**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**





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





**FOR
      THE QUARTERLY PERIOD ENDED** **JUNE 30, 2008**




**OR**





o
            **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 001-33711**





**SP
      ACQUISITION HOLDINGS, INC.**


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





**Delaware**
            **20-8523583***(State
                or other jurisdiction of*
            *(I.R.S.
                Employer**Incorporation
                or organization)*
            *Identification
                Number)***590
                MADISON AVENUE, 32****nd****FLOOR**
              **NEW
                YORK, NY**
            **10022***(Address
                of principal executive offices)*
            *(Zip
                Code)*





**Registrant's
      telephone number including area code: (212) 520-2300**





**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
      xNo
o**




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




**Large
      accelerated filer oAccelerated
      filer oNon-accelerated
      filer x**




**Smaller
      reporting company o**




**Indicate
      by check mark whether the Registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).**




**Yes
      xNo
o**




**There
      were 54,112,000 shares of the Registrant’s Common Stock, par value $.001,
      outstanding on August 13, 2008.**










**SP
      ACQUISITION HOLDINGS, INC.**





**FORM
      10-Q**





**Quarter
      ended** **June
      30, 2008**





**TABLE
      OF CONTENTS**


Page**PART
                  I**FINANCIAL
                  INFORMATIONItem
                  1.
              Condensed
                  Financial Statements:Condensed
                  Balance Sheets as of June 30, 2008 (unaudited) and December 31,
                  2007
              
              4Condensed
                  Statements of Operations (unaudited) for the three months ended
                  June 30,
                  2008 and 2007, for the six months ended June 30, 2008 and for the
                  period
                  fromFebruary
                  14, 2007 (inception) through June 30, 2007 and for the period from
                  February14,
                  2007 (inception) through June 30, 2008
              
              5Condensed
                  Statements of Cash Flows (unaudited) for the six months ended June
                  30,
                  2008and
                  2007, and for the period from February 14, 2007 (inception) through
                  June
                  30, 2008
              
              6Condensed
                  Statements of Stockholders’ Equity for the period February 14, 2007(inception)
                  through December 31, 2007 and for the six months ended June 30,
                  2008(unaudited)
              
              7Notes
                  to Condensed Financial Statements
              
              8Item
                  2.
              Management's
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              
              17Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              
              19Item
                  4.
              Controls
                  and Procedures
              
              20**PART
                  II**OTHER
                  INFORMATIONItem
                  1.
              Legal
                  Proceedings
              
              20Item
                  1A.
              Risk
                  Factors
              
              20Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              
              21Item
                  3.
              Defaults
                  Upon Senior Securities
              
              21Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              
              21Item
                  5.
              Other
                  Information
              
              21Item
                  6.
              Exhibits
              
              21Signatures
              22Exhibit
                  Index
              
              23Certifications


2


**CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





This
      report, and the information incorporated by reference in it, include “forward
      looking statements” within the meaning of Section 27A of the Securities Act of
      1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
      amended, (the “Exchange Act”). Our forward-looking statements include, but are
      not limited to, statements regarding our or our management’s expectations,
      hopes, beliefs, intentions or strategies regarding the future. In addition,
      any
      statements that refer to projections, forecasts or other characterizations
      of
      future events or circumstances, including any underlying assumptions, are
      forward-looking statements. The words “anticipates,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,”
“potential,” “predicts,” “project,” “should,” “would” and similar expressions
      may identify forward-looking statements, but the absence of these words does
      not
      mean that a statement is not forward-looking. Forward-looking statements in
      this
      report may include, for example, statements about our:




·
            ability
                to complete our initial business
                combination;





·
            success
                in retaining or recruiting, or changes required in, our officers,
                key
                employees or directors following our initial business
                combination;





·
            officers
                and directors allocating their time to other businesses and potentially
                having conflicts of interest with our business or in approving our
                initial
                business combination, as a result of which they would then receive
                expense
                reimbursements;





·
            potential
                ability to obtain additional financing to complete a business
                combination;





·
            ability
                of our officers and directors to generate a number of potential investment
                opportunities;





·
            potential
                change in control if we acquire one or more target businesses for
                stock;




·
            our
                public securities’ potential liquidity and trading; listing or delisting
                of our securities from the American Stock Exchange or the ability
                to have
                our securities listed on the American Stock Exchange following our
                initial
                business combination;





·
            use
                of proceeds not held in the trust account or available to us from
                interest
                income on the trust account balance;
                or





·
            financial
                performance.





The
      forward-looking statements contained or incorporated by reference in this report
      are based on our current expectations and beliefs concerning future developments
      and their potential effects on us. There can be no assurance that future
      developments affecting us will be those that we have anticipated. These
      forward-looking statements involve a number of risks, uncertainties (some of
      which are beyond our control) or other assumptions that may cause actual results
      or performance to be materially different from those expressed or implied by
      these forward-looking statements. These risks and uncertainties include, but
      are
      not limited to, those factors described under the heading “Risk Factors.” Should
      one or more of these risks or uncertainties materialize, or should any of our
      assumptions prove incorrect, actual results may vary in material respects from
      those projected in these forward-looking statements. We undertake no obligation
      to update or revise any forward-looking statements, whether as a result of
      new
      information, future events or otherwise, except as may be required under
      applicable securities laws.





References
      in this report to “we,” “us” or “our company” refer to SP Acquisition Holdings,
      Inc. References to “public stockholders” refer to purchasers of our securities
      by persons other than our founders in, or subsequent to, our initial public
      offering.


3




**PART
      1. FINANCIAL INFORMATION**





**SP
      ACQUISITION HOLDINGS, INC.**


(a
      corporation in the development stage)


**CONDENSED
      BALANCE SHEETS**




**June
                30,**
              **2008**
            
            **December
                31,**
              **2007****(Unaudited)****Current
                Assets**:Cash
                and cash equivalents
            
            $
            2,643,895
            
            $
            1,317,688Trust
                account, interest available for working capital and taxes:Cash
                and cash equivalents held in trust account, interest
              available
                for working capital and taxes
            
            
            105,567
            
            
            989,183Accrued
                interest receivable
            
            
            157,214
            
            
            469,705Total
                trust account, interest available for working capital and
                taxes
            
            
            262,781
            
            
            1,458,888Accounts
                receivable other
            
            
            —
            
            
            26,323Prepaid
                expenses
            
            
            103,507
            
            
            108,024**Total
                current assets**
            
            
            3,010,183
            
            
            2,910,923Deferred
                tax assets - non current
            
            
            —
            
            
            125,406**Total
                current assets**
            
            
            3,010,183
            
            
            3,036,329**Non
                current assets**Trust
                account, restrictedCash
                and cash equivalents held in trust account
            
            
            425,909,120
            
            
            425,909,120Accrued
                interest receivable
            
            
            370,117
            
            
            —Trust
                account, restricted
            
            
            426,279,237
            
            
            425,909,120**Total
                Assets**
            
            $
            429,289,420
            
            $
            428,945,449**Current
                Liabilities**:Accounts
                payable
            
