UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
|X| Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 2005
|_| Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _____________ to _____________
Commission File Number 000-50682
Tremisis Energy Acquisition Corporation
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 20-0700684
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1775 Broadway, Suite 604, New York, New York 10019
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(Address of Principal Executive Office)
(212) 397-1464
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(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes |X| No
|_| |_|
As of May 16, 7,700,000 shares of common stock, par value $.0001 per
share, were issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
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Page
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Part I: Financial Information:
Item I - Financial Statements (Unaudited):
Balance Sheet 3
Statements of Operations 4
Statements of Stockholders' Equity 5
Statements of Cash Flows 6
Notes to Financial Statements 7-10
Item 2 - Management's Discussion and Analysis or Plan of Operation 11
Item 3 - Controls and Procedures 12
Part II. Other Information
Item 2 - Changes in Securities and Small Business Issuer Purchases of
Equity Securities Controls and Procedures 13
Item 6 - Exhibits and Reports on Form 10Q 13
Signatures 14
2
Tremisis Energy Acquisition Corporation
(a corporation in the development stage)
Balance Sheet (Unaudited)
================================================================================
March 31, December 31,
2005 2004
----------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 722,229 $ 834,094
U.S. Government Securities held in Trust Fund (Note 2) 33,619,888 33,351,358
Accrued interest receivable held in Trust Fund (Note 2) 3,248 91,170
Prepaid expenses 7,375 22,125
----------- -----------
Total Current assets 34,352,740 34,298,747
----------- -----------
Deferred Acquisition Costs (Note 4) 15,000 --
Furniture and equipment (net accumulated depreciation of
$1,999 and $1,418) 8,865 6,558
----------------------------------------------------------------------------------------------
Total assets $34,376,605 $34,305,305
==============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 96,797 $ 26,680
Taxes Payable 8,300 26,000
----------- -----------
Total current liabilities 105,097 52,680
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Common stock, subject to possible conversion
1,264,368 shares at conversion value (Note 2) 6,448,277 6,448,277
Commitment (Note 5)
Stockholders' equity (Notes 2, 3, 6 and 7)
Preferred stock, $.0001 par value, authorized
1,000,000 shares; none issued
Common stock, $.0001 par value
Authorized 30,000,000 shares; Issued and outstanding
7,700,000 shares (which includes 1,264,368 subject to
possible conversion) 770 770
Additional paid-in capital 27,739,053 27,739,053
Earnings accumulated during the development stage 83,408 64,525
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Total stockholders' equity 27,823,231 27,804,348
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Total liabilities and stockholders' equity $34,376,605 $34,305,305
==============================================================================================
See Notes to Unaudited Financial Statements.
3
Tremisis Energy Acquisition Corporation
(a corporation in the development stage)
Statement of Operations (Unaudited)
================================================================================
For the For the
Three Period from
Months February 5,
Ended 2004
March 31, (inception)
2005 to March 31,
2005
--------------------------------------------------------------------------------
Expenses:
General and administrative expenses (Note 5) $ 131,214 $ 295,606
----------- ---------
Operating Loss (131,214) (295,606)
Interest Income 183,397 491,429
----------- ---------
Income before provision for taxes 52,183 195,823
----------- ---------
Provision for taxes (Note 8) (33,300) (112,415)
----------- ---------
Net income $ 18,883 $ 83,408
----------- ---------
Basic and diluted net income per share $ -0-
Weighted average common shares outstanding 7,700,000
================================================================================
See Notes to Unaudited Financial Statements
4
Tremisis Energy Acquisition Corporation
(a corporation in the development stage)
Statement of Stockholders' Equity (Unaudited)
================================================================================
Earnings
Accumulated
Common Stock During the
------------------- Addition paid- Development
Shares Amount in cap Stage Total
------------------------------------------------------------------
Balance, February 5, 2004 (inception) -- $-- $-- $-- $--
Issuance of common stock to initial
stockholders 1,375,000 137 24,863 -- 25,000
Sale of 6,325,000 units and
underwriters' option, net of
underwriters' discount and offering
expenses (includes 1,264,368
shares subject to possible
conversion) 6,325,000 633 27,714,190 -- 27,714,823
Net income for the period -- -- -- 64,525 64,525
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Balance, December 31, 2004 7,700,000 770 27,739,053 64,525 27,804,348
Net income for the three months
ended March 31, 2005 (unaudited) -- -- -- 18,883 18,883
--------- ---- ----------- ------- -----------
Balance, March 31, 2005 (unaudited) 7,700,000 $770 $27,739,053 $83,408 $27,823,231
--------- ---- ----------- ------- -----------
==================================================================
See Notes to Unaudited Financial Statements.
