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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 10-Q

 

  þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    For the quarterly period ended October 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, Maryland 20814
(301) 502-8602

 

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

 

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   þ Yes     ¨ No 

 

Indicate by check mark whether the registrant 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 (§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     þ No 

 

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 ¨ (Do not check if a smaller reporting company) Smaller reporting company þ

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

As of December 13, 2012, 18,250,003 shares of common stock, par value $0.0001 per share, of the registrant were outstanding.

 

 
 

 

TABLE OF CONTENTS

 

        Page
         
    PART I - FINANCIAL INFORMATION    
         
Item 1.   Financial Statements   3
    Condensed Balance Sheets as of October 31, 2012 (unaudited) and July 31, 2012 (audited)   3
    Condensed Statement of Operations, for the three months ended October 31, 2012 (unaudited) and 2011 (unaudited), and for the period from August 1, 2005 (inception) to October 31, 2012 (unaudited)   4
    Condensed Statement of Stockholders’ Equity for the period from inception (August 1, 2005) to July 31, 2012 (audited) and the three months ended October 31, 2012 (unaudited)   5
    Condensed Statement of Cash Flows, for the three months ended October 31, 2012 (unaudited) and 2011 (unaudited), for the period from August 1, 2005 (inception) to October 31, 2012 (unaudited)   6
    Notes to Unaudited Condensed Financial Statements   7
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   13
Item 4.   Controls and Procedures   15
       
    PART II - OTHER INFORMATION    
         
Item 1.   Legal Proceedings   16
Item 1A.   Risk Factors   16
Item 6.   Exhibits   16
         
    SIGNATURES   17

 

2
 

 

PART I - FINANCIAL INFORMATION

 

 Item 1.  Financial Statements

 

Israel Growth Partners Acquisition Corp.
Condensed Balance Sheets

 

Balance Sheets

 

   As of   As of 
   October 31, 2012   July 31, 2012 
   (Unaudited)   (Audited) 
ASSETS          
Current Assets:          
Cash and cash equivalents  $13,583   $7,219 
           
Total assets  $13,583   $7,219 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
           
Current Liabilities:          
Accrued expenses  $58,309   $33,166 
Notes Payable due shareholders & directors (Note 1)   125,000    110,500 
Total current liabilities   183,309    143,666 
           
Notes Payable long-term (Note 1)   -    - 
           
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 at July 31, 2012 and 2011, respectively.   1,825    1,825 
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   (1,669,765)   (1,636,486)
           
Total stockholders' equity (deficit)   (169,726)   (136,447)
           
Total liabilities and stockholders' (deficit)  $13,583   $7,219 

 

See Notes to Unaudited Condensed Financial Statements 

 

3
 

 

Israel Growth Partners Acquisition Corp.
Condensed Statement of Operations

  

   For the three month period ended   Period from inception 
   (Unaudited)   (August 1, 2005) to 
   October 31, 2012   October 31, 2011   October 31, 2012 
Revenue  $-   $-   $- 
Operating expenses:               
Professional fees   8,991    6,557    928,496 
Delaware franchise tax   -    -    237,137 
Other general and administrative expenses (Note 4)   24,288    6,604    610,542 
                
Loss from operations   (33,279)   (13,161)   (1,776,175)
                
Other Income (Note1)   -    -    14,574 
Interest Income   -    -    3,715,745 
                
Income (loss) before provision for income taxes   (33,279)   (13,161)   1,954,144 
                
Provision for income taxes   -    -    - 
                
Net income (loss) for the period  $(33,279)  $(13,161)  $1,954,144 
                
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  $(33,279)  $(13,161)  $1,220,141 
                
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    18,250,003      
                
Net income (loss)per share, basic and diluted  $(0.00)  $(0.00)     

 

See Notes to Unaudited Condensed Financial Statements

 

4
 

 

Israel Growth Partners Acquisition Corp.
Condensed Statement of Stockholders’ Equity for the period
from inception (August 1, 2005) to October 31, 2012

 

                       Deficit     
                   Additional   accumulated in     
   Common Stock   Common Stock, Class B   Paid -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 (Audited)   18,250,003   $1,825    -   $-   $1,498,214   $(1,636,486)  $(136,447)
                                    
Net (Loss) for the period   -    -    -    -    -    (33,279)   (33,279)
                                    
Balance, October 31, 2012 (Unaudited)   18,250,003   $1,825    -   $-   $1,498,214   $(1,669,765)  $(169,726)

 

See Notes to Unaudited Condensed Financial Statements 

 

5
 

 

Israel Growth Partners Acquisition Corp.
Condensed Statement of Cash Flows

 

   For the three months ended   Period from inception 
   (Unaudited)   (August 1, 2005) to 
   October 31, 2012   October 31, 2011   October 31, 2012 
CASH FLOWS FROM OPERATING ACTIVITIES               
Net income (loss) for the period  $(33,279)  $(13,161)  $1,954,144 
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   25,143    (7,683)   58,309 
Net cash used in operating activities   (8,136)   (20,844)   (1,610,180)
                
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   14,500    -    125,000 
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   14,500    -    53,315,563 
                
Net increase (decrease) in cash and cash equivalents   6,364    (20,844)   13,583 
                
Cash and cash equivalents               
Beginning of period   7,219    24,474    - 
                
End of period  $13,583   $3,630   $13,583 
                
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 Unaudited Condensed Financial Statements

 

6
 

 

Israel Growth Partners Acquisition Corp

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the three months ended October 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 October 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.