            $
            10,669
            
            $
            449,194Note
                payable to affiliate
            
            
            —
            
            
            250,000Advances
                payable to affiliate
            
            
            1,504
            
            
            26,818Interest
                payable to affiliate
            
            
            —
            
            
            9,435Accrued
                expenses
            
            
            100,685
            
            
            96,915Taxes
                payable
            
            
            186,375
            
            
            808,278Other
                payables - deferred underwriters’ fee
            
            
            17,315,840
            
            
            17,315,840**Total
                Current Liabilities**
            
            
            17,615,073
            
            
            18,956,480**Common
                stock, subject to possible conversion, 12,986,879 shares at conversion
                value:**
            
            
            127,772,726
            
            
            127,772,726**Deferred
                interest, attributable to common stock subject to possible
                conversion**
            
            
            111,035
            
            
            —**Commitments
                and Contingencies:**
            
            
            —
            
            
            —**Stockholders’
                Equity**:Preferred
                stock, $.001 par value; 1,000,000 authorized, none issued
            
            
            —
            
            
            —Common
                stock, $.001 par value, 200,000,000 shares authorized; 41,125,121
                shares
                issued and outstanding (excluding 12,986,879 shares subject to possible
                conversion)
            
            
            41,125
            
            
            41,125Additional
                paid-in capital
            
            
            280,597,790
            
            
            280,708,825Retained
                earnings accumulated during the development stage
            
            
            3,151,671
            
            
            1,466,293**Total
                Stockholders’ Equity**
            
            
            283,790,586
            
            
            282,216,243**Total
                Liabilities and Stockholders’ Equity**
            
            $
            429,289,420
            
            $
            428,945,449





The
      accompanying notes are an integral part of these condensed financial
      statements.




4




**SP
      ACQUISITION HOLDINGS, INC.**


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




**CONDENSED
      STATEMENTS OF OPERATIONS**


**(Unaudited)**




**For
                the Three Months Ended**
              **June
                30, 2008**
            
            **For
                the Three Months Ended**
              **June
                30, 2007**
            
            **For
                the Six Months Ended**
              **June
                30, 2008**
            
            **For
                the Period from February 14, 2007 (inception) to June 30,
                2007**
            
            **For
                the Period from February 14, 2007 (inception) to June 30,
                2008**Formation
                and operating costs
            
            $
            301,765
            
            $
            132
            
            $
            499,229
            
            $
            25,568
            
            $
            763,602Loss
                from operations
            
            
            (301,765
            )
            
            (132
            )
            
            (499,229
            )
            
            (25,568
            )
            
            (763,602
            )Interest
                income - Trust
            
            
            1,700,797
            
            
            —
            
            
            4,341,829
            
            
            —
            
            
            7,286,222Interest
                income - other
            
            
            11,950
            
            
            —
            
            
            25,427
            
            
            —
            
            
            31,507Interest
                expense
            
            
            (3,021
            )
            
            (3,185
            )
            
            (6,146
            )
            
            (3,185
            )
            
            (15,581
            )Income
                (loss) before tax
            
            
            1,407,961
            
            
            (3,317
            )
            
            3,861,881
            
            
            (28,753
            )
            
            6,538,546Provision
                for income taxes
            
            
            (698,507
            )
            
            —
            
            
            (2,176,503
            )
            
            —
            
            
            (3,386,875
            )Net
                income (loss)
            
            
            709,454
            
            
            (3,317
            )
            
            1,685,378
            
            
            (28,753
            )
            
            3,151,671Deferred
                interest, attributable to common stock subject to possible
                conversion
            
            
            231,809
            
            
            —
            
            
            (111,035
            )
            
            —
            
            
            (111,035
            )Net
                income (loss) attributable to common stock
            
            $
            941,263
            
            $
            (3,317
            )
            $
            1,574,343
            
            $
            (28,753
            )
            $
            3,040,636Net
                income (loss) attributable to common stock per common share, basic
                and
                diluted
            
            $
            0.02
            
            $
            (0.00
            )
            $
            0.04
            
            $
            0.00Weighted
                average number of common shares outstanding - excluding shares subject
                to
                possible conversion, basic and diluted
            
            
            41,125,121
            
            
            10,000,000
            
            
            41,125,121
            
            
            10,000,000





The
      accompanying notes are an integral part of these condensed financial
      statements.


5


**SP
      ACQUISITION HOLDINGS, INC.**


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




**CONDENSED
      STATEMENTS OF CASH FLOWS**


**For
                the Six Months ended June 30,**
              **2008**
            
            **For
                the Period from February 14,**
              **2007
                (inception) to**
              **June
                30, 2007**
            
            **For
                the Period from February 14,**
              **2007
                (inception) to June 30, 2008****(unaudited)**
            
            
            
            **(unaudited)**Cash
                flows from operating activities:Net
                Income (loss)
            
            $
            1,685,378
            
            $
            (28,753
            )
            $
            3,151,671Adjustments
                to reconcile net income (loss) to net cash used in operating
                activities:Deferred
                tax asset and valuation allowance
            
            
            125,406
            
            
            —
            
            
            —Changes
                in asset and liability accounts:Accrued
                interest receivable
            
            
            (57,626
            )
            
            —
            
            
            (527,331
            )Other
                receivable
            
            
            26,323
            
            
            —
            
            
            —Prepaid
                expenses
            
            
            4,517
            
            
            —
            
            
            (103,507
            )Accounts
                payable
            
            
            (438,525
            )
            
            —
            
            
            10,669Advances
                payable to affiliate
            
            
            (25,314
            )
            
            26,818
            
            
            1,504Interest
                payable to affiliate
            
            
            (9,435
            )
            
            3,185
            
            
            —Accrued
                expenses
            
            
            3,770
            
            
            (1,250
            )
            
            100,685Income
                taxes payable
            
            
            (621,903
            )
            
            —
            
            
            186,375Net
                cash generated in operating activities
            
            
            692,591
            
            
            —
            
            
            2,820,066Cash
                flows from investing activities:Cash
                and cash equivalents held in trustaccount,
                interest available for workingcapital
                and taxes
            
            
            883,616
            
            
            —
            
            
            (105,567
            )Trust
                account restricted
            
            
            —
            
            
            —
            
            
            (425,909,120
            )Net
                cash provided by (used in) investingactivities
            
            
            883,616
            
            
            —
            
            
            (426,014,687
            )Cash
                flows from financing activities:Proceeds
                from issuance of founder’s units
            
            
            —
            
            
            25,000
            
            
            25,000Proceeds
                from issuance of additional founder’s warrants
            
            
            —
            
            
            —
            
            
            7,000,000Proceeds
                from note payable to affiliate
            
            
            —
            
            
            250,000
            
            
            250,000Repayment
                of note payable to affiliate
            
            
            (250,000
            )
            
            —
            
            
            (250,000
            )Proceeds
                from initial public offering
            
            
            —
            
            
            —
            
            
            432,896,000Payment
                of offering costs
            
            
            —
            
            
            (76,915
            )
            
            (14,082,484
            )Net
                cash provided by (used in) financing activities
            
            
            (250,000
            )
            
            198,085
            
            
            425,838,516Net
                increase in cash
            
            
            1,326,207
            
            
            198,085
            
            
            2,643,895Cash
                at the beginning of the period
            
            
            1,317,688
            
            
            —
            
            
            —Cash
                at the end of the period
            
            $
            2,643,895
            
            $
            198,085
            
            $
            2,643,895Supplemental
                disclosure of non-cash financing activities:Deferred
                offering costs
            
            $
            —
            
            $
            372,456
            
            $
            —Accrual
                of deferred underwriters’ discount
            
            $
            —
            
            $
            —
            
            $
            17,315,840Cash
                payments for federal, state and local income taxes
            
            $
            2,673,000
            
            $
            —
            
            $
            3,200,500





The
      accompanying notes are an integral part of these condensed financial
      statements.


