MBH Mbf Healthcare Acquisition Corp.

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 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 1-33396

MBF Healthcare Acquisition Corp.

(Exact name of registrant as specified in its charter)

Delaware		22-3934207
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

121 Alhambra Plaza, Suite 1100
Coral Gables, Florida		33134
(Address of principal executive offices)		(Zip code)

(305) 461-1162
(Registrant’s telephone number, including area code)

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 þ      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definition of “larger accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  o		Accelerated filer  o		Non-accelerated filer  þ		Smaller reporting company  o
			(Do not check if a 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 þ      No o

At August 14, 2008, 26,593,750 shares of the registrant’s common stock were issued and outstanding.

 

 

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS AS OF JUNE 30, 2008 (UNAUDITED) AND DECEMBER 31, 2007			3
STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2008 (UNAUDITED), FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED), FOR THE THREE MONTHS ENDED JUNE 30, 2007 (UNAUDITED), FOR THE SIX MONTHS JUNE 30, 2007 (UNAUDITED) AND FOR THE PERIOD FROM JUNE 2, 2006 (DATE OF INCEPTION) THROUGH JUNE 30, 2008 (UNAUDITED)			4
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED) AND FOR THE PERIOD FROM JUNE 2, 2006 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2007 (UNAUDITED)			5
STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED), FOR THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED) AND FOR THE PERIOD FROM JUNE 2, 2006 (DATE OF INCEPTION) THROUGH JUNE 30, 2008 (UNAUDITED)			6
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)			7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			14
ITEM 4. CONTROLS AND PROCEDURES			14
PART II — OTHER INFORMATION
ITEM 6. EXHIBITS			15
SIGNATURES			16
EX-10.1 Letter Agreement
EX-31.1 Section 302 CEO Certification
EX-31.2 Section 302 CFO Certification
EX-32.1 Section 906 CEO Certification
EX-32.2 Section 906 CFO Certification

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS

		June 30, 2008				December 31,
		(unaudited)				2007
ASSETS
Current assets:
Cash and cash equivalents		$	91,454			$	957,753
Restricted cash held in Trust Fund			176,762,666				175,501,579
Prepaid expenses			4,456				47,826
Prepaid income taxes			165,642				—
Other current assets			25,000				—
Total current assets			177,049,218				176,507,158
Deferred acquisition costs			2,847,990				22,379
Deferred tax asset			315,216				47,110
Total assets		$	180,212,424			$	176,576,647
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Income taxes payable		$	—			$	312,505
Accrued expenses			2,408,135				165,965
Deferred underwriters’ fee			6,037,500				6,037,500
Total current liabilities			8,445,635				6,515,970
Common stock, subject to possible redemption, 6,468,749 shares at redemption value			51,491,242				51,491,242
Interest income attributable to common stock subject to possible redemption (net of taxes)			1,716,814				1,148,636
Total common stock, subject to possible redemption			53,208,056				52,639,878
Stockholders’ equity
Preferred stock, $.0001 par value, authorized 1,000,000 shares; no shares issued and outstanding			—				—
Common stock, $.0001 par value, authorized 50,000,000 shares, issued and outstanding 26,593,750 shares (which includes 6,468,749 shares subject to possible redemption)			2,659				2,659
Additional paid-in capital			115,030,029				115,030,029
Retained earnings			3,526,045				2,388,111
Total stockholders’ equity			118,558,733				117,420,799
Total liabilities and stockholders’ equity		$	180,212,424			$	176,576,647

See notes to unaudited financial statements

MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS (UNAUDITED)

																		June 2, 2006
		Three months				Three months				Six months				Six months				(date of inception)
		ended				ended				ended				ended				through
		June 30, 2008				June 30, 2007				June 30, 2008				June 30, 2007				June 30, 2008
Revenues		$	—			$	—			$	—			$	—			$	—
Expenses:
Formation and operating costs			(113,840	)			(183,133	)			(307,995	)			(210,664	)			(827,359	)
Net loss before interest income			(113,840	)			(183,133	)			(307,995	)			(210,664	)			(827,359	)
Interest income			1,263,636				1,633,479				3,043,464				1,630,338				9,224,971
Income before income tax provision			1,149,796				1,450,346				2,735,469				1,419,674				8,397,612
Provision for income taxes			(432,668	)			(501,769	)			(1,029,357	)			(501,769	)			(3,154,752	)
Net income		$	717,128			$	948,577			$	1,706,112			$	917,905			$	5,242,860
Weighted average shares outstanding
Basic			26,593,750				20,871,909				26,593,750				12,824,413				17,174,959
Diluted			32,565,113				25,141,723				32,515,874				14,947,525				20,565,713
Net earnings per share:
Basic		$	0.03			$	0.05			$	0.06			$	0.07			$	0.31
Diluted		$	0.02			$	0.04			$	0.05			$	0.06			$	0.25

