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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2009.
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-33979
BPW ACQUISITION CORP.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 26-1259837 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
| 750 Washington Boulevard, Stamford, Connecticut | 06901 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(203) 653-5800
(Registrant’s Telephone Number, Including Area Code)
N/A
Former Name, Former Address and Former Fiscal year, if Changed Since Last Report
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨
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 June 30, 2009 there were 41,176,471 shares of common stock, par value $.0001 per share, issued and outstanding.
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FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2009
INDEX
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PART I. – FINANCIAL INFORMATION
BPW ACQUISITION CORP.
(a corporation in the development stage)
| June 30, 2009 (Unaudited) | December 31, 2008 | |||||
| ASSETS | ||||||
Current assets | ||||||
Cash | $ | 59,708 | $ | 31,848 | ||
Prepaid expenses | 122,810 | 93,810 | ||||
Total current assets | 182,518 | 125,658 | ||||
Other assets | ||||||
Investment in Trust Account | 350,054,247 | 350,530,373 | ||||
Deferred income taxes | 167,000 | 113,000 | ||||
Total other assets | 350,221,247 | 350,643,373 | ||||
| $ | 350,403,765 | $ | 350,769,031 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities | ||||||
Accounts payable and accrued expenses | $ | 222,223 | $ | 216,636 | ||
Income taxes payable | 246,650 | |||||
Total current liabilities | 222,223 | 463,286 | ||||
Long-term liabilities, Deferred underwriters’ fees | 10,010,000 | 10,010,000 | ||||
Common stock subject to possible redemption, 12,249,999 shares at redemption value, $9.96 per share | 122,009,990 | 122,009,990 | ||||
Commitments and contingencies | ||||||
Stockholders’ equity | ||||||
Preferred stock, $.0001 par value; 1,000,000 shares authorized; none issued | — | — | ||||
Common stock, $.0001 par value, authorized 200,000,000 shares; 41,176,471 shares issued and outstanding, respectively | 4,118 | 4,118 | ||||
Additional paid-in capital | 216,351,823 | 216,351,823 | ||||
Retained earnings | 1,805,611 | 1,929,814 | ||||
Total stockholders’ equity | 218,161,552 | 218,285,755 | ||||
| $ | 350,403,765 | $ | 350,769,031 | |||
See accompanying notes to condensed interim financial statements.
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(a corporation in the development stage)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30, |
Six Months Ended June 30, | For the Period October 12, 2007 (inception) to June 30, 2009 | ||||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Formation and operating costs | 156,845 | 171,956 | 373,731 | 233,880 | 844,311 | |||||||||||||||
Loss from operations | (156,845 | ) | (171,956 | ) | (373,731 | ) | (233,880 | ) | (844,311 | ) | ||||||||||
Interest and dividend income | 169,795 | 1,195,756 | 184,278 | 1,767,023 | 3,578,772 | |||||||||||||||
Net income (loss) before provision for income taxes (benefit) | 12,950 | 1,023,800 | (189,453 | ) | 1,533,143 | 2,734,461 | ||||||||||||||
Provision for income taxes (benefit) | 4,400 | 300,174 | (65,250 | ) | 521,450 | 928,850 | ||||||||||||||
Net income (loss) applicable to common stockholders | $ | 8,550 | $ | 723,626 | $ | (124,203 | ) | $ | 1,011,693 | $ | 1,805,611 | |||||||||
Weighted average number of common shares outstanding – excluding common shares subject to possible redemption: | ||||||||||||||||||||
Basic | 28,926,472 | 28,926,472 | 28,926,472 | 22,594,381 | 24,754,428 | |||||||||||||||
Diluted | 35,474,257 | 37,402,949 | 28,926,472 | 26,218,350 | 29,183,186 | |||||||||||||||
Income (loss) per common share – excluding common shares subject to possible redemption: | ||||||||||||||||||||
Basic | $ | 0.00 | $ | 0.03 | $ | (0.00 | ) | $ | 0.04 | $ | 0.07 | |||||||||
Diluted | $ | 0.00 | $ | 0.02 | $ | (0.00 | ) | $ | 0.04 | $ | 0.06 | |||||||||
Weighted average number of common shares subject to possible redemption | 12,249,999 | 12,249,999 | 12,249,999 | 8,053,867 | 9,456,140 | |||||||||||||||
Income per common share for shares subject to possible redemption, basic and diluted | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
See accompanying notes to condensed interim financial statements.
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(a corporation in the development stage)
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the period October 12, 2007 (inception) to June 30, 2009
Common Stock | Additional Paid in Capital | Retained Earnings (Deficit Accumulated during the Development Stage) | Total Stockholders’ Equity | ||||||||||||||||
| Shares | Amount | ||||||||||||||||||
Sale of Units issued to the Sponsors on October 31, 2007 at $0.0023 per Unit (each unit consists of one share of common stock and one warrant to purchase one share of common stock) | 10,781,250 | $ | 1,078 | $ | 23,922 | $ | — | $ | 25,000 | ||||||||||
Net loss | — | — | — | (94 | ) | (94 | ) | ||||||||||||
Balances, at December 31, 2007 | 10,781,250 | 1,078 | 23,922 | (94 | ) | 24,906 | |||||||||||||
Forfeiture of Units issued to the Sponsors on February 19, 2008 and February 26, 2008 | (3,678,309 | ) | (368 | ) | 368 | — | — | ||||||||||||
Sale of Units issued in the public offering on March 3, 2008 at $10 per Unit (including 12,249,999 shares of common stock subject to possible redemption) | 35,000,000 | 3,500 | 349,996,500 | — | 350,000,000 | ||||||||||||||
Proceeds from public offering subject to redemption (12,249,999 shares at redemption value) | — | — | (122,009,990 | ) | — | (122,009,990 | ) | ||||||||||||
Underwriter’s discount and offering costs related to the public offering (includes $10,010,000 payable upon a business combination) | — | — | (20,259,069 | ) | — | (20,259,069 | ) | ||||||||||||
Sale of 8,600,000 warrants at $1 per warrant on March 3, 2008 to the Sponsors | — | — | 8,600,000 | — | 8,600,000 | ||||||||||||||
Forfeiture of Units issued to the Sponsors on March 27, 2008 | (926,470 | ) | (92 | ) | 92 | — | — | ||||||||||||
Net income | — | — | — | 1,929,908 | 1,929,908 | ||||||||||||||
Balances, at December 31, 2008 | 41,176,471 | 4,118 | 216,351,823 | 1,929,814 | 218,285,755 | ||||||||||||||
Net loss (unaudited) | — | — | — | (124,203 | ) | (124,203 | ) | ||||||||||||
Balances, at June 30, 2009 (unaudited) | 41,176,471 | $ | 4,118 | $ | 216,351,823 | $ | 1,805,611 | $ | 218,161,552 | ||||||||||
See accompanying notes to condensed interim financial statements.
