UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 2

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2005
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from              to

Commission file number: 000-51047

FEDERAL SERVICES ACQUISITION
CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	11-3747850
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

900 Third Avenue, 33^rd Floor
New York, New York, 10022-4775

(Address of principal executive office)

(646) 403-9765

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

NONE

Securities registered pursuant to section 12(g) of the Act:

Units, each consisting of one share of Common Stock, $0.0001 par value, and two Warrants

Common Stock, $0.0001 par value

Warrants to purchase shares of Common Stock

(Title Of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o    No  ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o    No  ý

Indicate by checkmark 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  ý    No  o

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

 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.     Large Accelerated Filer  o     Accelerated Filer  o    Non-accelerated Filer  ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  ý    No o

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant computed by reference to the closing sales price for the Registrant’s Common Stock on December 30, 2005, as reported on the OTC Bulletin Board, was approximately $112,140,000.

The number of shares outstanding of the Registrant’s Common Stock as of February 23, 2006: 26,250,000 shares.

Explanatory Note:

This Annual Report on Form 10-K/A is being filed as Amendment No. 2 to our Annual Report on Form 10-K, which was originally filed with the Securities and Exchange Commission on March 31, 2006 and subsequently amended on September 29, 2006.  Amendment No. 1 was filed to restate our financial statements for the period ended December 31, 2005 to reflect non-operating gains and losses related to the classification and accounting for the warrants to purchase common stock associated with the units sold in our initial public offering.

This Amendment No. 2 does not amend the financial data as reflected in Amendment No. 1, but does conform certain disclosures in Note B[6] to the financial statements with disclosures that will be reflected in the definitive proxy statement for our special meeting of stockholders at which our proposed acquisition of Advanced Technology Systems, Inc., among other proposals, will be voted upon.

This Amendment No. 2 amends only certain information in Part II– Item 8, Financial Statements, as a result of the amendments described above.

In addition, we are also including currently dated Sarbanes-Oxley Act Section 302 and Section 906 certifications of the Chief Executive Officer and Chief Financial Officer that are attached to this Form 10-K/A as Exhibits 31.1, 31.2, 32.1 and 32.2.

Pursuant to SEC Rule 12b-15, this Amendment No. 2 to the 2005 Form 10-K/A sets forth the complete text of only the financial statements reflected in Part II – Item 8 of Form 10-K, as previously amended, and includes, as Exhibits 31 and 32, new certifications by the Chief Executive Officer and Chief Financial Officer.  The balance of the 2005 Form 10-K/A, as previously amended, is not included.  Accordingly, except for the foregoing amended information and the amendments reflected in Amendment No. 1, this Form 10-K/A continues to speak as of March 31, 2006 (the original filing date of the 2005 Form 10-K), and does not reflect events occurring after the filing of our 2005 Form 10-K and does not modify or update those disclosures affected by subsequent events.

1

Item 8. Financial Statements and Supplementary Data.

Reference is made to our financial statements beginning on page F-1 of this report.

2

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)     The following documents are filed as a part of this Report:

1.      Financial Statements:

Index to Financial Statements and Schedules

Report of Independent Registered Public Accounting Firm

Balance sheet as of December 31, 2005

Statement of operations for the period from April 12, 2005 (date of inception) through December 31, 2005

Statement of changes in stockholders’ equity for the period from April 12, 2005 (date of inception) through December 31, 2005

Statement of cash flows for the period from April 12, 2005 (date of inception) through December 31, 2005

Notes to Financial Statements

2.      Financial Statement Schedule(s):

All schedules are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required or are not applicable.