See notes to unaudited financial statements

MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY (UNAUDITED)

														Retained earnings/
														(deficit)
														accumulated
										Additional				during the
		Common Stock								Paid-In				development
		Shares				Amount				Capital				stage				Total
Balance, June 2, 2006 (date of inception)			—			$	—			$	—			$	—			$	—
Initial capitalization from founding stockholder			4,687,500				469				19,531				—				20,000
Net loss			—				—				—				(57,392	)			(57,392	)
Balance, December 31, 2006			4,687,500				469				19,531				(57,392	)			(37,392	)
Sale of 343,750 units in a private placement			343,750				34				2,749,966				—				2,750,000
Sale of 4,250,000 warrants to initial stockholders			—				—				4,250,000				—				4,250,000
Sale of 21,562,500 units, net of underwriters’ discount and offering expenses of $12,996,070 (6,468,749 shares subject to possible redemption)			21,562,500				2,156				159,501,774				—				159,503,930
Proceeds subject to possible redemption of 6,468,749 shares			—				—				(51,491,242	)			—				(51,491,242	)
Accretion of trust fund relating to common stock subject to possible redemption			—				—				—				(1,148,636	)			(1,148,636	)
Net income			—				—				—				3,594,139				3,594,139
Balance, December 31, 2007			26,593,750				2,659				115,030,029				2,388,111				117,420,799
Accretion of trust fund relating to common stock subject to possible redemption			—				—				—				(568,178	)			(568,178	)
Net income			—				—				—				1,706,112				1,706,112
Balance, June 30, 2008			26,593,750			$	2,659			$	115,030,029			$	3,526,045			$	118,558,733

See notes to unaudited financial statements

MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (UNAUDITED)

										June 2, 2006
		Six months				Six months				(date of inception)
		ended				ended				through
		June 30, 2008				June 30, 2007				June 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	1,706,112			$	917,905			$	5,242,860
Adjustments to reconcile net income to net cash provided by operating activities:
Changes in:
Prepaid expenses			43,370				(133,938	)			(4,456	)
Other current assets			(25,000	)			—				(25,000	)
Income taxes payable			(746,253	)			501,769				(480,858	)
Accrued expenses			(111,027	)			169,962				54,935
Net cash provided by operating activities			867,202				1,455,698				4,787,481
CASH FLOWS FROM INVESTING ACTIVITIES
Cash held in trust fund			(1,261,087	)			(172,574,622	)			(176,762,666	)
Deferred acquisition costs			(472,414	)			—				(494,792	)
Net cash used in investing activities			(1,733,501	)			(172,574,622	)			(177,257,458	)
CASH FLOWS FROM FINANCING ACTIVITIES
Gross proceeds from initial public offering			—				172,500,000				172,500,000
Payment of costs of public offering			—				(6,815,504	)			(6,958,569	)
Proceeds from sale of units in a private placement			—				2,750,000				2,750,000
Proceeds from notes payable to a related party			—				35,000				275,000
Payments of notes payable to a related party			—				(275,000	)			(275,000	)
Proceeds from issuance of common stock to founding stockholders			—				—				20,000
Proceeds from issuance of warrants			—				4,250,000				4,250,000
Net cash provided by financing activities			—				172,444,496				172,561,431
(Decrease) increase in cash and cash equivalents			(866,299	)			1,325,572				91,454
Cash and cash equivalents, beginning of period			957,753				12,404				—
Cash and cash equivalents, end of period		$	91,454			$	1,337,976			$	91,454
Supplemental schedule of non-cash financing activity:
Accrual of offering costs		$	—			$	—			$	251,419
Common stock subject to possible redemption			—				51,491,242				51,491,242
Interest income on common stock subject to possible redemption			568,178				—				1,716,814
Accrual of deferred acquisition costs			2,353,197				—				2,353,197
Deferred underwriters’ fees			—				6,037,500				6,037,500
Total		$	2,921,375			$	57,528,742			$	61,850,172
Cash paid for interest		$	—			$	10,312			$	10,312
Cash paid for taxes		$	1,775,611			$	—			$	3,635,611

See notes to unaudited financial statements

MBF HEALTHCARE ACQUISITION CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008

Note A — Organization and Business Operations

     MBF Healthcare Acquisition Corp. (the “Company”) was incorporated in Delaware on June 2, 2006. The Company was formed to serve as a vehicle for the acquisition of an operating business through a merger, capital stock exchange, stock purchase, asset acquisition, or other similar business combination (the “Business Combination”). The Company has neither engaged in any operations nor generated any revenue to date. The Company is considered to be in the development stage and is subject to the risks associated with activities of development stage companies.

