**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-K**






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







**For
      the fiscal year ended December 31, 2005**




**OR**




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







**For
      the transition period from********to******




**Commission
      file number: 001-32659**


---



**COLD
      SPRING CAPITAL INC.**


**(Exact
      name of registrant as specified in its charter)**







**Delaware**
            
            **75-3192592****(State
                or other jurisdiction of**
              **incorporation
                or organization)**
            
            **(IRS
                Employer**
              **Identification
                Number)**







**51
                Locust Avenue, Suite 302, New Canaan, Connecticut**
            
            **06840****(Address
                of principal executive offices)**
            
            **(Zip
                Code)**







**Registrant’s
      telephone number, including area code: (203) 972-0888**


---



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





Title of each class
            
            Name of each exchange
              on which
              registeredCommon Stock, $0.001 par value
            
            American Stock ExchangeWarrants
            
            American Stock ExchangeUnits
            
            American Stock Exchange











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


**NONE**


**(Title
      Of Class)**








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





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





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 x No  ̈




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




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







Large
      accelerated filer  ̈     Accelerated
      filer  ̈     Non-accelerated
      filer x





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




The
      aggregate market value of the voting common stock held by non-affiliates of
      the
      Registrant computed by reference to the closing sales price for the Registrant’s
      Common Stock on March 23, 2006, as reported on the American Stock Exchange
      was
      approximately $112,600,000. (The Registrant became subject to the reporting
      requirements of the Exchange Act in November 2005 and, therefore, is not able
      to
      provide information about the market value as of the end of the second quarter
      of 2005.)




In
      determining the market value of the voting stock held by any non-affiliates,
      shares of Common Stock of the Registrant beneficially owned by directors,
      officers and holders of more than 10% of the outstanding shares of Common Stock
      of the Registrant have been excluded. This determination of affiliate status
      is
      not necessarily a conclusive determination for other purposes.





The
      number of shares outstanding of the Registrant’s Common Stock as of March 23,
      2006 was 25,000,000 shares.







**TABLE
      OF CONTENTS**







**Item**
              
              **Page**1.
              Business
              21A.
              Risk
                  Factors
              61B.
              Unresolved
                  Staff Comments
              142.
              Properties
              143.
              Legal
                  Proceedings
              154.
              Submission
                  of Matters to a Vote of Security Holders
              155.
              Market
                  for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                  Purchases of Equity Securities
              156.
              Selected
                  Financial Data
              167.
              Management
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              167A.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              178.
              Financial
                  Statements and Supplementary Data
              179.
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              179A.
              Controls
                  and Procedures
              179B.
              Other
                  Information
              1810.
              Directors
                  and Executive Officers of the Registrant
              1811.
              Executive
                  Compensation
              1912.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              2013.
              Certain
                  Relationships and Related Transactions
              2114.
              Principal
                  Accounting Fees and Services
              2215.
              Exhibits
                  and Financial Statement Schedules
              22SIGNATURES
              33





i





***FORWARD-LOOKING
      STATEMENTS***




*This
      Annual Report on Form 10-K and the documents incorporated by reference into
      the
      Annual Report on Form 10-K include forward-looking statements within the meaning
      of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
      Exchange Act of 1934. These forward-looking statements can be identified by
      the
      use of forward-looking terminology, including the words “believes,” “estimates,”
“anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,”
“continue,” or “should,” or, in each case, their negative or other variations or
      comparable terminology. Such statements include, but are not limited to, any
      statements relating to our ability to consummate any acquisition or other
      business combination and any other statements that are not statements of current
      or historical facts. These statements are based on management’s current
      expectations, but actual results may differ materially due to various factors,
      including, but not limited to, our being a development stage company with no
      operating history, our dependence on key personnel, some of whom may join us
      following an initial transaction, our personnel allocating their time to other
      businesses and potentially having conflicts of interest with our business,
      our
      potentially being unable to obtain additional financing to complete an initial
      transaction, the ownership of our securities being concentrated, and those
      other
      risks and uncertainties detailed in the Company’s filings with the Securities
      and Exchange Commission.*




*By
      their nature, forward-looking statements involve risks and uncertainties because
      they relate to events and depend on circumstances that may or may not occur
      in
      the future. We caution you that forward-looking statements are not guarantees
      of
      future performance and that our actual results of operations, financial
      condition and liquidity, and developments in the industry in which we operate
      may differ materially from those made in or suggested by the forward-looking
      statements contained in this Annual Report on Form 10-K. In addition, even
      if
      our results of operations, financial condition and liquidity, and developments
      in the industry in which we operate are consistent with the forward-looking
      statements contained in this Annual Report on Form 10-K, those results or
      developments may not be indicative of results or developments in subsequent
      periods.*




*These
      forward-looking statements are subject to numerous risks, uncertainties and
      assumptions about us described in “Risk Factors.” The forward-looking events we
      discuss in this Annual Report on Form 10-K speak only as of the date of such
      statement and might not occur in light of these risks, uncertainties and
      assumptions. Except as required by applicable law, we undertake no obligation
      and disclaim any obligation to publicly update or revise any forward-looking
      statements, whether as a result of new information, future events or
      otherwise.*




*Unless
      otherwise provided in this Annual Report on Form 10-K, references to “the
      Company,” “the Registrant,” “we,” “us” and “our” refer to Cold Spring Capital
      Inc.*







1





**PART
      I**





Item
      1.Business.




**General**




We
      were
      incorporated in Delaware on May 26, 2005, as a blank check company formed for
      the
      purpose of acquiring, through a merger, capital stock exchange, asset
      acquisition or other similar business combination, one or more operating
      businesses, portfolios of financial assets or real estate assets that we expect
      will generate a portfolio of financial assets. A ‘‘portfolio of financial
      assets’’ refers to a pool of consumer or commercial receivables, which may or
      may not be secured by collateral, such as real estate or consumer goods. The
      phrase ‘‘real estate assets that we expect will generate financial assets’’
refers to real estate that we would purchase and then re-sell, likely in smaller
      parcels, in circumstances where we would finance a portion of the sale price
      for
      our buyers and receive promissory notes from the purchasers secured by the
      real
      estate sold. While
      we
      may seek to effect an initial transaction with more than one target, our initial
      transaction must be with a target whose fair market value is at least equal
      t o
      80% of
      our net assets ( excluding
      the amount held in a trust account representing a portion of the underwriters’
discount) at the time of such acquisition.




A
      registration statement for our initial public offering was declared effective
      on
      November 11, 2005. On November 16, 2005, we sold 20,000,000 units in our initial
      public offering. Each of our units consists of one share of our common stock,
      $0.001 par value per share, and two redeemable common stock purchase warrants.
      Each warrant sold in the initial public offering entitles the holder to purchase
      from us one share of common stock at an exercise price of $5.00. We received
      net
      proceeds of  $109,966,924 from our initial public offering. Of those net
      proceeds, approximately $107,426,000 (plus an additional $2,400,000 attributable
      to a deferred underwriters’ discount) has
      been
      placed in a trust account and will not be released until the earlier of (i)
      the
      completion of an initial transaction or (ii) our liquidation. Therefore, unless
      and until an initial transaction is consummated, the proceeds held in the trust
      account will not be available to us. For a more complete discussion of our
      financial information, see the section appearing elsewhere in our Annual Report
      on Form 10-K entitled “Selected
      Financial Data”.




We
      intend
      to focus on specialty finance companies (and portfolios) in market sectors
      which
      we believe possess potential for attractive returns, either in terms of
      significant revenue growth opportunities or in terms of unique opportunities
      to
      expand profitability and cash flow. While we have not determined all of the
      desired attributes and criteria of potential targets, we will generally seek
      to
      identify targets that we believe will generate a favorable yield on our
      investment, net of anticipated loan losses, delinquencies, and servicing costs.
      We will seek executive management teams who have demonstrated the ability to
      operate and profitably grow specialty finance companies. We will look to create
      competitive advantages in a given market place.





Examples
      of qualities we will look for in a target operating business
      include:





·
            experienced
                management groups with operating experience in finance
                companies;


·
            demonstrated
                track records of growth in revenues and cash
                flow;


·
            involvement
                in a fragmented industry providing opportunity for additional
                acquisitions;


·
            well-developed
                and disciplined credit underwriting and risk management
                culture;


·
            regulatory
                or technical barriers to entry;
                and/or


·
            companies
                with strong internal growth prospects with a need for growth
                capital.





Examples
      of qualities we will look for in a target portfolio of financial assets
      include:





·
            the
                asset quality and historical performance, including but not limited
                to
                historical interest rates, delinquency and default and loss
                experience;


·
            the
                experience and track record of the seller of the
                assets;


·
            the
                credit underwriting policies and procedures employed in creating
                the
                portfolio;


·
            the
                value of any collateral;


·
              cash
                  flow potential;


·
            the
                quality of the servicing by the seller of the assets prior to the
                date of
                sale; and/or


·
            the
                geographic diversity of the underlying
                borrowers.





Examples
      of qualities we will look for in a target real estate asset
      include:





·
              geographic
                  location;


·
            attractive
                topographical features;


·
            ability
                to subdivide the property;


·
            demand
                in the area;


·
            general
                economic conditions in the region;
                and/or


·
            anticipated
                resale value and profitability.





After
      effecting an initial transaction, we intend to seek to realize and enhance
      shareholder value through some combination of borrowed money to pay a portion
      of
      the purchase price of additional assets, strategic planning, cost reductions,
      complementary acquisitions, divestitures of non-strategic assets, investments
      in
      technology, and additional investments in real estate and/or portfolios of
      financial assets that we believe are attractive. In addition, we currently
      intend to use leverage to finance a significant portion of the acquisition
      or
      acquisitions we make. While we believe that the proceeds raised in our initial
      public offering are sufficient to allow us to complete an initial transaction,
      we anticipate that we will seek to borrow money to pay a portion of the purchase
      price in connection with an acquisition to attempt to increase the return on
      our
      investment. Use of leverage will also allow us to acquire more than we would
      otherwise be able to without leverage. As a result, it is possible that, through
      the use of debt financing, we may acquire a target with a fair market value
      in
      excess of our net assets at the time of the acquisition.





We
      are
      not presently engaged in, and will not engage in, any substantive commercial
      business until we consummate an initial transaction. In the case of all possible
      acquisitions, we will seek to determine whether the transaction is advisable
      and
      in the best interests of us and our shareholders. We believe it is possible
      that
      our attractiveness as a potential buyer of businesses and assets may increase
      after the consummation of an initial transaction and there may or may not be
      additional acquisition opportunities as we grow and integrate our acquisitions.
      We may or may not make future acquisitions. Fundamentally, however, we believe
      that, following an initial transaction, we could learn of, identify and analyze
      acquisition targets in the same way after an initial transaction as we will
      before an initial transaction. To the extent we are able to identify multiple
      acquisition targets and options as to which business or assets to acquire as
      part of an initial transaction, we intend to seek to consummate the acquisition
      which is most attractive and provides the greatest opportunity for creating
      shareholder value. The determination of which entity is the most attractive
      would be based on our analysis of a variety of factors, including whether such
      acquisition would be in the best interests of our securityholders, the purchase
      price, the terms of the sale, the perceived quality of the assets and the
      likelihood that the transaction will close. We intend to source our target
      opportunities from various internal and external sources. We believe that we
      will be able to generate deal flow from internal sources primarily resulting
      from personal contacts and relationships that our officers and directors have
      developed and maintain in the specialty finance, banking and real estate
      industries, as well as through relationships they have developed and maintain
      with various professionals, including accountants, consultants, commercial
      bankers, attorneys, regional brokers and other investors. We will also seek
      to
      generate deal flow from external sources by contacting investment bankers,
      banks, insurance companies and other members of the financial community which
      may present solicited or unsolicited proposals. We are currently in the process
      of evaluating and identifying targets for an initial transaction. However,
      we
      cannot assure you that we will be able to locate a target or that we will be
      able to engage in an initial transaction on favorable terms or at all. While
      we
      may or may not consummate an initial transaction with a company involved in
      the
      consumer or commercial industries, we believe this focus should prove to be
      an
      attractive area in which to find a target, and we believe that many companies
      in
      those areas would find the opportunity to sell to us attractive as well. We
      believe that the owners of many potential targets would find an acquisition
      by
      us to be an easier and less risky route to liquidity than going through an
      initial public offering or other financing transactions.





2


**Government
      Regulations**





Some
      aspects of our future operations may be subject to supervision and regulation
      by
      state and federal governmental authorities and may be subject to various laws
      and judicial and administrative decisions imposing various requirements and
      restrictions. Those items include, but are not limited to, credit granting
      activities, including licensing requirements in some jurisdictions; establishing
      maximum interest rates, finance charges and other fees we may charge our
      clients; governing any secured transactions we may enter into; requiring us
      to
      specify information and make certain disclosures to our clients; setting
      collection, foreclosure, repossession and claims handling procedures and other
      trade practices; prohibiting discrimination in the extension of credit and
      administration of our loans; and regulating the use and reporting of information
      related to a client’s credit experience.





**Effecting** **an
      Initial Transaction**




*General*




We
      are
      not presently engaged in, and will not engage in, any substantive commercial
      business until we consummate an initial transaction. We intend to utilize cash
      derived from the proceeds of our initial public offering, our capital stock,
      debt or a combination of these in effecting one or more business combinations
      or
      portfolio or real estate acquisitions. An initial transaction may involve the
      acquisition of, or merger with, a company which does not need substantial
      additional capital but which desires to establish a public trading market for
      its securityholders, while avoiding what it may deem to be adverse consequences
      of undertaking a public offering itself. These include time delays, significant
      expense, loss of voting control and compliance with various Federal and state
      securities laws. In the alternative, we may seek to consummate an initial
      transaction with a company that may be in its early stages of development or
      growth or that is otherwise at a stage where a sale is advisable. We may also
      purchase a portfolio of financial assets from a financial institution in a
      market sector that we believe is promising. Such an acquisition could also
      include the benefit of acquiring some of the management, infrastructure and
      marketing techniques which created the portfolio. Finally, we may acquire real
      estate assets that we expect will generate a portfolio of financial assets
      as
      the real estate is resold and we provide financing to customers. While we may
      seek to effect business combinations or portfolio or real estate acquisitions
      with more than one target, we may have the ability, as a result of our limited
      resources, to effect only a single business combination or portfolio or real
      estate acquisition. To the extent we try to consummate more than one transaction
      at the same time, all of the risks associated with acquisitions, including
      diversion of management’s attention, legal, financial, accounting and due
      diligence expenses, and general risks that transactions will not be consummated,
      will be exacerbated, especially in light of the small size of our management
      team and our limited financial and other resources. In addition, if our initial
      transaction entails simultaneous transactions with different sellers, each
      seller will need to agree that its transaction is contingent upon simultaneous
      closing of the other transactions, which may make it more difficult for us,
      or
      delay our ability, to complete the initial transaction. As a result, if we
      attempt to consummate our initial transaction in the form of multiple
      transactions, there is an increased risk that we will not be in a position
      to
      consummate some or all of those transactions, which could result in our failure
      to have targets with the required aggregate fair market value, in which event
      we
      may be forced to liquidate.




*Search
      for a target*




We
      are
      currently in the process of identifying and evaluating targets for an initial
      transaction. We have not entered into any acquisition agreements. Subject to
      the
      limitations that a target have a fair market value of at least 80% of our net
      assets (excluding the amount held in the trust account representing a portion
      of
      the underwriters’ discount) at the time of the acquisition, as described below
      in more detail, we have virtually unrestricted flexibility in identifying and
      selecting prospective acquisition candidates. To the extent we effect an
      initial transaction ,
      we may
      be affected by numerous risks inherent in the business and operations of the
      target finance company and/or in real estate assets. These risks in connection
      with an
      initial transaction may
      include risks of a financially unstable company or an entity in its early stage
      of development or growth, including entities without established records of
      sales or earnings. Although our management will endeavor to evaluate the risks
      inherent in a particular target, we cannot assure you that we will properly
      ascertain or assess all significant risk factors.




*Sources
      of targets*




Targets
      candidates have been, and we anticipate will continue to be, brought to our
      attention from various unaffiliated sources, including investment bankers,
      venture capital funds, private equity funds, leveraged buyout funds, management
      buyout funds and other members of the financial community, who may present
      solicited or unsolicited proposals. Our
      officers and directors as well as their affiliates may also bring to our
      attention target candidates. While we do not currently expect to engage the
      services of brokers or professional firms that specialize in locating business
      acquisitions on any formal basis, we may engage these firms in the future,
      in
      which event we may pay a finder’s fee or other compensation from the proceeds of
      our initial public offering not held in trust. In no event, however, will we
      pay
      any of our existing officers, directors or stockholders or any of their
      affiliates or family members any finder’s fee or other compensation for services
      rendered to us prior to or in connection with the consummation of an initial
      transaction nor do we expect any of our officers, directors or stockholders
      or
      any of their affiliates or family members to receive any such fee or
      compensation from any third party.





*Selection
      of a target and structuring of a business combination or portfolio or real
      estate acquisition*





Subject
      to the requirement that our initial transaction must be with a target with
      a
      fair market value that is at least 80% of our net assets (excluding the amount
      held in the trust account representing a portion of the underwriters’ discount)
      at the time of such transaction, our management will have virtually unrestricted
      flexibility in identifying and selecting a prospective target. In evaluating
      a
      prospective target, we anticipate that our management will consider, among
      other
      factors, the following:





·
            financial
                condition and results of operation;


·
            cash
                flow potential;


·
            growth
                potential;


·
            experience
                and skill of management and availability of additional
                personnel;






3


·
            capital
                requirements;


·
            competitive
                position;


·
            barriers
                to entry into the target’s
                industries;


·
            availability
                of financing sources;


·
            security
                measures employed to protect technology, trademarks, customer data
                or
                trade secrets;


·
            degree
                of current or potential market acceptance of the products, processes
                or
                services;


·
            proprietary
                features and degree of intellectual property or other protection
                of the
                products, processes or services;


·
            regulatory
                environment of the industry sector;


·
            asset
                quality and historical performance, including but not limited to
                historical interest rates, delinquency, default and loss
                experience;


·
            credit
                underwriting policies and
                procedures;


·
            methods
                of origination of loans and origination
                channels;


·
            servicing
                platforms and use of information technology;
                and


·
            costs
                associated with effecting the transaction.





In
      evaluating a prospective target real estate asset, our management will consider,
      among other factors, the following:





·
            regulatory
                considerations;


·
            anticipated
                demand and profitability;


·
            geographic
                location;


·
            general
                economic conditions in the area;


·
            ability
                to subdivide the property;


·
            availability
                of financing; and


·
            environmental
                sensitivity.





These
      criteria are not intended to be exhaustive. Any evaluation relating to the
      merits of a particular business combination or portfolio or real estate
      acquisition will be based, to the extent relevant, on the above factors as
      well
      as other considerations deemed relevant by our management in effecting a
      business combination or portfolio or real estate acquisition consistent with
      our
      business objective. In evaluating a prospective target, we will conduct an
      extensive due diligence review which will encompass, among other things,
      meetings with incumbent management and inspection of any facilities, as well
      as
      review of financial reports, portfolio performance and other information which
      will be made available to us. Where possible, we will attempt to structure
      an
      initial transaction to achieve the most favorable tax treatment to us, the
      target and both companies’ stockholders, taking into account other terms of the
      transaction. Depending on the circumstances of any acquisition, however, we
      may
      not be able to structure a transaction in the most tax advantageous manner.
      Further, we cannot assure you that the Internal Revenue Service or appropriate
      state tax authorities will agree with our tax treatment of any transaction.





