UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
x
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
|
For
the quarterly period ended March 31, 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: 001-33541
Polaris
Acquisition Corp.
(Exact
Name of Registrant as Specified in its Charter)
Delaware
|
|
26-0443717
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
2200 Fletcher Avenue 4
th
Floor
Fort Lee,
New Jersey 07024
(Address
of Principal Executive Offices including Zip Code)
(201)
242-3500
(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
x
No
o
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (Check one):
Large
Accelerated Filer
o
|
Accelerated Filer
o
|
Non-Accelerated
Filer
x
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Smaller Reporting Company
o
|
(Do not check if Smaller Reporting
Company)
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
x
No
o
There
were 18,750,000 shares of the Registrant's common stock issued and
outstanding as of May 12, 2008.
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Page
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|
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Part
I: Financial Information:
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Item
1 –Financial Statements:
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|
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Condensed
Balance Sheets
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3
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Condensed
Statements of Operations
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4
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|
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Condensed
Statement of Stockholders’ Equity
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5
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Condensed
Statements of Cash Flows
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6
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Notes
to Unaudited Condensed Financial Statements
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7
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Item
2 – Management’s Discussion and Analysis or Results of
Operations
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12
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Item
3 – Quantitative and Qualitative Disclosures about Market
Risk
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13
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Item
4 – Controls and Procedures
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14
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Part
II. Other Information
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Item
2 – Unregistered Sales of Equity Securities and Use of
Proceeds
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14
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Item
6 – Exhibits
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15
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Signatures
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16
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Polaris
Acquisition Corp.
(a
corporation in the development stage)
BALANCE
SHEETS
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March
31,
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2008
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December
31,
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(unaudited)
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2007
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ASSETS
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Current
Assets:
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|
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|
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|
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Cash
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$
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130,805
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$
|
12,801
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Investments
Held in Trust
|
|
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150,660,136
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|
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-
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Prepaid
Expenses
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130,473
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-
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Total
Current Assets
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150,921,414
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12,801
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|
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Deferred
Tax Asset
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33,076
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-
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Deferred
Offering Costs
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|
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-
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175,802
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Total
Assets
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$
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150,954,490
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$
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188,603
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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Current
Liabilities:
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Accrued
Operating Expenses
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$
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131,358
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$
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-
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Income
Taxes Payable
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|
292,693
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-
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Accrued
Offering Costs
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-
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51,365
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Due
to Affiliate
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-
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12,911
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Note
Payable to Affiliate
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-
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100,000
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Deferred
Underwriting Fee
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6,750,000
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-
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Total
Liabilities
|
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7,174,051
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164,276
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Common
Stock, subject to possible conversion of 4,499,999 shares at
conversion
value
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44,999,990
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-
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Commitments
(Note 5)
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Stockholders'
Equity
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Preferred
stock, $.0001 par value Authorized 1,000,000 shares; none issued
and
outstanding
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-
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-
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Common
stock, $.0001 par value Authorized 55,000,000 shares Issued and
outstanding 19,312,500 shares (which includes 4,499,999 shares
subject to
possible conversion)
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1,931
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518
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Additional
Paid in Capital
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98,403,770
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24,482
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Income/(Deficit)
Accumulated During the Development Stage
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374,748
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(673
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)
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Total
Stockholders' Equity
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98,780,449
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24,327
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Total
Liabilities and Stockholders' Equity
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$
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150,954,490
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$
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188,603
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|
See
Notes
to Unaudited Financial Statements
Polaris
Acquisition Corp.
(
a corporation in the development stage )
STATEMENTS
OF OPERATIONS
(Unaudited)
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Period From
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For The Three
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June 18, 2007
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Months Ended
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(inception) to
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March 31, 2008
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March 31, 2008
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Formation
Costs
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$
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-
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$
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1,062
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Trustee
Fees
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3,494
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3,494
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Administrative
Fees
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22,500
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22,500
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Professional
Fees
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24,515
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24,515
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Operating
Costs
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46,435
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46,435
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Delaware
Franchise Taxes
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28,055
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28,055
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Operating Loss
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(124,999
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)
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(126,061
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)
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Interest
Income
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760,886
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761,275
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Income
Before Provision For Income Taxes
|
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635,887
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635,214
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Provision
For Income Taxes
|
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260,466
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260,466
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|
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|
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Net
Income
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$
|
375,421
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$
|
374,748
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Weighted
average shares outstanding, basic and diluted
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16,769,918
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8,838,672
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Basic
and diluted net income per share
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|
$
|
0.02
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$
|
0.04
|
|
See
Notes
to Unaudited Financial Statements
Polaris
Acquisition Corp.