     The Company’s management has broad discretion with respect to the specific application of the net proceeds of the initial public offering of Units (as defined in Note C below) and the private placement of 343,750 units and 4,250,000 warrants that occurred prior to the initial public offering (the “Private Placement”), although substantially all of the net proceeds of the initial public offering and Private Placement are intended to be generally applied toward consummating a Business Combination with (or acquisition of) one or more operating businesses in the healthcare industry. Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the initial public offering, at least ninety-nine and a half (99.5%) percent of the gross proceeds of the initial public offering, after payment of certain amounts to the underwriters, were deposited in a trust account maintained at Continental Stock Transfer & Trust Co. (the “Trust Account”), and were invested in money market funds meeting conditions of the Investment Company Act of 1940 or securities principally issued or guaranteed by the U.S. government until the earlier of (i) the consummation of its first Business Combination or (ii) the distribution of the Trust Account as described below. The remaining proceeds may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. The Company, after signing a definitive agreement for the acquisition of a target business, will submit such transaction for stockholder approval. The Company will proceed with the Business Combination only if:

	•		a majority of the shares of common stock voted by the public stockholders are voted in favor of the Business Combination; and
	•		public stockholders owning less than 30% of the shares sold in the initial public offering both vote against the Business Combination and exercise their conversion rights as described below.

     Public stockholders voting against the Business Combination will be entitled to convert their stock into a pro rata share of the amount held in the Trust Account (including the amount held in the Trust Account representing the deferred portion of the underwriters’ discounts and commissions), including any interest earned on their pro rata share (net of taxes payable), if the Business Combination is approved and consummated.

     In the event that the Company does not complete a Business Combination within 24 months from the consummation of the initial public offering, the Company will dissolve and distribute the proceeds held in the Trust Account to public stockholders, excluding the existing stockholder to the extent of its initial stockholdings and the shares purchased by it in the Private Placement. In the event of such distribution, the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per share in the initial public offering.

     On February 6, 2008, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Critical Homecare Solutions Holdings, Inc. (“CHS”), a Delaware corporation, Kohlberg Investors V, L.P. (the “Seller’s Representative”) and the other stockholders of CHS (each, together with the Seller’s Representative, a “Seller” and collectively the “Sellers”).

     Pursuant to the terms of the Stock Purchase Agreement, the Company will acquire all of the outstanding capital stock of CHS for $420.0 million, subject to a working capital and certain other customary adjustments as set forth in the Stock Purchase Agreement. The Company intends to fund the purchase price and the acquisition costs and provide additional capital to CHS for growth and expansion through a combination of approximately $180.0 million of cash in the Trust Account, approximately $180.0 million of debt, a $35.0 million equity issuance of MBH common stock to certain Sellers and a commitment from MBF Healthcare Partners, L.P. (“MBFHP”) to acquire up to an additional $50 million in shares of MBH common stock. The shares of MBH common stock to be issued to certain Sellers and the shares that are subject to the commitment from MBFHP will be priced at the closing per share price of MBH common stock on the date of close, estimated at $8.27.

     On April 22, 2008, the Company, CHS and the Sellers entered into Amendment No. 1 to the Stock Purchase Agreement. Amendment No. 1 was entered into to provide for the issuance of 4,000 shares of Series A Convertible Preferred Stock, $0.001 par value (“Preferred Shares”), by CHS to certain Sellers and to include the Preferred Shares in the outstanding capital stock of CHS to be acquired by the Company in the transaction. In addition, Amendment No. 1 amended the Stock Purchase Agreement to indicate that CHS will appoint a designee of the Kohlberg Entities, as defined in the Stock Purchase Agreement, to the Board of Directors of the Company rather than nominate a designee for election as previously contemplated.

     On July 7, 2008, the Company, CHS and the Sellers entered into Amendment No. 2 to the Stock Purchase Agreement. Amendment No. 2 extended the termination date from June 30, 2008 to July 31, 2008.