The
      structure of an initial transaction may take the form of a merger, capital
      stock
      exchange, asset acquisition or other similar structure. We may issue a
      substantial number of additional shares of our common stock or preferred stock,
      a combination of common and preferred stock, or debt securities, to complete
      a
      business combination or portfolio or real estate acquisition. Our management
      team has experience using both equity and debt to finance acquisitions. We
      believe that effective use of leverage can produce a higher return for investors
      than the return available from unlevered acquisitions. It is likely that we
      will
      borrow capital in addition to using the proceeds of our initial public offering
      to consummate our initial transaction. The time and costs required to select
      and
      evaluate a target and to structure and complete the business combination or
      portfolio or real estate acquisition cannot presently be ascertained with any
      degree of certainty. Any costs incurred with respect to the identification
      and
      evaluation of a prospective target with which a business combination or
      portfolio or real estate acquisition is not ultimately completed will result
      in
      a loss to us and reduce the amount of capital available to otherwise complete
      a
      business combination or portfolio or real estate acquisition. However, we will
      not pay any finder’s or consulting fees to our initial stockholders
      ( *i.e.,* persons
      who held shares of our common stock prior to our initial public offering),
      or
      any of their respective affiliates or family members, for services rendered
      to
      or in connection with an initial transaction.





*Fair
      market value of target*





The
      initial target that we acquire must have a fair market value equal to at least
      80% of our net assets (excluding the amount held in the trust account
      representing a portion of the underwriters’ discount) at the time of such
      acquisition. The fair market value of such business, portfolio or asset will
      be
      determined by our board of directors based upon standards which it believes
      are
      generally accepted by the financial community. If our board is not able to
      independently determine that the target has a sufficient fair market value,
      or
      if the target is affiliated with any of our initial stockholders, we will obtain
      an opinion from an unaffiliated, independent investment banking firm which
      is a
      member of the National Association of Securities Dealers, Inc. with respect
      to
      the satisfaction of such criteria. Since any opinion, if obtained, would merely
      state that fair market value meets the 80% of net assets (excluding the amount
      held in the trust account representing a portion of the underwriters’ discount)
      threshold, it is not anticipated that copies of such opinion would be
      distributed to our stockholders, although copies will be provided to
      stockholders who request it. We will not be required to obtain an opinion from
      an investment banking firm as to the fair market value if our board of directors
      independently determines that the target has sufficient fair market
      value.





*Possible
      lack of business diversification*





While
      we
      may seek to effect business combinations or portfolio or real estate
      acquisitions with more than one target, our initial transaction must be with
      a
      target or targets which satisfies the minimum valuation standard at the time
      of
      such acquisition, as discussed above. Consequently, it is possible that we
      will
      have the ability to effect only a single business combination or portfolio
      or
      real estate acquisition. Accordingly, the prospects for our success may be
      entirely dependent upon the future performance of a single business or portfolio
      or asset. Even if we consummate more than one transaction, our business may
      focus on a single or limited number of industries or segments within those
      industries. Unlike other entities which may have the resources to complete
      several business combinations of entities operating in multiple industries
      or
      multiple areas of a single industry, it is probable that we will not have the
      resources to diversify our operations or benefit from the possible spreading
      of
      risks or offsetting of losses. By consummating a business combination with
      only
      a single entity or acquiring only a single portfolio of financial assets or
      real
      estate asset, or by making more than one acquisition in the same industry or
      segment, our lack of diversification may:





·
            subject
                us to numerous economic, competitive and regulatory developments,
                any or
                all of which may have a substantial adverse impact upon the particular
                industry in which we may operate subsequent to a business combination
                or
                portfolio or real estate acquisition;
                and


·
            result
                in our dependency upon the development or market acceptance of a
                single or
                limited number of products, processes or
                services.





4


*Limited
      ability to evaluate the target’s management*





Although
      we intend to closely scrutinize the management of a prospective target when
      evaluating the desirability of effecting a business combination or portfolio
      or
      real estate acquisition, we cannot assure you that our assessment of the
      target’s management will prove to be correct. In addition, we cannot assure you
      that the future management will have the necessary skills, qualifications or
      abilities to manage a public company. Furthermore, the future role of our
      current officers and directors, if any, in the target cannot presently be
      ascertained. We expect that Messrs. Stratton and Weingarten will remain
      associated in some capacity with us following an initial transaction, although
      they are not currently obligated to do so. The extent to which our current
      officers will be actively involved in our business following an initial
      transaction may depend on, among other things, the management, if any, that
      becomes part of our company as a result of, or join us in connection with,
      that
      transaction.





In
      addition, it is possible that the terms of an initial transaction might address
      the extent to which our officers and directors remain involved in our business
      following consummation
      of an initial transaction. Moreover, we cannot assure you that our officers
      and
      directors will have significant experience or knowledge relating to the
      operations of the particular target. Following a business combination or
      portfolio or real estate acquisition, we may seek to recruit additional managers
      to supplement our incumbent management. We cannot assure you that we will have
      the ability to recruit additional managers, or that additional managers will
      have the requisite skills, knowledge or experience necessary to enhance the
      incumbent management.





*Opportunity
      for stockholder approval of initial transaction*





Prior
      to
      the completion of an initial transaction, we will submit the transaction to
      our
      stockholders for approval, even if the nature of the transaction is such as
      would not ordinarily require stockholder approval under applicable state law.
      In
      connection with seeking stockholder approval of an initial transaction, we
      will
      furnish our stockholders with proxy solicitation materials prepared in
      accordance with the Securities Exchange Act of 1934, which, among other matters,
      will include, in the case of a business combination, a description of the
      operations of the target and audited historical financial statements of the
      business, and in the case of a portfolio or real estate acquisition, such
      financial information as shall be required by applicable law and regulation.





In
      connection with the vote required for an initial transaction, all of our initial
      stockholders, including all of our officers and directors, have agreed to vote
      the shares of common
      stock owned by them immediately prior to our initial public offering in
      accordance with the majority of the shares of common stock voted by the public
      stockholders. This voting arrangement shall not apply to shares included in
      units purchased in our initial public offering or purchased following our
      initial public offering in the open market by any of our initial stockholders.
      We will proceed with the initial transaction only if a majority of the shares
      of
      common stock voted by the public stockholders are voted in favor of the
      transaction and public stockholders owning less than 20% of the shares sold
      in
      our initial public offering both vote against the transaction and exercise
      their
      conversion rights.





*Conversion
      rights*





At
      the
      time we seek stockholder approval of an initial transaction, we will offer
      each
      public stockholder the right to have such stockholder’s shares of common stock
      converted to cash if the stockholder votes against the initial transaction
      and
      the transaction is approved and completed. The actual per-share conversion
      price
      will be equal to the amount in the trust account (excluding the amount held
      in a
      trust account representing a portion of the underwriters’ discount), inclusive
      of any interest (calculated as of two business days prior to the consummation
      of
      the proposed initial transaction), divided by the number of shares of common
      stock sold in the initial public offering. Without taking into account any
      interest earned on the trust account, the initial per-share conversion price
      would be $5.37, or $0.63 less than the per-unit offering price of $6.00 and
      does
      not include $0.12 per share held in the trust account for the benefit of the
      underwriters. An eligible stockholder may request conversion at any time after
      the mailing to our stockholders of the proxy statement and prior to the vote
      taken with respect to a proposed initial transaction at a meeting held for
      that
      purpose, but the request will not be granted unless the stockholder votes
      against the initial transaction and the transaction is approved and completed.
      Any request for conversion, once made, may be withdrawn at any time up to the
      date of the meeting. It is anticipated that the funds to be distributed to
      stockholders entitled to convert their shares who elect conversion will be
      distributed promptly after completion of an initial transaction. Public
      stockholders who convert their stock into their share of the trust account
      still
      have the right to exercise the warrants that they received as part of the units.
      We will not complete any initial transaction if public stockholders, owning
      20%
      or more of the shares sold in the initial public offering both vote against
      that
      transaction and exercise their conversion rights. Our initial stockholders
      are
      not entitled to convert any shares of common stock held by them, whether
      acquired by them prior to, as part of or after our initial public offering,
      into
      a pro rata share of the trust account.





*Liquidation
      if no initial transaction*





If
      we do
      not complete an initial transaction within 12 months after the consummation
      of
      our initial public offering (that is, by November 16, 2006), or within 18 months
      (that is, by May 16, 2007) if the extension criteria described below have been
      satisfied, we will be dissolved and distribute to all of our public
      stockholders, in proportion to their respective equity interests, an aggregate
      sum equal to the amount in the trust account (including the amount held in
      the
      trust account representing a portion of the underwriters’ discount), inclusive
      of any interest, plus any remaining net assets. Our initial stockholders have
      waived their rights to participate in any liquidation distribution with respect
      to shares of common stock owned by them immediately prior to our initial public
      offering. There will be no distribution from the trust account with respect
      to
      our warrants, which will expire worthless.





If
      we
      were to expend all of the net proceeds of our initial public offering, other
      than the proceeds deposited in the trust account, and without taking into
      account interest, if any, earned on the trust account, the initial per-share
      liquidation price would be $5.49 (of which $0.12 per share is attributable
      to
      the underwriters’ discount), or $0.51 less than the per-unit offering price of
      $6.00. The proceeds deposited in the trust account could, however, become
      subject to the claims of our creditors which could be prior to the claims of
      our
      public stockholders. If we liquidate before the completion of an initial
      transaction and distribute the proceeds held in trust to our public
      stockholders, Richard A. Stratton, our Chairman of the Board and Executive
      Officer, and Joseph S. Weingarten, our President, will severally, one half
      each,
      be personally liable under certain circumstances to ensure that the proceeds
      in
      the trust account are not reduced by (i) the claims of various vendors or other
      entities that are owed money by us for services rendered or contracted for
      or
      products sold to us, (ii) the claims of any prospective target with which we
      have entered into a written letter of intent, confidentiality or nondisclosure
      agreement with respect to a failed transaction with such prospective target
      or
      (iii) claims by Ferris, Baker Watts, Inc. (to the extent such claims exceed
      $300,000). However, we cannot assure you that Messrs. Stratton and Weingarten
      will be able to satisfy those obligations. They will not, however, be personally
      liable to pay debts and obligations except as provided above. Furthermore,
      we
      cannot assure you that the actual per-share liquidation price will not be less
      than $5.49, plus interest, due to claims of creditors. Additionally, the
      underwriters have agreed to forfeit any rights to or claims against the proceeds
      held in the trust account which includes a portion of their underwriters’
discount. If we enter into either a letter of intent, an agreement in principle
      or a definitive agreement to complete an initial transaction prior to the
      expiration of 12 months of the closing of our initial public offering, but
      are
      unable to complete the initial transaction within the 12-month period, then
      we
      will have an additional six months in which to complete the initial transaction
      contemplated by the letter of intent, agreement in principle or definitive
      agreement. If we are unable to do so within 18 months of the closing of our
      offering, we will then liquidate. Upon notice from us, the trustee of the trust
      account will commence
      liquidating the investments constituting the trust account and will turn over
      the proceeds to our transfer agent for distribution to our public stockholders.
      We anticipate that our instruction to the trustee would be given promptly after
      the expiration of the applicable 12-month or 18-month period.





5


Our
      public stockholders will be entitled to receive funds from the trust account
      only in the event of our liquidation or if the stockholders seek to convert
      their respective shares into cash upon an initial transaction which the
      stockholder voted against and which is completed by us. In no other
      circumstances will a stockholder have any right or interest of any kind to
      or in
      the trust account.





**Competition**




In
      identifying, evaluating, and selecting a target we may encounter intense
      competition from other entities having a business objective similar to ours.
      Many of these entities are well established and have extensive experience in
      identifying and effecting business combinations directly or through affiliates.
      Many of these competitors possess greater technical, human and other resources
      than us, and our financial resources will be relatively limited when contrasted
      with those of many of these competitors. While we believe there are numerous
      potential targets that we could acquire with the net proceeds of our initial
      public offering, our ability to compete in acquiring certain sizable targets
      will be limited by our available financial resources. This inherent competitive
      limitation gives others an advantage in pursuing the acquisition of a target.
      Further:




•
            
            our
                obligation to seek stockholder approval of an initial transaction
                or
                obtain the necessary financial information to be included in the
                proxy
                statement to be sent to stockholders in connection with such initial
                transaction may delay or prevent the completion of a transaction
                and/or
                make it less likely a potential target will want to enter into an
                acquisition agreement with us;





•
            
            our
                obligation to convert into cash shares of common stock held by our
                public
                stockholders in certain instances may reduce the resources available
                to us
                foran
                initial transactionor
                prevent the completion of a
                transaction;





•
            
            our
                outstanding warrants and options, and the future dilution they potentially
                represent, may not be viewed favorably by certain
                targets;





•
            
            the
                requirement to acquire an operating finance company, portfolio of
                financial assets or real estate that has a fair market value equal
                to at
                least 80% of our net assets (excluding the amount held in a trust
                account
                representing a portion of the underwriters’ discount) at the time of the
                acquisition could require us to acquire several closely related operating
                businesses, portfolios or properties at the same time, all of which
                sales
                would be contingent on the closings of the other sales, which could
                make
                it more difficult to consummate the initial transaction;
                and





•
            
            our
                limited funds available outside of the trust account may limit our
                ability
                to pursue acquisitions of certain targets, including acquisitions
                that
                require earnest money or other pre-closing
                deposits.





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




If
      we
      succeed in effecting an
      initial transaction ,
      there
      will be, in all likelihood, intense competition from competitors of the target.
      We cannot assure you that, subsequent to an
      initial transaction ,
      we will
      have the resources or ability to compete effectively.




**Employees**




We
      have
      two employees, each of whom are officers and also members of our board of
      directors. These individuals have other business interests and are not obligated
      to contribute any specific number of hours per week and intend to devote only
      as
      much time as they deem necessary to our affairs. The amount of time they will
      devote in any time period will vary based on the availability of suitable
      targets to investigate, although we expect Mr. Stratton, our C hairman
      of the Board, and C hief E xecutive O fficer,
      to devote an average of approximately thirty hours per week to our business.
      We
      do not intend to have any full time employees prior to the consummation of an
      initial transaction.




**Item
      1A.**  **Risk
      Factors** **.**





*An
      investment in our securities involves a high degree of risk. You should consider
      carefully all of the risks described below, together with the other information
      contained in this Annual Report on Form 10-K before making a decision to invest
      in our securities. If any of the following risks occur, our business, financial
      condition and results of operations may be materially adversely affected. In
      that event, the trading price of our securities could decline, and you could
      lose all or part of your investment.*





**Risks
      Related to Our Business**





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





We
      are a
      recently incorporated development stage company with no operating results to
      date. Since we do not have any operating history, you will have no basis upon
      which to evaluate our ability to achieve our business objective, which is to
      acquire one or more operating businesses, portfolios of financial assets or
      real
      estate assets that we expect will generate a portfolio of financial assets,
      as
      described in this Annual Report on Form 10-K. We are currently in the process
      of
      evaluating and identifying targets for an initial transaction. We are not
      presently engaged in, and will not engage in, any substantive commercial
      business until we consummate an initial transaction. We will not generate any
      revenues (other than interest income on the proceeds of our initial public
      offering) until, at the earliest, after the consummation of an initial
      transaction. We cannot assure you as to when or if an initial transaction will
      occur.





**If
      we are unable to complete an initial transaction and are forced to liquidate
      and
      distribute the trust account, our public stockholders will receive less than
      $6.00 per share upon distribution of the trust account and our warrants will
      expire worthless.**





If
      we are
      unable to complete an initial transaction and are forced to liquidate our
      assets, the per-share liquidation distribution will be less than $6.00 because
      of the expenses of our initial public offering, our general and administrative
      expense, the anticipated costs of seeking an initial transaction and the costs
      and expenses associated with litigation in which we are involved. If we were
      to
      expend all of the net proceeds of our initial public offering, other than the
      proceeds deposited in the trust account, and without taking into account
      interest, if any, earned on the trust account, the initial per-unit liquidation
      price would be $5.49, or $0.51 less than the per-unit offering price of $6.00,
      assuming that amount was not further reduced by claims of creditors. For
      a
      more complete discussion of ways in which the trust account could be reduced,
      see "—We are subject to litigation and in the future may face additional third
      party claims.  As
      a
      result of these third party claims, the proceeds held in trust could be reduced
      and the per share liquidation price received by stockholders would be less
      than
      $5.49 per share.” In addition, it is possible that we will use a portion of the
      funds not being placed in trust as a down payment or to fund a down payment,
      lock-up or "no-shop" provision with respect to a particular proposed business
      combination, although we do not have any current intention to do so.
      Furthermore, there will be no distribution with respect to our outstanding
      warrants, which will expire worthless if we liquidate before the completion
      of
      an initial transaction. For a more complete discussion of the effects on our
      stockholders if we are unable to complete an initial transaction, see the
      section appearing elsewhere in this Annual Report on Form 10-K
      entitled "Business — Effecting
      an initial transaction—Liquidatio n
      if no
      initial transaction."




6


**Since
      we have not yet selected any target with which to complete an initial
      transaction, we are unable to currently ascertain the merits or risks of any
      particular target's operations or the performance of any particular portfolio
      of
      financial assets or real estate asset or the industry or business in which
      we
      may ultimately operate.**





We
      are
      currently in the process of evaluating and identifying targets for an initial
      transaction. Although we are focusing on acquiring consumer and commercial
      finance companies (or portfolios of financial assets originated by consumer
      and
      commercial finance companies) and real estate assets that we expect will
      generate a portfolio of financial assets, we may acquire a company operating
      in
      any industry we choose. We have not engaged or retained any agent or other
      representative to identify or locate any suitable target, although we may do
      so
      in the future. Accordingly, there is no reliable basis for you to currently
      evaluate the possible merits or risks of the particular industry in which we
      may
      ultimately operate or the target that we may ultimately acquire. To the extent
      we complete an initial transaction with an entity in its development stage,
      we
      may be affected by numerous risks inherent in the business operations of those
      entities. If we complete an initial transaction with an entity in an industry
      characterized by a high level of risk, we may be affected by the currently
      unascertainable risks of that industry. Although our management will endeavor
      to
      evaluate the risks inherent in a particular industry or target, we cannot assure
      you that we will properly ascertain or assess all of the significant risk
      factors. We also cannot assure you that an investment in our securities will
      not
      ultimately prove to be less favorable to investors than a direct investment,
      if
      an opportunity were available, in a target. For a more complete discussion
      of
      our selection of targets, see the section appearing elsewhere in this Annual
      Report on Form 10-K entitled "Business—Effecting an initial transaction—We have
      not selected or approached any target."





**Our
      officers and directors are not required to devote any specified percentage
      of
      their working time to our affairs. Our officers and directors will allocate
      some
      of their time to other businesses thereby causing conflicts of interest in
      their
      determination as to how much time to devote to our affairs, which could have
      a
      negative impact on our ability to consummate a business combination or portfolio
      or real estate acquisition or results of operations following any such
      acquisition.**





Our
      officers and directors are not required or expected to commit their full time,
      or any specified amount of time, to our affairs. This may result in a conflict
      of interest in allocating their time between our operations and other businesses
      and could have a negative effect on our ability to consummate a business
      combination or portfolio or real estate acquisition or our results of operations
      following any such acquisition. We do not intend to have any full time employees
      prior to the consummation of an initial transaction. In connection with an
      initial transaction, we expect to acquire additional management personnel and
      employees who will devote their full time efforts to our business. If we acquire
      an operating company, the employees of the target may become our employees
      upon
      consummation of the acquisition. All of our executive officers are expected
      to
      remain, actively engaged in other business endeavors and are not obligated
      to
      contribute any specific number of hours to those endeavors or to our affairs,
      and the number of hours contributed will vary from time to time depending on,
      among other things, the availability of suitable targets and nature and timing
      of due diligence and negotiations. We expect Mr. Stratton to devote up to
      30 hours per week to our business and Mr. Weingarten to devote a
      majority of his business time. If our executive officers' or directors' other
      business affairs require them to devote more substantial  amounts
      of time to these other affairs, it could limit their ability to devote time
      to
      our affairs and could have a negative impact on our ability to consummate a
      business combination or portfolio or real estate acquisition or our results
      of
      operations. For example, with respect to one other company with which
      Mr. Stratton is affiliated and in which he owns an equity interest, Resort
      Finance Corporation, or RFC, an event of default will exist under RFC's loan
      agreements if Mr. Stratton ceases to be actively engaged in the management
      of the entity’s businesses. Although the agreement does not define what is meant
      by "actively engaged in management of the entities' businesses,"
      Mr. Stratton has always devoted some of his time to his business interests
      other than RFC and has not devoted his full time to the business of RFC.
      Mr. Stratton does not believe that his efforts on our behalf will cause him
      to spend less time on RFC than he otherwise would. Mr. Stratton has
      guaranteed a portion of RFC’s indebtedness and Mr. Stratton's obligations
      under the guaranty could become due and payable if an event of default were
      to
      exist. Mr. Weingarten is not subject to any agreement with other entities
      that impose any restrictions on the amount of time he needs to spend on another
      business.





