FILED PURSUANT TO
RULE 424(b)(3)
SEC FILE NO.: 333-127755
PROSPECTUS
$35,000,000
ASIA AUTOMOTIVE ACQUISITION CORPORATION
4,375,000 UNITS
Asia Automotive Acquisition Corporation is a newly organized blank check
company organized for the purpose of effecting a merger, capital stock exchange,
asset acquisition or other similar business combination with an operating
business. Our objective is to acquire one or more automotive component supplier
operating businesses that have their primary operating facilities located in the
People's Republic of China (PRC), the Republic of India (India) and/or the
Association of Southeast Asian Nations (ASEAN). We do not have any specific
business combination under consideration and we have not (nor has anyone on our
behalf) contacted any prospective target businesses or had any discussions,
formal or otherwise, with respect to such a transaction.
This is an initial public offering of our securities. Each unit consists
of:
- one share of our common stock; and
- one warrant.
Each warrant entitles the holder to purchase one share of our common stock
at a price of $5.00. Each warrant will become exercisable on the later of our
completion of a business combination and April 11, 2007, and will expire on
April 10, 2011, or earlier upon redemption.
We have granted Rodman & Renshaw, LLC, the representative of the
underwriters, a 45-day option to purchase up to 656,250 additional units solely
to cover over-allotments, if any (over and above the 4,375,000 units referred to
above). The over-allotment will be used only to cover the net syndicate short
position resulting from the initial distribution. We have also agreed to sell to
Rodman & Renshaw, for $100, as additional compensation, an option to purchase up
to a total of 350,000 units at $10.00 per unit. The units issuable upon exercise
of this option are identical to those offered by this prospectus except that the
warrants included in the option have an exercise price of $6.65 (133% of the
exercise price of the warrants included in the units sold in the offering). The
purchase option and its underlying securities have been registered under the
registration statement of which this prospectus forms a part.
There is presently no public market for our units, common stock or
warrants. The units will be quoted on the OTC Bulletin Board under the symbol
AAACU on or promptly after the date of this prospectus. Once the securities
comprising the units begin separate trading, the common stock and warrants will
be quoted on the OTC Bulletin Board under the symbols AAAC and AAACW,
respectively. We cannot assure you that our securities will continue to be
quoted on the OTC Bulletin Board.
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION OF INFORMATION
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN OUR SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<Table>
<Caption>
UNDERWRITING PROCEEDS,
PUBLIC DISCOUNT AND BEFORE
OFFERING PRICE COMMISSIONS(1) EXPENSES, TO US
-------------- -------------- ----------------
Per unit.................................................... $ 8.00 $ 0.56 $ 7.44
Total....................................................... $35,000,000 $2,450,000 $32,550,000
</Table>
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(1) Of the amount disclosed, the underwriters have agreed to defer underwriting
fees in an amount equal to 3% of the gross proceeds of this offering, or
$0.24 per unit ($1,050,000 in total, or $1,207,500 if the over-allotment
option is exercised), until the consummation of a business combination. Upon
the consummation of a business combination, we will pay such fees out of the
proceeds of this offering held in trust at JPMorgan Chase NY Bank,
maintained by Continental Stock Transfer & Trust Company acting as trustee.
Of the net proceeds we receive from this offering, $32,378,000 ($7.40 per
unit) or 37,418,000 ($7.44 per unit) if the over-allotment option is exercised
in full, will be deposited into a trust account at JPMorgan Chase NY Bank
maintained by Continental Stock Transfer & Trust Company acting as trustee.
We are offering the units for sale on a firm-commitment basis. Rodman &
Renshaw, acting as representative of the underwriters, expects to deliver our
securities to investors in the offering on or about April 18, 2006.
RODMAN & RENSHAW, LLC CHARDAN CAPITAL MARKETS, LLC
April 11, 2006
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
Prospectus Summary.......................................... 1
Summary Financial Data...................................... 6
Risk Factors................................................ 7
Use of Proceeds............................................. 21
Dilution.................................................... 23
Capitalization.............................................. 25
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 26
Proposed Business........................................... 28
Management.................................................. 39
Principal Stockholders...................................... 43
Certain Transactions........................................ 45
Description of Securities................................... 47
Underwriting................................................ 52
Legal Matters............................................... 55
Experts..................................................... 55
Where You Can Find Additional Information................... 55
Index to Financial Statements............................... F-1
</Table>
---------------------
Notice for New Jersey Investors: Offers and sales in this offering in New
Jersey may only be made to accredited investors as defined in Rule 501(a) of
Regulation D under the Securities Act of 1933. Under Rule 501(a) to be an
accredited investor an individual must have (a) a net worth or joint net worth
with the individual's spouse of more than $1,000,000 or (b) income of more than
$200,000 in each of the two most recent years or joint income with the
individual's spouse of more than $300,000 in each of those years and a
reasonable exception of reaching the same income level in the current year.
Other standards apply to investors who are not individuals. There will be no
secondary sales of the securities to persons who are not accredited investors
for 90 days after the date of this offering in New Jersey by the underwriter and
selected dealers.
PROSPECTUS SUMMARY
This summary highlights certain information appearing elsewhere in this
prospectus. For a more complete understanding of this offering, you should read
the entire prospectus carefully, including the risk factors and the financial
statements. Unless otherwise stated in this prospectus, references to "we," "us"
or "our company" refer to Asia Automotive Acquisition Corporation. Unless
otherwise specified, references to "China" or the "PRC" refer to the People's
Republic of China; "India" refers to the Republic of India; and "ASEAN" refers
to the Association of South East Nations, including Thailand, Malaysia,
Indonesia, Philippines and Vietnam. Reference to Europe refers to the 13
automotive vehicle producing countries within Western Europe and Eastern Europe.
Reference to "target regions" refer to China, India or ASEAN. All share and per
share information in this prospectus gives retroactive effect to a stock
dividend of .094 shares of common stock for each outstanding share of common
stock on December 14, 2005, and a subsequent stock dividend of .233 shares of
common stock for each share of common stock on January 23, 2006. Unless we tell
you otherwise, the information in this prospectus assumes that the
representative of the underwriters will not exercise its over-allotment option.
We are a blank check company organized under the laws of the State of
Delaware on June 20, 2005. We were formed with the purpose of effecting a
merger, capital stock exchange, asset acquisition or other similar business
combination with one or more operating businesses within the global automotive
component industry that have their primary operating facilities located in our
target regions. To date, our efforts have been limited to organizational
activities. We will not be able to implement our business plan until the sale of
the units offered by this prospectus.
We do not have any specific business combination under consideration and we
have not (nor has anyone on our behalf) contacted any prospective target
business or had any discussions, formal or otherwise, with respect to such a
transaction. We have not (nor have any of our agents or affiliates) been
approached by any candidates (or representative of any candidate) with respect
to a possible acquisition transaction with our company. While we may seek to
effect business combinations with more than one target business, our initial
business combination must be with a target business whose fair market value is
at least equal to 80% of our net assets (all of our assets, including the funds
held in the trust account, less our liabilities) at the time of such
acquisition.
As used in this prospectus, a "target business" shall include an operating
automotive component manufacturing business and a "business combination" shall
mean the acquisition by us of such a target business. We may further seek to
acquire a target business that has a fair market value significantly in excess
of 80% of our net assets. In order to do so, we may seek to raise additional
funds through a private offering of debt or equity securities and/or any other
methods of financing although we have not entered into any such arrangement and
have no current intention of doing so. However, if we did, such arrangement
would only be consummated simultaneously with the consummation of the business
combination.
Our principal executive offices are located at 401 Old South Woodward,
Suite 450, Birmingham, Michigan 48009 and our telephone number is (248)
203-9940.
THE OFFERING
Securities offered:........... 4,375,000 units, at $8.00 per unit, each unit
consisting of:
- one share of common stock; and
- one warrant.
The units will begin trading on or promptly
after the date of this prospectus. Each of the
common stock and warrants may trade separately
on the 60(th) day after the date of this
prospectus unless Rodman & Renshaw determines
that an earlier date is acceptable, based upon
its assessment of the relative strengths of the
securities markets and small capitalization
companies in general and the
1
trading pattern of, and demand for, our
securities in particular. If Rodman & Renshaw
determines to permit separate trading of the
common stock and warrants earlier than the
60(th) day after the date of this prospectus,
we will issue a press release and file a
Current Report on Form 8-K announcing when such
separate trading will begin. In no event will
Rodman & Renshaw allow separate trading of the
common stock and warrants until we file an
audited balance sheet reflecting our receipt of
the gross proceeds of this offering. We will
file a Current Report on Form 8-K, including an
audited balance sheet, upon the consummation of
this offering, which is anticipated to take
place three business days from the date the
units commence trading. The audited balance
sheet will include proceeds we receive from the
exercise of the over-allotment option if the
over-allotment option is exercised prior to the
filing of the Form 8-K. If the over-allotment
option is exercised following the initial
filing of such Form 8-K, an amended Form 8-K
will be filed to provide updated financial
information to reflect the exercise of the
over-allotment option. We will also include in
this Form 8-K information indicating if Rodman
& Renshaw has allowed separate trading of the
common stock and warrants prior to the 60(th)
day after the date of this prospectus. Rodman &
Renshaw expects to permit separate trading of
the common stock and warrants as soon as
reasonably practicable after our filing of the
Current Report on Form 8-K reflecting the
closing of the exercise of the over-allotment
option, if such closing occurs.
Common stock:
Number outstanding before
this offering................. 1,349,000 shares
Number to be outstanding
after this offering........... 5,724,000 shares
Warrants:
Number outstanding before
this offering................. 0 warrants
Number to be outstanding
after this offering........... 4,375,000 warrants
Exercisability.............. Each warrant is exercisable for one share of
common stock.
Exercise price.............. $5.00
Exercise period............. The warrants will become exercisable on the
later of:
- the completion of a business combination with
a target business, and
- April 11, 2007.
The warrants will expire at 5:00 p.m., New York
City time, on April 10, 2011 or earlier upon
redemption.
2
Redemption.................. We may redeem the outstanding warrants
(including any warrants issued upon exercise of
our unit purchase option):
- in whole and not in part,
- at a price of $.01 per warrant at any time
after the warrants become exercisable,
- upon a minimum of 30 days' prior written
notice of redemption, and
- if, and only if, the last sales price of our
common stock equals or exceeds $10.00 per
share for any 20 trading days within a 30
trading day period ending three business days
before we send the notice of redemption.
We have established these criteria to provide
warrant holders with a significant premium to
the initial warrant exercise price and a
sufficient degree of liquidity to cushion the
market reaction to our redemption call. If the
foregoing conditions are satisfied and we call
the warrants for redemption, each warrant
holder shall then be entitled to exercise his
or her warrant prior to the date scheduled for
redemption, however, there can be no assurance
that the price of the common stock will exceed
the call trigger price or the warrant exercise
price after the redemption call is made.
Proposed OTC Bulletin Board
symbols for our:..............
Units....................... AAACU
Common stock................ AAAC
Warrants.................... AAACW
Offering proceeds to be held
in trust:..................... $32,378,000 of the proceeds of this offering
($7.40 per unit) will be placed in a trust
account at JPMorgan Chase NY Bank maintained by
Continental Stock Transfer & Trust Company,
acting as trustee pursuant to an agreement to
be signed on the date of this prospectus. These
proceeds will not be released until the earlier
of the completion of a business combination and
our liquidation. Therefore, unless and until a
business combination is consummated, the
proceeds held in the trust fund will not be
available for our use for any expenses related
to this offering or expenses which we may incur
related to the investigation and selection of a
target business and the negotiation of an
agreement to acquire a target business. These
expenses may be paid prior to a business
combination only from the net proceeds of this
offering not held in the trust account
(initially, approximately $780,000). Of the
amount placed in trust, the underwriters have
agreed to defer underwriting fees in an amount
equal to 3% of the gross proceeds of this
offering, or $0.24 per unit ($1,050,000 in
total, or $1,207,500 if the over-allotment
option is exercised), until the consummation of
a business combination. Upon the consummation
of a business combination, we will pay such
fees out of the proceeds of this offering held
in trust. However, we will not be obligated to
pay such portion of the 3% deferred
underwriting fee out of the proceeds of this
offering that will be paid from the trust
account to the stockholders that vote against a
business combination and elect to exercise its,
his or her
3
redemption rights. There will be no fees,
reimbursements or cash payments made to our
existing stockholders and/or officers and
directors other than:
- Repayment of a total amount of loans of
$25,000 bearing interest at the rate of 4.0%
per annum made by William Herren, Rudy
Wilson, Vinit Bansal, Chun Hao and Asia
Development Capital LLC, to cover offering
expenses; and
- Payment of up to $7,500 per month to Asia
Development Capital LLC, an affiliate of our
existing stockholders, for general and
administrative services, office space, and
utilities; and
None of the warrants may be exercised until
after the consummation of a business
combination and, thus, after the proceeds of
the trust fund have been disbursed.
Accordingly, the warrant exercise price will be
paid directly to us and not placed in the trust
account.
Stockholders must approve
business combination:......... We will seek stockholder approval before we
effect any business combination, even if the
nature of the acquisition would not ordinarily
require stockholder approval under applicable
state law. In connection with the vote required
for any business combination, all of our
existing stockholders, including all of our
officers and directors, have agreed to vote the
shares of common stock owned by them
immediately before this offering or acquired in
this offering or the aftermarket in accordance
with the majority of the shares of common stock
voted by the public stockholders. The term
"public stockholders" means the holders of
common stock sold as part of the units in this
offering or in the aftermarket, including any
existing stockholders to the extent that they
purchase or acquire such shares. We will
proceed with a business combination only if a
majority of the shares of common stock voted by
the public stockholders are voted in favor of
the business combination and public
stockholders owning less than 20% of the shares
sold in this offering exercise their redemption
rights described below. Voting against the
business combination alone will not result in
redemption of a stockholder's shares for a pro
rata share of the trust fund. Such stockholder
must have also exercised its redemption rights
described below.
Redemption rights for
stockholders
voting to reject a business
combination:.................. Public stockholders voting against a business
combination will be entitled to redeem their
common stock for a pro rata share of the trust
account, including any interest earned on their
portion of the trust account, if the business
combination is approved and completed. In
connection with the vote required for any
business combination, all of our existing
stockholders, including all officers and
directors, have agreed to vote any shares held
by them, including shares owned prior to this
offering, shares acquired in this offering and
in the aftermarket, in accordance with the
majority of shares voted by the public
stockholders. Public stockholders who redeem
their stock for their share of the trust fund
will continue to have the right to exercise any
warrants they may hold. We will not structure a
business combination unless 19.99% of the
public
4
stockholders will be able to redeem their
common stock for a pro rata share of the trust
account. We will not seek to amend our
certificate of incorporation to change the
19.99% threshold in connection with a
redemption.
Liquidation if no business
combination: We will dissolve and promptly distribute only
to our public stockholders the amount in our
trust fund (including any accrued interest)
plus any remaining net assets if we do not
effect a business combination within 18 months
after consummation of this offering (or within
24 months from the consummation of this
offering if a letter of intent, agreement in
principle or definitive agreement has been
executed within 18 months after consummation of
this offering and the business combination has
not yet been consummated within such 18 month
period). We will not request any further
extensions beyond the aforementioned 18 and 24
month periods. We will not amend or modify the
business combination procedures outlined in our
certificate of incorporation because we view
the business combination procedures and this
prospectus as obligations to our stockholders
that we will not propose to amend. All of our
officers and directors own shares of our common
stock, but have waived their right to receive
distributions (other than with respect to
common stock underlying units they purchase in
this offering or common stock they purchase in
the aftermarket) upon our liquidation prior to
a business combination. We will pay the costs
of liquidation and dissolution from our
remaining assets outside of the trust fund. The
initial per-share liquidation price without
taking into account interest would be $7.40 or
$0.60 less than the per-unit offering price of
$8.00.
Escrow of existing
stockholders' shares: On the date of this prospectus, all of our
existing stockholders, including all of our
officers and directors, will place the shares
they owned before this offering into an escrow
account maintained by Continental Stock
Transfer & Trust Company, acting as escrow
agent. Subject to certain limited exceptions
(such as transfers to relatives and trusts for
estate planning purposes, and upon death, while
remaining in escrow), these shares will not be
transferable during the escrow period and will
not be released from escrow until April 11,
2008 unless we are forced to liquidate, in
which case the shares will be cancelled, or if
we were to consummate a transaction after the
consummation of the initial business
combination which results in all of the
stockholders of the combined entity having the
right to exchange their shares of common stock
for cash, securities or other property.
RISKS
In making your decision on whether to invest in our securities, you should
take into account not only the backgrounds of our management team, but also the
special risks we face as a blank check company, as well as the fact that this
offering is not being conducted in compliance with Rule 419 promulgated under
the Securities Act of 1933, as amended, and, therefore, you will not be entitled
to protections normally afforded to investors in Rule 419 blank check offerings.
Additionally, our initial security holders' initial equity investment is below
that which is required under the guidelines of the North American Securities
Administrators' Association, Inc. You should carefully consider these and the
other risks set forth in the section entitled "Risk Factors" beginning on page 7
of this prospectus.
5
SUMMARY FINANCIAL DATA
The following table summarizes the relevant financial data for our business
and should be read with our financial statements, which are included in this
prospectus. We have not had any significant operations to date, so only balance
sheet data are presented.
<Table>
<Caption>
DECEMBER 31, 2005
-----------------------
ACTUAL AS ADJUSTED
--------- -----------
BALANCE SHEET DATA:
Working capital (deficiency).............................. $(245,626) $32,127,374
Total assets.............................................. 279,743 32,127,374
Total liabilities(1)...................................... 260,369 1,050,000
Value of common stock which may be redeemed for cash
($7.40 per share)...................................... -- 6,472,362
Stockholders' equity...................................... 19,374 25,655,012
</Table>
- ---------------
(1) The total liabilities (as adjusted) amount represents the underwriters' fee
being held in trust that will be paid to the underwriters upon consummation
of our initial business combination.
The "as adjusted" information gives effect to the sale of the units we are
offering, including the application of the related gross proceeds and the
payment of the estimated remaining costs from such sale and the repayment of the
accrued expenses required to be repaid.
The working capital and total assets amounts include the $31,328,000 to be
held in the trust account, which will be available to us only upon the
consummation of a business combination within the time period described in this
prospectus. The underwriters have agreed to defer underwriting fees in an amount
equal to 3% of the gross proceeds of this offering, or $0.24 per unit
($1,050,000 in total, or $1,207,500 if the over-allotment option is exercised),
until the consummation of a business combination. Upon the consummation of a
business combination, we will pay such fees out of the proceeds of this offering
held in trust. However, we will not be obligated to pay such portion of the 3%
deferred underwriting fee out of the proceeds of this offering that will be paid
from the trust account to the stockholders that vote against a business
combination and elect to exercise its, his or her redemption rights. If a
business combination is not so consummated, the trust account will be
distributed solely to our public stockholders.
We will not proceed with a business combination if public stockholders
owning 20% or more of the shares sold in this offering vote against the business
combination and exercise their redemption rights. Accordingly, we may effect a
business combination if public stockholders owning up to approximately 19.99% of
the shares sold in this offering exercise their redemption rights. If this
occurred, we would be required to redeem for cash up to approximately 19.99% of
the 4,375,000 shares sold in this offering, or 874,562 shares of common stock,
at an initial per-share redemption price of $7.40, without taking into account
interest earned on the trust account. We will not structure a business
combination unless 19.99% of the public stockholders will be able to redeem
their common stock for a pro rata share of the trust account. The actual
per-share redemption price will be equal to:
- the amount in the trust account, including all accrued interest, as of
two business days prior to the proposed consummation of the business
combination,
- plus an amount equal to the difference between (A) $1,050,000 ($1,207,500
if the over-allotment option is exercised) and (B) the amount to be paid
to the public stockholders who elect to redeem its, his or her shares of
common stock.
- divided by the number of shares of common stock sold in the offering.
6
RISK FACTORS
An investment in our securities involves a high degree of risk. You should
consider carefully all of the risks described below, together with the other
information contained in this prospectus, before making a decision to invest in
our units.
RISKS ASSOCIATED WITH OUR BUSINESS
WE ARE A DEVELOPMENT STAGE COMPANY WITH NO OPERATING HISTORY AND, ACCORDINGLY,
YOU WILL NOT HAVE ANY BASIS ON WHICH TO EVALUATE OUR ABILITY TO ACHIEVE OUR
BUSINESS OBJECTIVE.
We are a recently incorporated development stage company with no operating
results to date. Therefore, our ability to begin operations is dependent upon
obtaining financing through the public offering of our securities. Since we do
not have an operating history, you will have no basis upon which to evaluate our
ability to achieve our business objective, which is to acquire an operating
business within the global automotive component industry that has its primary
operating facilities located in China, India and/or ASEAN. We have not conducted
any discussions and we have no plans, arrangements or understandings with any
prospective acquisition candidates. We will not generate any revenues until, at
the earliest, after the consummation of a business combination.
IF WE ARE FORCED TO LIQUIDATE BEFORE A BUSINESS COMBINATION AND DISTRIBUTE THE
TRUST ACCOUNT, OUR PUBLIC STOCKHOLDERS WILL RECEIVE LESS THAN $8.00 PER SHARE
AND OUR WARRANTS WILL EXPIRE WORTHLESS.
If we are unable to complete a business combination within the prescribed
time frames and are forced to liquidate our assets, the per-share liquidation
distribution will be less than $8.00 because of the expenses of this offering,
our general and administrative expenses and the anticipated costs of seeking a
business combination. Additionally, we could use a portion of the funds not
being placed in trust as a down payment or lock-up payment in connection with a
proposed business combination, although we do not have any current intention to
do so. If we did and were subsequently required to forfeit such funds (whether
as a result of a breach of the terms of the agreement containing the requirement
of a down payment or lock-up payment or otherwise), we might not have sufficient
funds to continue our search for a target business. Furthermore, there will be
no distribution with respect to our outstanding warrants which will expire
worthless if we liquidate before the completion of a business combination. If we
do not complete a business combination within 18 months after the consummation
of this offering (or within 24 months after the consummation of this offering if
a letter of intent, agreement in principle or definitive agreement has been
executed within 18 months after consummation of this offering and the business
combination has not yet been consummated within such 18 month period), we will
be dissolved and distribute to all of our public stockholders, in proportion to
their respective equity interests, an aggregate sum equal to the amount in the
trust account, inclusive of any interest, plus any remaining net assets. We will
not request any further extensions beyond the aforementioned 18 and 24 month
periods. We will not amend or modify the business combination procedures
outlined in our certificate of incorporation because we view the business
combination procedures and this prospectus as obligations to our stockholders
that we will not propose to amend. For a more complete discussion of the effects
on our stockholders if we are unable to complete a business combination, see the
section entitled "Proposed Business -- Effecting a business
combination -- Liquidation if no business combination."
YOU WILL NOT BE ENTITLED TO PROTECTIONS NORMALLY AFFORDED TO INVESTORS OF
BLANK CHECK COMPANIES.
Since the net proceeds of this offering are intended to be used to complete
a business combination with a target business that has not been identified, we
may be deemed to be a "blank check" company under the United States securities
laws. However, since we will have net tangible assets in excess of $5,000,000
upon the successful consummation of this offering and will file a Current Report
on Form 8-K with the SEC upon consummation of this offering including an audited
balance sheet demonstrating this fact, we are exempt from rules promulgated by
the SEC to protect investors of blank check companies such as Rule 419.
Accordingly, investors will not be afforded the benefits or protections of those
rules. Because we are not subject to Rule 419,
7
our units will be immediately tradable and we have a longer period of time to
complete a business combination in certain circumstances than we would if we
were subject to such rule. For a more detailed comparison of our offering to
offerings under Rule 419, see the section entitled "Proposed
Business -- Comparison to offerings of blank check companies".