     On July 31, 2008, the financing commitment letter with Jefferies Finance LLC, dated February 6, 2008, expired pursuant to its terms. The Company is seeking alternative sources of financing in connection with the transactions contemplated by the Stock Purchase Agreement. Also on July 31, 2008, the Company, CHS and the Sellers entered into Amendment No. 3 to the Stock Purchase Agreement. Pursuant to Amendment No. 3, the parties, have agreed to set the termination date of the Stock Purchase Agreement as August 29, 2008, subject to the parties’ ability to secure a new committed credit facility on or before August 29, 2008, and the Company’s ability to acquire at least 16,171,875 warrants from certain MBH warrant holders in privately negotiated transactions and subsequently retire such warrants. If both of these conditions are met, the termination date will be extended to September 30, 2008. In connection with meeting these conditions, MBFHP and the Sellers will seek to revise certain terms of the Stock Purchase Agreement, including increasing the Sellers’ equity participation and decreasing MBFHP’s share purchase commitment.

Note B — Summary of Significant Accounting Policies

     The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements, or those normally made in an Annual Report on Form 10-K. 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 three month and six month period ended June 30, 2008 are not necessarily indicative of the results that may be reported for the remainder of the year ending December 31, 2008 or future periods.

     For further information, refer to the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. The accompanying December 31, 2007 balance sheet has been derived from these audited financial statements. These interim condensed financial statements should be read in conjunction with the audited financial statements and notes to financial statements included in that report.

[1] Cash and cash equivalents:

     The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

[2] Earnings per common share:

     Income per share is computed by dividing net income applicable to common stockholders by the weighted average number of common shares outstanding for the period. Included in the weighted average shares calculation for Diluted EPS purposes are 5,922,124 and 3,445,455 shares related to the dilutive effect of outstanding stock warrants for the three months and six months ended June 30, 2008 and the period from June 2, 2006 through June 30, 2008, respectively.

[3] Use of estimates:

     The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

[4] Income taxes:

     Deferred income taxes are provided for the differences between the basis of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

     The temporary differences as of as of June 30, 2008 and December 31, 2007 represent deferred start-up costs. The Company recorded deferred income tax assets of $315,216 and $47,110 as of June 30, 2008 and December 31, 2007, respectively.

     The Company recorded income tax expense of $432,668 and $1,029,357 for the three and six months ended June 30, 2008. For the three and six months ended June 30, 2008, the effective tax rate of 38% differs from the statutory rate of 35% due to the provision for state income taxes. For the three and six months ended June 30, 2007, the effective tax rate was the same as the statutory rate of 35%.

[5] Fair value of financial instruments

     Financial instruments consist primarily of cash in which the fair market value approximates the carrying value due to its short term nature.

     The Company adopted SFAS No. 157, Fair Value Measurements , for financial assets and financial liabilities in the first quarter of fiscal 2008, which did not have a material impact on the Company’s financial statements.

     In accordance with FASB Staff Position (“FSP FAS”) 157-2, Effective Date of FASB Statement No. 157 , the Company has deferred application of SFAS No. 157 until January 1, 2009, the beginning of the next fiscal year, in relation to nonrecurring nonfinancial assets and nonfinancial liabilities including goodwill impairment testing, asset retirement obligations, long-lived asset impairments and exit and disposal activities.

[6] Recent accounting pronouncements:

     In September 2006, FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”) . SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 does not impose fair value measurements on items not already accounted for at fair value; rather it applies, with certain exceptions, to other accounting pronouncements that either require or permit fair value measurements. Under SFAS No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market. The standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In February 2008, the FASB issued FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP FAS 157-2”), which delays the effective date of SFAS No. 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until fiscal years beginning after November 15, 2008. These non-financial items include assets and liabilities such as non-financial assets and liabilities assumed in a Business Combination, reporting units measured at fair value in a goodwill impairment test and asset retirement obligations initially measured at fair value. The Company adopted the provisions of SFAS No. 157 for assets and liabilities recognized at fair value on a recurring basis effective January 1, 2008. The partial adoption of SFAS No. 157 did not have a material impact on the Company’s financial statements. The Company is currently assessing the impact of SFAS 157 for non-financial assets and non-financial liabilities on its financial statements.

     This standard requires that a Company measure its financial assets and liabilities using inputs from the three levels of the fair value hierarchy. A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows:

o		Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
o		Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
o		Level 3 — Unobservable inputs reflect the Company’s judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. The Company develops these inputs based on the best information available, including the Company’s own data.

As of the January 1, 2008 and June 30, 2008, the Company has no financial assets or liabilities that are measured at fair value.

     In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (“SFAS No. 159”) “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The provisions of SFAS No. 159 were effective for the Company beginning January 1, 2008. The adoption of SFAS No. 159 did not have a material impact on its financial statements.

