UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

Form 10-K

(Mark One)

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

For the fiscal year ended July 31, 2012

 

OR

 

¨	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 000-51980

 

ISRAEL GROWTH PARTNERS ACQUISITION CORP.

(Exact Name of Registrant as Specified in Its Charter) 

 

Delaware		20-3233358
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

 

4808 Moorland Lane

Suite 109

Bethesda, MD 20814

301-502-8602

 

(Address including zip code, and telephone number, including area code, of principal executive offices) 

 

Securities registered pursuant to Section 12(g) of the Act: 

 

None 

 

Securities registered pursuant to Section 12(b) of the Act: 

 

Common Stock, par value $.0001 per share

Class Z Warrants, each to purchase one share of common stock

Series A Units, each consisting of two shares of common stock and ten Class Z warrants

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ¨     No þ

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ¨     No þ

 

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 (the “Exchange Act”) 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 ¨

 

Indicate by check mark whether the registrant (1) has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ¨     No þ

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

 

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 ¨		Accelerated filer ¨		Non-accelerated filer ¨		Smaller reporting company þ

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes þ   No o

 

The aggregate market value of the common stock held by nonaffiliates of the registrant (236,088 shares) based on the $0.1 closing price of the registrant’s common stock as reported on the Over-The-Counter Bulletin Board on January 31, 2012, was approximately $23,608.80. For purposes of this computation, all officers, directors and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors or 10% beneficial owners are, in fact, affiliates of the registrant.

 

As of October 26, 2012, there were 18,250,003 outstanding shares of the registrant’s common stock.

 

 

CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS

 

This report on Form 10-K contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.  

 

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “intends,” “potential” and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We discuss many of these risks in greater detail under the heading “Risk Factors” in Item 1A. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. Except as required by law, we assume no obligation to update any forward-looking statements after the date of this report.

 

 

PART I

 

Item 1. Business.

 

Overview

 

We were formed on August 1, 2005 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with a currently unidentified operating business which has operations or facilities located in Israel, or which is a company operating outside of Israel which our management believes would benefit from establishing operations or facilities in Israel.  On July 18, 2006, we completed our initial public offering of 500,000 Series A Units and 4,600,000 Series B Units.  We have neither engaged in any operations, nor generated any revenues, nor incurred any debt or expenses other than in connection with our initial public offering and, thereafter, expenses related to identifying and pursuing acquisitions of targets and expenses related to liquidating our trust fund for the benefit of our Class B common stockholders and reconstituting the Company as an ongoing business corporation.  We have incurred expenses only in connection with (i) the preparation and filing of our quarterly reports on Form 10-Q, annual reports on Form 10-K and proxy statements in connection with the February 16, 2009 Stockholders’ Meeting, (ii) the preparation and filing of the Form F-4 in connection with the proposed Merger (as discussed below), and (iii) travel expenses related to finding and developing acquisition candidates.  Our travel expense policies are consistent with good business practice, and we try to minimize such costs to the extent possible.

 

At a special meeting of our stockholders held on February 16, 2009, our stockholders approved a proposal to distribute our trust fund for the benefit of our Class B common stockholders, without the requirement that we dissolve and liquidate.  As a result of the stockholder vote, we filed an amendment to our certificate of incorporation that resulted in the cancellation of all shares of our Class B common stock and the conversion of those shares into the right to receive a pro rata share of the trust fund distribution.  Thereafter, our Class B common stock and Series B Units ceased to be quoted on the Over-The-Counter Bulletin Board and ceased to traded or be tradable, and the trust fund was distributed to the holders of Class B common stock.

 

At a continuation of the special stockholder meeting held on February 17, 2009, our stockholders (then consisting only of holders of common stock) approved proposals to amend and restate our certificate of incorporation to (i) remove certain blank check company-related restrictions, including provisions which required us to dissolve following the distribution of the trust fund and provisions authorizing the Class B common stock, and (ii) increase the authorized shares of common stock from 40,000,000 shares to 80,000,000 shares.  As a result of this stockholder vote, we filed an amended and restated certificate of incorporation, which allowed us to continue our corporate existence following the distribution of the trust fund.

 

We believe that our previous focus on operating businesses which have operations or facilities located in Israel, or which are operating outside of Israel but would benefit from establishing operations or facilities in Israel, was too limiting and we broadened our search without regard to the industry in which potential targets operate. We seek a business that is profitable, has positive cash flow, has significant growth potential, and which can benefit from (i) the advantages which typically accrue to a public company, such as greater visibility, greater ability to finance growth through acquisition, and greater ability to attract talent by offering incentive and contingent compensation, and (ii) the strategic, financial and operational expertise and experience our management can offer on an ongoing basis. To that end, on August 28, 2012, the Company entered into a Merger Agreement (the “Merger Agreement”) with Macau Resources Group Limited, a British Virgin Islands company (“Macau”) and the shareholders of Macau, pursuant to which the Company will merge with and into Macau and the separate corporate existence of the Company will cease and Macau will survive such merger (the “Merger”). Under the terms of the Merger Agreement, each share of the Company’s common stock will convert into the right to receive one-twentieth (1/20th) of a Macau ordinary share and the Macau ordinary shares should continue to be quoted on the Over-The-Counter Bulletin Board and Macau will remain subject to the United States Securities and Exchange Commission (“SEC”) reporting requirements. However, we expect that Macau will become a foreign private issuer upon the consummation of the Merger. As such, it will be subject to reduced reporting requirements. Under the Merger Agreement, subject to the satisfaction or waiver of certain conditions, the current shareholders of Macau will hold a total of 14,295,836 ordinary shares of Macau, representing approximately 94% of the total number of issued and outstanding shares of Macau. Current stockholders of the Company will own approximately 6% of the total number of issued and outstanding shares of Macau upon the closing of the Merger. The Merger is subject to customary closing conditions, including Macau’s Registration Statement on Form F-4 filed with the SEC on September 12, 2012 being declared effective with the SEC.

 

 

We are a “blank check” company.  The Securities Act of 1933 defines such companies as “any development stage company that is issuing a penny stock (within the meaning of section 3 (a)(51) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and that (A) has no specific business plan or purpose; or (B) has indicated that its business plan is to merge with an unidentified company or companies.” Under SEC Rule 12b-2 under the Exchange Act, we also qualify as a “shell company,” because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.

 

If the Merger does not become effective, our plan is to continue to acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our current business consists solely of identifying, researching and negotiating the purchase of a business that our management deems to be in the best interest of our stockholders. Our principal business objective for the next 12 months and beyond such time will be, in the event that the Merger does not become effective, to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business. The pending Merger with Macau is not guaranteed to occur, and in such event, we cannot assure you that we will be able to locate an appropriate target business or that we will be able to engage in a business combination with a target business on favorable terms.

 

The analysis of new business opportunities will be undertaken by or under the supervision of our officers and directors. In our analysis of the transaction with Macau and any future effort to analyze potential acquisition targets, we will consider the following kinds of factors:

 

·

Potential for growth, indicated by new technology, anticipated market expansion or new products;

 

·

Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;

 

·

Strength and diversity of management, either in place or scheduled for recruitment;

 

·

Capital requirements and anticipated availability of required funds, to be provided by us or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;

 

·

The cost of our participation as compared to the perceived tangible and intangible values and potentials;

 

·

The extent to which the business opportunity can be advanced;

 

·

The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and

 

·

Other relevant factors.

 

 

In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to our limited capital available for investigation, we may not discover or adequately evaluate adverse facts concerning possible acquisition opportunities.

 

Management

 

In connection with the changes to our business identified above, we expect that our management may change in the future. If the Merger with Macau is consummated, the shareholders of Macau will (i) own a majority of the outstanding ordinary shares of the Company immediately following the completion of the Merger, and (ii) have the significant influence and the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity, and Macau’s senior management will dominate the management of the combined entity immediately following the completion of the Merger.

 

Sources of Target Businesses

 

If the Merger does not become effective, based on our management’s experience in finance and industry and with transactions involving the acquisition of operating businesses, we believe that there are numerous acquisition candidates. In general, our review procedure is expected to be as follows: Once an operating business passes an initial screening intended to eliminate any obviously unsuitable candidates, we will examine it through analysis of available information and general due diligence. We will then pursue in more detail and at greater expense in time, money and effort the most promising businesses we identify. In addition to our management’s, directors’ and advisors’ extensive experience and personal networks, potential target businesses may be brought to our attention by various unaffiliated sources, including securities broker-dealers, investment bankers, venture capitalists, bankers and other members of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls, meetings or mailings. These sources may also introduce us to target businesses they think we may be interested in on an unsolicited basis, since we are known to be looking for acquisition candidates. We may agree (and have agreed in the past) to pay unaffiliated parties a fee if a purchase transaction is consummated with the target company brought to our attention by such a party. Our management continues to broaden its network of contacts by attending seminars, trade shows and conventions. We may engage firms in the finance or transaction businesses in the future, in which event we may pay a finder’s fee or other compensation to them in an amount and on such terms to be determined at the time of the engagement in an arm’s length negotiation. A finder’s fee or other compensation payable by us might be conditioned, in whole or in part, on the consummation of the related acquisition and would likely be a percentage of the fair market value of the transaction, with the percentage to be determined on an arm’s length basis based on market conditions at the time we enter into an agreement with a finder or broker.

 

Competition

 

In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. There are numerous “public shell” companies either actively or passively seeking operating businesses with which to merge in addition to a large number of “blank check” companies formed and capitalized specifically to acquire operating businesses. Additionally, we are subject to competition from other companies looking to expand their operations through the acquisition of a target business. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. Our ability to compete in acquiring certain sizable target businesses is limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of a target business. Further, our outstanding warrants and the future dilution they potentially represent may not be viewed favorably by certain target businesses.