**Our
      chief executive officer is a party to a non-competition agreement that will
      limit the types of companies we can target for an initial transaction and may
      make us a less attractive buyer to certain target companies.**





Richard
      A. Stratton, our chairman of the board and chief executive officer, is a party
      to a non-competition agreement with Resort Finance LLC, or RFL, pursuant to
      which he agreed not to engage in or be interested in any business which
      competes, directly or indirectly, with RFL, including, but not limited to,
      any
      business involved in the acquisition, maintenance, administration and financing
      of timeshare loans and/or making loans to timeshare developers. Between July
      24,
      2003 and February 9, 2006 when Mr. Stratton resigned from RFL, Mr. Stratton
      served as chief executive officer of RFL. RFL has exercised its option to extend
      the term of the non-compete for a period of two years. Accordingly, the RFL
      non-compete agreement will continue to apply to Mr. Stratton until February
      9,
      2008. During this time, absent a waiver of the terms of such non-compete
      agreement by the entity owning the remaining 60% of RFL, we will not be
      permitted to engage in or be interested in any business which competes, directly
      or indirectly, with RFL including any business involved in the acquisition,
      maintenance, administration and financing of timeshare loans and/or making
      loans
      to timeshare developers. No assurances can be given that any such waiver will
      be
      requested or, if requested, granted. Since its inception, RFL's business has
      consisted of acquiring, maintaining, administering and financing portfolios
      of
      timeshare finance loans and loans to timeshare developers. An expansion by
      RFL
      of the scope of its business might potentially further restrict the scope of
      business activities Mr. Stratton could engage in without competing with
      RFL, although Mr. Stratton does not believe that any such expansion is
      contemplated. We do not intend to acquire any business that Mr. Stratton is
      restricted from engaging in. A disagreement or litigation between RFL or its
      investors and Mr. Stratton with respect to the scope of the non-compete
      could potentially result in a material adverse effect and impair our ability
      to
      fulfill our business plan. Mr. Weingarten is not subject to any non-compete
      agreements.





**Our
      current officers and directors may resign upon consummation of an initial
      transaction and we will have only limited ability to evaluate the management
      of
      the target.**





Our
      ability to successfully effect a business combination or portfolio or real
      estate acquisition will be totally dependent upon the efforts of our key
      personnel. Upon consummation of an initial transaction, the future role of
      our
      key personnel cannot presently be ascertained. We expect that
      Messrs. Stratton and Weingarten will remain as directors following an
      initial transaction, if elected, although they are not currently obligated
      to do
      so. In addition, Messrs. Stratton and Weingarten may remain associated in
      various other capacities, including as officers or consultants, depending,
      among
      other things, on the strength, depth and needs of management after the initial
      transaction.





7


We
      may
      attempt to retain the management of the target or we may recruit new management
      team members to join us. Moreover, to the extent we acquire a portfolio of
      financial assets or real estate assets, our ability to recruit personnel from
      the selling entity may be limited because the seller may wish to retain the
      services of such personnel. Although we intend to closely scrutinize the
      management of a prospective target in connection with evaluating the
      desirability of effecting a business combination or portfolio or real estate
      acquisition, we cannot assure you that our assessment of management will prove
      to be correct. These individuals may be unfamiliar with the requirements of
      operating a public company as well as applicable securities laws, including
      the
      requirements under Section 404 of the Sarbanes-Oxley Act relating to
      internal control over financial reporting, which could cause us to have to
      expend time and resources helping them become familiar with such laws. This
      could be an expensive and time-consuming process, which could adversely affect
      our operations.





**Our
      officers and directors may not have significant experience or knowledge of
      the
      industry of the target.**





If
      we
      decide to acquire a target that operates in a field outside of the realm of
      experience of our officers and directors, we cannot assure you that our officers
      and directors will have gained enough experience or have sufficient knowledge
      relating to the industry of the target to make an appropriate acquisition
      decision.





**Only
      one of our officers or directors has ever been a principal of, or has ever
      been
      affiliated with, a company formed with a business purpose similar to
      ours.**





Our
      officers and directors have never served as officers or directors of a
      development stage public company with the business purpose of raising funds
      to
      acquire a consumer or commercial finance company (or a portfolio of financial
      assets originated by a consumer or commercial finance company) or real estate
      assets. Further, except for Mr. Robert Chefitz, who is one of our directors
      and is also on the board of advisors of Key Hospitality Acquisition Corp.,
      a
      blank check company focused on the hospitality industry, none of our officers
      or
      directors has ever been involved with a blank check public company of any sort.
      Key Hospitality Acquisition Corp. completed its initial public offering in
      October 2005, and has not announced the entry into any agreement with a
      target. Accordingly, you may not be able to adequately evaluate their ability
      to
      consummate successfully a business combination or portfolio or real estate
      acquisition.





**Some
      of our officers and directors are currently, and may in the future become,
      affiliated with entities engaged in business activities similar to those
      intended to be conducted by us and, accordingly, may have conflicts of interest
      in determining to which entity a particular business opportunity should be
      presented.**





Some
      of
      our officers and directors are currently, and may in the future become,
      affiliated with entities engaged in business activities similar to those
      intended to be conducted by us. For example, Mr. Stratton and
      Mr. Weingarten are each affiliates of companies engaged in the business of
      originating, financing, purchasing and servicing consumer, commercial and real
      estate loans. In addition, our officers and directors may become aware of
      business opportunities which may be appropriate for presentation to us as well
      as the other entities to which they have fiduciary obligations. Accordingly,
      they may have conflicts of interest in determining to which entity a particular
      business opportunity should be presented. For a
      more complete discussion of our management's business affiliations and the
      potential conflicts of interest that you should be aware of, see the section
      appearing elsewhere in this Annual Report on Form 10-K entitled "—Our chief
      executive officer is a party to a non-competition agreement that will limit
      the
      types of companies we can target for an initial transaction and may make us
      a
      less attractive buyer to certain target companies," "Management—Directors and
      Officers."  We
      cannot
      assure you that these conflicts will be resolved in our favor.





**All
      of our officers and directors directly or indirectly own shares of our common
      stock that will not participate in liquidation distributions, and therefore
      they
      may have a conflict of interest in determining whether a particular target
      is
      appropriate for an acquisition.**





All
      of
      our officers and directors directly or indirectly own stock in our company,
      but
      do not have a right with respect to those shares of common stock acquired by
      them prior to the initial public offering to receive distributions upon our
      liquidation prior to an initial transaction. Additionally, Messrs. Stratton
      and Weingarten each purchased an additional 2,437,614 warrants following our
      initial public offering. The shares and warrants owned by our officers and
      directors will be worthless if we do not consummate an initial transaction.
      The
      personal and financial interests of our officers and directors may influence
      their motivation in identifying and selecting a target and completing an initial
      transaction within the required time frame. Consequently, our officers' and
      directors' discretion in identifying and selecting a suitable target may result
      in a conflict of interest when determining whether the terms, conditions and
      timing of a particular initial transaction are appropriate and in our
      stockholders' best interest.





**Our
      directors' and officers' interests in obtaining reimbursement for out-of-pocket
      expenses incurred by them or indemnity payments made by them may lead to a
      conflict of interest in determining whether a particular target is appropriate
      for a business combination and in the public stockholders' best
      interest.**





Our
      existing stockholders, including all of our officers and directors, will not
      receive reimbursement for any out-of-pocket expenses incurred by them or any
      indemnity payments made by them for our benefit, including in connection with
      outstanding litigation, to the extent that such expenses exceed the amount
      of
      available proceeds not deposited in the trust account unless the initial
      transaction is consummated. The amount of available proceeds is based on
      management's estimates of the costs needed to fund our operations and pay the
      costs and expenses of litigation through May 16, 2007 and consummate a business
      combination or portfolio acquisition. Those estimates may prove to be
      inaccurate, especially if a portion of the available proceeds is used to make
      a
      down payment or pay exclusivity or similar fees in connection with a business
      combination or portfolio acquisition or if we expend a significant portion
      of
      the available proceeds in pursuit of a business combination or portfolio
      acquisition that is not consummated or if the costs and expenses associated
      with
      defending and resolving outstanding litigation are larger than anticipated.
      The
      financial interest of our directors and officers could influence their
      motivation in selecting a target or proceeding with an initial transaction
      and
      thus, there may be a conflict of interest in determining whether a particular
      initial transaction is in the public stockholders' best interest. Specifically,
      our existing stockholders may view potential business combinations or portfolio
      acquisitions where such excess expenses and indemnity payments would be repaid
      more favorably than those where such excess expenses and payments would not
      be
      repaid or any business combination or portfolio acquisition in which such excess
      expenses and payments would be repaid more favorably than no business
      combination or portfolio acquisition.





**Our
      initial stockholders, including our officers and directors, control a
      substantial interest in us and this may influence certain actions requiring
      a
      stockholder vote.**





Our
      initial stockholders (including all of our officers and directors) and their
      affiliates collectively own approximately 20% of our issued and outstanding
      shares of common stock. Additionally, two of our initial stockholders,
      Messrs. Stratton and Weingarten, each also own 2,437,614 warrants to
      purchase our common stock. Any exercise of these warrants by
      Messrs. Stratton and Weingarten would increase their relative ownership
      percentage of us. In connection with the vote required for our initial
      transaction, all of our initial stockholders, including all of our officers
      and
      directors, have agreed to vote the shares of common stock owned by them
      immediately before the initial public offering in accordance with the majority
      of the shares of common stock voted by the public stockholders. However, they
      may cast votes with respect to any shares of common stock acquired in connection
      with or following our initial public offering (including shares acquired upon
      exercise of their warrants) in any manner as they may determine in their
      discretion. Our board of directors is divided into three classes; each class
      will generally serve for a term of three years with only one class of  directors being elected in each year. It is unlikely that there will be an
      annual meeting of stockholders to elect new directors prior to the consummation
      of an initial transaction. If there is an annual meeting, as a consequence
      of
      our "staggered" board of directors, only a minority of the board of directors
      will be considered for election and our existing stockholders, because of their
      ownership position, will have considerable influence regarding the outcome.
      Accordingly, our existing stockholders will continue to exert control at least
      until an initial transaction. Additionally, our initial stockholders and their
      affiliates and relatives are not prohibited from purchasing additional
      securities in the market. If they do, we cannot assure you that our initial
      stockholders will not have considerable influence upon the vote in connection
      with an initial transaction.





8


**We
      may not be able to consummate an initial transaction within the required time
      frame, in which case we would be forced to liquidate.**





We
      must
      complete an initial transaction with a fair market value of at least 80% of
      our
      net assets (excluding the amount held in the trust account representing a
      portion of the underwriters' discount) at the time of acquisition within
      12 months after the consummation of our initial public offering (or within
      18 months after the consummation of our initial public offering if a letter
      of intent, agreement in principle or a definitive agreement has been executed
      within 12 months after the consummation of our initial public offering and
      the initial transaction relating thereto has not yet been consummated within
      such 12-month period). If we fail to consummate an initial transaction within
      the required time frame, we will be forced to liquidate our assets. We may
      not
      be able to find a suitable target within the required time frame. In addition,
      our negotiating position and our ability to conduct adequate due diligence
      on
      any potential target may be reduced as we approach the deadline for the
      c onsummation
      of an initial transaction. We are currently in the process of evaluating and
      identifying targets for an initial transaction. We do not have any specific
      business combination, portfolio of financial assets or real estate asset
      acquisition under consideration. We have not engaged or retained any agent
      or
      other representative to identify or locate any suitable target, although we
      may
      do so in the future.





**Any
      attempt to consummate more than one transaction as our initial transaction
      will
      make it more difficult to consummate our initial
      transaction.**





We
      may
      seek to effect business combinations, portfolio acquisitions and/or real estate
      acquisitions with more than one target with a combined fair market value of
      at
      least 80% of our net assets (excluding the amount held in the trust account
      representing a portion of the underwriters' discount) at the time of such
      transactions. Acquisitions involve a number of special risks, including
      diversion of management's attention, legal, financial, accounting and due
      diligence expenses, and general risks that transactions will not be consummated.
      To the extent we try to consummate more than one transaction at the same time,
      all of these risks will be exacerbated, especially in light of the small size
      of
      our management team and our limited financial and other resources. In addition,
      if our initial transaction entails simultaneous transactions with different
      sellers, each seller will need to agree that its transaction is contingent
      upon
      the simultaneous closing of the other transactions, which may make it more
      difficult for us, or delay our ability, to complete the initial transaction.
      As
      a result, if we attempt to consummate our initial transaction in the form of
      multiple transactions, there is an increased risk that we will not be in a
      position to consummate some or all of those  transactions,
      which could result in our failure to satisfy the requirements for an initial
      transaction and force us to liquidate.





**You
      will not be entitled to protections normally afforded to investors of blank
      check companies under federal securities laws.**





Since
      the
      net proceeds of our initial public offering are intended to be used to complete
      an initial transaction with one or more targets or assets that we have not
      yet
      identified, we may be deemed to be a "blank check" company under the United
      States securities laws. However, since we have net tangible assets in excess
      of
      $5,000,000 and have filed a Current Report on Form 8-K with the
      Securities and Exchange Commission, or SEC, including an audited balance sheet
      demonstrating this fact, we believe that we are exempt from rules promulgated
      by
      the SEC to protect investors of blank check companies, such as Rule 419
      promulgated under the Securities Act of 1933, as amended. Accordingly, investors
      will not be afforded the benefits or protections of those rules. Because we
      do
      not believe we are subject to Rule 419, we have a longer period of time to
      complete an initial transaction in certain circumstances.





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





Based
      upon publicly available information as of March 13, 2006, we believe there
      are
      approximately 48 similarly structured blank check companies which have gone
      public since August 2003, of which approximately six have actually
      completed a business combination. As of such date, the remaining 42 blank check
      companies have raised more than $2.7 billion and are seeking to complete
      business combinations. Of these companies, approximately 10 have announced
      that
      they have entered into definitive agreements for business combinations but
      not
      yet consummated these transactions. Furthermore, there are a number of
      additional offerings for blank check companies that are still in the
      registration process but have not completed initial public offerings and there
      are likely to be more blank check companies filing registration statements
      for
      initial public offerings after the date of this Annual Report on Form 10-K
      and
      prior to our completion of a business combination. While some of the blank
      check
      companies must complete their respective business combinations in specific
      industries, a significant number of them may consummate their business
      combinations in any industry they choose or have very broad definitions of
      the
      industries they will target. Therefore, we may be subject to competition from
      these and other companies seeking to consummate a business combination. We
      cannot assure you that we will be able to successfully compete for an attractive
      business combination. In addition, because of this competition, we cannot assure
      you that we will be able to effectuate an initial transaction within the
      required time period. Further, the fact that only six of such companies have
      completed a business combination and only 10 additional of such companies have
      entered into a definitive agreement for a business combination may be an
      indication that there are only a limited number of attractive targets available
      to such entities or that many targets are not inclined to enter into a
      transaction with a blank check company. Moreover, we will also compete with
      private equity funds, financial institutions and numerous other buyers for
      potential acquisitions. If we are unable to consummate an initial transaction
      within the prescribed time period, we will be forced to liquidate.





**Because
      of our limited resources and the significant competition for business
      combination and portfolio or real estate acquisition opportunities, we may
      not
      be able to consummate an attractive business combination or portfolio or real
      estate acquisition.**





We
      expect
      to encounter intense competition from other entities having a business objective
      similar to ours, including finance companies, banks, venture capital funds,
      leveraged buyout funds, operating businesses and other financial buyers
      competing for acquisitions. Many of these entities are well established and
      have
      extensive experience in identifying and effecting business combinations or
      portfolio or real estate acquisitions directly or through affiliates. Many
      of
      these competitors possess greater technical, human and other resources than
      we
      do and our financial resources will be relatively limited when contrasted with
      those of many of these competitors. While we believe, based on the industry
      knowledge and experience of our management, that there are numerous potential
      targets that we could acquire with the net proceeds of our initial public
      offering, our ability to compete in acquiring certain large targets will be
      limited by our available financial resources. This inherent competitive
      limitation gives others an advantage in pursuing the acquisition of certain
      targets. Further, the obligation that we have to seek stockholder approval
      of an
      initial transaction may delay or prevent the consummation of a transaction,
      and
      our obligation to convert into cash the shares of common stock held by public
      stockholders in certain instances may reduce the resources available for an
      initial transaction. Additionally, our outstanding warrants, and the future
      dilution they potentially represent, may not be viewed favorably by certain
      targets. Any of these obligations may place us at a competitive disadvantage
      in
      successfully negotiating a business combination or portfolio or real estate
      acquisition.





**We
      may have insufficient resources to cover our operating expenses, the costs
      and
      expenses of litigation and the expenses of consummating an initial
      transaction.**





We
      have
      reserved $2,540,925 from the proceeds of our initial public offering to cover
      our operating expenses and the costs and expenses associated with litigation
      in
      which we are involved through May 16, 2007 and to cover the expenses incurred
      in
      connection with our initial transaction. As of March 10, 2006, we had $2,082,231
      remaining outside of the trust account to cover our operating costs and expenses
      associated with litigation. This amount is based on management's estimates
      of
      the costs needed to fund our operations through May 16, 2007 and consummate
      our
      initial transaction. Those estimates may prove inaccurate, especially if a
      portion of the available proceeds is used to pay legal costs of, to settle,
      or
      to pay a judgment in outstanding litigation or make a down payment or pay
      exclusivity or similar fees in connection with our initial transaction or if
      we
      expend a significant portion of the available proceeds in pursuit of a business
      combination or portfolio acquisition that is not consummated. If we do not
      have
      sufficient proceeds available to fund our expenses, we may be forced to obtain
      additional financing (including loans), either from our management or the
      existing stockholders or from third parties. We may not be able to obtain
      additional financing and our existing stockholders and management are not
      obligated to provide any additional financing. If we do not have sufficient
      proceeds and cannot find additional financing, we may be forced to liquidate
      prior to consummating a business combination or portfolio
      acquisition .
      For a
      more complete discussion of outstanding litigation, see the section appearing
      elsewhere in this Annual Report on Form 10-K entitled “Legal
      Proceedings.”





9


**We
      are subject to litigation and in the future may face additional third party
      claims. As a result of these third party claims, the proceeds held in trust
      could be reduced and the per share liquidation price received by stockholders
      would be less than $5.49 per share.**





Our
      placing of funds in the trust account may not protect those funds from third
      party claims against us. We currently face litigation with Ferris, Baker Watts,
      Inc. and we cannot  predict
      the outcome of that litigation or the costs we may incur to defend and resolve
      such litigation. In addition, although we will seek to have all vendors,
      prospective targets, sellers or other entities we do business with execute
      agreements with us waiving any right, title, interest or claim of any kind
      in or
      to any monies held in the trust account for the benefit of our public
      stockholders, there is no guarantee that they will execute such agreements.
      Nor
      is there any guarantee that such entities will agree to waive any claims they
      may have in the future as a result of, or arising out of, any negotiations,
      contracts or agreements with us and will not seek recourse against the trust
      account for any reason. We may elect to enter into arrangements with such
      parties even if they do not agree to execute such waivers if we believe that
      the
      arrangements would nevertheless be in the best interests of our stockholders.
      Accordingly, the proceeds held in trust could be subject to claims which could
      take priority over the claims of our public stockholders and the per-share
      liquidation price could be less than $5.49 (of which $0.12 per share is
      attributable to the underwriters' discount), plus interest, due to claims of
      such creditors or such indemnification obligations. If we liquidate before
      the
      completion of an initial transaction and distribute the proceeds held in trust
      to our public stockholders, Richard A. Stratton, our Chairman of the Board
      and
      Chief Executive Officer, and Joseph S. Weingarten, our President, will,
      severally, one half each, be personally liable under certain circumstances
      to
      ensure that the proceeds in the trust account are not reduced by (i) the claims
      of various vendors that are owed money by us for services rendered or contracted
      for or products sold to us, (ii) the claims of any prospective target with
      which
      we have entered into a written letter of intent, confidentiality or
      non-disclosure agreement with respect to a failed transaction with such
      prospective target or (iii) claims by Ferris, Baker Watts, Inc. (to the
      extent such claims exceed $300,000). However, we cannot assure you that
      Messrs. Stratton and Weingarten will be able to satisfy those obligations.
      Further, they will not be personally liable to pay debts and obligations except
      as provided above. For a more complete discussion of our litigation with Ferris,
      Baker Watts, see the section appearing elsewhere in this Annual Report on Form
      10-K entitled "Legal Proceedings."





