Attached files
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EX-32.2 - EX-32.2 - JWC Acquisition Corp. | b86114exv32w2.htm |
EX-31.1 - EX-31.1 - JWC Acquisition Corp. | b86114exv31w1.htm |
EX-32.1 - EX-32.1 - JWC Acquisition Corp. | b86114exv32w1.htm |
EX-31.2 - EX-31.2 - JWC Acquisition Corp. | b86114exv31w2.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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 March 31, 2011
or
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 000-54202
JWC ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) |
27-3092187 (I.R.S. Employer Identification No.) |
111 Huntington Avenue, Suite 2900, Boston, Massachusetts 02199
(617) 753-1100
(Address, including zip code, and telephone number, including area code,
of registrants principal executive offices)
(617) 753-1100
(Address, including zip code, and telephone number, including area code,
of registrants principal executive offices)
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 þ No o
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 during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ (Do not check if a smaller reporting company) | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes þ No o
As of May 16, 2011, the registrant had 14,534,884 shares of its common stock, par value $0.0001 per
share, outstanding.
JWC ACQUISITION CORP.
TABLE OF CONTENT
i
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)
(A Corporation in the Development Stage)
Condensed Consolidated Balance Sheets
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | (Audited) | |||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash |
$ | 589,109 | $ | 865,355 | ||||
Prepaid insurance |
173,863 | 204,545 | ||||||
Other current assets |
201 | 159 | ||||||
Total current assets |
763,173 | 1,070,059 | ||||||
Investments held in trust |
125,007,960 | 124,966,373 | ||||||
Total assets |
$ | 125,771,133 | $ | 126,036,432 | ||||
Liabilities and Stockholders Equity: |
||||||||
Current liabilities: |
||||||||
Loan payable to related party |
$ | 30,049 | $ | 30,049 | ||||
Franchise tax payable |
45,000 | 19,800 | ||||||
Accounts payable and other liabilities |
71,161 | 206,374 | ||||||
Total current liabilities |
146,210 | 256,223 | ||||||
Deferred underwriter compensation |
4,375,000 | 4,375,000 | ||||||
Total liabilities |
4,521,210 | 4,631,223 | ||||||
Commitment and contingencies |
||||||||
Common stock subject to possible redemption: 11,624,992 shares (at redemption value) at
March 31, 2011 and 11,640,520 shares (at redemption value) at December 31, 2010 |
116,249,920 | 116,405,200 | ||||||
Stockholders equity: |
||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized;
none issued and outstanding |
| | ||||||
Common stock, $0.0001 par value; 400,000,000 shares authorized; 14,534,884 shares
issued and outstanding at March 31, 2011 and 14,840,116 shares
issued and outstanding at
December 31, 2010 |
1,453 | 1,484 | ||||||
Additional paid-in capital |
5,187,804 | 5,032,493 | ||||||
Deficit accumulated during the development stage |
(189,254 | ) | (33,968 | ) | ||||
Total stockholders equity, net |
5,000,003 | 5,000,009 | ||||||
Total liabilities and stockholders equity |
$ | 125,771,133 | $ | 126,036,432 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
JWC ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Statement of Operations
(Unaudited)
(A Development Stage Company)
Condensed Consolidated Statement of Operations
(Unaudited)
Period from | ||||||||
Three Months | July 22, 2010 | |||||||
Ended | (inception) through | |||||||
March 31, 2011 | March 31, 2011 | |||||||
Revenue |
$ | | $ | | ||||
General and administrative expenses |
196,873 | 247,214 | ||||||
Loss from operations |
(196,873 | ) | (247,214 | ) | ||||
Interest income |
41,587 | 57,960 | ||||||
Loss before provision for income taxes |
(155,286 | ) | (189,254 | ) | ||||
Provision for income taxes |
| | ||||||
Net loss attributable to common shares outstanding |
$ | (155,286 | ) | $ | (189,254 | ) | ||
Net loss |
$ | (155,286 | ) | $ | (189,254 | ) | ||
Interest earned in Trust Account, attributable to common stock subject to possible redemption, net of tax |
| | ||||||
Net loss applicable to common shareholders |
$ | (155,286 | ) | $ | (189,254 | ) | ||
Weighted average number of common shares outstanding basic and diluted |
14,558,891 | 8,999,901 | ||||||
Net loss per common share outstanding, basic and diluted |
$ | 0.01 | $ | 0.02 | ||||
Two Class Method |
||||||||
Weighted average number of common shares outstanding subject to possible redemption |
11,622,228 | 6,251,063 | ||||||
Net loss per common share for shares subject to possible redemption |
$ | 0.00 | $ | 0.00 | ||||
Weighted average number of common shares, excluding shares subject to possible redemption |
2,936,663 | 2,748,838 | ||||||
Net loss per common share, excluding shares subject to possible redemption basic and diluted |
$ | 0.05 | $ | 0.07 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
JWC ACQUISITION CORP. AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Statement of Stockholders Equity
(A Development Stage Company)
Condensed Consolidated Statement of Stockholders Equity
Accumulated | ||||||||||||||||||||
Deficit | ||||||||||||||||||||
Additional | During the | Total | ||||||||||||||||||
Common Stock | Paid-in | Development | Stockholders | |||||||||||||||||
Shares | Amount | Capital | Stage | Equity | ||||||||||||||||
Issuance of founder shares to
Sponsor at $0.010 per
founder share |
2,464,286 | $ | 246 | $ | 24,754 | | $ | 25,000 | ||||||||||||
Return and cancellation on
October 25, 2010 of 124,170
of founder shares |
(124,170 | ) | (12 | ) | 12 | | | |||||||||||||
Sale on November 23, 2010 of
12,500,000 units, net of
offering expenses (including
11,659,490 shares subject to
possible redemption |
12,500,000 | 1,250 | 124,998,750 | | 125,000,000 | |||||||||||||||
Underwriters discount and
offering expenses |
| | (7,585,823 | ) | | (7,585,823 | ) | |||||||||||||
Proceeds from private placement
of 5,333,333 warrants |
| | 4,000,000 | | 4,000,000 | |||||||||||||||
Proceeds subject to possible
redemption of 11,659,490
