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| KHA > SEC Filings for KHA > Form 10-Q on 13-Nov-2008 | All Recent SEC Filings |
13-Nov-2008
Quarterly Report
The following discussion should be read in conjunction with the Company's Consolidated Financial Statements and footnotes thereto contained in this report.
Forward Looking Statements
The statements discussed in this Report include forward looking statements that involve risks and uncertainties detailed from time to time in the Company's reports filed with the Securities and Exchange Commission.
Overview
We were formed on January 9, 2007 as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business in the healthcare or healthcare-related industries. We intend to utilize cash derived from the proceeds of our recently completed public offering, our capital stock, debt or a combination of cash, capital stock and debt, in effecting a business combination.
Results of Operations
For the three months ended September 30, 2008, we had a net loss of $(172,412) derived from interest income of $384,811 offset by $17,500 for officer liability insurance, $393,013 for professional fees, $92,043 in Capital and Delaware franchise taxes, $(16,116) in New York State and City income taxes, $30,000 in administrative fees, $7,655 for dues and subscriptions and $33,128 for other operating expenses.
For the three months ended September 30, 2007, we had a net income of $563,987 derived from interest income of $912,692 offset by $13,968 for officer liability insurance, $71,940 for professional fees, $20,500 in Delaware franchise taxes, $149,258 in New York State and City income taxes, $23,871 in administrative fees, $9,256 for dues and subscriptions and $59,912 for other operating expenses.
For the nine months ended September 30, 2008, we had a net income of $196,259 derived from interest income of $1,698,418 offset by $52,500 for officer liability insurance, $745,515 for professional fees, $133,376 in Capital and Delaware franchise taxes, $190,903 in New York State and City income taxes, $90,000 in administrative fees, $21,565 for dues and subscriptions and $268,300 for other operating expenses.
For the period from January 9, 2007 (inception) to September 30, 2007, we had a net income of $558,751 derived from interest income of $912,836 offset by $13,968 for officer liability insurance, $75,891 for professional fees, $20,500 in Delaware franchise taxes, $149,258 in New York State and City income taxes, $23,871 in administrative fees, $9,256 for dues and subscriptions and $61,341 for other operating expenses .
For the period from January 9, 2007 (inception) to September 30, 2008, we had a net income of $1,438,699 derived from interest income of $3,746,858 offset by $83,968 for officer liability insurance, $932,047 for professional fees, $214,093 in Capital and Delaware franchise taxes, $517,426 in New York State and City income taxes, $143,871 in administrative fees, $40,251 for dues and subscriptions and $376,503 for other operating expenses.
Decreases in interest income was the result of interest rates decreasing over the periods reported on.
Financial Condition and Liquidity
We consummated our initial public offering on July 25, 2007. Gross proceeds from our initial public offering (including from our private placement of warrants and exercise of the underwriters' over-allotment option) were $138,000,000. We incurred a total of $9,660,000 in underwriting discounts and commissions and $609,108 for other costs and expenses related to the offering and the over-allotment option. After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to us from the offering were approximately $131,871,000, of which $131,855,000 was deposited into the trust account. The amount placed in trust includes $4,140,000 of deferred underwriting discounts and commissions that will be paid to the underwriters of our initial public offering if we consummate a business combination. In addition, all of the proceeds from the private sale of the warrants were deposited into the trust fund, for a total of $133,930,000 held in trust (or approximately $7.76 per share sold in the offering). The funds held in trust are being held in a segregated account at Deutsche Bank Trust Americas and are currently invested in the Federated U.S. Treasury Cash Reserves Fund (ticker UTIXX).The remaining proceeds are available to be used by us to provide for business, legal and accounting due diligence on prospective acquisitions, tax payments and continuing general and administrative expenses. We intend to use substantially all of the net proceeds of this offering to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating the 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 fund as well as any other net proceeds not expended will be used to finance the operations of the target business. We believe we will have sufficient available funds outside of the trust fund to operate through July 19, 2009, assuming that a business combination is not consummated during that time.
We expect our primary liquidity requirements during this period to include $600,000 of expenses for legal, accounting and other third-party expenses attendant to the search for target businesses and to the due diligence investigations, structuring and negotiating of a business combination, $240,000 for the administrative fee payable to KBL Healthcare Management, an affiliate of three of the Initial Stockholders ($10,000 per month for 24 months), $140,000 of expenses in legal and accounting fees relating to our SEC reporting obligations, $50,000 of expenses for the due diligence and investigation of a target business performed by our officers, directors and existing stockholders and $970,000 for general working capital that will be used for miscellaneous expenses, taxes and reserves, including approximately $140,000 for director and officer liability insurance premiums. We do not believe we will need to raise additional funds following this offering 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 financing simultaneously with the consummation of a business combination.
Commencing on July 25, 2007, we began incurring a fee from KBL Healthcare Management of $10,000 per month for providing us with office space and certain general and administrative services. Additionally, on January 5, 2007, Marlene Krauss advanced to us $100,000 for payment of offering expenses on our behalf. The loan was repaid following our initial public offering from the proceeds of the offering.
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