x
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
¨ |
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
Delaware
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
03-0561397
(I.R.S.
Employer
Identification
No.)
|
Page
No.
|
||
Part
I
|
Financial
Information
|
3
|
Item
1
|
Financial
Statements
|
3
|
Condensed
Balance Sheets as of September 30, 2008 (unaudited) and December
31,
2007
|
3
|
|
Condensed
Statements of Income for the three and nine months ended September
30,
2008 and September 30, 2007 and for the period from April 20, 2005
(inception) to September 30, 2008 (unaudited)
|
4
|
|
Condensed
Statement of Stockholders’ Equity for the period from April 20, 2005
(inception) to September 30, 2008
|
5
|
|
Condensed
Statements of Cash Flows for the nine months ended September 30,
2008 and
September 30, 2007 and from April 20, 2005 (inception) to September
30,
2008 (unaudited)
|
6
|
|
Notes
to Condensed Financial Statements
|
7
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
15
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
19
|
Item
4T.
|
Controls
and Procedures
|
19
|
Part
II.
|
Other
Information
|
19
|
Item
1.
|
Legal
Proceedings
|
19
|
Item
1A.
|
Risk
Factors
|
20
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
20
|
Item
3.
|
Default
Upon Senior Securities
|
20
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
20
|
Item
5.
|
Other
Information
|
20
|
Item
6.
|
Exhibits
|
20
|
Signatures
|
21
|
September 30,
2008
|
December 31, 2007
|
||||||
(unaudited)
|
|||||||
ASSETS
|
|||||||
Current
Assets
|
|||||||
Cash
|
$
|
27,146
|
$
|
8,726
|
|||
Investment
in trust
account
|
60,681,893
|
60,578,630
|
|||||
Prepaid
expenses &
taxes
|
19,963
|
17,342
|
|||||
Total
current assets
|
60,729,002
|
60,604,698
|
|||||
Deferred
tax
asset
|
359,688
|
150,220
|
|||||
Property
&
equipment,
net of
depreciation
|
6,839
|
6,099
|
|||||
Total
assets
|
$
|
61,095,529
|
$
|
60,761,017
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
Liabilities
|
|||||||
Accounts
payable and accrued
expenses
|
$
|
149,685
|
$
|
75,235
|
|||
Income
taxes
payable
|
61,571
|
||||||
Deferred
underwriting
fees
|
1,800,000
|
1,800,000
|
|||||
Notes
payable -
stockholders
|
250,000
|
250,000
|
|||||
Total
liabilities
|
2,261,256
|
2,125,235
|
|||||
Common
stock, subject to possible
redemption,
|
|||||||
2,099,400
shares, at redemption value of
$9.70 per share
|
20,364,180
|
20,364,180
|
|||||
Commitments
|
|||||||
Stockholders'
equity
|
|||||||
Preferred
stock, $.0001 par
value, authorized
|
|||||||
1,000,000
shares, none
issued
|
|||||||
Common
stock, $.0001 par value,
authorized
|
|||||||
30,000,000
shares; issued and
outstanding
|
|||||||
7,580,000
shares, inclusive of 2,099,400
shares
subject
to possible redemption, at
September 30,
2008
and December 31,
2007
|
758
|
758
|
|||||
Additional
paid-in
capital
|
37,488,281
|
37,488,281
|
|||||
Earnings
accumulated during the
development stage
|
981,054
|
782,563
|
|||||
Total
stockholders'
equity
|
38,470,093
|
38,271,602
|
|||||
Total
liabilities and stockholders'
equity
|
$
|
61,095,529
|
$
|
60,761,017
|
For the period
from April 20,
|
||||||||||||||||
For the
|
2005
|
|||||||||||||||
Three months ended
|
Nine months ended
|
(inception) to
|
||||||||||||||
September 30,
2008
|
September 30,
2007
|
September 30,
2008
|
September 30,
2007
|
September 30,
2008
|
||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
||||||||||||
Interest
and dividend income
|
$
|
294,461
|
$
|
663,210
|
$
|
1,164,094
|
$
|
1,434,335
|
$
|
3,258,624
|
||||||
Formation
and operating costs
|
(244,115
|
)
|
(134,204
|
)
|
(668,991
|
)
|
(353,319