shares at November 23, 2010 |
| | (116,594,900 | ) | | (116,594,900 | ) | |||||||||||||
Decrease in carrying amount of
redeemable shares to
11,640,520 shares subject to
possible redemption at
December 31, 2010 |
| | 189,700 | | 189,700 | |||||||||||||||
Net loss |
| | | (33,968 | ) | (33,968 | ) | |||||||||||||
Balances as of December 31,
2010 |
14,840,116 | $ | 1,484 | $ | 5,032,493 | $ | (33,968 | ) | $ | 5,000,009 | ||||||||||
Unaudited: |
||||||||||||||||||||
Forfeiture of common stock issued to
initial stockholders on January
8, 2011 |
(305,232 | ) | (31 | ) | 31 | | | |||||||||||||
Decrease in carrying amount of
redeemable shares to
11,624,992 shares subject to
possible redemption at March 31, 2011 |
| | 155,280 | | 155,280 | |||||||||||||||
Net loss |
| | | (155,286 | ) | (155,286 | ) | |||||||||||||
Balances as of March 31, 2011 |
14,534,884 | $ | 1,453 | $ | 5,187,804 | $ | (189,254 | ) | $ | 5,000,003 | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)
Condensed Consolidated Statement of Cash Flows
(A Corporation in the Development Stage)
Condensed Consolidated Statement of Cash Flows
Period from | ||||||||
Three Months | July 22, 2010 | |||||||
Ended | (inception) through | |||||||
March 31, 2011 | March 31, 2011 | |||||||
Cash Flows From Operating Activities: |
||||||||
Net loss |
$ | (155,286 | ) | $ | (189,254 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Changes in operating assets & liabilities: |
||||||||
Prepaid insurance |
30,682 | (173,863 | ) | |||||
Other current assets |
(42 | ) | (201 | ) | ||||
Franchise tax payable |
25,200 | 45,000 | ||||||
Accounts payable and other liabilities |
(135,213 | ) | 71,161 | |||||
Proceeds from loan payable to related party |
| 30,049 | ||||||
Net cash used in operating activities |
(234,659 | ) | (217,108 | ) | ||||
Cash Flows from Investing Activities: |
||||||||
Change in investments held in trust |
(41,587 | ) | (125,007,960 | ) | ||||
Net cash used in investing activities |
(41,587 | ) | (125,007,960 | ) | ||||
Cash Flows from Financing Activities: |
||||||||
Proceeds from note payable to related party |
| 25,000 | ||||||
Payment of note payable to related party |
| (25,000 | ) | |||||
Proceeds from sale of shares to Sponsor |
| 25,000 | ||||||
Proceeds from public offering |
| 125,000,000 | ||||||
Proceeds from private placement |
| 4,000,000 | ||||||
Payment of offering costs |
| (3,210,823 | ) | |||||
Net cash provided by financing activities |
| 125,814,177 | ||||||
Increase (decrease) in cash |
(276,246 | ) | 589,109 | |||||
Cash at beginning of period |
865,355 | | ||||||
Cash at end of period |
$ | 589,109 | $ | 589,109 | ||||
Supplemental Disclosure of Non-Cash Financing Activities: |
||||||||
Deferred offering costs |
$ | | $ | 4,375,000 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
JWC ACQUISITION CORP. AND SUBSIDIARY
(A Corporation in the Development Stage)
(A Corporation in the Development Stage)
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Business Operations
Incorporation
JWC Acquisition Corp. (the Company) was incorporated in Delaware on July 22, 2010.
Sponsor
The companys sponsor is JWC Acquisition, LLC, a Delaware limited liability company (the
Sponsor). Members of the Sponsor owning a majority of the Sponsors equity interests are
affiliated with J.W. Childs Associates, L.P. (Associates), a private equity firm founded in 1995
by John W. Childs, the Companys Chairman and Chief Executive Officer, and Adam L. Suttin, the
Companys President.
Fiscal Year End
The Company has selected December 31 as its fiscal year end.
Business Purpose
The Company was formed to effect a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more businesses (an Initial
Business Combination).
Financing
The registration statement for the Companys initial public offering (the Public Offering) (as
described in Note 3) was declared effective November 17, 2010. The Company consummated the Public
Offering on November 23, 2010, and simultaneously with the closing of the Public Offering, the
Sponsor purchased $4,000,000 of warrants in a private placement (Note 4).
On November 23, 2010, $124,950,000 from the Public Offering and private placement was placed in the
Trust Account (discussed below).
Trust Account
The trust account (the Trust Account) can either be invested in permitted United States
government securities within the meaning of Section 2(a)(16) of the Investment Company Act of
1940, as amended (the Investment Company Act), 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. The funds in the Trust Account are held in the name of JWC Acquisition Security Corporation,
a wholly-owned subsidiary of the Company qualified as a Massachusetts security corporation (See
Note 6).
Except for a portion of interest income earned on the Trust Account balance that may be released to
the Company to pay any franchise and income taxes and to fund working capital requirements, and any
amounts necessary for the Company to purchase up to 15% of the Companys public shares if the
Company seeks stockholder approval of the Initial Business Combination, none of the funds held in
the
5
Trust Account will be released until the earlier of: (i) the consummation of the Initial Business
Combination; or (ii) the redemption of 100% of the shares of common stock included in the units
sold in the Public Offering if the Company is unable to consummate an Initial Business Combination
within 21 months from the closing of the Public Offering (subject to the requirements of law).
Business Combination
An Initial Business Combination is subject to the following size, focus and stockholder approval
provisions:
Size The prospective target business will not have a limitation to size; however, the
Company will not consummate an Initial Business Combination unless it acquires a controlling
interest in a target company or is otherwise not required to register as an investment company
under the Investment Company Act.
Focus The Companys efforts in identifying prospective target businesses will initially
be focused on businesses in the consumer products and specialty retail sectors but the Company may
pursue opportunities in other business sectors.
