UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________
FORM
10-Q
(Mark
One)
[X]
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For
the quarterly period ended January 31, 2009
[ ]
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For
the transition period
from to
Commission
file number 001-33502
______________________
STONELEIGH PARTNERS
ACQUISITION CORP.
(Exact
name of Registrant as specified in its charter)
Delaware
|
|
20-3483933
|
(State
or other jurisdiction of
|
|
(I.R.S.
Employer
|
incorporation
or organization)
|
|
Identification
No.)
|
|
|
|
20
Marshall Street #104
|
|
|
South
Norwalk, CT
|
|
06854
|
(Address
of principal executive offices)
|
|
(Zip
code)
|
|
|
|
Registrant’s
telephone number, including area code: (203) 663-4200
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES
[ X ]
NO
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of and “large
accelerated filer”, “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.
Large
accelerated filer
[ ]
Accelerated filer
[X ]
Non- accelerated filer
[
]
Smaller
reporting company
[ ]
Indicate
by check mark whether the registrant is a shell company (as defined in Exchange
Act Rule 12b-2) Yes
[X]
No
[ ]
As of
March 9, 2009 there were 34,097,500 shares of Common Stock, par value $0.0001
outstanding.
Part
I: Financial Information
|
|
|
|
Item
1. Financial Statements (Unaudited):
|
|
|
|
Condensed
Balance Sheets
|
3
|
|
|
Condensed
Statements of Operations
|
4
|
|
|
Condensed
Statements of Stockholders’ Equity
|
5
|
|
|
Condensed
Statements of Cash Flows
|
6
|
|
|
Notes
to Condensed Financial Statements
|
7
|
|
|
|
17
|
|
|
|
19
|
|
|
Item
4. Controls and Procedures
|
19
|
|
|
|
20
|
|
|
|
20
|
|
|
Item
6. Exhibits
|
20
|
|
|
Signatures
|
20
|
|
|
ITEM 1. FINANCIAL
STATEMENTS.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
CONDENSED
BALANCE SHEETS
|
January 31,
2009
|
|
July
31, 2008
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
$
|
2,546,322
|
|
$
|
2,800,268
|
|
Investments
held in Trust (Notes 1 and 3)
|
|
224,014,838
|
|
|
223,183,301
|
|
Prepaid
federal and state income taxes
|
|
260,903
|
|
|
426,826
|
|
Prepaid
expenses
|
|
42,782
|
|
|
115,305
|
|
Total
current assets
|
|
226,864,845
|
|
|
226,525,700
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
226,864,845
|
|
$
|
226,525,700
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
$
|
189,637
|
|
$
|
70,452
|
|
Note
payable (Note 7)
|
|
18,123
|
|
|
72,491
|
|
Total
current liabilities
|
|
207,760
|
|
|
142,943
|
|
|
|
|
|
|
|
|
COMMON
STOCK SUBJECT TO POSSIBLE CONVERSION
|
|
|
|
|
|
|
(8,351,465
shares at conversion value) (Note 1)
|
|
68,062,163
|
|
|
67,901,298
|
|
|
|
|
|
|
|
|
COMMITMENTS
(Note
5)
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
(Notes 2 and 6):
|
|
|
|
|
|
|
Preferred
stock, $0.0001 par value, 5,000,000 shares authorized, 0
issued
|
|
|
|
|
|
|
and
outstanding
|
|
|
|
|
|
|
Common
stock, par value $0.0001 per share, 100,000,000 shares
|
|
|
|
|
|
|
authorized,
25,746,035 shares issued and outstanding (excluding
|
|
|
|
|
|
|
8,351,465
shares subject to possible conversion)
|
|
2,575
|
|
|
2,575
|
|
Additional
paid-in capital
|
|
152,652,249
|
|
|
152,813,114
|
|
Earnings
accumulated in the development stage
|
|
5,940,098
|
|
|
5,665,770
|
|
TOTAL
STOCKHOLDERS’ EQUITY
|
|
158,594,922
|
|
|
158,481,459
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
226,864,845
|
|
$
|
226,525,700
|
|
|
|
|
|
|
|
|
The
accompanying notes should be read in conjunction with the condensed financial
statements.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
CONDENSED STATEMENTS OF
OPERATIONS
|
|
For the
three
|
|
|
For the
three
|
|
|
For the
six
|
|
|
For the
six
|
|
|
From September
9,
|
|
|
|
months
ended
|
|
|
months
ended
|
|
|
months
ended
|
|
|
months
ended
|
|
|
2005 (inception)
to
|
|
|
|
January 31,
2009
|
|
|
January 31,
2008
|
|
|
January 31,
2009
|
|
|
January 31,
2008
|
|
|
January 31,
2009
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative costs (Notes 4 and 5)
|
|
|
225,466
|
|
|
|
139,818
|
|
|
|
450,076
|
|
|
|
|
|
|
|
1,253,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
|
(225,466
|
)
|
|
|
(139,818
|
)
|
|
|
(450,076
|
)
|
|
|
(281,962
|
)
|
|
|
(1,253,315
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income (Note 1)
|
|
|
78,840
|
|
|
|
2,498,209
|
|
|
|
911,120
|
|
|
|
5,305,092
|
|
|
|
11,037,457
|
|
Interest
expense (Note 7)
|
|
|
(1,915
|
)
|
|
|
(1,916
|
)
|
|
|
(3,830
|
)
|
|
|
(3,832
|
)
|
|
|
(12,767
|
)
|
(Loss) income before provision
for income taxes
|
|
|
(148,541
|
)
|
|
|
2,356,475
|
|
|
|
457,214
|
|
|
|
5,019,298
|
|
|
|
9,771,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Benefit
from) provision for federal and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
state
income taxes (Note 4)
|
|
|
(59,416
|
)
|
|
|
862,689
|
|
|
|
182,886
|
|
|
|
2,007,719
|
|
|
|
3,831,277
|
|
Net (loss) income for the
period
|
|
$
|
(89,125
|
)
|
|
$
|
1,493,786
|
|
|
$
|
274,328
|
|
|
$
|
3,011,579
|
|
|
$
|
5,940,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion
of Trust Fund relating to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common
stock subject to possible conversion
|
|
|
(13,213
|
)
|
|
|
(468,060
|
)
|
|
|
(160,865
|
)
|
|
|
(943,499
|
)
|
|
|
(1,952,312
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income attributable to common stockholders
|
|
$
|
(102,338
|
)
|
|
$
|
1,025,726
|
|
|
$
|
113,463
|
|
|
$
|
2,068,080
|
|
|
$
|
3,987,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding subject to
possible conversion
|
|
|
8,351,465
|
|
|
|
8,351,465
|
|
|
|
8,351,465
|
|
|
|
8,351,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share subject to
possible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
conversion
, basic and
diluted
|
|
$
|
0.00
|
|
|
$
|
0.06
|
|
|
$
|
0.02
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding
|
|
|
25,746,035
|
|
|
|
25,746,035
|
|
|
|
25,746,035
|
|
|
|
25,746,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
0.04
|
|
|
$
|
0.00
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes should be read in conjunction with the condensed financial
statements.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
CONDENSED
STATEMENTS OF STOCKHOLDERS’ EQUITY
From
September 9, 2005 (inception) to January 31, 2009
|
|
|
|
|
|
|
|
|
|
|
(Deficit)
Earnings
|
|
|
|
|
|
|
Common
stock
|
|
|
Additional
|
|
|
Accumulated
in the
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid-In-Capital
|
|
|
Development
Stage
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 9, 2005
(inception)
