TREMISIS ENERGY ACQUISITION
CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
FINANCIAL STATEMENTS
FOR THE PERIOD FROM FEBRUARY 5, 2004 (INCEPTION) TO MAY 18, 2004
AND FEBRUARY 5, 2004 (INCEPTION) TO MARCH 10, 2004
TREMISIS ENERGY ACQUISITION
CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 3
FINANCIAL STATEMENTS
Balance Sheets 4
Statements of Operations 5
Statements of Stockholders' Equity 6
Statements of Cash Flows 7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 8
NOTES TO FINANCIAL STATEMENTS 9-12
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Tremisis Energy Acquisition Corporation
New York, New York
We have audited the accompanying balance sheets of Tremisis Energy Acquisition
Corporation (a corporation in the development stage) as of May 18, 2004 and
March 10, 2004, and the related statements of operations, stockholders' equity
and cash flows for the periods from February 5, 2004 (inception) to May 18, 2004
and February 5, 2004 (inception) to March 10, 2004. 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide 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 Tremisis Energy Acquisition
Corporation as of May 18, 2004 and March 10, 2004, and the results of its
operations and its cash flows for the periods from February 5, (inception) to
May 18, 2004 and February 5 (inception) to March 10, 2004 in conformity with
accounting principles generally accepted in the United States of America.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
May 18, 2004
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TREMISIS ENERGY ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
BALANCE SHEETS
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May 18, March 10,
2004 2004
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ASSETS
Current assets:
Cash $ 1,167,495 $ 4,265
Cash held in Trust Fund (Note 1) 33,143,000 --
------------ ------------
Total current assets 34,310,495 4,265
Deferred registration costs -- 89,885
------------ ------------
Total assets $ 34,310,495 $ 94,150
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 49,168 $ --
Note payable, stockholder (Note 3) 77,500 70,000
------------ ------------
Total current liabilities 126,668 70,000
------------ ------------
Common stock, subject to possible redemption,
1,264,368 shares at redemption value (Note 1) 6,448,277 --
------------ ------------
Commitment (Note 4)
Stockholders' equity (Notes 1, 2, 5 and 6)
Preferred stock, $.0001 par value, Authorized
1,000,000 shares; none issued
Common stock, $.0001 par value
Authorized 30,000,000 shares
Issued and outstanding 7,700,000 shares
(which includes 1,264,368 subject to
possible redemption) and 1,375,000,
respectively 770 137
Additional paid-in capital 27,738,953 24,863
Deficit accumulated during development stage (4,173) (850)
------------ ------------
Total stockholders' equity 27,735,550 24,150
------------ ------------
Total liabilities and stockholders' equity $ 34,310,495 $ 94,150
============ ============
See accompanying summary of significant accounting policies and notes to
financial statements.
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TREMISIS ENERGY ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENTS OF OPERATIONS
Period from Period from
February 5, 2004 February 5, 2004
(inception) to (inception) to
May 18, 2004 March 10, 2004
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Expenses:
General and administrative expenses $ 4,173 $ 850
----------- -----------
Net loss for the period $ (4,173) $ (850)
----------- -----------
Basic and fully diluted net loss per share $ (.00) $ (.00)
----------- -----------
Weighted average common shares outstanding 1,386,408 1,375,000
----------- -----------
See accompanying summary of significant accounting policies and notes to
financial statements.
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TREMISIS ENERGY ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENTS OF STOCKHOLDERS' EQUITY
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Deficit
accumulated
Preferred Stock Common Stock Additional during the
--------------- ------------------- Paid-In development
Shares Amount Shares Amount Capital stage Total
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, February 5, 2004 (inception) -- $ -- -- $ -- $ -- $ -- $ --
Issuance of common stock to initial
stockholders -- -- 1,375,000 137 24,863 -- 25,000
Net loss for the period -- -- -- -- -- (850) (850)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, March 10, 2004 -- -- 1,375,000 137 24,863 (850) 24,150
Sale of 6,325,000 units, net of underwriters'
discount and offering expenses (includes
1,264,368 shares subject to possible -- -- 6,325,000 633 27,714,090 -- 27,714,723
redemption)
Net loss for the period -- -- -- -- -- (3,323) (3,323)
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Balance May 18, 2004 -- $ -- 7,700,000 $ 770 $ 27,738,953 $ (4,173) $ 27,735,550
========= ========= ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying summary of significant accounting policies and notes to
financial statements.