 

 

Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately held entities with a business objective similar to ours to acquire a target business on favorable terms.

 

If we succeed in effecting the Merger or another business combination, there will be, in all likelihood, intense competition from competitors of the target business. Many of our target business’s competitors are likely to be significantly larger and have far greater financial and other resources than we will. Some of these competitors may be divisions or subsidiaries of large, diversified companies that have access to financial resources of their respective parent companies. Our target business may not be able to compete effectively with these companies or maintain them as customers while competing with them on other projects. In addition, it is likely that our target business will face significant competition from smaller companies that have specialized capabilities in similar areas. We cannot accurately predict how our target business’s competitive position may be affected by changing economic conditions, customer requirements or technical developments. We cannot assure you that, subsequent to a business combination, we will have the resources to compete effectively.

 

Facilities

 

Our sole office is located at 4808 Moorland Lane, Suite 109, Bethesda, Maryland 20814, and is presently provided free of charge by Moorland Lane Partners, LLC, one of our stockholders. We consider our current office space adequate for our current operations.

 

Employees

 

We do not have any employees. Our sole director currently serves in an executive capacity in order for the board of directors to be able to discharge its responsibilities until such time as we acquire an operating business. This individual has other business interests and is not obligated to contribute any specific number of hours to our matters and intend to devote only as much time as they deems necessary to our affairs. The amount of time he will devote in any time period will vary based on whether a target business has been selected for a business combination and the stage of our business combination process. When a target business is believed to be worthy of further examination as a potential acquisition, he will spend more time investigating that target business and negotiating a potential business combination (and consequently more time on our affairs) than he will when no specific target business has been identified. We do not intend to have any full-time employees prior to the consummation of a business combination.

 

Available Information

 

We file or submit to the SEC annual, quarterly and current periodic reports, proxy statements and other information meeting the informational requirements of the Exchange Act. While we do not have a website with available filings, we will provide at no additional charge, copies of these reports, proxy and information statements and other information upon request to our address at 4808 Moorland Lane, Suite 109, Bethesda, Maryland 20814 . You may also inspect and copy these reports, proxy and information statements and other information, and related exhibits and schedules, at the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website that contains reports, proxy, information statements and other information filed electronically by us with the SEC which are available on the SEC’s website at http://www.sec.org.

 

 

Item 1A. Risk Factors.

 

As a smaller reporting company, we are not required to provide risk factors.  However, we have included the following risk factors.

 

The ownership of shares of our common stock is highly speculative and involves a high degree of risk. Therefore, you should consider all of the risk factors discussed below, as well as the other information contained in this Annual Report and other reports filed by us with the SEC prior to considering any investment in us.

 

The pending merger with Macau is not guaranteed to occur. Compliance with the terms of the Merger Agreement in the interim could adversely affect our business.

 

If the Merger does not occur, it could have a material and adverse affect on our business, results of operations and our stock price. On August 28, 2012, the Company entered into the Merger Agreement with Macau and its shareholders, pursuant to which the Company will merge with and into Macau and the separate corporate existence of the Company will cease and Macau will survive such Merger. Under the terms of the Merger Agreement, each share of the Company’s common stock will convert into the right to receive one-twentieth (1/20th) of a Macau ordinary share and the Macau ordinary shares should continue to be quoted on the Over-The-Counter Bulletin Board and Macau will remain subject to the SEC reporting requirements. However, we expect that Macau will become a foreign private issuer upon the consummation of the Merger. As such, it will be subject to reduced reporting requirements. Under the Merger Agreement, subject to the satisfaction or waiver of certain conditions, the current shareholders of Macau will hold a total of 14,295,836 ordinary shares of Macau, representing approximately 94% of the total number of issued and outstanding shares of Macau. Current stockholders of the Company will own approximately 6% of the total number of issued and outstanding shares of Macau upon the closing of the Merger. The Merger is subject to customary closing conditions, including Macau’s Registration Statement on Form F-4 filed with the SEC on September 12, 2012 being declared effective with the SEC.

 

As a result of the pending Merger, (a) the attention of management has been and will continue to be diverted from finding and developing acquisition candidates; (b) the restrictions and limitations on the conduct of the Company’s business pending the Merger have and will continue to disrupt or otherwise adversely affect its business, and may not be in the best interests of the Company if it were to have to act as an independent entity following a termination of the Merger Agreement; and (c) the Company’s ability to maintain its efforts to identify, evaluate and select a target business may be adversely affected. Any delay in consummating the Merger may exacerbate these issues.

 

There can be no assurance that all of the conditions to closing will be satisfied, or where possible, waived, or that the Merger will become effective. If the Merger does not become effective because all conditions to closing are not satisfied, or because one of the parties, or all of the parties mutually, terminate the Merger Agreement, then, among other possible adverse effects: (a) the Company’s shareholders will not receive the consideration which Macau has agreed to pay; (b) the Company’s stock price may decline significantly; (c) the Company’s business may have been adversely affected; and (d) the Company will have incurred significant transaction costs.

 

The absence of operations and revenues raises substantial doubt about our ability to continue as a going concern.

 

The report of our independent auditor included in this report indicates that we are in the development stage, have suffered losses from operations, and have yet to generate cash flow, and that these factors raise substantial doubt about our ability to continue as a going concern. In addition, we have no significant assets or financial resources. We will continue to sustain operating expenses without corresponding revenues, at least until the consummation of the Merger or another business combination. This will result in continued net operating losses that will increase until we can consummate a business combination with a profitable target business. In light of our limited resources, we cannot assure you that we will be able to continue operations, or if the Merger does not become effective, that we will be able to identify a suitable target business or that we will consummate a business combination.

 

 

We are not generating any revenue, have limited capital resources and are dependent entirely upon our largest stockholders to fund our operations.

 

We are not generating any revenues and possess limited capital to fund our operations, including for such purposes as preparing and filing periodic reports under the Exchange Act, identifying a target business and negotiating a business combination. We are dependent entirely on our largest stockholders to provide funds for the foregoing requirements and for any other corporate purposes that may arise in the future. Though our largest stockholder has advised us of its intention to fund our operations, there is no written agreement binding it to do so. Our operating and financial condition renders it unlikely that we would be able to obtain third-party financing to sustain operations, if necessary. In the even that our largest stockholder does not fund our capital requirements, we may not be able to continue operations and stockholders could lose the entire amount of their investment in us.

 

We may have insufficient resources to cover our operating expenses and the costs and expenses of consummating the Merger or another business combination.

 

At July 31, 2011, we had cash on hand of $7,219.00. We do not expect that these funds will be sufficient to cover our operating costs and expenses, including those we will incur in connection with satisfying our reporting obligations under the Exchange Act and consummating the Merger or another business combination. If our financial resources are inadequate to cover our costs and expenses, we will require additional financing and we cannot be certain that such financing will be available to us on acceptable terms, if at all. Our failure to secure funds necessary to cover our costs and expenses would have an adverse affect on our operations and ability to achieve our objective.

 

We are a development stage company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective.

 

We are a development stage company and have not engaged in any revenue generating activities to date. Since we do not have any operating history, you will have no basis upon which to evaluate our ability to achieve our business objective. If the Merger does not become effective, we cannot assure you as to when or if a business combination will occur.

 

Our future success is dependent on the ability of management to complete a business combination with a target business that operates profitably. The nature of our operations is highly speculative. The future success of our plan of operation will depend entirely on the operations, financial condition and management of Macau or, if the Merger does not become effective, another target business with which we may enter into a business combination. If the Merger does not become effective, management intends to seek to enter into a business combination with another entity having an established, profitable operating history, but we cannot assure you that we will be successful in consummating a business combination with a candidate that meets that criterion In the event we complete the Merger or another business combination, the success of our operations will be dependent upon management of Macau or the other target business and numerous other factors beyond our control.

 

Because there are numerous companies with a business plan similar to ours seeking to effectuate a business combination, it may be difficult for us to complete a business combination.

 

There are a large number of “public shell” companies, “blank check” companies and operating companies seeking to acquire operating businesses and we are subject to competition from these and other companies seeking to consummate a business combination. We cannot assure you that we will be able to successfully compete for an attractive business combination.

 

 

Initially, we will only be able to complete one business combination, which will cause us to be dependent solely on a single business and a limited number of products or services.

 

Because of our uncertain and limited capital position, it is likely that any business combination we enter into with an operating business, such as the Merger, will likely be for stock, or will be closed simultaneously with an equity or debt transaction to raise additional capital for the purchase transaction and possibly for working capital as well. Thus, we expect that initially we will have the ability to complete only a single business combination, although this may entail the simultaneous acquisitions of several closely related operating businesses. By consummating a business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the security industry. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:

 

·

dependent solely upon the performance of a single business; or

 

·

dependent upon the development or market acceptance of a single or limited number of products, processes or services.

 

Alternatively, if our business combination entails the simultaneous acquisitions of several operating businesses and with different sellers, each such seller will need to agree that the purchase of its business is contingent upon simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. If we were to consummate a business combination with several operating businesses, we could also face additional risks, including burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies into a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.

 

If the proposed Merger with Macau is not completed, because of our limited resources and structure, we may not be able to consummate an attractive business combination.

 

If the proposed Merger with Macau is not completed, we expect to encounter intense competition from other entities with business objectives similar to ours including blank check companies, venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. Our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Additionally, our outstanding Class Z warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination.

 

We may have insufficient capital or be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure the transaction or abandon a particular business combination.

 

We cannot ascertain the capital requirements for any particular transaction. If the capital available to us proves to be insufficient, either because of the size of the business combination or the depletion of the available net proceeds in search of a target business, we will be required to seek additional financing. We cannot assure you that such financing would be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after a business combination.

 

 

Our sole officer and director will apportion his time to other businesses which may cause conflicts of interest in his determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to consummate a business combination.

