RNS Number:5847J
Cross Shore Acquisition Corporation
28 September 2006
Cross Shore Acquisition Corporation
Unaudited interim results for the period ended 30 June 2006
It has been nearly five months since Cross Shore Acquisition Corporation ("Cross
Shore" or the "Company") began trading on AIM on 28 April 2006. During that
time, the management team has been actively seeking suitable candidates for a
Qualified Business Combination. It remains the Company's intention to invest in
one or more companies engaged in the delivery of business services in the U.S.
and to focus on those companies which can benefit from the ''productivity
arbitrage'' associated with offshoring select operations. While many industries
have been vetted, management believes that outsourcing in the healthcare arena
is particularly attractive given the fragmented nature of the healthcare
industry and the basic dynamics that underlie the industry. As such, management
has given particular focus on companies engaged in providing services to the
healthcare industry.
For the five month period ended 30 June 2006, Cross Shore generated no revenue
as it is still a shell company that has not yet entered into a business
combination. Expenses to date have consisted primarily of professional fees and
travel expenses. At 30 June 2006, Cross Shore's working capital account (the
cash retained from the proceeds of the initial public offering to fund
expenses), which was originally $1.3 million, had a balance of approximately
$1.0 million. Management estimates that it has sufficient working capital to
continue pursuing target businesses and complete a Qualified Business
Combination.
Cross Shore Acquisition Corporation
(A Development Stage Enterprise)
Unaudited interim financial statements
30 June 2006
Contents
Balance sheet
Statements of operations
Statement of changes in stockholders' equity
Statements of cash flows
Notes to the financial statements for the period ended June 30, 2006
Balance sheet
June 30,
2006
ASSETS
Current Assets
Cash $ 1,052,014
Prepaid expenses and other current assets 78,753
Deferred offering costs -
Total Assets $ 1,130,767
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ (34,547)
Note payable - related party -
Total Liabilities $ (34,547)
Commitments
Stockholders' Equity
Preferred stock, $.0001 par value; 1,000,000 shares
authorized -0- issued -
Common stock, $.0001 par value; 74,800,000 shares
authorized, 23,333,335 issued and outstanding at
June 30, 2006 and 74,800,000 shares authorized,
none issued and outstanding at February 1, 2006 2,334
Additional paid-in capital 104,595,668
Called up share capital held in trust (103,393,585)
Deficit accumulated during development stage (108,197)
Total Stockholders' Equity 1,096,220
Total Liabilities and Stockholders' Equity $ 1,130,767
Statements of operations
January 30,
2006 (inception)
to June
30, 2006
Formation and operating costs 108,197
Net Loss $ (108,197)
Weighted Average Shares Outstanding, 9,793,860
Basic and Diluted
Net Loss Per Share, Basic and Diluted $ (0.01)
Statement of changes in stockholders' equity
For the period from January 30, 2006 (inception) to June 30, 2006
Common Stock Additional Called Up Total
Paid-In Accumulated Share Capital Stockholders'
Shares (1) Amount Capital Deficit Held in Trust Equity
Common Shares issued on April $ $ $ $ $
23, 2006 at $0.0001 per share 4,666,667 467 24,533 - - 25,000
Sale of 18,666,668 units, net
of underwriters' discount and
offering expenses 18,666,668 1,867 103,088,066 - - 103,089,933
Deferred underwriters' fees - - 756,000 - - 756,000
Income earned on funds held in
trust - - 727,069 - - 727,069
Called up share capital held in
trust - - - - (103,393,585) (103,393,585)
Net loss - - - (108,197) - (108,197)
Balance at June 30, 2006 23,333,335 $2,334 $104,595,668 $(108,197) $ (103,393,585) $ 1,096,220
Statement of cash flows
For the period from January 30, 2006 (inception) to June 30, 2006
January 30,
2006 (inception)
to June
30, 2006
Cash Flows from Operating Activities
Net loss (108,197)
Changes in operating assets/liabilities:
Prepaid expenses (78,753)
Accounts payable 34,547
Net Cash Used in Operating Activities $ (152,403)
Cash Flows from Financing Activities
Proceeds from issuance of Common Stock 112,025,008
Payment of offering expenses (8,154,074)
Payment of share capital into trust account (102,666,517)
Net Cash Provided by Financing Activities $ 1,204,417
Net Increase in Cash $ 1,052,014
Cash, Beginning of Period $ -
Cash, End of Period $ 1,052,014
Notes to the financial statements for the period ended 30 June 2006
NOTE 1 - Organization and business operations
Cross Shore Acquisition Corporation (a development stage enterprise) (the ''
Company'') was incorporated in Delaware on 30 January 2006 as a company, the
objective of which is to acquire one or more operating companies engaged in the
delivery of business services to companies and consumers in the U.S. The
Company is considered to be in the development stage as it has solely been
engaged in efforts to raise capital and to identify and assess potential
acquisitions.