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(a corporation in the development stage)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, | For the Period October 12, 2007 (inception) to June 30, 2009 | |||||||||||
| 2009 | 2008 | |||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | (124,203 | ) | $ | 1,011,693 | $ | 1,805,611 | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
Deferred income tax benefit | (54,000 | ) | (52,000 | ) | (167,000 | ) | ||||||
Increase (decrease) in cash attributable to changes in operating assets and liabilities: | ||||||||||||
Prepaid expenses | (29,000 | ) | (134,713 | ) | (122,810 | ) | ||||||
Accounts payable and accrued expenses | 5,587 | 189,339 | 222,223 | |||||||||
Income taxes payable | (246,650 | ) | 213,000 | |||||||||
Net cash provided by (used in) operating activities | (448,266 | ) | 1,227,319 | 1,738,024 | ||||||||
Net cash provided by (used in) investing activities | ||||||||||||
Change in cash held in Trust Account | 476,126 | (349,405,396 | ) | (350,054,247 | ) | |||||||
Cash flows from financing activities | ||||||||||||
Proceeds from issuance of units to the Sponsors | 25,000 | |||||||||||
Proceeds from notes payable, Sponsors | 250,000 | |||||||||||
Payments of the notes payable, Sponsors | (250,000 | ) | (250,000 | ) | ||||||||
Proceeds from the issuance of warrants in private placement | 8,600,000 | 8,600,000 | ||||||||||
Proceeds from the issuance of common stock in the initial public offering | 350,000,000 | 350,000,000 | ||||||||||
Payment of offering costs | (10,172,205 | ) | (10,249,069 | ) | ||||||||
Net cash provided by financing activities | — | 348,177,795 | 348,375,931 | |||||||||
Net increase (decrease) in cash | 27,860 | (282 | ) | 59,708 | ||||||||
Cash, beginning of period | 31,848 | 199,042 | — | |||||||||
Cash, end of period | $ | 59,708 | $ | 198,760 | $ | 59,708 | ||||||
Supplemental disclosure of cash flow information, cash paid during the period for income taxes | $ | 260,000 | $ | 360,000 | $ | 1,120,000 | ||||||
Supplemental schedule of non-cash financing activities | ||||||||||||
Deferred underwriters’ fees | $ | — | $ | 10,010,000 | $ | 10,010,000 | ||||||
See accompanying notes to condensed interim financial statements.
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BPW ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
(unaudited)
NOTE A — BASIS OF PRESENTATION
The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These statements should be read in conjunction with the more complete information and financial statements and notes thereto included in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) are considered necessary for a fair presentation of interim results of the Company. Operating results for the interim period presented are not necessarily indicative of the results to be expected for any other interim period or for the full year.
NOTE B — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
BPW Acquisition Corp. (a corporation in the development stage) (the “Company”) was incorporated in Delaware on October 12, 2007 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more operating businesses (a “Business Combination”). The Company intends to focus on an acquisition or acquisitions in the financial services or business services industries. The Company has neither engaged in any operations nor generated operating revenue to date. The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting By Development Stage Enterprises”, and is subject to the risks associated with activities of development stage companies.
The registration statement for the Company’s initial public offering (the “Offering”) (as described in Note C) was declared effective on February 26, 2008. The Company consummated the Offering on March 3, 2008 and simultaneously with such Offering, BNYH BPW Holdings LLC and Perella Weinberg Partners Acquisition LP (the “Sponsors”) purchased an aggregate of 8,600,000 warrants at $1.00 per warrant (the “Sponsors’ Warrants”) from the Company in private placements (the “Private Placements”).
The Company’s management has broad discretion with respect to the specific application of the net proceeds of this Offering, although substantially all of the net proceeds of the Offering are intended to be generally applied toward consummating a business combination with (or acquisition of) an operating business. Upon the closing of the Offering, approximately $348,650,000 (an amount equal to 99.6% of the proceeds received from the Offering) of the aggregate proceeds of the Offering and the Private Placements, including deferred underwriting discounts and commissions payable to the underwriters in the Offering only if the Company consummates a Business Combination, were placed in a trust account (“Trust Account”) until the earlier of (i) the consummation of the Company’s initial Business Combination or (ii) the distribution of the Trust Account as described below, other than any amounts released to public stockholders who exercise their conversion rights in connection with certain stockholders votes.
The Company, after signing a definitive agreement to effect a Business Combination with a target business, will submit such transaction for stockholder approval. In the event that 35% or more of the outstanding stock (excluding, for this purpose, those shares of common stock issued prior to the Offering), on a cumulative basis, including the shares as to which conversion rights were exercised in connection with the stockholder vote, if any, required to approve an amendment to the Company’s amended and restated certificate of incorporation to provide for an extension of the time period within which it must complete its Business Combination, vote against the Business Combination and elect to exercise their conversion rights, the Business Combination will not be consummated.
In the event an extension period or a Business Combination is consummated, public stockholders who exercised their conversion rights and voted against an extension period or a Business Combination, as applicable, will be entitled to convert their stock for a pro rata share of the aggregate amount of cash then on deposit in the Trust Account, including their pro rata portion of the deferred underwriting discount and any interest earned on the Trust
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Account, net of income taxes payable on the interest income on the Trust Account and net of any interest income of up to $4,000,000 released to the Company for working capital requirements. However, voting against an extension period or the Business Combination alone will not result in an election to exercise a stockholder’s conversion rights.