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Issuance
of Common Stock to initial stockholder
|
|
|
100
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
Issuance
of 8,150,000 Warrants at $0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per
warrant
|
|
|
-
|
|
|
|
-
|
|
|
|
407,500
|
|
|
|
-
|
|
|
|
407,500
|
|
Issuance
of 700,000 Class Z warrants and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,000
Class W warrants at $0.05 per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
warrant
|
|
|
-
|
|
|
|
-
|
|
|
|
70,000
|
|
|
|
-
|
|
|
|
70,000
|
|
Issuance
of 6,925,000 Class Z warrants and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,925,000
Class W warrants at $0.05 per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
warrant
|
|
|
-
|
|
|
|
-
|
|
|
|
692,500
|
|
|
|
-
|
|
|
|
692,500
|
|
Net
loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,230
|
)
|
|
|
(2,230
|
)
|
Balance, July 31,
2006
|
|
|
100
|
|
|
$
|
-
|
|
|
$
|
1,170,001
|
|
|
$
|
(2,230
|
)
|
|
$
|
1,167,771
|
|
Issuance
of 3,800,000 Class Z warrants and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,800,000
Class W warrants at $0.05 per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
warrant
|
|
|
-
|
|
|
|
-
|
|
|
|
380,000
|
|
|
|
-
|
|
|
|
380,000
|
|
Issuance
of common stock to initial stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with
an aggregate value of $1,550,000 in exchange
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for
the return and cancellation of 15,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
Z warrants and 15,500,000 Class W warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with
an aggregate value of $1,550,000
|
|
|
6,249,900
|
|
|
|
625
|
|
|
|
(625
|
)
|
|
|
-
|
|
|
|
-
|
|
Proceeds
from sale of underwriter purchase option
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
100
|
|
Proceeds
from issuance of insider warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
4,450,000
|
|
|
|
-
|
|
|
|
4,450,000
|
|
Sale
of 27,847,500 units through public
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
offering
net of underwriter discount and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
offering
expenses and excluding $66,109,851 of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
proceeds
allocable to 8,351,465 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
common stock subject to possible conversion
|
|
|
19,496,035
|
|
|
|
1,950
|
|
|
|
148,605,085
|
|
|
|
-
|
|
|
|
148,607,035
|
|
Accretion of trust
fund relating to common stock
subject to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
possible
conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
(317,741
|
)
|
|
|
-
|
|
|
|
(317.,741
|
)
|
Net
income for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,040,419
|
|
|
|
1,040,419
|
|
Balance, July 31,
2007
|
|
|
25,746,035
|
|
|
$
|
2,575
|
|
|
$
|
154,286,820
|
|
|
$
|
1,038,189
|
|
|
$
|
155,327,584
|
|
Accretion
of trust fund relating to common stock subject to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
possible
conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,473,706
|
)
|
|
|
-
|
|
|
|
(1,473,706
|
)
|
Net
income for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,627,581
|
|
|
|
4,627,581
|
|
Balance, July 31,
2008
|
|
|
25,746,035
|
|
|
$
|
2,575
|
|
|
$
|
152,813,114
|
|
|
$
|
5,665,770
|
|
|
$
|
158,481,459
|
|
Accretion
of trust fund relating to common stock subject to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
possible
conversion (unaudited)
|
|
|
-
|
|
|
|
-
|
|
|
|
(160,865
|
)
|
|
|
-
|
|
|
|
(
160,865
|
)
|
Net
income for the period (unaudited)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
274,328
|
|
|
|
274,328
|
|
Balance,
January 31, 2009 (unaudited)
|
|
|
25,746,035
|
|
|
$
|
2,575
|
|
|
$
|
152,652,249
|
|
|
$
|
5,940,098
|
|
|
$
|
158,594,922
|
|
The
accompanying notes should be read in conjunction with the condensed financial
statements.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
CONDENSED
STATEMENTS OF CASH FLOWS
|
|
For
the six
|
|
|
For
the six
|
|
|
From
September 9,
|
|
|
|
months
ended
|
|
|
months
ended
|
|
|
2005
(inception) to
|
|
|
|
January 31,
2009
|
|
|
January 31,
2008
|
|
|
January 31,
2009
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
income for the period
|
|
$
|
274,328
|
|
|
$
|
3,011,579
|
|
|
$
|
5,940,098
|
|
(Increases)
decreases in investments held in trust fund, net
|
|
|
(831,537
|
)
|
|
|
(96,885
|
)
|
|
|
(3,575,188
|
)
|
Adjustments
to reconcile net income to net cash (used in) provided by
|
|
|
|
|
|
|
|
|
|
|
|
|
operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid federal and state income taxes
|
|
|
165,923
|
|
|
|
(246,097
|
)
|
|
|
(260,903
|
)
|
Prepaid expenses
|
|
|
72,523
|
|
|
|
61,675
|
|
|
|
156,569
|
|
Accounts payable and accrued expenses
|
|
|
119,185
|
|
|
|
63,121
|
|
|
|
189,637
|
|
Federal and state income taxes payable
|
|
|
-
|
|
|
|
(690,189
|
)
|
|
|
-
|
|
Net
cash (used in) provided by operating activities
|
|
|
(199,578
|
)
|
|
|
2,103,204
|
|
|
|
2,450,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of investments held in Trust Fund
|
|
|
(223,669,830
|
)
|
|
|
(5,146,523
|
)
|
|
|
(671,949,421
|
)
|
Maturities
of investments held in Trust Fund
|
|
|
223,669,830
|
|
|
|
5,146,523
|
|
|
|
451,509,771
|
|
Net
cash (used in) investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
(220,439,650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock to initial stockholders
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
Proceeds
from issuance of insider warrants in private placement
|
|
|
-
|
|
|
|
-
|
|
|
|
4,450,000
|
|
Proceeds
from issuance of underwriter’s purchase option
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
Portion
of net proceeds from sale of units through public offering
|
|
|
|
|
|
|
|
|
|
|
|
|
allocated to shares of common stock subject to possible
conversion
|
|
|
-
|
|
|
|
-
|
|
|
|
66,109,851
|
|
Proceeds
from issuance of warrants to security holders
|
|
|
-
|
|
|
|
-
|
|
|
|
1,550,000
|
|
Principal
payment on notes
|
|
|
(54,368
|
)
|
|
|
(54,368
|
)
|
|
|
(181,228
|
)
|
Payment
of deferred registration costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(272,132
|
)
|
Net
proceeds from sale of units through public offering
|
|
|
|
|
|
|
|
|
|
|
|
|
including the proceeds from underwriter over-allotment
exercise
|
|
|
-
|
|
|
|
-
|
|
|
|
148,879,167
|
|
Net
cash (used in) provided by financing activities
|
|
|
(54,368
|
)
|
|
|
(54,368
|
)
|
|
|
220,535,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
|
|
(253,946
|
)
|
|