Tender Offer/Stockholder Approval The Company, after signing a definitive agreement for
an Initial Business Combination, will either (i) seek stockholder approval of the Initial Business
Combination at a meeting called for such purpose in connection with which stockholders may seek to
redeem their shares, regardless of whether they vote for or against the Initial Business
Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the
Trust Account, including interest but less franchise and income taxes payable, or (ii) provide
stockholders with the opportunity to sell their shares to the Company by means of a tender offer
(and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata
share of the aggregate amount then on deposit in the Trust Account, including interest but less
franchise and income taxes payable. The decision as to whether the Company will seek stockholder
approval of the Initial Business Combination or will allow stockholders to sell their shares in a
tender offer will be made by the Company, solely in its discretion, and will be based on a variety
of factors such as the timing of the transaction and whether the terms of the transaction would
otherwise require the Company to seek stockholder approval. If the Company seeks stockholder
approval, it will consummate its Initial Business Combination only if a majority of the outstanding
shares of common stock voted are voted in favor of the Initial Business Combination. However, in
no event will the Company redeem its public shares in an amount that would cause its net tangible
assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption
of its public shares and the related Initial Business Combination, and instead may search for an
alternate Initial Business Combination.
Regardless of whether the Company holds a stockholder vote or a tender offer in connection with an
Initial Business Combination, a public stockholder will have the right to redeem their shares for
an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the
Trust Account, including interest but less franchise and income taxes payable upon the closing of
the Initial Business Combination. As a result, such shares of common stock were recorded at
conversion/tender value and classified as temporary equity in accordance with Financial Accounting
Standards Board, or FASB, ASC Topic 480, Distinguishing Liabilities from Equity.
Permitted Purchase of Public Shares If the Company seeks stockholder approval prior to
the Initial Business Combination and does not conduct redemptions pursuant to the tender offer
rules, prior to the Initial Business Combination, the Companys Amended and Restated Certificate of
Incorporation permits the release to the Company from the Trust Account amounts necessary to
purchase up to 15% of the
6
shares sold in the Public Offering. All shares so purchased by the Company will be immediately
cancelled.
Liquidation
If the Company does not consummate an Initial Business Combination by August 23, 2012, the Company
will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem 100% of the common stock sold as
part of the units in the Public Offering, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the Trust Account, including interest but net of franchise and
income taxes payable (less up to $100,000 of such net interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely
extinguish public stockholders rights as stockholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and subject to the requirement that
any refund of income taxes that were paid from the Trust Account which is received after such
redemption shall be distributed to the former public stockholders, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the Companys remaining
stockholders and the Companys board of directors, dissolve and liquidate, subject in each case to
the Companys obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law.
In the event of liquidation, it is likely that the per share value of the residual assets remaining
available for distribution (including Trust Account assets) will be less than the initial public
offering price per share in the Public Offering (assuming no value is attributed to the warrants
contained in the units to be offered in the Public Offering discussed in Note 3).
2. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements as of March 31, 2011 and the
results of operations and cash flows for the period from July 22, 2010 (inception) through March
31, 2011, have been prepared in accordance with accounting principles generally accepted in the
United States of America (GAAP) for interim financial information and with the instructions to
Form 10-Q and pursuant to the rules and regulations of the Securities and Exchange Commission
(SEC). Accordingly, they do not include all of the information and notes required by GAAP for
complete financial statements of the Company. In the opinion of management, all adjustments
necessary for a fair presentation have been included and are of a normal recurring nature. Interim
results are not necessarily indicative of the results that may be expected for any other interim
period or for the full year.
These unaudited condensed consolidated interim financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto for the period ended December
31, 2010 included in the Companys Annual Report on Form 10-K filed with the SEC on March 31, 2011.
The December 31, 2010 balance sheet included herein has been derived from those audited
consolidated financial statements. The accounting policies used in preparing these unaudited
condensed consolidated financial statements are consistent with those used in preparing the
December 31, 2010 audited consolidated financial statements.
The condensed consolidated financial statements include the accounts of JWC Acquisition Corp. and
its wholly-owned subsidiary, JWC Acquisition Security Corporation. All significant intercompany
transactions and balances have been eliminated in consolidation.
7
Development Stage Company
The Company is considered to be in the development stage as defined by FASB ASC 915, Development
Stage Entities, and is subject to the risks associated with activities of development stage
companies. The Company has neither engaged in any operations nor generated any income to date.
All activity through the date the condensed consolidated financial statements were issued relates
to the Companys organizational activities, activities relating to the Public Offering, activities
relating to identifying and evaluating prospective acquisition candidates and activities relating
to general corporate matters. The Company will not generate any operating revenues until after
completion of an Initial Business Combination, at the earliest. The Company will generate
non-operating income in the form of interest income on the Trust Account after the Public Offering.
Securities held in Trust Account
The Company classifies investment in short-term treasury securities as held-to-maturity in
accordance with FASB ASC 320, as the Company has the ability and intent to hold until maturity.
Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the
amortization or accretion of premiums or discounts.
A decline in the market value of held-to-maturity securities below cost that the Company deems to
be other than temporary results in an impairment that reduces the carrying costs to such
securities fair value. The impairment is charged to earnings and a new cost basis for the
security is established. To determine whether an impairment is other than temporary, the Company
considers whether it has the ability and intent to hold the investment until a market price
recovery and considers whether evidence indicating the cost of the investment is recoverable
outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons
for the impairment, the severity and the duration of the impairment, changes in value subsequent to
year-end, forecasted performance of the investee, and the general market condition in the
geographic area or industry the investee operates in.
Premiums and discounts are amortized or accreted over the life of the related held-to-maturity
security as an adjustment to yield using the effective-interest method. Such amortization and
accretion is included in the Interest income line item in the statement of operations. Interest
income is recognized when earned.
Net Loss Per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of shares
of common stock outstanding during the period in accordance with FASB ASC 260, Earnings Per
Share. Diluted net loss per share is computed by dividing net loss by the weighted average number
of shares of common stock outstanding, plus to the extent dilutive, the incremental number of
shares of common stock to settle warrants issued in the Public Offering and private placement, as
calculated using the treasury stock method. As the Company reported a net loss for the three
months ended March 31, 2011, the effect of the 17,833,333 warrants (including 5,333,333 warrants
issued to the members of the Sponsor in the private placement), have not been considered in the
diluted loss per common share because their effect would be anti-dilutive. As a result, dilutive
loss per common share is equal to basic loss per common share.