5
Tremisis Energy Acquisition Corporation
(a corporation in the development stage)
Statement of Cash Flows (Unaudited)
================================================================================
For the Three For the period from
Months Ended February 5, 2004
March 31, (inception) to March
2005 31, 2005
---------------------------------------------------------------------------------------------------------
Cash flows from operating activities
Net income for the period $ 18,883 $ 83,408
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation 580 1,999
Gain on maturity of U.S. Government Securities held in
Trust Fund (270,890) (480,531)
Change in operating assets and liabilities:
Decrease (increase) in prepaid expenses 14,750 (7,375)
Decrease in accrued interest receivable 91,170 --
Increase in accrued expenses 70,117 96,797
(Decrease) increase in income tax payable (17,700) 8,300
------------ ------------
Net cash used in operating activities (93,090) (297,402)
------------ ------------
Cash flows from investing activities
Purchases of U.S. Government Securities held in Trust Fund (33,619,888) (100,112,605)
Maturity of U.S. Government Securities held in Trust Fund 33,619,000 66,970,000
Increase in deferred acquisition costs (15,000) (15,000)
Purchase of furniture and equipment (2,887) (10,864)
------------ ------------
Net cash used in investing activities (18,775) (33,168,469)
------------ ------------
Cash flows from financing activities
Proceeds from public offering of 6,325,000 units
and underwriter option, net -- 34,163,100
Proceeds from issuance of common stock to initial
Stockholders -- 25,000
Proceeds from note payable, stockholder -- 77,500
Repayment of note payable, stockholder -- (77,500)
------------ ------------
Net cash provided by financing activities -- 34,188,100
------------ ------------
Net (decrease) increase in cash and cash equivalents $ (111,865) $ 722,229
Cash and cash equivalent at beginning of period 834,094 --
------------ ------------
Cash and cash equivalents at end of period $ 722,229 $ 722,229
------------ ------------
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $ 51,000 $ 104,115
=========================================================================================================
See Notes to Unaudited Financial Statements.
6
Tremisis Energy Acquisition Corporation
(a corporation in the development stage)
Notes to Unaudited Financial Statements
================================================================================
1. Basis of Presentation The accompanying financial statements are
unaudited and have been prepared in accordance
with accounting principles generally accepted in
the United States of America for interim financial
information and with instructions to Form 10-QSB.
Accordingly, 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. These financial statements
should be read in conjunction with the financial
statements that were included in the Company's
Annual Report on Form 10-KSB for the period ended
December 31, 2004.
In the opinion of management, all adjustments
(consisting of normal accruals) have been made
that are necessary to present fairly the financial
position of Tremisis Energy Acquisition
Corporation (the "Company") as of March 31, 2005
and the results of its operations and its cash
flow for the three month period ended March 31,
2005 and from February 5, 2005 (inception) to
March 31, 2005. Operating results for the interim
period presented are not necessarily indicative of
the results to be expected for a full year.
2. Organization and The Company was incorporated in February 5, 2004
Business Operations as a blank check company whose objective is to
acquire an operating business in either the energy
or the environmental industry and their related
infrastructures.
The registration statement for the Company's
initial public offering ("Offering") was declared
effective May 13, 2004. The Company consummated
the offering on May 18, 2004 and received net
proceeds of approximately $34,163,100 (Note 3).