All of the Company’s stockholders prior to the Offering have agreed to vote all of the shares of common stock held by them prior to the Offering (i) in the same manner as the majority of the votes cast by the public stockholders at a duly held stockholders meeting (a) in connection with the vote required to approve an initial Business Combination and (b) in connection with the vote required to approve an amendment to the Company’s amended and restated certificate of incorporation to provide for an extension of the Company’s corporate existence to up to 30 months from the consummation of the Offering in the event the Company has entered into a definitive agreement for, but has not yet consummated, an initial Business Combination, and (ii) in favor of an amendment to the Company’s amended and restated certificate of incorporation to provide for the Company’s perpetual existence in connection with a vote to approve an initial Business Combination. In addition, all of the Company’s stockholders prior to the Offering and the Company’s directors and officers have agreed that they will vote any shares of common stock they purchase in the open market in, or after, the Offering, including those shares purchased pursuant to the limit orders (as described below under Note D), in favor of an initial Business Combination, in favor of an extension of the Company’s corporate existence to up to 30 months from the consummation of the Offering and in favor of an amendment to the Company’s amended and restated certificate of incorporation to provide for the Company’s perpetual existence in connection with a vote to approve an initial Business Combination.
In the event that the Company does not consummate a Business Combination by February 26, 2010 (or August 26, 2010, if extended), the proceeds held in the Trust Account, including any interest earned and net of any income taxes payable on the interest income, will be distributed to the Company’s public stockholders, excluding the initial stockholders to the extent of their initial stock holdings prior to the consummation of the Offering.
NOTE C — OFFERING
On March 3, 2008, the Company consummated the sale of 35,000,000 units (“Units”) at $10.00 per unit. Each Unit consists of one share of the Company’s common stock, $0.0001 par value, and one redeemable common stock purchase warrant (“Warrants”). Each Warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of $7.50 commencing on the later of (i) February 26, 2009 or (ii) the completion of a Business Combination with a target business, and will expire February 26, 2014. The Warrants will be redeemable at a price of $0.01 per Warrant upon 30 days prior notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $13.25 per share for any 20 trading days within a 30 trading day period ending on the third business day prior to the date on which notice of redemption is given. If the Company is unable to deliver registered shares of common stock to the holder upon exercise of warrants during the exercise period, there will be no cash settlement of the warrants and the warrants will expire worthless.
The Company had granted the underwriters a 30-day option expiring on March 27, 2008 to purchase up to 5,250,000 additional Units to cover the over-allotment, if any. This option expired unexercised.
In connection with the Offering, the Company paid an underwriting discount of $9,100,000 (2.6% of the gross offering proceeds) to the underwriters at the closing of the Offering. An additional fee of $15,400,000 (4.4% of the gross offering proceeds) is payable upon the Company’s consummation of a Business Combination, reduced pro rata (up to $5,390,000) by the exercise of any conversion rights described in Note B. The underwriters will not be entitled to any interest accrued on the deferred discount which aggregates $10,010,000.
NOTE D — RELATED PARTY TRANSACTIONS
The Company issued two unsecured promissory notes to the Sponsors for aggregate proceeds of $250,000 on October 31, 2007. The notes are non-interest bearing and were payable on the earlier of October 31, 2008 or the consummation of the Offering. On March 3, 2008, the promissory notes were repaid in full.
On October 31, 2007, the Company issued 10,781,250 Units (“Founders’ Units”) for proceeds of $25,000 to the Sponsors. Subsequently, the Sponsors have returned to the Company an aggregate of 3,678,309 of such Founders’ Units, which, upon receipt, the Company cancelled. Up to an aggregate of 926,470 of the Founders’ Units were subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part by the underwriters. On March 27, 2008, 926,470 of the Founders’ Units were returned to the Company and cancelled.
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The Company has agreed to pay a monthly fee of $10,000 per month to an entity affiliated with one of the Sponsors, for office space and certain office and secretarial services. This agreement commences on the date of the Offering and shall continue through the earlier of a Business Combination or the liquidation of the Company. Approximately $30,000, $nil and $130,000 has been paid under this agreement for the six month period ended June 30, 2009 and 2008 and for the period October 12, 2007 (inception) through to June 30, 2009, respectively and at June 30, 2009, $30,000 is payable under this agreement.
On March 3, 2008, prior to the Offering, the Sponsors purchased, in the Private Placements, 8,600,000 Sponsors’ Warrants at $1.00 per warrant simultaneously with the consummation of the Offering, but not as part of the Offering. The aggregate proceeds of the Private Placements of $8,600,000 are held in the Trust Account described in Note B above. The Sponsors’ Warrants are identical to the Warrants underlying the Units sold in the Offering except that (i) the Sponsors have agreed that they will not sell or otherwise transfer the warrants until the Company consummates a Business Combination, (ii) they may be exercised on a cashless basis at the option of the holder and (iii) are not redeemable as long as they are held by the Sponsors or their affiliates. If the Company does not complete a Business Combination, then the $8,600,000 of proceeds will be part of the liquidating distribution to the public stockholders and the Sponsors’ Warrants will expire worthless.
The Company’s Board of Directors approved an amendment to modify the terms of the warrants granted to the Sponsors’ as part of the Founders’ Units (the “Founders’ Warrants”) whereby (i) the exercise price of the Founders’ Warrants was increased from $7.50 to $10.00, (ii) the expiration date of the Founders’ Warrants was extended to six years from the date of the final prospectus relating to the Offering and (iii) the last sale price that triggers when the warrants become exercisable was changed to $12.25 per share for the Founders’ Warrants.
The Sponsors transferred at cost an aggregate of 150,000 Founders’ Units to Roger W. Einiger, J. Richard Fredericks and Wolfgang Schoellkopf (the “Directors” and together with the Sponsors, the “Founders”), each of whom agreed to serve on the Board of Directors of the Company upon the closing of the Offering. In addition, the Directors have purchased from the Sponsors an aggregate of 120,927 Founders’ Units prior to the Offering and have also purchased from the Sponsors an aggregate of 149,571 Sponsors’ Warrants immediately following the consummation of the Offering for an aggregate purchase price of $150,000. On March 27, 2008, the Directors returned an aggregate of 16,116 Founders’ Units and therefore currently hold an aggregate of 254,811 Founders’ Units.
The holders of the Founders’ Units, as well as the holders of the Sponsors’ Warrants (and underlying securities), are entitled to registration rights pursuant to an agreement signed on February 26, 2008. The holders of a majority of these securities are entitled to make up to three demands that the Company register such securities. In addition, these stockholders have “piggy-back” registration rights to include their securities in other registration statements filed by the Company. The registration rights agreement provides that, in certain instances, the holders (and affiliates and other permitted transferees) of a majority of these securities may require the Company to register these securities held by them on a registration statement filed under the Securities Act, provided that no sales will be allowed to be made pursuant to such registration statement until termination of the applicable lock-up period for the securities being registered, even if such registration statement has already been declared effective, and provided further that with respect to the Founders’ Warrants, such warrants must also have become exercisable. The Company will bear the expenses incurred in connection with filing any such registration statement.
