UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of December 2011
Commission File Number: 001-34959
AUSTRALIA ACQUISITION CORP.
(name of Registrant)
Level 9 Podium, 530 Collins Street
Melbourne VIC 3000
Australia
(Address of Principal Executive Offices)
Level 11, 459 Collins Street
Melbourne VIC 3000
Australia
(Former Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes ¨No x
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
EXPLANATORY NOTE
The Company, a foreign private issuer, is not required to file Quarterly Reports on Form 10-Q with the Securities and Exchange Commission (the “SEC”). However, the Company has elected to furnish to the SEC, under cover of this Form 6-K, the unaudited financial statements and other information that would have been included by the Company in a Form 10-Q for its quarter ended December 31, 2011 had it been required to file a report on Form 10-Q for that period.
Financial Statements
Unaudited financial statements for the quarters ended December 31, 2011 and December 31, 2010, for the six months ended December 31, 2011, for the period from July 29, 2010 (inception) to December 31, 2010 and the period from July 29, 2010 (inception) to December 31, 2011 are included as Exhibit 99.1 to this Report of Foreign Private Issuer on Form 6-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This report on Form 6-K 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, as well as assumptions made by, our management 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 consummate a successful business transaction; uncertainty of capital resources; the speculative nature of our business; our ability to successfully implement new strategies; present and possible future governmental regulations; operating hazards; competition; the loss of key personnel; any of the factors in the “Risk Factors” section of our Registration Statement No. 333-169983 and in Item 3.D. of our annual report on Form 20-F; other risks identified in this Report 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 are a blank check company organized under the laws of the Cayman Islands on July 29, 2010 as an exempted company with limited liability. Exempted companies are Cayman Islands companies intending to conduct business outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Law of the Cayman Islands. As an exempted company, we are not currently obligated to pay any taxes in the Cayman Islands on either income or capital gains. We also have been granted an exemption from the imposition of any such tax on us for 20 years from August 17, 2010. We were formed for the purpose of acquiring, or acquiring control of, one or more operating businesses or assets that we have not yet identified through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business transaction. We are not limited to a particular industry or geographic region for purposes of consummating an initial business transaction. Notwithstanding, we intend to focus on operating businesses that have their primary operations located in the Commonwealth of Australia. We believe the following sectors, among others, offer value creation opportunities: mining, financial services and media, entertainment and leisure. Of these industry sectors, we will focus on those that we believe are capable of providing attractive financial returns. We may also focus on other geographic regions or industries if we believe that those regions or industries are better able to provide these attractive financial returns. We have not established specific criteria that would trigger our consideration of businesses outside of the Commonwealth of Australia or the above industry sectors. Our initial business transaction must be with one or more target businesses having an aggregate fair market value of at least 80% of the value of the trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into such initial business transaction. We do not have any specific business transaction under consideration although we are actively searching for a target business.
We intend to utilize cash derived from the proceeds from our initial public offering, our capital stock, debt or a combination of cash, capital stock and debt, in effecting a business transaction. The issuance of additional shares of our capital stock in a business transaction:
| · | may significantly dilute the equity interests of our shareholders; |
| · | may subordinate the rights of holders of ordinary shares if we issue preferred stock with rights senior to those afforded to our ordinary shares; |
| 2 |
| · | may cause a change in control if a substantial number of our ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and |
| · | may adversely affect prevailing market prices for our ordinary shares. |
Similarly, any issuance of debt securities could result in:
| · | default and foreclosure on our assets if our operating revenues after a business transaction are insufficient to pay our debt obligations; |
| · | acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if we breach any covenants contained in any debt agreements, such as covenants that require the maintenance of financial ratios or revenues, without a waiver or renegotiation of such covenants; |
| · | our obligation to immediately repay all principal and accrued interest, if any, to the extent any debt security is payable on demand; and |
| · | our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such debt security is outstanding, or to the extent our existing leverage discourages other potential investors in our debt. |
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date. Our entire activity since inception to the closing of our initial public offering was limited to preparations for that event. Since the consummation of our initial public offering, our activity has been limited to evaluating business transaction candidates. We have not generated any operating revenues and will not until after completion of our initial business transaction, at the earliest. We will generate non-operating income in the form of interest income on cash and cash equivalents. We expect to incur substantially increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence.
For the three months ended December 31, 2011, we had a net (loss) of ($93,961) consisting of expenses of $84,594 and decreases in the market value of government securities investments of $9,367. All of these expenses were incurred during the three months ended December 31, 2011.
For the six months ended December 31, 2011, we had a net (loss) of ($183,214) consisting of expenses of $171,315 and decreases in the market value of government securities investments of $11,899. All of these expenses were incurred during the six months ended December 31, 2011.
Liquidity and Capital Resources
As of December 31, 2011, we had $501,781 in a bank account available for use by management to cover the costs associated with identifying a target business and negotiating an acquisition or merger.
Our initial public offering and the private placement of insider warrants to our executive officers and directors provided us with $1,028,300 of working capital after transferring $64,640,000 into the trust account. For the three months ended December 31, 2011 we used cash of $56,789 in operating activities which was largely attributable to a net loss for the period of ($93,961) and an increase of accounts payable and accruals of $10,211, a decrease in prepaid expenses of $17,594, resulting in a net decrease in cash of $56,789 for the three months ended December 31, 2011. Adding the net cash increase of $501,781 for the period from July 29, 2010 (inception) to December 31, 2011, to the cash we started with on July 29, 2010 of $0 we ended the period at December 31, 2011 with a cash balance of $501,781.