(
a corporation in the development stage )
STATEMENT
OF STOCKHOLDERS' EQUITY
For
the Period from June 18, 2007 (Inception) to March 31,
2008
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Income/(Deficit)
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|
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Additional
|
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Accumulated
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|
Total
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|
Common Stock
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Paid - In
|
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During the
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Stockholders'
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Shares
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Amount
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Capital
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Development Stage
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|
Equity
|
|
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Issuance
of Units to Founders on June 18, 2007 at approximately $0.005
per
share
|
|
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5,175,000
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$
|
518
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$
|
24,482
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|
|
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|
$
|
25,000
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net
Loss
|
|
|
|
|
|
|
|
|
|
|
|
(673
|
)
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|
(673
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)
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|
|
|
|
|
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|
|
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Balance
at December 31, 2007
|
|
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5,175,000
|
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|
518
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24,482
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(673
|
)
|
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24,327
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Contribution
of shares to capital on January 11, 2008
|
|
|
(862,500
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)
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|
(87
|
)
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87
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|
-
|
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|
|
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Sale
of 4,500,000 Private Placement Warrants at $1 per warrant
|
|
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|
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|
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4,500,000
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4,500,000
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|
|
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|
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Sale
of 15,000,000 units on January 17, 2008 at $10 per unit through
public
offering (net of
underwriter's
discount and offering expenses)
including
4,499,999 shares subject to possible conversion
|
|
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15,000,000
|
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|
1,500
|
|
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138,879,191
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|
|
|
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138,880,691
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|
|
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|
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|
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Proceeds
subject to possible conversion
|
|
|
|
|
|
|
|
|
(44,999,990
|
)
|
|
|
|
|
(44,999,990
|
)
|
|
|
|
|
|
|
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|
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|
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Unaudited:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net
Income
|
|
|
|
|
|
|
|
|
|
|
|
375,421
|
|
|
375,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Balance
at March 31, 2008
|
|
|
19,312,500
|
|
$
|
1,931
|
|
$
|
98,403,770
|
|
$
|
374,748
|
|
$
|
98,780,449
|
|
See
Notes
to Unaudited Financial Statements
Polaris
Acquisition Corp.
(
a corporation in the development stage )
STATEMENTS
OF CASH FLOWS
(Unaudited)
|
|
|
|
Period From
|
|
|
|
For The Three
|
|
June 18, 2007
|
|
|
|
Months Ended
|
|
(inception) to
|
|
|
|
March 31, 2008
|
|
March 31, 2008
|
|
Cash Flows
from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$
|
375,421
|
|
$
|
374,748
|
|
Adjustments
to reconcile net income to net cash used in operating activities
Increase
in accrued operating expenses
|
|
|
131,358
|
|
|
131,358
|
|
Increase
in income taxes payables
|
|
|
292,693
|
|
|
292,693
|
|
Increase
in prepaid expenses
|
|
|
(130,473
|
)
|
|
(130,473
|
)
|
Interest
earned on trust
|
|
|
(760,136
|
)
|
|
(760,136
|
)
|
Increase
in deferred tax asset
|
|
|
(33,076
|
)
|
|
(33,076
|
)
|
|
|
|
|
|
|
|
|
Net
Cash Used in Operating Activities
|
|
|
(124,213
|
)
|
|
(124,886
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
placed in trust
|
|
|
(150,000,000
|
)
|
|
(150,000,000
|
)
|
Disbursements
from trust
|
|
|
100,000
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Investing Activities
|
|
|
(149,900,000
|
)
|
|
(149,900,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sale of units to public
|
|
|
150,000,000
|
|
|
150,000,000
|
|
Proceeds
from private placement of warrants
|
|
|
4,500,000
|
|
|
4,500,000
|
|
Proceeds
from sale of units to Founders
|
|
|
-
|
|
|
25,000
|
|
Proceeds
from notes payable to affiliates of Founders
|
|
|
-
|
|
|
100,000
|
|
Payment
of notes payable Founders
|
|
|
(100,000
|
)
|
|
(100,000
|
)
|
Proceeds
from due to affiliates
|
|
|
-
|
|
|
12,911
|
|
Payment
of due to affiliates
|
|
|
(12,911
|
)
|
|
(12,911
|
)
|
Payment
of offering costs
|
|
|
(4,244,872
|
)
|
|
(4,369,309
|
)
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
|
150,142,217
|
|
|
150,155,691
|
|
|
|
|
|
|
|
|
|
Net
Increase in Cash
|
|
|
118,004
|
|
|
130,805
|
|
|
|
|
|
|
|
|
|
Cash
at Beginning of Period
|
|
|
12,801
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Cash
at End of Period
|
|
$
|
130,805
|
|
$
|
130,805
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Noncash Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual
of deferred offering costs
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Accrual
of deferred underwriting fee
|
|
$
|
6,750,000
|
|
$
|
6,750,000
|
|
See
Notes
to Unaudited Financial Statements
POLARIS
ACQUISITION CORP.