The holders of the warrants will not be able to exercise those warrants unless the Company has an effective registration statement covering the shares issuable upon their exercise and a related current prospectus available. Although the shares of common stock issuable pursuant to the Founders’ Warrants and Sponsors’ Warrants may or may not be issued pursuant to a registration statement, the warrant agreement provides that so long as they are held by our Founders or Sponsors, or their affiliates or other permitted transferees, the Founders’ Warrants and Sponsors’ Warrants may not be exercised unless a registration statement relating to the common stock issuable upon exercise of the warrants purchased in the Offering is effective and a related current prospectus is available.
The Sponsors have entered into agreements with Citigroup Global Markets Inc. in accordance with the guidelines of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to which they have placed limit orders for an aggregate of up to $25,000,000 of the Company’s common stock,
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commencing on the later of (i) the day after the Company files a preliminary proxy statement relating to the Company’s initial Business Combination and (ii) 60 days after termination of the “restricted period” in connection with the Offering under Regulation M of the Exchange Act and ending on the business day immediately preceding the record date for the meeting of stockholders at which such Business Combination is to be approved, or earlier in certain circumstances (“Buyback Period”). Brooklyn NY Holdings LLC and Perella Weinberg Partners Group LP have agreed to contribute to the capital of BNYH BPW Holdings LLC and Perella Weinberg Partners Acquisition LP, respectively, sufficient funds for them to meet their respective obligations under these limit order agreements. These limit orders will require the Sponsors to purchase the Company’s common stock offered for sale (and not purchased by another investor) at or below a price equal to the per share amount held in the Trust Account, until the earlier of the expiration of the Buyback Period or until such purchases reach $25,000,000 in total.
The Sponsors will participate in any liquidation distributions with respect to any shares of common stock purchased by them following consummation of the Offering, including shares purchased pursuant to such limit orders, in the event the Company fails to complete an initial Business Combination. In addition, the Sponsors have agreed that they will not sell or transfer any shares of common stock purchased by them pursuant to these agreements until 180 days after the Company has completed an initial Business Combination, and will vote all such shares (i) in favor of the Company’s initial Business Combination, (ii) in favor of an amendment to the Company’s amended and restated certificate of incorporation to provide for an extension of the Company’s corporate existence to up to 30 months from the date of the prospectus in the event the Company has entered into a definitive agreement for, but has not yet consummated, the Company’s initial Business Combination, and (iii) in favor of an amendment to the Company’s amended and restated certificate of incorporation to provide for the Company’s perpetual existence in connection with a vote to approve the Company’s initial Business Combination.
In March 2009, the Company entered into an agreement for consulting services with Douglas McGovern. Services under this agreement require monthly payments of up to $13,500 (and Mr. McGovern is entitled to a bonus upon completion of an initial Business Combination) and extends through the earlier of February 26, 2010 (or August 26, 2010, if extended) or completion of a Business Combination. Mr. McGovern was formerly an employee of Brooklyn NY Holdings LLC.
NOTE E — TRUST ACCOUNT
A total of $348,650,000, which includes $324,650,000 of the net proceeds from the Offering, $8,600,000 from the sale of Sponsors’ Warrants (see Notes B and D) and $15,400,000 of deferred underwriting discounts and commissions, has been placed in the Trust Account. The trust proceeds were invested in the “Dreyfus Treasury Prime Cash Management” money market fund, a fund which invests exclusively in U.S. Treasury securities. Effective April 15, 2009, the Company redeemed primarily all its holdings in the “Dreyfus Treasury Prime Cash Management” money market fund and immediately re-invested the proceeds of such redemption directly in U.S. Treasury securities with maturities of 180 days or less.
Investment in the Company’s Trust Account at June 30, 2009 consist of (a) United States treasury securities and (b) cash. The Company classifies its United States Treasury and equivalent securities as held-to-maturity in accordance with SFAS No. 115, “Accounting for Certain Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts. The Company’s cash amount held in the Trust Account was $710 at June 30, 2009.
The carrying amount, including accrued interest, gross unrealized holding gains, and fair value of held-to-maturity securities at June 30, 2009 (unaudited) were as follows:
| Carrying amount | Gross unrealized holding gains (loss) | Fair value | ||||||||
Held-to-maturity: | ||||||||||
U. S. Treasury securities | $ | 350,053,537 | $ | (100,258 | ) | $ | 349,953,280 | |||
Through June 30, 2009, the Company transferred approximately $2,170,000 from the Trust Account including approximately $1,120,000 for payment of income taxes and approximately $1,050,000 for use in working capital.
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NOTE F — REDEEMABLE COMMON STOCK
As discussed in Note B, the Company is required to obtain shareholder approval for any Business Combination of a target business. In the event that 35% or more of the outstanding stock (excluding, for this purpose, those shares of common stock issued prior to the Offering), on a cumulative basis, including the shares as to which conversion rights were exercised in connection with the stockholder vote, if any, required to approve an amendment to the Company’s amended and restated certificate of incorporation to provide for an extension of the time period within which it must complete its Business Combination both vote against the Business Combination and elect to exercise their conversion rights, the Business Combination will not be consummated. The Company can still effect a Business Combination if the public shareholders owning up to approximately 35% (minus one share) of the common stock sold in the Offering exercise their conversion rights.
This conversion obligation with respect to up to 35% (minus one share) of the shares of common stock sold in the Offering will exist regardless of how a Business Combination is structured. That is, the Company would be required to redeem up to an amount equal to the product of approximately 35% (minus one share) of the 35,000,000 shares of common stock sold in the Offering (or 12,249,999 shares of common stock) multiplied by an initial cash per-share redemption price of $9.96. The actual per-share redemption price will be equal to the quotient of the amount in the Trust Account plus all accrued interest not previously released to the Company, as of two business days prior to the proposed consummation of the Business Combination, divided by 35,000,000 shares of common stock.
