Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
(Mark
One)
x
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended December 31, 2008
o
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ____________ to ____________
Commission
file number 001-33563
ALYST
ACQUISITION CORP.
|
(Exact
Name of Registrant as Specified in Its Charter)
|
|
Delaware
|
|
20-5385199
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
|
|
|
233
East 69th
Street #6J, New York, New York 10021
|
(Address
of Principal Executive
Offices) (Zip
Code)
|
|
|
|
(646)
290-6104
|
(Registrant’s
Telephone Number, Including Area Code)
|
N/A
|
Former
Name, Former Address and Former Fiscal year, if Changed Since Last
Report
|
Indicate
by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No o
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act (Check one).
Large
accelerated filer o
|
|
Accelerated
filer o
|
|
|
|
|
|
Non-accelerated
filer o
|
|
Smaller
reporting company x
|
|
(Do not
check if smaller reporting company)
Indicate
by check mark whether the registrant is a shell Company (as defined in Rule
12b-2 of the Exchange Act).
Yes x No o
As
of February 10, 2009, 9,794,400 shares of the registrants’ common stock
par value $0.0001 per share were
outstanding.
|
ALYST
ACQUISITION CORP. AND SUBSIDIARIES
(a
development stage company)
FORM
10-Q
FOR
THE QUARTER ENDED DECEMBER 31, 2008
TABLE
OF CONTENTS
|
|
Pages
|
|
Part
I. Financial
Information |
|
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets at December 31, 2008 (Unaudited) and June 30,
2008
|
3
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited) for the three and
six
months
ended December 31, 2008 and 2007, and for the period from
August
16, 2006 (inception) through December 31, 2008
|
4
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Changes in Stockholders’ Equity
|
|
|
|
(Unaudited)
for the period from August 16, 2006 (inception) through
|
|
|
|
December
31, 2008
|
5
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited) for the
six
|
|
|
|
months
ended December 31, 2008 and 2007, and for the period from
|
|
|
|
August
16, 2006 (inception) through December 31, 2008
|
6
|
|
|
|
|
|
|
Notes
to Unaudited Condensed Consolidated Financial Statements
|
7-9
|
|
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
10-11
|
|
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
12
|
|
|
|
|
|
Item
4T.
|
Controls
and Procedures
|
12
|
|
|
|
|
|
Part
II. Other
Information |
|
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
13
|
|
|
|
|
|
Item
1A.
|
Risk
Factors
|
13
|
|
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
13
|
|
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
13
|
|
|
|
|
|
Item
4.
|
Submissions
of Matters to a Vote of Security Holders
|
13
|
|
|
|
|
|
Item
5.
|
Other
Information
|
13
|
|
|
|
|
|
Item
6.
|
Exhibits
|
13
|
|
|
|
|
|
Signature
|
14
|
|
FORWARD-LOOKING
STATEMENTS
This
report, and the information incorporated by reference in it, include
“forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Our forward-looking
statements include, but are not limited to, statements regarding our or our
management’s expectations, hopes, beliefs, intentions or strategies regarding
the future. In addition, any statements that refer to projections, forecasts or
other characterizations of future events or circumstances, including any
underlying assumptions, are forward-looking statements. The words “anticipates,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,”
“plan,” “possible,” “potential,” “predicts,” “project,” “should,” “would” and
similar expressions may identify forward-looking statements, but the absence of
these words does not mean that a statement is not forward-looking.
