looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
The following discussion should be read in conjunction with our unaudited Financial Statements and related Notes thereto included elsewhere in this report.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. Overview
We were formed on July 18, 2006 as a blank check company for the purpose of acquiring, through a merger, stock exchange, asset acquisition, reorganization or similar business combination, one or more operating businesses. We intend to use cash derived from the net proceeds of our initial public offering, together with any additional financing arrangements that we undertake, to effect a business combination.
On February 9, 2007, the Company sold 12,500,000 units ("Units") at an offering price of $8.00 per Unit. Each Unit consists of one share of the Company's common stock, $0.0001 par value, and one redeemable common stock purchase warrant (each, a "Warrant"). Each Warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of $6.00 commencing on the later of (a) February 5, 2008 or (b) the consummation of an initial Business Combination with a target business and expiring January 30, 2011.
Recent Developments
On February 26, 2008, as previously disclosed in our Current Report on Form 8-K, dated February 26, 2008 and filed with the SEC on February 27, 2008, the Company entered into definitive agreements to acquire Archway Marketing Services Inc. ("Archway"), a provider of marketing operations management services, which is a subsidiary of AHL Services, Inc. ("AHL") and RAZOR Business Strategy Consultants, LLC ("RAZOR"), a direct and interactive retail marketing agency (the "Acquisitions").
Under the terms of the acquisition agreements, Union Street will acquire both RAZOR and Archway for an aggregate purchase price of $110.3 million, of which $10.0 million will be paid in shares of our common stock. The completion of each transaction is contingent upon the closing of the other.
• Archway Marketing Services, Inc. - Union Street will acquire Archway from AHL Services for a purchase price of $80.3 million. Mr. A. Clayton Perfall, Chairman of the Board of Directors, President and Chief Executive Officer of Union Street, is President, Chief Executive Officer, a director and 4.6% shareholder of AHL Services and pursuant to a Letter Agreement, dated February 26, 2008, Mr. Perfall has agreed to invest $3.0 million of his proceeds in Union Street common stock, valued at $8.00 per share. The shares will be restricted from disposition or transfer for a period of one year from closing. If mutually agreed upon between a special committee of the board of directors of Union Street and Mr. Perfall, he may fulfill some or all of this obligation by purchasing common stock of Union Street in the open market or in privately negotiated transactions prior to closing of the Acquisitions. Founded in 1953, Archway has grown to approximately 600 employees across eight North American facilities and six on-site locations. Archway is primarily focused on the operational components of outsourced marketing services, including program budgeting, logistics management, vendor management, sales portals, inventory management, fulfillment and distribution, customer care and analytics. Archway offers a comprehensive suite of marketing solutions to meet the needs of clients across a broad range

industries, including food & beverage, retail, automotive, life sciences, financial services, consumer products, and technology.

• RAZOR Business Strategy Consultants, LLC - Union Street will acquire RAZOR for a purchase price of $30.0 million, of which $10.0 million will be paid in shares of our common stock. The shares of common stock issued to RAZOR in connection with the transaction will be restricted from disposition or transfer for a period of two years from closing. Founded in 2003, RAZOR has approximately 165 employees and serves leading national marketers. RAZOR is focused on heavy data analytics and program design capabilities, including customer and transaction analytics, such as media mix modeling, segmentation, and ROI analysis, and transaction-level communications, such as database marketing/CRM, direct mail, promotion, web development and digital communications.