|
2,
048,836
|
|
|
|
2,546,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and Cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period
|
|
|
2,800,268
|
|
|
|
1,035,420
|
|
|
|
-
|
|
End
of period
|
|
$
|
2,546,322
|
|
|
$
|
3,084,256
|
|
|
$
|
2,546,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of underwriter purchase option included in offering
costs
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,372,000
|
|
Accretion
relating to common stock subject to possible conversion
|
|
$
|
160,865
|
|
|
$
|
943,499
|
|
|
$
|
1,952,312
|
|
Financed
insurance
|
|
$
|
18,123
|
|
|
$
|
126,860
|
|
|
$
|
199,350
|
|
Supplemental disclosure of cash
flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
3,830
|
|
|
$
|
3,832
|
|
|
$
|
12,767
|
|
Cash
paid for income taxes
|
|
$
|
16,963
|
|
|
$
|
2,944,005
|
|
|
$
|
4,092,180
|
|
The
accompanying notes should be read in conjunction with the condensed financial
statements.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
1 — DISCUSSION OF THE COMPANY’S ACTIVITIES
Organization
and activities – Stoneleigh Partners Acquisition Corp. (the “Company”) was
incorporated in Delaware on September 9, 2005 to serve as a vehicle to effect a
merger, capital stock exchange, asset acquisition or other similar business
combination with a currently unidentified operating business (a “Target
Business”). All activities from inception (September 9, 2005) through January
31, 2009 relate to the Company’s formation and capital raising
activities.
The
Company is considered to be a development stage company and as such the
financial statements presented herein are presented in accordance with Statement
of Financial Accounting Standards (“SFAS”) No. 7, Accounting and Reporting by
Development Stage Enterprises.
The
registration statement for the Company’s initial public offering (“IPO” or the
“Offering”) was declared effective on May 31, 2007. The Company consummated the
Offering on June 5, 2007 and received net proceeds of approximately $197.8
million, which includes approximately $4.45 million from the Insider Warrants
sold in a private placement (described in Note 6) and a portion of the proceeds
of the sale of the Company’s shares of common stock sold to the Company’s
stockholders prior to the Offering (“Initial Stockholders”). On June 12, 2007
the Company consummated the closing of an additional 2,847,500 Units, which were
subject to an underwriter over-allotment option, generating additional gross
proceeds of $22,780,000.
The
Company’s management intends to apply substantially all of the net proceeds of
the Offering toward consummating a Business Combination (as defined in the
Company’s Certificate of Incorporation). The initial Target Business must have a
fair market value equal to at least 80% of the Company’s net assets at the time
of such acquisition. However, there is no assurance that the Company will be
able to effect a Business Combination successfully.
The Company’s Certificate of
Incorporation provides that the Company’s corporate existence will cease in the
event it does not consummate a Business Combination by May 31, 2009. If the
Company does not effect a Business Combination by May 31, 2009 (the “Target
Business Acquisition Period”), the Company's corporate existence will
cease. In such case, the Company will disolve and liquidate for the
purpose of winding up its affairs and will promptly distribute the amount
held in trust (the “Trust Account”), which is substantially all of the proceeds
from the Offering, including any accrued interest, to its public
stockholders.
As of March 10, 2009, the
Company has not executed any definitive agreements related to an
acquisition.
In
connection with the IPO, approximately $220.4 million (or approximately $7.91
per Unit) of the net proceeds of the Offering, the sale of the Insider Warrants
(defined in Note 6) and the sale of common stock to the Initial Stockholders
were initially held in the Trust Account and invested in permitted United States
government securities and money market funds. 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 acquisition
targets 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. There may be released to the Company from the Trust Account (i)
interest income earned on the Trust Account balance to pay any tax obligations
of the Company, and (ii) up to an aggregate amount of $3,000,000 in interest
earned on the Trust Account to fund expenses related to investigation and
selection of a Target Business and the Company’s other working capital
requirements. As of January 31, 2009, the Company has transferred $7,280,750 of
interest income to its operating account of which $4,280,750 was used to pay
income and franchise taxes.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
1 — DISCUSSION OF THE COMPANY’S ACTIVITIES – (CONTINUED)
The
Company, after signing a definitive agreement for a Business Combination, is
obligated to submit such transaction for approval by a majority of the public
stockholders of the Company. Stockholders that vote against such proposed
Business Combination and exercise their conversion rights are, under certain
conditions described below, entitled to convert their shares into a pro-rata
distribution from the Trust Account (the “Conversion Right”). The
actual per share conversion price will be equal to the amount in the Trust
Account (inclusive of interest thereon other than (i) up to $3.0 million
distributed to the Company for working capital and (ii) amounts necessary to pay
any of the Company’s tax obligations), calculated as of two business days prior
to the proposed Business Combination, divided by the number of shares sold in
the Offering, or approximately $8.04 per share based on the value of the Trust
Account as of January 31, 2009. As a result of the
Conversion Right, $68,062,163 (including accumulated accretion of $1,952,312)
has been classified as common stock subject to possible conversion. The Initial
Stockholders have agreed to vote their 6,250,000 founding shares of common stock
in accordance with the manner in which the majority of the shares of common
stock offered in the Offering are voted by the Company’s public stockholders
(“Public Stockholders”) with respect to a Business Combination.
In the
event that a majority of the outstanding shares of common stock voted by the
Public Stockholders vote for the approval of the Business Combination and
holders owning 30% or more of the outstanding common stock do not vote against
the Business Combination and do not exercise their Conversion Rights, the
Business Combination may then be consummated.