     On December 4, 2007, the FASB issued SFAS No. 141R (revised 2007) Business Combinations , which will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R retains the purchase method of accounting for acquisitions, but requires a number of changes, including expensing acquisition costs as incurred, capitalization of in-process research and development at fair value, recording noncontrolling interests at fair value and recording acquired contingent liabilities at fair value. SFAS No. 141R will apply prospectively to business combinations with an acquisition date on or after the beginning of the first annual reporting period beginning after December 15, 2008. Both early adoption and retrospective application are prohibited. SFAS No. 141R will have an impact on the accounting for the Company’s business combinations once adopted, but the effect depends on the terms of the Company’s business combinations subsequent to January 1, 2009, if any.

     A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed standards would be material to the Company’s financial statements.

Note C — Public Offering

     On April 23, 2007, the Company completed its initial public offering (“IPO”) of 18,750,000 units (“Units”), consisting of one share of common stock and one warrant, and on May 8, 2007, the Company completed the closing of an additional 2,812,500 Units that were subject to the underwriters’ over-allotment option. The 21,562,500 Units sold in the IPO, including the 2,812,500 Units subject to the over-allotment option, were sold at an offering price of $8.00 per Unit, generating total gross proceeds of $172,500,000. Of the net proceeds after offering expenses of the IPO and the Private Placement, $170,962,500 was placed in a Trust Account. Except for payment of taxes, the proceeds will not be released from the Trust Account until the earlier of (i) the completion of a Business Combination or (ii) liquidation of the Company. Public stockholders voting against the Company’s initial Business Combination will be entitled to convert their common stock into a pro rata share of the amount held in the Trust Account (including the amount held in the Trust Account representing the deferred portion of the underwriters’ discounts and commissions), including any interest earned on their pro rata share (net of taxes payable), if the Business Combination is approved and consummated. Public stockholders who convert their stock into a pro rata share of the Trust Account will continue to have the right to exercise any warrants they may hold.

Note D — Related Party Transactions

     The Company presently occupies office space provided by MBFHP, an affiliate of several of the officers of the Company. Such affiliate has agreed that 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 which commenced on the effective date of the Registration Statement, April 17, 2007 and continues until the earlier of the acquisition of a target business by the Company or the Company’s liquidation. For the six months ended June 30, 2008, the expense for such services was $45,000. The Company has also agreed to reimburse MBF Healthcare Management LLC, an affiliate of several officers of the Company, of up to $750 per person per flight for the use of its corporate jet by the Company’s officers and directors in connection with activities on the Company’s behalf, such as identifying and investigating targets for the Company’s initial Business Combination. For the six months ended June 30, 2008, the cost for the use of the corporate jet was $24,000, of which $4,500 was accrued as of June 30, 2008.

Note E — Commitments

     In connection with the Public Offering, the Company has committed to pay a fee of 3.5% of the gross offering proceeds, including the over-allotment option, to the underwriters at the closing of the Public Offering (or the over-allotment option, as the case may be). In addition, the Company has committed to pay a deferred fee of 3.5% of the gross proceeds to the underwriters on the completion of an initial Business Combination by the Company (subject to a pro rata reduction of $0.28 per share for public stockholders who exercise their conversion right). The Company paid the underwriters $6,037,500 upon the closing of the Public Offering and the underwriters’ over-allotment option. The remaining $5,250,000 from the Public Offering and an additional $787,500 from the exercise of the Units that were subject to the underwriters’ over-allotment option, for a total of $6,037,500, has been accrued by the Company as of June 30, 2008.

Note F — Common Stock Subject to Possible Redemption

     Public stockholders voting against the Company’s initial Business Combination will be entitled to convert their common stock into a pro rata share of the amount held in the Trust Account (including the amount held in the Trust Account representing the deferred portion of the underwriters’ discounts and commissions), including any interest earned on their pro rata share (net of taxes payable), if the Business Combination is approved and consummated. Public stockholders who convert their stock into a pro rata share of the Trust Account will continue to have the right to exercise any warrants they may hold. As a result of the potential redemption, the Company has recorded a long term liability of $53,208,056 as of June 30, 2008.

Note G — Subsequent Events

     On August 7, 2008, the Company entered into a $300,000 unsecured non-revolving line of credit facility as evidenced by a letter agreement with MBF Healthcare Management, LLC, an affiliate of several officers of the Company. The proceeds of this line of credit will be used for purposes of funding the Company’s operating costs through April 2009. The line of credit bears interest at 5% per annum and all interest and principal is payable upon the earlier of the consummation of a Business Combination or the dissolution of the Company. No amounts have yet been drawn on this line of credit.

ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations, financial condition, and cash flows of the Company. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes to the financial statements.