We intend to use substantially all of the funds held in the trust account (net of taxes) to consummate our initial business transaction. To the extent that our capital stock or debt is used, in whole or in part, as consideration to consummate our initial business transaction, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
| 3 |
We believe that the $501,781 in funds available to us outside of the trust account, together with interest earned on the trust account balance, net of taxes payable on such interest, that may be released to us to fund our expenses relating to investigating and selecting a target business and other working capital requirements, will be sufficient to allow us to operate until August 15, 2012, assuming that a business transaction is not consummated during that period. Over this time period, we will use these funds for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants, sites or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business transaction. In order to meet our working capital needs, certain of our officers and directors may, but are not obligated to, loan us funds, from time to time, or at any time, in whatever amount such officer or director deems reasonable at his sole discretion. The unpaid principal amount of any such loans may be converted, at the option of the lender, into warrants to acquire shares of the post transaction business on the basis of one warrant for each $0.50 of principal amount so converted. The warrants would be identical to the insider warrants. The holders of a majority of any such warrants that may be issued (or the 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 by us subsequent to such date. We will bear the expense incurred with the filing of any such registration statements. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist. However, such loans would not have any recourse against the trust account and would be on terms believed by us to be no less favorable to us than would be available from unaffiliated third parties.
We anticipate that we will incur approximately:
| · | $300,000 of expenses for due diligence (excluding accounting and legal due diligence) of prospective target(s); |
| · | $300,000 of expenses for legal and accounting expenses attendant to the due diligence investigation, structuring and negotiation of a business transaction including the payment of exclusivity fees in the course of negotiation of a business transaction; |
| · | $210,000 for office space and administrative and support services; |
| · | $75,000 of expenses in legal and accounting fees relating to our SEC reporting obligations; and |
| · | $115,000 for general working capital that will be used for miscellaneous expenses and general corporate purposes (including director and officer liability insurance premiums). |
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business transaction, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business transaction and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
We do not believe we will need to raise additional funds until the consummation of our initial business transaction to meet the expenditures required for operating our business. However, we may need to raise additional funds through a private offering of debt or equity securities if such funds are required to consummate a business transaction that is presented to us. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business transaction.
We have evaluated the appropriate accounting treatment for the insider warrants and the warrants attached to the public units. In accordance with generally accepted accounting principles, we are not required to net-cash settle such warrants under any circumstances, including when we are unable to maintain sufficient registered shares to settle such warrants. Accordingly, we intend to classify such instruments within permanent equity as additional paid-in capital.
We believe the purchase price of the insider warrants is greater than the fair value of such warrants. Therefore, we will not be required to incur a compensation expense in connection with the purchase by our management team of the insider warrants.
Related Party Transactions
We are obligated, commencing on the date of the consummation of our initial public offering, to pay to Ziegler Asset Partners a monthly fee of $10,000 for office space and administrative and support services. Peter Ziegler, our chairman of the board and chief executive officer, is the president of Ziegler Asset Partners.
On November 19, 2010, immediately prior to the consummation of our initial public offering, we consummated the private sale of 8,000,000 insider warrants to our executive officers and directors at a price of $0.50 per warrant, generating gross proceeds of $4.0 million. For a further description of this transaction, see “Other Information – Unregistered Sales of Equity Securities and Use of Proceeds,” below.
| 4 |
On November 15, 2010 and December 1, 2010 we redeemed from our initial shareholders, at a nominal cost to us, an aggregate of 613,334 initial ordinary shares and 320,000 initial ordinary shares, respectively. For a further description of these transactions, see “Other Information – Unregistered Sales of Equity Securities and Use of Proceeds,” below.
Recent Accounting Pronouncements
We do not believe that any recently issued, but not yet effective, accounting standards would have a material effect on our financial position and results of operation, if adopted.
Quantitative and Qualitative Disclosures about Market Risk
The net proceeds of our initial public offering, including amounts in the trust account, have been invested in U.S. government securities with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Controls and Procedures
Disclosure Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the period covered by this report on Form 6-K. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer. Based upon that evaluation, management concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is accumulated and communicated to management (including our principal executive officer and principal financial officer) to allow timely decisions regarding required disclosure and that our disclosure controls and procedures are effective to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
Changes in Internal Control Over Financial Reporting
As required by Rule 13a-15(d) of the Exchange Act, our management, including our principal executive officer and our principal financial officer, conducted an evaluation of the internal control over financial reporting to determine whether any changes occurred during the period covered by this report on Form 6-K that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our principal executive officer and principal financial officer concluded no such changes during the period covered by this report on Form 6-K materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
OTHER INFORMATION
Legal Proceedings
Not applicable
Risk Factors
Not applicable
Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable
Defaults Upon Senior Securities
Not applicable
Mine Safety Disclosures
Not applicable
| 5 |
Other Information
Not applicable
Exhibits
(a) Exhibits.