 

Our sole officer and director engages in other businesses and is not required to devote his full time or any specific number of hours to our affairs, which could create a conflict of interest when allocating his time between our operations and his other commitments. We do not have and do not expect to have any full-time employees prior to the consummation of a business combination. If our management’s other business affairs requires him to devote more substantial amounts of time to such affairs, it could limit his ability to devote time to our affairs and could have a negative impact on our ability to consummate a business combination. We cannot assure you that these conflicts will be resolved in our favor.

 

Our outstanding warrants and options may have an adverse effect on the market price of our common stock and warrants and make it more difficult to effect a business combination.

 

We issued warrants to purchase 15,561,000 shares of common stock in our initial public offering. We have also issued to our initial security holders, warrants to purchase 4,950,000 shares of common stock at an exercise price of $5.00 per share. We also issued an option to certain of our securities to the representative of the underwriters of our initial public offering which, if exercised, will result in the issuance of an additional 510,000 shares of common stock and 710,000 warrants.  To the extent we issue shares of common stock to effect a business combination, the potential for the issuance of substantial numbers of additional shares upon exercise of these warrants and option could make us a less attractive acquisition vehicle in the eyes of a target business as such securities, when exercised, will increase the number of issued and outstanding shares of our common stock and reduce the value of the shares issued to complete the business combination. Accordingly, our warrants and option may make it more difficult to effectuate a business combination or increase the cost of the target business. Additionally, the sale, or even the possibility of sale, of the securities underlying the warrants and option could have an adverse effect on the market price for our securities or on our ability to obtain future public financing. If and to the extent these warrants and option are exercised, our existing stockholders may experience dilution of their holdings.

 

Item 2. Properties.

 

We do not own any material property. Our sole office is located at 4808 Moorland Lane, Suite 109, Bethesda, Maryland 20814, and is presently provided free of charge by Moorland Lane Partners, LLC one of our shareholders. We consider our current office space adequate for our current operations.

 

Item 3. Legal Proceedings.

 

To the knowledge of our officers and directors, we are not a party to any legal proceeding or litigation.

 

 

PART II

 

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Following our initial public offering in July 2006, our Series A units, Series B units, common stock, Class B common stock, Class W warrants and Class Z warrants were quoted on the Over-The-Counter Bulletin Board under the symbols IGPAU, IGPBU, IGPAA, IGPAB, IGPAW and IGPAZ, respectively.

 

Our Class B common stock ceased being quoted on the Over-The-Counter Bulletin Board and was cancelled and converted into a right to receive approximately $5.40 per share from our trust fund on February 17, 2009. As a result of the cancellation of the Class B common stock, our Series B units were mandatorily separated from their associated Class W warrants and then cancelled on February 17, 2009. Our Class W warrants expired and ceased being quoted on the Over-The-Counter Bulletin Board on July 10, 2011. Our Series A units, common stock, and Class Z warrants are now quoted on the Over-The-Counter Bulletin Board under the symbols IGPAU, IGPAA, and IGPAZ, respectively. 

 

The following table sets forth, for the quarterly period indicated below, the quarterly high and low closing sale prices of our securities as reported on the Over-The-Counter Bulletin Board in U.S. dollars. The quotations listed below reflect interdealer prices, without retail markup, markdown or commission and may not necessarily represent actual transactions.

 

										Class Z
		Common Stock								Warrants								Series A Units
		High				Low				High				Low				High				Low
Fiscal year ended July 31, 2011
First Quarter			0.0055				0.02				0.05				0.002				0.001				0.001
Second Quarter			0.02				0.02				0.002				0.002				0.001				0.001
Third Quarter			0.02				0.02				0.002				0.002				0.001				0.001
Fourth Quarter			0.10				0.02				0.002				0.002				0.001				0.001
Fiscal year ended July 31, 2012
First Quarter			0.10				0.10				0.002				0.002				0.001				0.001
Second Quarter			0.10				0.10				0.002				0.002				0.02				0.001
Third Quarter			0.10				0.10				0.50				0.002				0.02				0.02
Fourth Quarter			0.10				0.10				0.01				0.01				0.02				0.02

 

The trading of our securities, especially our Class Z warrants, is limited, and therefore there may not be deemed to be an established public trading market under guidelines set forth by the SEC. As of October 26, 2012, there were four (4) stockholders of record of our common stock, nine (9) holders of record of our Class Z warrants, and one (1) holder of record of our Series A units. Such numbers do not include beneficial owners holding shares, units or warrants through nominee names.

 

Dividends

 

We have not paid any dividends on our units or our common stock to date and do not intend to pay dividends.

 

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion should be read in conjunction with our financial statements and footnotes thereto contained in this report.

 

General

 

We were formed on August 1, 2005 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with a currently unidentified operating business which has operations or facilities located in Israel, or which is a company operating outside of Israel which our management believes would benefit from establishing operations or facilities in Israel. On July 18, 2006, we completed our initial public offering of 500,000 Series A Units and 4,600,000 Series B Units.   We have neither engaged in any operations, nor generated any revenues, nor incurred any debt or expenses other than in connection with our initial public offering and thereafter, expenses related to identifying and pursuing acquisitions of targets and expenses related to liquidating our trust fund for the benefit of our Class B common stockholders and reconstituting the Company as an ongoing business corporation.  We have incurred expenses only in connection with (i) the preparation and filing of our quarterly reports on Form 10-Q, annual reports on Form 10-K and proxy statements in connection with the February 16, 2009 Stockholders’ Meeting and (ii) travel expenses related to finding and developing acquisition candidates.  Our travel expense policies are consistent with good business practice, and we try to minimize such costs to the extent possible.

 

At a special meeting of our stockholders held on February 16, 2009, our stockholders approved a proposal to distribute our trust fund for the benefit of our Class B common stockholders, without the requirement that we dissolve and liquidate.  As a result of the stockholder vote, we filed an amendment to our certificate of incorporation which resulted in the cancellation of all shares of our Class B common stock, and the conversion of those shares into the right to receive a pro rata share of the trust fund distribution.  Thereafter, our Class B common stock and Series B Units ceased to be quoted on the Over-The-Counter Bulletin Board and ceased to trade or be tradable, and the trust fund was distributed to the holders of Class B common stock.

 

At a continuation of the special stockholder meeting held on February 17, 2009, our stockholders (then consisting only of holders of common stock) approved proposals to amend and restate our certificate of incorporation to (i) remove certain blank check company-related restrictions, including provisions which required us to dissolve following the distribution of the trust fund and provisions authorizing the Class B common stock, and (ii) increase the authorized shares of common stock from 40,000,000 shares to 80,000,000 shares.  As a result of this stockholder vote, we filed an amended and restated certificate of incorporation, which allowed us to continue our corporate existence following the distribution of the trust fund.

 

It is the Company’s belief that the proposed Merger with Macau is in the best interest of its stockholders. The Company’s management has directed a significant amount of time and attention to completing this Merger. On August 28, 2012, Moorland Lane Partners, LLC, which owns approximately 94.2% of the outstanding shares of the Company’s common stock as of the date of the Merger Agreement, executed a written consent approving and adopting the Merger and the Merger Agreement. In the event that the Company is not successful in completing the Merger, our plan is to acquire another target company or business seeking the perceived advantages of being a publicly held corporation. Our current business consists solely of identifying, researching and negotiating the purchase of a business management deems to be in the best interest of our shareholders. If the Merger does not become effective, our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings.  We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.  We cannot assure you that we will be able to locate an appropriate target business or that we will be able to engage in a business combination with a target business on favorable terms.

 

 

Results of Operations

 

Net loss for the year ended July 31, 2012 increased to $58,358 compared to a net loss for the same prior-year of $39,274.  Net loss for the year ended July 31, 2012 consisted of professional fees of $31,061, Delaware franchise taxes of $1,136 and other general and administrative expenses of $26,161.  Net loss for the year ended July 31, 2011 consisted of professional fees of $38,686, Delaware franchise taxes of $325 and other general and administrative operating expenses of $14,837. The net loss for the year ended July 31, 2011 included other income of $14,574 which was a refund from State of Delaware for over payment of excise taxes for a prior year.

 

Net income for the period from inception (August 1, 2005) to July 31, 2012 of $1,987,423, consisted of interest income of $3,715,745, offset by professional fees of $919,505, Delaware franchise taxes of $237,137 and other operating expenses of $585,254, which includes a monthly administrative services agreement with an affiliate, and insurance and travel expenses.

 

Liquidity and Capital Resources

 

We consummated our initial public offering of 500,000 Series A units and 4,600,000 Series B units on July 18, 2006. On July 26, 2006, we consummated the closing of an additional 32,500 Series A Units and 518,000 Series B Units that were subject to the over-allotment option. Proceeds from our initial public offering were approximately $52.9 million, net of underwriting and other expenses of approximately $3.3 million, of which $51,691,800 was deposited into the trust fund with American Stock Transfer & Trust Company as trustee, and the remaining $1.2 million was held outside of the trust fund. The proceeds held outside the trust are available to be used by us, and are being used by us, to provide for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. The proceeds held in the trust fund were distributed to our Class B stockholders beginning on February 18, 2009 (see Note 3 to our audited financial statements included elsewhere in this report).

 

As indicated in the accompanying financial statements, at July 31, 2012, we had $7,219 in cash, current liabilities of $143,666 and working capital deficit of $136,447. Further, we have incurred and expect to continue to incur costs in pursuit of acquisition plans. We believe that we will need to raise capital to fund ongoing operations, and we may be unable to continue operations unless further financing is consummated. Costs for ongoing operations are anticipated to include the compliance cost of continuing to remain a public reporting company, and to fund the acquisition of an operating business. There is no assurance that the Company’s plans to raise capital or to consummate a transaction will be successful.