(A
CORPORATION IN THE DEVELOPMENT STAGE)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
1.
|
BASIS
OF PRESENTATION
|
|
|
|
The
financial statements of Polaris Acquisition Corp. (the “Company”) at
March 31, 2008, for the three months ended March 31, 2008 and
for the period from June 18, 2007 (inception) to March 31, 2008
(cumulative), are unaudited. In the opinion of management, all adjustments
(consisting of normal accruals) have been made that are necessary
to
present fairly the financial position of the Company as of March 31,
2008 and the results of its operations and its cash flows for the
three
months ended March 31, 2008, and for the period from June 18,
2007 (inception) to March 31, 2008. Operating results for the interim
periods are not necessarily indicative of the results to be expected
for a
full fiscal year. The December 31, 2007 balance sheet has been
derived from the audited financial statements.
|
|
|
|
The
statements and related notes have been prepared pursuant to the rules
and
regulations of the U.S. Securities and Exchange Commission. Accordingly,
certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles may be omitted pursuant to such rules and
regulations.
|
|
|
Note
2.
|
ORGANIZATION
AND BUSINESS OPERATIONS
|
|
|
|
Polaris
Acquisition Corp. (the "Company") was incorporated in Delaware on
June 18,
2007 for the purpose of effecting a merger, stock exchange, asset
acquisition, stock purchase, reorganization or other similar business
combination with an operating business.
|
|
|
|
The
registration statement for the Company's Offering (as described in
Note 3)
was declared effective on January 14, 2008. The Company consummated
the
Offering on January 17, 2008 , and received gross proceeds of
approximately $154,500,000, including $4,500,000 of proceeds from
the
private placement ("the Private Placement") sale of 4,500,000 sponsors
’
warrants to certain affiliates of the Company. The net proceeds were
approximately $143,381,000.
|
|
|
|
The
Company's management has broad discretion with respect to the specific
application of the net proceeds of this Offering, although substantially
all of the net proceeds of this Offering are intended to be generally
applied toward consummating a business combination with an operating
business ("Business Combination"). There is no assurance that the
Company
will be able to successfully affect a Business Combination. Upon
the
closing of the Offering and Private Placement, $150,000,000, including
$6,750,000 of the underwriters' discounts and commissions (as described
in
Note 3), is being held in a trust account ("Trust Account") and invested
in United States "government securities" within the meaning of Section
2(a)(16) of the Investment Company Act of 1940 having a maturity
of 180
days or less or in money market funds meeting certain conditions
under
Rule 2a-7 promulgated under the Investment Company Act of 1940 until
the
earlier of (i) the consummation of its first Business Combination
and (ii)
liquidation of the Company.
|
|
|
|
The
Placing of funds in the Trust Account may not protect those funds
from
third party claims against the Company. Although the Company will
seek to
have all vendors, providers of financing, prospect target businesses
or
other entities it engages, execute agreements with the Company waiving
any
right, title, interest or claim of any kind in or to any monies held
in
the Trust Account, there is no guarantee that they will execute such
agreements or that such agreements, if executed, will insure that
no
claims are filed against the Trust. Two of the Company's affiliates
have
agreed that they will be liable under certain circumstances to ensure
that
the proceeds in the Trust Account are not reduced by the claims of
target
businesses or vendors, providers of financing, service providers
or other
entities that are owed money by the Company for services rendered
to or
contracted for or products sold to the Company. There can be no assurance
that they will be able to satisfy those obligations. The net proceeds
not
held in the Trust Account may be used to pay for business, legal
and
accounting due diligence on prospective acquisitions and continuing
general and administrative expenses. Additionally, up to an aggregate
of
$1,800,000 of interest earned on the Trust Account balance may be
released
to the Company to fund working capital requirements and additional
funds
may be released to fund tax
obligations.
|
POLARIS
ACQUISITION CORP.