6




**SP
      ACQUISITION HOLDINGS, INC.**


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


**STATEMENT
      OF STOCKHOLDERS’ EQUITY**




**Common**
              **Stock
                Shares**
            
            **Common
                Stock**
              **Amount**
            
            **Additional
                Paid-in Capital**
            
            **Retained
                Earnings Accumulated During the Development Stage**
            
            **Total
                Stockholders’ Equity**Proceeds
                from founder’s units issued on March 22, 2007
            
            
            11,500,000
            
            $
            11,500
            
            $
            13,500
            
            $
            -
            
            $
            25,000Proceeds
                from issuance of 40,000,000 units, net of underwriters’ commissions and
                offering expenses of $29,030,049 on October 16, 2007
            
            
            40,000,000
            
            
            40,000
            
            
            370,929,951
            
            
            —
            
            
            370,969,951Net
                proceeds subject to possible conversion of 11,999,999
                shares
            
            
            (11,999,999
            )
            
            (12,000
            )
            
            (118,187,990
            )
            
            —
            
            
            (118,199,990
            )Proceeds
                from issuance of 7,000,000 warrants on October 16, 2007
            
            
            —
            
            
            —
            
            
            7,000,000
            
            
            —
            
            
            7,000,000Proceeds
                from issuance of 3,289,600 units, net of underwriters’ commissions and
                offering expenses of $2,368,275 on October 31, 2007
            
            
            3,289,600
            
            
            3,290
            
            
            30,524,435
            
            
            —
            
            
            30,527,725Net
                proceeds subject to possible conversion of 986,880 shares
            
            
            (986,880
            )
            
            (987
            )
            
            (9,571,749
            )
            
            —
            
            
            (9,572,736
            )Common
                stock forfeited by founders on October 31, 2007
            
            
            (677,600
            )
            
            (678
            )
            
            678
            
            
            —
            
            
            —Net
                income
            
            
            —
            
            
            —
            
            
            —
            
            
            1,466,293
            
            
            1,466,293Balances
                at December 31, 2007
            
            
            41,125,121
            
            
            41,125
            
            
            280,708,825
            
            
            1,466,293
            
            
            282,216,243Deferred
                interest, attributable to common stock subject to possible
                conversion
            
            
            —
            
            
            —
            
            
            (111,035
            )
            
            —
            
            
            (111,035
            )Net
                income attributable to common stockholders (unaudited)
            
            
            —
            
            
            —
            
            
            —
            
            
            1,685,378
            
            
            1,685,378Balances
                at June 30, 2008 (unaudited)
            
            
            41,125,121
            
            $
            41,125
            
            $
            280,597,790
            
            $
            3,151,671
            
            $
            283,790,586





The
      accompanying notes are an integral part of these condensed financial
      statements.


7




**SP
      ACQUISITION HOLDINGS, INC.**


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





**NOTES
      TO CONDENSED FINANCIAL STATEMENTS**


**(Unaudited)**




**NOTE
      A — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS AND INTERIM FINANCIAL
      INFORMATION**




SP
      Acquisition Holdings, Inc. (a corporation in the development stage) (the
“Company”) was incorporated in Delaware on February 14, 2007. The Company was
      formed to acquire one or more businesses or assets through a merger, capital
      stock exchange, asset acquisition, stock purchase or other similar business
      combination (“Business Combination”). The Company has neither engaged in any
      operations nor generated revenue to date. The Company will not generate any
      operating revenues until after the completion of its initial business
      combination. Since the completion of its initial public offering, the Company
      generates non-operating income in the form of interest income on cash and cash
      equivalents.




The
      Company is considered to be in the development stage as defined in Statement
      of
      Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting By
      Development Stage Enterprises,” and is subject to the risks associated with
      activities of development stage companies.




The
      Company was initially formed and capitalized through the sale of founder’s units
      to a related entity, SP Acq LLC (See Note D).




The
      registration statement for the Company’s initial public offering (“Offering”)
      was declared effective October 10, 2007. The Company consummated the Offering
      on
      October 16, 2007 and recorded proceeds of $370,969,951, net of the underwriters’
discount of $28,000,000 and offering costs of $1,030,049. Simultaneously with
      the consummation of the Offering, the Company consummated the private sale
      of
      7,000,000 warrants to SP Acq LLC at a price of $1 per warrant (an aggregate
      purchase price of $7,000,000) (see Note D).




On
      October 31, 2007, the underwriters exercised a portion and terminated the
      balance of their over allotment option granted in connection with the initial
      public offering and consummated the purchase of an additional 3,289,600 units
      at
      a price of $10.00 per unit, for gross proceeds of $32,896,000 or net proceeds
      of
      $30,527,725, net of the underwriters’ fee of $2,302,720 and offering costs of
      $65,555.




The
      Company’s management has broad discretion with respect to the specific
      application of the net proceeds of the Offering, although substantially all
      of
      the net proceeds of the Offering are intended to be generally applied toward
      consummating a Business Combination. Furthermore, there is no assurance that
      the
      Company will be able to successfully effect a Business Combination.




A
      total
      of $425,909,120 (or approximately $9.84 per share), including $371,000,000
      of
      the net proceeds from the Offering, $7,000,000 from the sale of warrants to
      the
      founding shareholders (see Note D), $30,593,280 of net proceeds of the over
      allotment issuance and $17,315,840 of deferred underwriting discounts and
      commissions, has been placed in a trust account at JPMorgan Chase Bank, N.A.,
      with Continental Stock Transfer & Trust Company as trustee (the “Trust”)
      which is to be invested in United States “government securities” within the
      meaning of Section 2(a)(16) of the Investment Company Act of 1940 having a
      maturity of 180 days or less or in money market funds meeting certain conditions
      under Rule 2a-7 promulgated under the Investment Company Act of 1940. Except
      for
      up to $3,500,000 of Trust interest income to be released to the Company to
      fund
      expenses relating to investigating and selecting a target business and other
      working capital requirements, and any additional amounts needed to pay income
      taxes on the Trust earnings, the proceeds held in the Trust will not be released
      from the Trust until the earlier of the completion of the Company’s Business
      Combination or the liquidation of the Company. As of June 30, 2008, the balance
      in the Trust account was $426,014,687 (which includes $105,567 of funds to
      be
      transferred to the operating account for the payment of taxes) and interest
      receivable on trust assets was $527,331 of which $157,214 will be transferred
      to
      the operating account for the payment of taxes. The $262,781 has been classified
      on the June 30, 2008 unaudited balance sheet as cash and cash equivalents held
      in trust account, interest available for working capital and taxes. Through
      June
      30, 2008, the Trust has released $3,500,000 of interest income to the Company.
      Through June 30, 2008, the Company had paid a total of $3,200,500 in taxes,
      of
      which $3,153,324 has been reimbursed by the Trust and the balance was funded
      from working capital. The Company intends to seek reimbursement of the balance
      of the taxes from the Trust.




