RETAIL OPPORTUNITY INVESTMENTS CORP - Quarter Report: 2007 September (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
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x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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FOR
THE QUARTER ENDED September 30, 2007.
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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COMMISSION
FILE NUMBER:
NRDC
ACQUISITION CORP.
(Exact
name of registrant as specified in its charter)
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Delaware
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26-0500600
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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3
Manhattanville Road
Purchase,
New York 10577
(Address
of principal executive office)
(914)
272-8067
(Registrant’s
telephone number,
including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ¨ No
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer” and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer ¨
. Accelerated filer ¨
. Non-accelerated filer x .
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes x No
¨
.
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
The
number of shares of the issuer’s Common Stock, $0.0001 par value, outstanding as
of October 23, 2007 was 51,750,000.
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Page
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PART
I – FINANCIAL INFORMATION
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Item 1.
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Financial
Statements
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3
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Balance
Sheet (Unaudited) as of September 30, 2007
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F-1
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Statement
of Operations (Unaudited) for the period from July 10, 2007 (date
of
inception) through September 30, 2007
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F-2
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Statement
of the Stockholders’ Equity (Unaudited) for the period from July 10, 2007
(date of inception) through September 30, 2007
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F-3
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Statement
of Cash Flows (Unaudited) for the period from July 10, 2007 (date
of
inception) through September 30, 2007
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F-4
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Notes
to Financial Statements
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F-5
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Item 2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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3
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Item 3.
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Quantitative
and Qualitative Disclosures about Market Risk
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5
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Item 4.
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Controls
and Procedures
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6
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PART
II – OTHER INFORMATION
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Item 1.
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Legal
Proceedings
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6
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Item 1A.
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Risk
Factors
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7
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Item 2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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8
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Item 3.
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Defaults
upon Senior Securities
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9
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Item 4.
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Submission
of Matters to a Vote of Security Holders
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9
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Item 5.
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Other
Information
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9
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Item 6.
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Exhibits
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9
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SIGNATURES
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10
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2
Reference
is made to our financial statements and accompanying notes beginning on Page
F-1
of this report.
Forward-Looking
Statements
The
following discussion should be read in conjunction with our combined
consolidated financial statements and the notes thereto included elsewhere
in
this Form 10-Q.
This
Form 10-Q contains forward-looking statements regarding the plans and
objectives of management for future operations. This information may involve
known and unknown risks, uncertainties and other factors which may cause our
actual results, performance or achievements to be materially different from
future results, performance or achievements expressed or implied by any
forward-looking statements. Forward-looking statements, which involve
assumptions and describe our future plans, strategies and expectations, are
generally identifiable by use of the words “may,” “will,” “should,” “expect,”
“anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of
these words or other variations on these words or comparable terminology. These
forward-looking statements are based on assumptions that may be incorrect,
and
we cannot assure you that these projections included in these forward-looking
statements will come to pass. Our actual results could differ materially from
those expressed or implied by the forward-looking statements as a result of
various factors.
We
have
based the forward-looking statements included in this quarterly report on Form
10-Q on information available to us on the date of this quarterly report on
Form 10-Q, and we assume no obligation to update any such forward-looking
statements. Although we undertake no obligation to revise or update any
forward-looking statements, whether as a result of new information, future
events or otherwise, you are advised to consult any additional disclosures
that
we may make directly to you or through reports that we in the future may file
with the SEC, including annual reports on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K.
Management’s
Discussion And Analysis Of Financial Condition And Results Of
Operations
Overview
The
following Management’s Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with our financial
statements and the related notes and schedules thereto.
We
were
formed on July 10, 2007 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, which was
consummated on October 23, 2007, and the exercise by the underwriters of their
over-allotment option, which closed on October 23, 2007, together with any
additional financing arrangements that we undertake, to effect a business
combination.