(A
CORPORATION IN THE DEVELOPMENT STAGE)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
2.
|
ORGANIZATION
AND BUSINESS OPERATIONS-Continued
|
|
|
|
The
Company, after signing a definitive agreement for the acquisition
of a
target business, is required to submit such transaction for stockholder
approval. In the event that stockholders owning 30% or more of the
shares
sold in the Offering vote against the Business Combination and exercise
their conversion rights described below, the Business Combination
will not
be consummated. All of the Company's stockholders prior to the Offering
("Founders"), have agreed to vote their founding shares of common
stock in
accordance with the vote of the majority of the shares voted by all
other
stockholders of the Company ("Public Stockholders") with respect
to any
Business Combination and in favor of an amendment to our certificate
of
incorporation to provide for the Company's perpetual existence. After
consummation of a Business Combination, these voting safeguards will
no
longer be applicable.
|
|
|
|
With
respect to a Business Combination which is approved and consummated,
any
Public Stockholder who voted against the Business Combination may
demand
that the Company convert his or her shares. The per share conversion
price
will equal the amount in the Trust Account, calculated as of two
business
days prior to the consummation of the proposed Business Combination,
divided by the number of shares of common stock held by Public
Stockholders at the consummation of the Offering. Accordingly, Public
Stockholders holding 4,499,999 shares sold in the Offering may seek
conversion of their shares in the event of a Business Combination.
Such
Public Stockholders are entitled to receive their per share interest
in
the Trust Account computed without regard to the shares of common
stock
held by the Founders prior to the consummation of the Offering.
Accordingly, a portion of the net proceeds from the Offering (29.99%
of
the amount held in Trust Fund, including the deferred portion of
the
underwriters' discount and commission) has been classified as common
stock
subject to possible conversion on the accompanying March 31, 2008
balance
sheet.
|
|
|
|
The
Company's Certificate of Incorporation provides that the Company
will
continue in existence only until January 11, 2010. If the Company
has not
completed a Business Combination by such date, its corporate existence
will cease and it will dissolve and liquidate for the purposes of
winding
up its affairs. In the event of liquidation, it is likely that the
per
share value of the residual assets remaining available for distribution
(including Trust Fund assets) will be less than the initial public
offering price per share in the Offering (assuming no value is attributed
to the Warrants contained in the Units to be offered in the Offering
discussed in Note 3).
|
|
|
|
CONCENTRATION
OF CREDIT RISK
|
|
|
|
The
Company maintains cash in a bank deposit account which, at times,
exceeds
federally insured (FDIC) limits. The Company has not experienced
any
losses on this account.
|
|
|
|
DEFERRED
INCOME TAXES
|
|
|
|
Deferred
income taxes are provided for the differences between bases of assets
and
liabilities for financial reporting and income tax purposes. A valuation
allowance is established when necessary to reduce deferred tax assets
to
the amount expected to be realized.
|
|
|
|
INCOME
PER COMMON SHARE
|
|
|
|
Income
per share is computed by dividing net income by the weighted-average
number of shares of common stock outstanding during the period. The
effect
of the 15,000,000 outstanding warrants issued in connection with
the
Offering, the 4,500,000 outstanding warrants issued in connection
with the
Founders' initial unit purchase and the 4,500,000 outstanding warrants
issued in connection with the Private Placement has not been considered
in
diluted income per share calculations since the warrants cannot be
exercised until the later of the Company’s initial business combination or
January 11, 2009.
|
|
|
|
USE
OF ESTIMATES
|
|
|
|
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of expenses during the reporting period.
Actual
results could differ from those
estimates.
|
POLARIS
ACQUISITION CORP.