| 31.1 | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) |
| 31.2 | Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) |
| 32.1 | Certification of the Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 |
| 99.1 | Financial Statements |
| 6 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: February 14, 2012 | AUSTRALIA ACQUISITION CORP. | ||
| By: | /s/ Peter Ziegler | ||
| Name: | Peter Ziegler | ||
| Title: | Chairman of the Board and | ||
| Chief Executive Officer | |||
| 7 |
Exhibit 31.1
CERTIFICATION
I, Peter Ziegler, certify that:
| 1. | I have reviewed this report on Form 6-K of Australia Acquisition Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: February 14, 2012 | ||
| By: | /s/ Peter Ziegler | |
| Peter Ziegler | ||
| Principal Executive Officer |
Exhibit 31.2
CERTIFICATION
I, E. Stephen Streeter, certify that:
| 1. | I have reviewed this report on Form 6-K of Australia Acquisition Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: February 14, 2012 | ||
| By: | /s/ E. Stephen Streeter | |
| E. Stephen Streeter | ||
| Principal Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In accordance with the rules and regulations of the Securities and Exchange Commission, the following certification shall not be deemed to be filed with the Commission under the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 18 of the Exchange Act and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, notwithstanding any general incorporation by reference of this Report of Australia Acquisition Corp. (the “Company”) on Form 6-K as filed with the Commission on the date hereof (the “Report”), into any other document filed with the Commission by the Company.
In connection with the Report, each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: February 14, 2012
| By: | /s/ Peter Ziegler | ||
| Peter Ziegler | |||
| Chairman and Chief Executive Officer | |||
| (Principal Executive Officer) | |||
Dated: February 14, 2012
| By: | /s/ E. Stephen Streeter | ||
| E. Stephen Streeter | |||
| Chief Financial Officer | |||
| (Principal Executive Officer) | |||
Exhibit 99.1
AUSTRALIA ACQUISITION CORP.
(a corporation in the development stage)
Index to Financial Statements
| Page | |||
| Unaudited Financial Statements | |||
| Balance Sheets as of December 31, 2011 (unaudited) and June 30, 2011 | F-2 | ||
| Statements of Operations for the three months ended December 31, 2011 and 2010, for the six months ended December 31, 2011, for the period from July 29, 2010 (inception) to December 31, 2010 and the period from July 29, 2010 (inception) to December 31, 2011 (unaudited) | F-3 | ||
| Statement of Changes in Shareholders’ Equity for the period from July 29, 2010 (inception) to December 31, 2011 (unaudited) | F-4 | ||
| Statement of Cash Flows for the six months ended December 31, 2011 and the period from July 29, 2010 (inception) to December 31, 2011 (unaudited) | F-5 | ||
| Notes to Financial Statements | F-6 |
| F-1 |
AUSTRALIA ACQUISITION
CORP.
(a corporation in the development stage)
Balance Sheet
| December 31, 2011 (unaudited) | June 30, 2011 (audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 501,781 | $ | 608,318 | ||||
| Prepaid expenses | 20,331 | 55,518 | ||||||
| Total current assets | 522,112 | 663,836 | ||||||
| Restricted cash equivalents held in trust | 64,658,492 | 64,670,391 | ||||||
| Total assets | $ | 65,180,604 | $ | 65,334,227 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 83,321 | $ | 53,730 | ||||
| Total current liabilities | 83,321 | 53,730 | ||||||
| Ordinary shares subject to possible redemption, 5,887,999 shares (at redemption value) | 59,485,803 | 59,496,750 | ||||||
| Commitments | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, $0.001 par value, 1,000,000 shares authorized; none issued and outstanding | — | — | ||||||
| Ordinary shares, $0.001 par value, 49,000,000 shares authorized; 8,533,333 shares issued and outstanding (includes 5,887,999 shares subject to possible redemption) | 8,534 | 8,534 | ||||||
| Additional paid-in capital | 6,020,669 | 6,009,721 | ||||||
| Deficit accumulated during the development stage | (417,723 | ) | (234,508 | ) | ||||
| Total shareholders’ equity | 5,611,480 | 5,783,747 | ||||||
| Total liabilities and shareholders’ equity | $ | 65,180,604 | $ | 65,334,227 | ||||
The accompanying notes are an integral part of the financial statements.
| F-2 |
AUSTRALIA ACQUISITION
CORP.
(a corporation in the development stage)
Statements of Operations
(Unaudited)
| Three Months Ended December 31, | Six Months Ended December | July 29, 2010 (Inception) to December | July 29, 2010 (Inception) to December | |||||||||||||||||
| 2011 | 2010 | 31, 2011 | 31, 2010 | 31, 2011 | ||||||||||||||||
| Revenue | $ | — | — | — | — | $ | — | |||||||||||||
| Cost of revenue | — | — | — | — | — | |||||||||||||||
| Gross profit (loss) | — | — | — | — | — | |||||||||||||||
| Formation and operating costs | 84,595 | 73,028 | 171,316 | 76,443 | 436,215 | |||||||||||||||
| Loss before increases (decreases) in the market value of trust account investments | (84,595 | ) | (73,028 | ) | (171,316 | ) | (76,443 | ) | (436,215 | ) | ||||||||||
| Increases (decreases) in the market value of trust account investments | (9,367 | ) | 6,680 | (11,899 | ) | 6,680 | 18,492 | |||||||||||||
| Net loss | $ | (93,962 | ) | (66,348 | ) | (183,215 | ) | (69,763 | ) | $ | (417,723 | ) | ||||||||
| Weighted average ordinary shares outstanding — basic and diluted | 8,533,333 | 4,547,351 | 8,533,333 | 4,547,351 | 7,339,833 | |||||||||||||||
| Basic and diluted net loss per ordinary share | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
The accompanying notes are an integral part of the financial statements.
| F-3 |
AUSTRALIA ACQUISITION CORP.