3

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Federal Services Acquisition Corporation
	By:	/s/ Joel R. Jacks
		Chairman of the Board and
		Chief Executive Officer
		(Principal executive officer)
	By:	/s/ Peter M. Schulte
		President and
		Chief Financial Officer
		(Principal financial officer)
Date: December 5, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Position	Date
/s/ JOEL R. JACKS	Chairman of the Board and Chief Executive Officer (Principal Executive	December 5, 2006
Joel R. Jacks	Officer)
/s/ PETER M. SCHULTE	President, Chief Financial Officer, Secretary and Director (Principal	December 5, 2006
Peter M. Schulte	Financial Officer)
/s/ EDWARD H. BERSOFF	Vice-Chairman	December 5, 2006
Edward H. Bersoff
/s/ JOSEPH A. SAPONARO	Director	December 5, 2006
Joseph A. Saponaro
/s/ EDWARD J. SMITH	Director	December 5, 2006
Edward J. Smith

4

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

Federal Services Acquisition Corporation
(a development stage company)

Financial statements

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors

Federal Services Acquisition Corporation

We have audited the accompanying balance sheet of Federal Services Acquisition Corporation (a development stage company) as of December 31, 2005, and the related statements of operations, changes in stockholders’ equity and cash flows for the period from April 12, 2005 (date of inception) through December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Federal Services Acquisition Corporation as of December 31, 2005, and the results of its operations and its cash flows for the period from April 12, 2005 (date of inception) through December 31, 2005 in conformity with U.S. generally accepted accounting principles.

As discussed in Note D to the accompanying financial statements, the Company had previously restated its financial statements for the period from April 12, 2005 (date of inception) through December 31, 2005, to reflect the classification of and accounting for the warrants to purchase common stock associated with the units sold at the initial public offering of the Company as a liability at its fair value and the resulting change in its fair value as a loss on the derivative liability.

The Company has expanded its disclosure regarding its accounting for derivative financial instruments in Note B[6].

Eisner LLP

New York, New York

March 23, 2006, except for notes D and F which are dated September 27, 2006 and note B[6] which is dated November 3, 2006

F-2

Federal Services Acquisition Corporation
(a development stage company)

Balance Sheet

December 31, 2005

ASSETS
Current assets:
Cash and cash equivalents	$	1,855,394
Prepaid expenses	72,122
Total current assets	1,927,516
Short-term investments held in Trust Account (including interest receivable of $39,444) (fair value $117,709,036)	117,709,036
Cash and cash equivalents held in trust fund	281,348
Deferred income tax benefit	34,629
Total assets	$	119,952,529
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	34,289
Income tax payable - current	356,000
Deferred income tax	15,714
Warrant liabilities	19,740,000
Total current liabilities	20,146,003
Common Stock, subject to possible redemption 4,197,900 shares	23,424,282
Interest income attributable to common stock subject to possible redemption (net of taxes of $64,000)	97,996
Total common stock, subject to possible redemption	23,522,278
COMMITMENTS AND CONTINGENCIES (Note I)
STOCKHOLDERS’ EQUITY:
Preferred stock—$.0001 par value; 1,000,000 shares authorized; 0 issued and outstanding
Common stock—$.0001 par value, 100,000,000 shares authorized; 26,250,000 issued and outstanding (which includes 4,197,900 shares subject to possible redemption)	2,625
Additional paid-in capital	81,467,698
Deficit accumulated during the development stage	(5,186,075		)
Total stockholders’ equity	76,284,248
	$	119,952,529

See notes to financial statements

F-3

Statement of Operations

For the period from April 12, 2005 (date of inception) through December 31, 2005

Expenses:
Operating costs	$	133,161
Other income (loss):
Bank interest	8,783
Interest on cash and short term investments held in trust	810,384
Loss on warrant liabilities	(5,460,000		)
Total other income (loss)	(4,640,833		)
Loss before provision for taxes	(4,773,994		)
Provision for income taxes
Current	(333,000		)
Deferred	18,915
Net loss	(5,088,079		)
Interest income attributable to common stock subject to possible redemption (net of taxes of $64,000)	(97,996		)
Net loss allocable to common stockholders not subject to possible redemption	$	(5,186,075	)
Weighted average number of shares outstanding
—basic and diluted	10,599,810
Net loss per share
—basic and diluted	$	(0.48	)
Weighted average number of shares outstanding exclusive of shares subject to possible redemption
—basic and diluted	9,530,382
Net loss per share not subject to possible redemption
—basic and diluted	$	(0.54	)

See notes to financial statements.