BECAUSE THERE ARE NUMEROUS COMPANIES WITH A BUSINESS PLAN SIMILAR TO OURS
SEEKING TO EFFECTUATE A BUSINESS COMBINATION, IT MAY BE MORE DIFFICULT FOR US
TO DO SO.
Since August 2003, based on publicly available information, approximately
47 similarly structured blank check companies have completed initial public
offerings and 38 additional blank check companies have filed registration
statements with the SEC seeking to go public. Of these companies, only six
companies have consummated a business combination, while nine other companies
have announced they have entered into a definitive agreement for a business
combination, but have not consummated such business combination. Accordingly,
there are approximately 32 blank check companies with more than $2.43 billion in
trust that are seeking to carry out a business plan similar to our business
plan. While some of those companies have specific industries that they must
complete a business combination in, a number of them may consummate a business
combination in any industry they choose. We may therefore be subject to
competition from these and other companies seeking to consummate a business plan
similar to ours. We cannot assure you that we will be able to successfully
compete for an attractive business combination.
Additionally, because of this competition, we cannot assure you that we
will be able to effectuate a business combination within the required time
periods. Further, because only four of such companies have either consummated a
business combination or entered into a definitive agreement for a business
combination, it may indicate that there are fewer attractive target businesses
available to such entities or that many privately held target businesses are not
inclined to enter into these types of transactions with publicly held blank
check companies like ours. If we are unable to find a suitable target business
within such time periods, we will be forced to liquidate.
IF THIRD PARTIES BRING CLAIMS AGAINST US, THE PROCEEDS HELD IN TRUST COULD BE
REDUCED AND THE PER-SHARE LIQUIDATION PRICE RECEIVED BY STOCKHOLDERS WILL BE
LESS THAN $7.40 PER SHARE.
Our placing of funds in trust may not protect those funds from third party
claims against us. Although we will seek to have all vendors, prospective target
businesses or other entities we engage, execute agreements with us waiving any
right, title, interest or claim of any kind in or to any monies held in the
trust account for the benefit of our public stockholders, there is no guarantee
that they will execute such agreements or even if they execute such agreements
that they would be prevented from bringing claims against the trust fund. If any
third party refuses to execute an agreement waiving such claims to the monies
held in the trust account, we would perform an analysis of the alternatives
available to us if we chose not to engage such third party and evaluate if such
engagement would be in the best interest of our stockholders if such third party
refused to waive such claims. Examples of possible instances where we may engage
a third party that refuses to execute a waiver include the engagement of a third
party consultant whose particular expertise or skills are believed by management
to be significantly superior to those of other consultants that would agree to
execute a waiver or in cases where management is unable to find a provider of
required services willing to provide the waiver. In addition, there is no
guarantee that such entities will agree to waive any claims they may have in the
future as a result of, or arising out of, any negotiations, contracts or
agreements with us and will not seek recourse against the trust account for any
reason. Accordingly, the proceeds held in trust could be subject to claims which
could take priority over the claims of our public stockholders. We cannot assure
you that the per-share distribution from the trust fund will not be less than
$7.40, plus interest, due to claims of such creditors. If we liquidate before
the completion of a business combination and distribute the proceeds held in
trust to our public stockholders, William R. Herren, the chairman of our board
of directors, Rudy Wilson, our chief executive officer and a member of our board
of directors, Vinit Bansal, our president of India operations, secretary and a
member of our board of directors, Chun Yi Hao, our president of China operations
and a member of our board of directors, Donald Runkle, a member of our board of
directors and Dr. David J. Brophy, our chief financial officer and a member of
our board of directors, have agreed that they, severally, in
8
accordance with their respective beneficial ownership interests in us, will be
personally liable to ensure that the proceeds in the trust account are not
reduced by the claims of target businesses or vendors or other entities that are
owed money by us for services rendered or contracted for or products sold to us.
However, we cannot assure you that they will be able to satisfy those
obligations.
SINCE WE HAVE NOT YET SELECTED A TARGET BUSINESS WITH WHICH TO COMPLETE A
BUSINESS COMBINATION, WE ARE UNABLE TO CURRENTLY ASCERTAIN THE MERITS OR RISKS
OF THE BUSINESS IN WHICH WE MAY ULTIMATELY OPERATE.
Subject to the initial objective that a target business be located in
China, India and/or ASEAN and have a fair market value of at least 80% of our
net assets at the time of the acquisition, we will have virtually unrestricted
flexibility in identifying and selecting a prospective acquisition candidate. We
may consummate a business combination with a company in the global automotive
industry and are not limited to any particular type of automotive product line.
Although our management will endeavor to evaluate the risks inherent in a
particular target business, we cannot assure you that we will properly ascertain
or assess all of the significant risk factors. We also cannot assure you that an
investment in our units will not ultimately prove to be less favorable to
investors in this offering than a direct investment, if an opportunity were
available, in a target business. For a more complete discussion of our selection
of a target business, see the section entitled "Proposed Business -- Effecting a
business combination -- We have not identified a target business."
WE MAY ISSUE SHARES OF OUR CAPITAL STOCK TO COMPLETE A BUSINESS COMBINATION,
WHICH WOULD REDUCE THE EQUITY INTEREST OF OUR STOCKHOLDERS AND LIKELY CAUSE A
CHANGE OF CONTROL OF THE OWNERSHIP.
Our certificate of incorporation authorizes the issuance of up to
39,000,000 shares of common stock, par value $.001 per share, and 1,000,000
shares of preferred stock, par value $.001 per share. Immediately after this
offering (assuming no exercise of the underwriters' over-allotment option),
there will be 28,456,000 authorized but unissued shares of our common stock
available for issuance (after appropriate reservation for the issuance of shares
upon full exercise of our outstanding warrants and the purchase option granted
to Rodman & Renshaw, the representative of the underwriters) and all of the
1,000,000 shares of preferred stock available for issuance. Although we have no
commitments as of the date of this offering to issue our securities, we will, in
all likelihood, issue a substantial number of additional shares of our common
stock or preferred stock, or a combination of common and preferred stock, to
complete a business combination. The issuance of additional shares of our common
stock or any number of shares of our preferred stock:
- may significantly reduce the equity interest of investors in this
offering;
- may subordinate the rights of holders of common stock if preferred stock
is issued with rights senior to those afforded to our common stock;
- will likely cause a change in control if a substantial number of our
shares of common stock are issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and
most likely also result in the resignation or removal of our present
officers and directors; and
- may adversely affect prevailing market prices for our common stock.
WE MAY ISSUE DEBT SECURITIES TO COMPLETE A BUSINESS COMBINATION, WHICH WOULD
REDUCE OUR FINANCING FLEXIBILITY AND COULD RESULT IN DEFAULT, FORECLOSURE,
ACCELERATION OF OBLIGATIONS OR INABILITY TO OBTAIN ADDITIONAL FINANCING.
We may issue debt securities to complete a business combination, which
could result in:
- default and foreclosure on our assets if our operating revenues after a
business combination are insufficient to pay our debt obligations;
- acceleration of our obligations to repay the indebtedness even if we have
made all principal and interest payments when due if the debt security
contains covenants that require the maintenance of certain financial
ratios or reserves and any such covenant is breached without a waiver or
renegotiation of that covenant;
9
- our immediate payment of all principal and accrued interest, if any, if
the debt security is payable on demand; and
- our inability to obtain additional financing, if necessary, if the debt
security contains covenants restricting our ability to obtain additional
financing while such security is outstanding.
For a more complete discussion of the possible structure of a business
combination, see the section entitled "Proposed Business -- Effecting a business
combination -- Selection of a target business and structuring of a business
combination."
OUR ABILITY TO SUCCESSFULLY EFFECT A BUSINESS COMBINATION AND TO BE SUCCESSFUL
AFTERWARDS WILL BE TOTALLY DEPENDENT UPON THE EFFORTS OF OUR KEY PERSONNEL,
SOME OF WHOM MAY CONTINUE WITH US FOLLOWING A BUSINESS COMBINATION.
Our ability to successfully effect a business combination will be totally
dependent upon the efforts of our key personnel. The future role of our key
personnel in the target business, however, cannot presently be ascertained.
Although it is possible that some of our key personnel, Donald L. Runkle,
William R. Herren, Rudy Wilson, Dr. David J. Brophy, Vinit Bansal, Chun Yi Hao,
Avinash P. Gandhi, Sam A. Hamdan and Somlux Sirikupphokakorn will remain
associated in various capacities with the target business in senior management
or advisory positions following a business combination, it is likely that some
or all of the management of the target business at the time of the business
combination will remain in place. Moreover, our current management will only be
able to remain with the combined company after the consummation of a business
combination if they are able to negotiate the same as part of any such
combination. However, management may view target companies in a more favorable
light as compared to other target companies which may provide greater value to
our stockholders. If we acquired a target business in an all-cash transaction,
it would be more likely that current members of management would remain with us
if they chose to do so. If a business combination were structured as a merger
whereby the stockholders of the target company were to control the combined
company following a business combination, it may be less likely that management
would remain with the combined company unless it was negotiated as part of the
transaction in the acquisition agreement, an employment agreement or other
arrangement. In making the determination as to whether current management should
remain with us following the business combination, management will analyze the
experience and skill set of the target business' management and negotiate as
part of the business combination that certain members of current management
remain if it is believed that it is in the best interests of the combined
company post-business combination. Although we intend to closely scrutinize the
management of a prospective target business in connection with evaluating the
desirability of effecting a business combination, we cannot assure you that our
assessment of management will prove to be correct. The terms of any employment
or consulting arrangements of our current management with the combined company
post-business combination will be determined at the time management negotiates
the terms of the business combination with the target business. Since our
current management will be negotiating the terms of the business combination as
well as the terms of their employment or consulting arrangements, our current
management may have a conflict of interest in negotiating terms favorable to the
company in the acquisition agreement and at the same time negotiating terms in
their employment or consulting arrangements that are favorable to them. Although
management intends to full exercise its fiduciary duty to negotiate terms in the
acquisition agreement that will be in the best interests of the combined-company
and its public stockholders, members of management will be negotiating terms in
their employment or consulting agreements that are favorable to them.
OUR OFFICERS AND DIRECTORS WILL ALLOCATE THEIR TIME TO OTHER BUSINESSES
THEREBY CAUSING CONFLICTS OF INTEREST IN THEIR DETERMINATION AS TO HOW MUCH
TIME TO DEVOTE TO OUR AFFAIRS. THIS CONFLICT OF INTEREST COULD REDUCE OUR
ABILITY TO FIND AND CONSUMMATE A BUSINESS COMBINATION.
Our officers and directors are not required to commit their full time to
our affairs, which may result in a conflict of interest in allocating their time
between our operations and other businesses. We do not intend to have any full
time employees prior to the consummation of a business combination. All of our
executive officers are engaged in several other business endeavors and are not
obligated to contribute any specific
10
number of hours to our affairs. If our executive officers' other business
affairs require them to devote more substantial amounts of time to such affairs,
it could limit their ability to devote time to our affairs and could have a
negative impact on our ability to consummate a business combination. For a
complete discussion of the potential conflicts of interest that you should be
aware of, see the section entitled "Management -- Conflicts of Interest." We
cannot assure you that these conflicts will be resolved in our favor.
OUR OFFICERS, DIRECTORS AND THEIR AFFILIATES MAY IN THE FUTURE BECOME
AFFILIATED WITH ENTITIES ENGAGED IN BUSINESS ACTIVITIES SIMILAR TO THOSE
INTENDED TO BE CONDUCTED BY US AND ACCORDINGLY, MAY HAVE CONFLICTS OF INTEREST
IN DETERMINING WHICH ENTITY A PARTICULAR BUSINESS OPPORTUNITY SHOULD BE
PRESENTED TO.
None of our directors, officers or their affiliates has been a principal
of, or affiliated or associated with, a blank check company and none of such
individuals is currently affiliated with any such entity. However, our officers
and directors may in the future become affiliated with entities, including other
"blank check" companies, engaged in business activities similar to those
intended to be conducted by us. Additionally, our officers and directors may
become aware of business opportunities which may be appropriate for presentation
to us as well as the other entities to which they owe fiduciary duties. For a
complete discussion of our management's affiliations and the potential conflicts
of interest that you should be aware of, see the sections entitled
"Management -- Directors and Executive Officers" and "Management -- Conflicts of
Interest." We cannot assure you that these conflicts will be resolved in our
favor.
ALL OF OUR OFFICERS AND DIRECTORS OWN SHARES OF OUR COMMON STOCK WHICH WILL
NOT PARTICIPATE IN LIQUIDATION DISTRIBUTIONS AND THEREFORE THEY MAY HAVE A
CONFLICT OF INTEREST IN DETERMINING WHETHER A PARTICULAR TARGET BUSINESS IS
APPROPRIATE FOR A BUSINESS COMBINATION.
All of our officers and directors own shares of our common stock that were
issued prior to this offering, but have waived their right to receive
distributions with respect to those shares upon our liquidation if we are unable
to consummate a business combination. Additionally, William R. Herren, Rudy
Wilson, Asia Development Capital LLC, Vinit Bansal, Chun Yi Hao, or their
designees have agreed with Rodman & Renshaw that they and certain of their
affiliates or designees will purchase 320,000 warrants in the open market at
prices not to exceed $1.40 per warrant during the 45 trading day period
commencing on the later of the date that the securities comprising the units
begin separate trading or sixty days following the consummation of this
offering. Our officers and directors and certain of their affiliates or
designees may purchase securities in this offering or in the open market
(although they are not obligated to do so). If they purchase units in this
offering or shares of common stock in the open market, they have agreed to vote
such shares of common stock in accordance with the majority of the shares of
common stock voted by the public stockholders on a proposal to approve a
business combination and exercise redemption rights in connection therewith. The
shares and warrants owned by our directors and officers will be worthless if we
do not consummate a business combination. The personal and financial interests
of our directors and officers may influence their motivation in identifying and
selecting a target business and completing a business combination timely.
Consequently, our directors' and officers' discretion in identifying and
selecting a suitable target business may result in a conflict of interest when
determining whether the terms, conditions and timing of a particular business
combination are appropriate and in our stockholders' best interest.
OUR EXISTING STOCKHOLDERS WILL NOT BE REIMBURSED FOR ANY OUT-OF-POCKET
EXPENSES INCURRED BY THEM TO THE EXTENT THAT SUCH EXPENSES EXCEED THE AMOUNT
IN THE TRUST FUND UNLESS THE BUSINESS COMBINATION IS CONSUMMATED AND THEREFORE
THEY MAY HAVE A CONFLICT OF INTEREST IN DETERMINING WHETHER A PARTICULAR
TARGET BUSINESS IS APPROPRIATE FOR A BUSINESS COMBINATION AND IN THE PUBLIC
STOCKHOLDERS' BEST INTEREST.
Our existing stockholders, including all of our officers and directors,
will not be reimbursed for any out-of-pocket expenses incurred by them to the
extent that such expenses exceed the amount in the trust fund unless the
business combination is consummated. Excess out-of-pocket expenses are
considered a liability to be repaid by the resulting company. The financial
interest of our officers and directors could influence their motivation in
selecting a target business and thus, there may be a conflict of interest when
determining whether a particular business combination is in the stockholders'
best interest.
11
IF OUR COMMON STOCK BECOMES SUBJECT TO THE SEC'S PENNY STOCK RULES,
BROKER-DEALERS MAY EXPERIENCE DIFFICULTY IN COMPLETING CUSTOMER TRANSACTIONS
AND TRADING ACTIVITY IN OUR SECURITIES MAY BE SUBSTANTIALLY REDUCED.
If at any time we have net tangible assets of $5,000,000 or less and our
common stock has a market price per share of less than $5.00, transactions in
our common stock may be subject to the "penny stock" rules promulgated under the
Securities Exchange Act of 1934. Under these rules, broker-dealers who recommend
such securities to persons other than institutional accredited investors must:
- make a special written suitability determination for the purchaser;
- receive the purchaser's written agreement to the transaction prior to
sale;
- provide the purchaser with risk disclosure documents which identify
certain risks associated with investing in "penny stocks" and which
describe the market for these "penny stocks" as well as a purchaser's
legal remedies; and
- obtain a signed and dated acknowledgment from the purchaser demonstrating
that the purchaser has actually received the required risk disclosure
document before a transaction in a "penny stock" can be completed.
If our common stock becomes subject to these rules, broker-dealers may find
it difficult to effectuate customer transactions and trading activity in our
securities may be adversely affected. As a result, the market price of our
securities may be depressed, and you may find it more difficult to sell our
securities.
INITIALLY, WE WILL ONLY BE ABLE TO COMPLETE ONE BUSINESS COMBINATION, WHICH
WILL CAUSE US TO BE SOLELY DEPENDENT ON A SINGLE BUSINESS AND A LIMITED NUMBER
OF PRODUCTS OR SERVICES.
The net proceeds from this offering (excluding the funds paid in trust)
will provide us with only approximately $780,000 which will be able to pay the
cost of completing a business combination. The net proceeds include specific
third party expenses we anticipate that we will incur including: $400,000 for
legal and accounting expenses attendant to the due diligence investigations,
structuring and negotiating a business combination; $180,000 for the
administrative fee payable to Asia Development Capital LLC for utilization of
its global office infrastructure; $40,000 of expenses in legal and accounting
relating to our SEC reporting obligations; and $134,000 for general working
capital that will be used for miscellaneous expenses and reserves, including
$70,000 for director and officers liability insurance premiums. Based upon an
analysis of similar blank check offerings, including three blank check companies
which have announced business combinations in China, and management's experience
in the auto supply businesses in Asia, management believes the amount of
$780,000 will be sufficient to pay the costs of consummating a business
combination. Although the three similar blank check companies referred to above
are not in our target industry, these companies are in the manufacturing
business, are of a similar size to us and have a value that is comparable to our
future trust proceeds. Management has not previously been involved in raising
pools of money having done no research and having no targets, and proceeding to
perform a search within a defined amount of time. Our initial business
combination must be with a business with a fair market value of at least 80% of
our net assets at the time of such acquisition. Consequently, initially it is
probable that we will have the ability to complete a business combination with
only a single operating business. Accordingly, the prospects for our success may
be:
- solely dependent upon the performance of a single business, or
- dependent upon the development or market acceptance of a single or
limited number of products, processes or services.
In this case, we will not be able to diversify our operations or benefit from
the possible spreading of risks or offsetting of losses, unlike other entities
which may have the resources to complete several business combinations in
different industries or different areas of a single industry.
12
THE ABILITY OF OUR STOCKHOLDERS TO EXERCISE THEIR REDEMPTION RIGHTS MAY NOT
ALLOW US TO EFFECTUATE THE MOST VALUABLE BUSINESS COMBINATION OR OPTIMIZE OUR
CAPITAL STRUCTURE.
At the time we seek stockholder approval of any business combination, we
will offer each public stockholder the right to have such stockholder's shares
of common stock redeemed for cash if the stockholder votes against the business
combination and the business combination is approved and completed. Such holder
must both vote against such business combination and then exercise his, her or
its redemption rights to receive a pro rata portion of the trust fund.
Accordingly, if our business combination requires us to use substantially all of
our cash to pay the purchase price, because we will not know how many
stockholders may exercise such redemption rights, we may either need to reserve
part of the trust fund for possible payment upon such redemption, or we may need
to arrange third party financing to help fund our business combination in case a
larger percentage of stockholders exercise their redemption rights than we
expected. Therefore, we may not be able to consummate a business combination
that requires us to use all of the funds held in the trust account as part of
the purchase price, or we may end up having a leverage ratio that is not optimal
for our business combination. This may limit our ability to effectuate the most
attractive business combination available to us.
BECAUSE OF OUR LIMITED FINANCIAL RESOURCES AND COMPETITION FOR BUSINESS
COMBINATION OPPORTUNITIES, WE MAY NOT BE ABLE TO CONSUMMATE AN ATTRACTIVE
BUSINESS COMBINATION.
We expect to encounter intense competition from other entities having a
business objective similar to ours, including other similar blank check
companies, leveraged buyout funds and automotive operating businesses competing
for acquisitions. Many of these entities are well established and have extensive
experience in identifying and effecting business combinations directly or
through affiliates. Many of these competitors may possess greater technical,
human and other resources than we do and our financial resources will be
relatively limited when contrasted with those of many of these competitors.
While we believe that there are numerous potential target businesses that we
could acquire with the net proceeds of this offering, our ability to compete in
acquiring certain sizable target businesses will be limited by our available
financial resources. This inherent competitive limitation gives others an
advantage in pursuing the acquisition of certain target businesses. In addition,
we may not have enough cash available from funds outside of the trust account to
make deposits or fund a "no-shop" provision in connection with a particular
business combination which may cause us to be at a competitive disadvantage in
pursuing the acquisition of target businesses. Further, the obligation we have
to seek stockholder approval of a business combination may delay the
consummation of a transaction. Additionally, our outstanding warrants, and the
future dilution they potentially represent, may not be viewed favorably by
certain target businesses. Any of these obligations may place us at a
competitive disadvantage in successfully negotiating a business combination.
WE MAY BE UNABLE TO OBTAIN ADDITIONAL FINANCING, IF REQUIRED, TO COMPLETE A
BUSINESS COMBINATION OR TO FUND THE OPERATIONS AND GROWTH OF THE TARGET
BUSINESS, WHICH COULD COMPEL US TO RESTRUCTURE OR ABANDON A PARTICULAR
BUSINESS COMBINATION.
Although we believe that the net proceeds of this offering will be
sufficient to allow us to consummate a business combination, inasmuch as we have
not yet identified any prospective target business, we cannot ascertain the
capital requirements for any particular transaction. If the net proceeds of this
offering prove to be insufficient, either because of the size of the business
combination or the depletion of the available net proceeds in search of a target
business, or because we become obligated to redeem for cash a significant number
of shares from dissenting stockholders, we will be required to seek additional
financing. We cannot assure you that such financing would be available on
acceptable terms, if at all. To the extent that additional financing proves to
be unavailable when needed to consummate a particular business combination, we
would be compelled to restructure the transaction or abandon that particular
business combination and seek an alternative target business candidate. It is
also possible that we could use a portion of such excess working capital to make
a deposit, a down payment, a lock-up payment or fund a "no-shop" provision with
respect to a particular proposed business combination, although we do not have
any current intention to do so. If we did, the amount that would be used as a
down payment or lock-up payment would be determined based on the terms of the
specific business combination and the amount of our available funds at the time.
In the event that
13
we were ultimately required to forfeit such funds (whether as a result of our
breach of the agreement relating to such payment or otherwise), we may not have
a sufficient amount of working capital available outside of the trust account to
conduct due diligence and pay other expenses related to finding another suitable
business combination without securing additional financing. Thus, if we were
unable to secure additional financing, we would most likely fail to consummate a
business combination in the allotted time and would be forced to liquidate. In
addition, if we consummate a business combination, we may require additional
financing to fund the operations or growth of the target business. The failure
to secure additional financing could have a material adverse effect on the
continued development or growth of the target business. None of our officers,
directors or stockholders is required to provide any financing to us in
connection with or after a business combination.
OUR EXISTING STOCKHOLDERS, INCLUDING OUR OFFICERS AND DIRECTORS, CONTROL A
SUBSTANTIAL INTEREST IN US AND THUS MAY INFLUENCE CERTAIN ACTIONS REQUIRING A
STOCKHOLDER VOTE.
Upon consummation of our offering, our existing stockholders (including all
of our officers and directors) will collectively own 20% of our issued and
outstanding shares of common stock (assuming they do not purchase units in this
offering). None of our existing stockholders, officers and directors has
indicated to us that he intends to purchase our securities in the offering. Any
shares of common stock acquired by existing stockholders in the aftermarket will
be considered part of the holding of the public stockholders and will have the
same rights as other public stockholders, including voting and redemption rights
with respect to a potential business combination. However, they have agreed to
vote such shares of common stock in accordance with the majority of the shares
of common stock voted by the public stockholders.