Through
September 30, 2007, our efforts have been limited to organizational activities
and activities relating to our initial public offering; we have neither engaged
in any operations nor generated any revenues. As of September 30, 2007, we
had
accrued expenses and offering costs of approximately $403,037. In addition,
we had cash of $130,589, which was principally funded pursuant to a $200,000
note issued to one of our initial stockholders.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with
generally accepted accounting principles in the United States 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 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:
Cash
and cash equivalents
The
Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
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.
Use
of estimates
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 and disclosure of contingent assets and liabilities at the date
of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Income
taxes
Deferred
income taxes are provided for the differences between the bases of assets and
liabilities for financial reporting and income tax purposes. A valuation
allowance is established when necessary to reduce deferred tax assets to the
amount expected to be realized. The Company recorded a deferred income tax
asset
for the tax effect of net operating loss carry-forwards and temporary
differences, aggregating approximately $249. In recognition of the uncertainty
regarding the ultimate amount of income tax benefits to be derived, the Company
has recorded a full valuation allowance at September 30, 2007. The effective
tax
rate differs from the statutory rate of 34% due to the increase in the valuation
allowance.
Deferred
offering costs
Deferred
offering costs consist principally of legal and other professional fees incurred
through the balance sheet date that are related to the Offering and that were
charged to capital upon the receipt of the capital raised.
3
Subsequent
Events
On
October 23, 2007, we consummated a private placement of 8 million warrants
with NRDC Capital Management, LLC, an entity owned and controlled by the
executive officers of the Company, and our initial public offering of 41,400,000
units, including 5,400,000 units pursuant to the underwriters’ over-allotment
option. We received net proceeds of approximately $384,000,000
and also received $8,000,000 of proceeds from the private placement sale of
8,000,000 insider warrants to NRDC Capital Management, LLC.
The
Company’s management has broad discretion with respect to the specific
application of the net proceeds of this Offering, although substantially all
of
the net proceeds of this Offering are intended to be generally applied toward
consummating a business combination with an operating business. There is no
assurance that the Company will be able to successfully affect a Business
Combination. Upon the closing of the Offering and Private Placement,
$406,456,881 including $14,490,000 of the underwriters’ discounts and
commissions is being held in a trust account and invested in United States
“government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940 having a maturity of 180 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act of 1940 until the earlier of (i) the consummation of
its
first Business Combination and (ii) liquidation of the Company.
The
initial target business or businesses with which we combine must have a
collective fair market value equal to at least 80% of the balance in the trust
account (excluding deferred underwriters’ discounts and commissions). However,
we may not use all of the proceeds held in the trust account in connection
with
a business combination, either because the consideration for the business
combination is less than the proceeds in trust or because we finance a portion
of the consideration with capital stock or debt securities that we can issue.
In
the event that that occurs, 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 or businesses.
We
may
issue additional capital stock or debt securities to finance a business
combination. The issuance of additional capital stock, including upon conversion
of any convertible debt securities we may issue, or the incurrence of debt,
could have material consequences on our business and financial condition. The
issuance of additional shares of our capital stock (including upon conversion
of
convertible debt securities):
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•
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may
significantly reduce the equity interest of our
stockholders;
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•
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will
likely cause a change in control if a substantial number of our shares
of
common stock or voting preferred stock are issued, which may affect,
among
other things, our ability to use our net operating loss carry forwards,
if
any, and may also result in the resignation or removal of one or
more of
our present officers and directors;
and
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•
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may
adversely affect prevailing market prices for our common
stock.
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Similarly,
if we issue debt securities, it could result in:
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•
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default
and foreclosure on our assets if our operating revenues after a business
combination are insufficient to pay our debt
obligations;
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•
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acceleration
of our obligations to repay the indebtedness even if we make all
principal
and interest payments when due if we breach the covenants contained
in any
debt securities, such as covenants that require the satisfaction
or
maintenance of certain financial ratios or reserves, without a waiver
or
renegotiation of such covenants;
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4
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•
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an
obligation to immediately repay all principal and accrued interest,
if
any, upon demand to the extent any debt securities are payable on
demand;
and
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•
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our
inability to obtain additional financing, if necessary, to the extent
any
debt securities contain covenants restricting our ability to obtain
additional financing while such security is outstanding, or to the
extent
our existing leverage discourages other potential
investors.