Forward-looking statements in this report may include, for example, statements
about our:
|
·
|
Ability to complete our
initial business
combination;
|
|
·
|
Success in retaining or
recruiting, or changes required in, our officers, key employees or
directors following our initial business
combination;
|
|
·
|
Officers and directors
allocating their time to other businesses and potentially having conflicts
of interest with our business or in approving our initial business
combination,as a
result of which they would then receive expense
reimbursements;
|
|
·
|
Potential ability to obtain
additional financing to complete our initial business
combination;
|
|
·
|
Limited pool of prospective
target businesses;
|
|
·
|
The ability of our officers
and directors to generate a number of potential investment
opportunities;
|
|
·
|
Potential change in control if
we acquire one or more target businesses for
stock;
|
|
·
|
Our public securities’
potential liquidity and
trading;
|
|
·
|
The delisting of our
securities from the New York Stock Exchange Alternext or the ability to
have our securities listed on the New York Stock Exchange Alternext
following our initial business
combination;
|
|
·
|
Use of proceeds not held in
the trust account or available to us from interest and dividend income on
the trust account balance;
or
|
The
forward-looking statements contained or incorporated by reference in this report
are based on our current expectations and beliefs concerning future developments
and their potential effects on us and speak only as of the date of such
statement. There can be no assurance that future developments affecting us will
be those that we have anticipated. These forward-looking statements involve a
number of risks, uncertainties (some of which are beyond our control) or other
assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but are not limited to, those factors
described under the heading “Risk Factors”(refer to Part II, Item
IA). Should one or more of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, actual results may vary in
material respects from those projected in these forward-looking statements. We
undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
may be required under applicable securities laws.
References in this report to “we,” “us”
or “our company” refers to Alyst Acquisition Corp. and
Subsidiaries. References to “public stockholders” refer to purchasers
of our securities by persons other than our founders in, or subsequent to, our
initial public offering.
ALYST
ACQUISITION CORP. AND SUBSIDIARIES
(a
development stage company)
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
December 31, 2008
|
|
|
June 30, 2008
|
|
|
|
Unaudited
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
844,624 |
|
|
$ |
419,058 |
|
Cash
held in trust account, interest and dividends available
for working capital and taxes (including
prepaid income taxes of $193,741 and
$256,481 as of December 31, 2008 and June
30, 2008, respectively)
|
|
|
239,034 |
|
|
|
749,337 |
|
Prepaid
expenses
|
|
|
— |
|
|
|
43,476 |
|
Total
current assets
|
|
|
1,083,658 |
|
|
|
1,211,871 |
|
|
|
|
|
|
|
|
|
|
Trust
account, restricted
|
|
|
|
|
|
|
|
|
Cash
held in trust account, restricted
|
|
|
63,183,711 |
|
|
|
63,154,286 |
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
|
|
|
|
|
|
Deferred
acquisition costs
|
|
|
730,336 |
|
|
|
472,752 |
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
64,997,705 |
|
|
$ |
64,838,909 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$ |
519,871 |
|
|
$ |
459,025 |
|
|
|
|
|
|
|
|
|
|
Common
stock subject to possible conversion, 2,413,319 shares at conversion
value
|
|
|
18,955,104 |
|
|
|
18,946,276 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity
|
|
|
|
|
|
|
|
|
Preferred
stock, $.0001 par value, authorized 1,000,000 shares; none issued or
outstanding
|
|
|
— |
|
|
|
— |
|
Common
stock, $.0001 par value, authorized 30,000,000 shares; issued and
outstanding 9,794,400 shares (less 2,413,319 shares subject to possible
conversion)
|
|
|
738 |
|
|
|
738 |
|
Additional
paid-in capital
|
|
|
44,271,422 |
|
|
|
44,280,250 |
|
Income
accumulated during the development stage
|
|
|
1,250,570 |
|
|
|
1,152,620 |
|
Total
stockholders’ equity
|
|
|
45,522,730 |
|
|
|
45,433,608 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity
|
|
$ |
64,997,705 |
|
|
$ |
64,838,909 |
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