Because of our existing stockholders' agreement with Rodman & Renshaw to
make open market purchases of the warrants during the 45 trading day period
commencing on the later of the date that the securities comprising the units
begin separate trading or sixty days following the consummation of this
offering, our existing stockholders may obtain an even larger ownership block of
our common stock upon exercise of the warrants which could permit them to
effectively influence the outcome of all matters requiring approval by our
stockholders at such time, including the election of directors and approval of
significant corporate transactions, following the consummation of our initial
business combination.
Our board of directors is divided into three classes, each of which will
generally serve for a term of two years with only one class of directors being
elected in each year. It is unlikely that there will be an annual meeting of
stockholders to elect new directors prior to the consummation of a business
combination, in which case all of the current directors will continue in office
at least until the consummation of the business combination. If there is an
annual meeting, as a consequence of our "staggered" board of directors, only a
minority of the board of directors will be considered for election and our
existing stockholders, because of their ownership position, will have
considerable influence regarding the outcome. Accordingly, our existing
stockholders will continue to exert control at least until the consummation of a
business combination. In addition, our existing stockholders and their
affiliates and relatives are not prohibited from purchasing units in this
offering or shares in the aftermarket. If they do, we cannot assure you that our
existing stockholders will not have considerable influence upon the vote in
connection with a business combination.
OUR EXISTING STOCKHOLDERS PAID AN AGGREGATE OF $25,000, OR APPROXIMATELY
$0.023 PER SHARE, FOR THEIR SHARES AND, ACCORDINGLY, YOU WILL EXPERIENCE
IMMEDIATE AND SUBSTANTIAL DILUTION FROM THE PURCHASE OF OUR COMMON STOCK.
The difference between the public offering price per share and the pro
forma net tangible book value per share of our common stock after this offering
constitutes the dilution to you and the other investors in this offering. The
fact that our existing stockholders acquired their shares of common stock at a
nominal price has significantly contributed to this dilution. Assuming the
offering is completed, you and the other new investors will incur an immediate
and substantial dilution of approximately 30.1% or $2.41 per share (the
difference between the pro forma net tangible book value per share of $5.59, and
the initial offering price of $8.00 per unit).
14
OUR OUTSTANDING WARRANTS AND OPTION MAY HAVE AN ADVERSE EFFECT ON THE MARKET
PRICE OF COMMON STOCK AND MAKE IT MORE DIFFICULT TO EFFECT A BUSINESS
COMBINATION.
In connection with this offering, as part of the units, we will be issuing
warrants to purchase 4,375,000 shares of common stock. We will also issue an
option to purchase 350,000 units to the representative of the underwriters
which, if exercised, will result in the issuance of an additional 350,000
warrants. To the extent we issue shares of common stock to effect a business
combination, the potential for the issuance of substantial numbers of additional
shares upon exercise of these warrants and options could make us a less
attractive acquisition vehicle in the eyes of a target business as such
securities, when exercised, will increase the number of issued and outstanding
shares of our common stock and reduce the value of the shares issued to complete
the business combination. Accordingly, our warrants and option may make it more
difficult to effectuate a business combination or increase the cost of the
target business.
Additionally, the sale, or even the possibility of sale, of the shares
underlying the warrants and option could have an adverse effect on the market
price for our securities or on our ability to obtain future financing. If and to
the extent these warrants and option are exercised, you may experience dilution
to your holdings. The significant price difference between the price of the
initial offering and the exercise price of the warrants would create downward
pressure on the share price when the warrants become exercisable.
IF OUR EXISTING STOCKHOLDERS EXERCISE THEIR REGISTRATION RIGHTS, IT MAY REDUCE
THE MARKET PRICE OF OUR COMMON STOCK AND THE EXISTENCE OF THESE RIGHTS MAY
MAKE IT MORE DIFFICULT TO EFFECT A BUSINESS COMBINATION.
Our existing stockholders are entitled to make a demand that we register
the resale of their shares of common stock at any time commencing three months
prior to the date on which their shares are released from escrow. We will bear
the costs and expenses incurred in connection with any such registration. If our
existing stockholders exercise their registration rights with respect to all of
their shares of common stock, then there will be an additional 1,349,000 shares
of common stock eligible for trading in the public market. The presence of this
additional number of shares of common stock eligible for trading in the public
market may have an adverse effect on the market price of our common stock. In
addition, the existence of these rights may make it more difficult to effectuate
a business combination or increase the cost of acquiring the target business, as
the stockholders of the target business may be discouraged from entering into a
business combination with us or will request a higher price for their securities
as a result of these registration rights and the potential future effect their
exercise may have on the trading market for our common stock.
IF YOU ARE NOT AN INSTITUTIONAL INVESTOR, YOU MAY PURCHASE OUR SECURITIES IN
THIS OFFERING ONLY IF YOU RESIDE WITHIN CERTAIN STATES.
We have applied to register our securities, or have obtained or will seek
to obtain or rely on an exemption from state securities registration
requirements, in Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois,
Indiana, Louisiana, Maryland, New Jersey, New York and Rhode Island. If you are
not an "institutional investor", as that term is defined in a particular
jurisdiction, you must be a resident of the listed jurisdictions to purchase our
securities in the offering. The definition of an "institutional investor" varies
from state to state but generally includes financial institutions,
broker-dealers, banks, insurance companies and other qualified entities. The
limited number of jurisdictions in which our securities are eligible for sale to
the public may limit your ability to resell the securities purchased in this
offering and may impact the price of our securities. For a more complete
discussion of state securities law issues which may affect this offering, please
see the section entitled "Underwriting -- State Blue Sky Information".
THE DETERMINATION OF THE PRICING OF THE UNITS AND THE SHARES OF COMMON STOCK
INCLUDED AS PART OF THE UNITS IS ARBITRARY RELATIVE TO THAT OF OPERATING
COMPANIES.
The determination of the pricing of the units and the shares of common
stock included as part of the units is arbitrary relative to that of operating
companies. Unlike the pricing of securities of operating companies, a blank
check company has no operating history, no historical financial revenues and no
trading history on which
15
to base the price at which its securities will be sold to the public. The
determination of the pricing of the units and the shares of common stock
included as part of the units is based solely on the pricing of securities in
other similar blank check offerings.
WE INTEND TO HAVE OUR SECURITIES QUOTED ON THE OTC BULLETIN BOARD, WHICH WILL
LIMIT THE LIQUIDITY AND PRICE OF OUR SECURITIES MORE THAN IF OUR SECURITIES
WERE QUOTED OR LISTED ON THE NASDAQ STOCK MARKET OR A NATIONAL EXCHANGE.
Our securities will be quoted in the over-the-counter market. It is
anticipated that they will be quoted on the OTC Bulletin Board, an
NASD-sponsored and operated inter-dealer automated quotation system for equity
securities not included on The Nasdaq Stock Market. Quotation of our securities
on the OTC Bulletin Board will limit the liquidity and price of our securities
more than if our securities were quoted or listed on The Nasdaq Stock Market or
a national exchange. We cannot assure you, however, that such securities will be
approved for quotation or continue to be authorized for quotation by the OTC
Bulletin Board or any other market in the future.
IF WE ARE DEEMED TO BE AN INVESTMENT COMPANY, WE MAY BE REQUIRED TO INSTITUTE
BURDENSOME COMPLIANCE REQUIREMENTS AND OUR ACTIVITIES MAY BE RESTRICTED, WHICH
MAY MAKE IT DIFFICULT FOR US TO COMPLETE A BUSINESS COMBINATION.
If we are deemed to be an investment company under the Investment Company
Act of 1940, we may be subject to certain restrictions that may make it more
difficult for us to complete a business combination, including:
- restrictions on the nature of our investments; and
- restrictions on the issuance of securities.
In addition, we may have imposed upon us burdensome requirements,
including:
- registration as an investment company;
- adoption of a specific form of corporate structure; and
- reporting, record keeping, voting, proxy, compliance policies and
procedures and disclosure requirements and other rules and regulations.
We do not believe that our anticipated principal activities will subject us to
the Investment Company Act of 1940. To this end, the proceeds held in trust may
only be invested by the trust agent in Treasury Bills issued by the United
States with maturity dates 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. By restricting the investment of the proceeds to these instruments, we
intend to meet the requirements for the exemption provided in Rule 3a-1
promulgated under the Investment Company Act of 1940. If we were deemed to be
subject to that act, compliance with these additional regulatory burdens would
require additional expense for which we have not allotted.
OUR DIRECTORS MAY NOT BE CONSIDERED "INDEPENDENT" UNDER THE POLICIES OF THE
NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION, INC.
Although each of our directors owns shares of our common stock, no salary
or other compensation will be paid to our directors for services rendered by
them on our behalf prior to or in connection with a business combination.
Accordingly, we believe our non-executive directors would be considered
"independent" as that term is commonly used. However, under the policies of the
North American Securities Administrators Association, Inc., an international
organization devoted to investor protection, because each of our directors own
shares of our securities and may receive reimbursement for out-of-pocket
expenses incurred by them in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable
business combinations, state securities administrators could take the position
that all of such individuals are not "independent." If this were the case, they
would take the position that we would not
16
have the benefit of any independent directors examining the propriety of
expenses incurred on our behalf and subject to reimbursement. Additionally,
there is no limit on the amount of out-of-pocket expenses that could be incurred
and there will be no review of the reasonableness of the expenses by anyone
other than our board of directors, which would include persons who may seek
reimbursement, or a court of competent jurisdiction if such reimbursement is
challenged. Although we believe that all actions taken by our directors on our
behalf will be in our best interests, whether or not they are deemed to be
"independent," we cannot assure you that this will actually be the case. If
actions are taken, or expenses are incurred that are actually not in our best
interests, it could have a material adverse effect on our business and
operations.
BECAUSE OUR INITIAL STOCKHOLDERS' INITIAL EQUITY INVESTMENT WAS ONLY $30,000,
OUR OFFERING MAY BE DISALLOWED BY STATE ADMINISTRATORS THAT FOLLOW THE NORTH
AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION, INC. STATEMENT OF POLICY ON
DEVELOPMENT STAGE COMPANIES.
Pursuant to the Statement of Policy Regarding Promoter's Equity Investment
promulgated by The North American Securities Administrators Association, Inc.,
any state administrator may disallow an offering of a development stage company
if the initial equity investment by a company's promoters does not equal a
certain percentage of the aggregate public offering price. Our promoters'
initial investment of $30,000 is less than the required $985,000 minimum amount
pursuant to this policy. Accordingly, a state administrator would have the
discretion to disallow our offering if it wanted to. We cannot assure you that
our offering would not be disallowed pursuant to this policy. Additionally, the
initial equity investment made by the initial stockholders may not adequately
protect investors.
RISKS ASSOCIATED WITH ACQUIRING AND OPERATING A TARGET BUSINESS IN THE PRC,
INDIA AND/OR ASEAN
IF THE PRC DOES NOT CONTINUE TO IMPLEMENT ITS COMMITMENTS TO THE WORLD TRADE
ORGANIZATION (WTO) OR DEEMPHASIZES ITS AUTOMOTIVE SECTOR AS A "PILLAR
INDUSTRY" SALES OPPORTUNITIES FOR OUR BUSINESS COMBINATION WOULD DECLINE.
Since China's entry into the WTO, there continues to be tremendous business
opportunities for both foreign and domestic companies in the automobile
industry. China will reduce its tariff on complete automobiles to an average
rate of 25%, and the import tariff on auto parts to an average rate of 10%. All
reductions are anticipated to be completed by January 1, 2006. However, to date,
the PRC has not fully complied with all of its WTO commitments to fully open its
markets to American and European automotive components and vehicles in order to
ease the current trade imbalance between the trade regions. If actions are not
taken to rectify these problems, trade relations may be strained and this may
reduce the growth of China's economy caused by tariffs on components exported
from China to the U.S. and European markets reducing the competitiveness of
target companies located in China and resulting in a potential lower demand for
autos and auto parts.
Additionally, the PRC government has emphasized the development of its auto
industry as one of two pillar industries -- the other being housing -- in an
effort to stimulate domestic consumption. The government is striving to
establish its own automotive industry with the intent to export Chinese designed
and manufactured vehicles to the North American and European markets. A key
requirement is to develop its own supplier infrastructure thereby reducing the
dependence on foreign intellectual property. Given the history of the PRC to
shift priorities, the PRC could deemphasize the importance of the automotive
industry as a "pillar industry", which could have a material adverse effect on
our business and operations.
IF INDIA REVERSES ITS CURRENT ECONOMIC EXPANSION POLICIES, SUCH A CHANGE WOULD
REDUCE THE GROWTH RATE OF ITS AUTOMOTIVE RETAIL MARKET.
Since 2002, India has embarked upon government policies fostering the
continued expansion of its automotive industry by promoting an integrated,
phased, and self-sustained growth of the Indian market. Its stated goal is to
double the contribution of the automotive industry to the overall India economy
by 2010. These policies have been instrumental in dramatically expanding growth
in vehicle production and corresponding component sales. While the government's
policies on improving its domestic road infrastructure, providing weighted tax
reductions for in-house R&D, harmonizing industry standards and introducing
global
17
safety and environmental regulations have contributed to this growth, there is
no guarantee that future government administrations will continue these
policies.
IF THE JAPANESE ORIGINAL EQUIPMENT MANUFACTURERS (OEMS) VEHICLE PRODUCTION
PLANS DECLINE, OPPORTUNITIES FOR ASEAN COMPONENT SALES WOULD BE REDUCED.
Thailand's vision includes becoming a major market for light vehicles, the
primary export base for global OEMs' pickup trucks, and establishing a globally
competitive supplier industry. These policies have been developed independently
and in concert with the ASEAN Free Trade Agreement (AFTA). While approximately
90% of vehicles produced and/or exported from ASEAN are Japanese designs, any
material change by the Japanese to their capacity plans would impact our
business operations in this region.
IF RELATIONS BETWEEN THE UNITED STATES (INCLUDING JAPAN) AND THE PRC
DETERIORATE, IT COULD REDUCE THE OPPORTUNITIES FOR EXPORT SALES.
The relationship between the United States and the PRC is subject to sudden
fluctuation and periodic tension while that of Japan and the PRC has become
acrimonious over the last six months. The United States may impose new
short-term quotas, which may be extended for several years, if China fails to
reduce its exports of certain goods such as clothing and furniture. Such import
quotas may adversely affect political relations between the two countries and
result in retaliatory countermeasures by the PRC in industries that may affect
our ultimate target business. Relations may also be compromised if the U.S.
becomes a more vocal advocate of Taiwan.
Relations between the PRC and Japan have deteriorated recently due to
friction over territorial rights governing the exploration of oil and Japan's
support for Taiwan. Further friction regarding Japan, China and World War II has
also surfaced. Changes in political conditions in the PRC and changes in the
state of Chinese-U.S. and Chinese-Japanese relations are difficult to predict
and could adversely affect our operations especially as they relate to business
with Japanese automotive customers.
IF THE PRC IMPOSES RESTRICTIONS TO REDUCE INFLATION, FUTURE ECONOMIC GROWTH IN
THE PRC COULD REDUCE THE OVERALL GROWTH RATE OF THE AUTOMOTIVE RETAIL MARKET.
While the economy of the PRC has experienced rapid growth, this growth has
been uneven among various sectors of the economy and in different geographical
areas of the country. If prices for the products of our ultimate target business
rise at a rate that is insufficient to compensate for the rise in the costs of
supplies, it may have an adverse effect on profitability. In order to control
inflation in the past, the PRC has imposed controls on bank credits, limits on
loans for fixed assets and restrictions on state bank lending. If similar
restrictions are imposed, it may lead to a slowing of economic growth and reduce
credit to finance the purchase of vehicles.
THE CONTINUED APPRECIATION OF CURRENCIES USED IN CHINA, INDIA AND ASEAN COULD
REDUCE OPPORTUNITIES FOR EXPORT SALES.
Because our initial objective is to acquire a business having its primary
operating facilities located in the China, India and ASEAN, and because
substantially all revenues and income would initially be received in a foreign
currency such as Chinese Renminbi, India Rupee or Thai Baht (Currencies) the
dollar equivalent of our net assets and distributions would be adversely
affected by reductions in the value of the currencies. The Chinese Renminbi
exchange rate has appreciated 2% since July while the Thai Baht and India Rupee
have both appreciated 7%-9% over the last five years. While this continued
appreciation versus the dollar have not materially affected component exports,
there is no guarantee that a material change to exports will not result long
term.
18
IF THE UNITED STATES IMPOSES TRADE SANCTIONS ON THE PRC DUE TO ITS CURRENT
CURRENCY POLICIES, OUR TARGET BUSINESS' ABILITY TO SUCCEED IN THE
INTERNATIONAL MARKETS MAY BE DIMINISHED.
The PRC currently "pegs" its currency to a "basket" of foreign currencies.
This means that each day the Central Bank of China will analyze the change in
the value of the basket of foreign currencies from the day before and will then
determine whether the Chinese currency will be changed. This policy is currently
under review by policy makers in the United States. Trade groups in the United
States have blamed the cheap value of the Chinese currency for causing job
losses in American factories, giving exporters an unfair advantage and making
its imports expensive.
BECAUSE ANY TARGET BUSINESS THAT WE ATTEMPT TO COMPLETE A BUSINESS COMBINATION
WITH WILL BE REQUIRED TO PROVIDE OUR STOCKHOLDERS WITH FINANCIAL STATEMENTS
PREPARED IN ACCORDANCE WITH AND RECONCILED TO UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES, PROSPECTIVE TARGET BUSINESSES MAY BE LIMITED.
In accordance with requirements of United States Federal securities laws,
in order to seek stockholder approval of a business combination, a proposed
target business will be required to have certain financial statements which are
prepared in accordance with, or which can be reconciled to, U.S. generally
accepted accounting principles and audited in accordance with U.S. generally
accepted auditing standards. To the extent that a proposed target business does
not have financial statements which have been prepared with, or which can be
reconciled to, U.S. GAAP, and audited in accordance with U.S. GAAS, we will not
be able to acquire that proposed target business. These financial statements may
limit the pool of potential target businesses which we may acquire.
IF TOP MANAGEMENT OF THE TARGET FIRM IN THE PRC EXPERIENCES HIGHER THAN NORMAL
TURNOVER, THE PERFORMANCE OF DAY-TO-DAY OPERATIONS OF A TARGET BUSINESS COULD
DECLINE.
Industry and internal estimates covering approximately 600 foreign funded
joint ventures in the PRC between 1995-2003 indicated a management turnover
between 12%-20%. This turnover is higher than comparable industries outside of
China and is driven by an insufficient supply of qualified executive management.
Existing management team members may be attracted to higher compensation
packages as a result of this insufficient supply and leave the target company.
The loss of talent could affect the day-to-day operations until suitable
management is recruited and hired.
IF THE PRC CHANGES ITS MOST RECENT MERGER AND ACQUISITION REGULATIONS AND/OR
INDIA MAKES CHANGES TO ITS FOREIGN INVESTMENT PROMOTION BOARD (FIPB) RULES,
THE TIMING AND VALUATION OF ASSETS ASSOCIATED WITH A BUSINESS COMBINATION MAY
BE INCREASED.
The use of merger and acquisition transactions to gain immediate market
access is becoming more common in the PRC. If a target firm is identified in the
PRC, we anticipate utilizing an indirect equity acquisition method to acquire
control by purchasing equity in a foreign investment enterprise (FIE) limited by
shares. Typically, PRC government approvals are not required for such
acquisitions since the FIE's registered equity holder does not change. This form
of transaction will also not trigger the statutory pre-emptive rights of the
other investors. Although we do not anticipate that an asset valuation conducted
by a company sanctioned by the PRC is required for this transaction any changes
to these current rules, making it more difficult to effect an acquisition, would
adversely impact the business combination.
Effecting a majority acquisition in India requires the approval of its
FIPB. Although an independent asset valuation currently is not required by the
Indian government any changes to its existing regulations could adversely impact
the timing of the business combination.
IF RELATIONS BETWEEN INDIA AND PAKISTAN DETERIORATE, IT COULD REDUCE EXPORT
OPPORTUNITIES FOR OUR BUSINESS OPERATIONS FOLLOWING A BUSINESS COMBINATION.
The relationship between India and Pakistan while showing overall
improvement recently is subject to periodic tension. Although bi-lateral
discussions regarding the disputed region of Kashmir are ongoing and commercial
negotiations regarding a trans-pipeline are positive signs, changes to these
relationships could lead
19
to a drop in trade between India and its Asian partners. Any detrimental change
to this relationship could impact the entire Asian region.
IF THE ASSOCIATION OF SOUTHEAST NATIONS (ASEAN) IMPOSES RESTRICTIONS TO REDUCE
TRADE, FUTURE ECONOMIC GROWTH IN THIS REGION COULD BE CURTAILED.
While the ASEAN countries could, in theory, offer a unified market of more
than 1 million cars and trucks a year as well as a valuable export base to vie
with China and India, much depends on free trade agreements, tax structures and
the strategies of the OEMs. The ASEAN Free Trade Area provides an easier
intra-regional trade within a market of more than 500 million consumers yet the
introduction of general, temporary exclusion or sensitive product limits may
reduce the business opportunities for suppliers.
WE MAY NOT BE ABLE TO ENFORCE OUR RIGHTS WITHIN THE PRC, INDIA AND ELSEWHERE.
The laws within PRC, India and ASEAN will govern all of our target
business' material agreements. We cannot assure you that the target business
will be able to enforce any of its material agreements or that remedies will be
available outside of the target regions.
The system of laws and the enforcement of existing laws in the PRC may not
be as certain in implementation and interpretation as in the United States. The
Chinese judiciary is relatively inexperienced in enforcing corporate and
commercial law, leading to a higher than usual degree of uncertainty as to the
outcome of any litigation. The inability to enforce or obtain a remedy under any
of our future agreements may have a material adverse impact on our operations.
The main sources of law in India and ASEAN are its respective
constitutions. The statutes are enacted by their Parliaments, state legislatures
and union territory legislatures.
SINCE SOME OF OUR DIRECTORS AND OFFICERS LIVE OUTSIDE OF THE UNITED STATES AND
SUBSTANTIALLY ALL OF OUR ASSETS WILL BE LOCATED OUTSIDE THE UNITED STATES,
INVESTORS MAY NOT BE ABLE TO ENFORCE FEDERAL SECURITIES LAWS OR THEIR OTHER
LEGAL RIGHTS.
Some of our directors and officers reside outside of the United States and,
after the consummation of a business combination; substantially all of our
assets will be located outside of the United States. As a result, it may not be
possible for investors in the United States to enforce their legal rights, to
effect service of process upon our directors or officers or to enforce judgments
of United States courts predicated upon civil liabilities and criminal penalties
of our directors and officers under Federal securities laws.
IF VARIOUS CULTURAL AND MANAGERIAL DIFFERENCES INHERENT IN THE TARGET REGIONS
ARE NOT ASSIMILATED INTO OUR COMPANY, THE OVERALL PERFORMANCE OF THE BUSINESS
MAY BE REDUCED.
While pan-Asian mergers and acquisitions are increasing in frequency,
assimilating cultural and managerial differences are still problematic.
Additionally friction may result with the consolidation of management teams from
the United States and Europe. We anticipate utilizing our advisors' broad Asian
cultural background and automotive managerial experience to help bridge
anticipated differences.
IF WE DETERMINE TO CHANGE DOMICILES IN CONNECTION WITH A BUSINESS COMBINATION,
THE NEW JURISDICTION'S LAWS WILL LIKELY GOVERN ALL OF OUR MATERIAL AGREEMENTS
AND WE MAY NOT BE ABLE TO ENFORCE OUR LEGAL RIGHTS.