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We
believe that we will have sufficient funds to allow us to operate for at least
the next 24 months, assuming that a business combination is not consummated
during that time. Approximately $2,700,000 of working capital over this time
period will be funded from the interest earned from the funds held in the trust
account. Over this time period, we anticipate making the following
expenditures:
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•
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approximately
$1,200,000 of expenses for due diligence of prospective target businesses,
including fees for market research or consultants used to perform
due
diligence, if any and reimbursement of out-of-pocket due diligence
expenses incurred by our management
team;
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•
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approximately
$1,000,000 of legal, accounting and other non-due diligence expenses
including structuring and negotiating a business
combination;
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•
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approximately
$180,000 of expenses for office space, administrative and support
services
to NRDC Capital Management, LLC;
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•
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approximately
$70,000 of legal and accounting fees relating to SEC reporting
obligations; and
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•
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approximately
$250,000 of miscellaneous expenses (potentially including deposits
or down
payments for a proposed business combination), premiums for key man
life
insurance for our chairman, chief executive officer and secretary
and
premiums and director and officer liability insurance premiums and
reserves.
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On
July
13, 2007, we used $200,000 of the proceeds from the private placement and our
initial public offering to repay the note payable to one of our initial
stockholders, NRDC Capital Management, LLC. The loan was repaid in full, without
interest, and cancelled.
On
November 16, 2007 we used $161,710 of our general working capital to pay
premiums associated with our directors and officers liability
insurance.
To
date,
our efforts have been limited to organizational activities and activities
relating to our initial public offering and the identification of a target
business; we have neither engaged in any operations nor generated any revenues.
As the proceeds from our initial public offering held in trust have been
invested in short term investments, our only market risk exposure relates to
fluctuations in interest rates.
As
of
October 23, approximately $ 391,966,881 of the net
proceeds of the private placement and our initial public offering (excluding
approximately $14,490,000 of deferred underwriting discounts and commissions)
was held in trust for the purposes of consummating a business combination.
The
proceeds held in trust (including approximately $14,490,000 of deferred
underwriting discounts and commissions) have been invested in a money market
fund that invests principally in short-term securities issued or guaranteed
by
the United States. As of December 3, 2007, the effective annualized
interest rate payable on our investment was approximately 3.92%. Assuming no
other changes to our holdings as of December 3, 2007, a 1% decrease in the
underlying interest rate payable on our investment as of December 3, 2007 would
result in a decrease of approximately $1,016,142 in the interest earned on
our
investment for the following 90-day period, and a corresponding decrease in
our
net increase in stockholders’ equity resulting from operations, if any, for that
period.
We
have
not engaged in any hedging activities since our inception on July 10, 2007.
We
do not expect to engage in any hedging activities with respect to the market
risk to which we are exposed.
5
As
of
September 30, 2007, we, including our chief executive officer, who also serves
as our principal financial officer, evaluated the effectiveness of the design
and operation of our disclosure controls and procedures. Based on that
evaluation, our management, including the chief executive officer, concluded
that our disclosure controls and procedures were effective in timely alerting
management, including the chief executive officer, of material information
about
us required to be included in periodic Securities and Exchange Commission
filings. However, in evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply
its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.
There
have been no changes in our internal control over financial reporting since
our
inception on July 10, 2007 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
We
are
not currently subject to any material legal proceedings, nor, to our knowledge,
is any material legal proceeding threatened against us. From time to time,
we
may be a party to certain legal proceedings incidental to the normal course
of
our business. While the outcome of these legal proceedings cannot be predicted
with certainty, we do not expect that these proceedings will have a material
effect upon our financial condition or results of operations.
