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RMGN > SEC Filings for RMGN > Form 10-Q on 15-May-2013All Recent SEC Filings

Show all filings for SCG FINANCIAL ACQUISITION CORP. | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for SCG FINANCIAL ACQUISITION CORP.


15-May-2013

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

References to the "Company," "us" or "we" refer to SCG Financial Acquisition Corp. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the interim financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (the "Report"). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Forward-Looking Statements

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "believe," "expect," "anticipate," "project," "target," "optimistic," "intend," "aim," "will" or similar expressions are intended to identify forward-looking statements. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. These statements are based on the beliefs of our management as well as assumptions made by and information currently available to us and reflect our current view concerning future events. As such, they are subject to risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among many others: our ability to successfully integrate the business of RMG and Symon; risks related to the operation of such businesses; our ability to maintain our listing on the Nasdaq Capital market; any of the factors in the "Risk Factors" section of our Annual Report for the year ended December 31, 2012, as filed with the Securities and Exchange Commission ("SEC") on March 14, 2013 ("Annual Report"); other risks identified in this Report and in the other reports and documents that we have filed with the SEC, including the Third Amended and Restated Offer to Purchase (the "Offer to Purchase") filed in connection with the Tender Offer; and any statements of assumptions underlying any of the foregoing. You should also carefully review other reports that we file with the SEC. We assume no obligation and do not intend to update these forward-looking statements, except as required by law.

Overview

We were formed as a blank check company on January 5, 2011 for the purpose of effecting the Initial Business Combination. We were not limited to a particular industry or geographic region for purposes of consummating an Initial Business Combination. The Nasdaq rules required that our Initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the sum of the balance in the Trust Account (less any deferred corporate finance fees and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our Initial Business Combination.

Recent Developments

On April 8, 2013, we consummated our acquisition of RMG pursuant to the RMG Merger Agreement, and on April 19, 2013, we consummated our acquisition of Symon pursuant to the Symon Merger Agreement. As a result of these transactions, we are no longer a blank check company. In connection with the RMG Merger, we provided our stockholders with the opportunity to redeem their shares of common stock for cash equal to $10.00 per share, upon the consummation of the RMG Merger, pursuant to the Tender Offer. The Tender Offer expired at 5:00 p.m. Eastern Time on April 5, 2013, and we promptly purchased the 4,551,228 shares of common stock validly tendered and not withdrawn pursuant to the Tender Offer, for an aggregate purchase price of approximately $45.5 million. For a description of these and other material developments subsequent to March 31, 2013, please see Note J - Subsequent Events to the interim financial statements included in this Report.

Results of Operations

We had not engaged in any operations nor generated any revenues through March 31, 2013. Our entire activity since inception up to the closing of our Offering had been in preparation of the Offering. Since the completion and closing of our Offering through March 31, 2013, our activity was limited to evaluating and negotiating business transaction candidates. We did not generate any operating revenues through March 31, 2013. Through March 31, 2013, we generated small amounts of non-operating income in the form of interest income on cash and cash equivalents. Interest income was not significant in view of current low interest rates on risk-free investments (i.e. United States Treasury Bills).

For the three months ended March 31, 2013 and March 31, 2012, we had net income/(losses) of $3,357,555 ($3,367,548 of expenses and $9,993 of accrued interest) and $369,140 ($361,777 of income and $7,363 of accrued interest), respectively. For the year ended December 31, 2012, we had net losses of $1,208,103 ($1,261,689 of expenses and $53,586 of accrued interest).

Liquidity and Capital Resources

As of March 31, 2013, we had $100,155 in a bank account which was available for use by management to cover the costs associated with identifying a target business and negotiating an acquisition or merger. Out of the proceeds of our Offering which remained available outside of the Trust Account, we obtained officers and directors insurance covering a 12 month period from April 12, 2011 through April 12, 2012 for a cost of $65,000, with a prepaid balance at December 31, 2011 of $18,236. The officers and directors insurance policy was renewed for nine months, providing coverage through January 12, 2013 and then for an additional three months, providing coverage through April 12, 2013. The premiums for coverage during the periods April 13, through January 12, 2013 and January 13, 2013 through April 12, 2013 are $48,839 and $15,984, respectively. The prepaid balance as of March 31, 2013 was $2,131.

The cash balance as of March 31, 2013 was $100,155, which includes 1) receipt of $81,025,000 from the public and private sale of securities, net of underwriter fees, 2) payment of $433,808 of expenses associated with the Offering, 3) payment of $1,886,192 in operating expenditures, 4) investment of $80,000,000 in the Trust Account, and 5) loans from the Sponsor of $1,295,000.

SCG Financial Holdings LLC loaned us funds from time to time, which were convertible into warrants of the post business transaction entity at a price of $0.75 per warrant at the option of the lender. The warrants would be identical to the Sponsor Warrants. The holders of a majority of such warrants (or underlying shares) will be entitled to demand that we register these securities pursuant to an agreement to be entered into at the time of the loan. The holders of a majority of these securities would have certain "piggy-back" registration rights with respect to registration statements filed subsequent to such date. We will bear the expense incurred with the filing of any such registration statements.

Critical Accounting Policies

The preparation of interim financial statements and related disclosures in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the interim financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:

Loss per common share:

Loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period.

Recent accounting pronouncements:

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company's interim financial statements.

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