(A
CORPORATION IN THE DEVELOPMENT STAGE)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
2.
|
ORGANIZATION
AND BUSINESS OPERATIONS-Continued
|
|
|
|
FAIR
VALUE OF FINANCIAL INSTRUMENTS
|
|
|
|
The
fair values of the Company's assets and liabilities that qualify
as
financial instruments under SFAS No. 107 "Disclosures about Fair
Value of
Financial Instrument," approximate their carrying amounts presented
in the
balance sheet at March 31, 2008.
|
|
|
|
The
Company accounts for derivative instruments, if any, in accordance
with
SFAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities" as amended ("SFAS 133"), which establishes accounting
and
reporting standards of derivative instruments.
|
|
|
|
NEW
ACCOUNTING PRONOUNCEMENTS
|
|
|
|
In
July 2006, the Financial Accounting Standards Board ("FASB") issued
FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes,"
an
interpretation of FASB Statement No. 109 ("FIN 48"), which provides
criteria for the recognition, measurement, presentation and disclosure
of
uncertain tax position. A tax benefit from an uncertain position
may be
recognized only if it is "more likely than not" that the position
is
sustainable based on its technical merits. The provisions of FIN
48 are
effective for fiscal years beginning after December 15, 2006. The
adoption
of FIN 48 did not have a material effect on the Company's financial
condition or results of operations.
|
|
|
|
The
Company does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect
on
the accompanying financial statements.
|
|
|
Note
3.
|
INITIAL
PUBLIC OFFERING
|
|
|
|
On
January 17, 2008, the Company sold 15,000,000 units ("Units") in
the
Offering at a price of $10 per Unit. Each Unit consists of one share
of
the Company's common stock and one Redeemable Common Stock Purchase
Warrant ("Warrants"). Each Warrant will entitle the holder to purchase
from the Company one share of common stock at an exercise price of
$7.00
commencing the later of the completion of a Business Combination
and
January 11, 2009 and expiring January 10, 2010. The Company may redeem
all
of the Warrants, at a price of $.01 per Warrant upon 30 days' notice
while
the Warrants are exercisable, only in the event that the last sale
price
of the common stock is at least $14.25 per share of any 20 trading
days
within a 30 trading day period ending on the third day prior to the
date
on which notice of redemption is given. In accordance with the warrant
agreement relating to the Warrants to be sold and issued in the Offering,
the Company is only required to use its best efforts to maintain
the
effectiveness of the registration statement covering the Warrants.
The
Company will not be obligated to deliver securities, and there are
no
contractual penalties for failure to deliver securities, if a registration
statement is not effective at the time of exercise. Additionally,
in the
event that a registration is not effective at the time of exercise,
the
holder of such Warrant shall not be entitled to exercise such Warrant
and
in no event (whether in the case of a registration statement not
being
effective or otherwise) will the Company be required to net cash
settle
the warrant exercise. Consequently, the Warrants may expire unexercised
and unredeemed.
|
POLARIS
ACQUISITION CORP.
(A
CORPORATION IN THE DEVELOPMENT STAGE)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
3.
|
INITIAL
PUBLIC OFFERING-Continued
|
|
|
|
The
Company entered into an agreement with the underwriters of the Offering
(the "Underwriting Agreement"). The Underwriting Agreement required
the
Company to pay 2.5% of the gross proceeds of the Offering as an
underwriting discount plus an additional 4.5% of the gross proceeds
of the
Offering only upon consummation of a Business Combination. The Company
paid an underwriting discount of 2.5% of the gross proceeds of the
Offering ($3,750,000) in connection with the consummation of the
Offering
and has placed 4.5% of the gross proceeds of the Offering ($6,750,000)
in
the Trust Account. The Company did not have to pay any discount related
to
the Sponsors' Warrants sold on a private placement basis. The underwriters
have waived their right to receive payment of the 4.5% of the gross
proceeds for the Offering upon the Company's liquidation if the Company
is
unable to complete a Business Combination.
|
|
|
|
Pursuant
to purchase agreements, the Founders have purchased from the Company,
in
the aggregate, 4,500,000 warrants for $4,500,000 (the Sponsors' Warrants).
The purchase and issuance of the Sponsors' Warrants occurred
simultaneously with the consummation of the Offering on a private
placement basis. All of the proceeds the Company received from these
purchases were placed in the Trust Account. The Sponsors' Warrants
are
identical to the Warrants included in the Units sold in the Offering
except that if the Company calls the warrants for redemption, the
Sponsors' Warrants will be exercisable on a cashless basis so long
as such
warrants are held by the initial purchasers or their affiliates.
