x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Delaware
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20-3893077
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(State
or other jurisdiction of
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(I.R.S.
Employer Identification No.)
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incorporation
or organization)
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2601
Ocean Park Blvd. Suite 320
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Santa
Monica, California
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90405
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(Address
of principal executive offices)
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(Zip
Code)
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·
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being
a development stage company with no operating
history;
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·
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dependence
on key personnel, some of whom may join us following an initial
transaction;
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·
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personnel
allocating their time to other businesses and potentially having
conflicts
of interest with our business;
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·
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potentially
being unable to obtain additional financing to complete an initial
transaction;
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·
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limited
pool of prospective target
businesses;
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·
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securities’
ownership being concentrated;
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·
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potential
change in control if we acquire one or more target businesses for
stock;
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·
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risk
associated with operating in the media, entertainment or
telecommunications industries;
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·
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delisting
of our securities from the American Stock Exchange or our inability
to
have our securities listed on the American Stock Exchange following
a
business combination;
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·
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financial
performance following an initial transaction;
or
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·
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those
other risks and uncertainties detailed in the Registrant’s filings with
the Securities and Exchange
Commission.
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PART I
— FINANCIAL INFORMATION
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Item 1.
Condensed Financial Statements
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4
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Condensed
Balance Sheet
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4
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Condensed
Statement of Operations
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5
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Condensed
Statement of Stockholders’ Equity
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6
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Condensed
Statement of Cash Flows
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7
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Notes
to Condensed Financial Statements
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8
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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
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15
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Item 3.
Quantitative and Qualitative Disclosures about Market Risk
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20
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Item 4.
Controls and Procedures
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20
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PART II
— OTHER INFORMATION
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Item
1. Legal Proceedings
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21
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Item 1A.
Risk Factors
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21
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Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds
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21
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Item 3.
Defaults Upon Senior Securities
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21
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Item 4.
Submission of Matters to a Vote of the Security Holders
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21
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Item 5.
Other Information
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21
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Item 6.
Exhibits
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21
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SIGNATURES
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22
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EXHIBITS
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September
30, 2007
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December 31, 2006
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||||||
(unaudited)
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|||||||
Assets
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|||||||
Current
assets:
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|||||||
Cash
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$
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452,224
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$
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1,228,722
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|||
Investments
Held in Trust
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148,220,957
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145,536,328
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|||||
Prepaid
Expenses
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17,501
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63,996
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|||||
Prepaid
income taxes
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----
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—
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|||||
Total
Current Assets
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148,690,682
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146,829,046
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|||||
Deferred
Tax Asset
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585,978
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256,314
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|||||
Deferred
Acquisition costs
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2,168,769
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196,880
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|||||
Total
Assets
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$
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151,445,429
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$
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147,282,240
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|||
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|||||||
Liabilities
And Stockholders’ Equity
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|||||||
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|||||||
Current
Liabilities
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|||||||
Accrued
Costs
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$
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623,989
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$
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76,978
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|||
Income
and Capital Taxes Payable
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20,001
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512,763
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|||||
Accounts
Payable and Accrued Expenses
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50,968
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64,558
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|||||
Deferred
Interest
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1,136,027
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485,916
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|||||
Stockholder
Loans
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750,000
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----
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|||||
Deferred
Underwriter Fees
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3,000,000
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3,000,000
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|||||
Total
Liabilities
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5,580,985
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4,140,215
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|||||
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|||||||
Common
Stock Subject to Possible Conversion, 3,748,125 Shares At Conversion
Value
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27,901,042
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27,901,042
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|||||
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|||||||
Commitments
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|||||||
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|||||||
Stockholders’
Equity
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|||||||
Preferred
Stock, $.001 par value, 1,000,000 shares authorized; None issued
or
outstanding