6
In
addition to the other information
set forth in this report, you should carefully consider the factors discussed
in
the section titled “Risk Factors” in our Prospectus as filed with the Securities
and Exchange Commission dated October 17, 2007, which could materially affect
our business, financial condition or future results. There have been no material
updates or changes to such Risk Factors that are required to be disclosed in
this Item 1A.
7
On
October 23, 2007, we consummated a
private placement of warrants to NRDC Capital Management, LLC, an entity owned
and controlled by our chief executive officer for an aggregate purchase price
of
$8 million, and our initial public offering of 41,400,000 units, each consisting
of one share of common stock and one warrant exercisable for an additional
share
of common stock. We received net proceeds of approximately $384,000,000 and
also
received $8,000,000 of proceeds from the private placement sale of 8,000,000
insider warrants to NRDC Capital Management, LLC. As of October 23,
2007, $391,966,881 of this amount had been placed in trust for purposes of
consummating a business combination (excluding $14,490,000 of deferred
underwriting
discounts and commissions).
On
October 23, 2007, the underwriters for our initial public offering exercised
their over-allotment option and purchased 5,400,000 additional units. All the
net proceeds from the exercise of the over-allotment option and deferred
underwriting discounts and commissions have been placed in trust. We have not
yet determined the amount of any expenses attributable to the sale of units
pursuant to the exercise of the over-allotment option.
On
July
13, 2007, we used $200,000 of our general working capital to repay the note
payable to our chief executive officer. The loan was repaid in full, without
interest, and cancelled.
On
November 16, 2007, we used $161,710 of our general working capital to pay
premiums associated with our directors and officers liability
insurance.
8
Not
applicable.
Not
applicable
Not
applicable.
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3.1
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Amended
and Restated Certificate of Incorporation **
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3.2
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By-Laws
*
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4.1
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Specimen
Unit Certificate ***
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4.2
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Specimen
Common Stock Certificate **
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4.3
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Specimen
Warrant Certificate ***
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4.4
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Form
of Warrant Agreement entered into by and between Continental Stock
Transfer & Trust Company ***
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10.1
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Form
of Letter Agreement between the Registrant and NRDC Capital Management
LLC
and all of the directors and executive officers of the Registrant
***
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10.2
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Letter
of Agreement between the Registrant and William L. Mack
****
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10.3
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Letter
of Agreement between the Registrant and Robert C. Baker
****
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10.4
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Letter
of Agreement between the Registrant and Richard A. Baker
****
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10.5
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Letter
of Agreement between the Registrant and Lee S. Neibart
****
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10.6
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Letter
of Agreement between the Registrant and Michael J. Indiveri
***
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10.7
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Letter
of Agreement between the Registrant and Edward H. Meyer
***
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10.8
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Letter
of Agreement between the Registrant and Laura Pomerantz
***
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10.9
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Letter
of Agreement between the Registrant and Vincent Tese
***
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10.10
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Letter
of Agreement between the Registrant and Ronald W. Tysoe
***
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10.11
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Form
of Investment Management Trust Agreement by and between the Registrant
and
Continental Stock Transfer & Trust Company ****.
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10.14
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Form
of Registration Rights Agreement among the Registrant NRDC Capital
Management LLC and certain directors of the Registrant
***
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10.16
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Private
Placement Warrant Purchase Agreement between the Registrant and
NRDC
Capital Management LLC ****
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10.17
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Form
of Right of First Offer Agreement between Registrant and NRDC Capital
Management LLC, NRDC Real Estate Advisors LLC and NRDC Equity Advisors
LLC
***
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10.18
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Letter
of Co-Investment Agreement between Registrant and NRDC Capital
Management
LLC ****
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10.19
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Form
of Letter Agreement between the Registrant and Apollo Real Estate
Advisors
L.P.****
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31.1
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Certification
of Chief Executive Officer and Principal Financial Officer pursuant
to
Rule 13a-14 of the Securities Exchange Act of 1934, as
amended
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32.1
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Certification
of Chief Executive Officer and Principal Financial Officer pursuant
to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
1350
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*
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Previously
filed in connection with NRDC Acquisition Corp.’s registration statement
on Form S-1 (File No. 333—144871) filed on July 26,
2007
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**
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Previously
filed in connection with amendment No. 1 to NRDC Acquisition Corp.’s
registration statement on Form S-1 (File No. 333-144871) filed
on
September 7, 2007
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***
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Previously
filed in connection with amendment No. 2 to NRDC Acquisition Corp.’s
registration statement on Form S-1 (File No. 333-144871) filed
on
September 27, 2007
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****
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Previously
filed in connection with amendment No. 3 to NRDC Acquisition Corp.’s
registration statement on Form S-1 (File No. 333-144871) filed
on October
10, 2007
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9
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused the report to be signed on its behalf
by
the undersigned, thereunto duly authorized.