With
respect to a Business Combination which is approved and consummated, any Public
Stockholder who voted against the Business Combination may contemporaneously
with or prior to such vote exercise their Conversion Right and their common
shares would be cancelled and returned to the status of authorized but unissued
shares. The per share conversion price will equal the amount in the Trust
Account, calculated as of two business days prior to the consummation of the
proposed Business Combination, divided by the number of shares of common stock
held by Public Stockholders at the consummation of the Offering. Accordingly,
Public Stockholders holding less than 30% of the aggregate number of shares
owned by all Public Stockholders may convert their shares in the event of a
Business Combination.
NOTE
2 — OFFERING AND PRIVATE PLACEMENT OF INSIDER WARRANTS
In
the Offering, effective May 31, 2007 (closed on June 5, 2007), the Company sold
to the public 25,000,000 units (the “Units” or a “Unit”) at a price of $8.00 per
Unit. Net proceeds from the Offering totaled approximately $193 million, which
was net of approximately $6.5 million in underwriting fees and other expenses
paid at closing. Each unit consists of one share of the Company’s common stock
and one warrant (a “Warrant”). The Company sold to HCFB/Brenner Securities LLC
(“HCFP” or “Representative”), the Representative of the underwriters in the
Offering, an option to purchase up to a total of 1,250,000 additional Units
(Note 6). The Company also granted to the Representative a 45-day option to
purchase up to 3,750,000 Units solely to cover over allotments.
On
June 12, 2007 the Company consummated the closing of an additional 2,847,500
Units which were subject to the underwriter’s over-allotment option generating
net proceeds of $22 million, which was net of $740,000 in underwriting discount
fees.
Simultaneously
with the closing of the Offering, the Company sold to certain of the Initial
Stockholders 5,975,000 Insider Warrants for an aggregate purchase price of
$4,450,000. See discussion in Note 6.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
-
The accompanying unaudited condensed financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
(“SEC”) and should be read in conjunction with the Company’s audited financial
statements and footnotes thereto for the period from inception (September 9,
2005) to July 31, 2008 included in the Company’s Form 10-K filed on October 6,
2008. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been omitted pursuant to such
rules and regulations. However, the Company believes that the disclosures are
adequate to make the information presented not misleading. The financial
statements reflect all adjustments (consisting primarily of normal recurring
adjustments) that are, in the opinion of management necessary for a fair
presentation of the Company’s financial position and results of operations. The
operating results for the three and six months ended January 31, 2009 and
January 31, 2008 and for the period from inception (September 9, 2005) to
January 31, 2009 are not necessarily indicative of the results to be expected
for any other interim period of any future year
Cash and Cash Equivalents
–
Included in cash and cash equivalents are deposits with financial institutions
as well as short-term money market instruments with original maturities of three
months or less when purchased.
Investments held in trust
- At
January 31, 2009 the investment held in trust was invested in a Morgan Stanley
Treasury Portfolio fund. The Company recognized interest income of $73,432 and
$893,992 on investments held in trust for the three and six months ended January
31, 2009, respectively, $2,462,138 and $5,243,408 for the three and six months
ended January 31, 2008, respectively, and $10,858,438 for the period from
inception (September 9, 2005) to January 31, 2009 which are included on the
accompanying statements of income.
Concentration of Credit Risk
–
Financial instruments that potentially subject the Company to a significant
concentration of credit risk consist primarily of cash and cash equivalents and
investments held in trust. The Company may maintain deposits in
federally insured financial institutions in excess of federally insured limits.
However, management believes the Company is not exposed to significant credit
risk due to the financial position of the depository institutions in which those
deposits are held.
Net Income (Loss) Per Share
–
Net income (loss) per share is computed based on the weighted average number of
shares of common stock outstanding.
Basic
earnings (loss) per share excludes dilution and is computed by dividing income
available to common stockholders by the weighted average common shares
outstanding for the period. In addition to the 100 shares purchased by the
Initial Stockholders upon formation, the 6,249,900 shares of the Company’s
common stock issued on April 4, 2007 (Note 6) and 19,496,035 shares issued in
the Offering have been included in the weighted average common shares
outstanding for the periods presented. Basic net income per share subject to
possible conversion is calculated by dividing accretion of Trust Account
relating to common stock subject to possible conversion by 8,351,465 shares
subject to possible conversion. Diluted earnings per share reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the earnings of the entity. No
such securities were outstanding as of January 31, 2009 and since the
outstanding warrants to purchase common stock and the underwriters purchase
option (“UPO”) are contingently exercisable, they have been excluded from the
Company’s computation of diluted net income per share for the three and
six months ended January 31, 2009 and 2008.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
Use of Estimates –
The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
Income Taxes –
Deferred income
tax assets and liabilities are computed for differences between the financial
statement and tax basis of assets and liabilities that will result in future
taxable or deductible amounts and are based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred income tax assets to the amount expected to be realized. As of January
31, 2009 and January 31, 2008, there were no temporary differences and therefore
no deferred tax has been established.
In July
2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes, and
Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in a company’s financial statements and
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in an income tax return. FIN 48 also provides guidance in derecognition,
classification, interest and penalties, accounting in interim periods,
disclosures and transition. The adoption of FIN 48 did not have a material
impact on the Company’s financial statements.
Fair Value Measurements -
On
August 1, 2008, the Company adopted Statement of Financial Accounting Standards
(“SFAS”) No. 157, “Fair Value Measurements” related to the valuation and
reporting of the Company’s financial assets and liabilities. The
adoption of the SFAS No. 157 did not have a material impact on the Company’s
financial assets and liabilities or its financial results. SFAS No.
157 establishes a hierarchy for inputs used in measuring fair value that
maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the most observable inputs be used when
available.
Observable
inputs are inputs that market participants would use in pricing the asset or
liability developed based on market data obtained from sources independent of
the Company. Unobservable inputs are inputs that reflect the Company’s
assumptions about the assumptions market participants would use in pricing the
asset or liability developed based on the best information available in the
circumstances. The hierarchy is
broken
down into three levels based on the reliability of inputs as
follows:
Level 1 -
Valuations based on unadjusted quoted prices in active markets for identical
assets or liabilities that the Company holds. An active market for the asset or
liability is a market in which transactions for the asset or liability occur
with sufficient frequency and volume to provide pricing information on an
ongoing basis.
Level 2 –
Valuations based on inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly. Level
2 inputs include quoted prices for identical or similar assets or
liabilities in markets that are not active, that is, markets in which there are
few transactions for the asset or liability, the prices are not current,
or where price quotations may vary either over time or among market
makers (for example, dealer or brokered markets).