 

We do not currently have any specific capital-raising plans. We may seek to issue equity securities, including preferred securities for which we may determine the rights and designations, common stock, warrants, equity rights, convertibles notes and any combination of the foregoing. Any such offering may take the form of a private placement, public offering, rights offering, other offering or any combination of the foregoing at fixed or variable market prices or discounts to prevailing market prices. We cannot assure you that we will be able to raise sufficient capital on favorable, or any, terms. If the proposals, discussed above, are approved we may be deemed to be a “blank check company” for purposes of the federal securities laws. If we are deemed to be “blank check company”, regulatory restrictions that are more restrictive than those currently set forth in our certificate of incorporation may apply to any future public offerings by us and may further limit our ability to raise funds for our operations.

 

Critical Accounting Policies

 

Our significant accounting policies are described in Note 3 to our audited financial statements included elsewhere in this report. We believe the following critical accounting polices involved the most significant judgments and estimates used in the preparation of our financial statements.

 

 

Item 9A.  Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Based on the evaluation of our disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15d-15(e) under the Exchange Act) required by Exchange Act Rules 13a-15(b) or 15d-15(b), our chief executive officer and our chief financial officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

 

Limitations on the Effectiveness of Controls

 

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving its objectives.

 

Management's Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process used 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 in the United States. 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 in the United States, 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.

 

An internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

 

Our management assessed the effectiveness of our internal control over financial reporting as of July 31, 2012. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework. Based on management’s assessment and those criteria, our management believes that we maintained effective internal control over financial reporting as of July 31, 2012.

 

Changes in Internal Controls

 

There were no changes in our internal controls over financial reporting during the quarter ended July 31, 2012 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

 

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance.

 

Our executive officers and sole director, as of October 29, 2012, are as follows:

 

Name		Age		Position
Craig Samuels		42		Director, Chief Executive Officer and President
Mitchell Metzman		48		Chief Financial Officer and Secretary

 

Craig Samuels, 42, has served as the sole member of our board of directors and our Chief Executive Officer and President since June 2010.  Prior to joining the Company, Mr. Samuels was a private investor and entrepreneur specializing in micro-cap investing focusing on emerging markets such as China.  In 2000, Mr. Samuels founded LearningElements, Inc., an early elementary education company that developed innovative, verbally interactive educational software, curriculum supplements, and teacher professional development programs, and served as chief executive officer for the company until its acquisition by Plato Learning, Inc. (Nasdaq: TUTR) in 2002.  Mr. Samuels received an A.B. degree in Psychology from Washington University in 1992 and received a J.D. from the University of Miami in 1995.

 

Mitchell Metzman, 48, has served as our Chief Financial Officer and Secretary since June 2010.  Prior to joining the Company, Mr. Metzman was a private investor, primarily focusing on small- and micro-cap public companies both domestically and in emerging countries in Asia. From June 1991 through July 2000, Mr. Metzman served as a research analyst and institutional trader for Newby & Company, Inc., a regional brokerage firm in Rockville, MD specialized in both value and growth companies. Mr. Metzman received a B.S. degree in Accounting from the Robert H. Smith School of Business, University of Maryland in 1986. He received his CPA in the state of Maryland in 1990.

 

Members of our board of directors are elected at the annual meeting of stockholders and are to serve until the next annual meeting of stockholders.

 

Our board of directors does not have an audit committee nor do we have an audit committee financial expert. We do not believe the nature of our business is such that an audit committee or audit committee financial expert would be useful or necessary. Furthermore, we believe that the Company has inadequate financial resources at this time to hire an audit committee financial expert.

 

We have not adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions, primarily because we do not and will not have any operations until such time as we enter into a business combination. If we are the survivor of a business combination, we intend to adopt a Code of Ethics at or prior to such time as we enter into a business combination.

 

Conflicts of Interest and Other Information

 

Potential investors should be aware of the following potential conflicts of interest:

 

·

Mr. Samuels is not required to commit his full time to the Company’s affairs and, accordingly, may have conflicts of interest in allocating management time among various business activities.

 

 

·

In the course of his other business activities, Mr. Samuels may become aware of investment and business opportunities which may be appropriate for presentation to the Company as well as the other entities with which he is affiliated. Mr. Samuels may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

 

·

Mr. Samuels may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by the Company.

 

·

Mr. Samuels may enter into consulting or employment agreements with the Company as part of a business combination pursuant to which he may be entitled to compensation for his services following the business combination. The personal and financial interests of Mr. Samuels may influence his motivation in identifying and selecting a target business, and completing a business combination in a timely manner.

 

In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:

 

·

the corporation could financially undertake the opportunity;

 

·

the opportunity is within the corporation’s line of business; and

 

·

it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation.

 

Accordingly, as a result of multiple business affiliations, Mr. Samuels may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board of directors evaluates a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above mentioned conflicts will be resolved in our favor. If any of these conflicts are not resolved in our favor, it may diminish our ability to complete a favorable business combination.

 

Board and Committee Meetings

 

Our board of directors held no meetings during the fiscal year ended July 31, 2012. Written consents were given on three occasions.

 

Section 16(a) Beneficial; Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires our directors, officers, and persons that own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Our officers, directors and 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. We prepare Section 16(a) forms on behalf of our directors and officers based on the information provided by them. Based solely on review of this information, we believe that, during the fiscal year ended July 31, 2012, no reporting person failed to file the forms required by Section 16(a) of the Exchange Act on a timely basis.

 

Item 11. Executive Compensation.

 

None of our executive officers or directors has received any cash compensation for services rendered to the Company.

 

 

From August 1, 2005 through October 12, 2008, we paid Danash Investment and Management Ltd., an entity owned solely by Dror Gad, our former Chief Financial Officer and a former member of our board of directors, a fee of $7,500 per month for office space and certain office and administrative services. From August 1, 2005 through October 12, 2008, a total of approximately $203,831 has been paid by us to Danash under this agreement. We believe, based on rents and fees for similar services in the Tel-Aviv, Israel metropolitan area, that the fee charged by Danash was at least as favorable as we could have obtained from an unaffiliated person. Other than this $7,500 per-month fee, no compensation of any kind, including finder’s and consulting fees, will be paid to any of our officers or directors, or any of their respective affiliates, for services rendered prior to or in connection with a business combination. However, persons who were stockholders prior to our IPO, including our former officers and directors, have received reimbursement for out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

Security Ownership by Certain Beneficial Owners and Management

 

The following table sets forth certain information regarding the beneficial ownership of our common stock on October 26, 2012, by (1) each director and named executive officer of our Company, (2) all directors and named executive officers of our Company as a group, and (3) each person known by us to own more than 5% of our common stock. Applicable percentage ownership in the following table is based on 18,250,003 shares of common stock outstanding as of October 26, 2012.

 

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or will become exercisable within 60 days after October 26, 2012, are deemed outstanding, while the shares are not deemed outstanding for purposes of computing percentage ownership of any other person. Unless otherwise indicated in the footnotes below, the persons and entities named in the table have sole voting or investment power with respect to all shares beneficially owned, subject to community property laws where applicable.

 

Unless otherwise indicated, the principal address of each of the persons below is c/o Moorland Land Partners LLC, 4808 Moorland Lane, Suite 109, Bethesda, Maryland 20814.

 

		Number of
		Shares				Percentage of
		Beneficially				Outstanding
Name and Address of Beneficial Owner		Owned				Shares
Executive Officers and Directors
Craig Samuels (1)			17,184,903				94.16	%
Mitchell Metzman (1)			17,184,903				94.16	%
All executive officers and directors as a group (2 persons) (1)			17,184,903				94.16	%
Other 5% Stockholders
Moorland Lane Partners, LLC (1)			17,184,903				94.16	%

 

(1)

Based on information contained in a Schedule 13D/A filed by Moorland Lane Partners, LLC (“Moorland”) on March 21, 2011.  Includes 17,184,903 shares of common stock owned by Moorland.  Each of Messrs Samuels and Metzman is a manager and member of Moorland.  Accordingly, each of Messrs Samuels and Metzman may be deemed to beneficially own 17,184,903 shares of common stock and disclaims beneficial ownership of all such shares, except to the extent of their respective pecuniary interest therein.

 

 

Changes in Control

 

If consummated, the Merger will result in a change in control of the Company.

 

Item 13. Certain Relationships and Related Transactions.

 

Other than the transactions described below, since August 1, 2011 there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed $120,000, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.

 

The information required by Item 1 of this Form 10-K with respect to the proposed transaction with Macau is incorporated herein by reference.

 

On July 1, 2010, the Company entered into a promissory note up to an amount not to exceed $50,000 with a shareholder of the Company, with such promissory note maturing on July 1, 2011. This maturity date of this promissory note was extended to March 31, 2012 pursuant to an amendment to promissory note entered into between the Company and such shareholder on August 21, 2012. The note bears interest at a rate of 10% annually and is due and payable on March 31, 2012. The lender has advanced $36,000 against the note as of October 29, 2012.

 

We have reimbursed our initial securityholders, including our former officers and directors, for any reasonable out-of-pocket business expenses incurred by them in connection with certain activities on our behalf such as identifying and investigating possible target businesses and business combinations.

 

None of our officers and directors is required to or does commit his full time to our affairs, and, accordingly, they may have conflicts of interest in allocating their time among various business activities. Our directors own warrants that are subject to lock-up agreements restricting their sale until a business combination is successfully completed. Accordingly, our board may have a conflict of interest in determining whether a particular target business is an appropriate one with which to effect a business combination. Additionally, such individuals may purchase units in the open market.

 

Item 14. Principal Accounting Fees and Services.