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 in the energy and environmental
industry and their related infrastructures
("Business Combination"). An amount of
approximately $33,623,136 of the net proceeds is
being held in an interest-bearing trust account
("Trust Fund") until the earlier of (i) the
consummation of its first Business Combination or
(ii) liquidation of the Company. Under the
agreement governing the Trust Fund, funds will
only be invested in United States government
securities (Treasury Bills) with a maturity of 180
days or less. The remaining net proceeds may be
used to pay for business, legal and accounting due
diligence on prospective acquisitions and
continuing general and administrative expenses.
7
Tremisis Energy Acquisition Corporation
(a corporation in the development stage)
Notes to Unaudited Financial Statements
================================================================================
The Company, after signing a definitive agreement
for the acquisition of a target business, will
submit such transaction for stockholder approval.
In the event that stockholders owning 20% or more
of the shares sold in the Offering, vote against
the Business Combination and exercise the
conversion rights described below, the Business
Combination will not be consummated. All of the
Company's stockholders prior to the Offering,
including all of the officers and directors of the
Company ("Initial Stockholders"), have agreed to
vote their 1,375,000 founding shares of common
stock in accordance with the vote of the majority
in interest of all other stockholders of the
Company ("Public Stockholders") with respect to
the Business Combination. After consummation of
the Business Combination, all of these voting
safeguards will no longer be applicable.
With respect to a Business Combination which is
approved and consummated, any Public Stockholder
who voted against the Business Combination may
demand that the Company convert his or her shares.
The per share conversion price will equal the
amount in the Trust Fund as of the record date for
determination of stockholders entitled to vote on
the Business Combination divided by the number of
shares of common stock held by Public Stockholders
at the consummation of the Offering. Accordingly,
Public Stockholders holding 19.99% of the
aggregate number of shares owned by all Public
Stockholders may seek conversion of their shares
in the event of a Business Combination. Such
Public Stockholders are entitled to receive their
per share interest in the Trust Fund computed
without regard to the shares held by Initial
Stockholders. In this respect, $6,448,277 has been
classified as common stock subject to possible
conversion The Company's Certificate of
Incorporation provides for mandatory liquidation
of the Company in the event that the Company does
not consummate a Business Combination within 18
months from the date of the consummation of the
Offering (such date would be November 18, 2005),
or 24 months from the consummation of the Offering
if certain extension criteria have been satisfied.
In the event of liquidation, it is likely that the
per share value of the residual assets remaining
available for distribution (including Trust Fund
assets) will be less than the initial public
offering price per share in the Offering (assuming
no value is attributed to the Warrants contained
in the Units sold in the Offering discussed in
Note 3).
8
Tremisis Energy Acquisition Corporation
(a corporation in the development stage)
Notes to Unaudited Financial Statements
================================================================================
3. Offering On May 18, 2004, the Company sold 6,325,000 units
("Units") in the Offering including an additional
825,000 Units pursuant to the underwriters'
over-allotment option. Each Unit consists of one
share of the Company's common stock, $.0001 par
value, and two Redeemable Common Stock Purchase
Warrants ("Warrants"). Each Warrant will entitle
the holder to purchase from the Company one share
of common stock at an exercise price of $5.00
commencing the later of the completion of a
Business Combination with a target business or one
year from the effective date of the Offering and
expiring five years from the date of the
prospectus. The Warrants will be redeemable at a
price of $.01 per Warrant upon 30 days' notice
after the Warrants become exercisable, only in the
event that the last sale price of the common stock
is at least $8.50 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 connection with this
Offering, the Company issued, for $100, an option
to the representative of the underwriters to
purchase 275,000 Units at an exercise price of
$9.90 per Unit. In addition, the warrants
underlying such Units are exercisable at $6.25 per
share.
4. Deferred Acquisition During the three months ended March 31, 2005,
Costs consulting fees of $15,000 have been incurred with
respect to a potential business combination.