ALYST
ACQUISITION CORP. AND SUBSIDIARIES
(a
development stage company)
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For the
three months
ended
December 31,
2008
|
|
|
For the
three months
ended
December 31,
2007
|
|
|
For the
six months
ended
December 31,
2008
|
|
|
For the
six months
ended
December 31,
2007
|
|
|
For the period
from
August 16, 2006
(inception)
through
December 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Formation
and operating costs
|
|
|
103,891 |
|
|
|
41,599 |
|
|
|
239,444 |
|
|
|
82,413 |
|
|
|
563,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(103,891 |
) |
|
|
(41,599 |
) |
|
|
(239,444 |
) |
|
|
(82,413 |
) |
|
|
(563,295 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and dividend income
|
|
|
133,697 |
|
|
|
744,043 |
|
|
|
481,217 |
|
|
|
1,505,931 |
|
|
|
2,909,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes
|
|
|
29,806 |
|
|
|
702,444 |
|
|
|
241,773 |
|
|
|
1,423,518 |
|
|
|
2,346,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
47,802 |
|
|
|
530,000 |
|
|
|
143,823 |
|
|
|
790,875 |
|
|
|
1,095,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(17,996 |
) |
|
$ |
172,444 |
|
|
$ |
97,950 |
|
|
$ |
632,643 |
|
|
$ |
1,250,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion
of trust income relating to common stock subject to possible
conversion
|
|
|
(8,828 |
) |
|
|
— |
|
|
|
(8,828 |
) |
|
|
— |
|
|
|
(8,828 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) attributable to common stockholders
|
|
$ |
(26,824 |
) |
|
$ |
172,444 |
|
|
$ |
89,122 |
|
|
$ |
632,643 |
|
|
$ |
1,241,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding excluding shares subject to
possible conversion-basic and diluted
|
|
|
7,381,081 |
|
|
|
7,318,884 |
|
|
|
7,381,081 |
|
|
|
7,259,452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net income per share
|
|
$ |
(.00 |
) |
|
$ |
0.02 |
|
|
$ |
.01 |
|
|
$ |
0.09 |
|
|
|
|
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
ALYST
ACQUISITION CORP. AND SUBSIDIARIES
(a
development stage company)
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For
the period from August 16, 2006 (inception) through December 31,
2008
(Unaudited)
|
|
Common Stock
|
|
|
Additional paid-
|
|
|
Income
(deficit)
accumulated
during
the
development
|
|
|
Total
stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
in
capital
|
|
|
Stage
|
|
|
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at August 16, 2006 (inception)
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares issued at inception at $0.014 per share
|
|
|
1,750,000 |
|
|
|
175 |
|
|
|
24,825 |
|
|
|
— |
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss from August 16, 2006 (inception) through June 30,
2007
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,916 |
) |
|
|
(3,916 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at June 30, 2007
|
|
|
1,750,000 |
|
|
|
175 |
|
|
|
24,825 |
|
|
|
(3,916 |
) |
|
|
21,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of 8,044,400 units, net of underwriters’ discount and offering expenses of
$2,973,036 (includes 2,413,319 shares subject to possible
conversion)
|
|
|
8,044,400 |
|
|
|
804 |
|
|
|
61,381,360 |
|
|
|
— |
|
|
|
61,382,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
subject to possible conversion of 2,413,319 shares
|
|
|
— |
|
|
|
(241 |
) |
|
|
(18,946,035 |
) |
|
|
— |
|
|
|
(18,946,276 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of insiders’ warrants
|
|
|
— |
|
|
|
— |
|
|
|
1,820,000 |
|
|
|
— |
|
|
|
1,820,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of underwriters’ purchase option
|
|
|
— |
|
|
|
— |
|
|
|
100 |
|
|
|
— |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income for the year ended June 30, 2008
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,156,536 |
|
|
|
1,156,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at June 30, 2008
|
|
|
9,794,400 |
|
|
|
738 |
|
|
|
44,280,250 |
|
|
|
1,152,620 |
|
|
|
45,433,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion
of trust income relating to common stock subject to possible
conversion
|
|
|
— |
|
|
|
— |
|
|
|
(8,828 |
) |
|
|
— |
|
|
|
(8,828 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income for the six months ended December 31, 2008
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
97,950 |
|
|
|
97,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2008 (unaudited)
|
|
|