8




The
      placing of funds in the Trust may not protect those funds from third party
      claims against the Company. Although the Company will seek to have all vendors
      and service providers (which would include any third parties we engaged to
      assist us in any way in connection with our search for a target business) and
      prospective target businesses execute agreements with the Company waiving any
      right, title, interest or claim of any kind in or to any monies held in the
      Trust, there is no guarantee that they will execute such
      agreements.




SP
      Acq
      LLC has agreed that it will be liable to the Company if and to the extent claims
      by third parties reduce the amounts in the trust account available for payment
      to our stockholders in the event of a liquidation and the claims are made by
      a
      vendor for services rendered, or products sold, to us, or by a prospective
      target business. A “vendor” refers to a third party that enters into an
      agreement with us to provide goods or services to us. However, the agreement
      entered into by SP Acq LLC specifically provides for two exceptions to the
      indemnity given: there will be no liability (1) as to any claimed amounts owed
      to a third party who executed a legally enforceable waiver, or (2) as to any
      claims under our indemnity of the underwriters of our initial public offering
      against certain liabilities, including liabilities under the Securities Act.
      Furthermore, there could be claims from parties other than vendors, third
      parties with which we entered into a contractual relationship or target
      businesses that would not be covered by the indemnity from SP Acq LLC, such
      as
      shareholders and other claimants who are not parties in contract with us who
      file a claim for damages against us.




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 30% or more of the outstanding stock (excluding, for this purpose, those
      shares of common stock issued prior to the Offering) vote against the Business
      Combination and exercise their conversion rights described below, the Business
      Combination will not be consummated. Public stockholders voting against a
      Business Combination will be entitled to convert their stock into a pro rata
      share of the Trust (including the additional 4% of the gross proceeds payable
      to
      the underwriters upon the Company’s consummation of a Business Combination),
      including any interest earned (net of taxes payable and the amount distributed
      to the Company to fund its working capital requirements) on their pro rata
      share, if the Business Combination is approved and consummated. However, voting
      against the Business Combination alone will not result in election to exercise
      a
      stockholder’s conversion rights. A stockholder must also affirmatively exercise
      such conversion rights at or prior to the time the Business Combination is
      voted
      upon by the stockholders. All of the Company’s stockholders prior to the
      Offering, and all of the officers and directors of the Company have agreed
      to
      vote all of the shares of the Company stock held by them in accordance with
      the
      vote of the majority in interest of all other stockholders of the
      Company.




In
      the
      event the Company does not consummate a Business Combination on or before
      October 10, 2009, the proceeds held in the Trust, including the unpaid portion
      of the underwriters’ commission (See Note D) will be distributed to the
      Company’s public stockholders (excluding SP Acq LLC, Steel Partners II, L.P. and
      Anthony Bergamo, Ronald LaBow, Howard M. Lorber, Leonard Toboroff and S.
      Nicholas Walker, each a director of the Company), to the extent of their
      pre-Offering stock holdings.




These
      unaudited interim condensed financial statements have been prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America for interim financial information and with the instructions to Form
      10-Q. Accordingly, they do not include all of the information and footnotes
      required by accounting principles generally accepted in the United States of
      America for complete financial statements. In the opinion of management, all
      adjustments (consisting of normal recurring accruals) considered necessary
      for a
      fair presentation have been included. The operating results for the interim
      periods presented are not necessarily indicative of the results to be expected
      for any other interim period or for the full year.




9




These
      unaudited interim condensed financial statements should be read in conjunction
      with the financial statements and notes thereto included in the Company’s
      December 31, 2007 Annual Report on Form 10-K, filed on March 26, 2008. The
      accounting policies used in preparing these unaudited condensed financial
      statements are consistent with those described in the audited financial
      statements included in the Company’s December 31, 2007 Form 10-K.




**NOTE
      B — BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**




***1.***  ***Development
      Stage Company:***




The
      Company complies with the reporting requirements of SFAS No. 7, “Accounting and
      Reporting by Development Stage Enterprises.”




As
      indicated in the accompanying unaudited interim condensed financial statements,
      the Company has incurred substantial organizational, legal, accounting and
      offering costs in the pursuit of its financing plans and expects to incur
      additional costs in pursuit of its acquisition plans. As of June 30, 2008,
      the
      Company had cash on hand of $2,643,895 as well as $426,014,687 of cash and
      cash
      equivalents in the Trust. Under terms of the investment management trust
      agreement, up to $3,500,000 of interest may be released to the Company in such
      amounts and such intervals as we request, subject to availability. At June
      30,
      2008, $3,500,000 of Trust interest has been released to the Company. Management
      has reviewed its cash requirements as of June 30, 2008 and believes that its
      cash on hand, along with the funds available to it from the interest income
      from
      the Trust is sufficient to cover its expenses for the next twelve
      months.




As
      discussed in Note D, the note with Steel Partners Ltd. has a due date of
      December 31, 2007. Steel Partners Ltd. has confirmed on May 7, 2008 that the
      note is not in default and that the payment may be made on or before December
      31, 2008. On June 27, 2008, the note was paid in full.




There
      is
      no assurance that the Company’s plan to complete a Business Combination will be
      successful.




***2.***  ***Cash
      and cash equivalents:***




The
      Company considers investments with a maturity of three months or less when
      purchased to be cash equivalents.




***3.***  ***Common
      Stock and Unit Dividends:***




Each
      share of common stock has one vote. As discussed in Note F, on August 8, 2007,
      the Company declared a unit dividend of 0.15 units for each unit outstanding
      and
      on September 4, 2007 declared a unit dividend of one third of a unit for each
      unit outstanding. All of the unit holders agreed to transfer their units due
      them with respect to these dividends to SP Acq LLC. Such stock dividends are
      presented as if they were stock splits and presented retroactively each period
      presented. All unit amounts outstanding reflect such dividends, except for
      weighted average shares outstanding as discussed in Note B-4.




***4.***  ***Net
      Income (loss) Per Common Share:***




The
      Company follows the provisions of Statement of Financial Accounting Standards
      (“SFAS”) No. 128, “Earnings Per Share”. In accordance with SFAS No. 128,
      earnings per common share amounts (“Basic EPS”) is computed by dividing earnings
      by the weighted average number of common shares outstanding for the period.
      Common shares subject to possible conversion of 12,986,879 shares have been
      excluded from the calculation of basic earnings per share since such shares,
      if
      redeemed, only participate in their pro rata shares of the trust earnings.
      Such
      earnings are deducted from earnings available to common stockholders. Earnings
      per common share amounts, assuming dilution (“Diluted EPS”), gives effect to
      dilutive options, warrants and other potential common stock outstanding during
      the period. SFAS No. 128 requires the presentation of both Basic EPS and Diluted
      EPS on the face of the statements of operations. The effect of the 61,112,000
      outstanding Warrants issued in connection with the Public Offering and the
      Private Placement described in Note A has not been considered in diluted
      earnings per share calculation since the exercise of the Warrants are contingent
      upon the occurrence of future events, and therefore, not includable in the
      calculation of diluted earning per share in accordance with SFAS
      128.