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TREMISIS ENERGY ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENTS OF CASH FLOWS
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February 5, February 5, 2004
(inception) to (inception) to
May 18, 2004 March 10, 2004
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (4,173) $ (850)
------------ ------------
Net cash used in operating activities (4,173) (850)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash held in Trust Fund (33,143,000) --
------------ ------------
Net cash used in investing activities (33,143,000) --
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in accrued expenses 49,168 --
Proceeds from public offering of 6,325,000 units, net 34,163,000
Deferred registration costs (89,885)
Proceeds issuance of common stock to initial stockholders 25,000 25,000
Proceeds from note payable, stockholder 77,500 70,000
------------ ------------
Net cash provided by financing activities 34,314,668 5,115
------------ ------------
Net increase in cash 1,167,495 4,265
Cash at beginning of the period -- --
------------ ------------
Cash at end of the period $ 1,167,495 $ 4,265
============ ============
See accompanying summary significant accounting policies and notes to financial
statements.
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TREMISIS ENERGY ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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INCOME TAXES The Company follows Statement of Financial Accounting
Standards No. 109 ("SFAS No. 109), "Accounting for
Income Taxes" which is an asset and liability approach
that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of
events that have been recognized in the Company's
financial statements or tax returns. The Company has a
net operating loss carryforward of approximately $4,200
available to reduce any future income taxes. The tax
benefit of this loss, approximately $1,700 has been
fully offset by a valuation allowance due to the
uncertainty of its realization.
NET LOSS PER SHARE Net loss per share is computed on the basis of the
weighted average number of common shares outstanding
during the period, including common stock equivalents
(unless anti-dilutive) which would arise from the
exercise of stock warrants.
USE OF ESTIMATES The preparation of financial statements in conformity
with accounting principles generally accepted in the
United State of America requires management to make
estimates and assumptions that affect the reported
amounts of assets and 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.
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TREMISIS ENERGY ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
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1. ORGANIZATION Tremisis Energy Acquisition Corporation ("Company")
AND was incorporated in Delaware on February 5, 2004 as a
BUSINESS OPERATIONS blank check company, the objective of which is to
acquire an operating business in either the energy or
the environmental industry and their related
infrastructures. The Company's initial stockholders
purchased 1,375,000 common shares, $.0001 par value,
for $25,000 on February 5, 2004. All activity from
February 5, 2004 (inception) through May 18, 2004
relates to the Company's formation and initial public
offering. The Company has selected December 31, as its
fiscal year-end.
The registration statement for the Company's initial
public offering ("Offering") was effective May 12,
2004. The Company consummated the offering on May 18,
2004 and received net proceeds of $34,163,000 (Note
2). The Company's management has broad discretion with
respect to the specific application of the net
proceeds of this Offering, although substantially all
of the net proceeds of this Offering are intended to
be generally applied toward consummating a business
combination with a operating business in either the
energy or the environmental industry and their related
infrastructures ("Business Combination"). Furthermore,
there is no assurance that the Company will be able to
successfully effect a Business Combination. An amount
of $33,143,000 of the net proceeds is being held in an
interest bearing trust account ("Trust Fund") until
the earlier of (i) the consummation of its first
Business Combination or (ii) liquidation of the
Company. Under the agreement governing the Trust Fund,
funds will only be invested in United States
government securities (treasury bills) with a maturity
of 180 days or less. The remaining proceeds 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, will submit such
transaction for stockholder approval. In the event
that stockholders owning 20% or more of the
outstanding stock excluding, for this purpose, those
persons who were stockholders prior to the Offering,
vote against the Business Combination, the Business
Combination will not be consummated. All of the
Company's stockholders prior to the Offering,
including all of the officers and directors of the
Company ("Initial Stockholders"), have agreed to vote
their 1,375,000 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 the Company's first
Business Combination, all of these voting safeguards
will no longer be applicable.