The Companys consolidated statement of operations includes a presentation of income per share for
common stock in a manner similar to the two-class method of income per share. Net income per common
share, basic and diluted, for the number of shares subject to possible redemption is calculated by
dividing the interest earned in the Trust Account, net of applicable income taxes and franchise
taxes, attributable to
8
common shares subject to possible redemption, by the weighted average number of common shares
subject to possible redemption.
Use of Estimates
The preparation of financial statements in conformity with GAAP 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 revenue and expenses during the reporting period. Actual results could differ from
those estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist
of cash accounts in a financial institution, which at times may exceed the federal depository
insurance coverage of $250,000. The Company has not experienced losses on these accounts and
management believes the Company is not exposed to significant risks on such accounts.
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 evaluates the uncertainty in tax positions taken or expected to be taken in the course
of preparing the Companys condensed consolidated financial statements to determine whether the tax
positions are more likely than not of being sustained by the applicable tax authority. Tax
positions deemed not to meet the more likely than not threshold would be recorded as a tax
expense in the current period. The Company has no uncertain tax positions at March 31, 2011.
The Company recognizes interest and penalties related to unrecognized tax benefits in interest
expense and other expenses, respectively. No interest expense or penalties have been recognized as
of and for the three months ended March 31, 2011,
and for the period from July 22, 2010 (inception) through March 31, 2011.
The Company files a U.S. federal income tax return and may file income tax returns in various U.S.
states and foreign jurisdictions.
The Company may be subject to potential examination by U.S. federal, U.S. states or foreign
jurisdiction authorities in the areas of income taxes. These potential examinations may include
questioning the timing and amount of deductions, the nexus of income among various tax
jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws. The Companys
management does not expect that the total amount of unrecognized tax benefits will materially
change over the next twelve months.
Redeemable Common Stock
As discussed in Note 1, all of the 12,500,000 common shares sold as part of units in the Public
Offering contain a redemption feature which allows for the redemption of common shares under the
Companys Liquidation or Tender Offer/Stockholder Approval provisions. In accordance with ASC 480,
redemption provisions not solely within the control of the Company require the security to be
classified outside of permanent equity. Ordinary liquidation events, which involve the redemption
and liquidation of all of the entitys equity instruments, are excluded from the provisions of ASC
480. Although the Company does not specify a maximum redemption threshold, its Amended and
Restated Certificate of Incorporation
9
provides that in no event will the Company redeem its public shares in an amount that would cause
its net tangible assets (stockholders equity) to be less than $5,000,001.
The Company recognizes changes in redemption value immediately as they occur and will adjust the
carrying value of the security to equal the redemption value at the end of each reporting period.
Increases or decreases in the carrying amount of redeemable common stock shall be affected by
charges against paid-in capital.
Accordingly, at March 31, 2011 and December 31, 2010, 11,624,992 and 11,640,520, respectively, of
the 12,500,000 public shares are classified outside of permanent equity at the redemption value.
The redemption value is equal to the pro rata share of the aggregate amount then on deposit in the
Trust Account, including interest but less franchise and income taxes payable (approximately $10.00
at March 31, 2011).
Fair Value of Financial Instruments
Unless otherwise disclosed, the fair value of the Companys assets and liabilities that qualify as
financial instruments under FASB ASC 820, Fair Value Measurements and Disclosures, approximates
the carrying amounts represented in the balance sheet.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if
currently adopted, would have a material effect on the Companys condensed consolidated financial
statements.
3. Public Offering
Public Units
On November 23, 2010, the Company sold 12,500,000 units at a price of $10.00 per unit in the Public
Offering. Each unit consists of one share of the Companys common stock, $0.0001 par value, and
one warrant (the Public Warrants). The Company granted the underwriters a 45-day option to
purchase up to 1,875,000 additional units solely to cover over-allotments, if any. This option was
not exercised.
Public Warrant Terms and Conditions
Exercise Conditions Each Public Warrant entitles the holder to purchase from the Company
one share of common stock at an exercise price of $11.50 per share commencing on the later of: (i)
the consummation of an Initial Business Combination, or (ii) 12 months from the date of the
prospectus for the offering, provided that the Company has an effective registration statement
covering the shares of common stock issuable upon exercise of the Public Warrants (or the Public
Warrants are exercisable on a cashless basis) and such shares are registered or qualified under the
securities laws of the state of the exercising holder. The Public Warrants expire five years from
the date of the completion of an Initial Business Combination, unless earlier redeemed. The Public
Warrants are redeemable in whole and not in part at a price of $0.01 per warrant upon a minimum of
30 days notice after the warrants become exercisable, only in the event that the last sale price
of the common stock exceeds $18.00 per share for any 20 trading days within a 30-trading day
period. If the Public Warrants are redeemed by the Company, management will have the option to
require all holders that wish to exercise warrants to do so on a cashless basis.
10
Registration Risk In accordance with the warrant agreement relating to the Public
Warrants, the Company will be required to use its best efforts to maintain the effectiveness of a
registration statement relating to common stock which would be issued upon exercise of the Public
Warrants. In the event that a registration is not effective at the time of exercise, the holders
of Public Warrants shall not be entitled to exercise such Public Warrants (except on a cashless
basis under certain circumstances) 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 or cash settle
the Public Warrants or be subjected to any other contractual penalty for failure to permit such
exercise. Consequently, the Public Warrants may expire unexercised, unredeemed and worthless, and
an investor in the Public Offering may effectively pay the full unit price solely for the shares of
common stock included in the units.
Accounting Since the Company is not required to net cash settle the Public Warrants, the
Public Warrants will be recorded at fair value and classified within stockholders equity as
Additional paid-in capital upon their issuance in accordance with FASB ASC 815-40.