 

Gruber & Company, LLC served as our independent registered public accounting firm and audited our financial statements for the fiscal years ended July 31, 2012 and 2011. Aggregate fees for professional services rendered to us by our independent registered public accounting firm are set forth below:

 

		2012				2011
Audit Fees (1)		$	7,000			$	6,500
Audit-Related Fees (2)							—
Tax Fees (3)							—
All Other Fees (4)							—
Total		$	7,000			$	6,500

 

(1)		Audit Fees consist of fees incurred for the audits of our annual financial statements and the review of our interim financial statements.
(2)		Audit-Related Fees consist of fees incurred for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under the category “Audit Fees.”

 

 

(3)		Tax Fees consist of fees incurred for professional services rendered for tax compliance, tax advice and tax planning.
(4)		All Other Fees consists of fees incurred for products and services other than Audit Fees, Audit-Related Fees and Tax Fees.

 

We currently do not have an audit committee. However, our board of directors has approved the services described above.

 

 

PART IV

 

Item 15.   Exhibits and Financial Statement Schedules.

 

(a)  Documents filed as part of this report:

 

Consolidated Financial Statements:

 

Reports of Independent Registered Public Accounting Firms for the fiscal years ended July 31, 2012 and 2011;

 

Balance sheets as of July 31, 2012 and 2011;

 

Statements of operations for the years ended July 31, 2012 and 2011;

 

Statements of cash flows for the years ended July 31, 2012 and 2011;

 

Statements of shareholders’ equity for the years ended July 31, 2012 and 2011; and

 

Notes to financial statements.

 

All other financial schedules are not required under the related instructions or are inappropriate and, therefore, have been omitted.

 

(b)  Exhibits

 

The exhibits listed in the accompanying Index to Exhibits are filed or incorporated by reference as part of this report.

 

 

Report of Independent Registered Public Accounting Firm

 

Board of Directors and Stockholders

Israel Growth Partners Acquisition Corp.

 

We have audited the accompanying balance sheet of Israel Growth Partners Acquisition Corp. (a development stage company) (the “Company”) as of July 31, 2012 and 2011, and the related statements of operations, stockholders equity (deficit), and cash flows for the years ended July 31, 2012 and 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the cumulative data from August 1, 2005 to July 31, 2008 in the consolidated statements of operations, stockholders’ equity (deficit) and cash flows, which were audited by other auditors whose report dated October 31, 2008 which expressed unqualified opinions (the report was modified related to the uncertainty of the Company’s ability to continue as a going concern) have been furnished to us. Our opinion, insofar as it relates to the amounts included for the cumulative period from August 1, 2005 (inception) to July 31, 2008 is based solely on the report of the other auditors.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Israel Growth Partners Acquisition Corp. (a development stage company) as of July 31, 2012, and the results of its operations and cash flows for the year ended July 31, 2012 and for the period from August 1, 2005 (inception) through July 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred and expects to continue to incur costs in pursuit of its acquisition plan. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Gruber & Company, LLC

 

Lake Saint Louis, Missouri

September 18, 2012

 

  

Israel Growth Partners Acquisition Corp.

Balance Sheets

 

		As of				As of
		July 31, 2012				July 31, 2011
ASSETS
Current Assets:
Cash and cash equivalents		$	7,219			$	24,474
Total assets		$	7,219			$	24,474
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accrued expenses		$	33,166			$	31,563
Notes Payable due shareholders & directors (Note 1)			110,500				36,000
Total current liabilities			143,666				67,563
Notes Payable long-term (Note 1)			-				35,000
Commitments (Note 4)
Stockholders' Equity (Deficit) (Notes 2, 4 and 5)
Preferred stock, par value $.0001 per share,
5,000 shares authorized, 0 shares issued			-				-
and outstanding
Common stock, par value $.0001 per share,
80,000,000 shares authorized, 18,250,003
shares issued and outstanding			1,825				1,825
at July 31, 2012 and 2011, respectively.
Common stock, Class B, par value $.0001 per share,
12,000,000 shares authorized, 0 shares issued
and outstanding			-				-
Additional paid-in-capital			1,498,214				1,498,214
Retained earnings (deficit) accumulated in the development stage			(1,636,486	)			(1,578,128	)
Total stockholders' equity (deficit)			(136,447	)			(78,089	)
Total liabilities and stockholders' (deficit)		$	7,219			$	24,474

 

See Notes to Financial Statements

 

 

Israel Growth Partners Acquisition Corp.

Statements of Operations

 

		For the Year Ended								Period from inception (August 1, 2005) to
		July 31, 2012				July 31, 2011				July 31, 2012
Revenue		$	-			$	-			$	-
Operating expenses:
Professional fees			31,061				38,686				919,505
Delaware franchise tax			1,136				325				237,137
Other general and administrative expenses (Note 4)			26,161				14,837				586,254
Loss from operations			(58,358	)			(53,848	)			(1,742,896	)
Other Income (Note1)			-				14,574				14,574
Interest Income			-				-				3,715,745
Income (loss) before provision for income taxes			(58,358	)			(39,274	)			1,987,423
Provision for income taxes			-				-				-
Net income (loss) for the period		$	(58,358	)		$	(39,274	)		$	1,987,423
Accretion of Trust Fund relating to Class B
common stock subject to conversion			-				-				(734,003	)
Net income (loss) attributable to other Class B stockholders
and common stockholders		$	(58,358	)		$	(39,274	)		$	1,253,420
Weighted average Class B common shares outstanding
subject to conversion (no Class B common shares
outstanding on October 31, 2009)			-				-
Net income per Class B common share subject to
conversion, basic and diluted		$	-			$	-
Weighted average number of shares outstanding, basic and diluted			18,250,003				8,606,076
Net income (loss)per share, basic and diluted		$	(0.00	)		$	(0.00	)

 

See Notes to Financial Statements 

 

 

 

Israel Growth Partners Acquisition Corp.

Statement of Stockholders’ Equity

 

		Common Stock								Common Stock, Class B								Additional Paid -In				Deficit accumulated in the development
		Shares				Amount				Shares				Amount				Capital				stage				Total
Balance, August 1, 2005 (inception)			-			$	-				-			$	-			$	-			$	-			$	-
Issuance of Common Stock to initial
stockholder			100				-				-				-				500				-				500
Issuance of 4,950,000 Warrants
at $0.05 Per Warrant			-				-				-				-				247,500				-				247,500
Sale of 532,500 Series A Units, 5,118,000
Series B Units through public offering
net of underwriters' discount and offering
expenses and net of proceeds of 10,333,190
allocable to 2,046,176 shares of common stock,
Class B subject to possible conversion			1,065,000				107				8,189,824				819				42,567,464				-				42,568,390
Proceeds from sale of underwriters'
purchase option			-				-				-				-				100								100
Accretion relating to Class B common stock
subject to possible conversion																			(5,853	)							(5,853	)
Net loss for the period			-				-				-				-				-				(84,852	)			(84,852	)
Balance, July 31, 2006			1,065,100			$	107				8,189,824			$	819			$	42,809,711			$	(84,852	)		$	42,725,785
Accretion relating to Class B common stock
subject to possible conversion																			(369,496	)							(369,496	)
Net income for the period																							1,479,275				1,479,275
Balance, July 31, 2007			1,065,100			$	107				8,189,824			$	819			$	42,440,215			$	1,394,423			$	43,835,564
Accretion relating to Class B common stock
subject to possible conversion																			(294,049	)							(294,049	)
Net income for the period																							798,309				798,309
Net income from inception to July 31, 2008
before reclassification of interest earned on trust account																							2,192,732				-
Reclassification of interest earned on trust account since
inception to additional paid-in capital																			3,319,382				(3,319,382	)			-
Reclassification of Class B common stock value
subject to redemption to current liability																			(44,014,447	)			-				(44,014,447	)
Proceeds from sale by beneficial owner of Class B stock																			7,343								7,343
Balance, July 31, 2008			1,065,100			$	107				8,189,824			$	819			$	1,458,444			$	(1,126,650	)		$	332,720
Accretion relating to Class B common stock
subject to possible conversion																			(64,605	)							(64,605	)
Reclassification of interest earned on trust account
to additional paid-in capital																			304,527				(304,527	)			-
Reclassification of Class B common stock value
subject to redemption to current liability																			(238,645	)							(238,645	)
Cancellation of B Common Stock											(8,189,824	)			(819	)			819								-
Net (Loss) for the period																							(66,898	)			(66,898	)
Balance, July 31, 2009			1,065,100			$	107				-			$	-			$	1,460,540			$	(1,498,075	)		$	(37,428	)
Capital contribution by shareholders																			25,392								25,392
Proceeds from the sale of common shares on June 30, 2010			1,400,000				140												13,860								14,000
Net (Loss) for the period																							(40,779	)			(40,779	)
Balance, July 31, 2010			2,465,100			$	247				-			$	-			$	1,499,792			$	(1,538,854	)		$	(38,815	)
Net (Loss) for the period																							(39,274	)			(39,274	)
Exercise of cashless common stock warrants (Note 1)			15,784,903				1,578												(1,578	)							-
Balance, July 31, 2011			18,250,003			$	1,825				-			$	-			$	1,498,214			$	(1,578,128	)		$	(78,089	)
Net (Loss) for the period																							(58,358	)			(58,358	)
Balance, July 31, 2012			18,250,003			$	1,825				-			$	-			$	1,498,214			$	(1,636,486	)		$	(136,447	)

 

See Notes to Financial Statements

 

 

Israel Growth Partners Acquisition Corp.