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
Level 3 -
Valuations based on inputs that are unobservable and significant to the overall
fair value measurement.
The
availability of observable inputs can vary from product to product and is
affected by a wide variety of factors, including, for example, the type of
product, whether the product is new and not yet established in the marketplace,
and other characteristics particular to the transaction. In certain
cases, the inputs used to measure fair value may fall into different levels of
the fair value hierarchy. In such cases, for disclosure purposes the level in
the fair value hierarchy within which the fair value measurement in its entirety
falls is
determined
based on the lowest level input that is significant to the fair value
measurement in its entirety. Fair value is a market-based measure
considered from the perspective of a market participant rather than an
entity-specific measure. The Company uses prices and inputs that are
current as of the measurement date.
The
following table presents certain of the Company’s assets that are measured at
fair value as of January 31 2009 and July 31, 2008.
|
|
Total
|
|
|
Level
1
|
|
|
Level
2
|
|
January 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
2,546,322
|
|
|
$
|
13,001
|
|
|
$
|
2,533,321
|
|
Cash
and cash equivalents held in Trust Accounts
|
|
|
224,014,838
|
|
|
|
-
|
|
|
|
224,014,838
|
|
Total
|
|
$
|
226,561,160
|
|
|
$
|
13,001
|
|
|
$
|
226,548,159
|
|
|
|
Total
|
|
|
Level
1
|
|
|
Level
2
|
|
July 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
2,800,268
|
|
|
$
|
84,074
|
|
|
$
|
2,716,194
|
|
Cash
and cash equivalents held in Trust Accounts
|
|
|
223,183,301
|
|
|
|
-
|
|
|
|
223,183,301
|
|
Total
|
|
$
|
225,983,569
|
|
|
$
|
84,074
|
|
|
$
|
225,899,495
|
|
In
accordance with the provisions of FSP No. FAS 157-2, Effective Date of FASB
Statement No. 157, the Company has elected to defer implementation of SFAS 157
as it relates to its non-financial assets and non-financial liabilities and is
evaluating the impact, if any, this standard will have on its financial
statements. If the Company were to complete an acquisition the provisions may
have a material effect.
New
Accounting Pronouncements –
In
December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations,
(“SFAS 141(R)”). SFAS 141(R) retains the fundamental requirements of the
original pronouncement requiring that the purchase method be used for all
business combinations, but also provides revised guidance for recognizing and
measuring identifiable assets and goodwill acquired and liabilities assumed
arising from contingencies, the capitalization of in-process research and
development at fair value, and the expensing of acquisition-related costs as
incurred. SFAS 141(R) is effective for fiscal years beginning after December 15,
2008. In the event that the Company completes acquisitions subsequent to its
adoption of SFAS 141 (R), the application of its provisions will likely have a
material impact on the Company’s results of operations, although the Company is
not currently able to estimate that impact.
In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51. SFAS 160
requires that ownership interests in subsidiaries held by parties other than the
parent, and the amount of consolidated net income, be clearly identified,
labeled and presented in the consolidated financial statements. It also requires
that once a subsidiary is deconsolidated, any retained noncontrolling equity
investment in the former subsidiary be initially measured at fair value.
Sufficient disclosures are required to clearly identify and distinguish between
the interests of the parent and the interests of the noncontrolling
owners.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
It is
effective for fiscal years beginning after December 15, 2008, and requires
retroactive adoption of the presentation and disclosure requirements for
existing minority interests. All other requirements are applied prospectively.
The Company does not expect the adoption of SFAS 160 to have a material impact
on its financial condition or results of operations.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities” (“SFAS 161”). SFAS No. 161 amends and expands the
disclosure requirements of SFAS No. 133, “Accounting for Derivative Instruments
and Hedging Activities”, to improve financial reporting of derivative
instruments and hedging activities by requiring enhanced disclosures to enable
investors to better understand their effects on an entity’s financial position,
financial performance, and cash flows. SFAS 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, which will require the Company to adopt these provisions
beginning in fiscal 2009 and thereafter. The Company does not expect
the adoption of SFAS 161 to have a material impact on its financial condition or
results of operations
The
Company does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
NOTE
4 — TAXES
The
Company’s effective tax rate approximates the combined federal and state
statutory rate. The Company is incorporated in Delaware and accordingly is
subject to franchise taxes. Included as part of general and administrative costs
in the accompanying statement of operations for the three and six months ended
January 31, 2009 is Delaware franchise tax expense of $29,346 and $72,976,
respectively, and $43,605 and $86,737 for the three and six months ended January
31, 2008, and $303,536 for the period from September 9, 2005 (inception) through
January 31, 2009. Provision for income taxes consists of:
|
|
For
the three
|
|
|
For
the six
|
|
|
From
September 9,
|
|
|
|
months
ended
|
|
|
months
ended
|
|
|
2005
(inception) to
|
|
|
|
January
31, 2009
|
|
|
January 31,
2009
|
|
|
January 31,
2009
|
|
Federal
|
|
$
|
(48,275
|
)
|
|
$
|
148,595
|
|
|
$
|
3,098,424
|
|
State
|
|
|
(11,141
|
)
|
|
|
34,291
|
|
|
|
732,853
|
|
|
|
$
|
(59,416
|
)
|
|
$
|
182,886
|
|
|
$
|
3,831,277
|
|
The
Company has recently been notified by the Internal Revenue Service that it will
be undergoing an audit for the year ended July 31, 2008.
NOTE
5 — COMMITMENTS
Administrative
Services Agreement
The
Company agreed to pay an affiliate of two stockholders $7,500 per month
commencing on May 31, 2007 (effective date of the Offering) for office,
secretarial and administrative services. The Company paid $22,500 and $45,00 for
the three and six months ended January 31, 2009, $22,500 and $45,000 for the
three and six months ended January 31, 2008 and $150,000 for the period from
September 9, 2005 (inception) through January 31, 2009 for these services which
is included in general and administrative costs in the accompanying statements
of operations.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
5 — COMMITMENTS-(CONTINUED)
Underwriting
Agreement
In
connection with the Offering, the Company entered into an underwriting agreement
(the “Underwriting Agreement”) with HCFP, the representative of the underwriters
in the Offering.
Pursuant
to the Underwriting Agreement, the Company paid to the underwriters certain fees
and expenses related to the Offering, including underwriting discounts of
$7,240,350.
In
addition, in accordance with the terms of the Underwriting Agreement, the
Company engaged HCFP, on a non-exclusive basis, to act as its agent for the
solicitation of the exercise of the Company’s Warrants. In consideration for
solicitation services, the Company will pay HCFP a commission equal to 5% of the
exercise price for each Warrant exercised if the exercise is solicited by
HCFP.