Underwriting Agreement
The Company paid an underwriting discount of 2.0% of the public unit offering price to the
underwriters at the closing of the Public Offering, with an additional fee of 3.5% of the gross
offering proceeds payable upon the Companys consummation of an Initial Business Combination. Such
amount is reflected as deferred offering costs of $4,375,000 on the consolidated balance sheet.
The underwriters will not be entitled to any interest accrued on the deferred discount.
4. Related Party Transactions
Founder Shares In August 2010, the Sponsor purchased 2,464,286 shares of common stock
(the Founder Shares) for $25,000, or $0.01 per share. Subsequently, on October 25, 2010, the
Sponsor returned an aggregate of 124,170 of the Founder Shares to the Company, which the Company
cancelled. Thereafter, on October 25, 2010, the Sponsor transferred an aggregate of 23,400 of the
Founder Shares to John K. Haley and Sonny King, each of whom agreed to serve on the Companys board
of directors following the closing of the Public Offering. The fair value of the securities
transferred was nominal.
On November 23, 2010, members of the Sponsor purchased an aggregate of 5,333,333 warrants (the
Sponsor Warrants) at $0.75 per warrant (for an aggregate purchase price of $4,000,000) from the
Company on a private placement basis simultaneously with the closing of the Public Offering.
Forfeiture As a result of the underwriters over-allotment option not being
exercised for the Public Offering, the Sponsor and the Companys independent directors, John
K. Haley and Sonny King (collectively, the Initial Stockholders), forfeited an aggregate
of 305,232 Founder Shares on January 8, 2011. After giving effect to the forfeitures, the
Initial Stockholders own 14% of the Companys issued and outstanding shares.
In addition, 290,697 of the Founder Shares in an amount equal to 2.0% of the Companys
issued and outstanding shares after the Public Offering (Earnout Shares), will be subject
to forfeiture by the Initial Stockholders in the event the last sales price of the Companys
stock does not equal or exceed $12.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period within 24 months following the closing of the Companys Initial
Business Combination.
Rights The Founder Shares are identical to the shares of common stock included in
the units sold in the Public Offering except that (i) the Founder Shares will be subject to
certain transfer
11
restrictions, as described in more detail below, and (ii) the Initial Stockholders have
agreed to waive their redemption rights with respect to the Founder Shares and public shares
they purchase in connection with the Initial Business Combination and will also waive their
redemption rights with respect to the Founder Shares if the Company fails to consummate an
Initial Business Combination by August 23, 2012.
Voting If the Company seeks stockholder approval of its Initial Business
Combination, the Initial Stockholders have agreed to vote the Founder Shares in accordance
with the majority of the votes cast by the public stockholders and to vote any public shares
purchased during or after the Public Offering in favor of the Initial Business Combination.
Liquidation Although the Initial Stockholders and their permitted transferees
waived their redemption rights with respect to the Founder Shares if the Company fails to
consummate an Initial Business Combination by August 23, 2012, they will be entitled to
redemption rights with respect to any public shares they may own.
Sponsor Warrants Each Sponsor Warrant is exercisable into one share of common stock at
$11.50 per share. The proceeds from the sale of the Sponsor Warrants were added to the proceeds
from the Public Offering held in the Trust Account. The Sponsor Warrants are identical to the
warrants included in the units sold in the Public Offering except that the Sponsor Warrants (i) are
not be redeemable by the Company as long as they are held by members of the Sponsor or any of their
permitted transferees, (ii) are subject to certain transfer restrictions described in more detail
below and (iii) may be exercised for cash or on a cashless basis. Since the Company is not
required to net-cash settle the Sponsor Warrants, management has determined that the Sponsor
Warrants will be recorded at fair value and classified within stockholders equity as Additional
paid-in capital upon their issuance in accordance with FASB ASC 815-40.
Disposition Restrictions The Initial Stockholders have agreed not to transfer, assign or
sell any of their Founder Shares until one year after the completion of the Initial Business
Combination or earlier if the last sales price of the Companys common stock exceeds $12.00 per
share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the
like) for any 20 trading days within any 30-trading day period commencing at least 150 days from
the date of consummation of an Initial Business Combination. The members of the Sponsor have
agreed not to transfer, assign or sell any of the Sponsor Warrants, including the common stock
issuable upon exercise of the Sponsor Warrants, until 30 days after the completion of an Initial
Business Combination.
Registration Rights The holders of the Founder Shares, Sponsor Warrants and warrants
that may be issued upon conversion of working capital loans will have registration rights to
require the Company to register a sale of any of the securities held by them pursuant to the
registration rights agreement. These securityholders will be entitled to make up to three demands,
excluding short form demands, that the Company register such securities for sale under the
Securities Act of 1933, as amended (the Securities Act). In addition, these securityholders have
piggy-back registration rights to include their securities in other registration statements filed
by the Company. However, the registration rights agreement provides that the Company will not
permit any registration statement filed under the Securities Act to become effective until
termination of the applicable lock-up period, which occurs (i) in the case of the Founder Shares,
(A) one year after the completion of the Initial Business Combination or earlier if, subsequent to
the Initial Business Combination, the last sales price of the Companys common stock equals or
exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after the Initial Business Combination or (B) when the Company consummates a
liquidation, merger, stock exchange or other similar transaction after the Companys Initial
Business
12
Combination which results in all of the Companys stockholders having the right to exchange their
shares of common stock for cash, securities or other property, and (ii) in the case of the Sponsor
Warrants and the respective common stock underlying such warrants, 30 days after the completion of
the Companys Initial Business Combination. The Company will bear the costs and expenses of filing
any such registration statements.
5. Other Related Party Transactions
Administrative Services
The Company has agreed to pay $5,000 a month in total for office space and general and
administrative services to Associates. Services commenced promptly after the date the Companys
securities were first quoted on the OTCBB and will terminate upon the earlier of (i) the
consummation of an Initial Business Combination or (ii) the liquidation of the Company. No
payments have been made under this agreement, and as of March 31, 2011, $25,000 is due to
Associates and is included in accounts payable and other liabilities.
Loan Payable
For the period from July 22, 2010 (date of inception) to March 31, 2011, Associates paid vendor
bills on behalf of the Company in the aggregate amount of $30,049. This amount is payable on
demand without interest.
