UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

---

 

FORM 10-Q

 

---

 

 

x

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

 

FOR THE QUARTER ENDED September 30, 2007.

 

¨

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

 

COMMISSION FILE NUMBER:

 

 

---

 

NRDC ACQUISITION CORP.

(Exact name of registrant as specified in its charter)

 

---

 

 

 

Delaware		26-0500600
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

3 Manhattanville Road

Purchase, New York  10577

(Address of principal executive office)

 

(914) 272-8067

 (Registrant’s telephone number, including area code)

 

---

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer   ¨ .    Accelerated filer   ¨ .    Non-accelerated filer   x .

 

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

 

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

 

The number of shares of the issuer’s Common Stock, $0.0001 par value, outstanding as of October 23, 2007 was 51,750,000.

 

---

 

 

 

3

---

 

Subsequent Events

 

On October 23, 2007, we consummated a private placement of 8 million warrants with NRDC Capital Management, LLC, an entity owned and controlled by the executive officers of the Company, and our initial public offering of 41,400,000 units, including 5,400,000 units pursuant to the underwriters’ over-allotment option.   We received net proceeds of approximately $384,000,000 and also received $8,000,000 of proceeds from the private placement sale of 8,000,000 insider warrants to NRDC Capital Management, LLC.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of this Offering, although substantially all of the net proceeds of this Offering are intended to be generally applied toward consummating a business combination with an operating business. There is no assurance that the Company will be able to successfully affect a Business Combination. Upon the closing of the Offering and Private Placement, $406,456,881 including $14,490,000 of the underwriters’ discounts and commissions is being held in a trust account and invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 until the earlier of (i) the consummation of its first Business Combination and (ii) liquidation of the Company.

The initial target business or businesses with which we combine must have a collective fair market value equal to at least 80% of the balance in the trust account (excluding deferred underwriters’ discounts and commissions). However, we may not use all of the proceeds held in the trust account in connection with a business combination, either because the consideration for the business combination is less than the proceeds in trust or because we finance a portion of the consideration with capital stock or debt securities that we can issue. In the event that that occurs, the proceeds held in the trust account as well as any other net proceeds not expended will be used to finance the operations of the target business or businesses.

 

We may issue additional capital stock or debt securities to finance a business combination. The issuance of additional capital stock, including upon conversion of any convertible debt securities we may issue, or the incurrence of debt, could have material consequences on our business and financial condition. The issuance of additional shares of our capital stock (including upon conversion of convertible debt securities):

 

•

may significantly reduce the equity interest of our stockholders;

 

•

will likely cause a change in control if a substantial number of our shares of common stock or voting preferred stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and may also result in the resignation or removal of one or more of our present officers and directors; and

 

•

may adversely affect prevailing market prices for our common stock.

 

Similarly, if we issue debt securities, it could result in:

 

•

default and foreclosure on our assets if our operating revenues after a business combination are insufficient to pay our debt obligations;

 

•

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach the covenants contained in any debt securities, such as covenants that require the satisfaction or maintenance of certain financial ratios or reserves, without a waiver or renegotiation of such covenants;

 

 

 

4

---

 

•

an obligation to immediately repay all principal and accrued interest, if any, upon demand to the extent any debt securities are payable on demand; and

 

•

our inability to obtain additional financing, if necessary, to the extent any debt securities contain covenants restricting our ability to obtain additional financing while such security is outstanding, or to the extent our existing leverage discourages other potential investors.

