Add
TUX to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| TUX > SEC Filings for TUX > Form 10-Q on 5-Nov-2008 | All Recent SEC Filings |
5-Nov-2008
Quarterly Report
Overview
We are a blank check company formed on October 16, 2007 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more domestic or international operating businesses or assets. We consummated our initial public offering on January 29, 2008. We are currently in the process of evaluating and identifying targets for a business combination. Our efforts in identifying prospective target businesses are not limited to a particular industry or group of industries.
We intend to effect our business combination using cash from the proceeds of our initial public offering, our capital stock, debt or a combination of cash, stock and debt.
The issuance of additional shares of our stock in a business combination:
· may significantly dilute the equity interest of our public stockholders;
· may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
· may cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carryforwards, if any, and could result in the resignation or removal of our present officers and directors and cause our public stockholders to become minority stockholders in the combined entity;
· may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights or a person seeking to obtain control of our company; and
· may adversely affect prevailing market prices for our common stock and/or warrants.
Similarly, if we issue debt securities, it could result in:
· default and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations;
· acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
· our immediate payment of all principal and accrued interest, if any, if the debt securities are payable on demand; and
· our inability to obtain necessary additional financing if the debt securities contain covenants restricting our ability to obtain such financing while the debt securities are outstanding.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. Our plans to raise capital or to consummate our business combination may not be successful. We will only continue in existence for a specified period of time if a business combination is not consummated.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date, other than in connection with our initial public offering. Our only activities since inception have been organizational activities, those necessary to consummate our initial public offering and those in connection with identifying and investigating targets for a business combination. We will not generate any operating revenues until after consummation of our business combination. We are generating non-operating income in the form of interest income on cash and cash equivalents and short-term investments. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase substantially.
Liquidity and Capital Resources
A total of $905.6 million of the net proceeds from our initial public offering, including $10.0 million from the sale of the sponsor warrants in a private placement and $29.8 million of deferred underwriting commissions, was placed in a trust account initially at Wilmington Trust Company, which we refer to as Wilmington, with Wilmington serving as trustee and custodian. As of September 30, 2008, the trust account was invested in Treasury bills with maturities ranging from 72 to 86 days when purchased and, to a lesser extent, two money market mutual funds that invest exclusively in U.S. Treasury securities. In addition, after the effect of $0.8 million that was deducted from the offering proceeds to pay expenses of the offering, we received $0.5 million of the offering proceeds to be held outside of the trust account to fund a portion of our working capital requirements. A portion of the amount held outside the trust account was used to repay a $250,000 loan from our sponsor, the proceeds of which had been used to fund offering related expenses.
As of September 30, 2008, the balance in the trust account was $909.9 million, or approximately $9.89 per share held by stockholders that participated in our initial public offering, which we refer to as our public stockholders. Up to $9.5 million of interest income earned on the cash equivalents and short-term investments in the trust account may be withdrawn to fund general and administrative expenses. Amounts necessary to pay income taxes and investment management fees may also be withdrawn but are not charged against the $9.5 million limit. Since the inception of the trust through September 30, 2008, $10.2 million of interest income was earned, $4.3 million was withdrawn to pay estimated income tax payments and investment management fees and $1.6 million was withdrawn to fund general and administrative expenses, including $0.35 million of legal and printing and engraving expenses previously incurred in connection with the offering but that had been deferred until after the consummation of the offering. As of September 30, 2008, the balance of our cash and cash equivalents held outside the trust account was $0.3 million.
Effective October 1, 2008, in accordance with the terms of the investment management trust agreement dated as of January 23, 2008 between us and Wilmington, which we refer to as the Original Trust Agreement, by mutual agreement of the parties, Wilmington resigned as trustee and custodian of the trust account and we appointed U.S. Trust Company of Delaware, which we refer to as U.S. Trust, as successor trustee and custodian. We and U.S. Trust have entered into an amended and restated investment management trust agreement dated as of October 1, 2008, the terms of which are substantially the same as the Original Trust Agreement.