10







***5.***
            ***Reclassification:***




The
      Company reclassified certain prior period amounts to conform to the current
      period’s presentation. The Company reclassified amounts held in trust from
      current assets to long-term assets with the exception of amounts held in trust
      that are available for current operations of the Company. These classifications
      have no effect on the results reported for the year ended December 31,
      2007.




***6.***
            ***Concentration
                of Credit Risk:***




Financial
      instruments that potentially subject the Company to concentrations of credit
      risk consist of cash accounts in a financial institution, which at times,
      exceeds the Federal Depository Insurance coverage of $100,000 and the Securities
      Investor Protection Corporation insures balances up to $500,000. As of June
      30,
      2008, the Company had $429,258,581 in cash and cash equivalents which exceeded
      Federally insured limits. Management believes the risk of loss to be
      minimal




***7.***
            ***Fair
                Value of Financial
                Instruments:***




The
      fair
      value of the Company’s assets and liabilities, which qualify as financial
      instruments under SFAS No. 107, “Disclosure About Fair Value of Financial
      Instruments,” approximate the carrying amounts represented in the balance sheet
      because of their short term maturities.




***8.***
            ***Use
                of Estimates:***




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




***9.***
            ***Trust
                Account-Restricted:***




The
      Company considers the restricted portion of the funds held in the Trust Account
      to be a non-current asset. A current asset is one that is reasonably expected
      to
      be used to pay current liabilities, such as accounts payable or short-term
      debt
      or to pay current operating expenses, or will be used to acquire other current
      assets. Since the acquisition of a business is principally considered to be
      for
      long-term purpose, with long-term assets such as property and tangibles
      typically being a major part of the acquired assets, the Company has reported
      the funds anticipated to be used in the acquisition as a non-current
      asset.




As
      discussed in Note A, the Trust Account is invested in T Bills with a 30 day
      maturity as of June 30, 2008 and December 31, 2007, respectively.




11




***10.***
            ***Income
                tax****:***




The
      Company complies with SFAS 109, “Accounting for Income Taxes,” which requires an
      asset and liability approach to financial accounting and reporting for income
      taxes. Deferred income tax assets and liabilities are computed for differences
      between the financial statement and tax bases of assets and liabilities that
      will result in future taxable or deductible amounts, based on enacted tax laws
      and rates applicable to the periods in which the differences are expected to
      affect taxable income. Valuation allowances are established, when necessary,
      to
      reduce deferred tax assets to the amount expected to be realized.




On
      February 14, 2007, the Company adopted the provisions of Financial Accounting
      Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
      prescribes a recognition threshold and measurement process for financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return and also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim period, disclosure
      and transition.




***11.***
            ***Share-based
                compensation:***




The
      Company accounts for stock options and warrants using the fair value recognition
      provisions of SFAS No.123 (Revised 2004), “ Share-Based Payment ”, (“SFAS
      123(R)”). SFAS 123(R) addresses all forms of share based compensation awards
      including shares issued under employment stock purchase plans, stock options,
      restricted stock and stock appreciation rights. Under SFAS 123 (R), share based
      payment awards will be
      measured at fair value on the awards grant date, based on estimated number
      of
      awards that are expected to vest and will be reflected as compensation expense
      in the financial statements.





***12.***
            ***Recent****Accounting
                Pronouncements:***




In
      September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
      No. 157, “Fair Value Measurements.” SFAS No. 157 establishes a single
      definition of fair value and a framework for measuring fair value, sets out
      a
      fair value hierarchy to be used to classify the source of information used
      in
      fair value measurements, and requires new disclosures of assets and liabilities
      measured at fair value based on their level in the hierarchy. This statement
      applies under other accounting pronouncements that require or permit fair value
      measurements. In February 2008, the FASB issued Staff Positions (FSPs)
      No. 157-1 and No. 157-2, which, respectively, remove leasing
      transactions from the scope of SFAS No. 157 and defer its effective date
      for one year relative to certain nonfinancial assets and liabilities. As a
      result, the application of the definition of fair value and related disclosures
      of SFAS No. 157 (as impacted by these two FSPs) was effective for the
      Company beginning January 1, 2008 on a prospective basis with respect to
      fair value measurements of (a) nonfinancial assets and liabilities that are
      recognized or disclosed at fair value in the Company’s financial statements on a
      recurring basis (at least annually) and (b) all financial assets and
      liabilities. This adoption did not have a material impact on the Company’s
      results of operations or financial condition. The remaining aspects of SFAS
      No. 157 for which the effective date was deferred under FSP No. 157-2
      was adopted effective January 1, 2008. Areas impacted by the deferral relate
      to
      nonfinancial assets and liabilities that are measured at fair value, but are
      recognized or disclosed at fair value on a nonrecurring basis. This deferral
      applies to such items as nonfinancial assets and liabilities initially measured
      at fair value in a business combination (but not measured at fair value in
      subsequent periods) or nonfinancial long-lived asset groups measured at fair
      value for an impairment assessment. The effects of these remaining aspects
      of
      SFAS No. 157 are to be applied to fair value measurements prospectively
      beginning January 1, 2009.





In
      February 2007, the FASB issued FASB Statement No. 159, “The Fair Value
      Option for Financial Assets and Financial Liabilities—Including an Amendment of
      FASB Statement No. 115” (“SFAS No. 159”). SFAS 159 creates a “fair
      value option” under which an entity may elect to record certain financial assets
      or liabilities at fair value upon their initial recognition. Subsequent changes
      in fair value would be recognized in earnings as those changes occur. The
      election of the fair value option would be made on a contract-by-contract basis
      and would need to be supported by concurrent documentation or a preexisting
      documented policy. SFAS 159 requires an entity to separately disclose the fair
      value of these items on the balance sheet or in the footnotes to the financial
      statements and to provide information that would allow the financial statement
      user to understand the impact on earnings from changes in the fair value. The
      Company adopted SFAS 159 effective January 1, 2008 and has elected not to record
      any assets for the “fair value option” at this time.




12





In
      December 2007, the FASB issued Statement No. 141 (revised 2007), “Business
      Combinations,” (“SFAS 141(R)”).  SFAS 141(R) retains the fundamental
      requirements of SFAS 141 that the acquisition method of accounting (which SFAS
      141 called the purchase method) be used for all business combinations and for
      an
      acquirer to be identified for each business combination.  SFAS 141(R)
      establishes principles and requirements for recognizing and measuring
      identifiable assets and goodwill acquired, liabilities assumed, and any
      noncontrolling interest in an acquisition, at their fair value as of the
      acquisition date.  SFAS 141(R) also requires an acquirer to recognize
      assets acquired and liabilities assumed arising from contractual contingencies
      as of the acquisition date, measured at their acquisition-date fair
      values.  Additionally, SFAS 141(R) will require that
      acquisition-related costs in a business combination be expensed as incurred,
      except for costs incurred to issue debt and equity securities. This statement
      applies prospectively to business combinations effective with the Company’s
      first fiscal quarter of 2009.  Early adoption is not
      permitted.  SFAS 141(R) would have an impact on accounting for any
      business acquired after the effective date of this pronouncement.