Note Payable
On August 5, 2010, the Company issued an unsecured promissory note for $25,000 to Associates;
proceeds from the loan were used to fund a portion of the organizational and offering expenses owed
by the Company to third parties. The principal balance of the loan was repayable on the earlier of
(i) the date of the consummation of the Public Offering or (ii) December 31, 2010. The principal
balance was pre-payable without penalty at any time in whole or in part. This note was repaid on
November 23, 2010.
6. Trust Account
A total of $124,950,000, which includes $120,950,000 of the net proceeds from the Public Offering
and $4,000,000 from the private placement, was placed in the Trust Account.
As of March 31, 2011, investment securities in the Companys Trust Account consist of $125,007,469
in U.S. government treasury bills with a maturity of 180 days or less and another $491 invested in
the Western Institutional US Treasury Reserves money market fund, a fund which invests
exclusively in U.S. government securities. The carrying amount, excluding accrued interest income,
gross unrealized holding gains and fair value of held-to-maturity securities at March 31, 2011 are
as follows:
Gross | ||||||||||||
Unrealized | ||||||||||||
Carrying | Holding | |||||||||||
Amount | Gains | Fair Value | ||||||||||
Held-to-maturity: |
||||||||||||
United
States Treasury Securities |
$ | 125,007,469 | $ | 6,282 | $ | 125,013,751 |
13
7. Fair Value Measurements
The Company has adopted ASC 820, Fair Value Measurement, for its financial assets and liabilities
that are re-measured and reported at fair value at each reporting period, and non-financial assets
and liabilities that are re-measured and reported at fair value at least annually. The adoption of
ASC 820 did not have an impact on the Companys financial position or results of operations.
The following table presents information about the Companys assets and liabilities that are
measured at fair value on a recurring basis as of March 31, 2011, and indicates the fair value
hierarchy of the valuation techniques the Company utilized to determine such fair value. In
general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active
markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data
points that are observable such as quoted prices, interest rates and yield curves. Fair values
determined by Level 3 inputs are unobservable data points for the asset or
liability, and includes situations where there is little, if any, market activity for the asset or
liability:
Quoted | Significant | |||||||||||||||
Prices in | Significant | Other | ||||||||||||||
March 31, | Active | Other | Unobservable | |||||||||||||
2011 | Markets | Observable Inputs | Inputs | |||||||||||||
Description | (unaudited) | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets: |
||||||||||||||||
Restricted cash
equivalents held
in Trust Account |
$ | 125,014,242 | $ | 125,014,242 | $ | | $ | | ||||||||
Quoted | Significant | |||||||||||||||
Prices in | Significant | Other | ||||||||||||||
Active | Other | Unobservable | ||||||||||||||
December 31, | Markets | Observable Inputs | Inputs | |||||||||||||
Description | 2010 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets: |
||||||||||||||||
Restricted cash equivalents held in Trust Account |
$ | 124,972,880 | $ | 124,972,880 | $ | | $ | | ||||||||
8. Income Taxes
Components of the Companys deferred tax assets are as follows:
March 31, 2011 (unaudited) | ||||
Net operating loss carryforwards |
$ | 25,000 | ||
Amortizable start-up costs |
50,000 | |||
Less, valuation allowance |
(75,000 | ) | ||
$ | | |||
14
December 31, 2010 | ||||
Net operating loss carryforwards |
$ | 13,512 | ||
Less, valuation allowance |
(13,512 | ) | ||
$ | | |||
Management has recorded a full valuation allowance against its deferred tax assets because it does
not believe it is more likely than not that sufficient taxable income will be generated. The
effective tax rate differs from the statutory rate of 34% due to the establishment of the valuation
allowance. The net operating loss carry-forward expires in 2030.
9. Stockholders Equity
Common Stock The authorized common stock of the Company includes up to 400,000,000 shares.
Holders of the Companys common stock are entitled to one vote for each share of common stock. At
March 31, 2011, there were 14,534,884 shares of common stock outstanding.
Preferred Shares The Company is authorized to issue 1,000,000 preferred shares with such
designations, voting and other rights and preferences as may be determined from time to time by the
Companys board of directors. At March 31, 2011, there were no shares of preferred stock
outstanding.
15
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to the Company, us or we refer to JWC Acquisition Corp. The following discussion
and analysis of the Companys consolidated financial condition and results of operations should be
read in conjunction with the condensed consolidated financial statements and the notes thereto
contained elsewhere in this report and in the consolidated financial statements and the notes
thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2010. Certain
information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Form 10-Q including,
without limitation, statements under Managements Discussion and Analysis of Financial Condition
and Results of Operations regarding our financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements. When used in this
Form 10-Q, words such as anticipate, believe, estimate, expect, intend and similar
expressions, as they relate to us or our management, identify forward-looking statements. Such
forward-looking statements are based on the beliefs of management, as well as assumptions made by,
and information currently available to, our management. Actual results could differ materially from
those contemplated by the forward-looking statements as a result of certain factors detailed in our
filings with the SEC. All subsequent written or oral forward-looking statements attributable to us
or persons acting on our behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company formed on July 22, 2010 for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (an Initial Business Combination). We will seek to capitalize on the
substantial deal sourcing, investing and operating expertise of our management team to identify,
acquire and operate a middle-market business in the consumer products or specialty retail sectors
operating primarily in North America, although we may pursue acquisition opportunities in other
sectors or in other geographic regions. In addition, we will not effect a business combination with
another blank check company or a similar company with nominal operations.
Results of Operations
Through March 31, 2011, our efforts have been limited to organizational activities, activities
relating to our Public Offering, activities relating to identifying and evaluating prospective
acquisition candidates and activities relating to general corporate matters. We have not generated
any revenues, other than interest income earned on the proceeds held in the Trust Account. As of
March 31, 2011, approximately $125.0 million was held in the Trust Account (including $4.38 million
of deferred underwriting discounts and commissions, $4.0 million from the sale of the Sponsor
Warrants and approximately $41,587 in accrued interest) and we had cash outside of trust of
approximately $589,000 and approximately $71,000 in accounts payable and accrued expenses. Up to
$1.25 million in interest income on the balance of the Trust Account (net of franchise and income
taxes payable) may be available to us to fund our working capital requirements. Through March 31,
2011, the Company had not withdrawn any funds from interest earned on the trust proceeds. Other
than the deferred underwriting discounts and commissions, no amounts are payable to the
underwriters of our Public Offering in the event of a business combination.
