date of adoption will require a retrospective application of the accounting through a cumulative effect adjustment to retained earnings upon adoption.  The adoption of EITF 07-5 did not have a significant impact on the Company’s financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

3. Initial Public Offering

On October 29, 2007, the Company sold 10,000,000 units at a price of $8.00 per unit. Each unit consists of one share of the Company’s common stock and one warrant. Each warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of $5.25 commencing on the later of the completion of a Business Combination and 12 months from the Effective Date and expiring four years from the Effective Date. The Company may redeem all of the warrants, at a price of $.01 per warrant upon 30 days’ notice while the warrants are exercisable, only in the event that the last sale price of the common stock is at least $11.50 per share for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given. In accordance with the warrant agreement relating to the warrants to be sold and issued in the Offering, the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the warrants. The Company will not be obligated to deliver securities, and there are no contractual penalties for failure to deliver securities, if a registration statement is not effective at the time of exercise. Additionally, in the event that a registration is not effective at the time of exercise, the holder of such warrant shall not be entitled to exercise such warrant and in no event (whether in the case of a registration statement not being effective or otherwise) will the Company be required to net cash settle the warrant exercise. Consequently, the warrants may expire unexercised and unredeemed.

The Company agreed to pay the underwriters in the Offering an underwriting discount of 7.0% of the gross proceeds of the Offering. The underwriters were paid an underwriting discount of 3.0%of the gross proceeds of the Offering at closing. However, the underwriters have agreed that underwriting discounts amounting to 4.0% of the gross proceeds of the Offering will not be payable unless and until the Company completes a Business Combination (See Note 4).

9

 SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

4. Deferred Underwriters’ Discounts and Commissions

Deferred underwriters’ discounts and commissions at June 30, 2009 and December 31, 2008 were $3,200,000. The underwriters have agreed that underwriting discounts amounting to 4% of the gross proceeds of the Offering will not be payable unless and until the Company completes a Business Combination and have waived their right to receive such payment upon the Company’s liquidation if it is unable to complete a Business Combination and to forfeit, on a pro rata basis, to pay converting stockholders (as described in Note 1).

5. Commitments and Related Party Transactions

The Company presently occupies office space provided by an affiliate of one of the Founders. This affiliate has agreed that, until the Company consummates a Business Combination, it will make such office space, as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company has agreed to pay such affiliate a total of $7,500 per month for such services commencing on the Effective Date. The Company records this fee as rent expense. For the six month periods ended June 30, 2009 and 2008, and for the period from May 14, 2007 (inception) through June 30, 2009, the Company recorded $45,000, $45,000 and $151,694, respectively, in rent expense under this agreement.

Pursuant to letter agreements which the Founders entered into with the Company and the underwriters, the Founders have waived their right to receive distributions with respect to their founding shares upon the Company’s liquidation.

Secure America Acquisition Holdings, LLC, the principal initial stockholder of the Company, purchased a total of 2,075,000 warrants (“Founder Warrants”) at $1.00 per Warrant (for an aggregate purchase price of $2,075,000) privately from the Company. This purchase took place simultaneously with the consummation of the Offering. All of the proceeds received from this purchase were placed in the Trust Account. The Founder Warrants are identical to the warrants offered in this offering, except that (i) the Founder Warrants are not subject to redemption, (ii) the Founder Warrants may be exercised on a cashless basis while the warrants included in the units sold in this offering cannot be exercised on a cashless basis, (iii) upon an exercise of the Founder Warrants, the holders of the Founder Warrants will receive unregistered shares of our common stock, and (iv) subject to certain limited exceptions, the Founder Warrants are not transferable until they are released from escrow, as described below, which would only be after the consummation of a Business Combination. The Founder Warrants are differentiated from warrants sold as part of the Units in the Offering through legends contained on the certificates representing the Founder Warrants indicating the restrictions and rights specifically applicable to such Founder Warrants.

10

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

5. Commitments and Related Party Transactions – (continued)

Secure America Acquisition Holdings, LLC, the holder of the Founder Warrants, is beneficially owned by two of the Company’s independent directors. The Company has determined that the purchase price of $1.00 per Founder Warrant is above the average trading price for warrants of similarly structured blank check companies. Accordingly, the Company believes that the purchase price of the Founder Warrants is greater than the fair value of the warrants included in the units and, therefore, the Company has not recorded compensation expense upon purchase of the Founder Warrants.

Exercising warrants on a “cashless basis” means that, in lieu of paying the aggregate exercise price for the shares of common stock being purchased upon exercise of the warrant in cash, the holder forfeits a number of shares issuable upon exercise of the warrant with a market value equal to such aggregate exercise price. Accordingly, the Company will not receive additional proceeds to the extent the Founder Warrants are exercised on a cashless basis.