9,794,400 |
|
|
$ |
738 |
|
|
$ |
44,271,422 |
|
|
$ |
1,250,570 |
|
|
$ |
45,522,730 |
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
ALYST
ACQUISITION CORP. AND SUBSIDIARIES
(a
development stage company)
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
For the six months
ended
December 31, 2008
|
|
|
For the six months
ended
December 31, 2007
|
|
|
For the period from
August 16, 2006
(inception) through
December 31, 2008
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
97,950 |
|
|
$ |
632,643 |
|
|
$ |
1,250,570 |
|
Adjustment
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
43,476 |
|
|
|
(59,617 |
) |
|
|
— |
|
Accounts
payable and accrued expenses
|
|
|
60,846 |
|
|
|
15,704 |
|
|
|
519,871 |
|
Net
cash provided by operating activities
|
|
|
202,272 |
|
|
|
588,730 |
|
|
|
1,770,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust
account, restricted
|
|
|
(29,425 |
) |
|
|
(63,154,286 |
) |
|
|
(63,183,711 |
) |
Cash
held in trust account, interest and dividends available for working
capital and taxes
|
|
|
510,303 |
|
|
|
(487,859 |
) |
|
|
(239,034 |
) |
Deferred
acquisition costs
|
|
|
(257,584 |
) |
|
|
— |
|
|
|
(730,336 |
) |
Net
cash provided by (used in) investing activities
|
|
|
223,294 |
|
|
|
(63,642,145 |
) |
|
|
(64,153,081 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock to initial stockholders
|
|
|
— |
|
|
|
— |
|
|
|
25,000 |
|
Proceeds
from notes payable to stockholders
|
|
|
— |
|
|
|
— |
|
|
|
150,000 |
|
Gross
proceeds from initial public offering
|
|
|
— |
|
|
|
64,355,200 |
|
|
|
64,355,200 |
|
Proceeds
from issuance of insiders’ warrants
|
|
|
— |
|
|
|
1,820,000 |
|
|
|
1,820,000 |
|
Proceeds
from issuance of underwriters’ purchase option
|
|
|
— |
|
|
|
100 |
|
|
|
100 |
|
Payment
of notes payable to stockholders
|
|
|
— |
|
|
|
(150,000 |
) |
|
|
(150,000 |
) |
Payment
of offering costs
|
|
|
— |
|
|
|
(2,865,439 |
) |
|
|
(2,973,036 |
) |
Net
cash provided by financing activities
|
|
|
— |
|
|
|
63,159,861 |
|
|
|
63,227,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash
|
|
|
425,566 |
|
|
|
106,446 |
|
|
|
844,624 |
|
Cash
at beginning of period
|
|
|
419,058 |
|
|
|
65,487 |
|
|
|
— |
|
Cash
at end of period
|
|
$ |
844,624 |
|
|
$ |
171,933 |
|
|
$ |
844,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$ |
67,800 |
|
|
$ |
790,000 |
|
|
$ |
1,291,112 |
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
ALYST
ACQUISITION CORP. AND SUBSIDIARIES
(a
development stage company)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1.
|
INTERIM
FINANCIAL INFORMATION, ORGANIZATION, BUSINESS OPERATIONS, SIGNIFICANT
ACCOUNTING POLICIES AND GOING
CONCERN
|
These
unaudited condensed consolidated interim financial statements as of December 31,
2008, and for the three and six months ended December 31, 2008, and 2007, and
for the period from August 16, 2006 (inception) through December 31, 2008,
have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”), for interim financial information and
with the instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements. In
addition, the June 30, 2008 balance sheet was derived from the audited financial
statements, but does not include all disclosures required by GAAP in these
unaudited condensed financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the interim periods
presented are not necessarily indicative of the results to be expected for any
other interim period or for the full year.
These
unaudited condensed consolidated interim financial statements should be read in
conjunction with the audited financial statements and notes thereto for the
fiscal year ended June 30, 2008 included in the Company’s Form 10-KSB filed on
September 25, 2008. The accounting policies used in preparing these unaudited
condensed consolidated interim financial statements are consistent with those
described in the June 30, 2008 financial statements.
Alyst
Acquisition Corp. (the “Company”) was incorporated in Delaware on August 16,
2006 as a blank check company to serve as a vehicle to effect a merger, capital
stock exchange, asset acquisition or other similar business combination with an
operating business (“Business Combination”).
All
activity from August 16, 2006 (inception) through July 5, 2007 relates to the
Company’s formation and the public offering, described below. Since July 6,
2007, the Company has been searching for a target business to
acquire.