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TREMISIS ENERGY ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
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With respect to the first Business Combination which
is approved and consummated, any Public Stockholder
who voted against the Business Combination may demand
that the Company redeem his shares. The per share
redemption price will equal the amount in the Trust
Fund as of the record date for determination of
stockholders entitled to vote on the Business
Combination divided by the number of shares of common
stock held by Public Stockholders at the consummation
of the Offering. Accordingly, Public Stockholders
holding 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 Fund computed without
regard to the shares held by Initial Stockholders.
Accordingly, $6,448,277 of the net proceeds from the
Offering has been classified as common stock subject
to possible redemption in the accompanying May 18,
2004 balance sheet.
The Company's Certificate of Incorporation provides
for mandatory liquidation of the Company, without
stockholder approval, in the event that the Company
does not consummate a Business Combination within 18
months from the date of the consummation of the
Offering, or 24 months from the consummation of the
Offering if certain extension criteria have been
satisfied. In the event of liquidation, it is likely
that the per share value of the residual assets
remaining available for distribution (including Trust
Fund assets) will be less than the initial public
offering price per share in the Offering due to costs
related to the Offering and since no value would be
attributed to the Warrants contained in the Units sold
(Note 2).
2. OFFERING On May 18, 2004, the Company sold 6,325,000 units
("Units") in the Offering, which included all of the
825,000 Units subject to the underwriters'
overallotment option. Each Unit consists of one share
of the Company's common stock, $.0001 par value, and
two Redeemable Common Stock Purchase Warrants
("Warrants"). Each Warrant will entitle the holder to
purchase from the Company one share of common stock at
an exercise price of $5.00 commencing the later of the
completion of a business combination with a target
business or one year from the effective date of the
Offering and expiring four years from the date of the
prospectus. The Warrants will be redeemable at a price
of
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TREMISIS ENERGY ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
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$.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
$8.50 per share for any 20 trading days within a 30
trading day period ending on the third day prior to
date on which notice of redemption is given. In
connection with this Offering, the Company issued an
option for $100 to the representative of the
underwriters to purchase 275,000 Units at an exercise
price of $9.90 per Unit. In addition, the warrants
underlying such Units are exercisable at $6.25 per
share.
3. NOTE PAYABLE, The Company issued a $70,000 unsecured non-interest
STOCKHOLDER bearing promissory note to a stockholder on February
17, 2004. The stockholder advanced additional amounts
aggregating $7,500 through May 18, 2004. The note is
payable on the earlier of February 17, 2005 or from
the net proceeds of the Offering.
4. COMMITMENT The Company presently occupies office space provided
by an affiliate of an Initial Stockholder. Such
affiliate has agreed that, until the acquisition of a
target business by the Company, 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 $3,500 per
month for such services commencing on the effective
date of the Offering.
5. 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.
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TREMISIS ENERGY ACQUISITION CORPORATION
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
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6. COMMON STOCK The Company's Board of Directors authorized a
1.1666666 to one forward stock split of its common
stock on March 10, 2004, a 1.1428571 to one forward
stock split of its common stock on April 16, 2004 and
a 1.375 to one forward stock split of its common stock
on April 23, 2004. All references in the accompanying
financial statements to the numbers of shares have
been retroactively restated to reflect these
transactions.
At May 18, 2004, 13,475,000 shares of common stock
were reserved for issuance upon exercise of redeemable
warrants and underwriters' unit purchase option
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