(a corporation in the development stage)
Statement of Changes in Shareholders’ Equity
The period from
July 29, 2010 (Inception) to December 31, 2011
(Unaudited)
| Deficit | ||||||||||||||||||||
| Accumulated | ||||||||||||||||||||
| Additional | During the | |||||||||||||||||||
| Ordinary shares | Paid-In | Development | Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Stage | Equity | ||||||||||||||||
| Sale of ordinary shares issued to initial shareholders at July 29, 2010 | 3,066,667 | $ | 3,067 | $ | 21,933 | $ | — | $ | 25,000 | |||||||||||
| Redemption of initial ordinary shares | (933,334 | ) | (933 | ) | 933 | — | — | |||||||||||||
| Sale of 6,400,000 units, net of underwriters’ discount and offering expenses (including 5,887,999 shares subject to possible redemption) | 6,400,000 | 6,400 | 61,483,605 | — | 61,490,005 | |||||||||||||||
| Net proceeds subject to possible redemption of 5,887,999 shares | — | — | (59,496,750 | ) | — | (59,496,750 | ) | |||||||||||||
| Sale of private placement warrants | — | — | 4,000,000 | — | 4,000,000 | |||||||||||||||
| Net loss | — | — | — | (234,508 | ) | (234,508 | ) | |||||||||||||
| Balance at June 30, 2011 | 8,533,333 | 8,534 | 6,009,721 | (234,508 | ) | 5,783,747 | ||||||||||||||
| Change in value of shares subject to possible redemption | — | — | 10,948 | — | 10,948 | |||||||||||||||
| Net loss | — | — | — | (183,215 | ) | (183,215 | ) | |||||||||||||
| Balance at December 31, 2011 | 8,533,333 | $ | 8,534 | $ | 6,020,669 | $ | (417,723 | ) | $ | 5,611,480 | ||||||||||
The accompanying notes are an integral part of the financial statements.
| F-4 |
AUSTRALIA ACQUISITION
CORP.
(a corporation in the development stage)
Statement of Cash Flows
(Unaudited)
| For the Six Months ended December 31, 2011 | July 29, 2010 (Inception) to December 31, 2011 | July 29, 2010 (Inception) to December 31, 2010 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | (183,215 | ) | (417,723 | ) | (69,763 | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Increase in prepaid expenses | 35,188 | (20,331 | ) | 0 | ||||||||
| Accrued interest in trust account | 11,899 | (18,492 | ) | (6,680 | ) | |||||||
| Increase in accounts payable and accrued expenses | 29,591 | 83,321 | 0 | |||||||||
| Net cash used in operating activities | (106,537 | ) | (373,225 | ) | (76,443 | ) | ||||||
| Cash flows from investing activities: | ||||||||||||
| Cash transferred to trust account | — | (64,640,000 | ) | (64,640,000 | ) | |||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from notes payable to shareholders | — | 200,000 | 200,000 | |||||||||
| Repayment of notes payable – shareholder | — | (200,000 | ) | (200,000 | ) | |||||||
| Proceeds from sale of initial ordinary shares | — | 25,000 | 25,000 | |||||||||
| Proceeds from public offering of units | — | 64,000,000 | 64,000,000 | |||||||||
| Proceeds from sale of insider warrants | — | 4,000,000 | 4,000,000 | |||||||||
| Payment of offering costs | — | (2,509,994 | ) | (2,361,515 | ) | |||||||
| Net cash provided by financing activities | — | 65,515,006 | 65,663,485 | |||||||||
| Net (decrease) increase in cash | (106,537 | ) | 501,781 | 947,042 | ||||||||
| Cash beginning of period | 608,318 | — | — | |||||||||
| Cash end of period | 501,781 | 501,781 | 947,042 | |||||||||
| Supplemental disclosures of non-cash financing activities: | ||||||||||||
| Accrual for offering costs | — | — | (82,643 | ) | ||||||||
The accompanying notes are an integral part of the financial statements.
| F-5 |
AUSTRALIA ACQUISITION
CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
(Amounts expressed in U.S. dollars)
Note 1 — Organization and Nature of Business Operations
Australia Acquisition Corp. (a corporation in the development stage) (the “Company”) was incorporated in the Cayman Islands on July 29, 2010. The Company was formed to acquire, or acquire control of, through a merger, stock exchange, asset acquisition or similar business transaction one or more currently unidentified operating businesses or assets (“Business Transaction”). The Company is considered to be in the development stage as defined under accounting principles generally accepted in the Unites States of America (“U.S. GAAP”), and is subject to the risks associated with activities of development stage companies.
The Company’s efforts in identifying a prospective Target Business (as defined below) will not be limited to a particular industry or geographic region; however, it expects to focus on businesses that have their primary operations located in the Commonwealth of Australia in the Company’s targeted industry sectors, which encompasses the following: mining, financial services and media, entertainment and leisure.