F-4

Statement of changes in Stockholders’ Equity
For the period from April 12, 2005 (date of inception) through December 31, 2005

							Deficit
							accumulated
				Additional			during
	Common Stock			Paid-In			development
	Shares	Amount		Capital			stage			Total
Balance—April 12, 2005 (date of inception)
Initial capital from founding stockholders	5,250,000	$	525	$	5,475		$	—		$	6,000
Sale of 21,000,000 units (including 4,197,900 shares of common stock subject to possible redemption), net of underwriters’ discount and offering expenses	21,000,000	2,100		119,166,505			—			119,168,605
Reclassification of proceeds allocated to warrants — derivatives liability	—	—		(14,280,000		)	—			(14,280,000		)
Reclassification of 4,197,900 shares of common stock being subject to possible redemption				(23,424,282		)	—			(23,424,282		)
Accretion of trust fund relating to common stock subject to possible redemption	—	—		—			(97,996		)	(97,996		)
Net loss for the period	—	—		—			(5,088,079		)	(5,088,079		)
Balance—December 31, 2005	26,250,000	$	2,625	$	81,467,698		$	(5,186,075	)	$	76,284,248

See notes to financial statements

F-5

Statement of Cash Flows
For the period from April 12, 2005 (date of inception) through December 31, 2005

Cash flows from operating activities:
Net loss	$	(5,088,079		)
Adjustments to reconcile net loss to net cash provided by operating activities:
Deferred income tax	(18,915			)
Loss on warrant liabilities	5,460,000
Changes in:
Interest receivable	(39,444			)
Prepaid expenses	(72,122			)
Accrued expenses	34,289
Income taxes payable—current	356,000
Net cash provided by operating activities	631,729
Cash flows from investing activities:
Purchase of U.S. government securities held in Trust fund	(234,848,658			)
Maturities of U.S. government securities held in Trust fund	117,179,066
Cash held in Trust Fund	(281,348			)
Net cash used in investing activities	(117,950,940			)
Cash flows from financing activities:
Proceeds from public offering, net of expenses	119,168,605
Proceeds from notes payable to stockholders	154,000
Repayment of notes to stockholders	(154,000			)
Proceeds from sale of common stock to founders	6,000
Net cash provided by financing activities	119,174,605
Net increase in cash and cash equivalents	1,855,394
Cash and cash equivalents—beginning of period	—
Cash and cash equivalents—end of period	$	1,855,394
Supplemental Disclosure of noncash activities:
Reclassification of common stock subject to possible redemption	$	23,424,282
Accretion of trust fund relating to common stock subject to possible redemption	97,996
Warrant obligation in connection with sale of units in offering			14,280,000

See notes to financial statements.

F-6

Notes to Financial Statements

December 31, 2005

NOTE A—ORGANIZATION AND BUSINESS OPERATIONS

Federal Services Acquisition Corporation (the “Company”) was incorporated in Delaware on April 12, 2005. The Company was formed to serve as a vehicle for the acquisition of an operating business in the federal services and defense industries through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination. The Company has neither engaged in any operations nor generated revenue to date. The Company is considered to be in the development stage and is subject to the risks associated with activities of development stage companies.  The Company has selected December 31 as its fiscal year end.

The registration statement for the Company’s initial public offering (“Offering”) was declared effective on October 19, 2005.  The Company consummated the offering on October 25, 2005 and received net proceeds of $119,169,000. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Offering, although substantially all of the net proceeds of the Offering are intended to be generally applied toward consummating a business combination with (or acquisition of) an operating business in the federal services and defense industries (“Business Combination”). Nonetheless, there is no assurance that the Company will be able to successfully effect a Business Combination. As of December 31, 2005, an amount of $117,990,384 including interest receivable of $39,444 of the net proceeds is being held in a trust account (“Trust Account”) and is invested in U.S. government securities, and cash or cash equivalents until the earlier of (i) the consummation of its first Business Combination or (ii) the distribution of the Trust Account to the Company’s public stockholders. The remaining proceeds may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. The Company, after signing a definitive agreement for the acquisition of a target business, will submit such transaction for stockholder approval. In the event that public stockholders of 20% or more of the outstanding stock (excluding, for this purpose, those shares of common stock issued prior to the Offering) vote against the Business Combination and exercise their conversion rights, the Business Combination will not be consummated.