|
)
|
(1,208,292
|
)
|
||||||
Income
before provision for income taxes
|
50,346
|
529,006
|
495,103
|
1,081,016
|
2,050,331
|
|||||||||||
Provision
for income taxes
|
(49,547
|
)
|
(253,474
|
)
|
(296,612
|
)
|
(526,354
|
)
|
(1,069,277
|
)
|
||||||
Net
income
|
799
|
275,532
|
198,491
|
554,662
|
981,054
|
|||||||||||
Weighted
average shares outstanding
|
7,580,000
|
7,580,000
|
7,580,000
|
5,689,890
|
4,221,366
|
|||||||||||
Net
income per share
|
$
|
0.00
|
$
|
0.04
|
$
|
0.03
|
$
|
0.10
|
$
|
0.23
|
For the period from April 20, 2005 (inception) to September 30, 2008
|
||||||||||||||||
Common stock
|
Additional
paid-in
|
Earnings
(deficit)
accumulated
during the
development
|
Stockholders’
equity
|
|||||||||||||
Shares
|
Amount
|
capital
|
stage
|
(deficiency)
|
||||||||||||
Common
shares issued
July
18, 2005 at
$.0156
|
1,600,000
|
$
|
160
|
$
|
24,840
|
$
|
—
|
$
|
25,000
|
|||||||
Net
loss – 2005
|
(11,140
|
)
|
(11,140
|
)
|
||||||||||||
Balance
– December 31, 2005
|
1,600,000
|
160
|
24,840
|
(11,140
|
)
|
13,860
|
||||||||||
Net
loss – 2006
|
(23,905
|
)
|
(23,905
|
)
|
||||||||||||
Redemption
– September 15, 2006
|
(20,000
|
)
|
(2
|
)
|
(310
|
)
|
(312
|
)
|
||||||||
Balance
– December 31, 2006
|
1,580,000
|
158
|
24,530
|
(35,045
|
)
|
(10,357
|
)
|
|||||||||
Proceeds
of private placement –
March
21, 2007
|
3,200,000
|
3,200,00
|
||||||||||||||
Common
shares issued
March
28, 2007 at $10 per
share
|
6,000,000
|
600
|
59,999,400
|
60,000,000
|
||||||||||||
Proceeds
subject to possible redemption
|
(20,346,180
|
)
|
(20,364,180
|
)
|
||||||||||||
Expenses
of the Offering
|
(5,371,569
|
)
|
(5,371,569
|
)
|
||||||||||||
Net
income – 2007
|
817,608
|
817,608
|
||||||||||||||
Proceeds
of options sold
|
100
|
100
|
||||||||||||||
Balance
– December 31, 2007
|
7,580,000
|
758
|
37,488,281
|
782,563
|
38,271,602
|
|||||||||||
(unaudited)
Net
income for the period
|
198,491
|
198,491
|
||||||||||||||
Balance
– September 30, 2008
|
7,580,000
|
758
|
$
|
37,488,281
|
$
|
981,054
|
$
|
38,470,093
|
For the period from
|
||||||||||
April 20, 2005
(Inception) to
September 30, 2008
|
January 1, 2008
to
September 30, 2008
|
January 1, 2007
to
September 30, 2007
|
||||||||
Cash
flows for operating activities:
|
||||||||||
Net
Income
|
$
|
981,054
|
$
|
198,491
|
$
|
554,662
|
||||
Adjustments
to reconcile net income to net cash used
in
operating
activities
|
||||||||||
Depreciation
|
1,559
|
1,260
|
54
|
|||||||
Increase
in investment in Trust
Account
|
(3,250,928
|
)
|
(1,164,094
|
)
|
(228,265
|
)
|
||||
Increase
in deferred tax
asset
|
(359,688
|
)
|
(209,468
|
)
|
(104,656
|
)
|
||||
Increase
in prepaid expenses
& taxes
|
(19,963
|
)
|
(2,621
|
)
|
(42,262
|
)
|
||||
Increase
in income taxes
payable
|
61,571
|
61,571
|
—
|
|||||||
Increase
in account payable and
accrued expenses
|
149,685
|
74,450
|
54,824
|
|||||||
Net
cash used in operating activities
|
(2,436,710
|
)
|
(1,040,411
|
)
|
234,357
|
|||||
Cash
flows from investing activities:
|
||||||||||
Payment
to trust
account
|
(60,002,831
|
)
|
—
|
(60,002,831
|
)
|
|||||
Withdrawals
from trust
account
|
2,571,866
|
1,060,831
|
(4,170
|
)
|
||||||
Purchase
of
equipment
|
(8,398
|
)
|
(2,000
|
)
|
—
|
|||||
Net
cash provided by (used in) investing activities
|
(57,439,363
|
)
|
1,058,831
|
(60,077,001
|
)
|
|||||
Cash
flows from financing activities:
|
||||||||||
Payment
of expenses of
offering
|
(3,571,569
|
)
|
—
|
(3,400,009
|
)
|
|||||
Proceeds
from sale of common
stock
|
25,000
|
—
|
—
|
|||||||
Proceeds
from notes payable –
stockholder(s)
|
250,000
|
—
|
250,000
|
|||||||
Proceeds
from initial public
offering
|