Accordingly, under the provision of EITF D-98, Classification and Measurement of Redeemable Securities, the Company has classified 35% (minus one share) of the net proceeds from the Offering, or $122,009,990, outside permanent equity as of June 30, 2009.
NOTE G — EARNINGS PER SHARE
The Company complies with the accounting and disclosure requirements of SFAS No. 128, “Earnings Per Share.” Basic earnings per common share for all periods is computed by dividing the earnings applicable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted income per share reflects the potential dilution assuming common shares were issued upon the exercise of outstanding in the money warrants and the proceeds thereof were used to purchase common shares at the average market price during the period.
The Company’s statements of operations include a presentation of earnings per share for common stock subject to possible redemption in a manner similar to the two-class method of earnings per share. Basic and diluted earnings per common share for the maximum number of shares subject to possible redemption is calculated by dividing the net interest income attributable to common shares subject to redemption ($0 for the three and six months ended June 30, 2009) by the weighted average number of shares subject to possible redemption. Basic and diluted earnings per common share for the shares outstanding not subject to possible redemption is calculated by dividing the net income exclusive of the net interest income attributable to common shares subject to redemption by the weighted average number of shares not subject to possible redemption.
At June 30, 2009, the Company had outstanding warrants to purchase 49,652,948 shares of common stock. For all the period presented, the weighed average of 6,176,471 shares underlying Founders’ Units were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. The Company uses the treasury-stock method to calculate potentially dilutive shares, as if they were converted into common stock at the beginning of the period. For the three and six months ended June 30, 2009 and the period October 12, 2007 (inception) to June 30, 2009, dilutive securities include warrants of 6,547,785, nil and 4,428,758, respectively. For the three and six months ended June 30, 2008, dilutive securities include warrants of 8,476,477 and 3,623,969, respectively. These dilutive securities represent the incremental common shares, based on their assumed conversion, to be included in the weighted average number of common shares for the calculation of diluted income (loss) per common share.
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NOTE H — INCOME TAXES
The Company complies with SFAS No. 109, “Accounting for Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company also complies with the provisions of the Financial Accounting Standards Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions. The Company adopted FIN 48 on the inception date, October 12, 2007. The Company did not recognize any adjustments for uncertain tax positions during the three months ended June 30, 2009.
The current and deferred components of taxes are comprised of the following for the three and six months ended June 30, 2009 and 2008 and for the period of October 12, 2007 (inception) to June 30, 2009 are approximately:
| Three Months Ended June 30, | Six Months Ended June 30, | October 12, 2007 (inception) to June 30, 2009 | |||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
Current tax provision (benefit) | $ | 4,000 | $ | 345,000 | $ | (12,000 | ) | $ | 573,000 | $ | 1,059,000 | ||||||||
Deferred tax provision (benefit) | $ | — | $ | (45,000 | ) | $ | (54,000 | ) | $ | (52,000 | ) | $ | (131,000 | ) | |||||
Provision (benefit) for income taxes | $ | 4,000 | $ | 300,000 | $ | (66,000 | ) | $ | 521,000 | $ | 928,000 | ||||||||
The Company has not yet begun its trade or business for U. S. tax reporting purposes. Accordingly, it could not yet recognize losses for start-up expenditures. As a result, a deferred tax asset was established for these start-up expenditures. The difference between the federal statutory rate and the effective tax rate relates to state income taxes net of federal benefit and exemptions from federal surtax levels.
NOTE I — FAIR VALUE MEASUREMENTS
Effective January 1, 2008, the Company implemented SFAS No. 157, “Fair Value Measurement” (“SFAS 157”), for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The adoption of SFAS No. 157 to the Company’s financial assets and liabilities and non-financial assets and liabilities that are re-measured and reported at fair value at least annually did not have an impact on the Company’s financial results.
The fair value hierarchy of the valuation techniques the Company utilizes to determine fair value are as follows:
| • | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. |
| • | Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. |
| • | Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. |
At June 30, 2009, the Company’s investment in the Trust Account (see Note E) is measured at fair value using Level 1 inputs that are determined through market, observable and corroborated sources.
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Description | June 30, 2009 | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||
Assets: | ||||||||||||
Cash equivalents held in Trust Account | $ | 710 | $ | 710 | $ | — | $ | — | ||||
Treasury securities held in Trust Account* | 349,953,280 | 349,953,280 | ||||||||||
Total | $ | 349,953,990 | $ | 349,953,990 | $ | — | $ | — | ||||
| * | See Note E, treasury securities are accounted for under SFAS 115 and are carried at amortized cost. |
NOTE J — NEW ACCOUNTING PRONOUNCEMENTS
In April 2009, the Financial Accounting Standards Board (“FASB”) issued three final Staff Positions (“FSP”s) intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities. FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides guidelines for making fair value measurements more consistent with the principles presented in FASB Statement No. 157, Fair Value Measurements. FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, enhances consistency in financial reporting by increasing the frequency of fair value disclosures. FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities.
FSP FAS 157-4 relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms what SFAS 157 states is the objective of fair value measurement — to reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions. Specifically, it reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive.
FSP FAS 107-1 and APB 28-1 relate to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year. The FSP requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. FSP FAS 115-2 and FAS 124-2 on other-than-temporary impairments is intended to bring greater consistency to the timing of impairment recognition, and provide greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. The FSP also requires increased and more timely disclosures regarding expected cash flows, credit losses, and an aging of securities with unrealized losses.
The FSPs are effective for interim and annual periods ending after June 15, 2009 and did not have a material effect on the condensed financial statements of the Company.
In June 2009, FASB issued SFAS No. 165, “Subsequent Events” which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. The Company does not believe this will have a material effect on the condensed financial statements.
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In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“GAAP”) — a replacement of FASB Statement No. 162,” which will become the source of authoritative US GAAP recognized by the FASB to be applied to nongovernmental entities. It is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company does not believe that this will have a material effect on its condensed financial statements.
The Company does not believe that any other recently issued, but not yet effective, accounting pronouncements if currently adopted would have a material effect on the accompanying financial statements.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our condensed Financial Statements and notes thereto contained in this report.
Forward Looking Statements
All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward looking statements. Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
Overview and Initial Public Offering
We are a blank check company, formed on October 12, 2007, to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more operating businesses in the financial services or business services industries. We intend to effect this Business Combination using cash from the proceeds of our recently completed Offering and the Private Placements of the Sponsors’ Warrants, our capital stock, debt or a combination of cash, stock and debt.