In the event that the Company does not consummate a Business Combination within 18 months from the date of the consummation of the Offering, or 24 months from the consummation of the Offering if certain extension criteria have been satisfied (the “Acquisition Period”), the proceeds held in the Trust Account will be distributed to the Company’s public stockholders, excluding the Founders (defined in the following sentence) to the extent of their stock acquired prior to the Offering. However, the persons who were stockholders prior to the Offering (the “Founders”) will participate in any liquidation distribution with respect to any shares of the common stock acquired in connection with or following the Offering. In the event of such distribution, 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 unit in the Offering (assuming no value is attributed to the Warrants contained in the Units offered in the Offering as discussed in Note C).

Public stockholders owning less than 20% of the shares sold in the Offering who vote against a business combination and exercise their conversion rights will be entitled to convert their stock into a pro rata share of the Trust Account, including any interest earned on their portion of the Trust Account (net of taxes payable), if the business combination is approved and consummated.  The Founders cannot convert their stock into a pro rata share of the Trust Account under these circumstances, because they have agreed to vote their stock in accordance with the majority of the shares of common stock voted by the public stockholders.  Public stockholders who convert their stock will retain any warrants they hold.

The Founders will be entitled to registration rights pursuant to an agreement signed as a part of the Offering.  The holders of the majority of these shares are entitled to make up to two demands that the Company register these shares.  The holders of the majority of these shares can elect to exercise these registration rights at any time after the date on which their shares of common stock are released from escrow (see below).  In addition, these stockholders have certain “piggy-back” registration rights on registration statements filed subsequent to such date.  The Company will bear the expenses incurred in connection with the filing of any such registration statement.

Upon consummation of the Offering the Founders have placed the shares they owned into an escrow account.  These shares will not be transferable during the escrow period and will not be released from escrow until the earliest of:

•three years following the date of the Offering,

•liquidation; or

•the consummation of a liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property subsequent to the Company consummating a business combination with a target business.

F-7

During the escrow period, the holders of these shares will not be able to sell or transfer their securities except to their spouses and children or trusts established for their benefit, but will retain all other rights as stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash dividends, if declared.  If dividends are declared and payable in shares of common stock, such dividends will also be placed in escrow.  If the Company is unable to effect a business combination and liquidates, none of the Founders will receive any portion of the liquidation proceeds with respect to common stock owned by them.

On October 25, 2005, the Company consummated its initial public offering of 21,000,000 units. Each unit consists of one share of common stock and two redeemable common stock purchase warrants. Each warrant entitles the holder to purchase from the Company one share of its common stock at an exercise price of $6.00.

F-8

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1]    Cash and cash equivalents:

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company had cash deposits in excess of the federally insured limits at December 31, 2005.

[2]   Earnings per common share:

Basic income per share is based on the weighted average number of common shares outstanding during the period. Diluted income per share reflects the potential dilution assuming common shares were issued upon the exercise of outstanding in-the-money warrants and the proceeds thereof were used to purchase treasury shares at the average market price during the period.

[3]    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 amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.

[4]    Fair value of financial instruments:

The carrying amounts of the Company’s financial assets, including cash and cash equivalents and short term investments, approximate fair value because of their short term maturities.

[5]    Income taxes:

Deferred income taxes are provided for the differences between the bases of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities are measured using tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

[6]    Accounting for Warrants and Derivative Instruments-As Restated:

Emerging Issues Task Force 00-19, or EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in, a Company’s Own Stock,” provides criteria for determining whether freestanding contracts that are settled in a company’s own stock, including common stock warrants, should be designated as either an equity instrument, an asset or as a liability under SFAS No. 133. Under the provisions of EITF 00-19, a contract designated as an asset or a liability must be carried at fair value on a company’s balance sheet, with any changes in fair value recorded in a company’s results of operations. A contract classified as an equity instrument is included within equity, and no fair value adjustments are required from period to period. In accordance with EITF 00-19, the warrants to purchase common stock included in the units sold in the Company’s initial public offering are separately accounted for as liabilities.

