RNS Number:8123X
Cross Shore Acquisition Corporation
05 June 2007
Cross Shore Acquisition Corporation
5 June 2007
Cross Shore Acquisition Corporation
Final results for the year ended 31 December 2006
Cross Shore Acquistion Corporation (AIM: CSE) ("Cross Shore") today announces
its results for the year ended 31 December 2006.
CHAIRMAN'S STATEMENT
Review of activities
The Company was incorporated on 30 January 2006 to serve as a vehicle for the
acquisition of all or part of one or more operating companies engaged in the
delivery of business services to companies and consumers in the U.S. and which
could benefit from the application of management's expertise in the offshoring
of business services.
In April 2006, the Company completed its Initial Public Offering in which
18,666,668 units were sold to investors at a price of $6.00 per unit. Each unit
consisted of one Share and two Warrants. The Shares and Warrants were admitted
to trading on AIM on 28 April 2006, and since then, the Board has continued to
review potential acquisitions with the objective of enhancing Shareholder value.
In April 2006, certain proceeds of the Initial Public Offering were placed into
the Trust Fund. The Company generated a profit for the year, after taxation, of
$1.51m after receiving investment and interest revenues of $3.4m, having paid
formation and operating costs of $0.7m and having made a provision for income
tax of $1.2m.
Net income per weighted average common share outstanding, basic and diluted was
$0.09.
Qualifying Business Combination
-------------------------------
During the course of the year, the Board continued to research and evaluate
opportunities of varying sizes which complemented the Company's strategic
purpose.
Having signed a letter of intent on 6 February 2007 and following a period of
due diligence and commercial negotiation, the Company announced on 27 April 2007
that it had entered a definitive merger agreement with Research Pharmaceutical
Services Inc. ("RPS").
Ed Yang
Chairman
5 June 2007
Cross Shore Acquisition Corporation
(A Development Stage Enterprise)
BALANCE SHEET
31 December 2006
ASSETS
Current Assets
Cash and cash equivalents $ 719,059
Investments held in trust 106,042,582
Prepaid expenses 42,390
----------------
Total Current Assets 106,804,031
----------------
Total Assets $ 106,804,031
================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued expenses $ 50,000
Accounts payable 171,598
Income taxes payable from cash in trust 1,200,000
Deferred Fees Payable 756,000
----------------
Total Current Liabilities $ 2,177,598
================
Common shares, subject to possible repurchase: 9,333,334 shares
at $5.50 plus interest per share 53,013,337
Shareholders' Equity
Preferred shares $0.0001 par value; 1,000,000 shares authorised,
-none issued and outstanding -
Common shares $0.0001 par value 74,800,000 shares authorised,
23,333,335 issued and outstanding at 31 December 2006 (of which
9,333,334 shares are subject to possible repurchase - see note
6) 1,401
Additional paid in capital 50,103,062
Earnings accumulated during the development stage 1,508,633
---------------
Total Shareholders' Equity 51,613,096
---------------
Total Liabilities and Shareholders' Equity $ 106,804,031
===============
Cross Shore Acquisition Corporation
(A Development Stage Enterprise)
STATEMENT OF INCOME
For the period from 30 January 2006 (inception) to 31 December 2006
30 January 2006
(inception) to
31 December 2006
Costs and expenses
Formation and Operating Costs $ 681,462
-----------------
Other income
Income on investments held in trust 3,376,048
Interest income 14,047
-----------------
Total other income 3,390,095
-----------------
Income before provision for income taxes 2,708,633
Provision for income taxes (1,200,000)
-----------------
Net Income $ 1,508,633
=================
Net income per weighted average common share outstanding - basic $0.09
and diluted
Cross Shore Acquisition Corporation
(A Development Stage Enterprise)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the period from 30 January 2006 (inception) to 31 December 2006
Earnings
Accumulated
Additional During Total
Paid-In Dev Share-
Capital Stage holders'
Common Shares Equity
Shares Amount
Common shares
issued
at 23 April
2006
at $0.0001
per share 4,666,667 $467 $24,533 $- $25,000
Sale of
18,666,668
units net of
underwriter's
discount and
offering
expenses 18,666,668 $1,867 103,090,833 - 103,092,700
Proceeds from
issuance
of option to
underwriters - - 100 - 100
Net proceeds
subject to
possible
repurchase of
9,333,334 shares - (933) (53,012,404) - (53,013,337)
Net income - - - 1,508,633 1,508,633
--------- ------- ----------- ---------- ------------
Balance at 31 23,333,335 $1,401 $50,103,062 $1,508,633 $51,613,096
December 2006 ========== ======= ============ ========== ===========
Cross Shore Acquisition Corporation