The registration statement for the Offering was declared effective on February 26, 2008 (the “Effective Date”). We consummated the Offering on March 3, 2008 and received gross proceeds of $350,000,000 from the Offering and $8,600,000 from the sale of the Sponsors’ Warrants. We sold 35,000,000 Units at the offering price of $10.00 per Unit. Each Unit consists of one share of our common stock and one Warrant. Each Warrant entitles the holder to purchase from us one share of common stock at an exercise price of $7.50 commencing the later of the completion of a Business Combination or one year from the Effective Date and expiring six years from the Effective Date. We may redeem the Warrants, at a price of $0.01 per Warrant upon 30 days’ notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $13.25 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which the notice of redemption is given. In accordance with the warrant agreement relating to the Warrants, we are only required to use our best efforts to maintain the effectiveness of the registration statement covering the Warrants. We 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 we be required to net cash settle the warrant exercise. Consequently, the Warrants may expire unexercised and unredeemed.
Pursuant to an Amended and Restated Sponsors’ Warrants Subscription Agreement dated February 19, 2008, our Sponsors have purchased from us, in the aggregate, 8,600,000 Sponsors’ Warrants for $8,600,000. The purchase and issuance of the Sponsors’ Warrants occurred simultaneously with the consummation of the Offering on a private placement basis. All of the proceeds we received from these purchases were placed in the Trust Account. The Sponsors’ Warrants are identical to the Warrants included in the Units sold in the Offering, except that (i) the Sponsors’ Warrants will not be transferable or salable (except to permitted transferees) until we complete our initial Business Combination, (ii) they are exercisable at the discretion of the holder for cash or on a cashless basis and (iii) are non-redeemable by us so long as they are held by the Sponsors or their permitted transferees. If we do not complete a Business Combination then the $8,600,000 paid in consideration for the Sponsors’ Warrants will be part of the liquidating distribution to our public stockholders, and the Sponsors’ Warrants will expire worthless.
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We entered into an Underwriting Agreement with the underwriters of the Offering. The Underwriting Agreement required us to pay 2.6% of the gross proceeds of the Offering as an underwriting discount plus an additional 4.4% of the gross proceeds only upon consummation of a Business Combination. We paid an underwriting discount of 2.6% of the gross proceeds ($9,100,000) in connection with the consummation of the Offering and have placed 4.4% of the gross proceeds ($15,400,000) in the Trust Account. We did not pay any discount related to the Sponsors’ Warrants sold in the Private Placements. The underwriters have waived their right to receive payment of the 4.4% of the gross proceeds upon our liquidation if we are unable to complete a Business Combination.
We intend to utilize cash derived from the Offering, our capital stock, debt or combination of cash, capital stock and debt, to effect a Business Combination.
Results of Operations and Known Trends or Future Events
For the three months ended June 30, 2009, for the six months ended June 30, 2009 and for the period from October 12, 2007 (inception) to June 30, 2009, we had net income (loss) of $8,550, $(124,203) and $1,805,611, respectively. Our income was all derived from interest and dividends on the net proceeds of the Offering. We incurred $156,845, $373,731 and $844,311 in formation and operating costs during the three months ended June 30, 2009, for the six months ended June 30, 2009 and for the period from October 12, 2007 (inception) to June 30, 2009, respectively.
All activity from October 12, 2007 (inception) through March 3, 2008 relates to our formation and the Offering described above. Since March 4, 2008, we have been searching for a target company to acquire. We believe that we have sufficient funds available to complete our efforts to effect a Business Combination with an operating business within the required 24 months (or up to 30 months if our stockholders approve an extension period) from the date of the Offering.
Liquidity and Capital Resources
As of June 30, 2009, we had cash of and cash equivalents held in the Trust Account of $701 and treasury securities with a carrying amount of approximately $350,054,000. Until the Offering, as described above, our only source of liquidity was the proceeds from the initial private sale of our Founders’ Units and the promissory notes made by our Sponsors. As of June 30, 2009, we had repaid these promissory notes. Since the Offering, our only source of funding has been from the interest and dividends earned on our cash accounts. As of June 30, 2009, we have withdrawn $2,170,000 of the interest and dividends earned on the funds held in our Trust Account of which $1,120,000 was for the payment of income taxes and $1,050,000 was released for working capital requirements. Pursuant to the terms of our trust agreement governing our Trust Account, we are entitled to use up to $4,000,000 of the earnings (subject to restrictions for monies needed to pay income tax liabilities) for working capital, provided, however, that the aggregate amount of all such distributions for working capital and income tax payments shall not exceed the total earnings. Therefore, up to $2,950,000 is still to be remitted, for working capital purposes, to our operating account which had a balance of $59,708 as of June 30, 2009. Our liabilities are all related to accrued expenses and costs associated with operating as a public company and searching for an acquisition target. We believe our working capital will continue to be sufficient to fund our operations until a target is acquired.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than a monthly fee of $10,000 for office space and certain office and secretarial services payable to Perella Weinberg Partners Group LP, an affiliate of one of our Sponsors. We began incurring this fee on February 26, 2008 and will continue to incur this fee monthly until the completion of our initial Business Combination or our liquidation.
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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.
As of June 30, 2009, our efforts were limited to organizational activities, activities relating to the Offering and activities involving searching for an acquisition target; we had neither engaged in any income producing operations nor generated any revenues other than the interest earned on the proceeds of the Offering.
Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. $348,650,000 of the net Offering proceeds (which includes $15.4 million of the proceeds attributable to the underwriters’ deferred discount from the Offering) has been placed in a Trust Account maintained by Mellon Bank, N.A., as account agent. As of June 30, 2009, the balance of the Trust Account was $350,054,247 which includes $3,578,248 of interest and dividends earned since the inception of the Trust Account. The proceeds of the Offering held in trust have only been invested in U.S. “government securities” defined as any Treasury Bill issued by the United States 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 that only invest in such “government securities” having a maturity of 180 days or less. The proceeds held in trust were invested in the “Dreyfus Treasury Prime Cash Management” money market fund, a fund which invests exclusively in U.S. Treasury securities. On April 15, 2009, we redeemed our holdings in the “Dreyfus Treasury Prime Cash Management” money market fund and immediately re-invested the proceeds of such redemption directly in U.S. Treasury securities with maturities of 180 days or less. Thus, we are currently subject to market risk primarily through the effect of changes in interest rates on U.S. Treasuries. Management cannot provide any assurance about the actual effect of changes in interest rates on net interest income. We do not believe that the effect of other changes, such as foreign exchange rates, commodity prices and/or equity prices currently pose significant market risk for us.