In
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of
      accounting principles and the framework for selecting the principles to be
      used
      in the preparation of financial statements of nongovernmental entities that
      are
      presented in conformity with generally accepted accounting principles in the
      United States. It is effective 60 days following the SEC’s approval of the
      Public Company Accounting Oversight Board amendments to AU Section 411, “The
      Meaning of Present Fairly in Conformity With Generally Accepted Accounting
      Principles”. The adoption of this statement is not expected to have a material
      effect on the Company’s financial position, statement of operations or cash
      flows.




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
      financial statements.




**NOTE
      C — INITIAL PUBLIC OFFERING**




On
      October 16, 2007 the Company sold to the public an aggregate of 40,000,000
      units
      at a price of $10.00. Each unit consists of one share of the Company’s common
      stock, $0.001 par value, and one redeemable common stock purchase warrant.
      On
      October 31, 2007, the underwriters exercised a portion and cancelled the balance
      of their over-allotment option granted in connection with the Offering and
      consummated the sale of an additional 3,289,600 units at a price of
      $10.00.




The
      Company has incurred an underwriters’ fee of 7% of the gross offering proceeds
      in connection with the completion of the Offering and the over-allotment. Of
      this fee, $12,000,000 and $986,880 were paid at the closing of the Offering
      and
      over-allotment on October 16, 2007 and October 31, 2007, respectively, and
      $17,315,840 is held in the Trust and will be paid to the underwriters in
      connection with the consummation of a Business Combination. As of June 30,
      2008
      and December 31, 2007, respectively, the remaining underwriting commitment
      of
      $17,315,840 is included as Other Payables - deferred underwriters’
fee.




**NOTE
      D — RELATED PARTY TRANSACTIONS**




SP
      Acq
      LLC purchased 11,500,000 of the Company’s founder’s units, each consisting of
      one common share and one warrant to purchase a common share, for a price of
      $25,000 in a private placement. The units are identical to those sold in the
      Offering, except that SP Acq LLC, Steel Partners II, L.P., and Messrs.
      Bergamo, LaBow, Lorber, Toboroff and Walker agreed to vote their founder’s
      shares in the same manner as a majority of the public stockholders who vote
      at
      the special or annual meeting called for the purpose of approving the Company’s
      Business Combination. As a result, they will not be able to exercise conversion
      rights with respect to the founder’s shares if the Company’s Business
      Combination is approved by a majority of its public stockholders. The founder’s
      shares included therein will not participate with the common stock included
      in
      the units sold in the Offering in any liquidating distribution. The founder’s
      units, including the founder’s shares and initial founder’s warrants may not be
      sold or transferred until at least one year after the completion of a Business
      Combination.




13




The
      founder’s units included up to 1,500,000 units that were subject to forfeiture
      by SP Acq LLC to the extent that the underwriters’ over-allotment option was not
      exercised or was exercised in part such that the holders of the Company’s
      founder’s units would collectively own 20% of the Company’s units after
      consummation of the Offering and exercise or expiration of the over-allotment
      option (assuming none of the holders of our founder’s units purchase units in
      the Offering). On October 31, 2007, in connection with the partial exercise
      of
      the over-allotment option, 677,600 founder’s units were forfeited to the Company
      and cancelled.




The
      Company has issued warrants to purchase 11,500,000 common shares at $7.50 per
      share as part of the founder’s units in connection with its initial
      capitalization on March 22, 2007 (“initial founder’s warrants”). On October 31,
      2007, in connection with the partial exercise of the underwriters’
over-allotment option, 677,600 initial founder’s warrants were forfeited to the
      Company and cancelled.




Additionally,
      pursuant to the Director’s Purchase Agreement dated as of June 25, 2007, SP Acq
      LLC has sold a total of 500,000 founder’s units to certain directors of the
      Company.




SP
      Acq
      LLC, pursuant to an agreement dated March 22, 2007, also sold to its affiliate
      Steel Partners II, L.P. a portion of its founder’s units, with the final number
      of units to be determined based on the number of units sold in the Offering
      once
      the underwriters’ over-allotment option was exercised or expired. As of October
      16, 2007 upon the closing of the Offering, Steel Partners II, L.P. owned 662,791
      founder’s units. On October 31, 2007, the underwriters exercised a portion of
      their over-allotment option and SP Acq LLC sold an additional 6,197 of its
      founders units to Steel Partners II, L.P., bringing Steel Partners II, L.P.
      ownership to 668,988 units.




On
      March
      28, 2007 the Company issued a $250,000 unsecured promissory note to Steel
      Partners, Ltd., an affiliate of SP Acq LLC and the Company. This note bears
      interest at a rate of 5% per annum, is unsecured and principal and interest
      payments were due on December 31, 2007. Interest payable of $15,581 has been
      accrued on this note through June 27, 2008, at which time the note and accrued
      interest were repaid in full.




Advances
      payable of $1,504 and $26,818 at June 30, 2008 and December 31, 2007,
      respectively, relate to certain costs paid by Steel Partners, Ltd. on behalf
      of
      the Company. The Company intends to repay such advances and thus such amounts
      are reflected as a liability to affiliate. None of the officers and directors
      of
      the Company received compensation for their services to the
      Company.




The
      Company presently occupies office space provided by Steel Partners, Ltd. Steel
      Partners, Ltd. has agreed that, until the acquisition of a target business
      by
      the Company, it will make such office space, as well as certain office,
      administrative and secretarial services, available to the Company, as may be
      required by the Company from time to time. The Company has agreed to pay Steel
      Partners, Ltd. $10,000 per month for such services. Services commenced on
      October 16, 2007. The Company has incurred and paid $60,000 and $25,000 for
      such
      services through June 30, 2008 and December 31, 2007, respectively.




SP
      Acq
      LLC purchased, in a private placement on October 16, 2007, 7,000,000 additional
      founder’s warrants at a price of $1 per warrant (an aggregate purchase price of
      $7,000,000) directly from the Company and not as part of the Offering. The
      purchase price of these additional founder’s warrants has been determined by the
      Company to be the fair value of such warrants as of the October 16, 2007
      purchase date. An aggregate of 500,000 additional founder’s warrants were sold
      by SP Acq LLC to certain directors.




In
      addition, Steel Partners II, L.P., has entered into an agreement with the
      Company requiring it to purchase 3,000,000 units (“co-investment units”) at a
      price of $10 per unit (an aggregate price of $30,000,000) from the Company
      in a
      private placement that will occur immediately prior to the Company’s
      consummation of a Business Combination. These private placement units will
      be
      identical to the units sold in the Offering. It has also agreed that these
      units
      will not be sold, transferred, or assigned until at least one year after the
      completion of the Business Combination. In the event that Steel Partners II,
      L.P. does not purchase the co-investment units, SP Acq LLC, Steel Partners
      II,
      L.P. and the directors who purchased founder’s units have agreed to surrender
      and forfeit its founder’s units and additional founder’s warrants to the
      Company, provided however that such surrender and forfeiture will not be
      required if SP Acq LLC purchases the co-investment units. In such event, Steel
      Partners II, L.P. has agreed to transfer its founder’s units to SP Acq LLC. None
      of the co-investment units have been issued by the Company as of June 30, 2008
      or December 31, 2007.