HCFP and
another underwriter were engaged by the Company to act as the Company’s
non-exclusive investment bankers in connection with a proposed Business
Combination (Note 1). For assisting the Company in obtaining approval of a
Business Combination, the Company will pay a cash transaction fee of $7,475,000
upon consummation of a Business Combination.
The
Company sold to HCFP an option to purchase the Company’s Units (Note
6).
Insider
Purchase Commitment
The
Company’s Chairman and Chief Executive Officer, the Company’s Vice Chairman and
Chief Financial Officer, a director, and one of the Company’s Senior Advisors,
have entered into an agreement with HCFP which is intended to comply with Rule
10b5-1 under the Exchange Act, pursuant to which such individuals, or entities
such individuals control, will place limit orders for an aggregate of $15
million of the Company’s Units commencing 30 calendar days after the Company
files a preliminary proxy statement seeking approval of the holders of common
stock for a Business Combination and ending 30 days thereafter. Each of these
individuals has agreed that he will not sell or transfer any Units purchased by
him pursuant to this agreement (or any of the securities included in such units)
until the completion of a Business Combination or the Company’s liquidation. It
is intended that these purchases will comply with Rule 10b-18 under the Exchange
Act. These purchases will be made at a price not to exceed $8.65 per unit and
will be made by HCFP or another broker dealer mutually agreed upon by such
individuals and HCFP in such amounts and at such times as HCFP or such other
broker dealer may determine, in its sole discretion, so long as the purchase
price does not exceed the above-referenced per unit purchase price.
NOTE
6 — COMMON AND PREFERRED STOCK, WARRANTS AND UNDERWRITER PURCHASE
OPTION
a.
Common and Preferred Stock
On May
30, 2007, the Company amended and restated its Certificate of Incorporation
authorizing the issuance of up to 100,000,000 shares of common stock, par value
$.0001 per share, and 5,000,000 shares of preferred stock, par value $.0001 per
share. In addition, the May 30, 2007 amendment to the Company’s Certificate of
Incorporation changed the capital stock’s par value from $0.01 to $0.0001. All
of the references in the accompanying financial statements to the par value have
been retroactively restated to reflect the change in par value.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
6 — COMMON STOCK, WARRANTS AND UNDERWRITER PURCHASE OPTION –
(CONTINUED)
b.
Warrants
In March
2006, the Company issued an aggregate of 4,075,000 Class W warrants and
4,075,000 Class Z warrants to its three existing warrant holders in exchange for
the return and cancellation of the outstanding 8,150,000 warrants which were
purchased in October 2005, for an aggregate $407,500, or $0.05 per warrant. On
March 15, 2006, the Company sold and issued additional Class W warrants to
purchase 700,000 shares of the Company’s common stock, and additional Class Z
warrants to purchase 700,000 shares of the Company’s common stock, for an
aggregate purchase price of $70,000, or $0.05 per warrant. On May 25, 2006, the
Company sold and issued additional Class W warrants to purchase 6,925,000 shares
of the Company’s common stock, and additional Class Z Warrants to purchase
6,925,000 shares of the Company’s common stock, to its existing warrant holders
for an aggregate purchase price of $692,500 or $0.05 per warrant.
On
January 23, 2007, the 11,700,000 old Class Z warrants were exchanged for
11,700,000 new Class Z warrants (the “Class Z Warrants”) and the 11,700,000 old
Class W warrants were exchanged for 11,700,000 new Class W warrants (the “Class
W Warrants”) and the Company sold and issued additional Class W warrants to
purchase 3,800,000 shares of the Company’s common stock and additional 3,800,000
Class Z warrants to purchase 3,800,000 shares of the Company’s common stock to
its existing warrant holders and to two other accredited investors for an
aggregate purchase price $380,000 or $0.05 per warrant.
Each
Class W Warrant was exercisable for one share of common stock. Except as set
forth below, the Class W Warrants entitled the holder to purchase shares at
$1.75 per share, subject to adjustment in the event of stock dividends and
splits, reclassifications, combinations and similar events, for a period
commencing on the completion of the Business Combination and ending June 5,
2015.
Each
Class Z Warrant was exercisable for one share of common stock. Except as set
forth below, the Class Z Warrants entitled the holder to purchase shares at
$1.50 per share, subject to adjustment in the event of stock dividends and
splits, reclassifications, combinations and similar events, for a period
commencing on the completion of the Business Combination and ending June 5,
2015.
On April
4, 2007, 15,500,000 Class W Warrants and 15,500,000 Class Z Warrants with an
aggregate value of $1,550,000 were returned by the warrant holders and cancelled
by the Company. In exchange for the return of the Class W Warrants and Class Z
Warrants, the Company issued 6,249,900 shares of the Company’s common stock with
an aggregate value of $1,550,000 to such individuals.
Simultaneously
with the consummation of the Offering, certain of the Company’s officers,
directors, and senior advisors purchased 5,975,000 Warrants for an aggregate
purchase price of $4,450,000 (“Insider Warrants”).
Public
Warrants
Each
warrant sold in the Offering (a “Public Warrant”) is exercisable for one share
of common stock. The Public Warrants entitle the holder to purchase shares at
$5.50 per share, subject to adjustment in the event of stock dividends and
splits, reclassifications, combinations and similar events for a period
commencing on the completion of the Business Combination and ending May 31,
2011.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
6 — COMMON STOCK, WARRANTS AND UNDERWRITER PURCHASE OPTION –
(CONTINUED)
The
Company has the ability to redeem the Public Warrants, in whole or in part, at a
price of $.01 per Public Warrant, at any time after the Public Warrants become
exercisable, upon a minimum of 30 days’ prior written notice of redemption, and
if, and only if, the last sale price of the Company’s common stock equals or
exceeds $11.50 per share, for any 20 trading days within a 30 trading day period
ending three business days before the Company sent the notice of
redemption.
Insider
Warrants
At the
closing of the Offering (Notes 1 and 2), the Company sold to certain of the
Initial Stockholders 5,975,000 Insider Warrants for an aggregate purchase price
of $4,450,000. All of the proceeds received from these purchases have been
placed in the Trust Account. The Insider Warrants are identical to the Public
Warrants in the Offering except that they may be exercised on a cashless basis
so long as they are held by the original purchasers, members of their immediate
families or their controlled entities, and may not be sold or transferred,
except in limited circumstances, until after the consummation of a Business
Combination. If the Company dissolves before the consummation of a Business
Combination, there will be no distribution from the Trust Account with respect
to such Insider Warrants, which will expire worthless.