The
Sponsors' Warrants may not be sold or transferred until 45 days after
the
consummation of a Business Combinations. The purchase price of the
Sponsors' Warrants has been determined to be the fair value of such
warrants as of the purchase date.
|
Note
4.
|
NOTE
PAYABLE TO AFFILIATE AND RELATED PARTY
TRANSACTIONS
|
|
|
|
The
Company issued an aggregate $100,000 unsecured promissory note to
an
affiliated company on July 12, 2007. The note was non-interest bearing
and
was payable on the earlier of the consummation of the Offering by
the
Company or July 12, 2008. The note was repaid from the net proceeds
of the
Offering.
|
|
|
|
An
affiliated company advanced $12,911. No formal repayment arrangement
was
in place and no interest was due on the advance. The advance was
repaid.
|
|
|
|
The
Company has entered into an administrative service agreement with
an
affiliated company as more fully described in Note 5
below.
|
|
|
Note
5.
|
COMMITMENTS
AND RELATED PARTY TRANSACTIONS
|
|
|
|
The
Company has agreed to pay up to $7,500 a month in total for office
space
and general and administrative services to an affiliated company.
Services
commenced on January 11, 2008 and will terminate upon the earlier
of (i)
the completion of the Business Combination or (ii) the Company's
liquidation.
The
Company has incurred $22,500 related to this agreement which is included
in Administrative and General Expenses.
|
|
|
|
Pursuant
to letter agreements which the Founders have entered into with the
Company
and the underwriters, the Founders have waived their right to receive
distributions with respect to their founding shares upon the Company's
liquidation.
|
|
|
Note
6.
|
PREFERRED
STOCK
|
|
|
|
The
Company is authorized to issue 1,000,000 shares of preferred stock
with
such designations, voting and other rights and preferences as may
be
determined from time to time by the Board of Directors.
|
|
|
|
The
agreement with the underwriters prohibits the Company, prior to a
Business
Combination, from issuing preferred stock which participates in the
proceeds of the Trust Account or which votes as a class with the
Common
Stock on a Business Combination.
|
POLARIS
ACQUISITION CORP.
(A
CORPORATION IN THE DEVELOPMENT STAGE)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
Note
7.
|
COMMON
STOCK
|
|
|
|
On
June 18, 2007, 4,312,500 shares of common stock were issued to nine
(9)
stockholders (Founders). Such shares were purchased at an average
purchase
price of approximately $0.006 per share. Effective November 8, 2007,
the
Company's Board of Directors authorized a stock dividend of 0.2 share
of
common stock for each outstanding share of common stock. All references
in
the accompanying financial statements to the number of shares of
stock
have been retroactively restated to reflect this transaction. In
January
2008, the Founders contributed an aggregate of 862,500 shares back
to
capital. The over-allotment option was not exercised and the Founders
forfeited 562,500 shares in April 2008 to maintain a 20% ownership
of the
common shares after the Offering.
|
|
|
Note
8
.
|
Income Taxes
|
|
|
|
The provision for income taxes for the three months ended March 31,
2008 consists of the following:
|
Current:
|
|
|
|
Federal
|
|
$
|
227,585
|
|
State
|
|
|
65,957
|
|
Total
current
|
|
|
293,542
|
|
Deferred:
|
|
|
|
|
Federal
|
|
|
(33,076
|
)
|
State
|
|
|
-
|
|
Total
deferred
|
|
|
(33,076
|
)
|
|
|
|
|
|
|
|
$
|
260,466
|
|
As
of
March 31, 2008, the tax effect of temporary differences that give rise to the
net deferred tax asset is as follows:
Expense
deferred for income tax purposes
|
|
$
|
38,855
|
|
Valuation
allowance
|
|
|
(5,779
|
)
|
|
|
$
|
33,076
|
|
The
Company has recorded a valuation allowance against the state deferred tax asset
since it cannot determine realizability for tax purposes and therefore cannot
conclude that the deferred tax asset is more likely than not recoverable at
this
time.