**We
      may issue shares of our capital stock or debt securities to complete a business
      combination or portfolio or real estate acquisition, which would reduce the
      equity interest of our stockholders and could likely cause a change in control
      of our ownership.**





Our
      certificate of incorporation authorizes the issuance of up to 85,000,000 shares
      of common stock, par value $0.001 per share, and 5,000,000 shares of preferred
      stock, par value $0.001 per share. There are approximately 17,000,000 authorized
      but unissued shares of our common stock available for issuance (after
      appropriate reservation for the issuance of shares upon full exercise of our
      outstanding warrants and the purchase option granted to Deutsche Bank Securities
      Inc., the lead underwriter), and all of the 5,000,000 shares of preferred stock
      available for issuance. Although we have no commitments as of the date of this
      Annual Report on Form 10-K to issue our securities, we may issue a substantial
      number of additional shares of our common stock or preferred stock, a
      combination of common and preferred stock, or debt securities, to complete
      an
      initial transaction or future acquisitions. The issuance of additional shares
      of
      our common stock or any number of shares of our preferred stock:





·
            may
                significantly reduce the equity interest of our investors;


·
            may
                subordinate the rights of holders of common stock if the preferred
                stock
                is issued with rights senior to those afforded to our common
                stock;


·
            would
                likely cause a change in control if a substantial number of our shares
                of
                common stock or voting preferred stock are issued, which may affect,
                among
                other things, our


o
            ability
                to use our net operating loss carry forwards, if any, and most likely
                also
                result in the resignation or removal of our present officers and
                directors; and


o
            may
                adversely affect prevailing market prices for our common stock and
                other
                securities.





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





·
            default
                and foreclosure on our assets if our operating revenues after an
                initial
                acquisition were insufficient to service our debt obligations;


·
              acceleration
                  of our obligations to repay the indebtedness even if we have made
                  all
                  principal and interest payments when due if the debt security contains
                  covenants that require the maintenance of certain financial ratios
                  or
                  reserves, or compliance with other covenants, and any such covenant
                  is
                  breached without a waiver or renegotiation of that
                  covenant;


·
            our
                immediate obligation to pay all principal and accrued interest, if
                any, if
                the debt security is payable on
                demand;


·
            covenants
                that limit our ability to take certain actions, including acquiring
                capital assets, making additional acquisitions, or making additional
                loans
                or other investments; and


·
            our
                inability to obtain additional financing, if necessary, if the debt
                security contains covenants restricting our ability to obtain additional
                financing while such security is
                outstanding.





For
      a
      more complete discussion of the possible structure of a business combination
      or
      portfolio or real estate acquisition, see the section appearing elsewhere in
      this Annual Report on Form 10-K entitled "Business—Effecting an initial
      transaction—Selection of a target and structuring of a business combination or
      portfolio or real estate acquisition."





**If
      additional financing is required, we may be unable to complete an acquisition
      or
      to fund the operations and growth of the target of an acquisition or the
      management and servicing of the portfolio of financial assets or real estate
      asset or the acquisition of additional portfolios or assets, which could compel
      us to restructure the transaction or abandon a particular business combination
      or portfolio or real estate acquisition.**





Although
      we believe that the net proceeds of our initial public offering will be
      sufficient to allow us to consummate a business combination or portfolio or
      real
      estate acquisition, in as much as we have not yet identified any prospective
      target, we cannot ascertain the capital requirements for any particular
      transaction. If the net proceeds of our initial public offering prove to be
      insufficient, either because of the size of the business combination or
      portfolio or real estate acquisition, or the depletion of the available net
      proceeds in search of a target, or because we become obligated to convert into
      cash a significant number of shares from dissenting stockholders, we will be
      required to seek additional financing. We may also finance a significant portion
      of the purchase price through debt financing. We cannot assure you that any
      such
      financing would be available on acceptable terms, if at all. To the extent
      that
      additional financing proves to be unavailable when needed to consummate a
      particular acquisition, we may be compelled to restructure the transaction
      or
      abandon that particular business combination or portfolio or real estate
      acquisition and seek an alternative target candidate or spend more of the
      amounts raised by our initial public offering to consummate a particular
      acquisition than we otherwise may have intended. In addition, if we consummate
      a
      business combination or portfolio or real estate acquisition, we may require
      additional financing to fund the operations or growth of the target or to
      acquire additional portfolios of financial assets or real estate assets. The
      failure to secure  additional
      financing could have a material adverse effect on the continued development
      or
      growth of the targets or the management and servicing of the portfolio of
      financial assets or real estate assets or the acquisition of additional
      portfolios or assets. None of our officers, directors or stockholders is
      required to provide any financing to us in connection with or after a business
      combination or portfolio or real estate acquisition.





10


**The
      ability of our stockholders to exercise their conversion rights may not allow
      us
      to effectuate the most desirable initial transaction or optimize our capital
      structure.**





At
      the
      time we seek stockholder approval of any initial transaction, we will offer
      each
      public stockholder (other than initial stockholders with respect to securities
      purchased in the initial public offering or afterwards) the right to have such
      stockholder's shares of common stock converted to cash if the stockholder votes
      against the initial transaction and the transaction is approved and completed.
      Accordingly, if an initial transaction requires us to use substantially all
      of
      our cash to pay the purchase price, because we will not know how many
      stockholders may exercise such conversion rights, we may either need to reserve
      part of the trust account for possible payment upon such conversion, or we
      may
      need to arrange third party financing to help fund the initial transaction
      in
      case a larger percentage of stockholders exercise their conversion rights than
      we expected. Therefore, we may not be able to consummate an initial transaction
      that requires us to use all of the funds held in the trust account as part
      of
      the purchase price, or the initial transaction may be more highly leveraged
      than
      desirable. As a result, we may not be able to effectuate the most attractive
      initial transaction available to us.





**If
      our common stock becomes subject to the Securities and Exchange Commission's
      penny stock rules, broker-dealers may experience difficulty in completing
      customer transactions, and trading activity in our securities may be adversely
      affected.**





If
      at any
      time we have net tangible assets of $5,000,000 or less and our common stock
      has
      a market price per share of less than $5.00, transactions in our common stock
      may be subject to the "penny stock" rules promulgated under the Securities
      Exchange Act of 1934. Under these rules, broker-dealers who recommend such
      securities to persons other than institutional accredited investors
      must:





·
            make
                a special written suitability determination for the
                purchaser;


·
            receive
                the purchaser's written agreement to a transaction prior to
                sale;


·
              provide
                  the purchaser with risk disclosure documents which identify certain
                  risks
                  associated with investing in "penny stocks" and which describe
                  the market
                  for these "penny stocks" as well as a purchaser's legal remedies;
                  and


·
            obtain
                a signed and dated acknowledgment from the purchaser demonstrating
                that
                the purchaser has actually received the required risk disclosure
                document
                before a transaction in a "penny stock" can be
                completed.





If
      our
      common stock becomes subject to these rules, broker-dealers may find it
      difficult to effectuate customer transactions and trading activity in our
      securities may be adversely affected. As a result, the market price of our
      securities may be depressed, and you may find it more difficult to sell our
      securities.





**It
      is possible that we will only be able to complete one business combination
      or
      portfolio or real estate acquisition, which will cause us to be solely dependent
      on a single business and a limited number of products, services or
      assets.**





The
      net
      proceeds from our initial public offering provided us with approximately
      $107,426,000 which we may use to complete a business combination or an
      acquisition of a portfolio of financial assets or real estate assets that we
      expect will generate financial assets. Our initial transaction must be with
      a
      target having a fair market value of at least 80% of our net assets (excluding
      the amount held in the trust account representing a portion of the underwriters'
      discount) at the time of such acquisition. Consequently, and depending on the
      extent to which we use debt financing or issue securities to finance the
      purchase price, it is possible that we will have the ability to complete only
      a
      single business combination or portfolio or real estate acquisition.
      Accordingly, the prospects for our success may be:





·
            solely
                dependent upon the performance of a single business, portfolio of
                financial assets or real estate asset;
                or


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





In
      this
      case, we will not be able to diversify our operations or benefit from the
      possible spreading of risks or offsetting of losses, unlike other entities
      which
      may have the resources to complete several business combinations or asset
      acquisitions in different industries or different areas of a single industry
      so
      as to diversify risks and offset losses.





**The
      American Stock Exchange may delist our securities from quotation on its exchange
      which could limit investors' ability to make transactions in our securities
      and
      subject us to additional trading restrictions.**





Our
      securities are listed on the American Stock Exchange, a national securities
      exchange. We cannot assure you that our securities will continue to be listed
      on
      the American Stock Exchange in the future. In addition, in connection with
      our
      initial transaction, it is likely that the American Stock Exchange may require
      us to file a new listing application and meet its initial listing
      requirements, as opposed to its more lenient continued listing requirements.
      We
      cannot assure you that we will be able to meet those initial listing
      requirements at that time.





If
      the
      American Stock Exchange delists our securities from trading on its exchange,
      we
      could face significant material adverse consequences, including:





·
            a
                limited availability of market quotations for our
                securities;


·
            a
                determination that our common stock is a "penny stock," which would
                require brokers trading in our common stock to adhere to more stringent
                rules and possibly resulting in a reduced level of trading activity
                in the
                secondary trading market for our common
                stock;


·
            a
                more limited amount of news and analyst coverage for our
                company;


·
            a
                decreased ability to issue additional securities or obtain additional
                financing in the future; and


·
            a
                decreased ability of our securityholders to sell their securities
                in
                certain states.




**We
      may not provide audited financial statements to our stockholders in seeking
      approval of an initial transaction, which may make it more difficult for
      stockholders to analyze the transaction in making their voting
      decisions.**





11


Prior
      to
      the completion of an initial transaction, we will submit the transaction to
      our
      stockholders for approval, even if the nature of the transaction is such as
      would not ordinarily require stockholder approval under applicable state law.
      In
      connection with seeking stockholder approval of an initial transaction, we
      will
      furnish our stockholders with proxy solicitation materials prepared in
      accordance with the Securities Exchange Act of 1934. In connection with an
      initial transaction ,
      these
      solicitation materials will include a description of the operations of the
      target and audited historical financial statements of the business. However,
      because a portfolio of financial assets or real estate assets that we seek
      to
      purchase will in many cases not have separate financial statements and will
      not
      meet the definition of a "business" requiring the disclosure of financial
      statements under SEC rules and regulations and because there will not exist
      sufficient historical information for us to create such financial statements,
      in
      the case of an acquisition of a portfolio of financial assets or of real estate
      assets, audited financial statements may not be available and we may not be
      required to provide stockholders with such financial statements. The absence
      of
      such financial statements may make it more difficult for stockholders to analyze
      the transaction in making their voting decisions.





**Risks
      Related to the**


**Real
      Estate Industry**





**Because
      our business may involve our holding real estate assets or loans secured by
      real
      estate assets, a downturn in the real estate market could result in a material
      diminution in the value of our assets, an increase in the rate of default on
      loans we hold, and/or a material diminution of the value of the collateral
      securing our loans.**





We
      may
      acquire an operating business which makes (or acquires a portfolio of) loans
      secured by real estate. We also may acquire real estate assets that we expect
      will lead to the generation of financial assets when we lend a portion of the
      purchase price to buyers of the real estate. Real estate markets are cyclical
      in
      nature and highly sensitive to changes in national and regional economic
      conditions, including, among other facts, levels of employment and discretionary
      disposable income, consumer confidence, available financing and interest rates.
      A downturn in the economy in general or in the market for real estate assets
      in
      particular could have a material adverse effect on our business, operating
      results and financial condition. In addition, concentration in a given region
      may increase our susceptibility to a downturn in such region. If a substantial
      portion of our assets is real estate, a downturn could have a material adverse
      effect on our ability to resell such real estate at a profit. In addition,
      such
      a downturn could result in an increase in the default rate of loans held by
      us,
      and would result in a material diminution of the value of the collateral
      securing those loans.





**To
      the extent we acquire one or more real estate assets, we will be subject to
      significant and customary risks relating to the ownership of real
      estate.**





We
      may
      acquire one or more real estate assets. To the extent we do this, we intend
      to
      subdivide the property, make certain improvements to the property, and then
      resell the subdivided parcels. We would offer to provide financing to customers
      for a significant portion  of the
      purchase price. Our activities in this area will be subject to numerous risks
      and uncertainties, including the following:





·
            the
                real estate market is highly competitive, and we may have difficulty
                locating and acquiring suitable
                assets;


·
            the
                property may decline in value due to changing market and economic
                conditions and other factors;


·
            the
                costs of developing and completing the asset may exceed those anticipated,
                possibly making the asset
                unprofitable;


·
            there
                may be delays in bringing the property to market due to, among other
                things, changes in regulations, delays in obtaining necessary approvals,
                and changes in the availability of
                financing;


·
            demand
                for the subdivided parcels may be lower, and the period necessary
                to sell
                off the asset may be longer, than
                anticipated;


·
            real
                estate is subject to extensive and complex regulations, and costs
                of
                regulatory compliance may exceed those
                anticipated;


·
            we
                may incur environmental liabilities in connection with our ownership
                of
                real estate; and


·
            even
                if we are able to sell the subdivided parcels, customers may wish
                to pay
                cash or utilize third party financing rather than borrow money from
                us.





To
      the
      extent customers utilize our financing, we will bear the risk of delinquencies
      and defaults and other customary risks. Please see "As an originator or owner
      of
      loan portfolios, we will be subject to a number of risks beyond our control"
      below.





**Risks
      Related to the**


**Consumer
      and Commercial Finance Industry**





**If
      we hold loan portfolios, changes in interest rates and our inability to
      effectively protect against changes in those rates may result in our being
      less
      profitable than anticipated or not profitable at all or in our being unable
      to
      meet our obligations under borrowing arrangements.**





We
      expect
      to be in the business of owning loan portfolios. Holding loan portfolios will
      subject us to a number of risks relating to interest rates. The interest rates
      applicable to loans in some or all of our portfolios may be less than prevailing
      market rates from time to time, and the spread between the rates obligors on
      our
      loans pay to us and the prevailing interest rates at which we borrow money
      from
      our lenders may be lower than anticipated or negative. In such event, our
      results of operations and financial position may be materially adversely
      affected and we may be unable to meet our obligations under our borrowing
      arrangements. In addition, applicable state laws may limit the effective
      interest rates that we may charge, which would limit our ability to effectively
      manage our business and our interest rate risk. To the extent we take steps
      to
      seek to manage our interest rate risk, such as through the purchase of interest
      swaps or caps, we will be subject to credit risks with respect to the financial
      institutions that provide us with interest rate protection and the steps we
      take
      to manage our interest rate risk may not prove to be effective.





**We
      will need to continually originate or acquire portfolios of loans and, if we
      are
      unable to do so, we will be unable to grow our business.**





We
      expect
      to be in the business of owning loan portfolios. By their nature, these
      portfolios will decline in value over time, as outstanding balances are repaid
      or the loans go into default. As a result, in order to grow our business we
      will
      need to continually originate, purchase or otherwise acquire new loans. The
      customer and commercial finance industry is highly competitive, and no
      assurances can be given that we will be able to originate, purchase or otherwise
      acquire additional pools of loans on attractive terms or at all. The need to
      acquire additional portfolios will require us to incur additional expenses
      in
      continuing to originate portfolios. In addition, after the initial transaction,
      our stockholders will not have the right to approve any future acquisitions,
      except as and to the extent otherwise required under Delaware law.





**We
      expect to incur significant indebtedness and be subject to customary risks
      relating to leverage.**





We
      expect
      to incur significant indebtedness to finance an initial transaction. Moreover,
      we expect to seek (and may need to seek) external sources of liquidity to
      support our operations, finance the acquisition of additional businesses or
      assets and satisfy our debt and other obligations in the future. Our ability
      to
      service or to refinance our indebtedness or to obtain additional financing
      will
      depend on our future performance, which is subject to a number of factors,
      including our business, results of operations, leverage, financial condition
      and
      business prospects, the performance of our portfolio(s) of financial assets,
      prevailing interest rates, general economic conditions and perceptions about
      the
      industries in which we operate. No assurances can be given that we will be
      able
      to obtain sufficient external sources of liquidity on attractive terms, or
      at
      all. To the extent we utilize debt financing, our credit agreements will likely
      include various representations and warranties, conditions to funding,
      eligibility requirements for collateral, affirmative, negative and financial
      covenants and events of default. We anticipate that our debt financing will
      require us to pledge certain collateral to our lenders. For example, a credit
      facility may have a borrowing base requirement pursuant to which our lender(s)
      will lend us up to a specified percentage of the outstanding principal balance
      of eligible loans. The eligibility requirements may limit our ability to borrow
      against certain assets, and assets that were initially eligible may cease to
      qualify if, for example, the obligor fails to make payments or otherwise
      defaults on its obligations to us. If this were to occur, we would be required
      to add additional eligible loans as collateral and/or repay a portion of our
      indebtedness in order to comply with the borrowing base
      requirements.





12


Our
      level
      of debt and debt service requirements will have several important effects on
      our
      future operations, including the following:





·
            we
                will have significant cash requirements to service debt, thereby
                reducing
                funds available for operations and future business opportunities
                and
                increasing our vulnerability to adverse economic and industry
                conditions;


·
            our
                leveraged position may increase our vulnerability to competitive
                pressures;


·
            the
                financial covenants and other restrictions contained in the agreements
                relating to our indebtedness will require us to meet certain financial
                tests and will restrict our ability to, among other things, borrow
                additional funds, dispose of assets or pay cash dividends on, or
                repurchase, preferred or common stock; and


·
            funds
                available for working capital, capital expenditures, acquisitions
                and
                general corporate purposes may be
                limited.




Many
      of
      our competitors will likely operate on a less leveraged basis and will have
      greater operating and financial flexibility than we will. There can be no
      assurance that our cash flow and capital resources will be sufficient for
      payment of our indebtedness in the future. If we are not able to satisfy our
      debt service obligations, we could default on our indebtedness, which would
      entitle the holders of such indebtedness to, among other things, accelerate
      the
      maturity thereof. Any default under the documents governing our indebtedness
      could have a material adverse effect on our business and the value of our
      securities.





**As
      an originator or owner of loan portfolios, we will be subject to a number of
      risks beyond our control.**





To
      the
      extent we are an originator or owner of consumer or commercial loan portfolios,
      we will be subject to a number of risks. The ability of obligors under loans
      in
      our portfolios to meet their obligations and our ability to recover the
      outstanding balances of loans following an event of default can be affected
      by
      circumstances outside of our control, including changes in general economic
      conditions, regulations governing consumer and commercial lending, levels of
      employment, consumer confidence, available financing and interest rates. If
      defaults under loans in our portfolios are higher than we expect, we may incur
      significant costs, including legal compliance costs, and delays in connection
      with servicing and collecting efforts, and we may incur legal and other
      restrictions and delays in foreclosing or otherwise realizing upon collateral
      for loans. In addition, our results of operations and financial position will
      be
      materially adversely affected if the value of assets serving as collateral
      for
      loans in our portfolios declines and we incur significant losses. Disputes
      with
      obligors may lead to litigation that will result in higher costs than we
      anticipate.





**Some
      of our target borrowers may be more susceptible to financial difficulties than
      larger businesses.**





Our
      expected target may involve commercial and/or consumer financing. To the extent
      that we engage in lending to small business, these borrowers:





·
            may
                be more vulnerable than large businesses to economic
                downturns;


·
            typically
                depend upon the management talents and efforts of one person or a
                small
                group of persons; and


·
            often
                need substantial additional capital to expand or
                compete.