16
For the period from January 1, 2011 through March 31, 2011, we had a net loss of $155,286 and
earned $41,587 in interest income. All of our funds in the Trust Account are invested in U.S.
government treasury bills with a maturity of 180 days or less or in money market funds meeting certain
conditions under Rule 2a-7 under the Investment Company Act.
We have agreed to pay Associates, an entity controlled by John W. Childs, our Chairman and Chief
Executive Officer, a total of $5,000 per month for office space, administrative services and
secretarial support. For the period from January 1, 2011 through March 31, 2011, the Company
accrued a payable of $15,000 for these costs.
Liquidity and Capital Resources
On November 23, 2010, we consummated our Public Offering of 12,500,000 units at a price of $10.00
per unit. Simultaneously with the consummation of our Public Offering, we consummated the private
sale of 5,333,333 warrants (the Sponsor Warrants) to members of our Sponsor for $4.0 million. We
received net proceeds from our Public Offering and the sale of the Sponsor Warrants of
approximately $125.75 million, net of the non-deferred portion of the underwriting commissions of
$2.5 million (none of which were incurred from January 1, 2011 through March 31, 2011) and offering
costs and other expenses of approximately $750,000 (none of which were incurred from January 1,
2011 through March 31, 2011). For a description of the proceeds generated in our Public Offering
and a discussion of the use of such proceeds, we refer you to Note 6 of the unaudited condensed
consolidated financial statements included in Part I, Item 1 of this Report. As of March 31, 2011,
we had cash of $589,109.
We will depend on sufficient interest being earned on the proceeds held in the Trust Account to
provide us with up to $1,250,000 of additional working capital we may need to identify one or more
target businesses, conduct due diligence and complete our initial business combination, as well as
to pay any franchise and income taxes that we may owe. As described elsewhere in this Report, the
amounts in the Trust Account may be invested only in U.S. government treasury bills with a maturity
of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the
Investment Company Act. The current low interest rate environment may make it more difficult for
such investments to generate sufficient funds, together with the amounts available outside the
Trust Account, to locate, conduct due diligence, structure, negotiate and close our Initial
Business Combination. If we are required to seek additional capital, we would need to borrow funds
from our Sponsor or management team to operate or may be forced to liquidate. Neither our Sponsor
nor our management team is under any obligation to advance funds to us in such circumstances. Any
such loans would be repaid only from funds held outside the Trust Account or from funds released to
us upon completion of our Initial Business Combination. If we are unable to complete our Initial
Business Combination because we do not have sufficient funds available to us, we will be forced to
cease operations and liquidate the Trust Account.
For the period from January 1, 2011 through March 31, 2011, we disbursed an aggregate of
approximately $108,182 out of the proceeds of our Public Offering not held in trust, for expenses in
legal, accounting and filing fees relating to our SEC reporting obligations, general corporate
matters, and miscellaneous expenses.
Off-balance sheet financing arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet
arrangements. We do not participate in transactions that create relationships with unconsolidated
entities or financial partnerships, often referred to as variable interest entities, which would
have been established for the purpose of facilitating off-balance sheet arrangements.
17
We have not entered into any off-balance sheet financing arrangements, established any special
purpose entities, guaranteed any debt or commitments of other entities, or entered into any
non-financial assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or
long-term liabilities other than a monthly fee of $5,000 for office space and general and
administrative services payable to Associates, an entity controlled by our Chairman and Chief
Executive Officer. We began incurring this fee on November 23, 2010 and will continue to incur this
fee monthly until the earlier of the completion of our Initial Business Combination and our
liquidation.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the financial
statements, and income and expenses during the periods reported. Actual results could materially
differ from those estimates. We have identified the following as our critical accounting policies:
Cash and cash equivalents
The Company considers all highly liquid investments with original maturities of three months or
less to be cash equivalents.
Cash held in trust
A total of $124.95 million, including approximately $116.57 million of the net proceeds from our
Public Offering, $4.0 million from the sale of the Sponsor Warrants and $4.38 million of deferred
underwriting discounts and commissions, was placed in the Trust Account with Continental Stock
Transfer & Trust Company serving as trustee. The trust proceeds are invested in U.S. Treasury bills
with a maturity of 180 days or less or money market funds meeting certain conditions under Rule
2a-7 under the Investment Company Act. As of March 31, 2011, the balance in the Trust Account was
approximately $125.01 million, which includes $57,960 of interest earned since the inception of the
trust.
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. The weighted average common shares
issued and outstanding of 14,558,891 for the period from January 1, 2011 to March 31, 2011 takes
into effect the 305,232 Founder Shares forfeited on January 8, 2011 by the Initial Stockholders due
to the underwriters over-allotment option not being exercised. The 17,833,333 warrants related to
our Public Offering and the private placement of the Sponsor Warrants are contingently issuable
shares and are excluded from the calculation of diluted earnings per share because they are
anti-dilutive.
Use of estimates
The preparation of financial statements in conformity with GAAP 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 revenue and expenses during the reporting period. Actual results could differ from those
estimates.
18
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.
Recent accounting pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if
currently adopted, would have a material effect on the Companys financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We were incorporated in Delaware on July 22, 2010 for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more operating businesses. We were considered in the development stage at March 31,
2011 and had not yet commenced any operations. Through March 31, 2011, our efforts have been
limited to organizational activities, activities relating to our Public Offering, activities
relating to identifying and evaluating prospective acquisition candidates and activities relating
to general corporate matters. We did not have any financial instruments that were exposed to market
risks at March 31, 2011.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure
that information required to be disclosed in our reports filed or submitted under the Securities
Exchange Act of 1934, as amended (the Exchange Act) is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in company reports filed or submitted under the Exchange Act is
accumulated and communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and
Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation
of our disclosure controls and procedures as of March 31, 2011. Based upon their evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.