Principles
of Consolidation:
The
condensed consolidated financial statements of the Company include the accounts
of the Company and its wholly–owned subsidiaries, China Networks International
Holdings Ltd and China Networks Merger Co., Ltd, after elimination of all
intercompany accounts and transactions. These subsidiaries were
organized as British Virgin Islands companies on April 17, 2008 for the purpose
of consummating the acquisition described in Note 2 “Potential
Acquisition”.
Going
Concern and Management’s Plan and Intentions:
As of
December 31, 2008, the Company had working capital of $563,787. Other than
interest and dividend income of up to $1.68 million from the trust account, the
Company’s only source of income, to enable it to continue to fund its search for
an acquisition candidate, is the interest and dividends it earns on its cash not
held in the Trust Account. These funds may not be sufficient to
maintain the Company until a business combination is consummated. In addition,
there can be no assurance that the Company will enter into a Business
Combination prior to June 29, 2009. Pursuant to its Certificate of
Incorporation, the Company would have to liquidate pursuant to a dissolution
plan and return the funds held in the Trust
Account to the holders of shares issued in the Offering as previously described.
These factors raise substantial doubt about the Company’s ability to continue as
a going concern. These financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
ALYST
ACQUISITION CORP. AND SUBSIDIARIES
(a
development stage company)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1.
|
INTERIM
FINANCIAL INFORMATION, ORGANIZATION, BUSINESS OPERATIONS, SIGNIFICANT
ACCOUNTING POLICIES AND GOING CONCERN
(CONTINUED)
|
Concentration
of Credit Risk:
Statement
of Financial Accounting Standards (“SFAS”) No. 105, “Disclosure of
Information about Financial Instruments with Off-Balance Sheet Risk and
Financial Instruments with Concentration of Credit Risk”, requires disclosure of
significant concentrations of credit risk regardless of the degree of risk. At
December 31, 2008, financial instruments that potentially expose the Company to
credit risk consist of cash. The Company maintains its cash balances in U.S.
Treasury only money market funds at various financial institutions. As of
December 31, 2008 the Federal Deposit Insurance Corporation insured balances in
bank accounts up to $250,000 and the Securities Investor Protection Corporation
insured balances up to $500,000 in brokerage accounts. At December 31, 2008, the
uninsured balances amounted to approximately $63,323,628.
Earnings
Per Share:
The
Company follows the provisions of SFAS No. 128, “Earnings per Share”. In
accordance with SFAS No. 128, earnings per common share amounts (“Basic
EPS”) are computed by dividing earnings by the weighted average number of common
shares outstanding for the period. Common shares subject to possible conversion
of 2,413,319 have been excluded from the calculation of
basic earnings per share since such shares,
if redeemed,
only participate in their pro rata
shares of the trust earnings. Earnings per common share amounts, assuming
dilution (“Diluted EPS”), gives effect to dilutive options, warrants, and other
potential common stock outstanding during the period. SFAS No. 128 requires
the presentation of both Basic EPS and Diluted EPS on the face of the statements
of operations. The effect of the 9,864,400 outstanding Warrants issued in
connection with the Public Offering and the Insiders’ Warrants have not been
considered in the diluted earnings per share calculation since the Warrants are
contingent upon the occurrence of future events, and therefore, are not
includable in the calculation of diluted earnings per share in accordance with
SFAS 128.
NOTE 2.
|
POTENTIAL
ACQUISITION
|
On August
13, 2008, the Company signed an agreement and plan of merger to acquire all of
the issued and outstanding shares of China Networks Media Ltd., a British Virgin
Islands Company (“China Networks”) which owns and is in the process of acquiring
television station operating assets in the People’s Republic of China (PRC). As
part of the transaction, the Company will redomesticate to the British Virgin
Islands by means of merging with its wholly owned subsidiary China Networks
Holdings immediately prior to consummating its transaction with China
Networks.