Warrants included in the units sold in the Offering are not exercisable on a cashless basis and the exercise price with respect to these warrants will be paid directly to the Company. The Founder Warrants have been placed in an escrow account at Continental Stock Transfer & Trust Company, acting as escrow agent, and will not be released from escrow until the later of (i) one year after the consummation of the Offering and (ii) sixty days after the consummation of the Company’s initial Business Combination.

Except for transfers to members of Secure America Acquisition Holdings, LLC, the Founder Warrants are not transferable (except in limited circumstances) or salable by the purchaser until the Company consummates a Business Combination, and are non-redeemable so long as the purchaser or a member transferee holds such warrants. The holders of Founder Warrants and the underlying shares of common stock are entitled to registration rights under an agreement to be signed on the date of the Offering to enable their resale commencing on the date such warrants become exercisable. The Company has elected to make the Founder Warrants non-redeemable in order to provide the purchaser and its member transferees a potentially longer exercise period for those warrants because they bear a higher risk while being required to hold such warrants until the consummation of a Business Combination. With those exceptions, the Founder Warrants have terms and provisions that are substantially identical to those of the warrants being sold as part of the units in this Offering.

11

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

5. Commitments and Related Party Transactions – (continued)

Prior to their release from escrow, the Founder Warrants may be transferred (i) to persons or entities controlling, controlled by, or under common control with Secure America Acquisition Holdings, LLC, or to any stockholder, member, partner or limited partner of such entity, or (ii) to family members and trusts of permitted assignees for estate planning purposes, or, upon the death of any such person, to an estate or beneficiaries of permitted assignees; in each case, such transferees will be subject to the same transfer restrictions as Secure America Acquisition Holdings, LLC until after the Company completes its initial Business Combination. If the purchaser or member transferees acquire warrants for their own account in the open market, any such warrants will be redeemable. If the Company’s other outstanding warrants are redeemed and the market price of a share of the Company’s common stock rises following such redemption, holders of the Founder Warrants could potentially realize a larger gain on exercise or sale of those warrants than is available to other warrant holders, although the Company does not know if the price of its common stock would increase following a warrant redemption. If the Company’s share price declines in periods subsequent to the redemption of the warrants and Secure America Acquisition Holdings, LLC or one of its existing members continue to hold the Founder Warrants, the value of the Founder Warrants still held by such persons may also decline.

The Company’s outside counsel has agreed to waive claims against the Trust Account and to defer a portion of fees incurred until either a Business Combination is consummated or the Company is liquidated. In exchange for outside counsel taking this business risk, the Company has agreed to reimburse outside counsel for fees incurred plus a premium in the event a Business Combination is consummated. As of June 30, 2009, the amount of legal fees that was unbilled and contingently payable, including the potential premium, was approximately $1,580,435.

6. Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors.

The agreement with the underwriters prohibits the Company, prior to a Business Combination, from issuing preferred stock which participates in the proceeds of the Trust Account or which votes as a class with the Common Stock on a Business Combination.

7.  Deferred Acquisition Costs

Costs deferred at December 31, 2008 which related to a potential acquisition were charged to operations on January 1, 2009 upon the adoption of FAS 141R.

12

SECURE AMERICA ACQUISITION CORPORATION

(a Corporation in the Development Stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

8. Fair Value of Financial Instruments

Effective January 1, 2008 the Company adopted Statement No. 157, Fair Value Measurements.  Statement No. 157 applies to all assets and liabilities that are being measured and reported on a fair value basis.  Statement No. 157 requires new disclosure that establishes a framework for measuring fair value in GAAP, and expands disclosure about fair value measurements.  This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.  The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1:  Quoted market prices in active markets for identical assets or liabilities.

Level 2:   Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3:   Unobservable inputs that are not corroborated by market data.

In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject to Statement No. 157.  At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3.

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis by level within the hierarchy.

	June 30, 2009
	Total		Level 1		Level 2		Level 3
Funds Held in Trust	$	79,431,708	$	79,431,708	$	—	$	—
Total assets	$	79,431,708	$	79,431,708	$	—	$	—

The Company’s restricted funds held in the Trust Account are invested in a money market that invests in U.S. Government securities. This investment is considered to be highly liquid and easily tradable.

13

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This Quarterly Report on Form 10-Q, including, without limitation, Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains ‘‘forward-looking statements’’ within the meaning of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend the forward-looking statements to be covered by the safe harbor for forward-looking statements in such sections of the Exchange Act. The forward-looking information is based on various factors and was derived using numerous assumptions. All statements, other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are usually accompanied by words such as “believe,” “anticipate,” “plan,” “seek,” “expect,” “intend” and similar expressions.