During the most recently completed fiscal quarter, there has been no change in our internal control
over financial reporting that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
19
ITEM 1A. RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties any of which
could result in a significant or material adverse effect on our results of operations or financial
condition. Part I, Item 1A, Risk Factors of our Annual Report on Form 10-K for the year ended
December 31, 2010 includes a detailed discussion of these factors and these factors have not
changed materially from those included in the Form 10-K. Additional risk factors not presently
known to us or that we currently deem immaterial may also impair our business or results of
operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Use of Proceeds from our Public Offering
On November 23, 2010, we consummated our Public Offering of 12,500,000 units, with each unit
consisting of one share of our common stock and one warrant to purchase one share of our common
stock at an exercise price of $11.50 per share. The warrants will become exercisable on the later
of (i) 30 days after the completion of the Initial Business Combination and (ii) 12 months from the
closing of the Public Offering. The warrants expire five years after the completion of our Initial
Business Combination or earlier upon redemption or liquidation. Once the warrants become
exercisable, the warrants will be redeemable in whole and not in part at a price of $0.01 per
warrant upon a minimum of 30 days notice if, and only if, the last sale price of our common stock
equals or exceeds $18.00 per share for any 20 trading days within a 30 trading day period ending on
the third business day before we send the notice of redemption. The units in the public offering
were sold at an offering price of $10.00 per unit, generating total gross proceeds of $125,000,000.
Citigroup Global Markets Inc., acted as sole bookrunning manager and as representative of I-Bankers
Securities, Inc., Ladenburg Thalmann & Co. Inc. and Maxim Group LLC. (together, the
Underwriters). The securities sold in the offering were registered under the Securities Act on a
registration statement on Form S-1 (No. 333-168798). The SEC declared the registration statement
effective on November 17, 2010.
We paid a total of $2.5 million in underwriting discounts and commissions (none of which were
incurred from January 1, 2011 through March 31, 2011) and approximately $750,000 for other costs
and expenses related to the offering (none of which were incurred from January 1, 2011 through
March 31, 2011). In addition, the Underwriters agreed to defer $4.375 million in underwriting
discounts and commissions, which amount will be payable upon consummation of our Initial Business
Combination if consummated. We also repaid Associates in satisfaction of an outstanding promissory
note after the closing of our Public Offering.
We also consummated the simultaneous private sale of 5,333,333 Sponsor Warrants to members of our
Sponsor at a price of $0.75 per warrant (for an aggregate purchase price of $4,000,000). The
Sponsor Warrants (including the common stock issuable upon exercise of the Sponsor Warrants) are
not transferable, assignable or salable until 30 days after the completion of our Initial Business
Combination (except, among certain other limited exceptions, to our officers and directors and
other persons or entities affiliated with the members of our Sponsor) and they will not be
redeemable by the Company so long as they are held by members of our Sponsor or their permitted
transferees. Otherwise, the Sponsor Warrants have terms and provisions that are identical to those
of the Public Warrants, except that the Sponsor Warrants may be exercised by the holders on a
cashless basis. The sale of the Sponsor Warrants was made pursuant to the exemption from
registration contained in Section 4(2) of the Securities Act.
After deducting the underwriting discounts and commissions (excluding the deferred portion of
$4.375 million in underwriting discounts and commissions, which amount will be payable upon
consummation of our Initial Business Combination if consummated) and the estimated offering
expenses, the total net proceeds from our Public Offering and the private placement of Sponsor
Warrants was $125,750,000 of
20
which $124,950,000 (or approximately $10.00 per unit sold in the Public Offering) was placed in the
Trust Account.
Purchases of Equity Securities
The following table sets forth purchases of Public Warrants by JWC Warrant Holdings, LLC (JWC
Warrant Holdings) for the period from January 1, 2011 to March 31, 2011.
Total number | Average price | |||||||
of warrants | paid per | |||||||
Period | purchased(1) | warrant(1) | ||||||
January 1, 2011 January 31, 2011 |
2,228,486 | $ | 0.62 | |||||
February 1, 2011 February 28, 2011 |
12,900 | $ | 0.67 | |||||
March 1, 2011 March 31, 2011 |
| | ||||||
Total |
2,241,386 | $ | 0.62 |
(1) | The information in the table is based on information available to us from public filings made by JWC Warrant Holdings and from disclosures to us by JWC Warrant Holdings. We have also been informed that JWC Warrant Holdings purchased 510,000 Public Warrants at an average price of $0.83 per warrant in April 2011 and 1,765,000 Public Warrants at an average price of $0.88 per warrant during May 2011. We have been informed that all of these purchases of Public Warrants by JWC Warrant Holdings were made through a broker-dealer, reported on the Over-The-Counter Bulletin Board quotation system and were not part of any publicly announced plan or program. John W. Childs, our Chairman and Chief Executive Officer, is the controlling member of JWC Warrant Holdings and, under the terms of JWC Warrant Holdings limited liability company agreement, has sole dispositive control of the 4,516,886 Public Warrants held by JWC Warrant Holdings. Mr. Childs disclaims beneficial ownership of such warrants acquired by JWC Warrant Holdings except to the extent of his pecuniary interest therein. |
We have
been informed by JWC Warrant Holdings that it may discontinue acquiring
additional Public Warrants at any time without
notice to the Company or any other party and it may acquire additional Public
Warrants from time to time in open market or privately negotiated
transactions.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. REMOVED AND RESERVED
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly
Report on Form 10-Q.
Exhibit Number | Description | |
31.1*
|
Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
31.2*
|
Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
32.1*
|
Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. | |
32.2*
|
Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. |
* | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
JWC ACQUISITION CORP. Date: May 16, 2011 |
||||
/s/ John W. Childs | ||||
Name: | John W. Childs | |||
Title: | Chief Executive Officer (principal executive officer) | |||
/s/ David A. Fiorentino | ||||
Name: | David A. Fiorentino | |||
Title: | Chief Financial Officer (principal financial officer) | |||
23