As the
proceeds from the exercise of the Insider Warrants will not be received until
after the completion of a Business Combination, the expected proceeds from
exercise will not have any effect on the Company’s financial condition or
results of operations prior to a Business Combination.
Each
Insider Warrant is exercisable for one share of common stock. The Insider
Warrants entitle the holder to purchase shares at $5.50 per share, subject to
adjustment in the event of stock dividends and splits, reclassifications,
combinations and similar events, for a period commencing on the completion of
the Business Combination and ending May 31, 2011.
The
Company is required to use its best efforts to cause a registration statement
covering the Insider Warrants and the Public Warrants to be declared effective
and, once effective, the Company will use its best efforts to maintain its
effectiveness. Accordingly, the Company’s obligation is merely to use its best
efforts in connection with the registration rights agreement and upon exercise
of the Warrants. The Company may satisfy its obligation under
the registration rights agreement by delivering unregistered shares of common
stock. If a registration statement is not effective at the time a Public Warrant
is exercised, the Company will not be obligated to deliver registered shares of
common stock, and there are no contracted penalties for its failure to do
so. Consequently, the Public Warrants may expire
worthless.
c.
Underwriter Purchase Option
Upon
closing of the Offering, the Company sold and issued an option (the “UPO”) for
$100 to HCFP, to purchase up to 1,250,000 Units at an exercise price of $10.00
per Unit. The Units underlying the UPO will be exercisable in whole or in part,
solely at holders’ discretion, commencing on the consummation of a Business
Combination and expire on May 31, 2012. The Company accounted for the fair value
of the UPO, inclusive of the receipt of the $100 cash payment, as an expense of
the Offering resulting in a charge directly to stockholders’ equity, which was
offset by an equivalent increase in stockholder’s equity for the issuance of the
UPO. As of June 5, 2007, the Company calculated, using a Black-Scholes option
pricing model, the fair value of the 1,250,000 Units underlying the UPO to be
approximately $4,372,000. The fair value of the UPO granted was calculated as of
the date of grant using the following assumptions: (1)
expected
volatility of 51.12% (2) risk-free interest rate of 4.86% and (3) contractual
life of 5 years. The UPO may be exercised for cash or on a “cashless” basis, at
the holder’s option, such that the holder may use the appreciated value of the
UPO (the difference between the exercise prices of the UPO and the underlying
warrants and the market price of the units and underlying securities) to
exercise the UPO without the payment of any cash.
STONELEIGH
PARTNERS ACQUISITION CORP.
(a
corporation in the development stage)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
NOTE
6 — COMMON STOCK, WARRANTS AND UNDERWRITER PURCHASE OPTION –
(CONTINUED)
The
Company has no obligation to net cash settle the exercise of the UPO or the
warrants underlying the UPO. The holder of the UPO will not be entitled to
exercise the UPO or the warrants underlying the UPO unless a registration
statement covering the securities underlying the UPO is effective or an
exemption from registration is available. If the holder is unable to exercise
the UPO or underlying warrants, the UPO or warrants, as applicable, will expire
worthless.
NOTE
7 — NOTE PAYABLE
The
Company financed its Directors’ and Officers’ insurance policy for the amount of
$199,350 (the ‘‘Payable’’) due to First Insurance Funding Corp. of New York
(secured by the uncovered premium of the policy). The Payable bears
interest at 7.2% per annum. Payments of $9,700 commenced June 30, 2007 and will
continue through March 31, 2009. The Company recognized interest expense of
$1,915 and $3,830 for the three and six months ended January 31, 2009,
respectively, $1,916 and $3,832 for the three and six months ended
January 31, 2008 and $12,767 for the period from September 9, 2005 (inception)
through January 31, 2009. The note payable balance at January 31, 2009 was
$18,123.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The
following discussion should be read in conjunction with our financials statement
and footnotes thereto contained in this report.
General
We were
formed on September 9, 2005 for the purpose of acquiring one or more assets or
control of one or more operating businesses through a merger, capital stock
exchange, asset acquisition, stock purchase or other similar business
combination. Our initial business combination must be with an acquisition target
or targets whose collective fair market value is at least equal to 80% of our
net assets at the time of such acquisition.
We
completed our initial public offering (“IPO”) on June 5, 2007. Our entire
activity from inception through the consummation of our IPO was to prepare for
and complete our IPO, and since the consummation of our IPO, our activity has
been limited to identifying and evaluating targets for a business combination.
We have not yet entered into any letters of intent, arrangements or agreements
with any companies with respect to a business combination.
We are
currently continuing the process of identifying and evaluating targets for a
business combination. We are not presently engaged in, and will not engage in,
any substantive commercial business unless and until we consummate a business
combination. Our Certificate of Incorporation provides that we will continue in
existance only until May 31, 2009, twenty-four months from the effective
date of our IPO. If we have not completed a business combination
by such date, our corporate existance will cease and we will disolve and
liquidate for the purposes of winding up our affairs. We cannot assure
investors that we will find or complete a suitable business combination in the
allocated time.
We
believe that we have sufficient available funds to complete our efforts to
effect a business combination with an operating business.
For a
description of the proceeds generated in our IPO and a discussion of the use of
such proceeds, we refer you to Notes 1 and 2 of the financial statements
included in Item 1 of this report.
The
Company’s Certificate of Incorporation provides that the Company’s corporate
existence will cease in the event it does not consummate a Business Combination
by May 31, 2009. If the Company does not effect a Business Combination by May
31, 2009 (the “Target Business Acquisition Period”), the Company will promptly
distribute the amount held in trust (the “Trust Account”), which is
substantially all of the proceeds from the Offering, including any accrued
interest, to its public stockholders.
Results
of Operations
Net
income (loss) for the three months ended January 31, 2009 and January 31, 2008
was ($89,125) and $1,493,786, respectively, which consisted of interest income
on the trust fund of $73,432 and $2,462,138 and interest income on cash and cash
equivalents of $5,408 and $36,071 respectively. Income before provision for
income taxes was offset by operating costs of $225,466 and $139,818 which was
comprised of professional fees of $122,939 and $39,714, filing fees of $12,487
and $200, and a monthly administrative services agreement with an affiliate of
$22,500 and $22,500. The Company also incurred $27,688 and $27,687 for directors
and officers (“D&O”) insurance and $29,346 and $43,605 for Delaware
franchise taxes for the three months ended January 31, 2009 and January 31,
2008, respectively, and $10,506 and $6,112 for miscellaneous expenses,
respectively. The Company incurred $1,915 and $1,916 of interest expense for the
financing of the D&O insurance and a ($59,416) and $862,689 provision
(benefit) for federal and state income taxes.