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—
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—
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|||||
Common
Stock, $.001 par value, 60,000,000 shares authorized; 23,437,500
Shares
(which
Includes
3,748,125
Subject
to Possible Conversion) and 4,687,500 Shares Issued and Outstanding,
respectively
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23,437
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23,437
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|||||
Additional
Paid in Capital
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113,190,621
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113,190,621
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|||||
Earnings
Accumulated during the Development Stage
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4,749,344
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2,026,925
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|||||
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|||||||
Total
Stockholders’ Equity
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117,963,402
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115,240,983
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|||||
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|||||||
Total
Liabilities and Stockholders’ Equity
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$
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151,445,429
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$
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147,282,240
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Three
Months
Ended
September
30, 2007
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Three
Months
Ended
September
30, 2006
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Nine
Months
Ended
September
30, 2007
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Nine
Months
Ended
September
30, 2006
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For
the period
From
December
6,
2005
(Inception)
to
September
30, 2007
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||||||||||||
Revenue
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$
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—
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$
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—
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$
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—
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$
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—
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$
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—
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||||||
Interest
Income
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1,654,293
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1,582,948
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4,788,894
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1,959,314
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8,381,807
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|||||||||||
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||||||||||||||||
Operating
Expenses
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||||||||||||||||
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||||||||||||||||
General &
Administrative
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81,522
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80,437
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255,303
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116,472
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474,842
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|||||||||||
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||||||||||||||||
Net
Income before Provision for Income Taxes
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$
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1,572,771
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$
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1,502,511
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$
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4,533,591
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$
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1,842,842
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$
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7,906,965
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||||||
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||||||||||||||||
Provision
for Income Taxes
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631,123
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599,316
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1,811,172
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734,808
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3,157,621
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|||||||||||
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||||||||||||||||
Net
Income
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$
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941,648
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$
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903,195
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$
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2,722,419
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$
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1,108,034
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$
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4,749,344
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||||||
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||||||||||||||||
Weighted
Average Number of Common Shares
Outstanding
—
Basic
and diluted
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23,437,500
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23,437,500
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23,437,500
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13,066,621
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18,468,750
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|||||||||||
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||||||||||||||||
Net
Income Per Share - Basic and diluted
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$
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0.04
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$
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0.04
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$
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0,12
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$
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0.08
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$
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0.26
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Common Stock
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Additional
Paid-in-
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Earnings/(Deficit)
Accumulated
During
the
Development
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|||||||||||||
Shares
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Amount
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Capital
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Stage
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Total
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||||||||||||
Contributions
from founding stockholders - December
13,
2005 at $.005 per share
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4,687,500
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$
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4,687
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$
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20,313
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$
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—
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$
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25,000
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|||||||
Net
Loss
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—
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—
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—
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(2,013
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)
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(2,013
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)
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|||||||||
Balance
- December 31, 2005
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4,687,500
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$
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4,687
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$
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20,313
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$
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(2,013
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)
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$
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22,987
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||||||
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||||||||||||||||
Sale
of Founding Director
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||||||||||||||||
Warrants
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—
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—
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2,250,000
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—
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2,250,000
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|||||||||||
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||||||||||||||||
Sale
of 18,750,000 Units Net of Underwriter’s Discount
and
Offering expenses (Includes 3,748,125 Shares
Subject
to Possible Conversion)
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18,750,000
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18,750
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138,821,250
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—
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138,840,000