Special Note About Forward-Looking Statements

     Certain statements in MD&A that are not historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, 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. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2007. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Trends That May Affect Our Business

     Our ability to consummate a business combination may depend on our access to the debt capital markets. Our ability to access the capital markets for future offerings may be limited by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. If there is a deterioration or disruption in the debt capital markets, and public or private financing is not available when needed or is not available on terms acceptable to us, our ability to consummate a business combination may be materially impaired.

Overview

     We were incorporated in Delaware on June 2, 2006. We were formed to serve as a vehicle for the acquisition of an operating business through a merger, capital stock exchange, stock purchase, asset acquisition, or other similar business combination (the “Business Combination”). We have neither engaged in any operations nor generated any revenue to date. We are considered to be in the development stage and are subject to the risks associated with activities of development stage companies. We have selected December 31st as our fiscal year end.

     On April 23, 2007, the Company completed its initial public offering (“IPO”) of 18,750,000 units (“Units”), consisting of one share of common stock and one warrant, and on May 8, 2007, the Company completed the closing of an additional 2,812,500 Units that were subject to the underwriters’ over-allotment option. The 21,562,500 Units sold in the IPO, including the 2,812,500 Units subject to the over-allotment option, were sold at an offering price of $8.00 per Unit, generating total gross proceeds of $172,500,000. Of the net proceeds after offering expenses of the IPO and the Private Placement, $170,962,500 was placed in a trust account maintained at Continental Stock Transfer & Trust Co. (the “Trust Account”). Except for payment of taxes, the proceeds will not be released from the Trust Account until the earlier of (i) the completion of a Business Combination or (ii) liquidation of the Company. Public stockholders voting against the Company’s initial Business Combination will be entitled to convert their common stock into a pro rata share of the amount held in the Trust Account (including the amount held in the Trust Account representing the deferred portion of the underwriters’ discounts and commissions), including any interest earned on their pro rata share (net of taxes payable), if the Business Combination is approved and consummated. Public stockholders who convert their stock into a pro rata share of the Trust Account will continue to have the right to exercise any warrants they may hold.

     If we are unable to find a suitable target business by April 23, 2009 we will be forced to liquidate. If we are forced to liquidate, the per-share liquidation may be less than the price at which public stockholders purchased their shares because of the expenses related to our initial public offering, our general and administrative expenses and the anticipated costs of seeking a Business Combination. Additionally, if third parties make claims against us, the offering proceeds held in the Trust Account could be subject to those claims, resulting in a further reduction to the per-share liquidation price. Under Delaware law, our stockholders who have received distributions from us may be held liable for claims by third parties to the extent such claims have not been paid by us. Furthermore, our warrants will expire worthless if we liquidate before the completion of a Business Combination.

     Since the IPO, we have been actively engaged in sourcing a suitable Business Combination candidate. We have met with target companies, service professionals and other intermediaries to discuss our Company, the background of our management and our combination preferences. In the course of these discussions, we have also spent time explaining the capital structure of the IPO, the combination approval process and the timeline under which we are operating before the proceeds of the offering are returned to investors.

     Consistent with the disclosures in our prospectus dated April 17, 2007, we have focused our search on companies in the healthcare industry. Overall, we would gauge the environment for target companies to be competitive and we believe that private equity firms and strategic buyers represent our biggest competition. Our management believes that many of the fundamental drivers of alternative investment vehicles like our company are becoming more accepted by investors and potential Business Combination targets; these include a difficult environment for initial public offerings, a cash-rich investment community looking for differentiated opportunities for incremental yield and business owners seeking new ways to maximize their shareholder value while remaining invested in the business. However, there can be no assurance that we will find a suitable Business Combination in the allotted time.

     Public stockholders voting against our initial Business Combination will be entitled to convert their common stock into a pro rata share of the amount held in the Trust Account (including the amount held in the Trust Account representing the deferred portion of the underwriters’ discounts and commissions), including any interest earned on their pro rata share (net of taxes payable), if the Business Combination is approved and consummated. Public stockholders who convert their stock into a pro rata share of the Trust Account will continue to have the right to exercise any warrants they may hold.

     In connection with the IPO, we agreed to pay the underwriters additional underwriting fees of $6,037,500, including units exercised with the over-allotment option which, the underwriters have agreed to defer until the consummation of our initial Business Combination. We expect that such fees will be paid out of the proceeds held in the Trust Account.

     On February 6, 2008, we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Critical Homecare Solutions Holdings, Inc. (“CHS”), a Delaware corporation, Kohlberg Investors V, L.P. (the “Seller’s Representative”) and the other stockholders of CHS (each, together with the Seller’s Representative, the “Seller” and collectively the “Sellers”).

