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| PEX > SEC Filings for PEX > Form 10-Q on 13-Nov-2008 | All Recent SEC Filings |
13-Nov-2008
Quarterly Report
Forward Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We have based these forward-looking statements on our current
expectations and projections about future events. These forward-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
Securities and Exchange Commission 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 June 1, 2006 as a blank check company for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition or other similar business combination, one or more operating businesses in the healthcare industry. Until the closing of our initial public offering on June 13, 2007 ("Public Offering"), all of our activity related to our formation and our Public Offering. 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.
Apex Acquisition Sub, Inc. is a Delaware corporation and a wholly-owned subsidiary of Apex ("Acquisition Sub"). Acquisition Sub was formed for the purpose of effecting a Business Combination and has engaged in no other business activities or operations since its formation.
Results of Operations
The Company's net income of $73,753 for the three months ended September 30, 2008 consisted of formation and operating costs of $144,146 offset by dividend and interest income of $278,057. During the same three month period, we recorded a provision for income taxes in the amount of $60,158. For the three months ended September 30, 2007, the Company had net income of $411,389, consisting of formation and operating costs of $170,920, dividend and interest income of $875,429 and a provision for income taxes of $293,120. Net income during the three months ended September 30, 2008 was lower than the prior year's quarter primarily due to reduced interest income resulting from lower interest rates on investment balances.
The net income for the nine months ended September 30, 2008 amounted to $35,963 and consisted of formation and operating costs of $1,067,187, dividend and interest income of $1,165,068 and a provision for income taxes of $61,918. For the nine months ending September 30, 2007, the net income of $443,989 consisted of formation and operating costs of $254,855, dividend and interest income of $991,964 and a provision for income taxes of $293,120.
The net income of $680,564 for the period from June 1, 2006 (date of inception) to September 30, 2008 consisted of formation and operating costs of $1,702,391, dividend and interest income of $2,951,848 and a provision for income taxes of $568,893.
Operating costs during the nine month period ending September 30, 2008 included $395,483 in expenses related to due diligence associated with the terminated merger with Dynogen. In addition, $150,000 of legal expenses, associated with the potential merger, were incurred.
Liquidity and Capital Resources
We will likely use all or substantially all of the net proceeds of the Public Offering and private placement that occurred immediately prior thereto held outside the trust account and the up to $1,600,000 of dividend income (net of income taxes payable thereon) available to us for working capital to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating the business combination. Certain of our Directors (or, in some cases, affiliates of our Directors) will provide additional working capital funding on an as-needed basis on terms to be agreed upon by the Board of Directors. We believe the funds currently available to us outside of the trust account, plus the advances from Directors, will be sufficient to allow us to operate through the end of 2008 and to consummate 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 as well as any other net proceeds not expended will be used to finance the operations of the target business.
Off-Balance Sheet Arrangements
Options and warrants issued in conjunction with our initial public offering are equity linked derivatives and accordingly represent off-balance sheet arrangements. The options and warrants meet the scope exception in paragraph 11(a) of Statement of Financial Accounting Standards 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") and are accordingly not accounted for as derivatives for purposes of SFAS 133, but instead are accounted for as equity. See Note 4 to the financial statements for more information.
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