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|||||||||||
Proceeds
Subject to Possible Conversion of 3,748,125 Shares
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—
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—
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(27,901,042
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)
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—
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(27,901,042
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)
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|||||||||
Sale
of Underwriter Option
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—
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—
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100
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—
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100
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|||||||||||
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||||||||||||||||
Net
Income
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—
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—
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—
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2,028,938
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2,038,938
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|||||||||||
Balance
- December 31, 2006
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23,437,500
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$
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23,437
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$
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113,190,621
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$
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2,026,925
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$
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115,240,983
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|||||||
Unaudited:
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||||||||||||||||
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||||||||||||||||
Net
Income
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—
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—
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—
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2,722,419
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2,722,419
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|||||||||||
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||||||||||||||||
Balance
- September 30, 2007
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23,437,500
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$
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23,437
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$
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113,190,621
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$
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4,749,344
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$
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117,963,402
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Nine
Months
Ended
September
30, 2007
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Nine
Months
Ended
September
30, 2006
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For
the period
from
December
6,
2005
(inception)
to
September 30,
2007
(cumulative)
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||||||||
Cash
Flows From Operating Activities:
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||||||||||
Net
Income
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$
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2,722,419
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$
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1,108,034
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$
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4,749,344
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||||
Adjustments
to reconcile net income to net cash used in
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||||||||||
operating
activities:
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||||||||||
Increase
in Value of Investments Held in Trust
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(5,420,302
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)
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(1,898,659
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)
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(9,471,630
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)
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||||
Increase
in Deferred Income Tax Benefit
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(329,664
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)
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(141,899
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)
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(585,978
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)
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Increase
in Deferred Interest
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650,111
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264,907
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1,136,027
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|||||||
Changes
in Operating Assets and Liabilities:
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||||||||||
Increase/Decrease
in Accounts Payable and Accrued
|
||||||||||
Expenses
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(13,590
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)
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25,174
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50,968
|
||||||
Increase/Decrease
in Income and Capital Taxes Payable
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(492,762
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)
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566,707
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20,001
|
||||||
Increase/Decrease
in Prepaid Expenses
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46,495
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(87,284
|
)
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(17,501
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)
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|||||
Net
Cash Used in Operating Activities
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(2,837,293
|
)
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(163,020
|
)
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(4,118,769
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)
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||||||||||
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||||||||||
Cash
Flow from Investing Activities
|
||||||||||
Increase/
Decrease in Other Assets - Payment of Acquisition
Costs
|
(1,424,878
|
)
|
—
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(1,544,780
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)
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|||||
Investments
Placed in Trust
|
—
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(142,575,000
|
)
|
(142,575,000
|
)
|
|||||
Tax
Payments from Trust
|
2,735,673
|
—
|
3,825,673
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|||||||
Net
Cash Provided by (Used in) Investing Activities
|
1,310,795
|
(142,575,000
|
)
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(140,294,107
|
)
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|||||
|
||||||||||
Cash
Flow from Financing Activities:
|
||||||||||
Proceeds
from Public Offering
|
—
|
150,000,000
|
150,000,000
|
|||||||
Proceeds
from Founding Director Warrant Purchase
|
—
|
2,250,000
|
2,250,000
|
|||||||
Proceeds
from Issuance of Underwriter Option
|
—
|
100
|
100
|
|||||||
Proceeds
from Sale of Common Stock
|
—
|
—
|
25,000
|
|||||||
Proceeds
from Notes Payable, Stockholders
|
750,000
|
—
|
975,000
|
|||||||
Payment
of Notes Payable, Stockholders
|
—
|
(225,000
|
)
|
(225,000
|
)
|
|||||
Payment
of Offering Costs
|
—
|
(8,064,239
|
)
|
(8,160,000
|
)
|
|||||
Net
Cash Provided by (Used in) Financing Activities
|
750,000
|
143,960,861
|
144,865,100
|
|||||||
|
||||||||||
Net
Increase/(Decrease) in Cash
|
(776,498
|
)
|
1,222,841
|
452,224
|
||||||
|
||||||||||
Cash
at Beginning of Period
|
1,228,722
|
154,239
|
—
|
|||||||
|
||||||||||
Cash
at end of period
|
$
|
452,224
|
$
|
1,377,080
|
$
|
452,224
|
||||
|
||||||||||
Supplemental
schedule of non-cash financing activities:
|
||||||||||
Accrual
of Deferred Underwriting Fees
|
$
|
—
|
$
|
3,000,000
|
$
|
3,000,000
|
||||
Accrual
of Acquisition Costs
|
$
|
547,011
|
|
$
|
—
|
$
|
623,959
|
|||
|
$
|
—
|
$
|
—
|
(i)
|
|
an
aggregate of 1,256,447 shares of the Registrant’s common stock valued at
$9,557,792;
|
Number
|
|
Description
|
|
|
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10.1
|
|
Asset
Purchase Agreement, dated May 30, 2007, by and between Registrant
and the
National Hot Rod Association (incorporated by reference to
Exhibit 10.1 to Current Report on Form 8-K dated June 5, 2007
(Commission File No. 1-32890))
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10.2
|
|
Key
Definitions Agreement, dated May 30, 2007, by and between Registrant
and
the National Hot Rod Association (incorporated by reference to Annex
B to
Schedule 14A Proxy Statement filed July 17, 2007 (Commission File
No. 1-32890))
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31.1*
|
|
Certification
by Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
31.2*
|
|
Certification
by Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
32.1*
|
|
Certification
by Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2*
|
|
Certification
by Principal Executive Officer pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
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|
HD PARTNERS ACQUISITION CORPORATION | ||
Date:
November 9, 2007
|
By:
|
/s/
Eddy W.
Hartenstein
|
|
Eddy
W. Hartenstein
|
|
|
Chairman,
President and Chief Executive Office
(Principal
Executive Officer)
|
|
By:
|
/s/
Robert L.
Meyers
|
|
Robert
L. Meyers
|
|
|
Chief
Financial Officer and Treasurer
(Principal
Financial and Accounting
Officer)
|