The offering circular for the Company's initial public offering (the "Offering")
was declared effective on 24 April 2006. The Company consummated the Offering
on 28 April 2006 and received net proceeds of $112,000,008 before offering
expenses. 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 a company that is engaged in the
delivery of business services (a "Business Combination").
$102,666,516 of the net proceeds of the Offering was placed in a trust account
(the "Trust Fund") to be held there until the earlier of the (i) consummation of
the Company's first Business Combination or (ii) liquidation of the Company.
Under the agreement governing the Trust Fund, funds will only be invested in
United States government securities defined as any Treasury Bill issued by the
US having a maturity of 180 days or less. The investments held in trust
amounted to $103,393,585 at June 30, 2006. The balance at 30 June 2006 and the
related income from the change in market value in the period are shown in
equity, as they are not considered to be assets or income of the Company because
they are not at the Company's disposal until the consummation of a Business
Combination. The remaining net proceeds received from the Offering, may be used
to pay for business, legal and accounting due diligence on prospective
acquisitions and continuing general and administrative expenses.
Sums held in the Trust Fund will be released only on the earlier of completion
of a Qualified Business Combination or the distribution of the remaining funds
held in the Trust Fund on the Company's failure to complete a Qualified Business
Combination by the later of (i) 12 months from the date of the consummation of
the Offering, (ii) 18 months after the date of the consummation of the Offering
in the event that either a letter of intent, an agreement in principle or a
definitive agreement to complete a Business Combination is executed but not
consummated within such 12 month period or (iii) another date agreed by a
majority of shareholders. If no Qualified Business Combination occurs the
Company will be liquidated and all sums will be distributed on a pro rata basis
to the Company's shareholders.
NOTE 2 - Basis of preparation
The following accounting policies have been applied consistently in dealing with
items which are material in relation to the financial information of Cross Shore
Acquisition Corporation set out in this report.
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America. ("U.S. GAAP").
Notes to the financial statements for the period ended 30 June 2006
NOTE 3 - Summary of Significant Accounting Policies
Cash and cash equivalents
The Company considers all highly liquid instruments purchased with a maturity of
three months or less to be cash equivalents.
Cash held in trust
Cash held in trust represents amounts invested in US government securities which
are recorded at market value. The balance at June 30, 2006 and the related
income from the change in market value in the period are shown in equity as they
are not considered to be assets or income of the Company. These funds will be
held in trust until the earlier of the consummation of a Qualified Business
Combination or 12 months from the date of the consummation of the Offering,
extended to 18 months if the Company has signed a letter of intent or definitive
agreement in respect of a Qualified Business Combination or extended to a date
approved by the majority of shareholders.
Income Taxes
Deferred income taxes are provided for the differences between the bases of
assets and liabilities for financial reporting and income tax purposes. A
valuation allowance is established when necessary to reduce deferred tax assets
to the amount expected to be realized.
The Company recorded a deferred income tax asset to reflect the tax effect of
net operating loss carryforwards and temporary differences of approximately
$36,787 at June 30, 2006. In recognition of the uncertainty regarding the
ultimate amount of income tax benefits to be derived, the Company has recorded a
full valuation allowance against the asset.
The effective tax rate differs from the statutory rate of 34% due to the
increase in the valuation allowance.
Loss Per Share
Loss per share is computed by dividing net loss by the weighted-average number
of shares of common stock outstanding during the period.