Statements of Cash Flows

 

		For the year ended								Period from inception (August 1, 2005) to
		July 31, 2012				July 31, 2011				July 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the period		$	(58,358	)		$	(39,274	)		$	1,987,423
Adjustments to reconcile net income to net cash used in operating activities:
Gain on maturity of Securities held in Trust Fund			-				-				(3,622,633	)
Changes in operating assets and liabilities:
Decrease (increase) in interest receivable in trust			-				-				-
Decrease (Increase) in prepaid expenses			-				-				-
(Decrease) Increase in accrued expenses			1,603				4,192				33,166
Net cash used in operating activities			(56,755	)			(35,082	)			(1,602,044	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Securities held in trust			-				-				(1,665,222,246	)
Maturity of Securities held in trust			-				-				1,613,530,446
Net cash used in investing activities			-				-				(51,691,800	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock to initial stockholder			-				-				500
Proceeds from issuance of warrants			-				-				247,500
Proceeds from advances from shareholders			-				-				25,392
Proceeds from promissory notes			39,500				35,000				110,500
Proceeds from the issuance of common stock			-				-				14,000
Proceeds from sale of underwriters' purchase option			-				-				100
Portion of net proceeds from sale of Series B units
through public offering allocable to shares of
common stock, Class B subject to possible
conversion			-				-				10,327,338
Proceeds from sale by beneficial owner of Class B stock			-				-				7,343
Net proceeds from sale of Series A and B units through public
offering allocable to stockholders' equity			-				-				42,568,390
Net cash (used in) provided by financing activities			39,500				35,000				53,301,063
Net increase (decrease) in cash and cash equivalents			(17,255	)			(82	)			7,219
Cash and cash equivalents
Beginning of period			24,474				24,556				-
End of period		$	7,219			$	24,474			$	7,219
Supplemental disclosure of non-cash financing activities:
Fair value of underwriter purchase option included in offering costs		$	-			$	-			$	641,202
Accretion of Trust Fund relating to Class B common stock subject to possible coversion		$	-			$	-			$	(735,003	)
Exercise of cashless common stock warrants (15,784,903 shares)		$	-			$	315,690			$	315,690

 

See Notes to Financial Statements

 

 

NOTES TO FINANCIAL STATEMENTS

 

NOTES TO AUDITED FINANCIAL STATEMENTS

 

Israel Growth Partners Acquisition Corp

NOTES TO FINANCIAL STATEMENTS

For the Year ended July 31, 2012

 

NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

 

Israel Growth Partners Acquisition Corp. (the “Company”) was incorporated in Delaware on August 1, 2005 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with a then unidentified operating business which has operations or facilities located in Israel, or which is a company operating outside of Israel which the Company’s management believes would benefit from establishing operations or facilities in Israel (a “Target Business”). All activity from inception (August 1, 2005) through July 31, 2012 related to the Company’s formation and capital raising activities. The Company has selected July 31 as its year end.

 

The Company is considered to be a development stage company and as such the financial statements presented herein are presented in accordance with FASB ASC: Topic 915, Accounting and Reporting by Development Stage Enterprises.

 

Organization

 

The registration statement for the Company’s initial public Offering (“Offering”) was declared effective on July 11, 2006. The Company consummated the Offering of 500,000 series A Units (Note 2) and 4,600,000 Series B Units (Note 2) on July 18, 2006. On July 26, 2006, the Company consummated the closing of an additional 32,500 Series A Units and 518,000 Series B Units which were subject to an over-allotment option granted to the underwriters. The Offering generated total net proceeds of approximately $52.9 million of which $51.7 million was placed in trust. The Company’s management had broad authority with respect to the application of the proceeds of the Offering although substantially all of the proceeds of the Offering are intended to be applied generally toward consummating a merger, capital stock exchange, asset acquisition or other similar transaction with a Target Business (a “Business Combination”). An amount of $55,011,182 including accrued interest of $77,146 was being held in an interest-bearing trust account (“Trust Fund”) to be returned to the holders of Class B common stock if a Business Combination was not contracted in 18 months, or consummated in 24 months, subsequent to the Offering (the “Target Business Acquisition Period”).

 

Both the Company’s common stock and Class B common stock had one vote per share. However, the Class B stockholders could, and the common stockholders could not, vote in connection with a Business Combination. Since a Business Combination was not consummated during the Target Business Acquisition Period, as noted above, the Trust Fund was distributed pro-rata to all of the Class B common stockholders and their Class B common shares were cancelled and returned to the status of authorized but unissued shares. Common stockholders did not receive any of the proceeds from the Trust Fund.

 

Operations

 

Under the Offering, the Company indicated its intent to dissolve in the event of a failure to consummate a Business Combination within the Target Business Acquisition Period. On March 6, 2008 the Company entered into a merger agreement with Negevtech Ltd., an Israeli company. On July 18, 2008, the Company announced that it and Negevtech had terminated their definitive agreement due to an inability to consummate the transaction by that date, which was the last possible date that the Company could consummate a transaction under its certificate of incorporation as amended. As a result, the Company announced plans to distribute the amount held in the Trust Fund to its Class B stockholders.

 

On September 12, 2008 the Company and FI Investment Group., LLC (“FIIG”), the largest holder of shares of the Company’s $.0001 par value common stock, entered into an agreement under which the Company, at the request of FIIG, agreed to propose to its stockholders, including the holders of its shares of $.0001 par value Class B common stock, as an alternative to dissolution, amendments to its certificate of incorporation allowing the Company to maintain its corporate existence and provide for the prompt distribution of the funds being held in trust for the benefit of the holders of Class B common stock in connection with the cancellation of their Class B shares.

 

 

The agreement also provided FIIG with the right to appoint a member to the Company’s board of directors. Additionally, it provided for the resignation of each of the Company’s directors and officers that were serving the Company as of the date of the agreement upon the Company’s stockholders approval of the amendments to the Company’s certificate of incorporation described in the agreement and after all of the assets in the trust fund are distributed to the holders of Class B common stock.

 

On October 14, 2008, the Company announced that it had determined, in light of current market uncertainties, to authorize the transfer of the funds being held in the IPO trust account from a money market fund invested primarily in municipal bonds into the Federated Treasury Obligations Fund - Institutional Shares ($33.5 billion in assets as of September 30, 2008), a money market fund invested in U.S. treasury and treasury repurchase agreements. The fund is held in a brokerage account at Barclays Capital. The IPO trust account assets are held in a custodial account at State Street Bank & Trust. The transfer of $55,222,377 in IPO trust account assets was affected at par on October 7, 2008.

 

On October 20, 2008, the Company filed a preliminary proxy statement, at the request of FIIG, to hold a special stockholders meeting to consider proposals for the distribution of the funds in the IPO trust account to the Class B common stockholders and the cancellation of the outstanding shares of the Class B common stock, without the requirement that the Company dissolve and liquidate, and to allow the Company to continue its corporate existence after the distribution of the trust fund by removing those provisions in the Company’s certificate of incorporation that would require the Company to dissolve or liquidate and that limit its status to a blank check company.

 

On January 27, 2009 the Company’s Board of Directors set a meeting date of February 16, 2009 for the Company’s special meeting of stockholders to be held to consider proposals to approve certain amendments to the Company’s certificate of incorporation to allow the Company to distribute the proceeds of the Company’s IPO trust account to the holders of its Class B common stock, and to allow the Company to continue its corporate existence after the distribution of the trust account, without requiring the dissolution and liquidation of the Company or to approve the dissolution and liquidation of the Company.

 

At a special meeting of stockholders held on February 16, 2009, the Company’s stockholders approved a proposal to distribute the Company’s trust fund for the benefit of its Class B common stockholders, without the requirement that the Company dissolve and liquidate. As a result of the stockholder vote, the Company filed an amendment to its certificate of incorporation which resulted in the cancellation of all shares of the Company’s Class B common stock, and the conversion of those shares into the right to receive a pro rata share of the trust fund distribution. Thereafter, the Company’s Class B common stock and Series B Units ceased to be quoted on the Over-The-Counter Bulletin Board and ceased to trade or be tradable, and the trust fund was distributed to the holders of Class B common stock. The total amount of funds in the Trust Fund distributed to the holders of Class B common stock was $55,315,709. FIIG, the largest holder of shares of the Company’s common stock, became the Company’s majority stockholder as a result of the cancellation of the outstanding Class B common stock.

 

At a continuation of the special stockholder meeting held on February 17, 2009, the Company’s stockholders (then consisting only of holders of common stock) approved proposals to amend and restate the Company’s certificate of incorporation to (1) remove certain blank check company-related restrictions, including provisions which required the Company to dissolve following the distribution of the trust account and provisions authorizing the Class B common stock, and (2) increase the authorized shares of common stock from 40,000,000 shares to 80,000,000 shares. As a result of this stockholder vote, the Company filed an amended and restated certificate of incorporation, which allowed the Company to continue its corporate existence following the distribution of the trust fund.

At a meeting of the Company’s Board of Directors held on March 13, 2009, the Board of Directors appointed Richard J. Roth, FIIG’s Managing Director and Chief Financial Officer, and Abhishek Jain, Chief Executive Officer of WTP Capital, LLC, to the Board of Directors. Immediately following the appointment of Mr. Roth and Mr. Jain, each of the remaining members of the Board of Directors, Matty Karp, Carmel Vernia and Dror Gad, resigned from the Board of Directors and as officers of the Company, resulting in Mr. Roth and Mr. Jain continuing as the sole members of the Board of Directors.

 

On December 16, 2009 and June 29, 2010, an officer and shareholder of the company advanced the company $10,000 and $15,392, respectively, in order to continue to fund its operations. The advances were non-interest bearing. These advances were later converted into shareholders equity.

 

On June 30, 2010, the Company issued and sold 1,400,000 shares of common stock (par value of $.0001) at a price of $.01 per share (total proceeds of $14,000) to Moorland Lane Partners, LLC (holder of 57% of the common shares issued and outstanding immediately after the transaction) (“Moorland”). Upon purchase of these shares, the sole director of the company (Richard J. Roth) resigned and was replaced with a designee director of Moorland.