5. Commitment The Company presently occupies office space
provided by an affiliate of an initial
stockholder. Such affiliate has agreed that, until
the acquisition of a target business by the
Company, it will make such office space, as well
as certain office and secretarial services
available to the Company, as may be required by
the Company from time to time. The Company pays
such affiliate $3,500 per month for such services
commencing on May 18, 2004, the effective date of
the Offering and $10,500 for the three month
period ended March 31, 2005 and $38,500 for the
period from February 5, 2004 (inception) to March
31, 2005 is included in general and administrative
expenses for such services.
6. Preferred Stock The Company is authorized to issue 1,000,000
shares of preferred stock with such designations,
voting and other rights and preferences as may be
determined from time to time by the Board of
Directors.
9
Tremisis Energy Acquisition Corporation
(a corporation in the development stage)
Notes to Unaudited Financial Statements
================================================================================
7. Common Stock The Company's Board of Directors authorized a
1.666666 to one forward stock split of its common
stock on March 10, 2004, a 1.1428571 to one
forward stock split of its common stock on April
16, 2004 and a 1.375 to one forward stock split of
its common stock on April 23, 2004. All references
in the accompanying financial statements to the
numbers of shares have been retroactively restated
to reflect the transactions.
As of March 31, 2005, 13,475,000 shares of common
stock were reserved for issuance upon exercise of
redeemable warrants and underwriters' unit
purchase option.
8. Provision for Taxes Provision for taxes consists of:
For the
Period from
For the Three February 5, 2005
Months ended (inception) to
March 31, 2005 March 31, 2005
-------------- --------------
Current
-------
Federal $10,500 $ 43,500
State and local 22,800 68,915
------- --------
$33,300 $112,415
======= ========
The effective tax rate exceeds statutory rates
primarily due to state and local taxes which are
calculated as a percentage of capital.
10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and footnotes thereto contained in this
report.
Forward Looking Statements
The statements discussed in this Report include forward looking statements
that involve risks and uncertainties, including the timely delivery and
acceptance of the Company's products and the other risks detailed from time to
time in the Company's reports filed with the Securities and Exchange Commission.
Plan of Operations
We were formed on February 5, 2004 to serve as a vehicle to effect a
merger, capital stock exchange, asset acquisition or other similar business
combination with a company in the either of the energy or environmental
industries and their related infrastructures. We intend to utilize cash derived
from the proceeds of our recently completed public offering, our capital stock,
debt or a combination of cash, capital stock and debt, in effecting a business
combination.
Net income for the three months ended March 31, 2005 consisted of interest
income of $183,397 reduced by $10,500 for a monthly administrative services
agreement, $37,979 for professional fees, $14,750 for officer liability
insurance, $54,655 for travel expenses, $7,494 for franchise fees, $33,300 for
taxes and $5,836 for other expenses.
Net income for the period from February 5, 2004 (inception) to March 31,
2005 consisted of interest income of $491,429 reduced by $38,500 for a monthly
administrative services agreement, $57,465 for professional fees, $51,625 for
officer liability insurance, $60,084 for travel expenses, $30,494 for franchise
fees, $112,415 for taxes and $57,438 for other expenses.