14




**NOTE
      E — PREFERRED STOCK**




The
      Company is authorized to issue 1,000,000 shares of preferred stock with such
      designations, voting and other rights and preferences as may be determined
      from
      time to time by the Board of Directors. No shares have been issued as of June
      30, 2008 or December 31, 2007.




**NOTE
      F — UNIT DIVIDENDS**




Effective
      August 8, 2007, the Board of Directors of the Company declared a unit dividend
      to the holders of record. The dividend consisted of 0.15 units for each
      outstanding share of common stock and totaled 1,125,000 units. Effective
      September 4, 2007, the Board of Directors of the Company declared a unit
      dividend to the holders of record. The dividend consisted of one third of a
      unit
      for each outstanding share of common stock and totaled 2,875,000 units. All
      of
      the unit holders agreed to transfer their units due them with respect to these
      dividends to SP Acq LLC.




**NOTE
      G — WARRANTS**




The
      following table presents warrants outstanding:


**June
                  30, 2008**
              
              **December
                  31, 2007**Initial
                  Founder’s Warrants
              
              
              10,822,400
              
              
              10,822,400Additional
                  Founder’s Warrants
              
              
              7,000,000
              
              
              7,000,000Public
                  Warrants
              
              
              43,289,600
              
              
              43,289,600Total
              
              
              61,112,000
              
              
              61,112,000




Initial
      founder’s warrants are not redeemable while held by SP Acq LLC or its permitted
      transferees and the exercisability of initial founder’s warrants are subject to
      certain additional restrictions. Each initial founder’s warrant entitles the
      holder to purchase from the Company one share of common stock at an exercise
      price of $7.50 only in the event that the last sale price of the common stock
      is
      at least $14.25 per share for any 20 trading days within a 30 trading day period
      beginning 90 days after a Business Combination. If the Company is unable to
      deliver registered shares of common stock to the holder upon exercise of the
      warrants during the exercise period, there will be no cash settlement of the
      warrants and the warrants will expire worthless.




Additional
      founder’s warrants entitle the holder to purchase from the Company one share of
      common stock at an exercise price of $7.50 for each warrant commencing on the
      completion of a Business Combination with a target business, and expire five
      years from the date of the prospectus. SP Acq LLC has also agreed that the
      warrants purchased by it will not be sold or transferred until after the
      completion of a Business Combination, and will be non-redeemable so long as
      they
      are held by the Company’s founders or their permitted transferees. Additionally,
      pursuant to the Director’s Purchase Agreement dated as of June 25, 2007, SP Acq
      LLC sold 500,000 of such initial founder’s warrants to certain directors on
      October 16, 2007.




Public
      warrants entitle the holder to purchase from the Company one share of common
      stock for each warrant at an exercise price of $7.50 commencing on the later
      of
      (a) one year from the date of the final prospectus for the Offering or (b)
      the
      completion of a Business Combination with a target business, and will expire
      five years from the date of the prospectus. The warrants are redeemable at
      the
      option of the Company at a price of $0.01 per warrant upon 30 days prior notice
      after the warrants become exercisable, only in the event that the last sale
      price of the common stock is at least $14.25 per share for any 20 trading days
      within a 30 trading day period ending on the third business day prior to the
      date on which notice of redemption is given. If the Company is unable to deliver
      registered shares of common stock to the holder upon exercise of the warrants
      during the exercise period, there will be no cash settlement of the warrants
      and
      the warrants will expire worthless.




15




As
      disclosed in Note D, the initial founder’s warrants and additional founder’s
      warrants have certain restrictions and may be surrendered or forfeited under
      certain circumstances.




Pursuant
      to a registration rights agreement between the Company and SP Acq LLC, Steel
      Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker,
      the
      holders of our founder’s units, founder’s shares and initial founder’s warrants
      and shares issuable upon exercise thereof will be entitled to certain
      registration rights at any time commencing three months prior to the date that
      they are no longer subject to transfer restrictions.




**NOTE
      H — TAXES ON INCOME**




Deferred
      tax assets reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial statement purposes
      and
      the amounts used for income tax purposes. During the six-months ended June
      30,
      2008, the Company recorded a full valuation allowance for its deferred tax
      assets, as the Company determined that it no longer met the more likely than
      not
      realization criteria of FAS 109.





The
      Company has paid a total of $3,200,500 since inception in estimated tax payments
      for federal, New York State and City income taxes.





The
      difference between the provision for income taxes and the amounts computed
      by
      applying the federal statutory income taxes to the income before tax is due
      to
      state and local taxes, and due to the increase in the deferred tax valuation
      allowance.




**NOTE
      I — ADJUSTMENTS RELATED TO PRIOR INTERIM PERIOD**




During
      the quarter ended June 30, 2008, the Company identified an accounting error
      in
      its accretion calculation which overstated the deferred interest, net of taxes,
      attributable to common stock subject to possible conversion by approximately
      $343,000 on our condensed financial statements for the three months ended
      March 31, 2008. Had these adjustments been reflected in the quarter ended
      March 31, 2008, the deferred interest, net of taxes, attributable to common
      stock subject to possible conversion would have been decreased by approximately
      $343,000 and net income attributable to common stock would have been increased
      by approximately $343,000. There was no impact on the net income/(loss). The
      effect of the adjustment, as corrected in the condensed financial statements
      for
      the three and six months ended June 30, 2008, was to decrease the deferred
      interest, net of taxes, attributable to common stock subject to possible
      conversion and increase the net income attributable to common stockholders
      for
      the three and six months ended June 30, 2008 by approximately $343,000. The
      adjustments did not have an impact on earnings per share in either the quarter
      ended March 31, 2008 or June 30, 2008 or for the six months ended June, 30,
      2008. Management believes the impact of the adjustment is not material to
      the condensed financial statements taken as a whole based upon management’s
      quantitative and qualitative assessment. It was deemed that a restatement of
      the
      previously filed March 31, 2008 report on Form 10-Q was not
      necessary.




16




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**




**Forward
      Looking Statements**




All
      statements other than statements of historical fact included in this Form 10-Q
      including, without limitation, statements under “Management's Discussion and
      Analysis of Financial Condition and Results of Operations” regarding our
      financial position, business strategy and the plans and objectives of management
      for future operation, are “forward looking statements” within the meaning of the
      Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
      Act of 1933, as amended (the “Security Act”) and Section 21E of the Securities
      Exchange Act of 1934. When used in this Form 10-Q, words such as "anticipate,"
      "believe," "plan," "expect," "future," "intend" and similar expressions, as
      they
      relate to us or our management, identify forward looking statements. Such
      forward looking statements are based on the beliefs of management, as well
      as
      assumptions made by, and information currently available to, our management.
      Actual results could differ materially from those contemplated by the forward
      looking statements as a result of certain factors detailed in our filings with
      the Securities and Exchange Commission. All subsequent written or oral forward
      looking statements attributable to us or persons acting on our behalf are
      qualified in their entirety by this paragraph.