 

We believe that we will have sufficient funds to allow us to operate for at least the next 24 months, assuming that a business combination is not consummated during that time. Approximately $2,700,000 of working capital over this time period will be funded from the interest earned from the funds held in the trust account. Over this time period, we anticipate making the following expenditures:

 

•

approximately $1,200,000 of expenses for due diligence of prospective target businesses, including fees for market research or consultants used to perform due diligence, if any and reimbursement of out-of-pocket due diligence expenses incurred by our management team;

 

•

approximately $1,000,000 of legal, accounting and other non-due diligence expenses including structuring and negotiating a business combination;

 

•

approximately $180,000 of expenses for office space, administrative and support services to NRDC Capital Management, LLC;

 

•

approximately $70,000 of legal and accounting fees relating to SEC reporting obligations; and

 

•

approximately $250,000 of miscellaneous expenses (potentially including deposits or down payments for a proposed business combination), premiums for key man life insurance for our chairman, chief executive officer and secretary and premiums and director and officer liability insurance premiums and reserves.

 

On July 13, 2007, we used $200,000 of the proceeds from the private placement and our initial public offering to repay the note payable to one of our initial stockholders, NRDC Capital Management, LLC. The loan was repaid in full, without interest, and cancelled.

 

On November 16, 2007 we used $161,710 of our general working capital to pay premiums associated with our directors and officers liability insurance.

 

5

---

 

 

10

---

 

F-1

---

 

F-2

---

 

 

F-5

---

 

NRDC ACQUISITION CORP.

(a development stage company)

 

Notes to Financial Statements — (Continued)

 

.

 

Note 2 — Summary of Significant Accounting Policies

 

[a]

Cash and cash equivalents:

 

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

 

[b]

Loss per common share:

 

Loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period.

 

[c]

Use of estimates:

 

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

 

[d]

Income taxes:

 

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

 

The Company recorded a deferred income tax asset for the tax effect of net operating loss carry forwards and temporary differences, aggregating approximately $249. In recognition of the uncertainty regarding the ultimate amount of income tax benefits to be derived, the Company has recorded a full valuation allowance at September 30, 2007.

 

The effective tax rate differs from the statutory rate of 34% due to the increase in the valuation allowance.

 

 

 

F-6

---

 

NRDC ACQUISITION CORP.

(a development stage company)

 

Notes to Financial Statements — (Continued)

 

[e]

Deferred offering costs:

 

Deferred offering costs consist of legal and other professional fees incurred through the balance sheet date that are related to the Offering and that were charged to capital upon the receipt of the capital raised.

 

Note 3 — Initial Public Offering

 

On October 23, 2007, the Company sold 41,400,000 units (“Units”) in the Offering at a price of $10 per Unit. Each Unit consists of one share of the Company’s common stock and one Redeemable Common Stock Purchase Warrant (“Warrants”), including 5,400,000 units sold by the underwriters in their exercise of the full amount of their over-allotment option. Each Warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of $7.50 commencing the later of the completion of a Business Combination and 12 months from the effective date of the Offering and expiring four years from the effective date of the Offering. The Company may redeem all of the Warrants, at a price of $.01 per Warrant upon 30 days’ notice while the Warrants are exercisable, only in the event that the last sale price of the common stock is at least $14.25 per share for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given. In accordance with the warrant agreement relating to the Warrants sold and issued in the Offering, the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Warrants. The Company will not be obligated to deliver securities, and there are no contractual penalties for failure to deliver securities, if a registration statement is not effective at the time of exercise. Additionally, in the event that a registration is not effective at the time of exercise, the holder of such Warrant shall not be entitled to exercise such Warrant and in no event (whether in the case of a registration statement not being effective or otherwise) will the Company be required to net cash settle the warrant exercise. Consequently, the Warrants may expire unexercised and unredeemed.

 

In connection with the Offering, the Company paid Banc of America Securities LLC, the underwriter of the Offering an underwriting discount of 7% of the gross proceeds of the Offering, of which 3.5% of the gross proceeds ($14,490,000) will be held in the Trust Account and payable only upon the consummation of a business combination and have waived their right to receive such payment upon the Company’s liquidation if it is unable to complete a Business Combination.