The agreement related to the Company’s warrants sold in the Offering, provides for the Company to register and maintain the registration of the shares underlying the warrants and does not specify a penalty in the absence of the Company’s ability to deliver registered shares to holders upon exercise of the warrants.  Further, the warrant agreement does not specify that the Company cannot be obligated to net cash settle the instrument.  Paragraph 14 of EITF 00-19 states that if the contract allows the company to net-share or physically settle the contract only by delivering registered shares, it is assumed that the company will be required to net-cash settle the contract, and as a result liability classification will be required.  Paragraph 17 of EITF 00-19 states that if the contract requires physical or net-share settlement by delivery of registered shares and does not specify any circumstances under which net-cash settlement is permitted or required, and the contract does not specify how the contract would be settled in the event that the company is unable to deliver registered shares, then net cash settlement is assumed if the company is unable to deliver registered shares (because it is unlikely that nonperformance would be an acceptable alternative).  Under EITF 00-19, registration of the common stock underlying the warrants is not within the Company’s control and, as a result, the Company must assume that it could be required to settle the securities on a net-cash basis, thereby necessitating the treatment of the potential settlement obligation as a liability. The fair value of these securities is presented on the Company’s balance sheet as “warrant liabilities,” and the unrealized changes in the values of these derivatives are shown in the Company’s statement of operations as “Gain (loss) on warrant liability.”

Fair values for traded securities and derivatives are based on quoted market prices.  Where market prices are not readily available, as in the case of the Company’s warrants as of the date of issuance, fair values are determined using methods requiring judgment and estimates.  Utilizing such methods, the fair value of the warrant liability at October 20, 2005 (the date of issuance) was determined to be $0.34 per warrant.  At the date of issuance, the Company allocated the unit price between the share of common stock and the warrants issued based upon relative fair value determined, among other things, by reference to the underlying cash held in the trust fund.  The warrants included in the units sold in the Company’s initial public offering began to be publicly traded on the Over the Counter Bulletin Board on December 5, 2005, and consequently the fair value of the warrants is reflected as the market price of a warrant at each period end. To the extent that the market prices of the Company’s warrants increase or decrease, the Company’s derivative liabilities will also increase or decrease with a corresponding impact on its statement of operations.

NOTE C—INITIAL PUBLIC OFFERING

On October 25, 2005 the Company sold 21,000,000 Units (“Units”).  Each Unit consisted of one share of the Company’s common stock, $.0001 par value, and two warrants (“Warrants”). Each Warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.00.  Each Warrant is exercisable on the later of (a) the completion of a Business Combination or (b) October 19, 2006 and expires October 19, 2009, or earlier upon redemption.  The Warrants are redeemable at a price of $.01 per Warrant upon 30 days notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $8.50 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 connection with the Offering, the Company paid CRT Capital Group LLC an underwriter’s discount of 5% of the gross proceeds of the Offering.

NOTE D-PRIOR RESTATEMENT AND RECLASSIFICATIONS OF INITIALLY ISSUED FINANCIAL STATEMENTS

Summary of restatement items:

In September 2006, the Company previously concluded that it was necessary to restate its financial statements for the period ended December 31, 2005 to reflect the classification of and accounting for the warrants to purchase common stock associated with the units sold at the initial public offering of the Company. The Company had initially classified the value of these warrants to purchase common stock, when applicable, as equity. After further review in connection with the preparation of Amendment No. 2 to the Proxy Statement related to the acquisition contemplated by the Stock Purchase Agreement dated April 19, 2006, by and among the Company, Advanced Technology Systems, Inc., a Virginia corporation (“ATS”) and shareholders of ATS, the Company had determined that these instruments should have been classified as liabilities and, therefore, the fair value of each instrument must be recorded as a liability on the Company’s balance sheet. Changes in the fair values of these instruments resulted in adjustments to the amount of the recorded liabilities, and the corresponding gain or loss was recorded in the Company’s statement of operations. At the date of the conversion of each warrants or portion thereof (or exercise of the warrants or portion thereof, as the case may be), the corresponding liability will be reclassified as equity.