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Date:
December 3, 2007
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NRDC
ACQUISITION CORP.
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By:
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/s/
Richard A. Baker
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Richard
A. Baker
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Chief
Executive Officer
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(Principal
Financial Officer)
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10
(a
development stage company)
Balance
Sheet
September
30, 2007
(unaudited)
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Assets
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Current
assets: Cash
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$
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130,589
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Deferred
offering costs
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496,717
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Total
assets
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$
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627,306
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Liabilities
and Stockholders’ Equity
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Current
liabilities:
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Accrued
expenses
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$
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731
|
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Accrued
offering costs
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402,306
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Note
payable to affiliate
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200,000
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Total
current liabilities
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603,037
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Commitments
and contingencies
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Stockholders’
equity:
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Preferred
stock, $0.0001 par value, 5,000 shares authorized; none issued or
outstanding
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—
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Common
stock, $0.0001 par value, 106,000,000 shares authorized; 10,350,000
shares
issued and outstanding
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1,035
|
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Additional
paid-in capital
|
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23,965
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Deficit
accumulated during the development stage
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(731)
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Total
stockholders’ equity
|
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24,269
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Total
liabilities and stockholders’ equity
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$
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627,306
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See
accompanying notes to financial statements.
F-1
(a
development stage company)
Statement
of Operations
For
the period from July 10, 2007 (inception) through September 30,
2007
(unaudited)
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Formation
and operating costs
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$
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731
|
|
|
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Net
Loss
|
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(731)
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Basic
and diluted net loss per share
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$
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(0.00)
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Weighted
average shares outstanding — basic and diluted
|
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10,350,000
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See
accompanying notes to financial statements.
F-2
(a
development stage company)
Statement
of Stockholders’ Equity
For
the period from July 10, 2007 (inception) through September 30,
2007
(unaudited)
|
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Common
Stock
|
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Additional
Paid-In
Capital
|
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Deficit
Accumulated
During
the
Development
Stage
|
|
|
Stockholders’
Equity
|
|
||||||
|
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||
|
Initial
capital from founding stockholders for cash
|
|
10,350,000
|
|
$
|
1,035
|
|
$
|
23,965
|
|
$
|
—
|
|
|
$
|
25,000
|
|
|
Net
loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(731)
|
|
|
(731)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2007
|
|
10,350,000
|
|
$
|
1,035
|
|
$
|
23,965
|
|
$
|
(731)
|
|
$
|
24,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to financial statements.