60,000,000
|
—
|
60,000,000
|
|||||||
Proceeds
from private
placement
|
3,200,000
|
—
|
3,200,000
|
|||||||
Proceeds
from sale of
option
|
100
|
—
|
100
|
|||||||
Repayment
of notes payable –
stockholders
|
—
|
—
|
(187,802
|
)
|
||||||
Redemption
of
stock
|
(312
|
)
|
—
|
—
|
||||||
Net
cash provided by financing activities
|
59,903,219
|
—
|
59,862,289
|
|||||||
Net
increase (decrease) in cash
|
27,146
|
27,146
|
96,764
|
|||||||
Cash
– beginning of period
|
—
|
8,726
|
7,119
|
|||||||
Cash
– end of period
|
$
|
27,146
|
$
|
27,146
|
$
|
96,764
|
||||
Supplemental
disclosure of cash flow information
|
||||||||||
Cash
paid for income
taxes
|
$
|
1,366,825
|
$
|
443,787
|
$
|
639,971
|
||||
Supplemental
disclosure of non-cash financing activities:
|
||||||||||
Accrual
of deferred offering
costs
|
$
|
1,800,000
|
$
|
—
|
$
|
1,800,000
|
·
|
the
market price of the underlying shares of common stock is lower than
the
exercise price;
|
·
|
the
holder of the warrants has not confirmed in writing that the
representative solicited the
exercise;
|
·
|
the
warrants are held in a discretionary
account;
|
·
|
warrants
are exercised in an unsolicited transaction;
or
|
·
|
the
arrangement to pay the commission is not disclosed in the prospectus
provided to warrant holders at the time of
exercise.
|
Nine months
ended
|
Year ended
|
||||||
September 30,
2008
|
December 31,
2007
|
||||||
Current:
|
|||||||
Federal
|
$
|
315,025
|
$
|
574,837
|
|||
State
|
191,055
|
348,047
|
|||||
Total
Current
|
$
|
506,080
|
$
|
922,884
|
|||
Deferred:
|
|||||||
Federal
|
$
|
(130,440
|
)
|
$
|
(93,658
|
)
|
|
State
|
(79,028
|
)
|
$
|
(56,562
|
)
|
||
Total
Deferred
|
$
|
(209,468
|
)
|
$
|
(150,220
|
)
|
|
Total
provisions
|
$
|
296,612
|
$
|
772,664
|
September
30,
2008
|
December
31,
2007
|
||||||
Expenses
deferred for income tax purposes
|
$
|
1,057,905
|
$
|
441,823
|
|||
Adjusted
deferred tax asset
|
569,156
|
193,878
|
|||||
Valuation
allowance
|
(209,468
|
)
|
(43,658
|
)
|
|||
Total
deferred tax asset
|
$
|
359,688
|
$
|
150,220
|
September 30,
2008
|
December 31,
2007
|
||||||
Federal
income tax rate
|
34.00
|
%
|
34.00
|
%
|
|||
State
& local tax rate
|
10.90
|
%
|
10.90
|
%
|
|||
Valuation
allowance
|
14.80
|
%
|
3.70
|
%
|
|||
Effect
Tax Rate
|
59.70
|
%
|
48.60
|
%
|
·
|
payment
of taxes on trust account interest
income;
|
·
|
payment
of State of Delaware franchise
taxes;
|
·
|
repayment
of up to $250,000 of an additional officer loan made prior to the
closing
of this offering by Steven M.
Wasserman;
|
·
|
our
working capital requirements before we complete a business combination
and, if necessary, funding the costs of our potential dissolution
and
liquidation;
|
·
|
solely
if we complete a business combination, interest on the amount of
deferred
underwriters’ compensation payable to the underwriters;
and
|
·
|
the
balance, if any, to us if we complete a business combination or to
our
public stockholders if we do not complete a business
combination.
|
Exhibit No.
|
Description
|
|
31.1
|
Certification
of the Chief Executive Officer and Chief Financial Officer (Principal
Executive and Financial Officer) pursuant to Rule 13a 14(a) of the
Securities Exchange Act, as amended.
|
|
32.1
|
Certification
of the Chief Executive Officer and Chief Financial Officer (Principal
Executive and Financial Officer) pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes Oxley Act of
2002.
|
ALPHA
SECURITY GROUP CORPORATION
|
||
November
19, 2008
|
By:
|
/s/
Steven M. Wasserman
|
Steven
M. Wasserman
|
||
Chief
Executive Officer and Chief Financial Officer
|
||
(Principal
Executive and Financial
Officer)
|