Use of Estimates
The preparation of accounts in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Trade and Other Payables
Trade and other payables are stated cost.
NOTE 4 - Initial Public Offering
On April 28, 2006, the Company sold 18,666,668 units ("Units") in the Offering
at a price of $6.00 per Unit, generating gross offering proceeds of
$112,000,008. Each Unit consisted of one share of the Company's common stock,
par value $.0001 per share (the "Common Stock"), and two redeemable common stock
purchase warrants ("Warrants"). Each Warrant entitles the holder to purchase
from the Company one share of Common Stock at an exercise price of $5.00 per
share commencing on the earlier of the completion of a Qualified Business
Combination with a target business or the Qualified Business Combination
Deadline as defined in the admission document. The Warrants expire on the
fourth anniversary of the admission date.
Notes to the financial statements for the periods ended 30 June 2006
NOTE 4 - Initial Public Offering (continued)
The Warrants are redeemable at a price of $.0001 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 and the weekly trading volume of the
Company's Common Stock has been at least 550,000 shares for each of the two
calendar weeks before the Company sends the notice of redemption.
In connection with the Offering, the Company issued, for $100, an option to the
representative of the underwriters to purchase up to 933,333 Units at an
exercise price of $6.60 per Unit. The option is exercisable on the earlier of
the completion of a Qualified Business Combination with a target business or the
Qualified Business Combination Deadline as defined in the admission document.
The Warrants expire on the fourth anniversary of the admission date. The
warrants underlying such Units are exercisable at $5.00 per share.
NOTE 5 - Deferred Underwriters' Fees
The Company's lead manager and placing agent, Sunrise Securities Corp. elected
to defer their non-accountable fees in connection with the placing in the amount
of $756,000. Upon completion of a business combination $756,000 of the funds
now in the Trust Fund will be payable. This amount will be waived if no
business combination takes place.
NOTE 6 - Stock Classifications
Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined from
time to time by the Board of Directors.
Stock subject to conversion
With respect to a Business Combination which is approved and consummated, any
Public Stockholder who voted against the Business Combination may demand that
the Company convert his shares to cash. Such repurchase rights entitle a
shareholder to have a certain number of New Shares repurchased which is
calculated as a fraction equal to the amount of funds held in the Trust Fund
immediately before the Business Combination divided by the funds placed in the
Trust Funds as a result of the offering (never to exceed 1). The per share
conversion price will equal $5.50 per share. A majority of new shares are
required to vote in favour of a business combination and founding shareholders
have agreed to vote with the majority of the new shareholders. Accordingly,
Public Stockholders holding up to approximately 40% of the aggregate number of
shares owned by all Public Stockholders may seek conversion of their shares in
the event of a Business Combination.
Notes to the financial statements for the periods ended 30 June 2006
NOTE 7 - Related Parties
Directors and Executive Officers
Edward V. Yang Chairman and Director
Dennis M. Smith Chief Executive Officer, Director, President and
Company Secretary
Stephen E. Stonefield Director
Jon A. Burgman Director
The directors of the Company and their immediate relatives control 20% of the
voting shares of the Company.
Transactions with Related Parties
On April 28, 2006, the Company repaid an unsecured promissory note payable to a
Founding Shareholder, who is an officer and director of the Company, of
$139,078. The note was non-interest bearing and therefore no interest was paid
in the transaction.
The Company occupies office space provided by an affiliate of a Founding
Shareholder. Such affiliate has agreed that, until the completion of a business
combination or the distribution of all the sums held in the Trust Fund, it will
make such office space, as well as certain office and secretarial services,
available to the Company, as may be required by the Company from time to time.
The Company has agreed to pay such affiliate $7,500 per month for such services.
NOTE 8 - Commitments and contingent liabilities
The company has agreed to pay an affiliate of a founding shareholder for office
space as described in note 7.
An affiliate of the sole manager and placing agent of the Company has been
engaged by the Company to provide financial advisory services in connection with
the acquisition and financing of the Company's initial business combination. The
Company has agreed, upon completion of its initial business combination, to pay
such affiliate a fee equal to the greater of (i) one per cent of the aggregate
consideration paid in completing such business combination or (ii) $750,000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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