In connection with a business combination, we may determine to relocate the
home jurisdiction of our business from Delaware to a jurisdiction outside of the
United States. If we determine to do this, the new jurisdiction's corporate law
will control our corporate governance requirements and will determine the rights
of our stockholders. The new jurisdiction's corporate law may provide less
protection to our stockholders than is afforded by Delaware law. In addition,
upon reincorporation, we may become a "foreign private issuer" for purposes of
United States securities laws, which means that we may be subject to less
stringent reporting requirements and that some provisions of the United States
securities laws (such as the proxy rules and the short-swing trading rules)
would not apply to us. In addition, if we were to relocate to a foreign
jurisdiction,
20
whether or not we reincorporate outside the United States, the new
jurisdiction's laws will likely govern all of our material agreements. We cannot
assure you that the system of laws and the enforcement of existing laws in such
jurisdiction would be as certain in implementation and interpretation as in the
United States. The inability to enforce or obtain a remedy under any of our
future agreements in a new jurisdiction could result in a significant loss of
business, business opportunities or capital. Any such reincorporation will
likely subject us to foreign regulation, including foreign taxation.
USE OF PROCEEDS
We estimate that the net proceeds of this offering will be as set forth in
the following table:
<Table>
<Caption>
APPROXIMATE PERCENTAGE
OF GROSS PROCEEDS
-----------------------------------
WITHOUT OVER- OVER-ALLOTMENT WITHOUT OVER- OVER-ALLOTMENT
ALLOTMENT OPTION OPTION EXERCISED ALLOTMENT OPTION OPTION EXERCISED
---------------- ---------------- ---------------- ----------------
Gross proceeds................. $35,000,000 $40,250,000 100.00% 100.00%
Offering expenses
Underwriting discount (7.00%
of gross proceeds)(1)...... $ 2,450,000 $ 2,817,500 4.0% 4.0%
Legal fees and expenses
(including blue sky
services and expenses)..... $ 290,000 $ 290,000 0.83% 0.72%
Miscellaneous expenses....... $ 32,000 $ 32,000 0.09% 0.08%
Printing and engraving
expenses................... $ 33,000 $ 33,000 0.09% 0.08%
Accounting fees and
expenses................... $ 49,000 $ 49,000 0.14% 0.12%
SEC registration fee......... $ 15,000 $ 15,000 0.05% 0.03%
NASD filing fee.............. $ 10,000 $ 10,000 0.03% 0.02%
Trustees fees................ $ 13,000 $ 13,000 0.04% 0.03%
Net proceeds
Held in trust for our
benefit.................... $31,328,000 $36,210,500 89.5% 90.0%
Held in trust for others..... $ 1,050,000 $ 1,207,500 3.0% 3.0%
Not held in trust............ $ 780,000 $ 780,000 2.2% 1.9%
----------- -----------
Total net proceeds......... $33,158,000 $38,198,000 94.7% 94.9%
=========== ===========
Use of net proceeds not held in
trust........................ $ 780,000 $ 780,000 2.2% 1.9%
Legal, accounting and other
expenses attendant to the due
diligence investigations,
structuring and negotiation
of a business combination.... $ 400,000 $ 400,000 1.14% 0.99%
Payment of administrative fee
to Asia Development Capital
LLC ($7,500 per month for 24
months)...................... $ 180,000 $ 180,000 0.51% 0.43%
Legal and accounting fees
relating to SEC reporting
Obligations including
preparation and filing of
proxy statement relating to a
business combination......... $ 40,000 $ 40,000 0.10% 0.09%
Payment of outstanding loans
plus interest from
management................... $ 26,000 $ 26,000 0.07% 0.06%
Working capital to cover
miscellaneous expenses
(including finder's fees,
consulting fees or other
similar compensation(2)...... $ 134,000 $ 134,000 0.38% 0.33%
----------- -----------
Total...................... $ 780,000 $ 780,000 2.2% 1.9%
=========== ===========
</Table>
(1) Of this amount, the underwriters have agreed to defer underwriting fees
in an amount equal to 3% of the gross proceeds of this offering, or
$0.24 per unit ($1,050,000 in total, or $1,207,500 if the
over-allotment option is exercised), until the consummation of a
business combination. Upon the
21
consummation of a business combination, we will pay such fees out of
the proceeds of this offering held in trust. However, we will not be
obligated to pay such portion of the 3% deferred underwriting fee out
of the proceeds of this offering that will be paid from the trust
account to the stockholders that vote against a business combination
and elect to exercise its, his or her redemption rights.
(2) Any down payment or lock-up payment would be limited to the amount
allocated to excess working capital. Any use of funds on a down payment
or lock-up payment could increase the chance that management or
existing stockholders would incur additional out-of-pocket expenses.
$32,378,000, or $37,418,000 if the underwriters' over-allotment option is
exercised in full, of net proceeds will be placed in a trust account at JPMorgan
Chase NY Bank maintained by Continental Stock Transfer & Trust Company, New
York, New York, as trustee. The proceeds will not be released from the trust
account until the earlier of the completion of a business combination or our
liquidation. The proceeds held in the trust account may be used as consideration
to pay the sellers of a target business with which we complete a business
combination. Excess working capital will be sufficient to cover miscellaneous
expenses based upon our extensive experience of doing business in Asia. This
experience includes management team member's affiliation with General Motors
from 1993 to 2001. During that period, General Motors embarked upon a program to
establish component operations in China, India and the ASEAN Region. Management
was responsible for researching, locating and negotiating joint ventures and
wholly owned subsidiaries to establish those operations. As a result of that
activity, management gained an insight into the size, scope and capabilities of
supplier companies in the region. All those companies researched were of
comparable size to 80% of our future net assets.
The underwriters have agreed to defer underwriting fees in an amount equal
to 3% of the gross proceeds of this offering, or $0.24 per unit ($1,050,000 in
total, or $1,207,500 if the over-allotment option is exercised), until the
consummation of a business combination. Upon the consummation of a business
combination, we will pay such fees out of the proceeds of this offering held in
trust. However, we will not be obligated to pay such portion of the 3% deferred
underwriting fee out of the proceeds of this offering that will be paid from the
trust account to the stockholders that vote against a business combination and
elect to exercise its, his or her redemption rights.
The payment to Asia Development Capital LLC, an affiliate of William R.
Herren, the chairman of our board of directors, Rudy Wilson, our chief executive
officer and a member of our board of directors, Vinit Bansal, our president of
India operations and a member of our board of directors and Chun Yi Hao, our
president of China operations and a member of our board of directors, of a
monthly fee of $7,500 is for general and administrative services, office space,
and utilities in our offices located in Birmingham, Michigan, Beijing, China,
Hong Kong, Bangkok and Delhi, India. This arrangement is being agreed to by Asia
Development Capital LLC for our benefit and is not intended to provide Messrs.
Herren, Wilson, Bansal and Hao compensation in lieu of a salary. We believe,
based on rents and fees for similar services in these locations, that the fee
charged by Asia Development Capital LLC is at least as favorable as we could
have obtained from an unaffiliated person. Upon completion of a business
combination or the distribution of the trust account to our public stockholders,
we will no longer be required to pay this monthly fee.
Regardless of whether the underwriters exercise their over-allotment option
in full, the net proceeds available to us out of trust for our search for a
business combination will be approximately $780,000. We intend to use the excess
working capital (approximately $134,000) for director and officer liability
insurance premiums (approximately $70,000) $180,000 for payment of
administrative fee to Asia Development Capital LLC, $10,000 for SEC Reporting,
with the balance of $466,000 being held for due diligence, legal, accounting and
other expenses of structuring and negotiating business combinations, as well as
for reimbursement of any out-of-pocket expenses incurred by our existing
stockholders in connection with activities on our behalf as described below. We
expect that due diligence of prospective target businesses will be performed by
some or all of our officers and directors and may include engaging market
research firms and/or third party consultants. Our officers and directors will
not receive any compensation for their due diligence of prospective target
businesses, but would be reimbursed for any out-of-pocket expenses (such as
travel expenses) incurred in connection with such due diligence activities. We
believe that the excess working capital will be sufficient to cover the
foregoing expenses and reimbursement costs.
22
It is also possible that we could use a portion of such excess working
capital to pay finder's fees, consulting fees or other similar compensation,
make a deposit, a down payment, a lock-up payment or fund a "no-shop" provision
with respect to a particular proposed business combination, although we do not
have any current intention to do so. If we did, the amount that would be used as
a down payment or lock-up payment would be determined based on the terms of the
specific business combination and the amount of our available funds at the time.
In the event that we were ultimately required to forfeit such funds (whether as
a result of our breach of the agreement relating to such payment or otherwise),
we may not have a sufficient amount of working capital available outside of the
trust account to conduct due diligence and pay other expenses related to finding
another suitable business combination without securing additional financing.
Thus, if we were unable to secure additional financing, we would most likely
fail to consummate a business combination in the allotted time and would be
forced to liquidate.
To the extent that our capital stock is used in whole or in part as
consideration to effect a business combination, the proceeds 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.
Each of William Herren, Rudy Wilson, Vinit Bansal, Chun Hao and Asia
Development Capital LLC have advanced to us $5,000 which was used to pay a
portion of the expenses of this offering referenced in the line items above for
SEC registration fee, NASD filing fee and legal and audit fees and expenses. The
loans will be payable on the earlier of March 31, 2006 or the consummation of
this offering and will bear interest at the rate of 4.0% per annum. The loans
will be repaid out of the proceeds of this offering not being placed in trust.
The net proceeds of this offering not held in the trust account and not
immediately required for the purposes set forth above will be invested only in
United States "government securities," defined as any Treasury Bills 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 so that we are not deemed to be an investment company under
the Investment Company Act. The interest income derived from investment of these
net proceeds during this period will be used to defray our general and
administrative expenses, as well as costs relating to compliance with securities
laws and regulations, including associated professional fees, until a business
combination is completed.
We believe that, upon consummation of this offering, we will have
sufficient available funds to operate for at least the next 24 months, assuming
that a business combination is not consummated during that time.
Commencing on the effective date of this prospectus through the
consummation of the acquisition of the target business we will pay Asia
Development Capital LLC the fee described above. A public stockholder will be
entitled to receive funds from the trust account (including interest earned on
his, her or its portion of the trust account) only in the event of our
liquidation or if that public stockholder were to seek to redeem such shares for
cash in connection with a business combination which the public stockholder
voted against and which we consummate. In no other circumstances will a public
stockholder have any right or interest of any kind to or in the trust account.
DILUTION
The difference between the public offering price per share of common stock,
assuming no value is attributed to the warrants included in the units, and the
pro forma net tangible book value per share of our common stock after this
offering constitutes the dilution to investors in this offering. Net tangible
book value per share is determined by dividing our net tangible book value,
which is our total tangible assets less total liabilities (including the value
of common stock which may be redeemed for cash), by the number of outstanding
shares of our common stock.
At December 31, 2005, our net tangible book value was a deficiency of
$245,626, or approximately $(0.18) per share of common stock. After giving
effect to the sale of 4,375,000 shares of common stock included in the units,
and the deduction of underwriting discounts and estimated expenses of this
offering, our pro forma net tangible book value at December 31, 2005 would have
been $26,440,012 or $5.45 per share,
23
representing an immediate increase in net tangible book value of $5.63 per share
to the existing stockholders and an immediate dilution of $2.55 per share or
31.8% to new investors not exercising their redemption rights. For purposes of
presentation, our pro forma net tangible book value after this offering is
approximately $6,472,362 less than it otherwise would have been because if we
effect a business combination, the redemption rights to the public stockholders
may result in the redemption for cash of up to approximately 19.99% of the
aggregate number of the shares sold in this offering at a per-share redemption
price equal to the amount in the trust account as of two business days prior to
the consummation of the proposed business combination, inclusive of any
interest, divided by the number of shares sold in this offering. We will not
structure a business combination unless 19.99% of the public stockholders will
be able to redeem their common stock for a pro rata share of the trust account.
In addition, if we consummate a business combination, we are obligated to
pay the underwriters an additional fee equal to 3% of the gross proceeds of this
offering, or $0.24 per unit ($1,050,000 in total, or $1,207,500 if the
over-allotment option is exercised), out of the proceeds of this offering held
in trust.
The following table illustrates the dilution to the new investors on a
per-share basis, assuming no value is attributed to the warrants included in the
units:
<Table>
Public offering price....................................... $ 8.00
Net tangible book value before this offering.............. $(0.18)
Increase attributable to new investors.................... $ 5.63
Pro forma net tangible book value after this offering....... $ 5.45
------
Dilution to new investors................................... $ 2.55
======
</Table>
The following table sets forth information with respect to our existing
stockholders and the new investors:
<Table>
<Caption>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ------------------------ PRICE PER
NUMBER PERCENTAGE AMOUNT PERCENTAGE SHARE
--------- ---------- ----------- ---------- ---------
Existing stockholders......... 1,349,000 23.5 25,000 0.1 $ .023
New investors................. 4,375,000 76.5 35,000,000 99.9 $8.000
--------- ----- ----------- ------
100.0% $35,025,000 100.00%
===== ======
</Table>
The pro forma net tangible book value after the offering is calculated as
follows:
<Table>
Numerator:
Net tangible book value before this offering................ $ (245,626)
Proceeds from this offering................................. $33,158,000
Offering costs accrued in advance and excluded from net
tangible book value before this offering.................. 0
Less: Proceeds held in trust subject to redemption for cash
($32,378,000 X 19.99%).................................... (6,472,362)
-----------
$26,440,012
===========
Denominator:
Shares of common stock outstanding prior to this offering... 1,349,000
Shares of common stock included in the units offered........ 4,375,000
Less: Shares subject to redemption (4,375,000 X 19.99%)..... (874,563)
-----------
4,849,437
</Table>
24
CAPITALIZATION
The following table sets forth our capitalization at December 31, 2005 and
as adjusted to give effect to the sale of our units and the application of the
estimated net proceeds derived from the sale of our units:
<Table>
<Caption>
DECEMBER 31, 2005
---------------------
ACTUAL AS ADJUSTED
------- -----------
Notes Payable to stockholders............................... $25,000 $ --
------- -----------
Total debt.................................................. $25,000 $ --
Underwriter fee payable..................................... $ -- $ 1,050,000
======= ===========
Common stock, $.001 par value, -0- and 874,563 shares which
are subject to possible redemption, shares at redemption
value..................................................... $ -- $ 6,472,362
======= ===========
Stockholders' equity:
Preferred stock, $.001 par value, 1,000,000 shares
authorized; none issued or outstanding................. -- --
======= ===========
Common stock, $.001 par value, 39,000,000 shares
authorized; 1,349,000 shares issued and outstanding;
4,849,347 shares issued and outstanding (excluding
874,563 shares subject to possible redemption), as
adjusted............................................... 1,349 4,849
Additional paid-in capital................................ 23,651 25,655,789
Deficit accumulated during the development stage.......... (5,626) (5,626)
------- -----------
Total stockholders' equity: 19,374 25,655,012
======= ===========
Total capitalization................................... $44,374 $33,177,374
======= ===========
</Table>
If we consummate a business combination, the redemption rights afforded to
our public stockholders may result in the redemption for cash of up to
approximately 19.99% of the aggregate number of shares sold in this offering at
a per-share redemption price equal to the amount in the trust account, inclusive
of any interest thereon, as of two business days prior to the proposed
consummation of a business combination divided by the number of shares sold in
this offering. We will not structure a business combination unless 19.99% of the
public stockholders will be able to redeem their common stock for a pro rata
share of the trust account.
25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We were formed on June 20, 2005 to serve as a vehicle to effect a merger,
capital stock exchange, asset acquisition or other similar business combination
with one or more automotive component supplier operating businesses that has
their primary operating facilities located in our target regions of China, India
or ASEAN. We intend to utilize cash derived from the proceeds of this offering,
our capital stock, debt or a combination of cash, capital stock and debt, in
effecting a business combination. The issuance of additional shares of our
capital stock:
- may significantly reduce the equity interest of our stockholders;
- may subordinate the rights of holders of common stock if preferred stock
is issued with rights senior to those afforded to our common stock;
- will likely cause a change in control if a substantial number of our
shares of common stock are issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and
most likely will also result in the resignation or removal of our present
officers and directors; and
- may adversely affect prevailing market prices for our common stock.
Similarly, if we issue debt securities, it could result in:
- default and foreclosure on our assets if our operating revenues after a
business combination are insufficient to pay our debt obligations;
- acceleration of our obligations to repay the indebtedness even if we have
made all principal and interest payments when due if the debt security
contains covenants that required the maintenance of certain financial
ratios or reserves and any such covenant is breached without a waiver or
renegotiation of that covenant;
- our immediate payment of all principal and accrued interest, if any, if
the debt security is payable on demand; and
- our inability to obtain additional financing, if necessary, if the debt
security contains covenants restricting our ability to obtain additional
financing while such security is outstanding.
We have neither engaged in any operations nor generated any revenues to
date. Our entire activity since inception has been to prepare for our proposed
fundraising through an offering of our equity securities.
We estimate that the net proceeds from the sale of the units, after
deducting offering expenses of approximately $442,000, underwriting discounts of
approximately $1,400,000, will be approximately $33,158,000, or $38,198,000 if
the underwriters' over-allotment option is exercised in full. Of this amount,
$32,378,000 or $37,418,000 if the underwriters' over-allotment option is
exercised in full, will be held in trust and the remaining $780,000 in either
event will not be held in trust. We intend to use substantially all of the net
proceeds of this offering to acquire 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 proceeds 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. We believe that, upon consummation of
this offering, the funds available to us outside of the trust account will be
sufficient to allow us to operate for at least the next 24 months, assuming that
a business combination is not consummated during that time. Over this time
period, we anticipate that we will incur approximately $400,000 of expenses for
legal, accounting and other expenses attendant to the due diligence
investigations, structuring and negotiating of a business combination, $180,000
for the administrative fee payable to Asia Development Capital LLC ($7,500 per
month for two years), $40,000 of expenses in legal and accounting fees relating
to our SEC reporting obligations, $26,000 for repayment of loans, and $134,000
for general working capital that will be used for miscellaneous expenses and
reserves, including approximately $70,000 for director and officer liability
insurance premiums. We do not believe we will need to raise additional funds
following this offering in order to
26
meet the expenditures required for operating our business through the
consummation of a business combination. The basis for this belief is several of
the management team member's affiliation with General Motors from 1993 to 2001.
During that period, General Motors embarked upon a program to establish
component operations in China, India and the ASEAN Region. Management was
responsible for researching, locating and negotiating joint ventures and wholly
owned subsidiaries to establish these operations. As a result of that activity,
management gained insight into the size, scope and capabilities of supplier
companies in the region.
We are obligated, commencing on the effective date of this prospectus, to
pay to Asia Development Capital LLC, an affiliate of Messrs. Herren, Wilson,
Bansal and Hao, a monthly fee of $7,500 for general and administrative services,
including office space and utilities. In addition, on July 11, 2005, each of
William Herren, Rudy Wilson, Vinit Bansal, Chun Hao and Asia Development Capital
LLC advanced $5,000 to us, at an interest rate of 4.0% per annum, for payment of
offering expenses on our behalf. The loans will be payable on the earlier of
March 31, 2006 or the consummation of this offering. The loans will be repaid
out of the proceeds of this offering not being placed in trust.
We have also agreed to sell Rodman & Renshaw, LLC, for $100, as additional
compensation, an option to purchase up to a total of 350,000 units at a per-unit
price of $10.00. The units issuable upon exercise of this option are also
identical to those offered by the proposed offering except that the warrants
included in the option have an exercise price of $6.65 (133% of the exercise
price of the warrants included in the units sold in the offering.) We will pay
the underwriters in the proposed offering an underwriting discount of 7% (of
which 3% is deferred until the consummation of a business combination) of the
gross proceeds of this offering. The option will be issued upon the completion
of the proposed offering and will not be issued if the offering is not
consummated.
The sale of the option will be accounted for as an equity transaction.
Accordingly, there will be no net impact on our financial position or results of
operations, except for the recording of the $100 proceeds from the sale. We have
determined, based upon a Black-Scholes model, that the fair value of the option
on the date of sale would be approximately $3.10 per unit, or $1,086,001 total,
using an expected life of five years, volatility of 45.47% and a risk-free
interest rate of 4.39%.
The volatility calculation of 45.47% is based on the 365-day average
volatility of a representative sample of ten (10) companies with market
capitalizations under $500 million that management believes to be engaged in the
business of auto component parts. Because we do not have a trading history, we
needed to estimate the potential volatility of our common stock price, which
will depend on a number of factors which cannot be ascertained at this time. We
referred to the 365-day average volatility of the sample companies because
management believes that the average volatility of such companies is a
reasonable benchmark to use in estimating the expected volatility of our common
stock post-business combination. Although an expected life of five years was
taken into account for purposes of assigning a fair value to the option, if we
do not consummate a business combination within the prescribed time period and
liquidate, the option would become worthless.
27
PROPOSED BUSINESS
INTRODUCTION
We are a Delaware blank check company incorporated on June 20, 2005 in
order to serve as a vehicle for the acquisition of an operating business. Our
objective is to acquire an operating business within the global automotive
component industry that has its primary operating facilities located in our
target regions of China, India or ASEAN. Opportunities for market expansion have
emerged for businesses with operations in the target regions due to certain
changes in its political, economic and social policies as well as certain
fundamental changes affecting the PRC and its neighboring countries. Based upon
independent forecasts of vehicle production, including Automotive News, Global
Insight, Wards Auto; disclosure by many global OEMs and suppliers at various
seminars, including the 2004 WWJ China Conference; component supply exhibits in
Thailand and China; and an internal assessment of this independent data, we
believe that target regions represent both a favorable environment for making
acquisitions and an attractive operating environment for a target business for
several reasons, including:
- Increase in Vehicle production: Vehicle production in Asia will increase
five fold by 2011 and begin to approach the levels of the North American
and European markets; (Global Insight; www.globalinsight.com)
- Export Sales Through Resourcing: OEMs will continue to increase sourcing
from low cost suppliers from $2.8 billion in 2004 to over $10 billion by
2011; (2004 WWJ China Conference; www.researchandmarkets.com)
- Prolonged Economic Expansion: Within the target regions, gross domestic
product (GDP) has averaged over 8% over the last 10 years and is
forecasted to grow by 6.5% from 2005-2011; (Global Insight;
www.globalinsight.com)
- Low Cost and High Quality Operating Model: Conformance to international
quality certification systems, favorable labor rates and efficient,
low-cost manufacturing capabilities. (Business Week;
www.businessweek.com, April 7, 2003; www.FTIconsulting.com, February
2006)
We are not presently engaged in, and we will not engage in, any substantive
commercial business for an indefinite period of time following this offering. We
intend to utilize cash derived from the proceeds of this offering, our capital
stock, debt or a combination of these in effecting a business combination. Our
management has broad discretion with respect to the specific application of the
net proceeds of this offering and, as a result, this offering can be
characterized as a blank check offering. Our objective is to acquire one or more
automotive component supplier operating businesses that have their primary
operating facilities located in China, India and/or ASEAN. We do not have any
specific business combination under consideration and we have not (nor has
anyone on our behalf) contacted any prospective target business or had any
discussions, formal or otherwise, with respect to such a transaction.
EFFECTING A BUSINESS COMBINATION
GENERAL
We are not presently engaged in, and we will not engage in, any substantive
commercial business for an indefinite period of time following this offering. We
intend to utilize cash derived from the proceeds of this offering, our capital
stock, debt or a combination of these in effecting a business combination.