We have not engaged in any hedging activities since our inception. We do not currently expect to engage in any hedging activities.
ITEM 4. Controls and Procedures.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief executive officer and principal financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2009. Based upon their evaluation, they concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.
Our internal control over financial reporting is a process designed by, or under the supervision of, our chief executive officer and principal financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles (United States). Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
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During the most recently completed fiscal quarter, there has been no 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 during the most recently completed fiscal quarter.
None.
| ITEM 1A. | Risk Factors. |
Factors that could cause our actual results to differ materially from those in this report are any of the risks described in our Annual Report on Form 10-K dated March 30, 2009 filed with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
As of June 30, 2009, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K dated March 30, 2009 filed with the SEC, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On October 31, 2007, we issued an aggregate of 10,781,250 Founders’ Units to our Sponsors for $25,000 in cash, at a purchase price of $0.002 per Founders’ Unit. Such issuance was made pursuant to the exemption from registration contained in Section 4(2) of the Securities Act as they were sold to sophisticated, accredited, wealthy individuals and entities. On November 14, 2007, the Sponsors committed to purchase 7,000,000 Sponsors’ Warrants at a purchase price of $1.00 per Sponsors’ Warrant in a private placement simultaneously with the Offering. On November 16, 2007, the Sponsors transferred at cost an aggregate of 377,001 of these Founders’ Units and committed to transfer at cost an aggregate of 149,466 Sponsors’ Warrants to the Directors. On February 19, 2008, the Directors returned an aggregate of 97,251 Founders’ Units to the Sponsors, and the Sponsors returned an aggregate of 3,170,956 Founders’ Units to us which we have cancelled. Also on February 19, 2008, the Sponsors committed to purchase an additional 1,600,000 Sponsors’ Warrants (for a total of 8,600,000 Sponsors’ Warrants) from us simultaneously with the Offering and the Sponsors committed to transfer an additional 105 Sponsors’ Warrants (for a total of 149,571 Sponsors’ Warrants) to the Directors. On February 26, 2008, the Directors returned an aggregate of an additional 8,823 Founders’ Units to the Sponsors, and the Sponsors returned an aggregate of an additional 507,353 Founders’ Units to us which we have cancelled.
The Founders’ Units included an aggregate of 926,470 units subject to forfeiture by these stockholders to the extent that the underwriters’ over-allotment is not exercised in full so that they collectively own 15% of the issued and outstanding shares of common stock after the Offering. As the underwriters did not exercise their over-allotment option, these units were forfeited on March 27, 2008. The Founders’ Units consist of one share of our common stock and one warrant, each to purchase one share of our common stock at an exercise price of $10.00 per share. The Founders’ Warrants will become exercisable on the later of February 26, 2009 or our consummation of a Business Combination, in each case, if an only when (x) the last sales price of our common stock equals or exceeds $12.25 per share for any 20 trading days within any 30-trading day period beginning 90 days after the Business Combination and (y) there is an effective registration statement covering the shares of common stock issuable upon exercise of the Founders’ Warrants. The Founders’ Warrants will expire on February 26, 2014. The Founders’ Units may not be sold or transferred until one year after the consummation of our Business Combination.
On March 3, 2008, we closed our initial public offering of 35,000,000 units, with each unit consisting of one share of our common stock and one warrant, each to purchase one share of our common stock at an exercise price of $7.50 per share. The warrants will become exercisable on the later of February 26, 2009 or our consummation of a Business Combination and will expire on February 26, 2014. The units from the Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $350,000,000. Citigroup Global Markets Inc., acted as sole bookrunning manager and representative of UBS Securities LLC, Piper Jaffray & Co., Sandler O’Neill & Partners, L.P., Ladenburg Thalmann & Co. Inc., Maxim Group LLC and I-Bankers Securities, Inc. (together, the “Underwriters”). The securities sold in the Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-147439). The SEC declared the registration statement effective on February 26, 2008.
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We incurred a total of $9,100,000 in underwriting discounts and commissions and $1,068,881 for other costs and expenses related to the Offering.
We also consummated the simultaneous private sale of 8,600,000 Sponsors’ Warrants at a price of $1.00 per warrant (for an aggregate purchase price of $8,600,000), exercisable for one share of our common stock at a price of $7.50 per share . The Sponsors’ Warrants were purchased by the Sponsors and the issuances were made pursuant to the exemption from registration contained in Section 4(2) of the Securities Act. The Sponsors’ Warrants will become exercisable on the later of February 26, 2009 or our consummation of a Business Combination and will expire on February 26, 2014. The Sponsors’ Warrants may not be sold or transferred until we consummate a Business Combination.
For a description of the use of proceeds generated in the Offering, see Part I, Item 2 of this Form 10-Q.
No purchases have been made by or on behalf of us or any “affiliated purchaser” during the quarter ended June 30, 2009.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Submission of Matters to a Vote of Security Holders.
None.
None.