The Company is currently evaluating Business Transaction candidates. All activity through December 31, 2011 relates to the Company’s formation and initial public offering (the “Offering”) described below and identifying and investigating prospective Target Businesses with which to consummate a Business Transaction. As used herein, “Target Business” shall mean one or more businesses or assets that the Company may target for a Business Transaction. There can be no assurance that the Company will be able to successfully effect a Business Transaction.
The Company will not generate any operating revenues until after completion of its initial Business Transaction, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents including interest earned on amounts in the Trust Account (as defined below).
The Company consummated the Offering on November 19, 2010 and received proceeds of $61.49 million, net of the underwriters’ commissions of $1.76 million and offering costs and other expenses of approximately $750,000. The Company sold to the public 6,400,000 Units (as defined in Note 4) at a price of $10.00 per Unit. Immediately prior to the consummation of the Offering, the Company consummated the private sale of 8,000,000 Insider Warrants (as defined in Note 5) to the Company’s executive officers and directors at a price of $0.50 per Insider Warrant, generating gross proceeds of $4.0 million (the “Private Placement”). Net proceeds received by the Company from the consummation of both the Offering and the Private Placement (collectively, the “Offerings”) totaled $65.49 million.
Upon the closing of the Offerings, $64.64 million was placed in a trust account (“Trust Account”) at J.P. Morgan Chase Bank N.A. and maintained by Continental Stock Transfer & Trust Company as trustee and invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (“Investment Company Act”), having a maturity of 180 days or less, or in money market funds selected by the Company meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act. The funds in the Trust Account will not be released until the earlier of the consummation of a Business Transaction or the Company’s liquidation if the Company is unable to consummate a Business Transaction by August 15, 2012; provided, however, the Company shall be permitted to draw amounts from the interest earned on the funds in the Trust Account that the Company needs to pay its income or other tax obligations and any remaining interest that the Company needs for its working capital requirements. The proceeds of the Offerings held outside of the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Offerings, although substantially all of the net proceeds of the Offerings are intended to be generally applied toward consummating a Business Transaction with one or more Target Businesses that collectively have a fair market value of at least 80% of the value of the Trust Account (excluding taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into such Business Transaction.
| F-6 |
The Company, after signing a definitive agreement for the acquisition of one or more Target Businesses, might not submit the transaction for shareholder approval. If no shareholder approval is sought, the Company will proceed with a Business Transaction if it is approved by its board of directors and holders of less than 92% of the Company’s public Ordinary Shares exercise their redemption rights. The Company will conduct the redemptions without a shareholder vote pursuant to the tender offer rules. In connection with redemptions under the tender offer rules, public shareholders properly exercising their redemption rights shall be entitled to receive a per share pro rata portion of the Trust Account (excluding interest). In the event that the Company seeks shareholder approval in connection with its Business Transaction, the Company will proceed with a Business Transaction only if a majority of the outstanding Ordinary Shares (as defined in Note 4) voted are voted in favor of the Business Transaction and holders of less than 92% of the Company’s public Ordinary Shares exercise their redemption rights. However, the Company's officers’, directors’ or their affiliates’ participation in privately-negotiated transactions (as described in the prospectus relating to the Offering), if any, could result in the approval of a Business Transaction even if the holders of a majority of the Company’s public Ordinary Shares either vote against, or indicate their intention to vote against, or the holders of 92% or more of the Company’s public Ordinary Shares exercise or indicate their intention to exercise their redemption rights in connection with such Business Transaction. If the Company seeks shareholder approval of a Business Transaction, because the Company is a foreign private issuer and is required to comply with the foreign private issuer rules, the public shareholders will be required to exercise their redemption rights in accordance with the tender offer rules. In connection with a shareholder vote and redemption under the tender offer rules, if a Business Transaction is approved and consummated: public shareholders voting in favor of or against the Business Transaction and electing to redeem Ordinary Shares shall be entitled to receive a per share pro rata portion of the Trust Account (excluding interest). The Ordinary Shares subject to possible redemption have been recorded at fair value and classified as temporary equity, in accordance with U.S. GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company’s Initial Shareholders (as defined in Note 5) consisting of all of the officers and directors have agreed, in the event the Company seeks shareholder approval of its Business Transaction, to vote their Initial Ordinary Shares (as defined in Note 5) in favor of a Business Transaction. The Company’s officers and directors have also agreed to vote Ordinary Shares acquired by them in the Offering or in the aftermarket in favor of a Business Transaction submitted to the Company’s shareholders for approval.
The Company’s memorandum and articles of association, as amended, provide that if after 21 months from the date of the prospectus relating to the Offering the Company has not completed a Business Transaction, it will go through an automatic liquidation. This has the same effect as if the Company’s board of directors and shareholders had formally voted to approve its voluntary winding up under the Companies Law in the Cayman Islands. As a result, no vote would be required from the Company’s shareholders to commence such a voluntary winding up. 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 price per share in the Offering (assuming no value is attributed to the Warrants contained in the Units offered in the Offering discussed in Note 4).
| F-7 |
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of the Company are presented in U.S. dollars in conformity with U.S. GAAP and pursuant to the rules and regulations of the SEC. The Company has selected June 30 as its fiscal year end.
Development Stage Company
The Company complies with the reporting requirements of U.S. GAAP. At December 31, 2011, the Company had not commenced any operations nor generated revenue to date, other than interest on the trust fund balance. All activity through December 31, 2011 relates to the Company’s formation and the Offering.