Prior to the consummation of a business combination, we intend to use a substantial portion of the cash released to us from the trust account in connection with identifying and evaluating prospective target businesses, selecting one or more target businesses, and structuring and negotiating the business combination. We intend to effect a business combination using the proceeds from our initial public offering, our capital stock, debt or a combination of cash, stock and debt. The proceeds held in the trust account (less amounts paid to any public stockholders who exercise their conversion rights and deferred underwriting commissions paid to the underwriters) that are not utilized as part of the consideration for a business combination will be released to us and will be available to finance the operations of the target business or businesses. Such working capital funds could be used in a variety of ways including continuing or expanding the target business' operations, for strategic acquisitions or the payment of principal or interest due on indebtedness incurred in consummating a business combination. Such funds could also be used to repay any operating expenses or finder's fees which we had incurred prior to the consummation of our business combination if the funds available to us outside of the trust account were insufficient to cover such expenses.
On November 5, 2007, our sponsor made a $250,000 loan to us to fund a portion of the organizational and offering expenses owed by us to third parties. The principal balance of the loan was repaid on January 29, 2008.
We do not believe we will need to raise additional funds following our initial public offering in order to meet our required expenditures. We will rely on the remaining funds available to us outside of the trust account, totaling $0.3 million as of September 30, 2008, and income earned of up to $9.5 million on the trust account, net of the $1.6 million withdrawn to fund general and administrative expenses through September 30, 2008, to fund such expenditures. If our estimates of the costs of undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our business combination. Moreover, we may need to obtain additional financing either to consummate our business combination or because we become obligated to convert into cash a significant number of shares of public stockholders voting against our business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Following our business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
We have never entered into any off-balance sheet financing arrangements and have never established any special purposes entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
We do not have any long-term debt, capital lease obligations, operating lease obligations, purchase obligations or other long-term liabilities.
We are obligated to pay a $10,000 monthly fee to Trian Fund Management, L.P. for office space, administrative services and support for up to 24 months (or up to 30 months in the event our stockholders approve an extension) from the date of our initial public offering. This obligation terminates upon the earlier of the consummation of our business combination and our liquidation.
In December 2007, the Financial Accounting Standards Board, with we refer to as the FASB, issued Statement No. 141 (revised 2007), "Business Combinations," which we refer to as SFAS 141(R). SFAS 141(R) retains the fundamental requirements of SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141(R) establishes principles and requirements for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in an acquisition, at their fair value as of the acquisition date. SFAS 141(R) also requires an acquirer to recognize assets acquired and liabilities assumed arising from contractual contingencies as of the acquisition date, measured at their acquisition-date fair values. Additionally, SFAS 141(R) will require that acquisition-related costs in a business combination be expensed as incurred, except for costs incurred to issue debt and equity securities. This statement applies prospectively to business combinations effective with our first fiscal quarter of 2009. Early adoption is not permitted. We are in the process of evaluating the impact SFAS 141(R) may have on our consolidated financial position and results of operations.
In December 2007, the FASB issued Statement No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of Accounting Research Bulletin No. 51," which we refer to as SFAS 160. SFAS 160 amends Accounting Research Bulletin No. 51 to establish accounting and reporting standards for the noncontrolling interest, also referred to as minority interest, in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 requires that the noncontrolling interest in a subsidiary be clearly identified and presented within the equity section of the consolidated statement of financial position but separate from the company's equity. Consolidated net income attributable to the parent and to the noncontrolling interest must be clearly identified and presented on the face of the consolidated statement of income. SFAS 160 requires that any subsequent changes in a parent's ownership interest while still retaining its controlling financial interest in its subsidiary must be accounted for as equity transactions on a consistent basis. In addition, SFAS 160 requires that upon the deconsolidation of a subsidiary, both the gain or loss arising from the deconsolidation and any retained noncontrolling equity investment in the former subsidiary be measured at fair value. SFAS 160 is effective commencing with our first fiscal quarter of 2009. Early adoption is not permitted. We are in the process of evaluating the impact FAS 160 may have on our consolidated financial position and results of operations.
We do not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
|
|