Forward-looking statements necessarily involve risks and uncertainties, and our actual results could differ materially from those anticipated in the forward looking statements due to a number of factors, including those set forth in the “Risk Factors” section of our Registration Statement on Form S-1, as amended, Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-KSB for the year ended December 31, 2007 and elsewhere in this report. These factors as well as other cautionary statements made in this Quarterly Report on Form 10-Q, should be read and understood as being applicable to all related forward-looking statements wherever they appear herein. The forward-looking statements contained in this Quarterly Report on Form 10-Q represent our judgment as of the date hereof. We encourage you to read those descriptions carefully. We caution you not to place undue reliance on the forward-looking statements contained in this report. These statements, like all statements in this report, speak only as of the date of this report (unless an earlier date is indicated) and we undertake no obligation to update or revise the statements except as required by law.

The following discussion should be read in conjunction with our unaudited financial statements and related notes thereto included elsewhere in this report.

Overview

We were formed on May 14, 2007, as a blank check company for the purpose of acquiring, or acquiring control of, through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination, one or more domestic or international operating businesses, which we refer to as our initial business combination. Our efforts in identifying a prospective target business will be limited to the homeland security industry, but not businesses that design, build or maintain mission-critical facilities. “Mission-critical” facilities are those facilities that shelter and support an organization's people, equipment and data to a level that far exceeds standards for normal facilities. Mission-critical facilities generally serve or house an essential business or government function that must operate absolutely reliably around the clock, 365 days per year, under any circumstances, such as data centers, operation centers, network facilities, server rooms, security operations centers, communications facilities and the infrastructure systems that are critical to their function. Services that may be provided to mission-critical facilities include technology consulting, engineering and design management, construction management, system installations, operations management and facilities management and maintenance. We changed our name from “Fortress America Acquisition Corporation II” to “Secure America Acquisition Corporation” on August 6, 2007.

14

Results of Operations

Three month period ended June 30, 2009 compared to the three month period ended June 30, 2008

For the three month period ended June 30, 2009, we had a total income of $33,507, consisting of net interest income on investments held in trust and on cash balances maintained. For the three month period ended June 30, 2008, we had a total income of $335,573, consisting of net interest income on investments held in trust and on cash balances maintained. The decrease in income for the three month period ended June 30, 2009 as compared to the three month period ended June 30, 2008 was due primarily to a significant decline in interest rates, which reduced the interest earned on investments held in trust.

Total expenses for the three month period ended June 30, 2009 were $70,147, consisting of $94,766 in operating expenses and an income tax benefit of ($24,619).  We had a net loss of $36,640 for this period. Total expenses for the three month period ended June 30, 2008 were $289,640, consisting of $258,828 in operating expenses and $30,812 in income tax expense.  We had net income of $45,933 for this period. The decrease in operating expenses for the three month period ended June 30, 2009 as compared to the three month period ended June 30, 2008 was largely due to approximately $158,000 in expenses associated with an abandoned acquisition that were charged to operations during the three month period ended June 30, 2008.

Six month period ended June 30, 2009 compared to the six month period ended June 30, 2008

For the six month period ended June 30, 2009, we had a total income of $100,257, consisting of net interest income on investments held in trust and on cash balances maintained. For the six month period ended June 30, 2008, we had a total income of $894,755, consisting of net interest income on investments held in trust and on cash balances maintained. The decrease in income for the six month period ended June 30, 2009 as compared to the six month period ended June 30, 2008 was due primarily to a significant decline in interest rates, which reduced the interest earned on investments held in trust.

Total expenses for the six month period ended June 30, 2009 were $211,739, consisting of $286,640 in operating expenses and an income tax benefit of ($74,901).  We had a net loss of $111,482 for this period. Total expenses for the six month period ended June 30, 2008 were $585,755, consisting of $391,307 in operating expenses and $194,448 in income tax expense.  We had net income of $309,000 for this period. The decrease in operating expenses for the six month period ended June 30, 2009 as compared to the six month period ended June 30, 2008 was largely due to the fact that approximately $158,000 in expenses associated with an abandoned acquisition that were charged to operations during the six month period ended June 30, 2008, while approximately106,000 in such expenses were charged during the six month period ended June 30, 2009.

Period from May 14, 2007 (inception) through June 30, 2009

For the period from May 14, 2007 (inception) through June 30, 2009, we had a total income of $1,919,043, consisting of net interest income on investments held in trust and on cash balances maintained.