Fair Value of Financial Instruments
The fair values of the Company’s assets and liabilities that qualify as financial instruments under U.S. GAAP, approximate their carrying amounts presented in the accompanying balance sheet.
Net Loss per Common Share
The Company complies with accounting and disclosure requirements of U.S. GAAP. Net loss per share is computed by dividing net loss by the weighted average number of Ordinary Shares outstanding for the period.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP 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.
Investments
The Company carries its investments in marketable debt and equity securities at fair value, based on quoted market prices. Security transactions are recorded on a trade date basis. Unrealized gains and losses are included in the statements of activities.
Income Taxes
The Company follows the provisions of U.S. GAAP which prescribes a recognition threshold and measurement attribute for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on its tax return. U.S. GAAP requires that the financial statements reflect expected future tax consequences of such positions presuming the taxing authorities’ full knowledge of the position and all relevant facts, but without considering time values. There were no adjustments related to uncertain tax positions recognized during the period July 29, 2010 (inception) to December 31, 2011.
| F-8 |
Note 3 – Per Share Information
Basic Earnings per Ordinary Share (“Basic EPS”) is computed by dividing net income by the weighted-average number of Ordinary Shares outstanding. Diluted Earnings per Ordinary Share (“Diluted EPS”) is computed by dividing net income by the weighted-average number of Ordinary Shares, and dilutive Ordinary Share equivalents and convertible securities then outstanding. U.S. GAAP requires the presentation of both Basic EPS and Diluted EPS on the face of the Company’s Condensed Statements of Income. Ordinary Share equivalents totaling 14,400,000 were excluded from the computation of Diluted EPS for the three months ended December 31, 2011 and for the period from July 29, 2010 (inception) to December 31, 2011, as their effect on the computation of Diluted EPS would have been anti-dilutive.
The following table sets forth the computation of basic and diluted per share information:
| For the Three Months Ended December 31, 2011 | For the Three Months Ended December 31, 2010 | For the Six Months Ended December 31, 2011 | For the period July 29, 2010 (Inception) to December 31, 2010 | For the period July 29, 2010 (Inception) to December 31, 2011 | ||||||||||||||||
| Numerator: | ||||||||||||||||||||
| Net income (loss): | $ | (93,961 | ) | $ | (66,348 | ) | $ | (183,214 | ) | $ | (69,763 | ) | $ | (417,723 | ) | |||||
| Denominator: | ||||||||||||||||||||
| Weighted-average Ordinary Shares outstanding | 8,533,333 | 4,547,351 | 8,533,333 | 4,547,351 | 7,339,833 | |||||||||||||||
| Net income (loss) per share: | ||||||||||||||||||||
| Basic and diluted | $ | NIL | $ | NIL | $ | NIL | $ | NIL | $ | NIL | ||||||||||
Note 4 —Initial Public Offering
On November 19, 2010, the Company sold to the public 6,400,000 units (“Units”) at a price of $10.00 per unit. Each Unit consists of one ordinary share, $0.001 par value (“Ordinary Share”), of the Company, and one redeemable Ordinary Share purchase warrant (“Warrant”). Each Warrant entitles the holder to purchase from the Company one Ordinary Share at an exercise price of $11.50 (a) commencing on the later of (i) the completion of a Business Transaction with a Target Business and (ii) one year from the effective date of prospectus relating to the Offering and (b) expiring five years from the date of the Business Transaction, unless earlier redeemed. The Warrants are redeemable at a price of $0.01 per Warrant upon 30 days’ notice after the Warrants become exercisable, only in the event that the last sale price of the Ordinary Shares is at least $17.50 per share for any 20 trading days within a 30 trading day period ending on the third business day prior to the date on which notice of redemption is sent. In accordance with the warrant agreement relating to the Warrants, the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Ordinary Shares issuable upon exercise of the Warrants. The Company will not be obligated to deliver securities, if a registration statement is not effective at the time of exercise. Additionally, in the event that a registration statement 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. Notwithstanding the foregoing, if a registration statement covering the Ordinary Shares issuable upon exercise of the Warrants is not effective within a specified period following the consummation of a Business Transaction, the holders of the Warrants may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis.
| F-9 |
Note 5 — Related Party Transactions
On July 29, 2010, in connection with the formation of the Company, the Company issued 3,066,667 Ordinary Shares to Ziegler Asset Partners Trust, an affiliate of Peter Ziegler, the Company’s chairman and chief executive officer, for an aggregate of $25,000 in cash, in a private placement (the “Initial Ordinary Shares”). In August 2010, Ziegler Asset Partners Trust entered into an agreement to transfer an aggregate of 406,334 Initial Ordinary Shares for nominal consideration to Charbel Nader, the Company’s executive vice president, Brett Chenoweth, the Company’s then executive vice president, E. Stephen Streeter, the Company’s chief financial officer and executive vice president, Ian Zimmer, a director of the Company, and Peter O’Brien, a director of the Company. Subsequently, on November 15, 2010, the Company redeemed from its Initial Shareholders (as defined below), at nominal cost to the Company, an aggregate of 613,334 of such Initial Ordinary Shares, that the Company has cancelled. On December 1, 2010, the Company redeemed, from its Initial Shareholders (as defined below), at a nominal cost to the Company, an aggregate of 320,000 Initial Ordinary Shares as a result of the underwriters’ decision not to exercise the Over-Allotment Option.