F-3
(a
development stage company)
Statement
of Cash Flows
For
the period July 10, 2007 (inception) through September 30,
2007
(unaudited)
|
Cash
flows from operating activities
|
|
||||||||
|
Net
loss
|
|
$
|
(731)
|
||||||
|
Adjustments
to reconcile net loss to net cash used in operating
activities
|
|
||||||||
|
Changes
in:
|
|
||||||||
|
Accrued
Expenses
|
|
|
731
|
|
|||||
|
|
|
|
|
||||||
|
Net
cash used in operating activities
|
|
|
—
|
|
|||||
|
|
|
|
|
||||||
|
Cash
flows from financing activities
|
|
||||||||
|
Proceeds
from note payable to affiliate
|
|
|
200,000
|
|
|||||
|
Proceeds
from sale of units
|
|
|
25,000
|
|
|||||
|
Payment
of offering costs
|
|
|
(94,411)
|
||||||
|
|
|
|
|
||||||
|
Net
cash provided by financing activities
|
|
|
130,589
|
|
|||||
|
|
|
|
|
||||||
|
Net
increase in cash
|
|
|
130,589
|
|
|||||
|
Cash
— beginning of period
|
|
|
—
|
|
|||||
|
|
|
|
|
||||||
|
Cash
— end of period
|
|||||||||
|
$
|
130,589
|
||||||||
|
Non-cash
financing activities:
Accrual
of offering costs
|
|
|
|||||||
|
402,306
|
|||||||||
|
|
|
|
|
||||||
See
accompanying notes to financial statements.
F-4
(a
development stage company)
Notes
to Financial Statements
Note
1 — Organization and Nature of Business Operations
NRDC
Acquisition Corp. (the “Company”) is a blank check company incorporated on July
10, 2007 for the purpose of effecting a merger, capital stock exchange, stock
purchase, asset acquisition or other similar business combination with one
or
more existing operating businesses.
At
September 30, 2007 the Company had not commenced any operations. All activity
through September 30, 2007 relates to the Company’s formation and of the public
offering described below. The Company has selected December 31 as its fiscal
year end.
The
Company’s ability to commence operations was contingent upon obtaining adequate
financial resources through a public offering (“Offering”) which is discussed in
Note 3. The Company’s management has broad discretion with respect to the
specific application of the net proceeds of this Offering, although
substantially all of the net proceeds of the Offering are intended to be applied
toward effecting a merger, capital stock exchange, stock purchase, asset
acquisition or other similar business combination. As used herein, a “Business
Combination” shall mean the acquisition of one or more businesses that at the
time of the Company’s initial business combination has a fair market value of at
least 80.0% of the Company’s assets held in the trust account excluding the
deferred underwriting discounts and commissions from the proposed offering
of
$14,490,000 and taxes payable.
Upon
closing of the Offering, approximately 98.2% of the proceeds ($406.5 million)
of
this offering was placed in a trust account invested until the earlier of (i)
the consummation of the Company’s first Business Combination or (ii) the
liquidation of the Company. The proceeds in the trust account include the
deferred underwriting discount of $14,490,000 that will be released to the
underwriters on completion of a Business Combination (subject to a $0.35 per
share reduction for public stockholders who exercise their conversion rights).
Interest (after taxes) earned on assets held in the trust account will remain
in
the trust account. However, up to $2.7 million of the after tax interest earned
on the trust account may be released to the Company to cover a portion of the
Company’s operating expenses.
The
Company will seek stockholder approval before it will affect any Business
Combination. “Public Stockholders” is defined as the holders of common stock
sold as part of the units in the Proposed Offering or in the aftermarket. The
Company will proceed with a Business Combination only if a majority of the
shares of common stock voted by the Public Stockholders are voted in favor
of
the Business Combination and Public Stockholders owning less than 30% of the
shares sold in the Public Offering vote against the Business Combination and
exercise their right to convert their shares into a pro rata share of the
aggregate amount then on deposit in the trust account and a majority of the
outstanding shares of the Company’s common stock vote in favor of an amendment
to the Company’s amended and restated certificate of incorporation to provide
for its perpetual existence.
If
a
Business Combination is approved and completed, Public Stockholders voting
against a Business Combination will be entitled to convert their stock into
a
pro rata share of the total amount on deposit in the trust account including
the
deferred underwriters’ discount, and including any interest earned on their
portion of the trust account, net of up to $2.7 million of the after tax
interest earned on the trust account which may be released to the Company to
cover a portion of the Company’s operating expenses. Public Stockholders who
convert their stock into their share of the trust account will continue to
have
the right to exercise any warrants they may hold.