Pursuant
to the transaction, China Networks will become a wholly owned subsidiary of the
Company and the holders of the capital stock of China Networks will receive,
upon the effectiveness of the merger, an aggregate of (i) 2,880,000 shares and
(ii) $17,000,000 in cash. The holders of ordinary shares of China Networks will
also be entitled to receive up to $6,000,000 of additional cash and 9,000,000
additional shares upon attaining certain performance
milestones.
ALYST
ACQUISITION CORP. AND SUBSIDIARIES
(a
development stage company)
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2.
|
POTENTIAL ACQUISITION
(CONTINUED)
|
Additionally,
the holders of the capital stock of China Networks will be entitled to receive
up to $21,910,000 (as amended - see Note 4) of the cash received by the Company
from the exercise of outstanding Alyst warrants. There remain a number of
conditions to the Company’s completing the acquisition of China Networks,
including review by the U.S. Securities and Exchange Commission (the “SEC”) of
the Company’s proxy and the related registration statement and approval by the
Company’s stockholders of the merger between the Company and China
Networks.
NOTE
3.
|
COMMITMENTS
AND CONTINGENCIES
|
The
Company entered into an agreement with the underwriters of the Offering (the
“Underwriting Agreement”). Under the terms of the Underwriting Agreement, the
Company paid an underwriting discount of 3.723% ($2,395,914) of the gross
proceeds in connection with the consummation of the Offering and has placed
3.277% ($2,108,950) of the gross proceeds in the Trust Account which will be
paid to the underwriters only upon consummation of a Business Combination.
Additionally, the Company has placed $560,000 in the Trust Account representing
the non-accountable expense allowance due from the Offering which will be
paid to the underwriters only upon consummation of a Business Combination. The
Company did not pay any discount related to the insiders’ warrants. The
Underwriters have waived their rights to receive payments from the Trust Account
of $2,108,950 of underwriting discounts and $560,000 of expense reimbursements,
which are due under the Underwriting Agreement if the Company is unable to
consummate a Business Combination prior to June 29, 2009.
NOTE
4.
|
SUBSEQUENT
EVENTS
|
On
January 12, 2009, Michael E. Weksel, the Company’s chief financial officer
(“CFO”), secretary and director, was appointed CFO of China Networks Media Ltd.
He will continue to serve in his current capacities with the Company and is
expected post-merger to serve as CFO of the surviving entity, China Networks
International Holdings, Ltd., currently a wholly-owned British Virgin Islands
subsidiary of the Company.
On
January 28, 2009, the parties to the agreement and plan of merger entered into
Amendment No. 1 to the agreement which reduced, among other things, the amount
of cash the holders of the capital stock of China Networks will be entitled to
receive from the proceeds, if any, of the exercise of Alyst outstanding warrants
from up to $24,910,000 to up to $21,910,000.
On
January 30, 2009 a subsidiary of the Company filed a registration statement on
Form S-4 containing a preliminary proxy statement/prospectus regarding the
potential acquisition discussed in Note 2, for the registration of shares,
warrants and units that may be issuable in that transaction. The Company
separately filed the preliminary proxy statement/prospectus to seek stockholder
approval of the transaction.
The
Company issued a press release on January 26, 2009, confirming the resignation
of Paul Levy, a director, on January 20, 2009. Mr. Levy resigned for
personal reasons. There was no disagreement between Alyst and Mr. Levy that led
to his resignation.
On
January 23, 2009, the Company’s board of directors (the “Board”) appointed
Stephen J. DeGroat to the Board as an independent
director.
On
February 10, 2009, the Company received a letter from the NYSE Alternext US
indicating it did not meet one of the Exchange’s continued listing standards
since it did not hold an annual meeting of stockholders in 2008. The Company
will submit a plan of compliance to the Exchange by March 10, 2009 demonstrating
the Company’s ability to regain compliance with the continued listing standards
by August 11, 2009. If the Company’s plan is not accepted by the Exchange, the
Company will be subject to delisting procedures.
ITEM
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
The
following discussion should be read in conjunction with our Unaudited Condensed
Consolidated Interim Financial Statements and footnotes thereto contained in
this report.