On July 20, 2010, the Company issued an unsecured promissory note in the aggregate principal amount of $150,000 to Ziegler Asset Partners Pty. Ltd., an affiliate of Mr. Ziegler, the Company’s chairman and chief executive officer. The note was non-interest bearing and payable on the earlier of July 29, 2011 or the consummation of the Offering. Due to the short-term nature of the note, the fair value of the note approximated its carrying amount of $150,000. In October 2010, Ziegler Asset Partners Pty. Ltd. advanced the Company an aggregate of $50,000, payable on demand without interest, to pay certain vendors and other costs of the Offering. On November 19, 2010, the Company repaid in full the promissory note and advance.
The Company’s officers and directors purchased warrants (“Insider Warrants”) exercisable for 8,000,000 Ordinary Shares at a purchase price of $0.50 per Insider Warrant directly from the Company immediately prior to the consummation of the Offering and not as part of the Offering. All of the proceeds from the sale of the Insider Warrants were placed in the Trust Account. The Insider Warrants are identical to the Warrants included in the Units sold in the Offering, except that the Insider Warrants: were placed in escrow; are subject to transfer restrictions; are non-redeemable by the Company so long as they are held by the Company’s officers and directors or their permitted transferees; and may be exercised by the Company’s officers and directors or their permitted transferees on a cashless basis.
Additionally, the Company’s officers and directors have agreed that the Insider Warrants will not be sold or transferred by them until 90 days after the Company has completed a Business Transaction. The Company believes based on a review of the trading prices of the public warrants of other “blank check” companies similar to the Company, that the purchase price of $0.50 per Insider Warrant is not less than the approximate fair value of such Insider Warrants on the date of issuance. Therefore, the Company did not record stock-based compensation expense upon the sale of the Insider Warrants.
The holders of the Company’s Ordinary Shares issued and outstanding prior to the consummation of the Offering (the “Initial Shareholders”), as well as the holders of the Insider Warrants (and underlying securities), will be entitled to registration rights pursuant to an agreement entered into on the date of the consummation of the Offering. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Ordinary Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these Ordinary Shares are to be released from escrow. The holders of a majority of the Insider Warrants (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Transaction. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Transaction. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
The Company agreed to pay Ziegler Asset Partners a monthly fee of $10,000 for office space and related administrative and support services, including but not limited to receptionist, secretarial and general office services, commencing on the date of the consummation of the Offering and continuing until the earlier to occur of: (i) the consummation of a Business Transaction, (ii) 21 months or (iii) the date on which the Company ceases its corporate existence in accordance with the Company’s Memorandum and Articles of Association, as amended. Mr. Ziegler, the Company’s chairman of the board and chief executive officer, is the president of Ziegler Asset Partners.
| F-10 |
Mr. Ziegler, the Company’s chairman of the board and chief executive officer, has agreed that he will be liable to the Company if and to the extent any insurance it may procure is inadequate to cover any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company discussed entering into or entered into a transaction agreement reduce the amounts in the trust account to below $10.10 per share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Offering against certain liabilities, including liabilities under the Securities Act of 1933. In the event that an executed waiver is deemed to be unenforceable against a third party, Mr. Ziegler will not be responsible to the extent of any liability for such third party claims. The Company currently does not have any executed waiver agreements, but it will seek to obtain them from all of its vendors, service providers and prospective Target Businesses.
In addition, in the event the Company is forced to liquidate and does not have sufficient funds from its remaining assets outside of the Trust Account, Mr. Ziegler has agreed to advance the Company the funds necessary to pay any and all costs involved or associated with the process of liquidation and the return of the funds in the Trust Account to the Company’s public shareholders (currently anticipated to be no more than approximately $25,000) and has agreed not to seek repayment for such expenses.
Note 6 — Commitments
The Company agreed to pay the underwriters of the Offering underwriting discounts and commissions equal to 4.25% of the gross proceeds of the Offering, 2.75% of which was paid at the closing of the Offering and 1.5% of which is payable to Cohen & Company Capital Markets, LLC, as the representative of the underwriters solely upon consummation of a Business Transaction (the “Deferred Underwriting Discount”). The Deferred Underwriting Discount was deposited in the Trust Account. On June 14, 2011, pursuant to an arrangement with the representative of the underwriters to provide special financial advisory services in connection with a potential Business Transaction, the underwriters waived their right to receive the Deferred Underwriting Discount.
The underwriters were granted a 45-day option to purchase up to 960,000 Units (over and above the 6,400,000 Units referred to above) at the Offering price less underwriting discounts and commissions, solely to cover over-allotments (the “Over-Allotment Option”), if any. On December 1, 2010, the representative of the underwriters notified the Company of its intention not to exercise the Over-Allotment Option.
On November 19, 2010, in connection with the Offering, the Company sold for $100 to Cohen & Company Capital Markets, LLC, as the representative of the underwriters, an option (the “Unit Purchase Option”) to purchase 640,000 Units (equivalent to 10% of the total number of Units sold in the Offering) at an exercise price of $15.00 per Unit (150% of the public offering price). The Units issuable upon exercise of the Unit Purchase Option are identical to the Units sold in the Offering. This Unit Purchase Option is exercisable commencing on the later of the consummation of a Business Transaction and one year from the date of the Offering and expires five years from the date of the Offering. The Company has accounted for the fair value of the Unit Purchase Option, net of the receipt of the $100 cash payment, as an expense of the Offering resulting in a charge directly to shareholders' equity. The Company estimates that the fair value of the Unit Purchase Option is approximately $2.02 per unit using a Black-Scholes option-pricing model.