Net
income for the six months ended January 31, 2009 and January 31, 2008 was
$274,328 and $3,011,579, which consisted of interest income on the trust fund of
$893,992 and $5,243,408 and interest income on cash and cash equivalents of
$17,128 and $61,684 respectively. Income before provision for income taxes was
offset by operating costs of $450,076 and $281,962 which was comprised of
professional fees of $227,523 and $93,026, filing fees of $23,094 and $1,303,
and a monthly administrative services agreement with an affiliate of $45,000 and
$45,000. The Company also incurred $55,375 and $55,375 for D&O insurance and
$72,976 and $86,737 for Delaware franchise taxes and $26,108 and $521 for
miscellaneous expenses for the six months ended January 31, 2009 and January 31,
2008 respectively. The Company incurred $3,830 and $3,832 of interest expense
for the financing of the D&O insurance and a $182,886 and $2,007,719
provision for federal and state income taxes.
Net
income for the period from inception (September 9, 2005) to January 31, 2009 was
$5,940,098 which consisted of interest income of the trust fund of $10,858,438
and interest income on cash and cash equivalents of $179,019, partially offset
by general and administrative costs of $1,253,315 which was comprised of
professional fees of $497,499, filing fees of $43,863, $150,000 for a monthly
administrative services payment to an affiliate, $184,583 for D&O Insurance,
$303,536 for Delaware franchise taxes, and $73,834 for miscellaneous expenses.
We also incurred $12,767 of interest expense for the financing of the D&O
Insurance and a $3,831,277 provision for income taxes.
Liquidity
and Capital Resources
Of the
gross proceeds from our IPO, including the exercise of an over allotment option
on June 12, 2007: (i) we deposited approximately $220.4 million into a trust
account at Morgan Stanley, maintained by Continental Stock Transfer & Trust
Company, as trustee, which amount included $4,450,000 that we received from the
sale of warrants to the Initial Stockholders in a private placement on June 5,
2007; (ii) the underwriters received $7,240,350 as underwriting discount; (iii)
we retained $300,000 for our use outside of the trust account; and (iv) we used
$872,679 for offering expenses.
Our
officers purchased an aggregate of $6,000,000 of our securities, consisting of
6,250,000 shares purchased from us prior to the IPO for $1,550,000, and
5,975,000 warrants, purchased for $4,450,000 concurrent with the
IPO.
The
proceeds deposited in the trust account will not be released from the trust
account until the earlier of the consummation of a business combination or the
expiration of the time period during which we may consummate a business
combination. The proceeds held in the trust account may be used as consideration
to pay the sellers of an acquisition target with which we complete a 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 will be used to finance the operations of the acquisition target. We may
also use the proceeds held in the trust account to pay a finder's fee to any
unaffiliated party that provides information regarding prospective targets to
us.
We
believe that the working capital available to us, in addition to the funds
available to us outside of the trust account will be sufficient to allow us to
operate until May 31, 2009, assuming that a business combination is not
consummated during that time. We have estimated that up to $3,300,000 of working
capital and reserves shall be allocated as follows for our operating expenses
from our initial public offering through May 31, 2009: $800,000 of expenses for
legal, accounting and other expenses attendant to the due diligence
investigations and structuring and negotiating a business combination; up to
$180,000 for the administrative fee payable to PLM International Inc. ($7,500
per month for 24 months), an affiliated third party; $100,000 of expenses in
legal and accounting fees relating to our SEC reporting obligations; and
$2,220,000 for general working capital that can be used for fairness opinions in
connection with our acquisition plans, director and officer liability insurance
premiums, and other miscellaneous expenses and reserves. As of January 31, 2009,
we had $2,546,322 of cash and cash equivalents available for our use outside of
the trust account.
We do not
believe we will need to raise additional funds in order to meet the expenditures
required for operating our business. However, we may need to raise additional
funds through a private offering of debt or equity securities if such funds are
required to consummate a business combination that is presented to us. We would
only consummate such a fund raising simultaneously with the consummation of a
business combination.
Through
January 31, 2009, $7,280,750 of interest income was released to the Company from
the trust account of which $4,280,750 was used to pay income and franchise
taxes.
During
the quarter ended January 31, 2009 the decrease in interest income was primarily
due to the trust funds being placed in a less risky investment vehicle due to
the current market conditions.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
To date,
our efforts have been limited to organizational activities and activities
relating to our initial public offering and the identification of a target
business. We have neither engaged in any operations nor generated any revenues.
As the proceeds from our initial public offering held in trust have been
invested in short term investments, our only market risk exposure relates to
fluctuations in interest.
As of
January 31, 2009, $224,014,838 was held in trust for the purposes of
consummating a business combination. At January 31, 2009 the investment held in
trust was invested in a Morgan Stanley Treasury Portfolio fund. As of January
31, 2009, the effective annualized interest rate payable on our investment was
0.10%.
We have
not engaged in any hedging activities since our inception on September 9, 2005.
We do not expect to engage in any hedging activities with respect to the market
risk to which we are exposed.
ITEM
4. CONTROLS AND PROCEDURES.
Our
management carried out an evaluation, with the participation of our principal
executive officer and principal financial officer of the effectiveness of our
disclosure controls and procedures as of January 31, 2009, the end of the fiscal
quarter covered in this report. Based upon that evaluation, our principal
executive officer and principal financial officer concluded that our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934 (“Exchange Act”)) were effective to ensure
that information required to be disclosed by us in reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in Securities and Exchange Commission rules
and forms and is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure.
As of
January 31, 2009, there has been no change in our internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during our most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART
II
OTHER
INFORMATION
Please
see the information disclosed in the “Risk Factors” section of our Form 10-K for
the year ended July 31, 2008 filed with the Securities and Exchange Commission
on October 6, 2008.
ITEM
6. EXHIBITS.
The
Company hereby files as part of this quarterly report on Form 10-Q the Exhibits
listed below:
31.1 -
Section 302 Certification by CEO
31.2 -
Section 302 Certification by CFO
32.1 -
Section 906 Certification by CEO
32.2 -
Section 906 Certification by CFO
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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STONELEIGH
PARTNERS ACQUISITION CORP.
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Dated:
March 10, 2009
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By:
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/s/ Gary
D. Engle
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Gary
D. Engle
Chairman
of the Board and Chief Executive Officer
(Principal
Executive Officer)
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Dated: March 10, 2009
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By:
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/s/ James
A. Coyne
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James
A. Coyne
Chief
Financial Officer and Vice Chairman
(Principal
Financial and Accounting Officer)
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