15

Total expenses for this period were $1,318,954, consisting of $930,268 in formation and operating expenses and $388,686 in income tax expense.  We had net income of $600,089 for this period.

Liquidity and Capital Resources

Prior to the consummation of our initial public offering, our liquidity needs were satisfied through receipt of $25,000 in stock subscriptions from our initial stockholders and a loan of $150,000 from Secure America Acquisition Holdings, LLC.

The net proceeds from (i) the sale of the units in our initial public offering, after deducting offering expenses of approximately $713,000 (of which approximately $88,000 was paid from interest earned on amounts held in the trust account) and underwriting discounts and commissions of approximately $5,600,000, (ii) the sale of the founder warrants in a private placement which occurred immediately prior to the closing of our initial public offering for an aggregate purchase price of $2,075,000 and (iii) the $150,000 loan made to us by Secure America Acquisition Holdings, LLC, were approximately $76,000,000. This entire amount was placed in the trust account. An additional amount equal to 4.0% of the gross proceeds of our initial public offering, or $3,200,000, was also placed in the trust account and will be used to pay the underwriters a deferred fee (or paid to public stockholders who elect to convert their common stock in connection with our initial business combination, as the case may be) upon the consummation of our initial business combination, and will not be available for our use to acquire a target business. We expect that most of the amounts held in the trust account will be used as consideration to pay the sellers of a target business or businesses with which we ultimately complete a business combination. We will use substantially all of the net proceeds of our initial public offering not in the trust account to acquire, or acquire control of, a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating the business combination. To the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the amounts held in the trust account as well as any other net proceeds not expended will be used to finance the operations of the target business.

An aggregate of $1,000,000 of interest earned (net of taxes) on the trust account balance has been released to us to fund working capital requirements and additional funds may be released to fund our income tax obligations. We believe that these amounts will be sufficient to allow us to operate until October 23, 2009, assuming that a business combination is not consummated during that time. Over this time period, we anticipate making the following expenditures:

· approximately $400,000 of expenses for legal, accounting and other expenses attendant to the due diligence investigations, structuring and negotiation of a business combination;

· approximately $100,000 of expenses for the due diligence and investigation of a target business;

· approximately $150,000 of expenses in legal and accounting fees relating to our Securities and Exchange Commission reporting obligations;

· approximately $180,000 of expenses in fees relating to our office space and certain general and administrative services; and

· approximately $170,000 for general working capital that will be used for miscellaneous expenses and reserves, including approximately $130,000 for director and officer liability and other insurance premiums, finders’ fees, consulting fees or other similar compensation, potential deposits, down payments or funding of a “no-shop” provision with respect to a particular business combination.

16

An additional $150,000 of interest earned (net of taxes) on the trust account balance was released to us to repay the loan made to us by Secure America Acquisition Holdings, LLC.

Through June 30, 2009, we have drawn $1,756,826 of the funds that may be used by us from the Trust Account to fund working capital requirements, to fund income tax payments and to repay loans made to us.

We believe we will need up to an additional $150,000 in financing following our initial public offering in order to meet the expenditures required for operating our business prior to our initial business combination. We have not yet identified a source for that additional capital. We will need to obtain additional financing to the extent such financing is required to consummate a business combination or because we become obligated to convert into cash a significant number of shares from dissenting stockholders, in which case we may issue additional securities or incur debt in connection with such business combination. Following a business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Off-Balance Sheet Arrangements

We do not have off-balance sheet arrangements, financings or other relationships with unconsolidated entities or other persons, also know as special purpose entities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable as we are a smaller reporting company.

Item 4T.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officers and principal financial officer, of the effectiveness of our disclosure controls and procedures as of June 30, 2009. Based on that evaluation, our principal executive officers and principal financial officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting.

During the most recently completed fiscal quarter, there has been no significant change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting as such term is defined in Rules 13a-15 and 15d-15 of the Exchange Act..

17

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

As a smaller reporting company, we are not required to provide information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Securities Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits required by Item 601 of Regulation S-B.

Exhibit	Description
31.1	Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009.
31.2	Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009.
31.3	Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009.
32.1	Certification of the Company’s Principal 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 of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.3	Certification of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

18

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SECURE AMERICA ACQUISITION CORPORATION
Date: August 14, 2009	By:	/s/ C. Thomas McMillen
		C. Thomas McMillen, Chairman and Co-Chief Executive Officer
		(Principal Executive Officer and Authorized Officer)
Date: August 14, 2009	By:	/s/ Harvey L. Weiss
		Harvey L.  Weiss, Co-Chief Executive Officer
		(Principal Executive Officer and Authorized Officer)

19