 

7
 

 

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.

 

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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.

 

On 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.

 

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. Warrants in the Company whether vested or not will be exchanged for ordinary shares in Macau Resources. The Company’s sole director has approved and declared advisable the merger agreement, and has approved the merger with Macau Resources. Expenses associated with the merger will be paid by the incurring party. In the three month period ending October 31, 2012 the company realized $20,147 in costs associated with this merger.

 

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. An Amended Form F-4 for Macau Resources was filed with the SEC on November 27, 2012.

 

On October 9, 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.

 

Interim financial statements

 

The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Company’s audited financial statements and footnotes thereto for the year ended July 31, 2012, included in the Company’s Form 10-K filed on October 29, 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management necessary for a fair presentation of the Company’s financial position and results of operations. The operating results for the three months ended October 31, 2012 are not necessarily indicative of the results to be expected for any other interim period of any future year.

 

Going concern consideration

 

At October 31, 2012, the Company had $13,583 in cash, current liabilities of $183,309 and working capital deficit of $169,726. 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”).

 

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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 maintained 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.

 

A 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 October 31, 2012.

 

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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.

 

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 the three months ended October 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 October 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 three months ended October 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 October 31, 2012 or 2011.

 

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Common Stock and Class B Common Stock

 

The Company is authorized to issue 80,000,000 shares of common stock. As of October 31, 2012, there are 18,250,003 shares of the Company’s common stock issued and outstanding. As of October 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 October 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 October 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 October 31, 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.

 

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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 (Reference Note 1). An Amended Form F-4 for Macau Resources was filed with the SEC on November 27, 2012.

 

On November 11, 2012, the Company issued a promissory note to a non-affiliate in the original principal amount of $10,000 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, 2013.

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this report and in our annual report on Form 10-K for the year ended July 31, 2012.

 

This report includes forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect,” “will,” “should,” “seeks” or other similar expressions. Forward-looking statements reflect our plans, expectations and beliefs, and involve inherent risks and uncertainties, many of which are beyond our control. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report as well as  in “Risk Factors” in Item 1A of Part I of our annual report on Form 10-K for the year ended July 31, 2012.

 

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.

 

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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.

 

Our current plan is to acquire a target company or business seeking the perceived advantages of being a publicly held corporation. 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. 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 three months ended October 31, 2012 increased to $33,279 compared to a net loss for the prior comparable period of $13,161.  Net loss for the three months ended October 31, 2012 consisted of professional fees of $8,991 and other general and administrative operating expenses of $24,288, compared to professional fees of $6,557 and general and administrative expenses of $6,604 for the prior comparable period. In the three month period ended October 31, 2012, the Company realized $20,147 in costs associated with the Merger.

 

Net income for the period from inception (August 1, 2005) to October 31, 2012 of $1,954,144, consisted of interest income of $3,715,745, offset by professional fees of $928,496, Delaware franchise taxes of $237,137 and other operating expenses of $610,542, 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 the accompanying financial statements included elsewhere in this report).

 

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As indicated in the accompanying financial statements, at October 31, 2012, we had $13,583 in cash and cash equivalents, current liabilities of $183,309 and working capital deficit of $169,726. 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 financings are 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 our 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.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934, as amended, or Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules, regulations and related forms, and that such information is accumulated and communicated to our officers to allow timely decisions regarding required disclosure.

 

As of October 31, 2012, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

 

Changes in Internal Controls

 

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

 

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PART II - OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

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

 

Item 1A.  Risk Factors

 

“Item 1A. Risk Factors” of our annual report on Form 10-K for the year ended July 31, 2012 includes a discussion of our risk factors.  There have been no material changes to risk factors as previously disclosed in our annual report on Form 10-K filed with the Securities and Exchange Commission on October 29, 2012.

 

Item 5.  Other Information

 

On November 11, 2012, the Company issued a promissory note to a non-affiliate in the original principal amount of $10,000 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, 2013.

 

Item 6.  Exhibits

 

Exhibit    
Number   Exhibit
3.1(1)     Third Amended and Restated Certificate of Incorporation.
     
3.2(2)     Bylaws.
     
10.1*   Promissory Note, effective October 9, 2012, between the Company and Hung Lei.
     
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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2*     Certification of 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.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  ISRAEL GROWTH PARTNERS ACQUISITION CORP.
     
  Date:  December 14, 2012 By: /s/ Craig Samuels
    Craig Samuels
    Director, Chief Executive Officer and President

 

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INDEX TO EXHIBITS

 

Exhibit    
Number   Exhibit
10.1     Promissory Note, effective October 9, 2012, between the Company and Hung Lei.
     
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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2     Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.