	At issuance date				At December 31, 2005
	per warrant		Total		per warrant		Total
Fair Value of warrants part of initial public offering unit 42,000,000 warrants	$	0.34	$	14,280,000	$	0.47	$	19,740,000

Statement of Operations

The accompanying financial statements for the period ended December 31, 2005 were restated to effect the changes described above. The impact of the adjustments related to the classification of and accounting for the warrants for the period ended December 31, 2005 are summarized below. The following table shows the impact of the restatements on the statement of operations.

		For the period from April 12, 2005 (date of inception) through December 31, 2005
		As Initially Reported				Adjustment				As Previously Restated
Operating costs		$	(133,161		)	$	—			$	(133,161		)
Interest income		819,167								819,167
Loss on warrant liabilities										(5,460,000			)
Income (loss) before provision for taxes				686,006				(5,460,000	)			(4,773,994	)
Provision for income taxes	-current	(333,000			)	—				(333,000			)
	-deferred	18,915				—				18,915
Net income (loss)			371,921				(5,460,000		)		(5,088,079		)
Interest income attributable to common stock subject to possible conversion (net of taxes of $64,000)		(97,996			)	—				(97,996			)
Net income (loss) allocable to common stockholders not subject to possible conversion		$	273,925			$	(5,460,000		)	$	(5,186,075		)
Weighted average number of shares outstanding
-basic		10,599,810								10,599,810
-diluted		11,050,752								10,599,810
Net income (loss) per share
-basic		$	0.04							$	(0.48		)
-diluted		$	0.03							$	(0.48		)
Weighted average number of shares outstanding exclusive of shares subject to possible redemption
-basic		9,530,382								9,530,382
-diluted		9,891,181								9,530,382
Net income (loss) per share not subject to possible redemption
-basic		$	0.03							$	(0.54		)
-diluted		$	0.03							$	(0.54		)

As a result of recording the change in the fair value of warrant liability, the Company has reported a net loss for the period ended December 31, 2005 compared to net income as previously reported. Therefore, the per share effect of potential common shares issued upon the exercise of warrants, aggregating 42,000,000 shares, have not been included in diluted loss per share as the effect is anti-dilutive.

F-9

Balance Sheet Impact

The following table set forth the effects for the restatement adjustment on the Company’s balance sheet as of December 31, 2005:

	December 31, 2005					December 31, 2005
	As Initially Reported		Adjustment			As Previously Restated
ASSETS
Current assets:
Cash and cash equivalents	$	1,855,394	$	—		$	1,855,394
Prepaid expenses	72,122		—			72,122
Total current assets	1,927,516		—			1,927,516
Short-term investments held in Trust Account (including interest receivable of $39,444)(fair value $117,709,036)	117,709,036		—			117,709,036
Cash and cash equivalents held in trust	281,348		—			281,348
Deferred income tax benefit	34,629		—			34,629
Total assets	$	119,952,529	—			$	119,952,529
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	34,289	$	—		$	34,289
Income tax payable-current	356,000		—			356,000
Deferred income tax	15,714		—			15,714
Warrant liabilities	—		19,740,000			19,740,000
Total current liabilities	406,003		19,740,000			20,146,003
Common Stock subject to possible redemption 4,197,900 shares	23,424,282		—			23,424,282
Interest income attributable to common stock subject to possible redemption (net of taxes of $64,000)	97,996		—			97,996
Total common stock, subject to possible redemption	23,522,278		—			23,522,278
COMMITMENTS AND CONTINGENCIES (Note H)
STOCKHOLDERS’ EQUITY:
Preferred stock-$.0001 par value; 1,000,000 shares authorized; 0 issued and outstanding
Common stock- $.0001 par value; 100,000,000 shares authorized; 26,250,000 issued and outstanding (which includes 4,197,900 shares subject to possible redemption)	2,625		—			2,625
Additional paid-in capital	95,747,698		(14,280,000		)	81,467,698
Earnings (deficit) accumulated during the development stage	273,925		(5,460,000		)	(5,186,075		)
Total stockholders’ equity	96,024,248		(19,740,000		)	76,284,248
Total liabilities and stockholders’ equity	$	119,952,529	$	—		$	119,952,529