Although substantially all of the net proceeds of this offering are intended to
be generally applied toward effecting a business combination as described in
this prospectus, the proceeds are not otherwise being designated for any more
specific purposes. Accordingly, investors in this offering are investing without
first having an opportunity to evaluate the specific merits or risks of any one
or more business combinations. A business combination may involve the
acquisition of, or merger with, a company which does not need substantial
additional capital but which desires to establish a public trading market for
its shares, while avoiding what it may deem to be adverse consequences of
undertaking a public offering itself. These include time delays, significant
expense, loss of voting control and compliance with various Federal and state
securities laws.
28
We do not have any specific business combination under consideration and we
have not (nor has anyone on our behalf) contacted any prospective target
business or had any discussions, formal or otherwise, with respect to such a
transaction. We have not (nor have any of our agents or affiliates) been
approached by any candidates (or representative of any candidate) with respect
to a possible acquisition transaction with our company. We have not taken any
direct or indirect measures to locate a target business and no other companies
have contacted us. While we may seek to effect business combinations with more
than one target business, our initial business combination must be with a target
business whose fair market value is at least equal to 80% of our net assets (all
of our assets, including the funds held in the trust account, less our
liabilities) at the time of such acquisition.
WE HAVE NOT IDENTIFIED A TARGET BUSINESS
To date, we have not selected any target business on which to concentrate
our search for a business combination. Our officers, directors, promoters and
other affiliates are not currently engaged in discussions on our behalf with
representatives of other companies regarding the possibility of a potential
merger, capital stock exchange, asset acquisition or other similar business
combination with us, nor have we, nor any of our agents or affiliates, been
approached by any candidates (or representatives of any candidates) with respect
to a possible acquisition transaction with us. Subject to the limitations that a
target business has its primary operating facilities located in the target
regions and has a fair market value of at least 80% of our net assets at the
time of the acquisition, as described below in more detail, we will have
virtually unrestricted flexibility in identifying and selecting a prospective
acquisition candidate. We plan to focus on small and medium size automotive
component supplier firms located in China, India and ASEAN. We have not
established any other specific attributes or criteria (financial or otherwise)
for prospective target businesses. Although our management will endeavor to
evaluate the risks inherent in a particular target business, we cannot assure
you that we will properly ascertain or assess all significant risk factors.
SOURCES OF TARGET BUSINESSES
We anticipate that target business candidates will be brought to our
attention primarily from Asia Development Capital LLC. Target business
candidates may also be brought to our attention through Asia Development
Capital's numerous contacts within the automotive industry. Asia Development
Capital will not receive compensation of any kind from us or from any client of
Asia Development Capital for introductions to us or for any other services
rendered by Asia Development Capital to us. We may also attract both solicited
and unsolicited proposals for business combinations from various unaffiliated
sources, including investment bankers, private equity funds, management buyout
funds and other members of the financial community. While we do not presently
anticipate engaging the services of unaffiliated firms that specialize in
business acquisitions on any formal basis, we may engage these firms in the
future, in which event we pay a finder's fee, consulting fees or other similar
compensation to be determined on an arm's length negotiation and on a case by
case basis based upon the successful completion of the business combination.
Such finder's fees, consulting fees or other similar compensation shall only be
paid from the proceeds not held in trust. The finders fee, if applicable, would
be negotiated as an "arms length transaction" and the amount based upon
acceptable industry practices.
Asia Development Capital will only identify and introduce potential targets
to us. Asia Development Capital will not be compensated for such introductions.
Asia Development Capital's role is limited to acting as a finder and it will not
perform any other services in connection with potential target companies. Asia
Development Capital is an automotive business consulting firm which works with
small and middle market automotive suppliers in Asia Pacific and the United
States. Asia Development Capital's obligations to its clients are pursuant to
contractual obligations relating to consulting services and do not relate to
furnishing capital or equity investments. Asia Development Capital assists these
companies in entering into contracts with third parties to further their
business in the area of manufacturing and supplying auto parts. Asia Development
Capital also provides marketing and sales support to its clients. With respect
to finding target companies for us, Asia Development Capital will first look to
its existing client base to see if we would be interested in exploring a
possible transaction.
29
Our officers and directors have fiduciary obligations to our shareholders
but do not have any obligations with respect to Asia Development Capital's
clients. Asia Development Capital's obligations to its clients are simply to
perform under the consulting agreements it has entered into with its clients as
described above. Asia Development Capital is under no obligation to its clients
to introduce them to potential merger partners and the ability to introduce
potential clients to us will not be used as an inducement for Asia Development
Capital to retain new clients.
SELECTION OF A TARGET BUSINESS AND STRUCTURING OF A BUSINESS COMBINATION
Subject to the requirement that our initial business combination must be
with a target business that has a fair market value that is at least 80% of our
net assets at the time of such acquisition, our management will have virtually
unrestricted flexibility in identifying and selecting a prospective target
business. We have not established any other specific attributes or criteria
(financial or otherwise) for prospective target businesses other than as set
forth below. In evaluating a prospective target business, our management will
consider, among other factors, the following:
- Small and medium size supplier firms with annual revenues from $25
million-$50 million.
- financial condition and results of operation;
- global growth potential in both the Original Equipment and Service Parts
markets;
- experience and skill of management and availability of additional
personnel;
- capital requirements;
- competitive position versus global competitors;
- barriers to entry;
- stage of development of automotive products;
- degree of current or potential market acceptance of automotive products;
- proprietary features and degree of intellectual property or other
protection of the products, processes or services;
- regulatory environment of the automotive industry; and
- costs associated with effecting the business combination.
These criteria are not intended to be exhaustive. Any evaluation relating
to the merits of a particular business combination will be based, to the extent
relevant, on the above factors as well as other considerations deemed relevant
by our management in effecting a business combination consistent with our
business objective. When considering these criteria, we will not place greater
emphasis on any one of these factors compared to another. In evaluating a
prospective target business, we will conduct an extensive due diligence review.
We will also seek to structure the tax aspects of any potential business
combination as favorably as possible to our company and our stockholders,
although we cannot assure you that we will be able to achieve such result. We
will also seek to have all prospective target businesses execute agreements with
us waiving any right, title, interest or claim of any kind in or to monies held
in the trust account. If any prospective target business refused to execute such
agreement, it is unlikely we would continue negotiations with such target
business due to the possibility that such target business would seek to bring a
claim against the trust account. Estimates of target company revenues will
initially be determined by ascertaining the number of employees and multiplying
by industry wide sales/employee calculations. Currently this relationship is
approximately $20,000-$40,000 per employee in the target regions. Management
estimates that approximately 3,200 companies fall within the relationship range.
The basis for this disclosure is management's experience in Asia while
associated with General Motors, and research in numerous automotive
publications. Management noted while locating and researching companies on
behalf of General Motors that companies were relatively more labor intensive
than similar companies in North America and Europe as a result of relatively low
labor compensation. A comparison indicated an approximate range of
$20,000-$40,000 per employee. Management
30
will use as a guide the lower number when seeking labor-intensive targets and
the higher number when seeking capital-intensive targets.
The time and costs required to select and evaluate a target business and to
structure and complete the business combination cannot presently be ascertained
with any degree of certainty. Any costs incurred with respect to the
identification and evaluation of a prospective target business with which a
business combination is not ultimately completed will result in a loss to us and
reduce the amount of capital available to otherwise complete a business
combination.
FAIR MARKET VALUE OF TARGET BUSINESS
The initial target business that we acquire must have a fair market value
equal to at least 80% of our net assets at the time of such acquisition,
including any amount held in the trust fund subject to the redemption rights
described below although we may acquire a target business whose fair market
value significantly exceeds 80% of our net assets. To this end, we may seek to
raise additional funds through a private offering of debt or equity securities
if such funds are required to consummate such a business combination although we
have not entered into any such arrangement and do not currently anticipate
effecting such a financing arrangement. However, if we did, such arrangement
would only be consummated simultaneously with the consummation of the business
combination. The fair market value of such business will be determined by our
board of directors based upon standards generally accepted by the financial
community, such as actual and potential sales, earnings and cash flow and book
value. If our board is not able to independently determine that the target
business has a sufficient fair market value in cases where the valuation is
influenced by competitors bidding for the same assets, upon a request from our
stockholders, we will obtain an opinion from an unaffiliated, independent
investment banking firm that is a member of the National Association of
Securities Dealers, Inc. with respect to the satisfaction of such criteria. Any
opinion will be presented to investors as part of the proxy materials to be
filed with the SEC in connection with the business combination.
LACK OF DIVERSIFICATION
While we intend to seek to effect business combinations with more than one
target business in China, India and ASEAN, our initial business combination must
be with a target business which satisfies the minimum valuation standard at the
time of such acquisition, as discussed above. Consequently, initially it is
probable that we will have the ability to effect only a single business
combination in one geographic region. Accordingly, the prospects for our success
may be entirely dependent upon the future performance of businesses in a single
region. Unlike other entities which may have the resources to complete several
business combinations of entities operating in multiple geographic regions or
multiple areas of a single industry, it is probable that we will not have the
resources to diversify our operations or benefit from the possible spreading of
risks or offsetting of losses. By consummating a business combination with only
a single entity in a single region, our lack of diversification may:
- subject us to numerous economic, competitive and regulatory developments,
any or all of which may have a substantial adverse impact upon the
particular industry in which we may operate subsequent to a business
combination, and
- result in our dependency upon the development or market acceptance of a
single or limited number of products.
LIMITED ABILITY TO EVALUATE THE TARGET BUSINESS' MANAGEMENT
Although we intend to closely scrutinize the management of a prospective
target business when evaluating the desirability of effecting a business
combination, we cannot assure you that our assessment of the target business'
management will prove to be correct. In addition, we cannot assure you that the
future management will have the necessary skills, qualifications or abilities to
manage a public company. Furthermore, the future role of our officers and
directors, if any, in the target business following a business combination
cannot presently be stated with any certainty. While it is possible that William
R. Herren, Rudy Wilson, David J. Brophy, Vinit Bansal, Chun Yi Hao, Avinash P.
Gandhi, Donald Runkle, Sam A.
31
Hamdan and Somlux Sirikupphokakorn will remain associated in senior management
or advisory positions with us following a business combination, it is unlikely
that any of them will devote their full efforts to our affairs subsequent to a
business combination. Moreover, our current management will only be able to
remain with the combined company after the consummation of a business
combination if they are able to negotiate the same as part of any such
combination.
Following a business combination, we may seek to recruit additional
managers to supplement the incumbent management of the target business. We
cannot assure you that we will have the ability to recruit additional managers,
or that any such additional managers we do recruit will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
OPPORTUNITY FOR STOCKHOLDER APPROVAL OF BUSINESS COMBINATION
Prior to the completion of a business combination, we will submit the
transaction to our stockholders for approval, even if the nature of the
acquisition is such as would not ordinarily require stockholder approval under
applicable state law. In connection with seeking stockholder approval of a
business combination, we will furnish our stockholders with proxy solicitation
materials prepared in accordance with the Securities Exchange Act of 1934, as
amended, which, among other matters, will include a description of the
operations of the target business and audited historical financial statements of
the business.
In connection with the vote required for any business combination, all of
our existing stockholders, including all of our officers and directors, have
agreed to vote any shares held by them, including shares owned prior to this
offering, shares acquired in this offering and in the aftermarket, in accordance
with the majority of shares voted by the public stockholders in connection with
the potential business combination. We will proceed with the business
combination only if a majority of the shares of common stock voted by the public
stockholders are voted in favor of the business combination and public
stockholders owning less than 20% of the shares sold in this offering both
exercise their redemption rights and vote against the business combination.
REDEMPTION RIGHTS
At the time we seek stockholder approval of any business combination, we
will offer each public stockholder the right to have such stockholder's shares
of common stock redeemed for cash if the stockholder votes against the business
combination and the business combination is approved and completed. In
connection with the vote required for any business combination, all of our
existing stockholders, including all officers and directors, have agreed to vote
any shares held by them, including shares owned prior to this offering, shares
acquired in this offering and in the aftermarket, in accordance with the
majority of shares voted by the public stockholders. The actual per-share
redemption price will be equal to the amount in the trust account, inclusive of
any interest (calculated as of two business days prior to the consummation of
the proposed business combination), divided by the number of shares sold in this
offering. Without taking into any account interest earned on the trust account,
the initial per-share redemption price would be $7.40 or $0.60 less than the
per-unit offering price of $8.00. An eligible stockholder may request redemption
at any time after the mailing to our stockholders of the proxy statement and
prior to the vote taken with respect to a proposed business combination at a
meeting held for that purpose, but the request will not be granted unless the
stockholder votes against the business combination and the business combination
is approved and completed. If a stockholder votes against the business
combination but fails to properly exercise its redemption rights, such
stockholder will not have its shares of common stock redeemed for its pro rata
distribution of the trust fund. Any request for redemption, once made, may be
withdrawn at any time up to the date of the meeting. It is anticipated that the
funds to be distributed to stockholders entitled to redeem their shares who
elect redemption will be distributed promptly after completion of a business
combination. Public stockholders who redeem their stock for their share of the
trust account still have the right to exercise any warrants they still hold. We
will not complete any business combination if public stockholders, owning 20% or
more of the shares sold in this offering, exercise their redemption rights.
32
LIQUIDATION IF NO BUSINESS COMBINATION
If we do not complete a business combination within 18 months after the
consummation of this offering, or within 24 months after the consummation of
this offering if the extension criteria described below have been satisfied, we
will be dissolved and distribute to all of our public stockholders, in
proportion to their respective equity interests, an aggregate sum equal to the
amount in the trust account, inclusive of any interest, plus any remaining net
assets. We will not request any further extensions beyond the aforementioned 18
and 24 month periods. We will not amend or modify the business combination
procedures outlined in our certificate of incorporation because we view the
business combination procedures and this prospectus as obligations to our
stockholders that we will not propose to amend. Our existing stockholders have
waived their rights to participate in any liquidation distribution with respect
to shares of common stock owned by them immediately prior to this offering.
There will be no distribution from the trust account with respect to our
warrants which will expire worthless. We will pay the costs of liquidation and
dissolution from our remaining assets outside of the trust fund.
If we were to expend all of the net proceeds of this offering, other than
the proceeds deposited in the trust account, and without taking into account
interest, if any, earned on the trust account, the initial per-share liquidation
price would be $7.40 or $0.60 less than the per-unit offering price of $8.00.
The proceeds deposited in the trust account could, however, become subject to
the claims of our creditors which could be prior to the claims of our public
stockholders. We cannot assure you that the actual per-share liquidation price
will not be less than $7.40, plus interest, due to claims of creditors. William
R. Herren, Rudy Wilson, Vinit Bansal, Dr. David J. Brophy, Donald Runkle and
Chun Yi Hao have severally agreed, pursuant to agreements with us and Rodman &
Renshaw, that, if we liquidate prior to the consummation of a business
combination, they will be personally liable to pay debts and obligations to
target businesses or vendors or other entities that are owed money by us for
services rendered or contracted for or products sold to us in excess of the net
proceeds of this offering not held in the trust account. We cannot assure you,
however, that they would be able to satisfy those obligations.
If we enter into either a letter of intent, an agreement in principle or a
definitive agreement to complete a business combination prior to the expiration
of 18 months after the consummation of this offering, but are unable to complete
the business combination within the 18-month period, then we will have an
additional six months in which to complete the business combination contemplated
by the letter of intent, agreement in principle or definitive agreement. If we
are unable to do so within 24 months following the consummation of this
offering, we will then liquidate. We will not request any further extensions
beyond the aforementioned 18 and 24 month periods. We will not amend or modify
the business combination procedures outlined in our certificate of incorporation
because we view the business combination procedures and this prospectus as
obligations to our stockholders that we will not propose to amend. Upon notice
from us, the trustee of the trust account will commence liquidating the
investments constituting the trust account and will turn over the proceeds to
our transfer agent for distribution to our public stockholders. We anticipate
that our instruction to the trustee would be given promptly after the expiration
of the applicable 18-month or 24-month period.
Our public stockholders will be entitled to receive funds from the trust
account only in the event of our liquidation or if the stockholders seek to
redeem their respective shares for cash upon a business combination which the
stockholder voted against and which is completed by us. In no other
circumstances will a stockholder have any right or interest of any kind to or in
the trust account.
COMPETITION
In identifying, evaluating and selecting a target business, we may
encounter competition from other entities having a business objective similar to
ours. Many of these entities are well established and have extensive experience
identifying and effecting business combinations directly or through affiliates.
Many of these competitors may possess greater technical, human and other
resources than us and our financial resources may be relatively limited when
contrasted with those of many of these competitors. Based upon our experience in
the target regions since 1993, we believe there may be numerous potential target
businesses whose fair market value is at least equal to 80% of our net assets,
however, our ability to compete in acquiring certain sizable target businesses
may be limited by our available financial resources. The basis for this belief
is
33
the affiliation of six of the management team members with General Motors from
1993 to 2001. During this time period, General Motors embarked upon a program to
establish component operations in China, India and the ASEAN Region. Management
was responsible for researching, locating and negotiating joint ventures and
wholly owned subsidiaries to establish these operations. As a result of this
activity management gained an insight into the size, scope and capabilities of
supplier companies in the region. All these companies researched were of
comparable size to 80% of our future net assets. This inherent competitive
limitation gives others an advantage in pursuing the acquisition of a target
business. Further:
- our obligation to seek stockholder approval of a business combination may
delay the completion of a transaction;
- our obligation to redeem for cash shares of common stock held by our
public stockholders to such holders that both vote against the business
combination and exercise their redemption rights may reduce the resources
available to us for a business combination; and
- our outstanding warrants and option, and the potential future dilution
they represent, may not be viewed favorably by certain target businesses.
Any of these factors may place us at a competitive disadvantage in successfully
negotiating a business combination. Our management believes, however, that our
status as a public entity, potential access to the United States public equity
markets and access to the resources of Asia Development Capital LLC may give us
a competitive advantage over privately-held entities having a similar business
objective as ours in acquiring a target business with significant growth
potential on favorable terms.
If we succeed in effecting a business combination, there will be, in all
likelihood, intense competition from competitors of the target business in the
target regions. We cannot assure you that, subsequent to a business combination,
we will have the resources or ability to compete effectively.
FACILITIES
We maintain our principal executive office at the following location:
- United States executive offices at 401 South Old Woodward, Suite 450,
Birmingham, Michigan, 48009;
We maintain our regional offices at the following locations:
- Beijing, China regional offices at Cai Zhi Fortune Tower, Room 834, #5
Chang Zhi Road, Haidian District Beijing, China 100089
- Hong Kong regional office at 1211 Peninsula Tower 538 Castle Peak Road
Kowloon, Hong Kong
- ASEAN Regional office at 46/14 Moo 105th Floor Nation Tower, Bangna Trad
Rd. Bangna, Bangna, Bangkok 10260, Thailand.
- India Regional office at No. 1056, sector 37 Noida, UP, 201301, India;
- Taiwan regional office at #516, 12F, Da-You Rd, Tao Yun City, Taiwan, ROC
The cost for these spaces is included in the $7,500 per-month fee Asia
Development Capital LLC will charge us for general and administrative services,
including office space, and utilities, commencing on the effective date of this
prospectus pursuant to a letter agreement between us and Asia Development
Capital LLC. We believe, based on rents and fees for similar services in these
locations, that the fee charged by Asia Development Capital LLC is at least as
favorable as we could have obtained from an unaffiliated person. We consider our
current office space adequate for our current operations.
34
EMPLOYEES
We have five executive officers, each of whom is a member of our board of
directors. These individuals are obligated to devote substantially their full
business time to effecting a business combination. We do not intend to have any
full time employees prior to the consummation of a business combination.
PERIODIC REPORTING AND AUDITED FINANCIAL STATEMENTS
We have registered our units, common stock and warrants under the
Securities Exchange Act of 1934, as amended, and have reporting obligations,
including the requirement that we file annual, quarterly and current reports
with the SEC. In accordance with the requirements of the Securities Exchange Act
of 1934, our annual reports will contain financial statements audited and
reported on by our independent registered public accountants.
We will not acquire a target business if audited financial statements based
on United States generally accepted accounting principles cannot be obtained for
the target business. Additionally, our management will provide stockholders with
audited financial statements, prepared in accordance with United States
generally accepted accounting principles, of the prospective target business as
part of the proxy solicitation materials sent to stockholders to assist them in
assessing the target business. We cannot assure you that any particular target
business identified by us as a potential acquisition candidate will have
financial statements prepared in accordance with United States generally
accepted accounting principles or that the potential target business will be
able to prepare its financial statements in accordance with United States
generally accepted accounting principles. The financial statements of a
potential target business will be required to be audited in accordance with
United States generally accepted accounting standards. To the extent that this
requirement cannot be met, we will not be able to acquire the proposed target
business. While this may limit the pool of potential acquisition candidates,
given the broad range of companies we may consummate a business combination
with, we do not believe that the narrowing of the pool will be material.
LEGAL PROCEEDINGS
To the knowledge of management, there is no litigation currently pending or
contemplated against us or any of our officers or directors in their capacity as
such.
35
COMPARISON TO OFFERINGS OF BLANK CHECK COMPANIES
The following table compares and contrasts the terms of our offering and
the terms of an offering of blank check companies under Rule 419 promulgated by
the SEC assuming that the gross proceeds, underwriting discounts and
underwriting expenses for the Rule 419 offering are the same as this offering
and that the underwriters will not exercise their over-allotment option. None of
the terms of a Rule 419 offering will apply to this offering.
<Table>
<Caption>
TERMS OF OUR OFFERING TERMS UNDER A RULE 419 OFFERING
--------------------- -------------------------------
ESCROW OF OFFERING
PROCEEDS..................... $32,378,000 of the net $29,295,000 of the offering
offering proceeds will be proceeds would be required to
deposited into a trust be deposited into either an
account at JPMorgan Chase NY escrow account with an insured
Bank maintained by depositary institution or in a
Continental Stock Transfer & separate bank account
Trust Company. established by a broker-dealer
in which the broker-dealer acts
as trustee for persons having
the beneficial interests in the
account.
INVESTMENT OF NET PROCEEDS... The $32,378,000, of net Proceeds could be invested only
offering proceeds held in in specified securities such as
trust will only be invested a money market fund meeting
in U.S. "government conditions of the Investment
securities," defined as any Company Act of 1940 or in
Treasury Bill issued by the securities that are direct
United States having a obligations of, or obligations
maturity of 180 days or less guaranteed as to principal or
or in money market funds interest by, the United States.
meeting certain conditions
under Rule 2a-7 promulgated
under the Investment Company
Act of 1940.
LIMITATION ON FAIR VALUE OR
NET ASSETS OF TARGET
BUSINESS..................... The initial target business We would be restricted from
that we acquire must have a acquiring a target business
fair market value equal to at unless the fair value of such
least 80% of our net assets business or net assets to be
at the time of such acquired represent at least 80%
acquisition. of the maximum offering
proceeds.
</Table>
36
<Table>
<Caption>
TERMS OF OUR OFFERING TERMS UNDER A RULE 419 OFFERING
--------------------- -------------------------------
TRADING OF SECURITIES
ISSUED....................... The units may commence No trading of the units or the
trading on or promptly after underlying common stock and
the date of this prospectus. warrants would be permitted
The common stock and warrants until the completion of a
comprising the units will business combination. During
begin to trade separately on this period, the securities
the 60th day after the date would be held in the escrow or
of this prospectus unless trust account.
Rodman & Renshaw informs us
of its decision to allow
earlier separate trading
(based upon its assessment of
the relative strengths of the
securities markets and small
capitalization companies in
general and the trading
pattern of, and demand for,
our securities in
particular), provided we have
filed with the SEC a Current
Report on Form 8-K, which
includes an audited balance
sheet reflecting our receipt
of the proceeds of this
offering, including any
proceeds we receive from the
exercise of the
over-allotment option, if
such option is exercised
prior to the filing of the
Form 8-K.
