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 September 30, 2008.
or
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
|
|
|
|
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).
As
of
November 4, 2008 there were 9,510,600 shares of Common Stock outstanding,
283,800 Units outstanding and 9,580,600 Warrants outstanding.
ALYST
ACQUISITION CORP.
(a
development stage company)
FORM
10-Q
FOR
THE QUARTER ENDED SEPTEMBER 30, 2008
TABLE
OF CONTENTS
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|
Pages
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|
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Item
1. Financial Statements
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|
|
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Condensed
Balance Sheets at September 30, 2008 (Unaudited) and June 30,
2008
|
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3
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|
|
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Condensed
Statements of Income (Unaudited) for the three months ended September
30,
2008 and 2007, and for the period from August 16, 2006 (inception)
through
September 30, 2008
|
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4
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|
|
|
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Condensed
Statements of Changes in Stockholders’ Equity (Unaudited) for the period
from August 16, 2006 (inception) through September 30, 2008
|
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5
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Condensed
Statements of Cash Flows (Unaudited) for the three months ended September
30, 2008 and 2007, and for the period from August 16, 2006 (inception)
through September 30, 2008
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6
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Notes
to Unaudited Condensed Financial Statements
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7-9
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Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
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10-11
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Item
3. Quantitative and Qualitative Disclosures About Market
Risk
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11
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Item
4T. Controls and Procedures
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12
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Part
II. Other Information
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Item
1. Legal Proceedings
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13
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Item
1A. Risk Factors
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13
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Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
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13
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Item
3. Defaults Upon Senior Securities
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13
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Item
4. Submissions of Matters to a Vote of Security Holders
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13
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Item
5. Other Information
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13
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Item
6. Exhibits
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13
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Signatures
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14
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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;
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|
· |
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 American Stock Exchange or
the
ability to have our securities listed on the American Stock Exchange
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.
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.
(a
development stage company)
CONDENSED
BALANCE SHEETS
|
|
September 30, 2008
|
|
June 30, 2008
|
|
|
|
Unaudited
|
|
|
|
ASSETS
|
|
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|
|
|
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Current
assets
|
|
|
|
|
|
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Cash
and cash equivalents
|
|
$
|
722,578
|
|
$
|
419,058
|
|
Cash
held in trust account, interest and dividends available
for working capital and taxes (including
prepaid income taxes of $173,995 and
$256,481 as of September 30, 2008 and June
30, 2008, respectively)
|
|
|
521,011
|
|
|
749,337
|
|
Prepaid
expenses
|
|
|
21,656
|
|
|
43,476
|
|
Total
current assets
|
|
|
1,265,245
|
|
|
1,211,871
|
|
|
|
|
|
|
|
|
|
Trust
account, restricted
|
|
|
|
|
|
|
|
Cash
held in trust account, restricted
|
|
|
63,154,286
|
|
|
63,154,286
|
|
|
|
|
|
|
|
|
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Other
assets
|
|
|
|
|
|
|
|
Deferred
acquisition costs
|
|
|
683,330
|
|
|
472,752
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
65,102,861
|
|
$
|
64,838,909
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
607,031
|
|
$
|
459,025
|
|
|
|
|
|
|
|
|
|
Common
stock subject to possible conversion, 2,413,319
shares at conversion value
|
|
|
18,946,276
|
|
|
18,946,276
|
|
|
|
|
|
|
|
|
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Commitments
and contingencies
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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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
|
|
|
44,280,250
|
|
|
44,280,250
|
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Income
accumulated during the development stage
|
|
|
1,268,566
|
|
|
1,152,620
|
|
Total
stockholders’ equity
|
|
|
45,549,554
|
|
|
45,433,608
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity
|
|
$
|
65,102,861
|
|
$
|
64,838,909
|
|
The
accompanying notes are an integral part of these condensed financial
statements
ALYST
ACQUISITION CORP.
(a
development stage company)
CONDENSED
STATEMENTS OF INCOME
(Unaudited)
|
|
For the
three months
ended
September 30,
2008
|
|
For the
three months
ended
September 30,
2007
|
|
For the period
from
August 16, 2006
(inception)
through
September 30,
2008
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Formation
and operating costs
|
|
|
135,553
|
|
|
40,814
|
|
|
459,404
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(135,553
|
)
|
|
(40,814
|
)
|
|
(459,404
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and dividend income, net
|
|
|
347,520
|
|
|
761,888
|
|
|
2,775,989
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for income
taxes
|
|
|
211,967
|
|
|
721,074
|
|
|
2,316,585
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
96,021
|
|
|
260,875
|
|
|
1,048,019
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
115,946
|
|
$
|
460,199
|
|
$
|
1,268,566
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common
shares outstanding
excluding shares subject
to possible conversion-basic
and diluted
|
|
|
7,381,081
|
|
|
7,137,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net income per
share
|
|
$
|
0.02
|
|
$
|
0.06
|
|
|
|
|
The
accompanying notes are an integral part of these condensed financial
statements
ALYST
ACQUISITION CORP.
(a
development stage company)
CONDENSED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For
the period from August 16, 2006 (inception) through September 30,
2008
(Unaudited)
|
|
Common Stock
|
|
Additional paid-
|
|
(Deficit)
income
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income for the three months
ended September
30, 2008
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115,946
|
|
|
115,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2008
(unaudited)
|
|
|
9,794,400
|
|
$
|
738
|
|
$
|
44,280,250
|
|
$
|
1,268,566
|
|
$
|
45,549,554
|
|
The
accompanying notes are an integral part of these condensed financial
statements
ALYST
ACQUISITION CORP.