NOTE E—INVESTMENTS HELD IN TRUST

The management of the Company intends to hold till maturity the investments held in the Trust Account which consists principally of short-term Treasury Bills.  These bills are purchased at a discount and the Company accretes the difference between the purchase price and the market price which is considered as interest income.

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NOTE F—INCOME TAXES

The provision for income taxes for the period ending December 31, 2005 consists of the following:

Current
Federal	$	206,000
State and local	127,000
Deferred tax (benefit)
Federal	(14,733		)
State and local	(4,182		)
Total	$	314,085

Provisions have been made for deferred taxes based on differences between the financial statements and the tax basis of assets and liabilities using currently enacted rates and regulations.

Deferred tax assets and liabilities at December 31, 2005 consist of the following:

Deferred tax assets – start up costs	$	34,629
Deferred tax liability – accrued interest receivable	(15,714		)
Net deferred tax benefit	$	18,915

The Company has recorded a deferred tax asset.  Realization is dependent on acquiring an operating company and the ability to use the deferred tax expenses to offset operating income.  Although realization is not assured, management believes it is more likely than not that all of the deferred tax will be realized through future taxable income.

The provision for income taxes differs from the amount computed using the federal statutory rate of 34% as a result of the following:

Period from April 12, 2005 (inception) to December 31, 2005

	As Reported		As Previously Restated
Federal statutory rate	34.0	%	(34.0	)%
State and local income taxes, net of federal income tax benefit	11.8		1.7
Non deductible loss			38.9
	45.8	%	6.6	%

NOTE G—NOTES PAYABLE TO STOCKHOLDERS

The Company issued two $77,000 non-interest bearing unsecured promissory notes to two of the Founders of the Company on April 18, 2005.   The notes where repaid in the accordance with their terms on October 25, 2005 from the proceeds of the Offering.

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NOTE H—RELATED PARTY TRANSACTION

The Company has agreed to pay CM Equity Management, L.P., a company where certain of the Founders serve in executive capacities, an administrative fee of $7,500 per month for office space and general and administrative services from October 19, 2005 through the effective date of the acquisition of a target business. For the period from inception to December 31, 2005, the amount paid to this entity was $18,145.

Two of the Founders have agreed with the Company and the underwriters that if the Company liquidates prior to the consummation of a Business Combination, they may be personally liable to ensure that the proceeds of the trust account are not reduced by the claims of vendors or others entities that are owed money by the Company for services rendered or products sold to the Company or the claims of prospective target businesses.

NOTE I—COMMITMENTS

The Company has a commitment to pay to CRT Capital Group LLC a 2% fee of the gross offering proceeds, or $2,520,000, payable upon the Company’s consummation of a Business Combination.

The Company has engaged CRT Capital Group LLC, the underwriter, on a non-exclusive basis, as their agent for the solicitation of the exercise of the warrants. The Company has agreed to pay CRT Capital Group LLC a commission equal to 2% of the exercise price for each warrant exercised more than one year from October 19, 2005 if the exercise was solicited by CRT Capital Group LLC.

NOTE J—COMMON STOCK RESERVED FOR ISSUANCE

At December 31, 2005, 42,000,000 shares of common stock were reserved for issuance upon exercise of redeemable warrants.

NOTE K—FOUNDERS

One or more of the Founders agreed with the Company that during the 40 trading day period beginning 60 days after the end of the “restricted period” under Regulation M, they collectively would spend up to $2,000,000 to purchase warrants in the public marketplace at prices not to exceed $.65 per warrant. They have further agreed that any warrants purchased by them or their affiliates or designees would not be sold or transferred until the completion of a Business Combination. Subsequent to December 31, 2005, 3,699,528 warrants have been purchased by the Founders.

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