     Pursuant to the terms of the Stock Purchase Agreement, we will acquire all of the outstanding capital stock of CHS for $420.0 million, subject to working capital and certain other customary adjustments as set forth in the Stock Purchase Agreement. We intend to fund the purchase price and the acquisition costs and provide additional capital to CHS for growth and expansion through a combination of approximately $180.0 million of cash in the Trust Account, approximately $180.0 million of debt, a $35.0 million equity issuance of our common stock to certain Sellers and a commitment from MBFHP to acquire up to an additional $50.0 million in shares of our common stock. The shares of our common stock to be issued to certain Sellers and the shares that are subject to the commitment from MBFHP will be priced at the closing per share price of our common stock on the date of close, estimated at $8.27.

     On April 22, 2008, CHS, the Sellers and we entered into Amendment No. 1 to the Stock Purchase Agreement. Amendment No. 1 was entered into to provide for the issuance of 4,000 shares of Series A Convertible Preferred Stock, $0.001 par value (“Preferred Shares”), by CHS to certain Sellers and to include the Preferred Shares in the outstanding capital stock of CHS to be acquired by us in the transaction. In addition, Amendment No. 1 amended the Stock Purchase Agreement to indicate that CHS will appoint a designee of the Kohlberg Entities, as defined in the Stock Purchase Agreement, to the Board of Directors of the Company rather than nominate a designee for election as previously contemplated.

     On July 7, 2008, CHS, the Sellers and we entered into Amendment No. 2 to the Stock Purchase Agreement. Amendment No. 2 extended the termination date from June 30, 2008 to July 31, 2008.

     On July 31, 2008, the financing commitment letter with Jefferies Finance LLC, dated February 6, 2008, expired pursuant to its terms. We will seek alternative sources of financing in connection with the transactions contemplated by the Stock Purchase Agreement. Also on July 31, 2008, CHS, the Sellers and we entered into Amendment No. 3 to the Stock Purchase Agreement. Pursuant to Amendment No. 3, the parties, have agreed to set the termination date of the Stock Purchase Agreement as August 29, 2008, subject to the parties’ ability to secure a new committed credit facility on or before August 29, 2008, and our ability to acquire at least 16,171,875 warrants from certain MBH warrant holders in privately negotiated transactions and subsequently retire such warrants. If both of these conditions are met, the termination date will be extended to September 30, 2008. In connection with meeting these conditions, MBFHP and the Sellers will seek to revise certain terms of the Stock Purchase Agreement, including increasing the Sellers’ equity participation and decreasing MBFHP’s share purchase commitment.

     The closing of the acquisition and the issuance of equity to MBFHP pursuant to its commitment are subject to stockholder approval. The closing of the acquisition is also subject to customary regulatory approvals, including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary closing conditions.

Results of Operations, Financial Condition and Liquidity

     Net income of $717,128 reported for the quarter ended June 30, 2008 and net income of $1,706,112 reported for the six month period ended June 30, 2008 consisted primarily of interest income earned on cash held in the Trust Account. Formation and operating costs were $113,840 and $307,995 for the three and six months ended June 30, 2008. Formation and operating costs consist primarily of legal, accounting and printing fees and expenses. We expect to use substantially all of the net proceeds from our initial public offering to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business and structuring, negotiating and consummating the Business Combination. To the extent that our capital stock is 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 net proceeds not expended will be used to finance the operations of the target business. In the event that we do not have sufficient available funds outside of the Trust Account to operate through April 23, 2009, assuming that a Business Combination is not consummated during that time, we may have to secure additional sources of liquidity. On August 7, 2008, we entered into a $300,000 unsecured non-revolving line of credit facility as evidenced by a letter agreement with MBF Healthcare Management, LLC, an affiliate of several of our officers. The proceeds of this line of credit will be used for purposes of funding our operating costs through April 2009. The line of credit bears interest at a rate of 5% per annum and all interest and principal is payable upon the earlier of the consummation of a Business Combination or our dissolution. No amounts have yet been drawn on this line of credit. Until we enter into a Business Combination, we expect to use our available resources for general working capital as well as legal, accounting and due diligence expenses for structuring and negotiating a Business Combination and legal and accounting fees relating to our Securities and Exchange Commission reporting obligations.

     We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business through April 23, 2009. 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 that is presented to us.