Small
      business loans may entail a greater risk of delinquencies and defaults than
      loans entered into with larger, more creditworthy customers. In addition, there
      is typically only limited publicly available financial and other information
      about small businesses and they often do not have audited financial statements.
      Accordingly, in making credit decisions, we will rely upon the accuracy of
      information about these small businesses obtained from the small business owner
      and/or third party sources, such as credit reporting agencies. If we
      inaccurately assess the creditworthiness of obligors, we may experience a higher
      number of loan defaults and related decreases in our earnings.





**Risks
      Related to Our Securities**





**Our
      outstanding warrants may have an adverse effect on the market price of our
      common stock and make it more difficult to effect a business combination or
      portfolio or real estate acquisition using our common stock as
      consideration.**





In
      connection with our initial public offering, as part of the units, we issued
      warrants to purchase 40,000,000 shares of common stock. We also issued an option
      to purchase 1,000,000 units to Deutsche Bank Securities Inc., the lead
      underwriter in our initial public offering, which, if exercised, will result
      in
      the issuance of an additional 2,000,000 warrants. Additionally, following our
      initial public offering, Messrs. Stratton and Weingarten each purchased an
      additional 2,437,614 warrants. To the extent we issue shares of common stock
      to
      effect a business combination or portfolio or real estate acquisition, the
      potential for the issuance of substantial numbers of additional shares upon
      exercise of these warrants and the lead underwriter’s option could make us a
      less attractive acquisition vehicle in the eyes of a target as such securities,
      when exercised, will increase the number of issued and outstanding shares of
      our
      common stock and reduce the value of any shares issued to complete the business
      combination or portfolio or real estate acquisition. Accordingly, our warrants
      and the lead underwriter's option may make it more difficult to effectuate
      a
      business combination or portfolio or real estate acquisition, or increase the
      cost of the target. Additionally, the sale, or even the possibility of sale,
      of
      the shares underlying the warrants and the lead underwriter's option could
      have
      an adverse effect on the market price for our securities or on our ability
      to
      obtain future financing. If and to the extent these warrants and the lead
      underwriter's option are exercised, you may experience further dilution to
      your
      holdings.





**If
      our initial stockholders or Deutsche Bank Securities Inc. exercise their
      registration rights, it may have an adverse effect on the market price of our
      common stock and the existence of these rights may make it more difficult to
      effect an initial transaction.**





Our
      initial stockholders are entitled to demand that we register the resale of
      their
      shares of common stock at any time after the date on which their shares are
      released from escrow. In addition, Deutsche Bank Securities Inc., the lead
      underwriter, is entitled to demand that we register the sale of its securities
      from time to time. If our initial stockholders exercise their registration
      rights with respect to all of their shares of common stock, then there will
      be
      an additional 5,000,000 shares of common stock eligible for trading in the
      public market. If Deutsche Bank Securities Inc. exercises its registration
      rights with respect to the shares of common stock issuable upon exercise of
      its
      purchase option and the warrants issuable under the purchase option, there
      will
      be an additional 3,000,000 shares of common stock, assuming exercise of the
      warrants held by Deutsche Bank Securities Inc., eligible for trading in the
      public market. The presence of this additional number of shares of common stock
      eligible for trading in the public market may have an adverse effect on the
      market price of our common stock. In addition, the existence of these rights
      may
      make it more difficult to effectuate a business combination or portfolio or
      real
      estate acquisition or increase the cost of the target, as the stockholders
      of
      the target or owner of the target portfolio or asset may be discouraged from
      entering into a business combination or portfolio or real estate acquisition
      with us or will request a higher purchase price as a result of these
      registration rights and the potential future effect their exercise may have
      on
      the trading market for our common stock.





13


**If
      we are deemed to be an investment company, we may be required to institute
      burdensome compliance requirements and our activities may be restricted, which
      may make it difficult for us to complete an initial
      transaction.**





If
      we are
      deemed to be an investment company under the Investment Company Act of 1940,
      our
      activities may be restricted, including:





·
            restrictions
                on the nature of our investments;
                and


·
            restrictions
                on the issuance of securities,





which
      may
      make it difficult for us to complete a business combination or portfolio or
      real
      estate acquisition. In addition, we may have imposed upon us burdensome
      requirements, including:





o
            registration
                as an investment company;


o
            adoption
                of a specific form of corporate
                structure;


o
            reporting,
                record keeping, voting, proxy, compliance and disclosure requirements;
                and


o
            complying
                with other rules and regulations.





We
      do not
      believe that our anticipated principal activities will subject us to the
      Investment Company Act of 1940. To this end, the proceeds held in trust may
      only
      be invested by the trust agent in "government securities" (within the meaning
      of
      the Investment Company Act of 1940) with specific maturity dates. By restricting
      the investment of the proceeds to these instruments, we intend to meet the
      requirements for the exemption provided in Rule 3a-1 promulgated under the
      Investment Company Act of 1940. In addition to the risk of being  deemed
      an
      investment company subject to the Act prior to the consummation of an initial
      transaction, we may, depending on the nature of the financial assets that we
      own, have a risk of being deemed an investment company subject to the Act in
      the
      future because the loan portfolios we own may be considered "securities." The
      Act includes a number of exemptions which we believe may be applicable to us
      depending on the nature of the loan portfolios we own. Although we will seek
      to
      operate in a way that avoids being classified as an investment company, no
      assurances can be given that we will be successful. If we were deemed to be
      subject to the Act, compliance with these additional regulatory burdens would
      require significant additional expense that we have not allotted for.





**Acquisitions
      that we may undertake would involve a number of inherent risks, any of which
      could cause us not to realize the benefits anticipated to
      result.**





Following
      our initial transaction, our strategy will include expanding our assets and
      operations through additional combinations or acquisitions. Combinations and
      acquisitions involve inherent risks, such as:





·
            uncertainties
                in assessing the value, strengths and potential profitability of,
                and
                identifying the extent of all weaknesses, risks, contingent and other
                liabilities of, acquisition or other transaction
                candidates;


·
            the
                potential of key management and employees of an acquired
                business;


·
            the
                ability to achieve identified operating and financial synergies
                anticipated to result from a combination or
                acquisition;


·
            problems
                that could arise from the integration of the acquired business or
                assets;
                and


·
            unanticipated
                changes in business, industry or general economic conditions that
                affect
                the assumptions underlying the combination or
                acquisition.





Any
      one
      or more of these factors could cause us not to realize the benefits anticipated
      to result from any combination or acquisition or could result in unexpected
      liabilities.





**The
      inability of the sellers of businesses or assets that we may acquire to fulfill
      their indemnification obligations to us under our combination or acquisition
      agreements could increase our liabilities and adversely affect our results
      of
      operations and financial position.**





Depending
      on the structure of the transaction and other sale terms, we expect that our
      combination or acquisition agreements may include provisions pursuant to which
      the sellers agree to retain responsibilities for and indemnify us against
      certain damages resulting from certain third-party claims or other liabilities.
      The failure of any seller to satisfy its obligations with respect to claims
      and
      retained liabilities covered by the combination or acquisition agreements could
      have an adverse effect on our results of operations and financial position  because
      claimants may successfully assert that we are liable for those claims or
      retained liabilities. In addition, we expect that certain obligations of the
      sellers to indemnify us will terminate upon the expiration of the applicable
      indemnification period and will not cover damages in excess of the applicable
      coverage limit. The assertion of third-party claims after the expiration of
      the
      applicable indemnification period or in excess of the applicable coverage limit,
      or the failure of any seller to satisfy its indemnification obligations with
      respect to breaches of its representations, warranties and covenants, could
      have
      an adverse effect on our results of operations and financial
      position.





**Item
      1B.**  **Unresolved
      Staff Comments** .





Not
      Applicable.





**Item
      2.****Properties.**





We
      maintain our executive offices at 51 Locust Avenue, Suite 302, New Canaan,
      Connecticut 06840. Full Circle LLC, an affiliate of Richard A. Stratton, our
      Chief Executive Officer and Chairman of the Board, has agreed to provide this
      space to us until either the consummation of an initial transaction or the
      liquidation of the company for failure to complete an initial transaction,
      at a
      cost of approximately $2,300 a month pursuant to a letter agreement between
      Full
      Circle LLC and us dated November 10, 2005. We pay Full Circle LLC an aggregate
      fee of $7,500 per month which includes the cost of the office space and the
      cost
      of other general and administrative services provided to us by Full Circle
      LLC.





14


**Item
      3.**  **Legal
      Proceedings.**




We
      had
      originally considered using the firm of Ferris, Baker Watts, Inc. as lead
      underwriter of our initial public offering. We never reached or entered into
      any
      agreement with Ferris, Baker Watts, and subsequently we decided, for market
      and
      other reasons, to use Deutsche Bank Securities Inc. as lead underwriter. On
      October 20, 2005, Ferris, Baker Watts filed a complaint against us entitled *Ferris,
      Baker Watts, Inc. v. Cold Spring Capital Inc.* in
      the
      Circuit Court for Baltimore City, Maryland. The complaint alleges breach of
      express contract, breach of implied-in-fact contract, detrimental reliance
      or
      promissory estoppel, and unjust enrichment arising out of our alleged refusal
      to
      pay Ferris, Baker Watts for alleged financial and investment banking services.
      The complaint seeks damages of $10.6 million, as well as attorneys’ fees, court
      costs, prejudgment interest and any other relief that may be deemed appropriate
      by the court. The complaint alleges that the claims run against the proceeds
      raised in our initial public offering, including those held in the trust
      account. We believe the claims in the complaint to be wholly without merit,
      and
      we intend to defend against those claims vigorously. On October 26, 2005, we
      filed an answer and counterclaim in the Circuit Court for Baltimore City,
      Maryland denying the claims and alleging tortious interference with economic
      relations. The case has been assigned to the Business and Technology Case
      Management Program of the Circuit Court for Baltimore City, Maryland. Discovery
      in this case is ongoing. No assurances can be given, however, that we will
      ultimately prevail in this matter or that an adverse judgment would not
      materially adversely affect our financial condition or results of operations.
      Messrs. Stratton and Weingarten have agreed, severally, one half each, to be
      personally liable to ensure that the proceeds in the trust account are not
      reduced by any claims in this matter and that the company’s working capital is
      not impacted by any such claims in excess of $300,000.





**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders** .




Not
      applicable.





**PART
      II**





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




Our
      equity securities trade on the American Stock Exchange. Each of our units
      consists of one share of our common stock and two redeemable common stock
      purchase warrants and trades on the American Stock Exchange under the symbol
      “CDS.U.” On December 12, 2005, the warrants and common stock underlying our
      units began to trade separately on the American Stock Exchange under the symbols
      “CDS.WS” and “CDS,” respectively. Each warrant entitles the holder to purchase
      from us one share of our common stock at an exercise price of $5.00 commencing
      on the later of the completion of an
      initial transaction with a
      target or November 11, 2006. Our warrants will expire at 5:00 p.m., New York
      City time, on November 11, 2009, or earlier upon redemption.




The
      following table sets forth, for the fourth quarter of the fiscal year ended
      December 31, 2005, the high and low bid information of our units, common stock
      and warrants as reported on the American Stock Exchange. The quotations listed
      below reflect interdealer prices, without retail markup, markdown or commission
      and may not necessarily represent actual transactions. Prior to November 16,
      2005, there was no established public trading market for our
      securities.





**Quarter
                ended**
            
            **Units**
            
            
            
            **Common
                Stock**
            
            
            
            **Warrants****High**
            
            **Low**
            
            **High**
            
            **Low**
            
            **High**
            
            **Low**Fourth
                Quarter (from November 16, 2005) of fiscal year ended December 31,
                2005
            
            $
            6.00
            
            $
            5.80
            
            $
            5.50
            
            $
            5.20
            
            $
            0.39
            
            $
            0.36





**Holders
      of Common Equity**




On
      March
      23, 2006, there were approximately 1 holder of record of our units, 1 holder
      of
      record of our warrants and 9 holders of record of our common stock. Such numbers
      do not include beneficial owners holding shares, warrants or units through
      nominee names.




**Dividends**




We
      have
      not paid any dividends on our common stock to date and do not intend to pay
      dividends prior to the completion of an
      initial transaction .
      The
      payment of dividends in the future will be contingent upon our revenues and
      earnings, if any, capital requirements and general financial condition
      subsequent to completion of an initial transaction. The payment of any dividends
      subsequent to an initial transaction will be within the discretion of our then
      board of directors. It is the present intention of our board of directors to
      retain all earnings, if any, for use in our business operations and,
      accordingly, our board does not anticipate declaring any dividends in the
      foreseeable future.




**Recent
      Sales of Unregistered Securities**




On
      June
      10, 2005, we issued 5,000,000 shares of our common stock (after giving effect
      to
      a 25,000-for-one stock split) to the parties set forth below for $25,000 in
      cash, at a purchase price of $0.005 per share, without
      registration under the Securities Act:




**Stockholders**
            
            **Number**
              **of
                Shares**Richard
                A. Stratton
            
            
            2,500,000Joseph
                S. Weingarten
            
            
            2,500,000





Such
      shares were issued in connection with our organization pursuant to the exemption
      from registration contained in Section 4(2) of the Securities Act as they were
      sold to sophisticated, wealthy individuals. Subsequently, each of Messrs.
      Stratton and Weingarten transferred 125,000 of his shares to each of our
      independent directors, Messrs. Binder, Chefitz and Rozowsky, as a result of
      which each of our independent directors owns 250,000 shares as of the date
      of
      this Annual Report on Form 10-K. Mr. Weingarten has also transferred 600,000
      shares to a trust for the benefit of Mr. Weingarten’s children and Mr. Stratton
      has transferred 1,000,000 shares to trusts for the benefit of his
      children. No
      underwriting discounts or commissions were paid with respect to such
      sales.





15




**Use
      of Proceeds from our Initial Public Offering**




On
      November 16, 2005, we closed our initial public offering of 20,000,000 units
      with each unit consisting of one share of our common stock and two redeemable
      common stock purchase warrants, each to purchase one share of our common stock
      at an exercise price of $5.00 per share. All of the units registered were sold,
      at an offering price of $6.00 per unit, and generated gross proceeds of
      $120,000,000. The securities sold in our initial public offering were registered
      under the Securities Act of 1933 on a registration statement on Form S-1 (No.
      333-125873). The Securities and Exchange Commission declared the registration
      statement effective on November 11, 2005. Deutsche Bank Securities Inc. served
      as the lead underwriting in our initial public offering.




We
      paid a
      total of $6,600,000 in underwriting discounts and commissions and approximately
      $1,033,076 for other costs and expenses related to the offering. We also placed
      an additional $2,400,000 into the trust account representing a deferral of
      a
      portion of the underwriters’ discount, which the underwriters will be entitled
      to receive upon consummation of an initial transaction. After deducting the
      underwriting discounts and commissions and the other offering expenses, the
      total net proceeds to us from our initial public offering was $109,966,924,
      of which $107,426,000 (plus the additional $2,400,000 attributable to the
      deferred underwriters’ discount) was placed in a trust account and the remaining
      proceeds ($2,540,926) became available to be used to provide for business,
      legal
      and accounting due diligence on prospective transactions and continuing general
      and administrative expenses. The net proceeds deposited into the trust account
      remain on deposit in the trust account and earned $499,598 in interest through
      December 31, 2005. ******




Following
      the consummation of our initial public offering through December 31, 2005,
      we
      incurred an aggregate of $276,813 in additional expenses, which consists of
      approximately $20,103 for D&O and other insurance, $77,409 for legal and
      accounting fees unrelated to our initial public offering, $21,917 for travel
      expenditures, $21,277 for Delaware franchise taxes, $10,757 for printing,
      supplies and phone expenses, $11,250 paid to Full Circle LLC, an affiliate
      of
      Richard A. Stratton, our Chief Executive Officer and Chairman of the Board,
      through December 31, 2005 for our office space and other general and
      administrative services, $89,000 for capital based taxes and $25,100 for
      other expenses. We also incurred $92,000 of income tax expenses. The net
      remaining proceeds from the initial public offering after deducting the
      underwriting discounts and commissions, the offering expenses and all other
      expenditures through December 31, 2005 were approximately $112,978,924, which
      consists of $2,528,516 of cash held outside the trust account and $110,450,408
      held in the trust account.




**Item
      6.**  **Selected
      Financial Data.**




The
      following is a summary of selected financial data of the Company for the period
      from May 26, 2005 (inception) to December 31, 2005, which should be read in
      conjunction with the financial statements of the Company and the notes
      thereto:





**SELECTED
      FINANCIAL DATA**





**Income
              statement data**
            
            **Period
                from May 26, 2005****(inception)
                to December 31, 2005**Interest
                income
            
            $
            501,171Income
                before provision for income taxes
            
            $
            224,358Provision
                for income taxes
            
            
            ($92,000
            )Net
                income
            
            $
            132,358Weighted
                average number of common shares outstandingBasic
            
            
            10,000,000Diluted
            
            
            10,000,000Net
                income per shareBasic
            
            $
            0.01Diluted
            
            $
            0.01









**Balance
              sheet data**
            
            
            **December
              31, 2005**Cash
            
            $
            2,528,516Investments
                held in trust
            
            $
            110,450,408Deferred
                tax asset
            
            $
            99,000Total
                Assets
            
            $
            113,301,577Total
                liabilities
            
            $
            3,177,195Common
                stock subject to possible conversion 3,998,000 shares at conversion
                value
            
            $
            21,474,457Total
                stockholders’ equity
            
            $
            88,649,925Total
                Liabilities and Stockholders’ equity
            
            $
            113,301,577








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




We
      were
      formed on May 26, 2005, to serve as a vehicle to acquire one or more operating
      finance companies, financial asset portfolios or real properties through a
      merger, capital stock exchange, asset acquisition or other similar business
      combination. We consummated our initial public offering on November 16, 2005.
      We
      have neither engaged in any operations nor generated any revenues nor incurred
      any debt or expenses during the period ended December 31, 2005, other than
      in
      connection with our initial public offering and, thereafter, certain minor
      legal
      and other expenses related to pursuing acquisitions of targets and defending
      litigation. Our entire activity since inception has been to prepare for and
      consummate our initial public offering and to identify and investigate targets
      for an
      initial transaction .





We
      are
      currently in the process of evaluating and identifying targets for an initial
      transaction. We are not presently engaged in, and will not engage in, any
      substantive commercial business until we consummate an initial transaction.
      We
      intend to utilize cash derived from the proceeds of our initial public offering,
      our capital stock, debt or a combination of cash, capital stock and debt, in
      effecting an
      initial transaction .
      The
      issuance of additional shares of our capital stock:





•
            
            may significantly reduce the equity interest
                of our
                stockholders;•
            
            will
                likely cause a change in control if a substantial number of our shares
                of
                common stock are issued, which may affect, among other things, our
                ability
                to use our net operating loss carry forwards, if any, and may also
                result
                in the resignation or removal of one or more of our present officers
                and
                directors; and•
            
            may
                adversely affect prevailing market prices for our
                securities.




16


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




•
            
            default
                and foreclosure on our assets, if our operating revenues afteran
                initial transactionwere
                insufficient to pay our debt
                obligations;




•
            
            acceleration
                of our obligations to repay the indebtedness, even if we have made
                all
                principal and interest payments when due, if the debt security contained
                covenants that required the maintenance of certain financial ratios
                or
                reserves and any such covenant were breached without a waiver or
                renegotiation of that covenant;




•
              
              our
                    immediate payment of all principal and accrued interest, if any,
                    if the
                    debt security was payable on demand;
                    and




•
            
            our
                inability to obtain additional financing, if necessary, if the debt
                security contained covenants restricting our ability to obtain additional
                financing while such security was
                outstanding.