 

On December 27, 2010, the Company issued a promissory note in the original principal amount of $35,000 to Moorland. The promissory note bears interest at the rate of 6% per annum and is due and payable on December 27, 2012. In consideration of the issuance of the promissory note, the Company issued a warrant to purchase 16,000,000 shares of the Company’s common stock to Moorland at an exercise price of $.02 per share. On March 10, 2011, Moorland exercised the warrant on a cashless basis, and as a result of such exercise, received 15,784,903 shares of the Company’s common stock. The remaining 215,097 shares were withheld by the Company in consideration for the exercise of the warrant.

 

 

On August 21, 2012, the Company and Moorland entered into a Second Amendment to Promissory Note that amended the promissory note issued to Moorland on July 1, 2010 in the original principal amount of $50,000.00, of which $36,000 is outstanding at July 31, 2012. Pursuant to the amendment, the promissory note, which bears interest at the rate of 10% per annum, is due and payable on March 1, 2013.

 

In January 2012, the Company issued a promissory note to an affiliate of Macau Resources Group Limited (“Macau Resources”) in the original principal amount of $12,500 to help meet the ongoing working capital needs of the Company. The promissory note bears interest at a rate of 2% per annum and is payable upon the lender’s request any time after December 31, 2012. Effective June 28, 2012, the Company issued a promissory note to the such affiliate of Macau in the original principal amount of $14,500 to help meet the ongoing working capital needs of the Company. The promissory note bears interest at a rate of 2% per annum and is payable upon the lender’s request any time after June 30, 2013.

 

On March 22, 2012, the Company issued a promissory note in the original principal amount of $12,500.00 to JRP Capital, Inc., a New York corporation (the “Note”). The Note accrues interest at 5% per annum ($625.00 minimum interest due) and is due and payable on demand.

 

On June 28, 2012, the Company issued a promissory note to a non-affiliate in the original principal amount of $14,500 to help meet the ongoing working capital needs of the Company. The promissory note bears interest at a rate of 2% per annum and is payable upon the lender’s request any time before June, 30, 2012.

 

In year ended July 31, 2011, the company received a tax refund from the State of Delaware in the amount of $14,574. This amount was recorded as “other Income” on the Statement of Operations for that year.

 

Going concern consideration

 

At July 31, 2012, the Company had $7,219 in cash, current liabilities of $143,666 and working capital deficit of $136,447. Further, the Company has incurred and expects to continue to incur costs in pursuit of its acquisition plans. These factors, among others, indicate that the Company may be unable to continue operations as a going concern unless further financing is consummated. There is no assurance that the Company’s plans to raise capital or to consummate a transaction will be successful.

  

NOTE 2 – OFFERING

 

In the Offering, effective July 11, 2006, the Company sold to the public an aggregate of 532,500 Series A Units (the “Series A Units” or a “Series A Unit”) and 5,118,000 Series B Units (the “Series B Units” or a “Series B Unit”) at a price of $8.50 and $10.10 per unit, respectively. Proceeds from the Offering, totaled approximately $52.9 million, which was net of approximately $3.3 million in underwriting expenses and other registration costs incurred through July 26, 2006. Each Series A Unit consists of two shares of the Company’s common stock, and ten Class Z Warrants (each a “Class Z Warrant”). Each Series B Unit consisted of two shares of the Company’s Class B common stock, and two Class W Warrants (each a “Class W Warrant”).

 

Each Class W Warrant included in the units sold in the Offering entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.00, subject to adjustment in certain circumstances, commencing on the later of (a) July 11, 2007 and (b) the completion of a Business Combination. The Class W Warrants expired on July 10, 2011. Each Class Z Warrant included in the units sold in the Offering entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.00, subject to adjustment in certain circumstances, commencing on the later of (a) July 11, 2007 and (b) the completion of a Business Combination. The Class Z Warrants will expire on July 10, 2013 or earlier upon redemption. The Company may redeem the outstanding Class Z Warrants in whole or in part, at a price of $.05 per warrant at any time after the warrants become exercisable, upon a minimum of 30 days’ prior written notice of redemption, and if, and only if, the last sale price of the Company’s common stock equals or exceeds $7.50 per share and $8.75 per share, for a Class Z Warrant, respectively, for any 20 trading days within any 30 trading day period ending three business days before the Company sent the notice of redemption.

 

The Company has also sold to certain of the underwriters, for an aggregate of $100, an option (the “Underwriter’s Purchase Option” or “UPO”) to purchase up to a total of 25,000 additional Series A Units and/or 230,000 additional Series B Units (see Note 6). This option expired in the calendar year ended December 31, 2011.

 

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

CASH AND CASH EQUIVALENTS – Included in cash and cash equivalents are deposits with financial institutions as well as short-term money market instruments with maturities of three months or less when purchased.

 

CONCENTRATION OF CREDIT RISK – Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintain deposits in federally insured financial institutions in excess of federally insured limits. However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

 

INVESTMENTS HELD IN TRUST – Investments held in the Trust Fund at July 31, 2008 consisted of municipal money fund securities with maturities of up to 30 days. Such securities generate current income which is exempt from federal income tax and therefore no provision for income taxes is required for the periods ended October 31, 2009 or 2008. The entire amount in the Trust Fund was transferred on October 7, 2008 at par into the Federated Treasury Obligations Fund - Institutional Shares ($33.5 billion in assets as of September 30, 2008), a money market fund invested in U.S. treasury and treasury repurchase agreements. The fund was held in a brokerage account at Barclays Capital. (See Note 1 – Organization and Business Operations). On February 16, 2009 the total amount of funds in the Trust Fund totaling $55,315,709 were distributed to the holders of the Class B Common Stock.

 

INCOME TAXES – Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts and are based in enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. Franchise taxes incurred in the State of Delaware are included in general and administrative expenses.

 

NET INCOME (LOSS) PER SHARE – Net income (loss) per share is computed based on the weighted average number of shares of common stock and Class B common stock outstanding. Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average common shares outstanding for the period. Basic net income per share is calculated by dividing net income attributable to (1) common and Class B stockholders and (2) Class B common stockholders subject to possible conversion by their weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the effect of outstanding warrants to purchase common stock and the UPO are antidilutive, as their exercise prices are greater than the average market price of common stock during the period, they have been excluded from the Company’s computation of net income per share. Therefore, basic and diluted income per share were the same for the period from inception (August 1, 2005) through July 31, 2012.

 

FAIR VALUE OF FINANCIAL INSTRUMENTS – FASB ASC Topic 820, “Fair Value measurement and Disclosures”, an Accounting Standard Update. In September 2009, the FASB issued this Update to amendments to Subtopic 82010, “Fair Value Measurements and Disclosures”. Overall, for the fair value measurement of investments in certain entities that calculates net asset value per share (or its equivalent). The amendments in this Update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this Update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entity’s measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this Update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this Update, such as the nature of any restrictions on the investor’s ability to redeem its investments at the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be made by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in GAAP on investments in debt and equity securities in paragraph 320-10-50-lB. The disclosures are required for all investments within the scope of the amendments in this Update regardless of whether the fair value of the investment is measured using the practical expedient. The amendments in this Update apply to all reporting entities that hold an investment that is required or permitted to be measured or disclosed at fair value on a recurring or non-recurring basis and, as of the reporting entity’s measurement date, if the investment meets certain criteria The amendments in this Update are effective for the interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued.

 

 

USE OF ESTIMATES – The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

NEW ACCOUNTING PRONOUNCEMENTS

 

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements.

 

NEW ACCOUNTING PRONOUNCEMENTS 

 

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements

 

NOTE 4 – COMMITMENTS

 

Administrative Services

 

Commencing on July 11, 2006, the effective date of the Offering, the Company was obligated to pay an affiliate of the Company’s chief financial officer, $7,500 per month for office, secretarial and administrative services. An amount of $0 for both years ended July 31, 2012 and 2011, respectively, is included in general and administrative expenses on the accompanying statements of operations and $202,984 for period from Inception (August 1, 2005) to July 31, 2012. The administrative service agreement was terminated on October 18, 2008.

 

Financial Advisory Services

 

The Company had engaged HFCP, on a non-exclusive basis, to act as its investment banker in connection with a proposed Business Combination. For assisting the Company in structuring and negotiating the terms of a Business Combination, the Company would have paid HCFP a cash transaction fee of $1,500,000 upon consummation of a Business Combination. The agreement has been terminated.

 

Solicitation Services

 

The Company had engaged HCFP, on a non-exclusive basis, to act as its agent for the solicitation of the exercise of the Company’s Class W Warrants and Class Z Warrants. In consideration for solicitation services, the Company would have paid HCFP a commission equal to 5% of the exercise price for each Class W Warrant and Class Z Warrant exercised after July 10, 2007 if the exercise is solicited by HCFP. No solicitation services were provided during the years ended July 31, 2012 and 2011. The agreement has been terminated.

 

NOTE 5 – CAPITAL STOCK

 

Preferred Stock

 

The Company is authorized to issue up to 5,000 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. No preferred shares were issued and outstanding at July 31, 2012 or 2011.

 

Common Stock and Class B Common Stock

 

The Company is authorized to issue 80,000,000 shares of common stock. As of July 31, 2012, there are 18,250,003 shares of the Company’s common stock issued and outstanding. As of July 31, 2012, there are 29,782,097 authorized but unissued shares of the Company’s common stock available for future issuance, after appropriate reserves for the issuance of common stock in connection with the Class Z Warrants.

 

The Company currently has no commitments to issue any shares of common stock other than as described herein; however, the Company will, in all likelihood, issue a substantial number of additional shares in connection with any Business Combination or future financing of the Company. To the extent that additional shares of common stock are issued, dilution to the interests of the Company’s stockholders who participated in the Offering will occur.