 

Simultaneously with the consummation of the Offering, the Company’s Sponsor purchased 8,000,000 warrants (“Private Placement Warrants”) at a purchase price of $1.00 per warrant, in a private placement. The proceeds of $8,000,000 were placed in the Trust Account. The Private Placement Warrants are identical to the Warrants underlying the Units sold in the Offering except that the Private Placement Warrants will be exercisable on a cashless basis as long as they are still held by the initial purchasers. The purchasers have agreed that the Private Placement Warrants will not be sold or transferred by them, until after the completion of a Business Combination. The purchase price of the Private Placement Warrants approximates the fair value of such warrants.

 

Our Sponsor will be entitled to make up to three demands that we register the 10,350,000 shares of common stock (the “Founder’s Shares”), the 8,000,000 Private Placement warrants and the shares for which they are exercisable, and the 2,000,000 co-investment shares and the 2,000,000 co-investment warrants (described in Note 4) and the shares of common stock for which they are exercisable, pursuant to an agreement signed prior to the Effective Date. Our sponsor may elect to exercise its registration rights at any time beginning on the date three months prior to the expiration of the applicable transfer restrictions. The restricted transfer period for the shares and the co-investment shares of common stock expires on the date that is one year after the consummation of the initial business combination, and the restricted transfer period for the Private Placement Warrants and the shares for which they are exercisable expires on the consummation of our initial business combination. Our directors will have “piggy-back” registration rights with respect to the shares of common stock that they own prior to the completion of this offering, subject to the same limitations with respect to the transfer restriction period. In addition, our Sponsor and our directors each have certain “piggy-back” registration rights with respect to the shares held by them on registration statements filed by us on or subsequent to the expiration of the applicable transfer restriction period and unlimited registration rights with respect to a registration statement on Form S-3. We will bear the expenses incurred in connection with the filing of any registration statement. Pursuant to the registration rights agreement, our sponsor and our executive officers and directors will waive any claims to monetary damages for any failure by us to comply with the requirements of the registration rights agreement.

Note 4 — Note Payable to Affiliate and Related Party Transactions

 

The Company issued an aggregate $200,000 unsecured promissory note to NRDC Capital Management, LLC on July 13, 2007. The note is non-interest bearing and is payable on the earlier of the consummation of the offering by the Company or July 13, 2009.  The Company repaid the notes in full on October 23, 2007.  Due to the short-term nature of the note, the fair value of the note approximated its carrying amount.

Note – 5  Commitments

The Company has agreed to pay up to $7,500 a month in total for office space and general and administrative services to NRDC Capital Management, LLC. Services commenced on the effective date of the offering and will terminate upon the earlier of (i) the completion of the Business Combination, or (ii) the Company’s liquidation.

Our sponsor has agreed to purchase from the Company an aggregate of 2,000,000 of its units at a price of $10.00 per unit for an aggregate purchase price of $20,000,000 in a private placement that will occur immediately prior to the consummation of our initial business combination. Each unit will consist of one share of common stock and one warrant.

 

Note 6 — Common Stock

 

As of September 30, 2007, 10,350,000 shares of common stock were outstanding, held by NRDC Capital Management, LLC. On July 13, 2007, the Company issued 10,350,000 shares (as adjusted for the stock splits) to NRDC Capital Management, LLC for $25,000 in cash, at an average purchase price of approximately $0.002 per share.

On September 4, 2007, the Company’s Board of Directors authorized a 6 for 5 stock split with respect to all outstanding shares of the Company’s common stock. On October 17, 2007, the Company’s Board of Directors authorized an additional 6 for 5 stock split with respect to all outstanding shares of the Company’s common stock. On September 4, 2007, the Company’s Certificate of Incorporation was amended to increase the authorized shares of common stock from 70,000,000 to 106,000,000 shares of common stock. All references in the accompanying financial statements to the number of shares of stock have been retroactively restated to reflect these transactions.

Note 7 — Preferred Stock

 

The Company is authorized to issue 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.

 

 

 

F-7