Net
      income for the period from May 26, 2005 (inception) to December 31, 2005 was
      $132,358, which consisted of $501,171 in interest income partially offset by
      $92,000 in income taxes and $276,813 in expenses consisting of  approximately
      $20,103 for D&O and other insurance, $77,409 for legal and accounting fees
      unrelated to our initial public offering, $21,917 for travel expenditures,
      $21,277 for Delaware franchise taxes, $10,757 for printing, supplies and phone
      expenses, $11,250 paid to Full Circle LLC, an affiliate of Richard A. Stratton,
      our Chief Executive Officer and Chairman of the Board, through December 31,
      2005
      for our office space and other general and administrative services, $89,000
      for
      capital based taxes and $25,100 for other expenses. The
      trustee of the trust account will pay any taxes resulting from interest accrued
      on the funds held in the trust account out of the funds held in the trust
      account.





The
      net
      proceeds to us from the sale of our units, after deducting offering expenses
      of
      approximately $1,033,076 and underwriting discounts of approximately $9,000,000
      (including $2,400,000 placed in the trust account representing a deferred
      underwriters’discount) was $109,966,924,
      of which $107,426,000 (plus the additional $2,400,000 attributable to the
      underwriters’discount) was placed in a trust account and the remaining proceeds
      ($2,540,926) became available to be used to provide for business, legal and
      accounting due diligence on prospective transactions and continuing general
      and
      administrative expenses. To
      the
      extent that our capital stock is used in whole or in part as consideration
      to
      effect an initial transaction, the proceeds held i n
      the
      trust account (excluding the amount held in a trust account representing a
      portion of the underwriters’ discount) as
      well
      as any other net proceeds not expended will be used to finance the operations
      of
      the target. At December 31, 2005, we had cash outside of the trust account
      of
      $2,528,516, cash held in the trust account of $110,450,408, prepaid expenses
      of
      $223,653 and total liabilities of $3,177,195. We believe that the funds
      available to us outside of the trust account will be sufficient to allow us
      to
      operate until May 16, 2007, assuming that an
      initial transaction is
      not
      consummated during that time. Of the funds held outside of the trust account
      totaling $2,082,231 as of March 10, 2006, we anticipate using these funds to
      cover legal and accounting fees (including certain costs of pending litigation),
      other expenses attendant to the due diligence investigations, structuring,
      and
      negotiating of an
      initial transaction ,
      and
      administrative expenses incurred prior to completing an initial transaction.
      We
      do not believe we will need to raise additional funds 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 an
      initial transaction that
      is
      presented to us. We would only consummate such a fund raising simultaneously
      with the consummation of an
      initial transaction .




As
      of
      November 16, 2005, Messrs. Stratton and Weingarten had each advanced $50,000
      for
      a total of $100,000 to us, on a non-interest bearing basis, for payment of
      offering expenses on our behalf. These loans were repaid without interest on
      the
      date we consummated our initial public offering.





**Off-Balance
      Sheet Arrangements**





Options
      and warrants issued in conjunction with our initial public offering are equity
      linked derivatives and accordingly represent off balance sheet
      arrangements.  The options and warrants meet the scope exception in
      paragraph 11(a) of FAS 133 and are accordingly not accounted for as derivatives
      for purposes of FAS 133, but instead are accounted for as equity.  For a
      more complete discussion of the treatment of the underwriter’s purchase option
      and the warrants, see footnote 1 to the financial statements.





**Item
      7A.****Quantitative
      and Qualitative Disclosures About Market Risk**.




Market
      risk is a broad term for the risk of economic loss due to adverse changes in
      the
      fair value of a financial instrument. These changes may be the result of various
      factors, including interest rates, foreign exchange rates, commodity prices
      and/or equity prices. $107,426,000 of the net offering proceeds has been placed
      into a trust account at Morgan Stanley maintained by Continental Stock
      Transfer & Trust Company, acting as trustee. Additionally, $2,400,000
      of the proceeds attributable to the underwriters' discount has also been
      deposited into the trust account. The proceeds held in trust will only be
      invested in U.S. "government securities," defined as any Treasury Bill issued
      by
      the United States having a maturity of 180 days or less. Thus, we are subject
      to
      market risk primarily through the effect of changes in interest rates on
      government securities. The effect of other changes, such as foreign exchange
      rates, commodity prices and/or equity prices, does not pose significant market
      risk to us.





**Item
      8.**  **Financial
      Statements and Supplementary Data.**




The
      Company’s Financial Statements together with the independent registered public
      accounting firm report thereon appears following Item 15 of this Report at
      pages
      23 through 32.




**Item
      9.****Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure**.




Not
      applicable.





**Item
      9A.**  **Controls
      and Procedures.**




**(a)**
            **Evaluation
                of Disclosure Controls and Procedures**




We
      evaluated the effectiveness of our disclosure controls and procedures, as
      defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
      as of the end of the period covered by this Annual Report on Form 10-K. Richard
      A. Stratton, our Chief Executive Officer, and Joseph S. Weingarten, our
      Treasurer, participated in this evaluation. Based upon that evaluation, Messrs.
      Stratton and Weingarten concluded that our disclosure controls and procedures
      were effective as of the end of the period covered by the report.




17


**(b)**
            **Changes
                in Internal Controls over Financial Reporting**




As
      a
      result of the evaluation completed by management, and in which Messrs. Stratton
      and Weingarten participated, we have concluded that there were no changes during
      the fiscal quarter ended December 31, 2005 in our internal controls over
      financial reporting, which have materially affected, or are reasonably likely
      to
      materially affect, our internal controls over financial reporting.




**Item
      9B.****Other
      Information.**




Not
      applicable.





**PART
      III**





**Item
      10.**  **Directors** **and Executive Officers of the Registrant.**







**Directors
      and** **Officers** ****





Our
      current directors and officers are as follows:


**Name
                  and Date First**
                **Became Director and
                  Officer**
              
              **Age**
              
              **Position**
              
              **Date
                  Director**
                **Term
                  Expires**Richard
                  A. Stratton (May 2005)
              
              55
              
              Chairman
                  of the Board, Chief Executive Officer and Secretary
              
              2008Joseph
                  S. Weingarten (May 2005)
              
              40
              
              President,
                  Treasurer, Assistant Secretary and Director
              
              2007Evan
                  E. Binder (July 2005)
              
              51
              
              Director
              
              2008Robert
                  M. Chefitz (July 2005)
              
              46
              
              Director
              
              2006I.
                  Trevor Rozowsky (July 2005)
              
              44
              
              Director
              
              2007





***Richard
      A. Stratton*** has
      been
      our Chairman of the Board, Chief Executive Officer and Secretary since our
      inception. Mr. Stratton is also Chairman of the Board of Directors and
      controlling stockholder of Developer Finance Corporation, or DFC, which
      generates a portfolio of financial assets by providing financing to consumers
      and developers for the purchase of rural, recreational and other real estate.
      Additionally, Mr. Stratton co-founded and is a controlling stockholder and
      Chief
      Executive Officer of Resort Finance Corporation, or RFC, which provides
      financing to developers of vacation ownership, or timeshare interests. Since
      the
      inception of DFC in December of 2001, and RFC in 2002, Mr. Stratton has been
      responsible for strategic planning, general oversight and raising capital for
      these entities. Between July 2003 and February 2006, Mr. Stratton served as
      chief executive officer of Resort Finance LLC, or RFL. RFC owns a 40% interest
      in RFL. RFL is in the business of acquiring, maintaining, administering and
      financing a portfolio of timeshare loans and loans to timeshare developers
      and
      certain related activities. Prior to co-founding DFC, Mr. Stratton was a
      co-founder, president, and from 1996 to October 1999, CEO of Litchfield
      Financial Corporation (NASDAQ: LTCH), a specialty finance company with land,
      timeshare, financial services and tax lien divisions. Litchfield Financial
      was
      acquired by Textron Financial in October 1999 and Mr. Stratton served as Senior
      Vice President of Textron Financial from October 1999 until September 2000.
      Prior to Litchfield, Mr. Stratton held senior finance and marketing positions
      at
      Patten Corporation (now known as Bluegreen Corporation), Summit Software
      Technology, Gillette Company, and American Appraisal Company. Mr. Stratton
      received his B.A. degree from The College of the Holy Cross.





***Joseph
      S. Weingarten*** has
      been
      our President and Treasurer, and a Director since our inception and is currently
      also our Chief Financial Officer and Assistant Secretary. Mr. Weingarten is
      the
      President of Cold Spring Capital Management Corporation which is principally
      in
      the business of providing management support to Developer Finance Corporation
      and Resort Finance Corporation (see the description of Mr. Stratton above)
      and
      also evaluates other opportunities in consumer and commercial finance. Mr.
      Weingarten was a Director in the Asset Backed Securities group of Nomura
      Securities International Inc., from August 2001 through June 2004, where he
      was
      primarily responsible for originating warehouse and term securitization
      transactions with focus on first time issuers and emerging asset classes, and
      has experience in financing a wide variety of asset types. He was also
      responsible for international asset backed securities clients issuing term
      securities in the United States, completing transactions for clients in
      Australia, Brazil, Japan, and the United Kingdom. From January 2000 to August
      2001, Mr. Weingarten was a Managing Director with ING Barings where he was
      responsible for originating, structuring, and executing securitized transactions
      in the term and asset-backed commercial paper markets. From March 1997 to
      December 1999, Mr. Weingarten was with Litchfield Financial Corporation (NASDAQ:
      LTCH), a specialty finance company with land, timeshare, financial services
      and
      tax lien divisions. During 1997 and 1998, he served first as Senior Vice
      President, and then as Executive Vice President from 1998 through December
      1999.
      At Litchfield Financial, Mr. Weingarten was responsible for business development
      activities and was a member of senior management. Mr. Weingarten also served
      as
      a Vice President of ING’s Asset Backed Finance Group at ING from 1993 to 1997,
      and with the Consumer Finance and Mortgage Finance Groups of USWEST Financial
      Services from 1992 to 1993, and as a certified public accountant with Arthur
      Andersen & Company from 1987 through 1991. Mr. Weingarten is a graduate of
      New York University and holds a B.S. in Finance and Accounting.





***Evan
      E. Binder*** has been
      a member of our board of directors since July 2005. Mr. Binder has
      been a member of Windmill Management LLC since January 2005. Windmill is
      the manager of SageCrest II LLC, an investment fund which seeks to
      achieve current income and capital appreciation through investment in high
      yield
      fixed income obligations, loans, securities and other instruments. Target
      sectors include consumer, asset-backed and corporate obligations, as well as
      specialty finance, real estate and other markets offering high yield
      opportunities. Mr. Binder has over 17 years of experience in
      structured finance, asset-backed lending, securitization, commercial paper
      conduit finance origination and administration and served most recently as
      Managing Director and Head of Asset Backed Securities at Nomura Securities
      and
      ING Securities from 1993 through 2003. Earlier in his career, he worked at
      Citicorp Securities, Aegis Holdings and CS First Boston. Mr. Binder
      received a BA and MBA from Temple University.





***Robert
      M. Chefitz*** has been
      a member of our board of directors since July 2005. Mr. Chefitz has
      over 25 years of investment experience. Since 2002, Mr. Chefitz has
      been a general partner of NJTC Venture Fund, a venture capital fund. From 1990
      until 2001, Mr. Chefitz was a general partner of Apax Partners (formerly
      Patricof & Co. Ventures, Inc.), a private equity fund. From 1987
      to 1990, Mr. Chefitz was a managing director of Patricof & Co.
      Ventures, Inc., where he led and managed certain of the firm's investments
      and from 1981 to 1987 was a senior associate of Golder, Thoma,
      Cressey & Co, where he worked on numerous investments in a wide range
      of industries. Mr. Chefitz is a member of the commitment committee of The
      Financial Recovery Fund, a fund established to provide funding to small
      businesses that were located in the World Trade Center and surrounding buildings
      following the September 11 disaster, and a director of World Links, a
      philanthropic, non-governmental organization that brings computer and internet
      access to schools in developing countries. Mr. Chefitz is the president of
      The New York Venture Capital Forum. Mr. Chefitz received an M.B.A. from
      Columbia University and a B.A. from Northwestern University.





18


***I.
      Trevor Rozowsky*** has been
      a member of our board of directors since July 2005. Mr. Rozowsky is a
      founder and Executive Vice President of Lydian Trust Company, a private
      financial services firm, established in 1999. Mr. Rozowsky also serves as
      Chief Executive Officer of Lydian Private Bank, a privately held
      $1.4 billion Federal Savings Bank subsidiary of Lydian Trust Company. From
      1997 to 1999, Mr. Rozowsky was Managing Director of Affinity Capital
      Corporation, the predecessor to Lydian Trust Company. Mr. Rozowsky was a
      Senior Vice President of Ocwen Financial Services, (NASDAQ: OCN) from 1993
      to
      1997, and during his tenure was responsible for the following areas:
      acquisitions, credit, capital markets and loan origination. Mr. Rozowsky
      was Director of Consumer Finance for U S West Financial Services from 1991
      to
      1993 and was responsible for acquiring and managing the consumer portfolio
      and
      for establishing a branch based automobile loan originator that was later sold
      to Bank of America. Mr. Rozowsky was a Manager with Arthur
      Andersen & Company from 1984 through 1991. Mr. Rozowsky is a
      graduate of the University of Cape Town (South Africa) and has a Bachelor of
      Commerce degree as well as being a Chartered Accountant and Certified Public
      Accountant.





**Audit
      Committee**





Our
      board
      of directors has established an audit committee of the board of directors,
      which
      consists of Mr. Rozowsky, as chairman, and Messrs. Binder and  Chefitz,
      each of whom is an independent director. The audit committee's duties, which
      are
      specified in our Audit Committee Charter, include, but are not limited
      to:





·
            serving
                as an independent and objective party to monitor our financial reporting
                process, audits of our financial statements and internal control
                system;


·
            reviewing
                and appraising the audit efforts of our independent registered public
                accounting firm and internal finance department;
                and


·
            providing
                an open avenue of communications among our independent registered
                public
                accounting firm, financial and senior management, our internal finance
                department, and the board of
                directors.





The
      audit
      committee is composed exclusively of "independent directors" who are
      "financially literate," meaning they are able to read and understand fundamental
      financial statements, including a company's balance sheet, income statement
      and
      cash flow statement as required by the rules and regulations of the Securities
      and Exchange Commission and the American Stock Exchange.





The
      board
      of directors has determined that Mr. Rozowsky satisfies the definitions of
      independent director and financial sophistication and also qualifies as an
      "audit committee financial expert," as defined under the rules and regulations
      of the Securities and Exchange Commission and the American Stock
      Exchange.





**Nominating
      Committee**





Our
      board
      of directors has established a nominating committee of the board of directors,
      which consists of Mr. Chefitz as chairman and Messrs. Binder and
      Rozowsky, each of whom is an independent director. The nominating committee
      is
      responsible for overseeing the selection of persons to be nominated to serve
      on
      our board of directors. The nominating committee considers persons identified
      by
      its members, management, shareholders, investment bankers and
      others.





**Guidelines
      for Selecting Director Nominees**





The
      guidelines for selecting nominees, which are specified in the Nominating
      Committee Charter, generally provide that persons to be nominated should be
      actively engaged in business endeavors, have an understanding of financial
      statements, corporate budgeting and capital structure, be familiar with the
      requirements of a publicly traded company, be familiar with industries relevant
      to our business endeavors, be willing to devote significant time to the
      oversight duties of the board of directors of a public company, and be able
      to
      promote a diversity of views based on the person's education, experience and
      professional employment. The nominating committee evaluates each individual
      in
      the context of the board as a whole, with the objective of recommending a group
      of persons that can best implement our business plan, perpetuate our business
      and represent shareholder interests. The nominating committee may require
      certain skills or attributes, such as financial or accounting experience, to
      meet specific board needs that arise from time to time. The nominating committee
      does not distinguish among nominees recommended by shareholders and other
      persons.





**Code
      of Ethics**





We
      have
      adopted a code of ethics that applies to all of our executive officers,
      directors and employees, a copy of which may be found on the Investor Relations
      portion of our web-site at www.coldspringcapital.com. Our code of ethics
      codifies the business and ethical principles that govern all aspects of our
      business. We will provide a copy of our code of ethics, free of charge, to
      any
      person who submits a written request to Joseph S. Weingarten, President, Cold
      Spring Capital Inc., 51 Locust Avenue, Suite 302, New Canaan Connecticut 06840.





**Promoters**





Messrs.
      Stratton and Weingarten are deemed our “promoters” under federal securities
      laws.





**Section
      16(a) Beneficial Ownership Reporting Compliance**





Section
      16(a) of the Securities Exchange Act of 1934 requires our officers, directors
      and persons who own more than ten percent of a registered class of our equity
      securities to file reports of ownership and changes in ownership with the
      Securities and Exchange Commission. Officers, directors and ten percent
      stockholders are required by regulation to furnish us with copies of all Section
      16(a) forms they file. Based solely on copies of such forms received, we believe
      that, during the fiscal year ended December 31, 2005, all filing requirements
      applicable to our officers, directors and greater than ten percent beneficial
      owners were complied with.





**Item
      11. Executive Compensation** .





No
      executive officer or director has received any cash compensation for services
      rendered. Since November 2005, we have paid Full Circle LLC, an affiliate of
      Richard A. Stratton, our Chief Executive Officer and Chairman of the Board,
      a
      fee of $7,500 per month for providing us with certain limited administrative,
      technology and secretarial services, as well as the use of certain limited
      office space in New Canaan, Connecticut. We expect this arrangement to continue
      through our acquisition of a target. However, this arrangement is solely for
      our
      benefit and is not intended to provide Richard A. Stratton compensation in
      lieu
      of a salary. No other executive officer or director has a relationship with
      or
      interest in Full Circle LLC.





19


Other
      than this $7,500 per month fee to Full Circle LLC, no compensation of any kind,
      including finder's and consulting fees, will be paid to any of our officers
      or
      directors, or any of their respective affiliates or family members, for services
      rendered prior to or in connection with an initial transaction. However, our
      officers and directors will be reimbursed for any out-of-pocket expenses
      incurred in connection with activities on our behalf such as identifying
      potential targets and performing due diligence on suitable initial transactions.
      There is no limit on the amount of these out-of-pocket expenses and there will
      be no review of the reasonableness of the expenses by anyone other than our
      board of directors, which includes persons who may seek reimbursement, or a
      court of competent jurisdiction if such reimbursement is challenged.





Other
      than the securities described in the section appearing elsewhere in this Annual
      Report on Form 10-K entitled “Security Ownership of Certain Beneficial Owners
      and Management and Related Stockholder Matters”, none of our officers or
      directors has received any equity securities of the company.





Following
      an initial transaction and to the extent our current executive officers continue
      to be involved in management of our business, they will be entitled to receive
      such compensation as our board of directors may approve.





**Compensation
      Committee Interlocks and Insider Participation**





Our
      board
      of directors has established a compensation committee of the board of directors,
      which consists of Mr. Binder as chairman **** and
      Messrs. Chefitz and Rozowsky, each of whom is an independent director. The
      compensation committee is responsible for recommending to the board of directors
      compensation for the chief executive officer and the other executive officers.
      To the extent necessary or appropriate, the compensation committee is also
      responsible for producing an annual report on executive
      compensation.





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




The
      following table sets forth information regarding the beneficial ownership of
      our
      common stock as of March 13, 2006 by:





·
            each
                person known by us to be the beneficial owner of more than 5% of
                our
                outstanding shares of common stock;


·
            each
                of our officers and directors; and


·
            all
                our officers and directors as a
                group.





The
      number and percentage of shares of common stock beneficially owned is determined
      in accordance with the rules of the Securities and Exchange Commission, or
      SEC,
      and is not necessarily indicative of beneficial ownership for any other purpose.
      Under these rules, beneficial ownership includes any shares as to which a person
      has sole or shared voting power or investment power and also any shares of
      common stock underlying any options or warrants that are exercisable by that
      person within 60 days of March 13, 2006. However, these shares underlying
      options or warrants are not treated as outstanding for the purpose of computing
      the percentage ownership of any other person or entity. Percentage of beneficial
      ownership is based on 25,000,000 shares of the company’s common stock
      outstanding as of March 13, 2006. Unless
      otherwise indicated, we believe that all persons named in the table have sole
      voting and investment power with respect to all shares of common stock
      beneficially owned by them.