EXERCISE OF THE WARRANTS..... The warrants cannot be The warrants could be exercised
exercised until the later of prior to the completion of a
the completion of a business business combination, but
combination and one year from securities received and cash
the date of this prospectus paid in connection with the
and, accordingly, will be exercise would be deposited in
exercised only after the the escrow or trust account.
trust fund has been
terminated and distributed.
</Table>
37
<Table>
<Caption>
TERMS OF OUR OFFERING TERMS UNDER A RULE 419 OFFERING
--------------------- -------------------------------
ELECTION TO REMAIN AN
INVESTOR..................... We will give our stockholders A prospectus containing
the opportunity to vote on information required by the SEC
the business combination. In would be sent to each investor.
connection with seeking Each investor would be given
stockholder approval, we will the opportunity to notify the
send each stockholder a proxy company, in writing, within a
statement containing period of no less than 20
information required by the business days and no more than
SEC. A stockholder following 45 business days from the
the procedures described in effective date of the post-
this prospectus is given the effective amendment, to decide
right to redeem his or her whether he or she elects to
shares for his or her pro remain a stockholder of the
rata share of the trust company or require the return
account. However, a of his or her investment. If
stockholder who does not the company has not received
follow these procedures or a the notification by the end of
stockholder who does not take the 45(th) business day, funds
any action would not be and interest or dividends, if
entitled to the return of any any, held in the trust or
funds. escrow account would
automatically be returned to
the stockholder. Unless a
sufficient number of investors
elect to remain investors, all
of the deposited funds in the
escrow account must be returned
to all investors and none of
the securities will be issued.
BUSINESS COMBINATION
DEADLINE..................... A business combination must If an acquisition has not been
occur within 18 months after consummated within 18 months
the consummation of this after the effective date of the
offering or within 24 months initial registration statement,
after the consummation of funds held in the trust or
this offering if a letter of escrow account would be
intent or definitive returned to investors.
agreement relating to a
prospective business
combination was entered into
prior to the end of the
18-month period. We will not
request any further
extensions beyond the
aforementioned 18 and 24
month periods. We will not
amend or modify the business
combination procedures
outlined in our certificate
of incorporation because we
view the business combination
procedures and this
prospectus as obligations to
our stockholders that we will
not propose to amend.
RELEASE OF FUNDS............. The proceeds held in the The proceeds held in the escrow
trust account will not be account would not be released
released until the earlier of until the earlier of the
the completion of a business completion of a business
combination and our combination or the failure to
liquidation upon failure to effect a business combination
effect a business combination within the allotted time.
within the allotted time.
</Table>
38
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Our current directors, executive officers and special advisors are as
follows:
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
William R. Herren............. 58 Chairman of the Board of Directors
Rudy Wilson................... 55 Chief Executive Officer and Director
Dr. David J. Brophy........... 69 Chief Financial Officer and Director
Vinit Bansal.................. 39 President of India Operations, Secretary, and Director
Chun Yi Hao................... 45 President of China Operations and Director
Donald L. Runkle.............. 60 Advisor and Director
Avinash P. Gandhi............. 66 Advisor
Sam A. Hamdan................. 59 Advisor
Somlux Sirikupphokakorn....... 39 Advisor
</Table>
William R. Herren has served as chairman of the board since our inception.
From July 2002 to January 2004, Mr. Herren provided advisory assistance leading
to the co-founding of Asia Development Capital LLC, an automotive business
consulting firm, which works with small and middle market automotive suppliers
in Asia Pacific. From 1968 to 2002, Mr. Herren was employed with General Motors
and its subsidiary Delphi, the largest global automotive vehicle/component
manufacturer. From July 1999 to June 2002, he was executive director of
marketing, sales, planning and M&A for Delphi Energy and Chassis Systems. From
1996 to 1999, in addition to his responsibility as executive director, Mr.
Herren also managed Delphi's Converter business unit. From 1993 to 1996 he
served as executive director of Delphi Saginaw's marketing, sales, planning and
M&A. From 1986 through 1993 he directed several Saginaw business units including
final drive, engine drive and steering systems. From 1968 through 1986 Mr.
Herren held a variety of assignments with General Motors including assignments
at Chevrolet, General Motors Assembly Division and GM corporate finance staff.
Mr. Herren earned a Bachelors Degree in Finance and an M.B.A. form Georgia State
University.
Rudy Wilson has served as our chief executive officer and a member of our
board of directors since our inception. In January 2004, Mr. Wilson co-founded
Asia Development Capital LLC. From January 1997 to December 2003, he was
responsible for various foreign funded investments in Asia for several Delphi
Energy and Chassis Systems business lines. Mr. Wilson was assigned to Beijing,
China from May 1993 through 1997 directing the development of Delphi Saginaw's
initial investment projects in China, India and ASEAN. During the assignment in
China he served on the board of directors of Delphi Lingyun Driveshaft, Delphi
Xiaoshan Steering and Delphi Malaysia. From 1976 through 1993 Mr. Wilson held a
variety of assignments with General Motors component operations and advanced
manufacturing engineering staff. Mr. Wilson received his Bachelor's Degree in
Chemical Engineering and an M.B.A. from the University of Detroit.
Dr. David J. Brophy has served as our chief financial officer and a member
of our board of directors since our inception. As a member of the Finance
Faculty at The University of Michigan School of Business Administration from
1968 to the present, and Director of its Center for Venture Capital and Private
Equity Finance since 1992, he assists emerging and mid-sized companies. Dr.
Brophy is a founding member of the editorial board of the Journal of Private
Equity and the International Journal of Venture Capital. His advisory and
consultant activities in the public and private sector include such funds as
Compass Technology Partners, Plymouth Ventures, and Bio-Star Ventures and
various government agencies in the United States, Australia and France. Dr.
Brophy received a Bachelor of Arts from St. Francis Xavier University, an M.B.A.
from the University of Detroit and a P.H.D. from the Ohio State University.
Chun Hao has served as our president of China operations and a member of
our board of directors since our inception. In January 2004 Mr. Hao co-founded
Asia Development Capital LLC. From 2003 Mr. Hao was a founding member of Pentad,
Ltd, a Hong Kong Electronics outsourcing firm. From 1999 to 2002, he
39
served as director of Costal Power, a power generating and investment facility
firm where he was responsible for management of its investment portfolio in the
PRC. From January 1994 through 1998, at Delphi Asia, a United Sates based
company, he was responsible for overseeing various financial aspects of its
China investment strategy including due diligence, auditing and post venture
internal controls. Mr. Hao received a Bachelors of Arts Degree in French and
English from the Beijing Languages Institute, a Masters of Arts Degree from
Notre Dame and an M.B.A. from Pace University.
Vinit Bansal has served as our president of India operations, secretary and
a member of our board of directors since our inception. In November 2004, Mr.
Bansal joined Asia Development Capital LLC as a founding partner and is
responsible for managing all consulting and potential investing activities on
behalf of Asia Development Capital LLC in India. He was employed by Ford Motor,
the second largest global automotive vehicle/component manufacturer, from March
1996 to July 2004 where he was responsible for developing corporate
manufacturing strategy, launching several car and truck products and the
development of aftermarket distribution systems. From 1994 to 1996 Mr. Bansal
served as Delphi Saginaw India country manager responsible for developing an
entry strategy and working closely with the Indian Foreign Investment Promotion
Board. He received a Bachelors Degree in Mechanical Engineering from Birla
Institute of Technology in India, a Masters of Science in Mechanical Engineering
from the Michigan Technological University and an M.B.A. from University of
Michigan.
Donald L. Runkle has served as special advisor and director since our
inception. From 2002 to June 2005 Mr. Runkle was vice chairman, enterprise
technologies for Delphi Corporation, and served on the company's Board of
Directors and its Strategy Board. Additionally, Mr. Runkle was Delphi's chief
technology officer and responsible for global supply management, manufacturing
and engineering oversight, research and development, the commercial vehicle
account, and the DaimlerChrysler account. He was named executive vice-president
of Delphi Corporation and president of the former Dynamics and Propulsion sector
from 2000 to 2002. Mr. Runkle served as general manager of Delphi Energy and
Engine Management Systems from 1996 to 2000. He was named vice-president and
general manager of Delphi Steering form 1993 to 1996. From 1981 through 1993 Mr.
Runkle held a variety of executive assignments with General Motors vehicle
operations, including chief engineer at Chevrolet, vice president of GM's
Advanced Engineering Staff and vice president of GM's North American Engineering
Center. Mr. Runkle earned both his bachelor's and master's degrees from the
University of Michigan in mechanical engineering, and a master's in management
science from the Massachusetts Institute of Technology where he was a Sloan
Fellow. Mr. Runkle has a fiduciary responsibility to us in execution of his
duties.
Avinash P. Gandhi has served as a special advisor to us since our
inception. Since 2002, Mr. Gandhi has provided consulting services to various
Indian automotive companies. From 1998 to 2002, Mr. Gandhi served as President,
Hyundai Motors India. From September 1994 to June 1997 he was the Chief
Executive Officer of Bhartia Cutler Hammer (now a part of Eaton Corporation).
From June 1997 to June 1998 he served as Group Chief Executive of Conglomerate
of seven companies having tie-ups with leading global electrical products
manufacturers. From 1969 to 1994 he served in a number of positions with Tata
Motors and Escorts Limited including Director on Board of Escorts Claas, a start
up joint venture project with the largest India self propelled combine harvester
company. He is currently active on several Boards of Automotive Component
manufacturing companies including the position as Non-Executive Chairman OF FAG
Bearing India. Mr. Gandhi received his Bachelor's Degree in Mechanical
Engineering from Birla Institute of Technology and has completed Senior
Management programs at Indian Institute of Management and Administration Staff
College of India.
Sam A. Hamdan has served as a special advisor to us since our inception. He
has served as an advisor to Asia Development Capital LLC since August 2004. From
June 2002 to July 2004 Mr. Hamdan was chief negotiator, purchasing with global
responsibility for all multiyear procurement agreements at DuPont. From 1993 to
2002 he served as global director, sourcing for raw materials and energy. From
1983 to 1993 Mr. Hamdan served in a variety of executive positions including
business director for its specialty chemical business and director of Asia
Pacific marketing activities in Hong Kong. Prior to 1993 he held functional
responsibilities in manufacturing, R&D and product management. Mr. Hamdan
received a Bachelors of
40
Science Degree in Chemical Engineering from the Pratt Institute and is a
graduate of the Mahler Advanced Management Program.
Somlux Sirikupphokakorn has served as a special advisor to us since our
inception. In June 2004, Mr. Sirikupphokakorn joined Asia Development Capital
LLC as a founding partner. From February 2002 to July 2005 he was general
manager of Prodrive Automotive Technology (Thailand), an automotive training
services firm. From January 1998 to May 2002 Mr. Sirikupphokakorn was employed
as OEM Sales Manager with Robert Bosch Thailand. From March 1995 to December
1997 he was Thailand Country Manager for Delphi working the ASEAN Board of
Investment on various investment projects. From February 1993 to February 1995
he was employed with AMP Thailand and form January 1991 to January 1993 with
Toyota Thailand. He received a Bachelors Degree in Engineering from
Chulalongkorn University in and an M.B.A. in Finance from the Thai National
Institute of Development Administration.
Dr. David J. Brophy, Donald L. Runkle, Avinash Gandhi, Sam Hamdan and
Somlux Sirikupphokakorn will each receive a number of allocated shares of our
common stock currently held by Asia Development Capital LLC.
Our board of directors is divided into three classes with only one class of
directors being elected in each year and each class serving a three-year term.
The term of office of the first class of directors, consisting of Chun Hao and
Vinit Bansal, will expire at our first annual meeting of stockholders. The term
of office of the second class of directors, consisting of Dr. David J. Brophy
and Donald Runkle, will expire at the second annual meeting. The term of office
of the third class of directors, consisting of William R. Herren and Rudy
Wilson, will expire at the third annual meeting. The special advisors' duties
are limited to providing advice and input on potential business combinations
that are located, researched and brought to the attention of the board of
directors. Their individual background experiences within the automotive
industry as well as their global locations are suited to these duties. All
advisors are considered to each have a fiduciary responsibility for the company.
EXECUTIVE COMPENSATION
No executive officer has received any cash compensation for services
rendered to us. Commencing on the effective date of this prospectus through the
acquisition of a target business, we will pay Asia Development Capital LLC, an
affiliate of Messrs. Herren, Wilson, Bansal and Hao, a fee of $7,500 per month
for providing us with office space and certain office and secretarial services.
However, this arrangement is solely for our benefit and is not intended to
provide Messrs. Herren, Wilson, Bansal and Hao compensation in lieu of a salary.
We believe that such fees are at least as favorable as we could have obtained
from an unaffiliated person. No compensation of any kind (including finder's,
consulting and other similar fees) will be paid to any of our existing
stockholders, or any of their affiliates, for services rendered to us prior to,
in connection with or following the consummation of the business combination,
other than the $7,500 per month administrative fee and reimbursable
out-of-pocket expenses payable to our officers and directors. However, our
existing stockholders will be reimbursed for any out-of-pocket expenses incurred
in connection with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable business combinations. Such
individuals may be paid consulting, management or other fees from target
businesses as a result of the business combination, with any and all amounts
being fully disclosed to stockholders, to the extent then known, in the proxy
solicitation materials furnished to the stockholders. There is no limit on the
amount of these out-of-pocket expenses and there will be no review of the
reasonableness of the expenses by anyone other than our board of directors,
which includes persons who may seek reimbursement, or a court of competent
jurisdiction if such reimbursement is challenged. Because of the foregoing, we
will generally not have the benefit of independent directors examining the
propriety of expenses incurred on our behalf and subject to reimbursement.
41
CONFLICTS OF INTEREST
Potential investors should be aware of the following potential conflicts of
interest:
- None of our officers and directors are required to commit their full time
to our affairs and, accordingly, they may have conflicts of interest in
allocating their time among various business activities.
- In the course of their other business activities, our officers and
directors may become aware of investment and business opportunities which
may be appropriate for presentation to our company as well as the other
entities with which they are affiliated. Our management may have
conflicts of interest in determining to which entity a particular
business opportunity should be presented. For a complete description of
our management's other affiliations, see the previous section entitled
"Directors and Executive Officers."
- Our officers and directors may in the future become affiliated with
entities, including other blank check companies, engaged in business
activities similar to those intended to be conducted by our company.
- Since our directors own shares of our common stock which will be released
from escrow only if a business combination is successfully completed, and
may own warrants which will expire worthless if a business combination is
not consummated, our board may have a conflict of interest in determining
whether a particular target business is appropriate to effect a business
combination. The personal and financial interests of our directors and
officers may influence their motivation in identifying and selecting a
target business, completing a business combination timely and securing
the release of their stock. Our directors and officers may purchase units
in this offering or in the open market and common stock in the open
market and will vote these shares in accordance with the majority of the
shares of common stock voted by the public stockholders on a proposal to
approve a business combination and exercise their redemption rights in
connection therewith.
- Excess out-of-pocket expenses are considered a liability to be repaid by
the resulting company.
- Management may view certain companies in a more favorable light as a
result of potential consulting opportunities as compared to others who
may not afford these opportunities yet may provide better value to our
stockholders.
- The terms of any employment or consulting arrangements of our current
management with the combined company post-business combination will be
determined at the time management negotiates the terms of the business
combination with the target business. Since our current management will
be negotiating the terms of the business combination as well as the terms
of their employment or consulting arrangements our current management may
have a conflict of interest in negotiating terms favorable to the company
in the acquisition agreement and at the same time negotiating terms in
their employment or consulting arrangements that are favorable to them.
Although management intends to full exercise its fiduciary duty to
negotiate terms in the acquisition agreement that will be in the best
interests of the combined-company and its public stockholders, members of
management will be negotiating terms in their employment or consulting
agreements that are favorable to them.
In general, officers and directors of a corporation incorporated under the
laws of the State of Delaware are required to present business opportunities to
a corporation if:
- the corporation could financially undertake the opportunity;
- the opportunity is within the corporation's line of business; and
- it would not be fair to the corporation and its stockholders for the
opportunity not to be brought to the attention of the corporation.
Accordingly, as a result of multiple business affiliations, our officers
and directors may have similar legal obligations relating to presenting business
opportunities meeting the above-listed criteria to multiple entities. In
addition, conflicts of interest may arise when our board evaluates a particular
business opportunity with
42
respect to the above-listed criteria. We cannot assure you that any of the above
mentioned conflicts will be resolved in our favor.
In order to minimize potential conflicts of interest which may arise from
multiple corporate affiliations, each of our officers and directors has agreed,
until the earliest of a business combination, our liquidation or such time as he
ceases to be an officer or director, to present to our company for our
consideration, prior to presentation to any other entity, any business
opportunity which may reasonably be required to be presented to us under
Delaware law, subject to any pre-existing fiduciary obligations he might have.
In connection with the vote required for any business combination, all of
our existing stockholders, including all of our officers and directors, have
agreed to vote their respective shares of common stock which were owned prior to
this offering in accordance with the vote of the public stockholders owning a
majority of the shares of our common stock sold in this offering. Any securities
acquired by existing stockholders in this offering or the aftermarket will be
considered as part of the holding of public stockholders and will have the same
rights as other public stockholders, including voting and redemption rights with
respect to a potential business combination. However, they will vote such
securities on a proposed business combination in accordance with the majority of
the shares of common stock voted by the public stockholders. In addition, they
have agreed to waive their respective rights to participate in any liquidation
distribution but only with respect to those shares of common stock acquired by
them prior to this offering.
We will not acquire or merge with any entity in which our stockholders are
beneficial or record stockholders.
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of our common stock as of April 11, 2006, and as adjusted to reflect
the sale of our common stock included in the units offered by this prospectus
(assuming none of the individuals listed purchase units in this offering), by:
- each person known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock;
- each of our officers and directors; and
- all our officers and directors as a group.
Unless otherwise indicated, we believe that all persons named in the table
have sole voting and investment power with respect to all shares of common stock
beneficially owned by them.
<Table>
<Caption>
APPROXIMATE
PERCENTAGE OF
OUTSTANDING
AMOUNT AND COMMON STOCK
NATURE OF -------------------
BENEFICIAL BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP OFFERING OFFERING
- --------------------------------------- ---------- -------- --------
William R. Herren....................................... 229,800 17.7% 4.01%
Rudy Wilson(2).......................................... 459,600 30.36% 8.02%
Vinit Bansal............................................ 229,800 17.7% 4.01%
Chun Yi Hao............................................. 229,800 17.7% 4.01%
Paul Packer(3).......................................... 100,000 7.5% 1.75%
Mitchell Metzman(4)..................................... 50,000 3.75% 0.875%
Craig Samuels(5)........................................ 50,000 3.75% 0.875%
All directors and executive officers as a group......... 1,149,200 85.17% 20%
</Table>
- ---------------
(1) Unless otherwise indicated, the business address of each of the individuals
is 401 Old South Woodward, Suite 450, Birmingham, Michigan 48009.
(2) 229,800 of such shares are held by Asia Development Capital LLC. Rudy Wilson
has ultimate voting and dispositive power over the shares held by Asia
Development Capital LLC. The beneficial owners of Asia Development Capital
LLC include Rudy Wilson, our chief executive officer and director, William
Herren, our chairman, Vinit Bansal, our president of India operations and
director, Chun Yi Hao, our
43
president of China operations and director, Somlux Sirikupphokakorn, our
board advisor, and Arthur Wang.
(3) Paul Packer exercises voting power over shares of common stock which are
held by Globis Capital Partners, L.P. (60,000 shares), Globis Overseas Fund,
Ltd. (20,000 shares) and Globis Asia LLC (20,000 shares). The business
address of Globis Capital Partners, L.P. and Globis Overseas Fund, Ltd. is
60 Broad Street, New York, NY 10004. The business address of Globis Asia LLC
is 1239 Veeder Drive, Hewlett, NY 11557.
(4) The business address of Mr. Mitchell Metzman is 4808 Mooreland Lane, Suite
109, Bethesda MD 20814.
(5) The business address of Mr. Craig Samuels is 4808 Mooreland Lane, Suite 109,
Bethesda, MD 20814.
None of our existing stockholders, officers and directors has indicated to
us that they intend to purchase units in the offering. Assuming these securities
are not purchased, immediately after this offering, our existing stockholders,
which include all of our officers and directors, collectively, will beneficially
own 20% of the then issued and outstanding shares of our common stock. Because
of this ownership block, these stockholders may be able to effectively influence
the outcome of all matters requiring approval by our stockholders, including the
election of directors and approval of significant corporate transactions other
than approval of a business combination.
All of the shares of common stock outstanding prior to the date of this
prospectus will be placed in escrow with Continental Stock Transfer & Trust
Company, as escrow agent, until the earliest of:
- two years following the date of this prospectus;
- our liquidation; and
- the consummation of a liquidation, merger, stock exchange or other
similar transaction which results in all of our stockholders having the
right to exchange their shares of common stock for cash, securities or
other property subsequent to our consummating a business combination with
a target business.
During the escrow period, the holders of these shares will not be able to
sell or transfer their securities except to their spouses and children or trusts
established for their benefit, but will retain all other rights as our
stockholders, including, without limitation, the right to vote their shares of
common stock and the right to receive cash dividends, if declared. If dividends
are declared and payable in shares of common stock, such dividends will also be
placed in escrow. If we are unable to effect a business combination and
liquidate, none of our existing stockholders will receive any portion of the
liquidation proceeds with respect to common stock owned by them prior to the
date of this prospectus.
William R. Herren, Rudy Wilson, Asia Development Capital LLC, Vinit Bansal
and Chun Yi Hao, or their designees, have agreed with Rodman & Renshaw that
during the 45 trading day period commencing on the later of the date separate
trading of the warrants has commenced or sixty days following the consummation
of this offering, they will purchase up to 320,000 warrants in the public
marketplace at prices not to exceed $1.40 per warrant.
Rodman & Renshaw has entered into a letter agreement with us pursuant to
which it agreed to purchase up to 125,000 warrants in the public marketplace at
prices not to exceed $1.40 per warrant during the 45 trading day period
commencing on the later of the date separate trading of the warrants has
commenced or 60 days following the consummation of this offering.
Chardan Capital Markets has entered into a letter agreement with us
pursuant to which it agreed to purchase up to 125,000 warrants in the public
marketplace at prices not to exceed $1.40 per warrant during the 45 trading day
period commencing on the later of the date separate trading of the warrants has
commenced or 60 days following the consummation of this offering.
Globis Capital Partners, L.P., one of our initial stockholders, has entered
into a letter agreement with Rodman & Renshaw pursuant to which it agreed to
purchase up to $600,000 in warrants at prices not to exceed $1.40 per warrant
during the 45 trading day period commencing on the later of the date separate
trading of the Warrants has commenced or 60 days following the consummation of
this offering.
44
Globis Overseas Fund, Ltd., one of our initial stockholders, has entered
into a letter agreement with Rodman & Renshaw pursuant to which it agreed to
purchase up to $200,000 in warrants at prices not to exceed $1.40 per warrant
during the 45 trading day period commencing on the later of the date separate
trading of the warrants has commenced or 60 days following the consummation of
this offering.
Globis Asia LLC, one of our initial stockholders, has entered into a letter
agreement with Rodman & Renshaw pursuant to which it agreed to purchase up to
$200,000 in warrants at prices not to exceed $1.40 per warrant during the 45
trading day period commencing on the later of the date separate trading of the
warrants has commenced or 60 days following the consummation of this offering.
Mitchell Metzman, one of our initial stockholders, has entered into a
letter agreement with Rodman & Renshaw pursuant to which it agreed to purchase
up to $500,000 in warrants at prices not to exceed $1.40 per warrant during the
45 trading day period commencing on the later of the date separate trading of
the warrants has commenced or 60 days following the consummation of this
offering.