Forward
Looking Statements
All
statements other than statements of historical fact included in this Form 10-Q
including, without limitation, statements under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” regarding our
financial position, business strategy and the plans and objectives of management
for future operations, are “forward looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,”
“expect,” “intend” and similar expressions, as they relate to us or our
management, identify forward looking statements. Such forward looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, our management. Actual results could differ
materially from those contemplated by the forward looking statements as a result
of certain factors detailed in our filings with the Securities and Exchange
Commission. All subsequent written or oral forward looking statements
attributable to us or persons acting on our behalf are qualified in their
entirety by this paragraph.
Overview
We are a
blank check company organized under the laws of the State of Delaware on August
16, 2006. We were formed with the purpose of effecting a merger, capital stock
exchange, asset acquisition or other similar business combination with an
operating business. Our efforts in identifying a prospective target business are
not limited to a particular industry although we intend to focus our efforts on
acquiring an operating business in the telecommunications industry, broadly
defined.
We
consummated our offering on July 5, 2007. All activity from August 16, 2006
(inception) through July 5, 2007 related to our formation and our offering.
Since July 5, 2007, we have been searching for a prospective target business to
acquire and have executed an agreement and plan of merger with China Networks
Media Ltd.
Results
of Operations
From
August 16, 2006 (inception) through December 31, 2008, we had net income of
$1,250,570 derived from interest and dividend income of $2,909,686 offset by
$563,295 of formation and operating costs, and $1,095,821 of income tax expense.
For the three and six months ended December 31, 2008, we had net income (loss)
of $(17,996) and $97,950 respectively, derived from interest and dividend income
of $133,697 and $481,217 respectively, offset by $103,891 and $239,444
respectively, of formation and operating costs, and $47,802 and $143,823
respectively of income tax expense as compared to a net income of $172,444 and
$632,643 derived from, $41,599 and $82,413 of formation and operating costs, and
$530,000 and $790,875 of income taxes offset by $744,043 and $1,505,931 of
interest and dividend income for the three and nine months ended
December 31, 2007, respectively. The difference was due to the interest earned
on the net proceeds received from the consummation of our offering on July 5,
2007 and the sale of the insider warrants, and the subsequent costs incurred
related to our search for an acquisition candidate.
Financial
Condition and Liquidity
Upon
consummation of our offering and the sale of the insider warrants, $63,154,286
of the net proceeds was deposited in trust. The remaining net proceeds of
$47,878 was available to pay for business, legal and accounting due diligence on
prospective acquisitions and continuing formation and operating costs. We intend
to utilize our cash, including the funds held in the trust account, capital
stock, debt or a combination of the foregoing to effect a business combination.
To the extent that our capital stock or debt securities are used in whole or in
part as consideration to effect a business combination, the proceeds held in the
trust account as well as any other available cash will be used to finance the
operations of the target business. At December 31, 2008, we had current assets
of $1,083,658 and current liabilities of $519,871, leaving us with working
capital of $563,787.
From the
date of the consummation of the offering until such time as we effectuate a
business combination, we may draw from the interest and dividends earned on the
trust account (1) up to $1,680,000 for use as working capital, and (2) all funds
necessary for us to meet our tax obligations. Since the offering, we have drawn
from the trust account a total of $2,809,000, of which $1,291,112 was drawn to
pay taxes and $1,517,888 was drawn for working capital purposes. An
additional $239,034 remains in the trust account of which $45,293 can be used
for working capital and $193,741 of prepaid taxes to be applied towards future
tax obligations.
We
believe we will have sufficient funds available to us from interest and
dividends earned on the trust account to operate through the later of June 29,
2009 or the date upon which we consummate a business combination. As
previously described, up to $1,680,000 of interest and dividends earned on the
assets of the trust account are available to us for the payment of expenses
associated with the due diligence and investigation of a target business or
businesses, structuring, negotiating and documenting an initial business
combination, legal, and accounting fess relating to our SEC reporting
obligations and general working capital that will be used for miscellaneous
expenses and reserves. Further, the Company may, from time to time, repurchase
its common stock, warrants and units in the open market or in
privately-negotiated transactions. We do not believe we will need to raise
additional funds in order 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 combination. We would only consummate such a financing simultaneously
with the consummation of a business combination. As needed, additional funds are
also available to us from the interest and dividends earned on the assets of the
trust account to pay all of our tax obligations.