**Name
                and Address of Beneficial Owner(1)**
            
            **Shares**
            
            **Approximate
                Percentage of Outstanding****Common
                Stock**Richard
                A. Stratton(2)
            
            
            4,562,614
            
            
            16.6
            %Joseph
                S. Weingarten(3)
            
            
            4,562,614
            
            
            16.6
            %Evan
                E. Binder
            
            
            250,000
            
            
            1.0
            %Robert
                M. Chefitz
            
            
            250,000
            
            
            1.0
            %I.
                Trevor Rozowsky
            
            
            250,000
            
            
            1.0
            %Millenco,
                L.P.(4)
            
            
            4,999,800
            
            
            20.0
            %Millennium
                Management, L.L.C.(4)
            
            
            4,999,800
            
            
            20.0
            %Israel
                A. Englander(4)
            
            
            4,999,800
            
            
            20.0
            %Magnetar
                Financial LLC(5)
            
            
            2,250,000
            
            
            8.5
            %Magnetar
                Capital Partners LLC(5)
            
            
            2,250,000
            
            
            8.5
            %Supernova
                Management LLC(5)
            
            
            2,250,000
            
            
            8.5
            %Alec
                N. Litowitz(5)
            
            
            2,250,000
            
            
            8.5
            %Wellington
                Management Company, LLP(6)
            
            
            1,974,200
            
            
            7.9
            %Amaranth
                LLC(7)
            
            
            2,237,800
            
            
            9.0
            %Amaranth
                Advisors L.L.C.(7)
            
            
            2,237,800
            
            
            9.0
            %Nicholas
                M. Maounis(7)
            
            
            2,237,800
            
            
            9.0
            %Sapling,
                LLC(8)
            
            
            1,452,600
            
            
            5.8
            %Fir
                Tree Recovery Master Fund, L.P.(8)
            
            
            547,400
            
            
            2.2
            %Ospraie
                Management, LLC(9)
            
            
            1,666,600
            
            
            6.7
            %Ospraie
                Holding I, L.P.(9)
            
            
            1,666,600
            
            
            6.7
            %Ospraie
                Management, Inc.(9)
            
            
            1,666,600
            
            
            6.7
            %Dwight
                Anderson(9)
            
            
            1,666,600
            
            
            6.7
            %North
                Sound Capital LLC(10)
            
            
            4,999,800
            
            
            20.0
            %All
                directors and officers as a group (5 individuals)(11)
            
            
            9,875,228
            
            
            36.2
            %


__________________





(1)  The
      business address of Richard A. Stratton, Joseph S. Weingarten, Evan E. Binder,
      Robert M. Chefitz and I. Trevor Rozowsky is c/o Cold Spring Capital Inc., 51
      Locust Avenue, Suite 302, New Canaan, Connecticut 06840.





20


(2)  Includes
      (a) 2,437,614 shares of common stock issuable pursuant to outstanding warrants
      that may be exercised within 60 days of March 13, 2006 in the event that an
      initial transaction is consummated prior to such date and (b) 1,000,000 shares
      of common stock that are held in trusts for the benefit of Mr. Stratton's
      children.





(3)  Includes
      (a) 2,437,614 shares of common stock issuable pursuant to outstanding warrants
      that may be exercised within 60 days of March 13, 2006 in the event that an
      initial transaction is consummated prior to such date and (b) 600,000 shares
      of
      common stock that are held in a trust for the benefit of Mr. Weingarten's
      children.





(4)  The
      business address of Millenco, L.P., Millennium Management, L.L.C. and Israel
      A.
      Englander is 666 Fifth Avenue, New York, New York 10103. Millennium Management,
      L.L.C. is the general partner of Millenco. Israel A. Englander is the managing
      member of Millennium Management. Millenco, L.P., Millennium Management, L.L.C.
      and Israel A. Englander exercise shared voting and dispositive power over the
      amounts reported above. The amounts reported above include 3,333,200 shares
      of
      common stock issuable pursuant to outstanding warrants that may be exercised
      within 60 days of March 13, 2006 in the event that an initial transaction is
      consummated prior to such date. The foregoing information was derived from
      a
      Schedule 13G filed by the above persons with the SEC on February 13,
      2006.





(5)  The
      business address of Magnetar Financial LLC, Magnetar Capital Partners LLC,
      Supernova Management LLC and Alec N. Litowitz is 1603 Orrington Avenue,
      13 th Floor,
      Evanston, Illinois 60210. Magnetar Financial LLC serves as investment adviser
      to
      Magnetar Capital Master Fund Ltd, a Cayman Islands exempted company. Magnetar
      Capital Partners LLC serves as the sole member and parent holding company of
      Magnetar Financial LLC. Supernova Management LLC is the controlling member
      of
      Magnetar Capital Partners LLC. Alec N. Litowitz is the manager of Supernova
      Management. Magnetar Financial LLC exercises sole voting and investment power
      over the shares held for the account of Magnetar Capital Master Fund. Magnetar
      Financial LLC, and Magnetar Capital Partners LLC, Supernova Management LLC
      and
      Alec N. Litowitz exercise shared voting and dispositive power over the amounts
      reported above. The amounts reported above include 1,500,000 shares of common
      stock issuable pursuant to outstanding warrants that may be exercised within
      60
      days of March 13, 2006 in the event that an initial transaction is consummated
      prior to such date. The foregoing information was derived from a Schedule 13G
      filed by the above persons with the SEC on February 14, 2006.





(6)  The
      business address of Wellington Management Company, LLP is 75 State Street,
      Boston, MA 02109. The shares of common stock reported above are owned of record
      by clients of Wellington Management Company, LLP in its capacity as investment
      adviser. Wellington Management Company, LLP exercises shared voting power over
      927,500 shares and shared investment power over the amounts reported above.
      The
      foregoing information was derived from a Schedule 13G filed by the above persons
      with the SEC on February 14, 2006.





(7)  The
      business address of Amaranth LLC, Amaranth Advisors L.L.C. and Nicholas M.
      Maounis is One American Lane, Greenwich, Connecticut 06831. Amaranth Advisors
      L.L.C. is the trading advisor for Amaranth LLC and has been granted investment
      discretion over portfolio investments, including the common stock held by it.
      Nicholas M. Maounis is the managing member of Amaranth Advisors L.L.C. Amaranth
      LLC, Amaranth Advisors L.L.C. and Nicholas M. Maounis exercise shared voting
      and
      dispositive power over the amounts reported above. The foregoing information
      was
      derived from a Schedule 13G filed by the above persons with the SEC on February
      3, 2006.





(8)  The
      business address of Sapling, LLC and Fir Tree Recovery Master Fund, L.P. is
      535
      Fifth Avenue, 31 st Floor,
      New York, New York 10017. Fir Tree Value Master Fund, LP is the sole member
      of
      Sapling, LLC and Fir Tree, Inc. Fir Tree, Inc. is the investment manager of
      both
      Sapling and Fir Tree Recovery. Sapling, LLC and Fir Tree Recovery Master Fund,
      L.P. are the beneficial owners of 2,000,000 shares of common stock. Sapling,
      LLC
      may direct the vote and disposition of 1,452,600 shares and Fir Tree Recovery
      Master Fund, L.P. may direct the vote and disposition of 547,400 shares. The
      foregoing information was derived from a Schedule 13G filed by the above persons
      with the SEC on November 30, 2005.





(9)  The
      business address of Ospraie Management, LLC, Ospraie Holding I, L.P., Ospraie
      Management, Inc. and Dwight Anderson is 780 Third Avenue, 42 nd Floor,
      New York, New York 10017. The Ospraie Portfolio Ltd., a Cayman Islands exempted
      company, directly owns the shares of common stock reported above. Ospraie
      Management, LLC is the investment manager of The Ospraie Portfolio Ltd. Ospraie
      Holding I, L.P. is the managing member of Ospraie Management, LLC. Ospraie
      Management, Inc. is the general partner of Ospraie Holding I, L.P. Dwight
      Anderson is the president and sole shareholder of Ospraie Management, Inc.
      Ospraie Management, LLC, Ospraie Holding I, L.P., Ospraie Management, Inc.
      and
      Dwight Anderson exercise shared voting and dispositive power over the amounts
      reported above. The foregoing information was derived from a Schedule 13G filed
      by the above persons with the SEC on November 18, 2005.





(10)  The
      business address of North Sound Capital LLC is 20 Horseneck Avenue, Greenwich,
      Connecticut 06830. North Sound Capital LLC is the managing member of North
      Sound
      Legacy Institutional Fund LLC and the investment advisor of North Sound Legacy
      International Ltd., who are the holders of such shares. Thomas McAuley is the
      managing member of North Sound Capital LLC. The amounts reported above include
      3,333,200 shares of common stock issuable pursuant to outstanding warrants
      that
      may be exercised within 60 days of March 13, 2006 in the event that an initial
      transaction is consummated prior to such date. The foregoing information was
      derived from a Schedule 13G filed by the above persons with the SEC on November
      17, 2005.





(11)  Includes
      (a) an aggregate of 4,875,228 shares of common stock issuable pursuant to
      outstanding warrants that may be exercised within 60 days of March 13, 2006
      in
      the event that an initial transaction is consummated prior to such date and
      (b)
      an aggregate of 1,600,000 shares of common stock that are held in trusts for
      the
      benefit of the children of Messrs. Weingarten and Stratton.





The
      company does not have any compensation plans under which equity securities
      of
      the registrant are authorized for issuance.





**Item
      13. Certain Relationships and Related Transactions.**





Commencing
      in November of 2005, we have paid Full Circle LLC, an affiliate of Richard
      A.
      Stratton, our Chief Executive Officer and Chairman of the Board, a fee of $7,500
      per month for providing us with certain limited administrative, technology
      and
      secretarial services, as well as the use of certain limited office space in
      New
      Canaan, Connecticut. We expect this arrangement to continue through our
      acquisition of a target. However, this arrangement is solely for our benefit
      and
      is not intended to provide Richard A. Stratton compensation in lieu of a salary.
      No other executive officer or director has a relationship with or interest
      in
      Full Circle LLC.





Richard
      A. Stratton, our chief executive officer, secretary and chairman of the board,
      and Joseph S. Weingarten, our president, treasurer and director, each advanced
      $50,000 to us, on a non-interest bearing basis, on June 10, 2005 to cover
      certain of our expenses related to our initial public offering. Full Circle
      LLC,
      an affiliate of Richard Stratton, advanced to us $114,143.60, on a non-interest
      bearing basis on November 6, 2005 to cover our operating expenses. We repaid
      these advances out of the proceeds of our initial public offering held outside
      of the trust account.





21


**Item
      14. Principal Accounting Fees and Services.**





The
      firm
      of Goldstein Golub Kessler LLP ("GGK") acts as our principal accountant. 
Through September 30, 2005, GGK had a continuing relationship with American
      Express Tax and Business Services Inc. (TBS), from which it leased auditing
      staff who were full time, permanent employees of TBS and through which its
      partners provide non-audit services.  Subsequent to September 30, 2005,
      this relationship ceased and the firm established a similar relationship with
      RSM McGladrey, Inc. (RSM). GGK has no full time employees and therefore, none
      of
      the audit services performed were provided by permanent full-time employees
      of
      GGK. GGK  manages  and  supervises  the  audit and
      audit  staff,  and is  exclusively responsible  for the
      opinion  rendered in connection with its  examination.  The
      following is a summary of fees paid to GGK, TBS and RSM for services
      rendered





*Audit
      Fees.* The
      aggregate fees billed or expected to be billed for professional services
      rendered by GGK for the fiscal year ended December 31, 2005 for (a) the
      annual audit of our financial statements for such fiscal year and (b) the
      audit of our financial statements dated June 30, 2005, September 30, 2005 and
      November 16, 2005 and filed with our registration statement on Form S-1 and
      (c) reviews of SEC filings amounted to $55,000.




*Audit-Related
      Fees.* We were
      not billed for audit-related services that are not reported as *Audit
      Fees* for the
      fiscal year ended December 31, 2005.




*Tax
      Fees.* We were
      not billed for professional services for tax compliance, tax advice and tax
      planning for the fiscal year ended December 31, 2005.




*All
      Other Fees.* We were
      not billed for products and services provided by GGK, other than those discussed
      above, for the fiscal year ended December 31, 2005 ***.***




*Pre-Approval
      Policy* .
      The
      audit committee has established
      policies and procedures for the review and pre-approval by the audit committee
      of all auditing services and permissible non-audit services (including the
      fees
      and terms thereof) to be performed by Goldstein Golub Kessler LLP, our
      independent auditor. The audit committee may delegate authority to one or more
      of its members, who shall report pre-approval decisions to the audit committee,
      but the committee may not delegate any of its responsibilities to pre-approve
      services by Goldstein Golub Kessler LLP to the management. The annual audit
      services engagement terms and fees are subject to the specific pre-approval
      of
      the audit committee. The audit committee may from time to time separately
      pre-approve assurance and related services that are reasonably related to the
      performance of the audit or review of the company’s financial statements and
      traditionally performed by the independent auditor. All tax services to be
      provided to the company by Goldstein Golub Kessler LLP must be separately
      pre-approved by the audit committee.




The
      committee may separately pre-approve those permissible non-audit services that
      it believes are routine and recurring services and would not impair the
      independence of the auditor. The following non-audit services are prohibited
      and
      may not be provided by Goldstein Golub Kessler LLP to the company: management
      functions; human resources; broker-dealer, investment adviser or investment
      banking services; legal services; and expert services unrelated to the
      audit.




Pre-approval
      fee levels for all services to be provided by Goldstein Golub Kessler LLP,
      will
      be set from time to time by the audit committee. With respect to each proposed
      pre-approved service, Goldstein Golub Kessler LLP must provide detailed back-up
      documentation to the audit committee. Requests or applications to provide
      services that require separate approval by the audit committee must be submitted
      to the committee by both Goldstein Golub Kessler LLP and Joseph S. Weingarten,
      and must include a joint statement as to whether, in their view, the request
      or
      application is consistent with the SEC’s rules on auditor
      independence.





**PART
      IV**





**Item
      15.**  **Exhibits
      and Financial Statements and Schedules.**




(a)
              The
                  following documents are filed as a part of this
                  Report:
  1.
              **Financial
                  Statements:**
  Index
        to
        Financial Statements and Schedules
  Report
        of
        Independent Registered Public Accounting Firm
  Balance
        Sheet as of December 31, 2005
  Statement
        of Income -- Period from May 26, 2005 (inception) to December 31,
        2005
  Statement
        of Stockholders’ Equity -- Period from May 26, 2005 (inception) to December
        31, 2005
  Statement
        of Cash Flows -- Period from May 26, 2005 (inception) to December 31,
        2005
  Notes
        to
        Financial Statements
  2.
              **Financial
                  Statement Schedule(s)**:
  All
        schedules are omitted for the reason that the information is included in
        the
        financial statements or the notes thereto or that they are not required or
        are
        not applicable.
  3.
              **Exhibits**:
 
 See
        attached Exhibit Index of this Annual Report on Form 10-K.
 
 (b)
              **Exhibits:**
 
 The
        Company hereby files as part of this Annual Report on Form 10-K the Exhibits
        listed in the attached Exhibit Index. Exhibits which are incorporated herein
        by
        reference can be inspected and copied at the public reference facilities
        maintained by the Securities and Exchange Commission (the “Commission”), 100 F
        Street, N.E., Room 1580, Washington D.C. 20549. Copies of such material can
        also
        be obtained from the Public Reference Section of the Commission, 100 F Street,
        N.E., Washington, D.C. 20549, at prescribed rates.
 
 (c)
              **Financial
                  Statement Schedules**
 
 All
        schedules are omitted for the reason that the information is included in
        the
        financial statements or the notes thereto or that they are not required or
        are
        not applicable.


22


**INDEX
      TO FINANCIAL STATEMENTS AND SCHEDULES**




**Cold
      Spring Capital Inc.**


**(a
      corporation in the development stage)**


**Report
                  of Independent Registered Public Accounting
                  Firm**
              
              24**Financial
                  statements**Balance
                  Sheet
              
              25Statement
                  of Income
              
              26Statement
                  of Stockholders’ Equity
              
              27Statement
                  of Cash Flows
              
              28**Notes
                  to Financial Statements**
              
              29
                  -  32











23





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors


Cold
      Spring Capital Inc.





We
      have
      audited the accompanying balance sheet of Cold Spring Capital Inc. (a
      development stage company) as of December 31, 2005, and the related statements
      of income, stockholders’ equity and cash flows for the period from May 26, 2005
      (inception) to December 31, 2005. These financial statements are the
      responsibility of Cold Spring Capital Inc.’s management. Our responsibility is
      to express an opinion on these financial statements based on our
      audit.





We
      conducted our audit in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Cold Spring Capital Inc. as of
      December 31, 2005, and the results of its operations and its cash flows for
      the
      period from May 26, 2005 (inception) to December 31, 2005 in conformity with
      United States generally accepted accounting principles.





The
      accompanying financial statements have been prepared assuming that Cold Spring
      Capital Inc. will continue as a going concern.  As discussed in Note 1 to
      the financial statements, Cold Spring Capital Inc. may face mandatory
      liquidation by November 16, 2006 if a business combination is not consummated,
      unless certain extension criteria are met, which raises substantial doubt about
      its ability to continue as a going concern.  The financial statements do
      not include any adjustments that might result from the outcome of this
      uncertainty.





/s/
      Goldstein Golub Kessler LLP





**GOLDSTEIN
      GOLUB KESSLER LLP**


New
      York,
      New York





March
      27,
      2006





24







**Cold
                  Spring Capital Inc.****(A
                  Development Stage Company)****Balance
                  Sheet****As
                  of December 31, 2005**Current
                  Assets:Cash
              
              $
              2,528,516Investments
                  held in Trust Fund (Note 1)
              
              
              110,450,408Prepaid
                  Expenses
              
              
              223,653Total
                current assets
              
              
              113,202,577Deferred
                  Tax Asset
              
              
              99,000Total
                  Assets
              
              $
              113,301,577**LIABILITIES
                  & STOCKHOLDERS' EQUITY**Current
                  Liabilities:Accounts
                  Payable and Accrued Expenses
              
              $
              351,100Income
                  and Capital Taxes Payable
              
              
              301,277Deferred
                  Underwriting Fees
              
              
              2,400,000Deferred
                  Interest
              
              
              124,818Total
                  Liabilities
              
              
              3,177,195Common
                  stock, subject to possible conversion 3,998,000 shares at conversion
                  value
              
              
              21,474,457Commitment
                  (Note 4)Stockholders'
                  Equity (Notes 1 and 2):Preferred
                  stock, $0.001 par value, 5,000,000 shares authorized, none issued
                  and
                  outstanding
              
              
              -Common
                  stock, $0.001 par value, 85,000,000 shares authorized, 25,000,000
                  issued
                  and outstanding (including 3,998,000 subject to possible
                  conversion)
              
              
              25,000Additional
                  paid-in capital
              
              
              88,492,567Earnings
                  accumulated during the development stage
              
              
              132,358Total
                  stockholders' equity
              
              
              88,649,925Total
                  Liabilities and Stockholders' Equity
              
              $
              113,301,577





The
      accompanying notes should be read in conjunction with the financial
      statements.





25










**Cold
                Spring Capital Inc.**
              **(A
                Development Stage Company)**
              **Statement
                of Income**
              **Period
                from May 26, 2005 (inception)to December 31, 2005**Interest
                Income
            
            $
            501,171General
                & Administrative Expense
            
            
            276,813Net
                Income before Provision for
              Income
                Taxes
            
            
            224,358Provision
                for Income Taxes
            
            
            (92,000)Net
                Income
            
            $
            132,358Weighted
                Average Number of Shares Outstanding - Basic and Diluted
            
            
            10,000,000Earnings
                Per Share - Basic and Diluted
            
            $
            0.01








The
      accompanying notes should be read in conjunction with the financial
      statements.