If the Archway Purchase Agreement is terminated because the holders of 19.99999% or more of the number of shares of Union Street's common stock issued in Union Street's initial public offering and outstanding as of the record date exercise their rights to convert the shares of Union Street common stock held by them into cash in accordance with Union Street's certificate of incorporation, Union Street will pay to AHL a termination fee equal to the lesser of: (a) $200,000 in cash; and (b) 50% of the funds held by Union Street outside of the trust fund after paying or reserving for all of its costs and expenses through liquidation.
If the Razor Purchase Agreement is terminated because the holders of 19.99999% or more of the number of shares of Union Street's common stock issued in Union Street's initial public offering and outstanding as of the record date exercise their rights to convert the shares of Union Street common stock held by them into cash in accordance with Union Street's certificate of incorporation, Union Street will pay to the Sellers a termination fee equal to the lesser of:
(a) $200,000 in cash; and (b) 50% of the funds held by Union Street outside of the trust fund after paying or reserving for all of its costs and expenses through liquidation. The Company received a loan commitment letter from Bank of America who has committed to provide financing of up to $30.0 million to partially fund the acquisition consideration and related fees and expenses, subject to borrowing base limitations. The commitment will expire on January 31, 2009, provided, however, that if the acquisitions have not been completed by October 31, 2008, the Company will be obligated to pay Bank of America a fee equal to 0.10% on the aggregate principal amount of the commitment. The Company has entered into certain arrangements with service providers that will result in incremental transaction costs upon completion of a business combination. As of June 30, 2008, these amounts would result in approximately $1,850,000 of additional costs. For a more complete discussion of our proposed business combination, see our Current Report on Form 8-K, dated February 26, 2008, as filed with the SEC on February 27, 2008 and our Preliminary Proxy Statement on Schedule 14 A filed with the SEC on April 23, 2008, as amended on June 5, 2008 and July 14, 2008. On June 23, 2008, Union Street entered into an agreement (the ''Argenbright Agreement'') with Archway and Argenbright, whereby Union Street agreed to waive Argenbright's compliance with the ''non-solicitation'' provisions of the Archway Purchase Agreement and release all claims that Union Street may have against Argenbright in connection with the presentation of an alternative transaction by certain principals of Union Street to Argenbright, provided that the pursuit of such an alternative transaction does not hinder or delay the consummation of the Acquisitions by Union Street. In consideration for such waiver, Argenbright agreed to waive its right to receive a termination fee as set forth in the Archway Purchase Agreement, subject to the consummation of an alternative transaction on or before the earlier of twenty (20) days after termination of the Archway Purchase Agreement, or October 31, 2008. For a more complete discussion of the Argenbright Agreement see our Current Report on Form 8-K filed on June 24, 2008.
On June 23, 2008, A. Clayton Perfall, Chief Executive Officer, President and Chairman of the Board of Directors of Union Street and President, Chief Executive Officer, a director and 4.6% shareholder of AHL and also a director and officer of its subsidiaries, including Archway, and Brian H. Burke, Chief Financial Officer, Treasurer and a member of Union Street's Board of Directors and a non-executive officer of AHL and certain of its subsidiaries, entered into a letter agreement (the ''Letter Agreement'') with Argenbright. Pursuant to the Letter Agreement, Messrs. Perfall and Burke and Argenbright agreed that if Messrs. Perfall and Burke, or their designee, are willing to enter into an alternative transaction to acquire Archway, then Messrs. Perfall and Burke, on behalf of themselves or their designee, and Argenbright will negotiate in good faith to enter into a stock purchase agreement on substantially the same terms as are in the Archway Purchase Agreement, including the same price, the same representations and warranties, the same covenants and indemnities and otherwise substantially similar except to the extent related to differences in the nature of any such buyer and the fact that it may not be a SPAC, and which shall have a condition to the closing of any alternative transaction be the failure of Union Street stockholders to approve the Acquisitions. In the event that the Archway Purchase Agreement is terminated, Messrs. Perfall and Burke and Argenbright agreed to use their reasonable best efforts

to consummate such an alternative transaction, provided that the closing of any such alternative transaction occur prior to the earlier of twenty (20) days after termination of the Archway Purchase Agreement, or October 31, 2008, after which date the parties' obligations under the Letter Agreement will expire and be of no further force or effect. For a more complete discussion of the Letter Agreement see our Current Report on Form 8-K filed on June 24, 2008.
As of June 30, 2008, $100,665,539 was held in trust and we had $573,884 of cash available to us for our activities in connection with identifying and conducting due diligence of a suitable business combination, and for general corporate matters.
Through June 30, 2008, our efforts have been limited to organizational activities, activities relating to our initial public offering, activities relating to identifying and evaluating prospective acquisition candidates, entering into the agreements described above and activities relating to general corporate matters; we have neither engaged in any operations nor generated any revenues, other than interest income earned on the proceeds of our private placement and initial public offering. For the three and six months ended June 30, 2008, we earned $336,388 and $1,160,241, respectively, in interest income on the trust account of which $44,403 and $103,151, respectively, was deferred and $291,985 and $1,057,090, respectively, is included in interest income in the statements of operations.
On February 19, 2008 and July 17, 2007, the Company had released to it $250,000 and $1,250,000, respectively, of investment income earned on the trust

account for working capital purposes in accordance with the Investment
Management Trust Agreement.
   The following table shows the total funds held in the trust account as of
June 30, 2008:

Net proceeds from our initial public offering and private placement of
warrants to Union Street Capital Management, LLC placed in trust            $  94,800,000
Deferred underwriters' discounts and commissions                                3,700,000
Total interest received through June 30,2008                                    5,520,539
Working capital disbursements through June 30, 2008                            (1,500,000 )
Less total disbursed for taxes through June 30, 2008                           (1,855,000 )

Total funds held in trust account as of June 30, 2008                       $ 100,665,539

Results of Operations for the three and six month period ended June 30, 2008 Net income of $66,710 reported for the three month period ended June 30, 2008 consisted primarily of investment income on the trust account (net of deferred interest) of $291,985 and other interest income of $2,973 offset by $48,212 expense for professional fees, $34,086 expense for director and officer liability insurance, $22,500 expense for a monthly administrative services agreement, $37,992 expense for travel and entertainment, $6,875 for AMEX listing fees, $40,000 for franchise tax, $4,218 for other expenses and $34,365 of income taxes. At June 30, 2008, we had cash outside of the trust fund of $573,883, prepaid expenses of $27,141 and accounts payable and accrued expenses of $41,468. Until we enter into a business combination, we will not have revenues other than interest income, and will continue to incur expenses relating to identifying a target business to acquire.
Net income of $443,585 reported for the six month period ended June 30, 2008 consisted primarily of investment income on the trust account (net of deferred interest) of $1,057,090 and other interest income of $10,124 offset by $85,547 expense for professional fees, $68,171 expense for director and officer liability insurance, $45,000 expense for a monthly administrative services agreement, $85,437 expense for travel and entertainment, $13,750 for AMEX listing fees, $84,775 for franchise tax, $12,325 for other expenses and $228,513 of income taxes. At June 30, 2008, we had cash outside of the trust fund of $573,883, prepaid expenses of $27,141 and accounts payable and accrued expenses of $41,468. Until we enter into a business combination, we will not have revenues other than interest income, and will continue to incur expenses relating to identifying a target business to acquire.
We presently occupy office space provided by Union Street Capital Management LLC, an affiliate of our initial stockholders. Union Street Capital Management LLC has agreed that, until we consummate the acquisition of a target business, it will make such office space, as well as certain office and secretarial services, available to us, as we may require from time to time. We have agreed to pay Union Street Capital Management LLC $7,500 per month for such services commencing on February 1,

2007. The statement of operations for the three and six months ended June 30, 2008 includes $22,500 and $45,000, respectively, related to this agreement. Liquidity and Capital Resources
Assuming the release of the full amount of the interest we are entitled to receive from the trust account, we believe we will have sufficient available funds outside of the trust account to operate through February 7, 2009, assuming that a business combination is not consummated during that time. We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business prior to a business combination. 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 financing simultaneously with the consummation of a business combination. Off-Balance Sheet Arrangements
Warrants issued in conjunction with our initial public offering are equity linked derivatives and accordingly represent off-balance sheet arrangements. The warrants meet the scope exception in paragraph 11(a) of Financial Accounting Standards (FAS) 133 and are accordingly not accounted for as derivatives for purposes of FAS 133, but instead are accounted for as equity. See Note C to the financial statements for more information. Recent Accounting Pronouncements
In September 2006, the FASB issued Statement No. 157, Fair Value Measurements ("SFAS No. 157"). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. This statement clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability. SFAS No. 157 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data. SFAS No. 157 applies whenever other standards require assets or liabilities to be measured at fair value. Effective January 1, 2008, the Company implemented SFAS No. 157, which did not have an impact on Company's financial results. 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 until January 1, 2009.
We adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities including an Amendment of FASB Statement No. 115 ("SFAS 159") on January 1, 2008. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. We have not made any fair value elections as permitted under the provisions of SFAS 159; therefore, the adoption of this standard did not have an impact on our consolidated financial statements.