(a) Exhibits:
| 3.1 – | Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 3.2 – | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Amendment No. 2 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on January 23, 2008) | |
| 4.1 – | Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 4.2 – | Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to Amendment No. 2 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on January 23, 2008) | |
| 4.3 – | Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 4.4 – | Warrant Agreement, dated as of February 26, 2008, by and between the Company and Mellon Investor Services, LLC (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
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| 4.5 – | Registration Rights Agreement, dated as of February 26, 2008, by and among the Company, Perella Weinberg Acquisition LP, BNYH BPW Holdings LLC, Roger W. Einiger, J. Richard Fredericks and Wolfgang Schoellkopf (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
| 10.1 – | Letter Agreement, dated as of February 26, 2008, by and among the Company, Citigroup Global Markets, Inc., Perella Weinberg Acquisition LP and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
| 10.2 – | Letter Agreement, dated as of February 26, 2008, by and among the Company, Citigroup Global Markets, Inc., and each officer and director (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
| 10.3 – | Trust Account Agreement, dated as of February 26, 2008, by and between the Company and Mellon Bank, N.A. (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
| 10.4 – | Amended and Restated Sponsors’ Warrant Subscription Agreement, dated as of February 19, 2008, by and among the Company, Perella Weinberg Acquisition LP and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.6 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 10.5 – | Amended and Restated Initial Unit Subscription Agreement, dated as of February 19, 2008, by and among the Company, Perella Weinberg Acquisition LP and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.8 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 10.6 – | Letter Agreement, dated as of February 26, 2008, by and between the Company and Perella Weinberg Partners Group LP regarding administrative support (incorporated by reference to Exhibit 10.9 to Amendment No. 5 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 14, 2008) | |
| 10.7 – | Rule 10b5-1 Stock Purchase Plan, dated as of January 14, 2008, by and among the Company, Citigroup Global Markets Inc. and Perella Weinberg Partners Acquisition LP (incorporated by reference to Exhibit 10.10 to Amendment No. 3 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 6, 2008) | |
| 10.8 – | Rule 10b5-1 Stock Purchase Plan, dated as of January 14, 2008, by and among the Company, Citigroup Global Markets Inc. and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.11 to Amendment No. 3 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 6, 2008) | |
| 10.9 – | Right of First Review Agreement, dated as of February 26, 2008, by and among the Company, Perella Weinberg Acquisition LP and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.12 to Amendment No. 5 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 14, 2008) | |
| 10.10 – | Amended and Restated Securities Purchase Agreement, dated as of February 19, 2008, by and among Perella Weinberg Acquisition LP, BNYH BPW Holdings LLC, Roger W. Einiger, J. Richard Fredericks and Wolfgang Schoellkopf (incorporated by reference to Exhibit 10.13 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
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| 10.11 – | Amended and Restated Securities Assignment Agreement, dated as of February 19, 2008, by and among Perella Weinberg Acquisition LP, BNYH BPW Holdings LLC, Roger W. Einiger, J. Richard Fredericks and Wolfgang Schoellkopf (incorporated by reference to Exhibit 10.14 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 31.1 – | Section 302 Certification by Chief Executive Officer* | |
| 31.2 – | Section 302 Certification by Principal Financial Officer* | |
| 32.1 – | Section 906 Certification by Chief Executive Officer* | |
| 32.2 – | Section 906 Certification by Principal Financial Officer* | |
| * | Filed herewith |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.
BPW ACQUISITION CORP.
| Dated: August 7, 2009 | By: | /s/ GARY S. BARANCIK | ||
| Gary S. Barancik | ||||
| Chief Executive Officer | ||||
| (Principal Executive Officer) | ||||
| By: | /s/ RICHARD J. JENSEN | |||
| Richard J. Jensen | ||||
| Senior Vice President and Secretary (Principal Financial and Accounting Officer) | ||||
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EXHIBIT INDEX
No. | Description | |
| 3.1 | Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 3.2 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Amendment No. 2 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on January 23, 2008) | |
| 4.1 | Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 4.2 | Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to Amendment No. 2 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on January 23, 2008) | |
| 4.3 | Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 4.4 | Warrant Agreement, dated as of February 26, 2008, by and between the Company and Mellon Investor Services, LLC (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
| 4.5 | Registration Rights Agreement, dated as of February 26, 2008, by and among the Company, Perella Weinberg Acquisition LP, BNYH BPW Holdings LLC, Roger W. Einiger, J. Richard Fredericks and Wolfgang Schoellkopf (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
| 10.1 | Letter Agreement, dated as of February 26, 2008, by and among the Company, Citigroup Global Markets, Inc., Perella Weinberg Acquisition LP and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
| 10.2 | Letter Agreement, dated as of February 26, 2008, by and among the Company, Citigroup Global Markets, Inc., and each officer and director (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
| 10.3 | Trust Account Agreement, dated as of February 26, 2008, by and between the Company and Mellon Bank, N.A. (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, File No. 001-33979, filed by the Company with the Securities and Exchange Commission on March 7, 2008) | |
| 10.4 | Amended and Restated Sponsors’ Warrant Subscription Agreement, dated as of February 19, 2008, by and among the Company, Perella Weinberg Acquisition LP and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.6 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 10.5 | Amended and Restated Initial Unit Subscription Agreement, dated as of February 19, 2008, by and among the Company, Perella Weinberg Acquisition LP and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.8 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
Table of Contents
| 10.6 | Letter Agreement, dated as of February 26, 2008, by and between the Company and Perella Weinberg Partners Group LP regarding administrative support (incorporated by reference to Exhibit 10.9 to Amendment No. 5 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 14, 2008) | |
| 10.7 | Rule 10b5-1 Stock Purchase Plan, dated as of January 14, 2008, by and among the Company, Citigroup Global Markets Inc. and Perella Weinberg Partners Acquisition LP (incorporated by reference to Exhibit 10.10 to Amendment No. 3 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 6, 2008) | |
| 10.8 | Rule 10b5-1 Stock Purchase Plan, dated as of January 14, 2008, by and among the Company, Citigroup Global Markets Inc. and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.11 to Amendment No. 3 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 6, 2008) | |
| 10.9 | Right of First Review Agreement, dated as of February 26, 2008, by and among the Company, Perella Weinberg Acquisition LP and BNYH BPW Holdings LLC (incorporated by reference to Exhibit 10.12 to Amendment No. 5 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 14, 2008) | |
| 10.10 | Amended and Restated Securities Purchase Agreement, dated as of February 19, 2008, by and among Perella Weinberg Acquisition LP, BNYH BPW Holdings LLC, Roger W. Einiger, J. Richard Fredericks and Wolfgang Schoellkopf (incorporated by reference to Exhibit 10.13 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 10.11 | Amended and Restated Securities Assignment Agreement, dated as of February 19, 2008, by and among Perella Weinberg Acquisition LP, BNYH BPW Holdings LLC, Roger W. Einiger, J. Richard Fredericks and Wolfgang Schoellkopf (incorporated by reference to Exhibit 10.14 to Amendment No. 6 to the Form S-1, File No. 333-147439, filed by the Company with the Securities and Exchange Commission on February 19, 2008) | |
| 31.1 | Section 302 Certification by Chief Executive Officer* | |
| 31.2 | Section 302 Certification by Principal Financial Officer* | |
| 32.1 | Section 906 Certification by Chief Executive Officer* | |
| 32.2 | Section 906 Certification by Principal Financial Officer* | |
| * | Filed herewith |