26








**Cold
      Spring Capital Inc.**


**(A
      Development Stage Company)**


**Statement
      of Stockholders’ Equity**


**Period
      from May 26, 2005 (inception) to December 31, 2005**








Additional
              Paid-In
              Capital
            
            Earnings
                Accumulated
              During
                the
              Development
                Stage
            
            Total
                Stockholder EquityCommon
                StockShares
            
            AmountStock
                issued June 10, 2005 for $0.005 per share
            
            
            5,000,000
            
            $
            5,000
            
            $
            20,000
            
            
            
            
            $
            25,000Sale
                of 20,000,000 units, net of underwriters discount and offering expenses
                (including 3,998,000 shares subject to possible
                conversion)
            
            
            20,000,000
            
            
            20,000
            
            
            109,946,924
            
            
            
            
            
            109,966,924Proceeds
                subject to possible conversion of 3,998,000 shares
            
            
            
            
            
            
            
            
            (21,474,457
            )
            
            
            
            
            (21,474,457
            )Proceeds
                from issuance of option
            
            
            
            
            
            
            
            
            100
            
            
            
            
            
            100Net
                Income for period
            
            
            
            
            
            
            
            
            
            
            $
            132,358
            
            
            132,358Balance
                as of December 31, 2005
            
            
            25,000,000
            
            $
            25,000
            
            $
            88,492,567
            
            $
            132,358
            
            $
            88,649,925





The
      accompanying notes should be read in conjunction with the financial
      statements.





27





**Cold
      Spring Capital Inc.**


**(A
      Development Stage Company)**


**Statement
      of Cash Flows**


**Period
      from May 26, 2005 (inception) to December 31, 2005**







**CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                Income
            
            $
            132,358Deferred
              income tax benefit
            
            
            (99,000
            )Adjustments
                to reconcile net income to net cash used in
              operating
                activities:Increase
                in value of investments held in trust
            
            
            (624,408
            )Increase
                in accounts payable and accrued expenses
            
            
            92,706Increase
                in prepaid expenses
            
            
            (223,653
            )Increase
                in income and capital taxes payable
            
            
            301,277Increase
                in deferred interest
            
            
            124,818Net
                cash used in operating activities
            
            
            (295,902
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES**Cash
                placed in Trust Fund
            
            
            (109,826,000
            )Net
                cash used in investing activities
            
            
            (109,826,000
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES**Gross
                Proceeds from public offering
            
            
            120,000,000Proceeds
                from sale of stock
            
            
            25,000Proceeds
                from issuance of option
            
            
            100Payment
                of costs of public offering
            
            
            (7,374,682
            )Net
                cash provided by financing activities
            
            
            112,650,418Net
                increase in cash
            
            
            2,528,516Cash
                at beginning of period
            
            
            -Cash
                at end of period
            
            $
            2,528,516Supplemental
                Schedule of non-cash financing activities:Accrual
                of costs of public offering
            
            $
            258,394Accrual
                of deferred underwriting fees:
            
            $
            2,400,000





The
      accompanying notes should be read in conjunction with the financial
      statements.





28





**COLD
      SPRING CAPITAL INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS**


**December
      31, 2005**




**NOTE
      1—ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING
      POLICIES**




Cold
      Spring Capital Inc. (the ‘‘Company’’), formerly Cold Spring Capital
      Incorporated, was incorporated in Delaware on May 26, 2005 as a blank check
      company whose objective is to acquire an operating business, portfolio of
      financial assets (including commercial, consumer, and/or mortgage loans), or
      real estate assets that are expected to generate a portfolio of financial assets
      (each a ‘‘Business Combination’’).




The
      registration statement for the Offering was declared effective on
      November 10, 2005.  The Company consummated the offering on
      November 16, 2005, and received net proceeds of approximately
      $109,967,000.  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 (excluding the
      amount held in the trust account representing a portion of the fees of the
      underwriters). Furthermore, there is no assurance that the Company will be
      able
      to successfully effect a Business Combination.  An amount of $109,826,000
      of the net proceeds (including $2,400,000 of underwriters fees which have been
      deferred by the underwriters as described in Note 2), was placed in a trust
      account (‘‘Trust Account’’) and invested in government securities until the
      earlier of (i) the consummation of a Business Combination and
      (ii) liquidation of the Company. The
      securities in the Trust Account have been accounted for as trading securities
      and have been recorded at their market value of $110,450,408 at December 31,
      2005. The increase in market value, exclusive of the deferred interest described
      below, has been included in interest income in the accompanying statement of
      income.The remaining net proceeds (not held in the Trust Account) may be
      used to pay for business, legal and accounting due diligence on prospective
      acquisitions and continuing general and administrative expenses. 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 their 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 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 any Business Combination.  After consummation of a Business Combination,
      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 Account (excluding the amount held in the Trust Account
      representing a portion of the fees of the underwriters), calculated as of two
      business days prior to the consummation of the proposed 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 Account (excluding the amount held in the trust account representing
      a
      portion of the fees of the underwriters) computed without regard to the shares
      held by Initial Stockholders. Accordingly,
      a portion of the net proceeds from the offering (19.99% of the amount held
      in
      the Trust Account) has been classified as common stock subject to possible
      conversion and 19.99% of the interest earned on the Trust Account has been
      classified as deferred interest in the accompanying December 31, 2005 balance
      sheet.


On
        October 17, 2005, the Company amended its Certificate of Incorporation to
        provide for mandatory liquidation of the Company in the event that the Company
        does not consummate a Business Combination within 12 months from the date
        of the
        consummation of the Offering (November 16, 2006), or 18 months from the
        consummation of the Offering if certain extension criteria have been
        satisfied. There is no assurance that the Company will be able to
        successfully effect a Business Combination during this period. This factor
        raises substantial doubt about the Company's ability to continue as a going
        concern. The accompanying financial statements are prepared assuming the
        Company
        will continue as a going concern. The financial statements do not include
        any
        adjustments that might result from the outcome of this uncertainty. 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 Offering (assuming
        no value is attributed to the Warrants contained in the Units sold in the
        Offering discussed in Note 2). The amendment to the Company’s Certificate of
        Incorporation also increased the number of common shares authorized to
        85,000,000, and authorized 5,000,000 shares of preferred
        stock.




Immediately
      following the amendment of the Company’s Certificate of Incorporation, the
      Company effected a 25,000-for-1 split of the outstanding common stock, in the
      form of a stock dividend.  The financial statements have been retroactively
      adjusted for the aforementioned amendment and stock dividend.




29


For
      purposes of the statements of cash flows, the Company considers all investments
      purchased with an original maturity of three months or less to be cash
      equivalents.




The
      Company maintains cash in bank deposit accounts which, at times, exceed
      federally insured limits. The Company has not experienced any losses on these
      accounts.




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.




Diluted
      net income per share reflects the additional dilution for all potentially
      dilutive securities such as stock, warrants and options. The effect of the
      40,000,000 outstanding warrants, issued in connection with the initial public
      offering described in Note 2, has not been considered in the diluted net income
      per share since the warrants are contingently exercisable. The effect of the
      1,000,000 units included in the underwriters purchase option, as described
      in
      Note 2, along with the warrants underlying such units, has not been considered
      in the diluted earnings per share calculation since the market price of the
      option was less than the exercise price during the period.




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




In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 123 (revised 2004) (“SFAS 123(R)”), “Share
      Based Payment”. SFAS 123(R) requires all share-based payments to employees,
      including grants of employee stock options, to be recognized in the financial
      statements based on their fair values. The Company is required to adopt SFAS
      123(R) effective January 1, 2006. The Company does not believe that the adoption
      of SFAS No. 123(R) will have a significant impact on its financial condition
      or
      results of operations.




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




**NOTE
      2—INITIAL PUBLIC OFFERING**




On
      November 16, 2005, the Company sold 20,000,000 units (‘‘Units’’) in the
      Offering. In addition, the Company granted the underwriters (the
‘‘Underwriters’’) of the Offering an option (the ‘‘Over-Allotment Option’’),
      exercisable not later than 30 days after the sale of the Units, to purchase
      up
      to 3,000,000 additional Units to cover over-allotments. The Over-Allotment
      Option expired on December 16, 2005 without being exercised.  Each Unit
      consists of one share of the Company’s common stock, $0.001 par value, and two
      Redeemable Common Stock Purchase Warrants (‘‘Warrants’’). Each Warrant entitles
      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 on November 11, 2006 and expiring on
      November 11, 2009. The Warrants will be redeemable at a price of $0.01 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.




The
      Underwriters of the Offering were paid fees equal to 7.5% of the gross proceeds;
      the Underwriters have agreed to defer $2,400,000 (the “Deferred Fees”) of their
      underwriting fees until the consummation of an initial transaction.  Upon
      the consummation of an initial transaction, the Company will pay such Deferred
      Fees, equal to 2.0% of the gross proceeds of the Offering, or approximately
      $0.12 per unit, out of the gross proceeds of the Offering held in the Trust
      Account at Morgan Stanley maintained by Continental Stock Transfer &
Trust Company, acting as trustee. The Underwriters will not be entitled to
      any
      interest accrued on the Deferred Fees. The Underwriters have agreed to forfeit
      any rights to, or claims against, such proceeds if the Company does not
      successfully complete a Business Combination. The Company issued to the lead
      underwriter for $100, as additional compensation, an option (the ‘‘UPO’’) to
      purchase up to a total of 1,000,000 Units. The Units issuable upon exercise
      of
      the UPO will be identical to those offered in the Offering, except that the
      warrants included in the UPO will have an exercise price of $6.25 per share
      (125% of the price of the warrants to be sold in the Offering). The UPO will
      be
      exercisable by the lead underwriter at $7.50 per unit (125% of the price of
      the
      units to be sold in the Offering) upon the later of the consummation of the
      Business Combination or November 16, 2006.  The UPO will expire
      November 16, 2010.  The sale of the UPO has been accounted for as an
      equity transaction. Accordingly, there is no net impact on the Company’s
      financial position or results of operations, except for the recording of the
      $100 proceeds from the sale. The Company has determined, based upon a
      Black-Scholes model, that the fair value of the option on the date of sale
      was
      be approximately $1.6 million using an expected life of five years, volatility
      of 31.6% and a risk-free interest rate of 4.19%. The Company has no trading
      history, and as a result it is not possible to value the UPO based on historical
      trades. In order to estimate the value of the UPO, the Company considered a
      basket of U.S. finance companies. The median volatility of the representative
      companies was calculated to be 30.7%, and the average volatility was calculated
      to be 31.6%. Management believes that this volatility is a reasonable benchmark
      to use in estimating the value of the UPO. The actual volatility of the UPO
      will
      depend on many factors which cannot be precisely valued.




30




Under
      an
      agreement with the lead underwriters and in accordance with guidelines specified
      by Rule 10b5-1 under the Securities Act of 1934, Richard A. Stratton and Joseph
      S. Weingarten, the Company’s founding stockholders, purchased 4,875,228 Warrants
      for an aggregate purchase price of $2,100,000, or approximately $0.43 per
      Warrant in the open market.  A broker-dealer who did not participate in the
      Offering made the purchases of the Warrants on behalf of Messrs. Stratton
      and Weingarten, pursuant to an irrevocable order.




**NOTE
      3 - INCOME TAXES**





The
      provision for income taxes for the period ended December 31, 2005 consists
      of
      the following:




Current:Federal
            
            $
            167,000State
            
            
            24,000Total
              current
            
            
            191,000Deferred
                federal
            
            
            (99,000
            )$
            92,000




The
      total
      provision for income taxes for the period ended December 31, 2005 differs from
      that amount which would be computed by applying the U.S. Federal income tax
      rate
      to income before provision for income taxes as follow:




Statutory
                federal income tax rate
            
            
            34.
            %Effect
                of state income taxes
            
            
            7
            %Effective
                income tax rate
            
            
            41
            %




The
      tax
      effect of temporary differences that give rise to the net deferred tax asset
      at
      December 31, 2005 is as follows:




Interest
                income deferred for reporting purposes
            
            $
            42,000Expenses
                deferred for income tax purposes
            
            
            57,000Net
                deferred tax asset
            
            $
            99,000








**NOTE
      4—COMMITMENT**




The
      Company utilizes certain administrative, technology and secretarial services,
      as
      well as certain limited office space provided by an affiliate of one of the
      Initial Stockholders. Such affiliate has agreed that, until the acquisition
      of a
      target business by the Company, it will make such services available to the
      Company, as may be required by the Company from time to time. The Company has
      agreed to pay such affiliate $7,500 per month for such services commencing
      on
      the effective date of the Offering.  The Company’s statement of income
      includes $11,250 relating to this agreement.




Pursuant
      to letter agreements with the Company, the Company’s founding stockholders have
      waived their right to receive distributions with respect to the founding shares
      upon the Company’s liquidation.




The
      founding stockholders will be entitled to registration rights with respect
      to
      their initial 5,000,000 shares of common stock pursuant to an agreement signed
      in connection with the Offering.  The holders of the majority of these
      shares are entitled to make up to two demands that the Company register these
      shares at any time after the date on which these shares of common stock are
      released from escrow.  In addition, the founding stockholders have certain
“piggy-back” registration rights on registration statements filed subsequent to
      the date on which these shares of common stock are released from
      escrow.




31


**NOTE
      5 —CONTINGENCIES**




The
      Company had originally considered using the firm of Ferris, Baker
      Watts, Inc. as lead underwriter of the Offering. The Company never reached
      or entered into any agreement with Ferris, Baker Watts, and the Company
      subsequently decided, for market and other reasons, to use Deutsche Bank
      Securities Inc. as lead underwriter. On October 20, 2005, Ferris, Baker
      Watts filed a complaint against the Company entitled *Ferris,
      Baker Watts, Inc. v. Cold Spring Capital Inc.* in
      the
      Circuit Court for Baltimore City, Maryland. The complaint alleges breach of
      express contract, breach of implied-in-fact contract, detrimental reliance
      or
      promissory estoppel, and unjust enrichment arising out of the Company’s alleged
      refusal to pay Ferris, Baker Watts for alleged financial and investment banking
      services. The complaint seeks damages of $10.6 million, as well as attorneys’
fees, court costs, prejudgment interest and any other relief that may be deemed
      appropriate by the court. The complaint alleges that the claims run against
      the
      proceeds raised in the Offering, including those held in the trust account.
      The
      Company believes the claims in the complaint to be wholly without merit, and
      intends to defend against those claims vigorously. On October 26, 2005, the
      Company filed an answer and counterclaim in the Circuit Court for Baltimore
      City, Maryland denying the claims and alleging tortious interference with
      economic relations. The case has been assigned to the Business and Technology
      Case Management Program of the Circuit Court for Baltimore City, Maryland.
      Discovery in this case is ongoing. No assurances can be given, however, that
      the
      Company will ultimately prevail in this matter or that an adverse judgment
      would
      not materially adversely affect the Company’s financial condition or results of
      operations. It is possible that the outcome of litigation may result in a
      material liability. However, the potential range of loss resulting from an
      adverse outcome of litigation cannot currently be estimated.
      Messrs. Stratton and Weingarten have agreed, severally, one half each, to
      be personally liable to ensure that the proceeds in the Trust Account are not
      reduced by any claims in this matter and that the Company’s working capital is
      not impacted by any such claims in excess of $300,000.




32




**SIGNATURES**
  Pursuant
        to the requirements of Section 13 or 15(d) of the Securities Exchange Act
        of
        1934, the registrant has duly caused this report to be signed on its behalf
        by
        the undersigned, thereunto duly authorized.
  **COLD
                  SPRING CAPITAL INC.**Date:
                  March 31, 2006
              
              By:
              
              /s/
                  Richard A. StrattonName:
                  Richard A. StrattonTitle:
                  Chairman of the Board and Chief Executive
                  Officer
 
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, this report has
        been
        signed below by the following persons on behalf of the registrant and in
        the
        capacities and on the dates indicated.
  **Name**
              
              **Position**
              
              **Date**/s/
                  Richard A. Stratton
              
              Chairman
                  of the Board and Chief Executive Officer and Secretary
              
              March
                  31, 2006Richard
                    A. Stratton/s/
                  Joseph S. Weingarten
              
              President,
                  Treasurer and Assistant Secretary (Principal financial and accounting
                  officer) and Director
              
              March
                  31, 2006Joseph
                  S. Weingarten/s/
                  Evan E. Binder
              
              Director
              
              March
                  31, 2006Evan
                    E. Binder/s/
                  Robert M. Chefitz
              
              Director
              
              March
                  31, 2006Robert
                  M. Chefitz/s/
                  I. Trevor Rozowsky
              
              Director
              
              March
                  31, 2006I.
                  Trevor Rozowsky
  33
  **EXHIBIT
        INDEX**
 
 
 **Exhibit
                  No.**
              
              **Description**1.1*
              
              Form
                  of Underwriting Agreement.3.1*
              
              Amended
                  and Restated Certificate of Incorporation.3.2*
              
              Amended
                  and Restated Bylaws.4.1*
              
              Specimen
                  Unit Certificate.4.2*
              
              Specimen
                  Common Stock Certificate.4.3*
              
              Specimen
                  Warrant Certificate.4.4*
              
              Form
                  of Warrant Agreement between Continental Stock Transfer & Trust
                  Company and the Registrant.4.5*
              
              Form
                  of Unit Purchase Option.5.1*
              
              Opinion
                  of Choate, Hall & Stewart LLP.10.1*
              
              Letter
                  Agreement between the Registrant and Richard A.
                  Stratton.10.2*
              
              Letter
                  Agreement between the Registrant and Joseph S.
                  Weingarten.10.3*
              
              Letter
                  Agreement between the Registrant and Evan E. Binder.10.4*
              
              Letter
                  Agreement between the Registrant and Robert M. Chefitz.10.5*
              
              Letter
                  Agreement between the Registrant and I. Trevor
                  Rozowsky.10.6*
              
              Form
                  of Investment Management Trust Agreement between Continental Stock
                  Transfer & Trust Company and the Registrant.10.7*
              
              Form
                  of Stock Escrow Agreement between the Registrant, Continental Stock
                  Transfer & Trust Company and the Initial
                  Stockholders.10.8*
              
              Form
                  of Letter Agreement between Full Circle LLC and the Registrant
                  regarding
                  administrative support.10.9*
              
              Advance
                  Agreement between the Registrant and Richard A. Stratton, dated
                  June 10,
                  2005.10.10*
              
              Advance
                  Agreement between the Registrant and Joseph S. Weingarten, dated
                  June 10,
                  2005.10.11*
              
              Form
                  of Registration Rights Agreement among the Registrant and the Initial
                  Stockholders.10.12*
              
              Form
                  of Registration Rights Agreement between the Registrant and Deutsche
                  Bank
                  Securities Inc.10.13*
              
              Form
                  of Warrant Purchase Agreement among each of Richard A. Stratton
                  and Joseph
                  S. Weingarten and Deutsche Bank Securities Inc.10.14*
              
              Non-Compete
                  Agreement between Richard A. Stratton and Resort Finance LLC, dated
                  as of
                  July 24, 2003.10.15*
              
              Form
                  of Letter Agreement between the Registrant and the Weingarten Children's
                  Trust.10.16*
              
              Form
                  of Letter Agreement between Deutsche Bank Securities Inc. and Richard
                  A.
                  Stratton.10.17*
              
              Form
                  of Letter Agreement between Deutsche Bank Securities Inc. and Joseph
                  S.
                  Weingarten.10.18*
              
              Form
                  of Letter Agreement between Deutsche Bank Securities Inc. and Evan
                  E.
                  Binder.10.19*
              
              Form
                  of Letter Agreement between Deutsche Bank Securities Inc. and Robert
                  M.
                  Chefitz.10.20*
              
              Form
                  of Letter Agreement between Deutsche Bank Securities Inc. and Trevor
                  Rozowsky.10.21*
              
              Form
                  of Letter Agreement between the Registrant and the Benjamin R.
                  Stratton
                  Trust.10.22*
              
              Form
                  of Letter Agreement between the Registrant and the Maxwell A. Stratton
                  Trust.
  
 31.1
              
              Rule
                  13a-14(a)/15(d)-14(a) Certification of Richard A.
                  Stratton.31.2
              
              Rule
                  13a-14(a)/15(d)-14(a) Certification of Joseph S.
                  Weingarten.32.1
              
              Section
                  1350 Certification of Richard A. Stratton.32.2
              
              Section
                  1350 Certification ofJoseph
                  S. Weingarten.
 _________________
 
 *
              Incorporated
                  by reference to exhibits of the same number filed with the Registrant’s
                  Registration Statement on Form S-1 or amendments thereto (File
                  No.
                  333-125873).