The
Company will liquidate and promptly distribute only to its Public Stockholders
the amount in the trust account, less any income taxes payable on interest
income, plus any remaining net assets if the Company does not affect a Business
Combination within 24 months after consummation of the Proposed Offering. In
the
event of liquidation, it is likely that the per share value of the residual
assets remaining available for distribution (including trust account assets)
will be less than the initial public offering price per share in the Proposed
Offering (assuming no value is attributed to the Warrants contained in the
units
to be offered in the Proposed Offering discussed in Note 3.)
F-5
NRDC
ACQUISITION CORP.
(a
development stage company)
Notes
to Financial Statements — (Continued)
.
Note
2 — Summary of Significant Accounting Policies
|
[a]
|
|
Cash
and cash equivalents:
|
The
Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
|
[b]
|
|
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.
|
[c]
|
|
Use
of estimates:
|
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 and disclosure of contingent assets and liabilities at the date
of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
|
[d]
|
|
Income
taxes:
|
Deferred
income taxes are provided for the differences between the bases of assets and
liabilities for financial reporting and income tax purposes. A valuation
allowance is established when necessary to reduce deferred tax assets to the
amount expected to be realized.
The
Company recorded a deferred income tax asset for the tax effect of net operating
loss carry forwards and temporary differences, aggregating approximately $249.
In recognition of the uncertainty regarding the ultimate amount of income tax
benefits to be derived, the Company has recorded a full valuation allowance
at
September 30, 2007.
The
effective tax rate differs from the statutory rate of 34% due to the increase
in
the valuation allowance.
F-6
NRDC
ACQUISITION CORP.
(a
development stage company)
Notes
to Financial Statements — (Continued)
|
[e]
|
|
Deferred
offering costs:
|
Deferred
offering costs consist of legal and other professional fees incurred through
the
balance sheet date that are related to the Offering and that were charged to
capital upon the receipt of the capital raised.
Note
3 — Initial Public Offering
On
October 23, 2007, the Company sold 41,400,000 units (“Units”) in the Offering at
a price of $10 per Unit. Each Unit consists of one share of the Company’s common
stock and one Redeemable Common Stock Purchase Warrant (“Warrants”), including
5,400,000 units sold by the underwriters in their exercise of the full amount
of
their over-allotment option. Each Warrant will entitle the holder to purchase
from the Company one share of common stock at an exercise price of $7.50
commencing the later of the completion of a Business Combination and 12 months
from the effective date of the Offering and expiring four years from the
effective date of the Offering. The Company may redeem all of the Warrants,
at a
price of $.01 per Warrant upon 30 days’ notice while the Warrants are
exercisable, only in the event that the last sale price of the common stock
is
at least $14.25 per share for any 20 trading days within a 30 trading day period
ending on the third day prior to the date on which notice of redemption is
given. In accordance with the warrant agreement relating to the Warrants sold
and issued in the Offering, the Company is only required to use its best efforts
to maintain the effectiveness of the registration statement covering the
Warrants. The Company will not be obligated to deliver securities, and there
are
no contractual penalties for failure to deliver securities, if a registration
statement is not effective at the time of exercise. Additionally, in the event
that a registration is not effective at the time of exercise, the holder of
such
Warrant shall not be entitled to exercise such Warrant and in no event (whether
in the case of a registration statement not being effective or otherwise) will
the Company be required to net cash settle the warrant exercise. Consequently,
the Warrants may expire unexercised and unredeemed.
In
connection with the Offering, the Company paid Banc of America Securities LLC,
the underwriter of the Offering an underwriting discount of 7% of the gross
proceeds of the Offering, of which 3.5% of the gross proceeds ($14,490,000)
will
be held in the Trust Account and payable only upon the consummation of a
business combination and have waived their right to receive such payment upon
the Company’s liquidation if it is unable to complete a Business
Combination.