Craig Samuels, one of our initial stockholders, has entered into a letter
agreement with Rodman & Renshaw pursuant to which it agreed to purchase up to
$500,000 in warrants at prices not to exceed $1.40 per warrant during the 45
trading day period commencing on the later of the date separate trading of the
warrants has commenced or 60 days following the consummation of this offering.
All of the warrant purchases described above will be made in accordance
with guidelines, specifically Rule 10b5-1, under the Securities Exchange Act of
1934 through an independent broker-dealer registered under Section 15 of the
Exchange Act which is not affiliated with us nor part of the underwriting or
selling group. Accordingly, Rodman & Renshaw will not be the broker in the
warrant purchase transactions and there are no, and will not be, side or other
agreements that would allow Rodman & Renshaw to have any influence over the
warrant purchases. In addition, all of the purchasers of warrants described
above have agreed not to sell their warrants until we complete a business
combination.
The warrants may trade separately on the 60(th) day after the date of this
prospectus unless Rodman & Renshaw determines that an earlier date is
acceptable, based upon its assessment of the relative strengths of the
securities markets and small capitalization companies in general, and the
trading pattern of, and demand for, our securities in particular. In no event
will Rodman & Renshaw allow separate trading of the common stock and warrants
until we file a Current Report on Form 8-K which includes an audited balance
sheet reflecting our receipt of the proceeds of this offering including any
proceeds we receive from the exercise of the over-allotment option if such
option is exercised prior to our filing of the Form 8-K. We believe that the
purchases of warrants by our officers and directors, Rodman & Renshaw, Chardan
Capital Markets and our other existing stockholders demonstrates confidence in
our ultimate ability to effect a business combination because the warrants will
expire worthless if we are unable to consummate a business combination. Rodman &
Renshaw and Chardan Capital Markets and their designees will rely solely on the
experience and ability of management and will not participate in the search and
consummation of a business combination.
We have also granted Rodman & Renshaw the right to have its designee
present at all board meetings for a period of three years following the date of
this prospectus.
Each of Messrs. Herren, Wilson, Bansal, Hao and Asia Development Capital
LLC are deemed to be our "parent" and "promoter," as these terms are defined
under the Federal securities laws.
CERTAIN TRANSACTIONS
On June 20, 2005, we issued 1,349,000 shares of our common stock to the
individuals set forth below for $25,000 in cash, at a purchase price of
approximately $.001 per share (giving retroactive effect to a stock dividend of
..094 shares of common stock for each outstanding share of common stock on
December 14, 2005,
45
and a stock dividend of .233 shares of common stock for each outstanding share
of common stock on January 23, 2006) as follows:
<Table>
<Caption>
NAME NUMBER OF SHARES RELATIONSHIP TO US
- ---- ---------------- ------------------
William R. Herren(1)...................... 269,800 Chairman of the Board of
Directors
Rudy Wilson(2)............................ 269,800 Chief Executive Officer and
Director
Vinit Bansal(3)........................... 269,800 President of India Operations,
Secretary and Director
Chun Yi Hao(4)............................ 269,800 President of China Operations
and Director
Asia Development Capital LLC(5)........... 269,800 Stockholder
</Table>
- ---------------
(1) Includes an aggregate of 40,000 shares transferred to Globis Capital
Partners, L.P., Globis Overseas Fund, Ltd., Globis Asia LLC, Mitchell
Metzman and Craig Samuels. Mr. Herren currently owns 229,800 shares.
(2) Includes an aggregate of 40,000 shares transferred to Globis Capital
Partners, L.P., Globis Overseas Fund, Ltd., Globis Asia LLC, Mitchell
Metzman and Craig Samuels. Mr. Wilson currently owns 229,800 shares.
(3) Includes an aggregate of 40,000 shares transferred to Globis Capital
Partners, L.P., Globis Overseas Fund, Ltd., Globis Asia LLC, Mitchell
Metzman and Craig Samuels. Mr. Bansal currently owns 229,800 shares.
(4) Includes an aggregate of 40,000 shares transferred to Globis Capital
Partners, L.P., Globis Overseas Fund, Ltd., Globis Asia LLC, Mitchell
Metzman and Craig Samuels. Mr. Chun Yi Hao currently owns 229,800 shares.
(5) Includes an aggregate of 40,000 shares transferred to Globis Capital
Partners, L.P., Globis Overseas Fund, Ltd., Globis Asia LLC, Mitchell
Metzman and Craig Samuels. Asia Development Capital LLC currently owns
229,800 shares.
On February 8, 2006, we transferred an aggregate of 200,000 shares of our
common stock to the three Globis entities, Craig Samuels and Mitchell Metzman,
pursuant to separate letter agreements which are attached as exhibits to the
registration statement of which this prospectus is a part. The shares were
purchased by each of the three Globis entities, Craig Samuels and Mitchell
Metzman for $.025 per share. The three Globis entities do not have any
relationship with the other existing stockholders and have no role in our
business. We transferred the shares to the Globis entities and other individual
stockholders to expand our existing ownership beyond the members of management
and because the Globis entities and these individuals committed to purchase our
warrants in the aftermarket.
If we take advantage of increasing the size of the offering pursuant to
Rule 462(b) under the Securities Act, we may effect a stock dividend in such
amount to maintain the existing stockholders' collective ownership at 23.6% of
our issued and outstanding shares of common stock upon consummation of the
offering. We will notify potential investors of this further dilution and will
recirculate the preliminary prospectus.
The holders of the majority of these shares will be entitled to make up to
two demands that we register these shares pursuant to an agreement to be signed
prior to or on the date of this prospectus. The holders of the majority of these
shares can elect to exercise these registration rights at any time commencing
three months prior to the date on which these shares of common stock are to be
released from escrow. In addition, these stockholders have certain "piggy-back"
registration rights with respect to registration statements filed subsequent to
the date on which these shares of common stock are released from escrow. We will
bear the expenses incurred in connection with the filing of any such
registration statements.
Our existing stockholders, Rodman & Renshaw and Chardan Capital Markets
have agreed to make certain purchases of our warrants as described above under
"Principal Stockholders."
Asia Development Capital LLC, an affiliate of Messrs. Herren, Wilson,
Bansal and Hao, has agreed that, commencing on the effective date of this
prospectus through the acquisition of a target business, it will make available
to us office space, certain office and secretarial services in its offices
located in the United States and
46
Asia. We have agreed to pay Asia Development Capital LLC $7,500 per month for
these services. Messrs. Herren, Wilson, Bansal and Hao each own 16.66% of Asia
Development Capital LLC. Accordingly, each will benefit from the transaction to
the extent of his respective interest in Asia Development Capital LLC. However,
this arrangement is solely for our benefit and is not intended to provide
Messrs. Herren, Wilson, Bansal and Hao compensation in lieu of a salary. We
believe, based on rents and fees for similar services in the United States and
Asia, that the fee charged by Asia Development Capital LLC is at least as
favorable as we could have obtained from an unaffiliated person. However, as our
directors may not be deemed "independent," we did not have the benefit of
disinterested directors approving this transaction.
Each of William Herren, Rudy Wilson, Vinit Bansal, Chun Hao and Asia
Development Capital LLC have advanced $5,000 to us as of the date of this
prospectus to cover expenses related to this offering. The loans will be payable
at an interest rate per annum of 4.0% on the earlier of March 31, 2006 or the
consummation of this offering. We intend to repay these loans from the proceeds
of this offering not being placed in trust.
We will reimburse our officers and directors for any reasonable
out-of-pocket business expenses incurred by them in connection with certain
activities on our behalf such as identifying and investigating possible target
businesses and business combinations. Excess out-of-pocket expenses will be
considered a liability and will be repaid by the resulting company.
Our officers and directors will use their best efforts to negotiate all
ongoing and future transactions between us and any of our officers and directors
or their respective affiliates, including loans by our officers and directors,
will be on terms believed by us to be no less favorable than are available from
unaffiliated third parties and such transactions or loans, including any
forgiveness of loans, will require prior approval in each instance by a majority
of our uninterested "independent" directors (to the extent we have any) or the
members of our board who do not have an interest in the transaction, in either
case who had access, at our expense, to our attorneys or independent legal
counsel. We will not enter into any such transaction unless our disinterested
"independent" directors (or, if there are no "independent" directors, our
disinterested directors) determine that the terms of such transaction are no
less favorable to us than those that would be available to us with respect to
such a transaction from unaffiliated third parties. In addition, our management
will gather pricing information, estimates or fairness opinions from
unaffiliated third parties with respect to similar transactions undertaken by
us.
DESCRIPTION OF SECURITIES
GENERAL
We are authorized to issue 39,000,000 shares of common stock, par value
$.001, and 1,000,000 shares of preferred stock, par value $.001. As of the date
of this prospectus, 1,349,000 shares of common stock are outstanding, held by
ten stockholders of record. No shares of preferred stock are currently
outstanding.
UNITS
Each unit consists of one share of common stock and one warrant. Each
warrant entitles the holder to purchase one share of common stock. The common
stock and warrants will begin to trade separately on the 60(th) day after the
date of this prospectus unless Rodman & Renshaw informs us of its decision to
allow earlier separate trading (based upon its assessment of the relative
strengths of the securities markets and small capitalization companies in
general and the trading pattern of, and demand for, our securities in
particular), provided that in no event may the common stock and warrants be
traded separately until we have filed with the SEC a Current Report on Form 8-K
which includes an audited balance sheet reflecting our receipt of the gross
proceeds of this offering. We will file a Current Report on Form 8-K which
includes this audited balance sheet upon the consummation of this offering. The
audited balance sheet will reflect proceeds we receive from the exercise of the
over-allotment option, if the over-allotment option is exercised prior to the
filing of the Form 8-K. If the over-allotment option is exercised after our
initial filing of the Form 8-K, we will file an amendment to the Form 8-K to
provide updated financial information to reflect the exercise of the over-
allotment option. Rodman & Renshaw expects to permit separate trading as soon as
reasonably practicable after our filing of the Current Report on Form 8-K
reflecting the closing of the exercise of the over-allotment
47
option, if such closing occurs. We will also include in this Form 8-K, or
amendment thereto, or in a subsequent Form 8-K information indicating if Rodman
& Renshaw has allowed separate trading of the common stock and warrants prior to
the 60(th) day after the date of this prospectus.
COMMON STOCK
Our stockholders of record are entitled to one vote for each share held on
all matters to be voted on by stockholders. In connection with the vote required
for any business combination, all of our existing stockholders, including all of
our officers and directors, have agreed to vote their respective shares of
common stock owned by them immediately prior to this offering in accordance with
the majority of the shares of our common stock voted by our public stockholders.
This voting arrangement shall not apply to shares included in units purchased in
this offering or purchased following this offering in the open market by any of
our existing stockholders, officers and directors. Additionally, our existing
stockholders, officers and directors will vote all of their shares in any manner
they determine, in their sole discretion, with respect to any other items that
come before a vote of our stockholders.
We will proceed with the business combination only if a majority of the
shares of common stock voted by the public stockholders are voted in favor of
the business combination and public stockholders owning less than 20% of the
shares sold in this offering both exercise their redemption rights discussed
below and vote against the business combination.
Our board of directors is divided into three classes, each of which will
generally serve for a term of three years with only one class of directors being
elected in each year. There is no cumulative voting with respect to the election
of directors, with the result that the holders of more than 50% of the shares
voted for the election of directors can elect all of the directors.
If we are forced to liquidate prior to a business combination, our public
stockholders are entitled to share ratably in the trust fund, inclusive of any
interest, and any net assets remaining available for distribution to them after
payment of liabilities. Our existing stockholders have agreed to waive their
rights to share in any distribution with respect to common stock owned by them
prior to the offering if we are forced to liquidate.
Our stockholders have no redemption, preemptive or other subscription
rights and there are no sinking fund or redemption provisions applicable to the
common stock, except that public stockholders have the right to have their
shares of common stock redeemed for cash equal to their pro rata share of the
trust account if they vote against the business combination and the business
combination is approved and completed. Public stockholders who redeem their
stock for their share of the trust account still have the right to exercise the
warrants that they received as part of the units.
PREFERRED STOCK
Our certificate of incorporation authorizes the issuance of 1,000,000
shares of blank check preferred stock with such designation, rights and
preferences as may be determined from time to time by our board of directors. No
shares of preferred stock are being issued or registered in this offering.
Accordingly, our board of directors is empowered, without stockholder approval,
to issue preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of common stock, although the underwriting agreement prohibits us, prior
to a business combination, from issuing preferred stock which participates in
any manner in the proceeds of the trust account, or which votes as a class with
the common stock on a business combination. We may issue some or all of the
preferred stock to effect a business combination. In addition, the preferred
stock could be utilized as a method of discouraging, delaying or preventing a
change in control of us. Although we do not currently intend to issue any shares
of preferred stock, we cannot assure you that we will not do so in the future.
48
WARRANTS
No warrants are currently outstanding. Each warrant entitles the registered
holder to purchase one share of our common stock at a price of $5.00 per share,
subject to adjustment as discussed below, at any time commencing on the later
of:
- the completion of a business combination; and
- one year from the date of this prospectus.
The warrants will expire five years from the date of this prospectus at 5:00
p.m., New York City time.
We may call the warrants for redemption (including those issuable upon
exercise of the purchase option described below):
- in whole and not in part,
- at a price of $.01 per warrant at any time after the warrants become
exercisable,
- upon not less than 30 days' prior written notice of redemption to each
warrant holder, and
- if, and only if, the reported last sale price of the common stock equals
or exceeds $10.00 per share, for any 30 trading days within a 30 trading
day period ending on the third business day prior to the notice of
redemption to warrant holders.
We have established these criteria to provide warrant holders with a
significant premium to the initial warrant exercise price and a sufficient
degree of liquidity to cushion the market reaction to our redemption call. If
the foregoing conditions are satisfied and we call the warrants for redemption,
each warrant holder shall then be entitled to exercise his or her warrant prior
to the date scheduled for redemption, however, there can be no assurance that
the price of the common stock will exceed the call trigger price or the warrant
exercise price after the redemption call is made.
The warrants will be issued in registered form under a warrant agreement
between Continental Stock Transfer & Trust Company, as warrant agent, and us.
You should review a copy of the warrant agreement, which has been filed as an
exhibit to the registration statement of which this prospectus is a part, for a
complete description of the terms and conditions applicable to the warrants.
The exercise price and number of shares of common stock issuable on
exercise of the warrants may be adjusted in certain circumstances including in
the event of a stock dividend, or our recapitalization, reorganization, merger
or consolidation. However, the warrants will not be adjusted for issuances of
common stock at a price below their respective exercise prices.
The warrants may be exercised upon surrender of the warrant certificate on
or prior to the expiration date at the offices of the warrant agent, with the
exercise form on the reverse side of the warrant certificate completed and
executed as indicated, accompanied by full payment of the exercise price, by
certified or official bank check payable to us, for the number of warrants being
exercised. The warrant holders do not have the rights or privileges of holders
of common stock and any voting rights until they exercise their warrants and
receive shares of common stock. After the issuance of shares of common stock
upon exercise of the warrants, each holder will be entitled to one vote for each
share held of record on all matters to be voted on by stockholders.
No warrants will be exercisable unless at the time of exercise a prospectus
relating to common stock issuable upon exercise of the warrants is current and
the common stock has been registered or qualified or deemed to be exempt under
the securities laws of the state of residence of the holder of the warrants.
Under the terms of the warrant agreement, we have agreed to meet these
conditions and use our best efforts to maintain a current prospectus relating to
common stock issuable upon exercise of the warrants until the expiration of the
warrants. However, we cannot assure you that we will be able to do so. The
warrants may be deprived of any value and the market for the warrants may be
limited if the prospectus relating to the common stock issuable upon the
exercise of the warrants is not current or if the common stock is not qualified
or exempt from qualification in the jurisdictions in which the holders of the
warrants reside.
49
No fractional shares will be issued upon exercise of the warrants. If, upon
exercise of the warrants, a holder would be entitled to receive a fractional
interest in a share, we will, upon exercise, round up to the nearest whole
number the number of shares of common stock to be issued to the warrant holder.
WARRANT SOLICITATION FEE
We have engaged Rodman & Renshaw, the representative of the underwriters,
on a non-exclusive basis, as our agent for the solicitation of the exercise of
the warrants. To the extent not inconsistent with the guidelines of the NASD and
the rules and regulations of the SEC, we have agreed to pay the representative
for bona fide services rendered a commission equal to 2.5% of the exercise price
for each warrant exercised more than one year after the date of this prospectus
if the exercise was solicited by the underwriters. In addition to soliciting,
either orally or in writing, the exercise of the warrants, the representative's
services may also include disseminating information, either orally or in
writing, to warrant holders about us or the market for our securities, and
assisting in the processing of the exercise of the warrants. No compensation
will be paid to the representative upon the exercise of the warrants if:
- the market price of the underlying shares of common stock is lower than
the exercise price;
- the holder of the warrants has not confirmed in writing that the
underwriters solicited the exercise;
- the warrants are held in a discretionary account;
- the warrants are exercised in an unsolicited transaction; or
- the arrangement to pay the commission is not disclosed in the prospectus
provided to warrant holders at the time of exercise.
PURCHASE OPTION
We have agreed to sell to Rodman & Renshaw, the representative of the
underwriters, an option to purchase up to a total of 350,000 units at $10.00 per
unit. The units issuable upon exercise of this option are identical to those
offered by this prospectus except that the warrants included in the option have
an exercise price of $6.65 (133% of the exercise price of the warrants included
in the units sold in this offering). For a more complete description of the
purchase option, including the registration rights afforded to the holders of
such option, see the section below entitled "Underwriting -- Purchase Option."
DIVIDENDS
We have not paid any cash dividends on our common stock to date and do not
intend to pay cash dividends prior to the completion of a business combination.
The payment of cash dividends in the future will be dependent upon our revenues
and earnings, if any, capital requirements and general financial condition
subsequent to completion of a business combination. The payment of any dividends
subsequent to a business combination will be within the discretion of our then
board of directors. It is the present intention of our board of directors to
retain all earnings, if any, for use in our business operations and,
accordingly, our board does not anticipate declaring any dividends in the
foreseeable future.
OUR TRANSFER AGENT AND WARRANT AGENT
The transfer agent for our securities and warrant agent for our warrants is
Continental Stock Transfer & Trust Company, 17 Battery Place, New York, New York
10004.
SHARES ELIGIBLE FOR FUTURE SALE
Immediately after this offering, we will have 5,724,000 shares of common
stock outstanding, or 6,380,250 shares if the underwriters' over-allotment
option is exercised in full. Of these shares, the 4,375,000 shares sold in this
offering, or 5,031,250 shares if the over-allotment option is exercised, will be
freely tradable without restriction or further registration under the Securities
Act, except for any shares purchased by one of our affiliates within the meaning
of Rule 144 under the Securities Act. All of the remaining 1,349,000 shares are
restricted securities under Rule 144, in that they were issued in private
transactions not involving a public offering. None of those will be eligible for
sale under Rule 144 prior to June 20, 2006. Notwithstanding this, all of those
1,349,000 shares have been placed in escrow and will not be
50
transferable for a period of two years from the date of this prospectus and will
only be released prior to that date subject to certain limited exceptions, such
as transfers to relatives and trusts for estate planning purposes and upon
death, while in each case remaining subject to the escrow agreement, and will
only be released prior to that date if we are forced to liquidate, in which case
the shares will be cancelled, or if we were to consummate a transaction after
the consummation of a business combination which results in all the stockholders
of the combined entity having the right to exchange their shares of common stock
for cash, securities or other property.
RULE 144
In general, under Rule 144 as currently in effect, a person who has
beneficially owned restricted shares of our common stock for at least one year
would be entitled to sell within any three-month period a number of shares that
does not exceed the greater of either of the following:
- 1% of the number of shares of common stock then outstanding, which will
equal 57,240 shares immediately after this offering (or 63,802 if the
underwriters exercise their over-allotment option); and
- if the common stock is listed on a national securities exchange or on The
Nasdaq Stock Market, the average weekly trading volume of the common
stock during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to the sale.
Sales under Rule 144 are also limited by manner of sale provisions and
notice requirements and to the availability of current public information about
us.
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at the time of or at any time during the three months preceding a
sale, and who has beneficially owned the restricted shares proposed to be sold
for at least two years, including the holding period of any prior owner other
than an affiliate, is entitled to sell their shares without complying with the
manner of sale, public information, volume limitation or notice provisions of
Rule 144.
SEC POSITION ON RULE 144 SALES
The Securities and Exchange Commission has taken the position that
promoters or affiliates of a blank check company and their transferees, both
before and after a business combination, act as "underwriters" under the
Securities Act when reselling the securities of a blank check company acquired
prior to the consummation of its initial public offering. Accordingly, the
Securities and Exchange Commission believes that those securities can be resold
only through a registered offering and that Rule 144 would not be available for
those resale transactions despite technical compliance with the requirements of
Rule 144.
REGISTRATION RIGHTS
The holders of our 1,349,000 issued and outstanding shares of common stock
on the date of this prospectus will be entitled to registration rights pursuant
to an agreement to be signed prior to or on the effective date of this offering.
The holders of the majority of these shares are entitled to make up to two
demands that we register these shares. The holders of the majority of these
shares can elect to exercise these registration rights at any time commencing
three months prior to the date on which these shares of common stock are to be
released from escrow. In addition, these stockholders have certain "piggy-back"
registration rights with respect to registration statements filed subsequent to
the date on which these shares of common stock are released from escrow. We will
bear the expenses incurred in connection with the filing of any such
registration statements.
51
UNDERWRITING
In accordance with the terms and conditions contained in the underwriting
agreement, we have agreed to sell to each of the underwriters named below, and
each of the underwriters, for which Rodman & Renshaw is acting as
representative, have severally, and not jointly, agreed to purchase on a firm
commitment basis the number of units offered in this offering set forth opposite
their respective names below:
<Table>
<Caption>
UNDERWRITERS NUMBER OF UNITS
- ------------ ---------------
Rodman & Renshaw, LLC....................................... 2,387,500
Chardan Capital Markets, LLC................................ 187,500
Maxim Group LLC............................................. 1,500,000
Fagenson & Co., Inc. ....................................... 200,000
Capital Growth Financial, LLC............................... 100,000
---------
Total..................................................... 4,375,000
=========
</Table>
A copy of the underwriting agreement has been filed as an exhibit to the
registration statement of which this prospectus forms a part.
STATE BLUE SKY INFORMATION
We are not making an offer of these securities in any jurisdiction where
the offer is not permitted. We will offer and sell the units to retail customers
only in Connecticut, Delaware, Georgia, Florida, Hawaii, Illinois, Indiana,
Louisiana, Maryland, New Jersey, New York and Rhode Island. In Georgia, Hawaii
and Louisiana we have relied on exemptions from the state registration
requirements and in New York we have filed the required notice. In the other
states, we have applied to have the units registered for sale and will not sell
the units in these states until such registrations are effective.
If you are not an institutional investor as that term is defined in a
particular state, you may purchase our securities in this offering only in the
jurisdictions described directly above. Generally, institutional investors in
every state (except in Idaho) may purchase the units in this offering pursuant
to exemptions provided for transactions with such entities under the Blue Sky
laws of various states. Idaho does not permit the sale of blank check company
securities to anyone. The definition of an "institutional investor" varies from
state to state but generally includes financial institutions, broker-dealers,
banks, insurance companies and other qualified entities.
The limited number of jurisdictions in which our securities are or will be
eligible for sale may affect your ability to sell your units in the secondary
market, particularly if the category of potential investors is limited in most
states to institutional investors.
PRICING OF SECURITIES
We have been advised by the representative that the underwriters propose to
offer the units to the public at the initial offering price set forth on the
cover page of this prospectus. They may allow some dealers concessions not in
excess of $0.11 per unit and the dealers may reallow a concession not in excess
of $0.05 per unit to other dealers.