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
For the period from 30 January 2006 (inception) to 31 December 2006
30 January 2006
(inception) to
31 December 2006
Cash Flows from Operating Activities
Net income $ 1,508,633
Adjustments to reconcile net income to net cash used in
operating activities
Income on investments held in trust (3,376,048)
Prepaid expenses (42,390)
Accounts payable and accrued expenses 221,598
Income tax accrual 1,200,000
-------------
Net Cash Used in Operating Activities $ (488,207)
-------------
Cash Flows from Investing Activities
Purchase of investments held in trust (102,666,534)
---------------
Cash Used in Investing Activities $ (102,666,534)
---------------
Cash Flows from Financing Activities
Proceeds from issuance of common shares 112,025,008
Payment of offering expenses (8,151,208)
---------------
Net Cash Provided by Financing Activities 103,873,800
---------------
Net Increase in Cash $ 719,059
---------------
---------------
Cash, Beginning of Period -
---------------
Cash, End of Period $ 719,059
===============
Cross Shore Acquisition Corporation
(A Development-Stage Enterprise)
Notes to the financial statements for the period ended 31 December 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").
$102,666,534 of the net proceeds of the Offering was placed in a trust account
(the "Trust Fund") to be held there until the earlier of (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
$106,042,582 at 31 December 2006. The balance is held in trust and is 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 (the "Business Combination Deadline"). 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 statements 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 31 December 2006
NOTE 3 - Summary of Significant Accounting Policies
Cash and cash equivalents
The Company considers all highly liquid instruments purchased with an original
maturity of three months or less to be cash equivalents. Investments held in
trust are not included in the cash balance reported in the cash flow statement
as the amount is restricted for use by the Company.
Investments held in trust
Investments held in trust represents amounts invested in US government
securities which are held to maturity and are recorded at amortised cost. 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 earned on the
investments is recorded on an accruals basis and shown within other income in
the income statement.
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 realised. The Company recorded a deferred income
tax asset to reflect the tax effect of temporary differences of approximately
$234,000 at 31 December 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 charge for ax related penalties
is recorded in the taxation line of the income statement.
Earnings Per Share
Earnings per share is computed by dividing net income by the weighted-average
number of shares of common shares outstanding during the period. At 31 December
2006, the weighted average number of common shares outstanding was 17,273,633.
The potentially diluted effects of the warrants and option described in note 4
are not included as they are contingent upon future events.
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.
Notes to the financial statements for the period ended 31 December 2006
NOTE 4 - Initial Public Offering
On 28 April 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 shares, par value
$.0001 per share (the "Common Shares" or "New Shares"), and two redeemable
common share purchase warrants ("Warrants"). Each Warrant entitles the holder to
purchase from the Company one share of Common Shares 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.
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 Shares 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 Shares 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.
The Company determined, based upon a Black-Scholes model, that the fair value of
the option on the date of the sale was approximately $1.15 per unit using an
expected life of 4 years, volatility of 19.51% and a risk-free interest rate of
4.56%. At that time the Company had no trading history and as a result it was
not possible to value this option based on historical trades. To estimate the
volatility, the Company considered a basket of similar companies that specialize
in business process outsourcing as well as broader market indices, such as the S
&P 500 and Russell 2000. Management believes that this volatility is a
reasonable benchmark to use in estimating the value of this option. The actual
volatility of this option depended on many factors that cannot be precisely
valued. The Company accounted for the fair value of the option, inclusive of the
receipt of the $100 cash payment, as an expense of the public offering resulting
in a charge directly to shareholders' equity.