A
reconciliation of income taxes at the statutory federal income tax rate to
net
income taxes included in the accompanying statements of operations for the
is as
follows:
Statutory
U.S. federal rate
|
|
|
34.00
|
%
|
State
income taxes, net of federal effect
|
|
|
7.20
|
%
|
Non-deductible
expenses
|
|
|
-
|
%
|
Valuation
allowance
|
|
|
(0.30)
|
%
|
Effective
Tax Rate
|
|
|
40.90
|
%
|
ITEM 2.
|
MANAGEME
NT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Forward
Looking Statements
This
Quarterly Report on Form 10-Q includes 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. We have
based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject
to
known and unknown risks, uncertainties and assumptions about us that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance
or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as “may,”
“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,” “continue,” or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other Securities and
Exchange Commission filings.
The
following discussion should be read in conjunction with our unaudited Financial
Statements and related Notes thereto included elsewhere in this
report.
Critical
Accounting Policies
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of
expenses during the reporting period. Actual results could differ from those
estimates.
Management
does not believe that any recently issued, but not yet effective, accounting
standards if currently adopted would have a material effect on the accompanying
financial statements.
Overview
We
were
formed on June 18, 2007 as a blank check company for the purpose of
acquiring, through a merger, stock exchange, asset acquisition, reorganization
or similar business combination, one or more operating businesses. We intend
to
use cash derived from the net proceeds of our initial public offering, together
with any additional financing arrangements that we undertake, to effect a
business combination.
On
January 17, 2008, the Company sold 15,000,000 units (“Units”) at an offering
price of $10.00 per Unit. Each Unit consists of one share of the Company’s
common stock, $0.0001 par value, and one redeemable common stock purchase
warrant (each, a “Warrant”). Each Warrant will entitle the holder to purchase
from the Company one share of common stock at an exercise price of $10.00
commencing on the later of (a) January 11, 2009 or (b) the
consummation of an initial Business Combination with a target business, and
expiring January 10, 2012.
As
of
March 31, 2008, approximately $150,660,000 was held in trust and we had
approximately $131,000 of unrestricted cash available to us for our activities
in connection with identifying and conducting due diligence of a suitable
business combination, and for general corporate matters.
Through
March 31, 2008, our efforts have been limited to organizational activities,
activities relating to our initial public offering, activities relating to
identifying and evaluating prospective acquisition candidates, and activities
relating to general corporate matters; we have neither engaged in any operations
nor generated any revenues, other than interest income earned on the proceeds
of
our private placement and initial public offering. For the three months ended
March 31, 2008, we earned approximately $760,000 in interest
income.
The
following table shows the total funds held in the trust account as of
March 31, 2008:
Net
proceeds from our initial public offering and private placement of
warrants placed in trust
|
|
$
|
143,250,000
|
|
Deferred
underwriters’ discounts and commissions
|
|
|
6,750,000
|
|
Total
interest received to date
|
|
|
760,136
|
|
Withdrawals
for operating expense through March 31, 2008
|
|
|
(100,000
|
)
|
|
|
|
|
|
Total
funds held in trust account as of March 31,
2008
|
|
$
|
150,660,136
|
|
Results
of Operations for the three month period ended March 31,
2008
Net
income of $375,421 reported for the quarter ended March 31, 2008 consisted
primarily of investment income on the trust account of $760,136 offset by
$24,515 expense for professional fees, $20,133 expense for director and officer
liability insurance, $22,500 expense for a monthly administrative services
agreement, $22,182 expense for travel and entertainment, $28,055 for franchise
tax, $7,614 for other expenses and $260,466 of income taxes. At March 31,
2008, we had cash outside of the trust fund of $130,805, prepaid expenses of
$130,473 and accounts payable and accrued costs of $131,358 and income taxes
payable of $292,693. Until we enter into a business combination, we will not
have revenues other than interest income, and will continue to incur expenses
relating to identifying a target business to acquire.
We
presently occupy office space provided by Trivergance, LLC, an affiliate of
our
initial stockholders. Trivergance, LLC has agreed that, until we consummate
the
acquisition of a target business, it will make such office space, as well as
certain office and secretarial services, available to us, as we may require
from
time to time. We have agreed to pay Trivergance, LLC $7,500 per month for such
services commencing on January 11, 2008. The statement of operations for the
period ended March 31, 2008 includes $22,500 related to this
agreement.