(a
development stage company)
CONDENSED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
For the three months
ended
September 30, 2008
|
|
For the three months
ended
September 30, 2007
|
|
For the period from
August 16, 2006
(inception) through
September 30, 2008
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
115,946
|
|
$
|
460,199
|
|
$
|
1,268,566
|
|
Adjustment
to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Change
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
21,820
|
|
|
(76,946
|
)
|
|
(21,656
|
)
|
Accounts
payable and accrued expenses
|
|
|
148,006
|
|
|
15,396
|
|
|
607,031
|
|
Income
taxes payable
|
|
|
—
|
|
|
260,000
|
|
|
—
|
|
Net
cash provided by operating activities
|
|
|
285,772
|
|
|
658,649
|
|
|
1,853,941
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Cash
held in trust
account, restricted
|
|
|
—
|
|
|
(63,154,286
|
)
|
|
(63,154,286
|
)
|
Cash
held in trust account, interest and dividends available
for working capital and taxes
|
|
|
228,326
|
|
|
(228,884
|
)
|
|
(521,011
|
)
|
Deferred
acquisition costs
|
|
|
(210,578
|
)
|
|
—
|
|
|
(683,330
|
)
|
Net
cash provided by (used in) investing activities
|
|
|
17,748
|
|
|
(63,383,170
|
)
|
|
(64,358,627
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
—
|
|
|
(2,865,438
|
)
|
|
(2,973,036
|
)
|
Net
cash provided by financing activities
|
|
|
—
|
|
|
63,159,862
|
|
|
63,227,264
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash
|
|
|
303,520
|
|
|
435,341
|
|
|
722,578
|
|
Cash
at beginning of period
|
|
|
419,058
|
|
|
65,487
|
|
|
—
|
|
Cash
at end of period
|
|
$
|
722,578
|
|
$
|
500,828
|
|
$
|
722,578
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during period for:
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
—
|
|
$
|
951
|
|
$
|
951
|
|
Income
taxes
|
|
$
|
13,355
|
|
$
|
875
|
|
$
|
1,222,014
|
|
The
accompanying notes are an integral part of these condensed financial
statements
ALYST
ACQUISITION CORP.
(a
development stage company)
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE
1. |
INTERIM
FINANCIAL INFORMATION, ORGANIZATION, BUSINESS OPERATIONS,
SIGNIFICANT ACCOUNTING POLICIES AND GOING
CONCERN
|
Alyst
Acquisition Corp.’s (the “Company”) unaudited, condensed interim financial
statements as of September 30, 2008, and for the three months ended September
30, 2008, and 2007, and for the period from August 16, 2006 (inception)
through September 30, 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 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
interim financial statements are consistent with those described in the June
30,
2008 financial statements.
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. The
Company has selected June 30 as its fiscal year end.
Going
Concern and Management’s Plan and Intentions:
As
of
September 30, 2008, the Company had working capital of $658,214. 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.
(a
development stage company)
NOTES
TO UNAUDITED CONDENSED 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
September 30, 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
September 30, 2008 the Federal Deposit Insurance Corporation insured balances
in
bank accounts up to $100,000 ($250,000 effective October 3, 2008) and the
Securities Investor Protection Corporation insured balances up to $500,000
in
brokerage accounts. At September 30, 2008, the uninsured balances amounted
to
approximately $63.6 million.
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.
(a
development stage company)
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE
2. |
POTENTIAL
ACQUISITION (CONTINUED)
|
Additionally,
the holders of the capital stock of China Networks will be entitled to receive
up to $24,900,000 of the cash received by the Company from the exercise of
outstanding 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 forthcoming
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.
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
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.
Results
of Operations
From
August 16, 2006 (inception) through September 30, 2008, we had net income of
$1,268,566 derived from interest and dividend income of $2,775,989 offset by
$459,404 of formation and operating costs, and $1,048,019 of income tax expense.
For the three months ended September 30, 2008, we had net income of $115,946
derived from interest and dividend income of $347,520 offset by $135,553 of
formation and operating costs, and $96,021 of income tax expense as compared
to
a net income of $460,199, $40,814 of formation and operating costs, and $260,875
of income taxes and by $761,888 of interest and dividend income for the three
months ended September 30, 2007. The difference was due to the interest earned
on the net proceeds received from the consummation of an offering on July 5,
2007 and the sale of the insider warrants, and the subsequent incurrence of
costs related to searching 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 September 30, 2008, we had current assets
of $1,265,245 and current liabilities of $607,031, leaving us with working
capital of $658,214.
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 $2,409,000, of which $1,223,564 was drawn
to
pay taxes and $1,185,436 was drawn for working capital purposes..
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. 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 securities in the open market
or
in privately-negotiated transactions from funds available, if any, from our
working capital. 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.
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.
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 September 30, 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 that reasonable
assurance level.
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:
31.1
– Section 302 Certification by Principal Executive
Officer
31.2
– Section 302 Certification by 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:
November 10, 2008
|
|
|
|
By:
|
/s/
Dr. William Weksel
|
|
|
Dr.
William Weksel
|
|
|
Chief
Executive Officer
|
|
|
(Principal
Executive Officer)
|
|
|
|
Dated:
November 10, 2008
|
|
|
|
By:
|
/s/
Michael E. Weksel
|
|
|
Michael
Weksel
|
|
|
Chief
Operating Officer and
|
|
|
Chief
Financial Officer
|
|
|
(Principal
Financial and Accounting Officer)
|