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.
Notes to the financial statements for the period ended 31 December 2006
NOTE 6 - Share Capital
Preferred Shares
The Company is authorized to issue 1,000,000 shares of preferred shares with
such designations, voting and other rights and preferences as may be determined
from time to time by the Board of Directors. No preferred shares have been
issued.
Common Shares
The Company is authorized to issue 74,800,000 shares of common shares. At 31
December 2006, there were 23,333,335 shares issued and outstanding, consisting
of 4,666,667 Founding Shares issued prior to the IPO and 18,666,668 New Shares.
The Directors considered the fair value of the Founding Shares issued prior to
the Offering, including factors such as the likelihood that the offering would
be successful and that a Qualified Business Combination would be achieved and
determined that no charge was required in respect of the Founding Shares due to
the remaining uncertainty at that time.
Shares subject to repurchase
With respect to a Business Combination which is approved and consummated, any
shareholder who voted against the Business Combination may demand that the
Company repurchase his shares for 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
repurchase price will equal $5.50 per New Share plus the pro rata portion of
income earned on the investments held in trust. 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,
shareholders holding up to approximately 40% of the aggregate number of shares
owned by all shareholders may seek repurchase of their shares in the event of a
Business Combination. These shares are shown outside permanent equity on the
balance sheet with a total value of $51,333,337 at 31 December 2006.
NOTE 7 - Income Tax Expense
For the year ended 31 December 2006, total income taxes were allocated as
follows:
Income from continuing operations $ 1,200,000
Shareholders' equity -
-----------
Total income taxes $ 1,200,000
===========
Notes to the financial statements for the period ended 31 December 2006
NOTE 7 - Income Tax Expense (continued)
Income tax attributable to income from continuing operations consists of:
Current Deferred Total
Federal income tax $ 1,157,232 $ (234,042) $ 923,190
Tax related penalties 42,768 - 42,768
Valuation allowance - 234,042 234,042
----------- ---------- -----------
Total income tax $ 1,200,000 $ - $ 1,200,000
=========== ========== ===========
Income tax expense attributable to income from continuing operations was
$1,200,000 for the year ended 31 December 2006, and differed from the amounts
computed by applying the U.S. Federal income tax rate of 34% to pretax income
from continuing operations as a result of the following.
Computed "expected" tax expense $ 920,935
Temporary differences - Section 195 start up costs 234,042
Non-deductible expenses 2,255
Tax related penalties 42,768
-----------
Total income taxes $ 1,200,000
===========
The tax effects of temporary differences that give rise to the significant
components of deferred income tax benefits attributable to income from
continuing operations for the year ended 31 December 2006 and corresponding
significant portions of the deferred tax asset at 31 December 2006 are presented
below:
Deferred tax asset - Start up costs $ 234,042
Less: Valuation allowance $ (234,042)
------------
Total deferred tax asset $ -
------------
In assessing the realisability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Because the generation of
future taxable income is dependent upon the successful closing of a Qualified
Business Combination, management has elected to establish a full valuation
allowance.
Notes to the financial statements for the period ended 31 December 2006
NOTE 8 - 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 28 April 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 9 - Commitments and Contingent Liabilities
The company has agreed to pay an affiliate of a founding shareholder for office
space as described in note 8.
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.
NOTE 10 - Subsequent Events
On 26 April 2007, the Company executed an agreement and plan of merger in
respect of a proposed Qualified Business Combination. Pursuant to the terms of
the Offering, the Business Combination Deadline has been extended as described
in Note 1. As a result of the extension, the Company's financial statements have
been prepared on a going concern basis.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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