We consummated our initial public offering on May 18, 2004. Gross proceeds
from our initial public offering, including the full exercise of the
underwriters' over-allotment option, were $37,950,100. After deducting offering
expenses of $1,510,000 including $990,000 evidencing the underwriters'
non-accountable expense allowance of 3% of the gross proceeds, and underwriting
discounts of $2,277,000, net proceeds were $34,163,100. Of this amount,
$33,623,136 (which includes accrued interest of $3,248) is held in trust and the
remaining proceeds are available to be used to provide for business, legal and
accounting due diligence on prospective acquisitions and continuing general and
administrative expenses. We will use substantially all of the net proceeds of
this offering to acquire a target business, including identifying and evaluating
prospective acquisition candidates, selecting the target business, and
structuring, negotiating and consummating the business combination. To the
extent that our capital stock is used in whole or in part as consideration to
effect a business combination, the proceeds held in the trust fund as well as
any other net proceeds not expended will be used to finance the operations of
the target business. We believe that we have sufficient available funds outside
of the trust fund to operate through May 18, 2006, assuming that a business
combination is not consummated during that time. Over this time period, we
anticipate approximately $180,000 of expenses for legal, accounting and other
expenses related to the due diligence investigations, structuring and
negotiating of a business combination, $84,000 for the administrative fee
payable to First Americas Management LLC ($3,500 per month for two years),
$50,000 of expenses for the due diligence and investigation of a target
business, $40,000 of expenses in legal and
11
accounting fees relating to our SEC reporting obligations and $666,000 for
general working capital that will be used for miscellaneous expenses and
reserves, including approximately $60,000 for director and officer liability
insurance premiums. We do not believe we will need to raise additional funds
following this offering in order to meet the expenditures required for operating
our business. However, we may need to raise additional funds through a private
offering of debt or equity securities if such funds are required to consummate a
business combination that is presented to us. We would only consummate such a
fund raising simultaneously with the consummation of a business combination.
We are obligated to pay to First Americas Management LLC, an affiliate of
Isaac Kier, our secretary, treasurer and a member of our board of directors, a
monthly fee of $3,500 for general and administrative services. Through March 31,
2005, an aggregate of $38,500 has been paid for such services. In addition, in
February and April 2004, Lawrence S. Coben, C.E.O. advanced an aggregate of
$77,500 to us, on a non-interest bearing basis, for payment of offering expenses
on our behalf. This amount was repaid in May 2004 out of proceeds of our initial
public offering.
ITEM 3. CONTROLS AND PROCEDURES.
An evaluation of the effectiveness of our disclosure controls and
procedures as of March 31, 2005 was made under the supervision and with the
participation of our management, including the chief executive officer and
treasurer. Based on that evaluation, they concluded that our disclosure controls
and procedures are effective as of the end of the period covered by this report
to ensure that information required to be disclosed by us in reports that we
file or submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. During the most recently completed fiscal
quarter, there has been no significant change in our internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
12
PART II.
OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES
On May 18, 2004, we closed our initial public offering of 6,325,000 Units,
including 825,000 Units issued upon exercise of the underwriters' over-allotment
option, with each unit consisting of one share of our common stock and two
warrants, each to purchase one share of our common stock at an exercise price of
$5.00 per share. The Units were sold at an offering price of $6.00 per Unit,
generating gross proceeds of 37,950,100. The representative of the underwriters
in the offering was EarlyBirdCapital, Inc. The securities sold in the offering
were registered under the Securities Act of 1933 on a registration statement on
Form S-1 (No. 333-113583). The Securities and Exchange Commission declared the
registration statement effective on May 12, 2004.
We paid a total of $2,277,000 in underwriting discounts and commissions,
and $1,510,000 for costs and expenses related to the offering, including
$990,000 for the underwriters' non-accountable expense allowance of 3% of the
gross proceeds.
After deducting the underwriting discounts and commissions and the
offering expenses, the total net proceeds to us from the offering were
$34,163,100, of which $33,143,000 was deposited into a trust fund and the
remaining proceeds are to be used to provide for business, legal and accounting
due diligence on prospective business combinations and continuing general and
administrative expenses. Through March 31, 2005, we have used approximately
$297,000 of cash for operating expenses and $77,500 to repay advances made to us
by one of our initial stockholders.
ITEM 6: EXHIBITS
(a) Exhibits:
31.1 - Section 302 Certification by CEO
31.2 - Section 302 Certification by Treasurer
32.1 - Section 906 Certification by CEO
32.2 - Section 906 Certification by Treasurer
13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TREMISIS ENERGY
ACQUISITION CORPORATION
Dated: May 16, 2005
/s/ Lawrence S. Coben
---------------------------
Lawrence S. Coben
Chairman of the Board and
Chief Executive Officer
/s/ Isaac Kier
---------------------------
Treasurer
14