Simultaneously
with the consummation of the Offering, the Company’s Sponsor purchased 8,000,000
warrants (“Private Placement Warrants”) at a purchase price of $1.00 per
warrant, in a private placement. The proceeds of $8,000,000 were placed in
the
Trust Account. The Private Placement Warrants are identical to the Warrants
underlying the Units sold in the Offering except that the Private Placement
Warrants will be exercisable on a cashless basis as long as they are still
held
by the initial purchasers. The purchasers have agreed that the Private Placement
Warrants will not be sold or transferred by them, until after the completion
of
a Business Combination. The purchase price of the Private Placement Warrants
approximates the fair value of such warrants.
Our
Sponsor will be entitled to make up to three demands that we register the
10,350,000 shares of common stock (the “Founder’s Shares”), the 8,000,000
Private Placement warrants and the shares for which they are exercisable, and
the 2,000,000 co-investment shares and the 2,000,000 co-investment warrants
(described in Note 4) and the shares of common stock for which they are
exercisable, pursuant to an agreement signed prior to the Effective Date. Our
sponsor may elect to exercise its registration rights at any time beginning
on
the date three months prior to the expiration of the applicable transfer
restrictions. The restricted transfer period for the shares and the
co-investment shares of common stock expires on the date that is one year after
the consummation of the initial business combination, and the restricted
transfer period for the Private Placement Warrants and the shares for which
they
are exercisable expires on the consummation of our initial business combination.
Our directors will have “piggy-back” registration rights with respect to the
shares of common stock that they own prior to the completion of this offering,
subject to the same limitations with respect to the transfer restriction period.
In addition, our Sponsor and our directors each have certain “piggy-back”
registration rights with respect to the shares held by them on registration
statements filed by us on or subsequent to the expiration of the applicable
transfer restriction period and unlimited registration rights with respect
to a
registration statement on Form S-3. We will bear the expenses incurred in
connection with the filing of any registration statement. Pursuant to the
registration rights agreement, our sponsor and our executive officers and
directors will waive any claims to monetary damages for any failure by us to
comply with the requirements of the registration rights agreement.
Note
4 — Note Payable to Affiliate and Related Party
Transactions
The
Company issued an aggregate $200,000 unsecured promissory note to NRDC Capital
Management, LLC on July 13, 2007. The note is non-interest bearing and is
payable on the earlier of the consummation of the offering by the Company or
July 13, 2009. The Company repaid the notes in full on October 23,
2007. Due to the short-term nature of the note, the fair value of the
note approximated its carrying amount.
Note
– 5 Commitments
The
Company has agreed to pay up to $7,500 a month in total for office space and
general and administrative services to NRDC Capital Management, LLC. Services
commenced on the effective date of the offering and will terminate upon the
earlier of (i) the completion of the Business Combination, or (ii) the Company’s
liquidation.
Our
sponsor has agreed to purchase from the Company an aggregate of 2,000,000 of
its
units at a price of $10.00 per unit for an aggregate purchase price of
$20,000,000 in a private placement that will occur immediately prior to the
consummation of our initial business combination. Each unit will consist of
one
share of common stock and one warrant.
Note
6 — Common Stock
As
of
September 30, 2007, 10,350,000 shares of common stock were outstanding, held
by
NRDC Capital Management, LLC. On July 13, 2007, the Company issued 10,350,000
shares (as adjusted for the stock splits) to NRDC Capital Management, LLC for
$25,000 in cash, at an average purchase price of approximately $0.002 per
share.
On
September 4, 2007, the Company’s Board of Directors authorized a 6 for 5 stock
split with respect to all outstanding shares of the Company’s common stock. On
October 17, 2007, the Company’s Board of Directors authorized an additional 6
for 5 stock split with respect to all outstanding shares of the Company’s common
stock. On September 4, 2007, the Company’s Certificate of Incorporation was
amended to increase the authorized shares of common stock from 70,000,000 to
106,000,000 shares of common stock. All references in the accompanying financial
statements to the number of shares of stock have been retroactively restated
to
reflect these transactions.
Note
7 — Preferred Stock
The
Company is authorized to issue 5,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined
from
time to time by the Board of Directors.
F-7