However,
these funds may not be sufficient to maintain us until a business combination is
consummated. In addition, there can be no assurance that we will enter into a
Business Combination prior to June 29, 2009. Pursuant to our
Certificate of Incorporation, if we are unable to consummate a timely business
combination, we would have to liquidate pursuant to a dissolution plan and
return the funds held in the Trust Account to the holders of shares issued in
the Offering as previously described.
Off-Balance
Sheet Arrangements.
None.
Recent
Developments
As
discussed above under Note 2 Potential Acquisition, on August 13, 2008 we
entered into an Agreement and Plan of Merger (the “Merger Agreement”) with China
Networks Media Limited, a British Virgin Islands corporation (“China Networks”),
and specified other persons, providing for, among other things, the
redomestication of the Company from the State of Delaware to the British Virgin
Islands (the “Redomestication Merger”) and the merger of a wholly-owned
subsidiary of the Company into China Networks (the "Business Combination").
Consummation of the transactions contemplated by the Merger Agreement are
conditioned upon, among other things, (i) approval of the Redomestication Merger
and the Business Combination by our shareholders and (ii) approval of the Merger
Agreement and the Business Combination by the shareholders of China
Networks.
On
January 30, 2009, a subsidiary of the Company filed a registration
statement on Form S-4 containing the preliminary proxy statement/prospectus
regarding the potential acquisition discussed in Note 2, and a prospectus for
the registration of shares, warrants and units that may be issuable in that
transaction. The Company separately filed the preliminary proxy
statement/prospectus to seek stockholder approval of the
transaction.
There can
be no assurance that the Merger Agreement will be approved by each company’s
stockholders or that a suitable alternative business combination transaction can
be effected prior to June 29, 2009, at which point our corporate existence will
cease and we will be required to liquidate.
For further information, see Notes
2 and 4 of Notes to Unaudited Condensed Consolidated Financial Statements.
ITEM
3. Quantitative and Qualitative Disclosures About Market Risk
The
information to be reported under this Item is not required of smaller reporting
companies.
ITEM
4T. Controls and Procedures.
Disclosure
Controls and Procedures
We have
established disclosure controls and procedures to ensure that material
information relating to us is made known to the officers who certify our
financial reports and to other members of senior management and the Board of
Directors.
A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Because of the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within a company have been detected. Our disclosure controls and
procedures are designed to provide reasonable assurance of achieving its
objectives. Based upon their evaluation as of December 31, 2008, our Principal
Executive and Principal Financial and Accounting Officer have concluded that our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934) are effective at such
date.
Changes
in Internal Control Over Financial Reporting
There has
been no change in our internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting during the most recently completed fiscal
quarter.
PART
II – OTHER INFORMATION
ITEM 1. Legal
Proceedings.
None.
ITEM
1A. RISK FACTORS.
The
information to be reported under this Item is not required of smaller reporting
companies.
ITEM
2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not
applicable.
ITEM
3. Defaults Upon Senior Securities.
None
ITEM
4. Submission of Matters to a Vote of Security Holders.
None
ITEM
5. Other Information.
None.
ITEM
6. Exhibits.
(a)
Exhibits:
31 –
Section 302 Certification by Principal Executive Officer and Principal Financial
and Accounting Officer
32 –
Section 906 Certification by Principal Executive Officer and Principal Financial
and Accounting Officer
SIGNATURES
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, thereunto
duly authorized.
|
ALYST
ACQUISITION CORP.
|
|
|
Dated:
February 12, 2009
|
|
|
By:
|
s/s William Weksel
|
|
|
Dr.
William Weksel
|
|
|
Chief
Executive Officer
|
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
Dated:
February 12, 2009
|
|
|
|
By:
|
s/s Michael Weksel
|
|
|
Michael
Weksel
|
|
|
Chief
Operating Officer and
|
|
|
Chief
Financial Officer
|
|
|
(Principal
Financial and Accounting
Officer)
|