 

 

NOTE 6 – WARRANTS AND OPTION TO PURCHASE COMMON STOCK

 

Warrants

 

In August 2005, the Company sold and issued Class W Warrants to purchase 2,475,000 shares of the Company’s common stock, and Class Z Warrants to purchase 2,475,000 shares of the Company’s common stock to its initial security holders, for an aggregate purchase price of $247,500, or $0.05 per warrant.

 

The Class W and Class Z Warrants outstanding prior to the offering are also subject to a registration rights agreement. On January 31, 2006, the Company and the initial security holders entered into a registration rights agreement and a letter agreement which revised the terms of the Company’s obligations under the warrant and registration rights agreement to clarify that the Company will only deliver unregistered common shares on the exercise of the warrants.

 

The Class W Warrants and Class Z Warrants outstanding prior to the Offering may be exercised with cash on or prior to their respective expiration dates. Although the Company’s initial security holders may make a written demand that the Company file a registration statement, the Company is only required to use its best efforts to cause the registration statement to be declared effective and, once effective, only to use its best efforts to maintain its effectiveness. Accordingly, the Company’s obligation is merely to use its best efforts in connection with the registration rights agreement and upon exercise of the warrants, the Company can satisfy its obligation by delivering unregistered shares of common stock.

 

Prior to entering into to the registration rights agreement and the letter agreement on January 31, 2006, the Company accounted for the Class W and Class Z Warrants issued to the initial security holders as liabilities in accordance with the guidance of EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Accordingly, the Company recorded the fair value of the warrants of $247,500 as a non-current liability on its balance sheet from the date of issuance through January 31, 2006. As a result of entering into the registration rights agreement, the warrants no longer are accounted for as liabilities and are classified in stockholder’s equity. For the period from inception (August 1, 2005) to July 31, 2012, no income (loss) was recorded related to recording the derivative to market value as there was no change in the fair value of such securities. The Company determined the fair value of the Class W and Class Z Warrants issued in August 2005 based on the aggregate purchase price paid to the Company of $247,500, or $0.05 per Warrant.

 

On January 31, 2006, the date of reclassification of the Warrants from liability to equity, the Company estimated that the fair value of the Class W and Class Z Warrants was still $0.05 per Warrant. The determination to value the Warrants at $0.05 was based on the cash purchase price paid in August 2005 by the holders, the fact that the Warrants were not publicly traded, the inherent price of $0.05 per Warrant contained in the Series A and Series B Units which were sold in the Offering, and an evaluation of the differences in the rights and privileges of the Warrants sold and issued in August 2005 versus the Warrants which were sold in the Offering.

 

Each Class W Warrant issued in the Offering and to the initial security holders were exercisable with cash for one share of common stock. Except as set forth below, the Class W Warrants entitled the holder to purchase shares at $5.00 per share, subject to adjustment in the event of stock dividends and splits, reclassifications, combinations and similar events for a period commencing on the later of: (a) completion of the Business Combination and (b) July 10, 2007 and ending July 10, 2011. At July 31, 2012 there were no Class W Warrants outstanding.

 

Each Class Z Warrant issued in the Offering and to the initial security holders is exercisable with cash for one share of common stock. Except as set forth below, the Class Z warrants entitle the holder to purchase shares at $5.00 per share, subject to adjustment in the event of stock dividends and splits, reclassifications, combinations and similar events for a period commencing on the later of: (a) completion of the Business Combination and (b) July 10, 2007 and ending July 10, 2013. At April 30, 2012 there were 7,800,000 Class Z Warrants outstanding.

 

The Class Z Warrants outstanding prior to the Offering, all of which are held by the Company’s initial security holders or their affiliates, shall not be redeemable by the Company as long as such warrants continue to be held by such security holders or their affiliates. Except as set forth in the preceding sentence, the Company may redeem the Class Z Warrants , in whole or in part, at a price of $.05 per warrant at any time after the warrants become exercisable, upon a minimum of 30 days’ prior written notice of redemption, and if, and only if, the last sale price of the Company’s common stock equals or exceeds $7.50 per share and $8.75 per share, for a Class W Warrant and Class Z Warrant, respectively, for any 20 trading days within a 30 trading day period ending three business days before the Company sent the notice of redemption (the “Measurement Period”). In addition, the Company may not redeem the Class Z Warrants unless the shares of common stock underlying such warrants are covered by an effective registration statement from the beginning of the measurement period through the date fixed for redemption.

 

 

The Class Z Warrants issued in the Offering will not be exercisable unless a registration statement covering the securities underlying the warrants is effective or an exemption from registration is available. Accordingly if the warrants are not able to be exercised such warrants may expire worthless. The Company has no obligation to net cash settle the exercise of the warrants.

 

The holders of Class Z Warrants do not have the rights or privileges of holders of the Company’s common stock or any voting rights until such holders exercise their respective warrants and receive shares of the Company’s common stock. As the proceeds from the exercise of the Class Z Warrants will not be received until after the completion of a Business Combination, the expected proceeds from exercise will not have any effect on the Company’s financial condition or results of operations prior to a Business Combination.

 

On December 27, 2010, the Company issued a promissory note in the original principal amount of $35,000 to Moorland. In consideration of the issuance of the promissory note, the Company issued a warrant to purchase 16,000,000 shares of the Company’s common stock to Moorland at an exercise price of $.02 per share. On March 10, 2011, Moorland exercised the warrant on a cashless basis, and as a result of such exercise, received 15,784,903 shares of the Company’s common stock.

 

Underwriter Purchase Option

 

In connection with the Offering, the Company issued to certain of the underwriters the UPO for $100 to purchase up to 25,000 Series A Units at an exercise price of $14.025 per unit and/or up to 230,000 Series B Units at an exercise price of $16.665 per unit. The UPO expired in the calendar year ended December 31, 2011.

 

NOTE 7 – SUBSEQUENT EVENTS

 

On August 28, 2012, the Company entered into a merger agreement with Macau Resources, under which the Company will merge into Macau Resources and have the shares of the Company converted and exchanged into outstanding shares of capital stock of Macau Resources. In the merger, shareholders of the Company will receive, for each share of the Company’s common stock that they hold, one-twentieth of an ordinary share of Macau Resources. The Macau Resources ordinary shares should continue to be quoted on the Over-The-Counter Bulletin Board, and Macau Resources will remain subject to U.S. Securities and Exchange Commission (the “SEC”) reporting requirements. However, Macau Resources expects that we will become a foreign private issuer following the consummation of the merger. As such, it will be subject to reduced reporting obligations.

 

Upon the closing of the merger with Macau Resources, the current shareholders of Macau Resources will hold a total of 14,295,836 ordinary shares of Macau Resources, representing approximately 94% of the total number of issued and outstanding shares of Macau Resources. Current stockholders of the Company will own approximately 6% of the total number of issued and outstanding shares of Macau Resources.

 

The Company’s sole director has approved and declared advisable the merger agreement, and has approved the merger with Macau Resources.

 

Under Delaware law, the approval of holders of a majority of the outstanding shares of the Company’s common stock is required to adopt the merger agreement. On August 28, 2012, Moorland, which owns approximately 94.2% of the outstanding shares of the Company’s common stock as of the date of the merger agreement, executed a written consent approving and adopting the merger and the merger agreement. Under Delaware law, if a shareholder of the Company complies with certain requirements of Delaware law, the Company’s shareholders will have the right to seek an appraisal and to be paid the “fair value” of the shares of the Company’s common stock held by such shareholders, as determined in accordance with Delaware law (exclusive of any element of value arising from the accomplishment or expectation of the merger) instead of the merger consideration. Form F-4 for Macau Resources was filed with the SEC on September 12, 2012.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

	ISRAEL GROWTH PARTNERS ACQUISITION CORP.
	By:	/s/ Craig Samuels
		Craig Samuels
		Director, Chief Executive Officer and President
Date:  October 29, 2012

 

 

Index to Exhibits

 

Exhibit Number		Description
3.1 (1)		Third Amended and Restated Certificate of Incorporation
3.2 (2)		Bylaws
4.1 (3)		Specimen Series A Unit Certificate
4.2 (2)		Specimen Common Stock Certificate
4.3 (4)		Specimen Class W Warrant Certificate
4.4 (4)		Specimen Class Z Warrant Certificate
4.5 (4)		Unit Purchase Option granted to HCFP/Brenner Securities LLC
4.6 (4)		Warrant Agreement between American Stock Transfer & Trust Company and the Registrant
10.1 (5)		Investment Management Trust Agreement between American Stock Transfer & Trust Company and the Registrant
10.2 (6)		Agreement among the Registrant and FI Investment Group, LLC, dated September 12, 2008
10.3 (7)		Merger Agreement among the Registrant, Macau Resources Group Limited and the Members of Macau Resources Group, dated August 28, 2012
23.1*		Consent of Gruber & Company, LLC
31.1*		Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934.
31.2*		Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 promulgated under the Securities Exchange Act of 1934.
32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

*	Filed herewith.
(1)	Incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on March 19, 2009.
(2)	Incorporated by reference to an exhibit to the Registrant’s Registration Statement of Form S-1 filed with the Commission on September 15, 2005.
(3)	Incorporated by reference to an exhibit to Amendment No. 2 to the Registrant’s Registration Statement of Form S-1 filed with the Commission on February 17, 2006.
(4)	Incorporated by reference to an exhibit to Amendment No. 9 to the Registrant’s Registration Statement of Form S-1 filed with the Commission on July 6, 2006.
(5)	Incorporated by reference to an exhibit to Amendment No. 7 to the Registrant’s Registration Statement of Form S-1 filed with the Commission on June 22, 2006.
(6)	Incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on September 17, 2008.
(7)	Incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on August 31, 2012.