Liquidity
and Capital Resources
Assuming
the release of the full amount of the interest we are entitled to receive from
the trust account, we believe we will have sufficient available funds outside
of
the trust account to operate through January 11, 2010, assuming that a business
combination is not consummated during that time. 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 that is presented to us. We would only
consummate such a financing simultaneously with the consummation of a business
combination.
Off-Balance
Sheet Arrangements
Warrants
issued in conjunction with our initial public offering are equity linked
derivatives and accordingly represent off-balance sheet arrangements. The
warrants meet the scope exception in paragraph 11(a) of Financial Accounting
Standards (FAS) 133 and are accordingly not accounted for as derivatives for
purposes of FAS 133, but instead are accounted for as equity.
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 are to be invested only in
money market funds meeting certain conditions under Rule 2a-7 promulgated under
the Investment Company Act of 1940 or United States “government securities”
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940
having a maturity of 180 days or less. Given our limited risk in our exposure
to
money market funds and treasury bills, we do not view the interest rate risk
to
be significant.
ITEM 4.
|
CONTROLS
AND PROCEDURES
|
Disclosure
controls and procedures are controls and other procedures that are designed
to
ensure that information required to be disclosed in company reports filed or
submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed
to
ensure that information required to be disclosed in company reports filed or
submitted under the Exchange Act is accumulated and communicated to management,
including our chief executive officer and chief operating officer, as
appropriate to allow timely decisions regarding required disclosure.
As
required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief
executive officer carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures as of March 31, 2008.
Based upon his evaluation, he concluded that our disclosure controls and
procedures were effective.
Our
internal control over financial reporting is a process designed by, or under
the
supervision of, our chief executive officer and effected by our board of
directors, management and other personnel, to provide reasonable assurance
regarding the reliability of our financial reporting and the preparation of
our
financial statements for external purposes in accordance with generally accepted
accounting principles. Internal control over financial reporting includes
policies and procedures that pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets; provide reasonable assurance that transactions
are
recorded as necessary to permit preparation of our financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with the authorization of
our
board of directors and management; and provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on our financial
statements.
During
the most recently completed fiscal quarter, 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.
PART
II - OTHER INFORMATION
ITEM 2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
On
January 17, 2008, we consummated our initial public offering of 15,000,000
Units. Each Unit consisted of one share of our common stock and one warrant,
each to purchase one share of our common stock at an exercise price of $7.00
per
share. The units were sold at an offering price of $10.00 per unit, generating
total gross proceeds of $150,000,000. Simultaneously with the consummation
of
the IPO, we consummated the private sale of 4,500,000 warrants (“Insider
Warrants”) at a price of $1.00 per warrant, generating total proceeds of
$4,500,000. Lazard Capital Markets, LLC acted as representative of the
underwriters in the offering. The securities sold in the offering were
registered under the Securities Act of 1933 on a registration statement on
Form
S-1 (No. 333-145749). The Securities and Exchange Commission declared the
registration statement effective on January 11, 2008.
We incurred
a total of $10,500,000 in underwriting discounts and commissions. Of that total,
$6,750,000 has been accrued and deferred and will not be payable unless and
until the Company completes a Business Combination. In addition, we incurred
approximately $11,116,000 for costs and expenses related to the
offering.
After
deducting the underwriting discounts and commissions and the offering expenses,
the total net proceeds to us from the offering were approximately $145,630,000,
of which $145,500,000 was deposited into the trust account and the remaining
proceeds are available to be used to provide for business, legal and accounting
due diligence on prospective business combinations and continuing general and
administrative expenses. In addition, all of the proceeds from the private
sale
of the warrants were deposited into the Trust Fund, for a total of $150,000,000
(or approximately $10.00 per share sold in the offering).
For
a
description of the use of the proceeds generated in our initial public offering,
see Part I, Item 2 of this Form 10-Q.
Exhibit No.
|
|
Description
|
31
|
|
Section
302 Certification of Chief Executive Officer
|
|
|
32
|
|
Section
906 Certification of Chief Executive Officer and Chief Financial
Officer
|
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused
this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
POLARIS
ACQUISITION CORP.
|
|
|
Dated:
May 14, 2008
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/s/
Marc V. Byron
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Marc V. Byron
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Chairman and Chief Executive Officer
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(Principal Executive Officer and Principal Accounting and Financial Officer)
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Polaris Acquisition Corp. (AMEX:TKP)
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Polaris Acquisition Corp. (AMEX:TKP)
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