Prior to this offering there has been no public market for any of our
securities. The public offering price of the units and the terms of the warrants
were negotiated between us and the representative. Factors considered in
determining the prices and terms of the units, including the common stock and
warrants underlying the units, include:
- the history and prospects of companies whose principal business is the
acquisition of other companies;
- prior offerings of those companies;
- our prospects for acquiring an operating business at attractive values;
- our capital structure;
52
- an assessment of our management and their experience in identifying
operating companies in the PRC, India or ASEAN;
- general conditions of the securities markets at the time of the offering;
and
- other factors as were deemed relevant.
However, although these factors were considered, the determination of our
offering price is more arbitrary than the pricing of securities for an operating
company in a particular industry since the underwriters are unable to compare
our financial results and prospects with those of public companies operating in
the same industry.
OVER-ALLOTMENT OPTION
We have granted to the representative of the underwriters an option,
exercisable during the 45-day period commencing on the effective date of this
prospectus, to purchase from us at the offering price, less underwriting
discounts, up to an aggregate of 656,250 additional units for the sole purpose
of covering over-allotments, if any. The over-allotment option will only be used
to cover the net syndicate short position resulting from the initial
distribution. The representative of the underwriters may exercise the
over-allotment option if the underwriters sell more units than the total number
set forth in the table above.
COMMISSIONS AND DISCOUNTS
The following table shows the public offering price, underwriting discount
to be paid by us to the underwriters and the proceeds, before expenses, to us.
This information assumes either no exercise or full exercise by the
representative of the underwriters of its over-allotment option.
<Table>
<Caption>
PER UNIT WITHOUT OPTION WITH OPTION
-------- -------------- -----------
Public offering price............................ $8.00 $35,000,000 $40,250,000
Discount(1)...................................... $0.56 $ 2,450,000 $ 2,817,500
Proceeds before expenses......................... $7.44 $32,550,000 $37,432,500
</Table>
- ---------------
(1) Of this amount, the underwriters have agreed to defer underwriting fees in
an amount equal to 3% of the gross proceeds of this offering, or $0.24 per
unit ($1,050,000 in total, or $1,207,500 if the over-allotment option is
exercised), until the consummation of a business combination. Upon the
consummation of a business combination, we will pay such fees out of the
proceeds of this offering held in trust. However, we will not be obligated
to pay such portion of the 3% deferred underwriting fee out of the proceeds
of this offering that will be paid from the trust account to the
stockholders that vote against a business combination and elect to exercise
its, his or her redemption rights. If we do not consummate a business
combination, then these fees shall not be paid to the underwriters and such
amount shall remain in the trust account available to the stockholders upon
a liquidation.
PURCHASE OPTION
We have also agreed to sell Rodman & Renshaw, LLC, for $100, as additional
compensation, an option to purchase up to a total of 350,000 units at a per-unit
price of $10.00. The units issuable upon exercise of this option are also
identical to those offered by the proposed offering except that the warrants
included in the option have an exercise price of $6.65 (133% of the exercise
price of the warrants included in the units sold in the offering.) We will pay
the underwriters in the proposed offering an underwriting discount of 7% of the
gross proceeds of this offering (of which 3% is deferred until the consummation
of a business combination). The option will be issued upon the completion of the
proposed offering and will not be issued if the offering is not consummated.
The option and the 350,000 units, the 350,000 shares of common stock and
the 350,000 warrants underlying such units, and the 350,000 shares of common
stock underlying such warrants, have been deemed to be compensation by the NASD
and are therefore subject to a 180-day lock-up pursuant to Rule 2710(g)(1) of
the NASD Conduct Rules. Additionally, the option may not be sold, transferred,
53
assigned, pledged or hypothecated for a one-year period (including the foregoing
180-day period) following the date of this prospectus. However, the option may
be transferred to any underwriter and selected dealer participating in the
offering and their bona fide officers or partners.
The sale of the option will be accounted for as an equity transaction.
Accordingly, there will be no net impact on our financial position or results of
operations, except for the recording of the $100 proceeds from the sale. We have
determined, based upon a Black-Scholes model, that the fair value of the option
on the date of sale would be approximately $3.10 per unit, or $1,086,001 total,
using an expected life of five years, volatility of 45.47% and a risk-free
interest rate of 4.39%.
The volatility calculation of 45.47% is based on the 365-day average
volatility of a representative sample of ten companies with market
capitalizations under $500 million that management believes to be engaged in the
business of auto component parts. Because we do not have a trading history, we
needed to estimate the potential volatility of its common stock price, which
will depend on a number of factors which cannot be ascertained at this time. We
referred to the 365-day average volatility of the sample companies because
management believes that the average volatility of such companies is a
reasonable benchmark to use in estimating the expected volatility of our common
stock post-business combination. Although an expected life of five years was
taken into account for purposes of assigning a fair value to the option, if we
do not consummate a business combination within the prescribed time period and
liquidate, the option would become worthless.
REGULATORY RESTRICTIONS ON PURCHASE OF SECURITIES
Rules of the SEC may limit the ability of the underwriters to bid for or
purchase our securities before the distribution of the securities is completed.
However, the underwriters may engage in the following activities in accordance
with the rules:
- Stabilizing Transactions. The underwriters may make bids or purchases
for the purpose of preventing or retarding a decline in the price of our
securities, so long as stabilizing bids do not exceed the offering price
of $8.00.
- Over-Allotments and Syndicate Coverage Transactions. The underwriters
may create a short position in our securities by selling more of our
securities than are set forth on the cover page of this prospectus. If
the underwriters create a short position during the offering, the
representative may engage in syndicate covering transactions by
purchasing our securities in the open market. The representative may also
elect to reduce any short position by exercising all or part of the
over-allotment option.
- Penalty Bids. The representative may reclaim a selling concession from a
syndicate member when the unit originally sold by the syndicate member is
purchased in a stabilizing or syndicate covering transaction to cover
syndicate short positions.
Stabilization and syndicate covering transactions may cause the price of
the securities to be higher than they would be in the absence of these
transactions. The imposition of a penalty bid might also have an effect on the
prices of the securities if it discourages resales of the securities.
Neither we nor the underwriters make any representation or prediction as to
the effect that the transactions described above may have on the prices of the
securities. These transactions may occur on the OTC Bulletin Board, in the
over-the-counter market or on any trading market. If any of these transactions
are commenced, they may be discontinued without notice at any time.
The restricted period under Regulation M for this offering will end when
all of the units have been distributed and after any over-allotment and
stabilization arrangements and trading restrictions in connection with the
offering have been terminated.
OTHER TERMS
We have granted the representative the right to have its designee present
at all meetings of our board of directors for a period of three years from the
date of this prospectus. The designee will be entitled to the same
54
notices and communications sent by us to our directors and to attend directors'
meetings, but will not have voting rights. The representative has not named a
designee as of the date of this prospectus.
We are obligated to reimburse the representative up to $20,000 for costs
and expenses incurred in connection with investigative background searches of
our officers, directors and initial stockholders conducted by the
representative. As currently contemplated, neither the representative nor any
other NASD member has provided or will provide any services to us in connection
with a potential merger or acquisition or additional capital raising activities.
Although we are not under any contractual obligation to engage any of the
underwriters to provide any services for us after this offering, and have no
present intent to do so, any of the underwriters may, among other things,
introduce us to potential target businesses or assist us in raising additional
capital, as needs may arise in the future. If any of the underwriters provide
services to us after this offering, we may pay such underwriter fair and
reasonable fees that would be determined at that time in an arm's length
negotiation; provided that no agreement will be entered into with any of the
underwriters and no fees for such services will be paid to any of the
underwriters prior to the one year anniversary of the date of this prospectus.
INDEMNIFICATION
We have agreed to indemnify the underwriters against some liabilities,
including civil liabilities under the Securities Act, or to contribute to
payments the underwriters may be required to make in this respect.
LEGAL MATTERS
The validity of the securities offered in this prospectus is being passed
upon for us by Strobl & Sharp PC, Bloomfield Hills, Michigan. Kramer Levin
Naftalis & Frankel LLP, New York, New York, is acting as counsel for the
underwriters in this offering.
EXPERTS
The financial statements included in this prospectus and in the
registration statement have been audited by Rothstein, Kass & Company, P.C.,
independent registered public accounting firm, to the extent and for the period
set forth in their report appearing elsewhere in this prospectus and in the
registration statement. The financial statements and the report of Rothstein,
Kass & Company, P.C. are included in reliance upon their report given upon the
authority of Rothstein, Kass & Company, P.C. as experts in auditing and
accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1, which
includes exhibits, schedules and amendments, under the Securities Act, with
respect to this offering of our securities. Although this prospectus, which
forms a part of the registration statement, contains all material information
included in the registration statement, parts of the registration statement have
been omitted as permitted by rules and regulations of the SEC. We refer you to
the registration statement and its exhibits for further information about us,
our securities and this offering. The registration statement and its exhibits,
as well as our other reports filed with the SEC, can be inspected and copied at
the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549.
The public may obtain information about the operation of the public reference
room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web
site at http://www.sec.gov which contains the Form S-1 and other reports, proxy
and information statements and information regarding issuers that file
electronically with the SEC.
55
ASIA AUTOMOTIVE ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
CONTENTS
<Table>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... F-2
Financial Statements
Balance Sheet............................................. F-3
Statement of Operations................................... F-4
Statement of Stockholders' Equity......................... F-5
Statement of Cash Flows................................... F-6
Notes to Financial Statements............................... F-7 - F-11
</Table>
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
Asia Automotive Acquisition Corporation
We have audited the accompanying balance sheet of Asia Automotive
Acquisition Corporation (a corporation in the development stage) as of December
31, 2005, and the related statement of operations, stockholders' equity and cash
flows for the period from June 20, 2005 (inception) to December 31, 2005. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Asia Automotive Acquisition
Corporation (a corporation in the development stage) as of December 31, 2005,
and the results of its operations and its cash flows for the period from June
20, 2005 (inception) to December 31, 2005, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Rothstein, Kass & Company,
P.C.
Roseland, New Jersey
February 15, 2006
F-2
ASIA AUTOMOTIVE ACQUISITION CORP
(A CORPORATION IN THE DEVELOPMENT STAGE)
BALANCE SHEET
<Table>
<Caption>
DECEMBER 31,
2005
-------------
ASSETS
CURRENT ASSET, cash......................................... $ 14,743
OTHER ASSETS, deferred offering costs....................... 265,000
--------
$279,743
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses............................................ $235,369
Notes payable, stockholders................................. 25,000
--------
Total current liabilities.............................. 260,369
--------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, authorized 1,000,000
shares; none issued....................................
Common stock, $.001 par value, authorized 39,000,000
shares; issued and outstanding 1,349,000............... 1,349
Paid-in capital in excess of par.......................... 23,651
Deficit accumulated during the development stage.......... (5,626)
--------
TOTAL STOCKHOLDERS' EQUITY.................................. 19,374
--------
$279,743
========
</Table>
F-3
ASIA AUTOMOTIVE ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS
FOR PERIOD FROM JUNE 20, 2005 (INCEPTION) TO DECEMBER 31, 2005
<Table>
Formation and operating costs............................... $ 5,626
----------
Net loss.................................................... $ (5,626)
----------
Weighted average shares outstanding......................... 1,349,000
==========
Net loss per share.......................................... $ --
==========
</Table>
F-4
ASIA AUTOMOTIVE ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR PERIOD FROM JUNE 20, 2005 (INCEPTION) TO DECEMBER 31, 2005
<Table>
<Caption>
DEFICIT
COMMON STOCK PAID-IN ACCUMULATED
--------------------- CAPITAL IN DURING THE STOCKHOLDERS
SHARES AMOUNT EXCESS OF PAR DEVELOPMENT STAGE EQUITY
------------ ------ ------------- ----------------- ------------
Common shares issued.............. 1,349,000 $1,349 $23,651 $ -- $ 25,000
Net loss.......................... (5,626) (5,626)
--------- ------ ------- -------- --------
Balances, at December 31, 2005.... 1,349,000 $1,349 $23,651 $ (5,626) $ 19,374
========= ====== ======= ======== ========
</Table>
F-5
ASIA AUTOMOTIVE ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
FOR PERIOD FROM JUNE 20, 2005 (INCEPTION) TO DECEMBER 31, 2005
<Table>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................. $ (5,626)
--------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable, stockholders................. 25,000
Proceeds from sale of common stock........................ 25,000
Payments of deferred offering costs....................... (29,631)
--------
NET CASH PROVIDED BY FINANCING ACTIVITIES................... 20,369
--------
NET INCREASE IN CASH........................................ 14,743
CASH, beginning of period................................... --
CASH, end of period......................................... $ 14,743
========
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Accrual of offering costs................................. $235,369
========
</Table>
F-6
ASIA AUTOMOTIVE ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Asia Automotive Acquisition Corporation (the "Company") was incorporated in
Delaware on June 20, 2005 as a blank check company whose objective is to acquire
an operating business.
At December 31, 2005, the Company had not yet commenced any operations. All
activity through December 31, 2005 relates to the Company's formation and the
proposed public offering described below. The Company has selected December 31
as its fiscal year-end.
The Company's ability to commence operations is contingent upon obtaining
adequate financial resources through a proposed public offering of up to
4,375,000 units ("Units") which is discussed in Note 2 ("Proposed Offering").
The Company's management has broad discretion with respect to the specific
application of the net proceeds of this Proposed Offering, although
substantially all of the net proceeds of this Proposed Offering are intended to
be generally applied toward consummating a business combination with an
operating business ("Business Combination"). Furthermore, there is no assurance
that the Company will be able to successfully affect a Business Combination.
Upon the closing of the Proposed Offering, management has agreed that at least
$7.40 per Unit sold in the Proposed Offering will be held in a trust account
("Trust Account") and invested in government securities until the earlier of (i)
the consummation of its first Business Combination and (ii) liquidation of the
Company. 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, 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. The Company's executive officers have
severally agreed that they will be personally liable under certain circumstances
to ensure that the proceeds in the Trust Account are not reduced by the claims
of target businesses or vendors or other entities that are owed money by the
Company for services rendered contracted for or products sold to the Company.
However, there can be no assurance that the directors will be able to satisfy
those obligations. The remaining 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. 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 20% or more of the shares sold in the
Proposed Offering vote against the Business Combination and exercise their
redemption rights described below, the Business combination will not be
consummated. All of the Company's stockholders prior to the Proposed Offering,
including all of the officers and directors of the Company ("Initial
Stockholders"), have agreed to vote their 1,349,000 founding shares of common
stock in accordance with the vote of the majority in interest of 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 redeem his or her shares. The per share redemption 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
Proposed Offering. Accordingly, Public Stockholders holding 19.99% of the
aggregate number of shares owned by all Public Stockholders may seek redemption
of their shares in the event of a Business Combination. Such Public Stockholders
are entitled to receive their per share interest in the Trust Account computed
without regard to the shares held by Initial Stockholders.
F-7
ASIA AUTOMOTIVE ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company's Certificate of Incorporation provides for mandatory
liquidation of the Company in the event that the Company does not consummate a
Business Combination within 18 months from the date of the consummation of the
Proposed Offering, or 24 months from the consummation of the Proposed Offering
if certain extension criteria have been satisfied. The Company does not intend
to request any further extensions beyond these time periods. 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 Proposed Offering
(assuming no value is attributed to the Warrants contained in the Units to be
offered in the Proposed Offering discussed in Note 2.)
On December 14, 2005, the Company effected a stock stock split in the form
of a dividend of .094 shares of common stock for each outstanding share of
common stock. Additionally, on January 23, 2006, the Company effected a stock
stock split in the form of a dividend of .233 shares of common stock for each
outstanding share of common stock. All references in the accompanying financial
statements to the number of shares of common stock and loss per share have been
retroactively restated to reflect these transactions.
LOSS PER COMMON SHARE
Loss per share is computed by dividing net loss by the weighted-average
number of shares of common stock outstanding during the period.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
contingent assets and contingent liabilities at the date of the financial
statements and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.
2. PROPOSED PUBLIC OFFERING
The Proposed Offering calls for the Company to offer for public sale up to
4,375,000 Units at a proposed offering price of $8.00 per Unit (plus up to an
additional 656,250 units solely to cover over-allotments, if any). Each Unit
consists of one share of the Company's common stock 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
$5.00 commencing the later of the completion of a Business Combination and one
year from the effective date of the Proposed Offering and expiring five years
from the effective date of the Proposed Offering. The Company may redeem the
Warrants at a price of $.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 $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.
3. DEFERRED OFFERING COSTS
Deferred offering costs consist principally of legal, accounting and
underwriting fees incurred through the balance sheet date that are directly
related to the Proposed Offering and that will be charged to stockholders'
equity upon the receipt of the capital raised.
4. NOTES PAYABLE, STOCKHOLDERS
The Company issued separate $5,000 unsecured promissory notes to four of
the Company's officers and directors and an affiliate of several of the Initial
Stockholders, Asia Development Capital LLC, ("ADC") on July 11, 2005. The notes
bear interest at the rate of 4% per annum and is payable on the earlier of March
31,
F-8
ASIA AUTOMOTIVE ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2006 or the consummation of the Proposed Offering. Due to the short-term nature
of the note, the fair value of the note approximates its carrying amount.
5. COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Company presently occupies office space provided by ADC, an affiliate
and stockholder of the Company. ADC 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 $7,500 per month for such services commencing on the effective date of
the Proposed Offering.
WARRANT SOLICITATION FEE
The Company has engaged Rodman & Renshaw, the representative of the
underwriters, on a non-exclusive basis, as the Company's agent for the
solicitation of the exercise of the warrants. To the extent not inconsistent
with the guidelines of the NASD and the rules and regulations of the SEC, the
Company has agreed to pay the representative for bona fide services rendered a
commission equal to 2.5% of the exercise price for each warrant exercised more
than one year after the date of this prospectus if the exercise was solicited by
the underwriters. In addition to soliciting, either orally or in writing, the
exercise of the warrants, the representative's services may also include
disseminating information, either orally or in writing, to warrant holders about
the Company or the market for our securities, and assisting in the processing of
the exercise of the warrants. No compensation will be paid to the representative
upon the exercise of the warrants if:
- the market price of the underlying shares of common stock is lower than
the exercise price;
- the holder of the warrants has not confirmed in writing that the
underwriters solicited the exercise;
- the warrants are held in a discretionary account;
- the warrants are exercised in an unsolicited transaction; or
- the arrangement to pay the commission is not disclosed in the prospectus
provided to warrant holders at the time of exercise.
The Company has also agreed to sell to Rodman & Renshaw, LLC for $100, as
additional compensation, an option to purchase up to a total of 350,000 units at
a per-unit price of $10.00. The units issuable upon exercise of this option are
also identical to those offered by the proposed offering except that the
warrants included in the option have an exercise price of $6.65 (133% of the
exercise price of the warrants included in the units sold in the offering.) The
Company will pay the underwriters in the Proposed Offering an underwriting
discount of 7% of the gross proceeds of the this Offering (of which 3% is
deferred until the consummation of a business combination). The option will be
issued upon the completion of the proposed offering and will not be issued if
the offering is not consummated.
The sale of the option will be accounted for as an equity transaction.
Accordingly, there will be no net impact on the Company's financial position or
results of operations, except for the recording of the $100 proceeds from the
sale. The Company has determined, based upon a Black-Scholes model, that the
fair value of the option on the date of sale would be approximately $3.10 per
unit, or $1,086,001 total, using an expected life of five years, volatility of
45.47% and a risk-free interest rate of 4.39%.
The volatility calculation of 45.47% is based on the 365-day average
volatility of a representative sample of ten (10) companies with market
capitalizations under $500 million that management believes to be engaged in the
business of auto component parts (the "Sample Companies"). Because the Company
does not have a trading history, the Company needed to estimate the potential
volatility of its common stock price,
F-9
ASIA AUTOMOTIVE ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
which will depend on a number of factors which cannot be ascertained at this
time. The Company referred to the 365-day average volatility of the Sample
Companies because management believes that the average volatility of such
companies is a reasonable benchmark to use in estimating the expected volatility
of the Company's common stock post-business combination. Although an expected
life of five years was taken into account for purposes of assigning a fair value
to the option, if the Company does not consummate a business combination within
the prescribed time period and liquidates, the option would become worthless.
Although the purchase option and its underlying securities have been
registered under the registration statement of which the prospectus forms a
part, the purchase option grants to holders demand and "piggy back" rights for
periods of five and seven years, respectively, from the date of the prospectus
with respect to the issuable upon exercise of the purchase option. The Company
will bear all fees and expenses attendant to registering the securities, other
than underwriting commissions which will be paid for by the holders themselves.
The exercise price and number of units issuable upon exercise of the purchase
option may be adjusted in certain circumstances including in the event of a
stock dividend, or the Company's recapitalization, reorganization, merger or
consolidation. However, the purchase option will not be adjusted for issuances
of common stock at prices below its exercise price.
Pursuant to letter agreements with the Company and the Representative, the
Initial Stockholders have waived their right to receive distributions with
respect to their founding shares upon the Company's liquidation.
Certain of the Company's officers, directors, or their designees have
agreed with the Representative that after consummation of the Proposed Offering
and during the 45 trading day period commencing on the later of the date that
the securities comprising the units begin separate trading or sixty days
following the consummation of the Proposed Offering, that they will purchase up
to 320,000 warrants in the public marketplace at prices not to exceed $1.40 per
Warrant.
The Initial Stockholders will be entitled to registration rights with
respect to their founding shares pursuant to an agreement to be signed prior to
or on the effective date of the Proposed Offering. The holders of the majority
of these shares are entitled to make up to two demands that the Company register
these shares at any time commencing three months prior to the third anniversary
of the effective date of the Proposed Offering. In addition, the Initial
Stockholders have certain "piggy-back" registration rights on registration
statements filed subsequent to the third anniversary of the effective date of
the Proposed Offering.
DEFERRED UNDERWRITER FEE
The underwriters have agreed to defer underwriting fees in an amount equal
to 3% of the gross proceeds of this offering, or $0.24 per unit ($1,050,000 in
total, or $1,207,500 if the over-allotment option is exercised), until the
consummation of a business combination. However, the Company will not be
obligated to pay such portion of the 3% deferred underwriting fee with respect
to the proceeds received by the Company in the Proposed Offering that will be
paid from the trust account to the stockholders that vote against a business
combination and elect to exercise its, his or her redemption rights. Upon the
consummation of a business combination, the Company will pay such fees out of
the proceeds of this offering held in trust. If a business combination is not so
consummated, the trust account will be distributed solely to our public
stockholders.
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.
F-10
ASIA AUTOMOTIVE ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. SUBSEQUENT EVENT
On February 8, 2006, five stockholders entered into five separate letter
agreements with the representatives of the underwriters pursuant to which they
agreed to purchase in aggregate up to $2,000,000 in warrants at prices not to
exceed $1.40 per warrant during the 45 trading day period commencing on the
later of the date separate trading of the Warrants has commenced or 60 calendar
days following the consummation of this offering. These entities have agreed
that any warrants purchased by them pursuant to this agreement will not be sold
or transferred until after completed a business combination.
F-11
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UNTIL MAY 28, 2006, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
NO DEALER, SALESPERSON OR ANY OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, THE INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS, OR AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANYONE IN
ANY JURISDICTION IN WHICH THE OFFER OR SOLICITATION IS NOT AUTHORIZED OR IS
UNLAWFUL.
$35,000,000
ASIA AUTOMOTIVE ACQUISITION CORPORATION
4,375,000 UNITS
-------------------------
PROSPECTUS
-------------------------
RODMAN & RENSHAW, LLC CHARDAN CAPITAL MARKETS, LLC
April 11, 2006
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