Off-Balance Sheet Arrangements

     We have not entered into any off-balance sheet financing arrangements and have not established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Recent Accounting Pronouncements

     In September 2006, FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”) . SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 does not impose fair value measurements on items not already accounted for at fair value; rather it applies, with certain exceptions, to other accounting pronouncements that either require or permit fair value measurements. Under SFAS No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market. The standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In February 2008, the FASB issued FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP FAS 157-2”), which delays the effective date of SFAS No. 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until fiscal years beginning after November 15, 2008. These non-financial items include assets and liabilities such as non-financial assets and liabilities assumed in a business combination, reporting units measured at fair value in a goodwill impairment test and asset retirement obligations initially measured at fair value. We adopted the provisions of SFAS No. 157 for assets and liabilities recognized at fair value on a recurring basis effective January 1, 2008. The partial adoption of SFAS No. 157 did not have a material impact on our financial statements. We are currently assessing the impact of SFAS 157 for non-financial assets and non-financial liabilities on our financial statements.

     This standard requires that a company measure its financial assets and liabilities using inputs from the three levels of the fair value hierarchy. A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows:

o		Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
o		Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
o		Level 3 — Unobservable inputs reflect our judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. We develop these inputs based on the best information available, including our own data.

     As of the January 1, 2008 and June 30, 2008, we have no financial assets or liabilities that are measured at fair value.

     In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159 (“SFAS No. 159”) “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The provisions of SFAS No. 159 were effective for us beginning January 1, 2008. The adoption of SFAS No. 159 did not have a material impact on our financial statements.

     On December 4, 2007, the FASB issued SFAS No. 141R (revised 2007) Business Combinations , which will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R retains the purchase method of accounting for acquisitions, but requires a number of changes, including expensing acquisition costs as incurred, capitalization of in-process research and development at fair value, recording noncontrolling interests at fair value and recording acquired contingent liabilities at fair value. SFAS No. 141R will apply prospectively to business combinations with an acquisition date on or after the beginning of the first annual reporting period beginning after December 15, 2008. Both early adoption and retrospective application are prohibited. SFAS No. 141R will have an impact on the accounting for our business combinations once adopted, but the effect depends on the terms of our business combinations subsequent to January 1, 2009, if any.

     A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, we have not determined whether implementation of such proposed standards would be material to our financial statements.

Critical Accounting Policies

     A description of our critical accounting policies is contained in our Annual Report on Form 10-K for the year ended December 31, 2007.

ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices. We are not presently engaged in and, if a suitable business target is not identified by us prior to the prescribed liquidation date of the trust fund, we may not engage in, any substantive commercial business. Accordingly, we are not and, until such time as we consummate a Business Combination, we will not be, exposed to risks associated with foreign exchange rates, commodity prices, equity prices or other market-driven rates or prices. The net proceeds of our initial public offering held in the Trust Account have been invested only in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940. Given our limited risk in our exposure to money market funds, we do not view the interest rate risk to be significant.

ITEM 4.		CONTROLS AND PROCEDURES

     The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of June 30, 2008 (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company required to be included in the Company’s periodic filings under the Exchange Act.

     Since the Evaluation Date, there have not been any significant changes in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1.		LEGAL PROCEEDINGS

     We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

ITEM 1A.		RISK FACTORS

     An investment in our securities involves a high degree of risk. Except for the risk factor below, there have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007 that was filed with the Securities and Exchange Commission on March 28, 2008.

We may be unable to secure additional financing to complete our initial business combination.

     Because our financing commitment letter with Jeffries Finance, LLC has expired on its terms, we will be required to seek additional financing to complete our initial business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. If additional financing is unavailable to consummate a particular business combination, we would be compelled to restructure or abandon the combination and seek an alternative target business.

ITEM 6.		EXHIBITS

Exhibits —

2.1		Stock Purchase Agreement, dated February 6, 2008, by and among the Company, Critical Homecare Solutions Holdings, Inc. and the stockholders named therein*
2.2		Amendment No. 1 to the Stock Purchase Agreement, dated April 22, 2008, by and among the Company, Critical Homecare Solutions Holdings, Inc. and the stockholders named therein**
2.2		Amendment No. 2 to the Stock Purchase Agreement, dated July 7, 2008, by and among the Company, Critical Homecare Solutions Holdings, Inc. and the stockholders named therein***
2.3		Amendment No. 3 to the Stock Purchase Agreement, dated July 31, 2008, by and among the Company, Critical Homecare Solutions Holdings, Inc. and the stockholders named therein****
10.1		Letter Agreement by and between the Registrant and MBF Healthcare Management, LLC *****
31.1		Section 302 CEO Certification.*****
31.2		Section 302 CFO Certification.*****
32.1		Section 906 CEO Certification.*****
32.2		Section 906 CFO Certification.*****

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.

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