The fair value of the Unit Purchase Option is estimated as of the date of grant using the following assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 1.73% and (3) expected life of 5 years. The Unit Purchase Option may be exercised for cash or on a “cashless” basis, at the holder’s option (except in the case of a forced cashless exercise upon the Company’s redemption of the Warrants, as described in Note 4 above), such that the holder may use the appreciated value of the Unit Purchase Option (the difference between the exercise prices of the Unit Purchase Option and the underlying Warrants and the market price of the Units and underlying Ordinary Shares) to exercise the Unit Purchase Option without the payment of cash.
| F-11 |
The Company will have no obligation to net cash settle the exercise of the Unit Purchase Option or the Warrants underlying the Unit Purchase Option. The holder of the Unit Purchase Option will not be entitled to exercise the Unit Purchase Option or the Warrants underlying the Unit Purchase Option unless a registration statement covering the securities underlying the Unit Purchase Option is effective or an exemption from registration is available. If the holder is unable to exercise the Unit Purchase Option or underlying Warrants, the Unit Purchase Option or underlying Warrants, as applicable, will expire worthless.
On November 19, 2010, in connection with the Offering the Company granted Cohen & Company Capital Markets, LLC a right of first refusal to act as lead underwriter or as a co-manager with at least 50% of the economics (or, in the case of a three-handed deal, 33% of the economics) for any and all public and private equity and debt offerings by the Company or its successors, during the period commencing on consummation of the Offering and terminating 12 months after the completion of an initial Business Transaction but in no instance longer than 36 months from the effective date of the prospectus relating to the Offering. Notwithstanding, such right of first refusal does not apply to offerings to be led outside of the United States.
Note 7 — Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
Note 8 — Ordinary Shares
On July 29, 2010, in connection with the formation of the Company, the Company issued 3,066,667 Initial Ordinary Shares to the Ziegler Asset Partners Trust, an affiliate of Mr. Ziegler, the Company’s chairman of the board and chief executive officer, for an aggregate of $25,000 in cash, in a private placement. In August 2010, Ziegler Asset Partners Trust entered into an agreement to transfer an aggregate of 406,334 Initial Ordinary Shares for nominal consideration to Mr. Nader, the Company’s executive vice president, Mr. Chenoweth, the Company’s then executive vice president, Mr. Streeter, the Company’s chief financial officer and executive vice president, Prof. Zimmer, a director of the Company, and Mr. O’Brien, a director of the Company. Subsequently, on November 15, 2010, the Company redeemed from its Initial Shareholders, at nominal cost to the Company, an aggregate of 613,334 of such Initial Ordinary Shares, that the Company has cancelled.
On December 1, 2010, the Company redeemed, from its Initial Shareholders, at a nominal cost to the Company, an aggregate of 320,000 Initial Ordinary Shares as a result of the underwriters’ decision not to exercise the Over-Allotment Option. The Company redeemed these Initial Ordinary Shares in order to maintain the Initial Shareholders’ collective 25% ownership interest in the Company’s Ordinary Shares after giving effect to the Offering and the non-exercise of the underwriters’ over-allotment option.
Note 9 —Investment in Trust Account
Subsequent to the Offering, an amount of $64,640,000, of the net proceeds of the Offering was deposited in an interest-bearing trust account and invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less until the earlier of (i) the consummation of a Business Combination or (ii) liquidation of the Company.
Investments at December 31, 2011 consist of the following:
| Cost | Gross Unrealized Holding Gain (Loss) | Fair Value | ||||||||||
| Fixed income securities: | ||||||||||||
| U.S. Treasury Securities | $ | 64,661,202 | $ | (7,812 | ) | $ | 64,653,390 | |||||
| F-12 |
Note 10 — Fair Value Measurements
As required by U.S. GAAP, the Company accounts for and reports its financial assets and liabilities at fair value at each reporting period.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2011, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability:
| Description | December 31, 2011 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Restricted cash equivalents held in Trust Account | $ | 64,658,492 | 64,658,492 | — | — | |||||||||||
| F-13 |
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Per Share Information
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Dec. 31, 2011
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| Earnings Per Share [Text Block] | Note 3 – Per Share Information
Basic Earnings per Ordinary Share (“Basic EPS”) is computed by dividing net income by the weighted-average number of Ordinary Shares outstanding. Diluted Earnings per Ordinary Share (“Diluted EPS”) is computed by dividing net income by the weighted-average number of Ordinary Shares, and dilutive Ordinary Share equivalents and convertible securities then outstanding. U.S. GAAP requires the presentation of both Basic EPS and Diluted EPS on the face of the Company’s Condensed Statements of Income. Ordinary Share equivalents totaling 14,400,000 were excluded from the computation of Diluted EPS for the three months ended December 31, 2011 and for the period from July 29, 2010 (inception) to December 31, 2011, as their effect on the computation of Diluted EPS would have been anti-dilutive.
The following table sets forth the computation of basic and diluted per share information:
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