**Overview**




We
      are a
      blank check company organized under the laws of the State of Delaware on
      February 14, 2007. We were formed for the purpose of acquiring, through a
      merger, capital stock exchange, asset acquisition or other similar business
      combination, one or more businesses or assets. We consummated our initial public
      offering on October 16, 2007. We are currently in the process of evaluating
      and
      identifying targets for a business combination. We intend to utilize cash from
      our initial public offering, our capital stock, debt or a combination of cash,
      capital stock and debt, in effecting a business combination. 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 current officers
                and
                directors; and





·
            may
                adversely affect prevailing market prices for our common
                stock.





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




·
            default
                and foreclosure on our assets if our operating revenues after a business
                combination were 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 require the maintenance of certain financial ratios
                or
                reserves and any such covenant were breached without a waiver or
                renegotiation of that covenant; and





·
            our
                immediate payment of all principal and accrued interest, if any,
                if the
                debt security were payable on demand; and our inability to obtain
                additional financing, if necessary, if the debt security contained
                covenants restricting our ability to do
                so.




17




**Results
      of Operations and Known Trends Or Future Events**





We
      have
      neither engaged in any operations nor generated any revenues to date. We will
      not generate any operating revenues until after completion of our initial
      business combination, at the earliest. We will continue to generate
      non-operating income in the form of interest income on cash and cash
      equivalents. Net income for the three months ended June 30, 2008 was $709,454,
      which consisted of $1,712,747 in interest income, partially offset by $301,765
      in operating expenses, $3,021 in interest expense and $698,507 in taxes on
      income. Net loss for the three months ended June 30, 2007 was $3,317, which
      consisted of formation and related costs. Net loss for the period from February
      14, 2007 (inception) to June 30, 2007 was $28,753, which consisted of formation
      and related costs. Net income for the period from February 14, 2007 (inception)
      through June 30, 2008 was $3,151,671, which consisted of $7,317,729 in interest
      income partially offset by $763,602 in formation and operating expenses, $15,581
      in interest expense and $3,386,875 in taxes on income. Through June 30, 2008,
      we
      did not engage in any significant operations. Our entire activity from inception
      through June 30, 2008 was to prepare for our initial public offering and begin
      the identification of and negotiations with a suitable business combination
      candidate.





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. In addition, we will incur expenses as a result of being a public
      company (for legal, financial reporting, accounting and auditing compliance),
      as
      well as for due diligence expenses.





**Off-Balance
      Sheet Arrangements**





We
      have
      never entered into any off-balance sheet financing arrangements and have never
      established any special purpose entities. We have not guaranteed any debt or
      commitments of other entities or entered into any options on non-financial
      assets.





**Contractual
      Obligations**





We
      do not
      have any long term debt, capital lease obligations, operating lease obligations,
      purchase obligations or other long term liabilities.





**Liquidity
      and Capital Resources**





The
      net
      proceeds from (i) the sale of the units in our initial public offering
      (including the underwriters’ over-allotment option), after deducting offering
      expenses of approximately $1,095,604 and underwriting discounts and commissions
      of approximately $30,302,720, together (ii) with $7,000,000 from SP Acq LLC’s
      investment in the additional founder’s warrants, were approximately
      $408,497,676. We expect that most of the proceeds held in the trust account
      will
      be used as consideration to pay the sellers of a target business or businesses
      with which we ultimately complete our initial business combination. We expect
      to
      use substantially all of the net proceeds of our initial public offering not
      in
      the trust account to pay expenses in locating and acquiring a target business,
      including identifying and evaluating prospective acquisition candidates,
      selecting the target business, and structuring, negotiating and consummating
      our
      initial business combination. To the extent that our capital stock or debt
      financing is used in whole or in part as consideration to effect our initial
      business combination, any proceeds held in the trust account as well as any
      other net proceeds not expended will be used to finance the operations of the
      target business.





We
      do not
      believe we will need additional financing in order to meet the expenditures
      required for operating our business prior to our initial business combination.
      However, we will rely on interest earned of up to $3,500,000 on the trust
      account to fund such expenditures and, to the extent that the interest earned
      is
      below our expectation, we may have insufficient funds available to operate
      our
      business prior to our initial business combination. Moreover, in addition to
      the
      co-investment we may need to obtain additional financing to consummate our
      initial business combination. We may also need additional financing because
      we
      may become obligated to convert into cash a significant number of shares of
      public stockholders voting against our initial business combination, in which
      case we may issue additional securities or incur debt in connection with such
      business combination. Following our initial business combination, if cash on
      hand is insufficient, we may need to obtain additional financing in order to
      meet our obligations.




18




**Critical
      Accounting Policies**





The
      Company’s significant accounting policies are more fully described in Note B to
      the condensed financial statements. However, certain accounting policies are
      particularly important to the portrayal of financial position and results of
      operations and require the application of significant judgments by management.
      As a result, the unaudited interim condensed financial statements are subject
      to
      an inherent degree of uncertainty. In applying those policies, management used
      its judgment to determine the appropriate assumptions to be used in
      determination of certain estimates. During the six months ended June 30, 2008,
      the Company recorded a full valuation allowance for its deferred tax assets,
      as
      the Company determined that it no longer met the more likely than not
      realization criteria of FAS 109. These estimates are based on the Company’s
      historical experience, terms of existing contracts, observance of trends in
      the
      industry and information available from outside sources, as
      appropriate.




**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**




**Interest
      Rate Sensitivity**




As
      of
      June 30, 2008, our efforts were limited to organizational activities and
      activities relating to our initial public offering. Since our initial public
      offering, we have been identifying possible acquisition candidates. We have
      neither engaged in any operations nor generated any revenues other than interest
      income.





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. $418,909,120 of the net Offering proceeds, including
      $17,315,840 of the proceeds attributable to the underwriters’ deferred fees from
      the Offering, as well as $7,000,000 of the proceeds of the private placement
      of
      7,000,000 additional founders warrants were placed in a trust account at
      JPMorgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust
      Company, acting as trustee. As of June 30, 2008, the balance in the trust
      account was $426,014,687 (which includes $105,567 of funds to be transferred
      to
      the operating account for the payment of taxes) and interest receivable on
      the
      trust account of $527,331 of which $157,214 will be transferred to the operating
      account for the payment of taxes. The proceeds held in trust have only been
      invested in U.S. Government securities having a maturity of 90 days or less
      or
      in money market funds which invest principally in either short term securities
      issued or guaranteed by the United States or having the highest rating from
      recognized credit rating agency or tax exempt municipal bonds issued by
      government entities located within the United States or otherwise meeting the
      conditions under Rule 2a-7 under the Investment Company Act. Thus, we are
      currently subject to market risk primarily through the effect of changes in
      interest rates on short-term government securities and other highly rated
      money-market instruments. As of June 30, 2008, the effective annualized interest
      rate payable on our investment was approximately 1.8%. Assuming no other changes
      to our holdings at June 30, 2008, a 1% decrease in the underlying interest
      rate
      payable on our investment as of June 30, 2008 would result in a decrease of
      approximately $ 1.0 million in the interest earned in our investment for the
      following 90-day period, and a corresponding decrease in our net increase in
      stockholders’ equity resulting from operations, if any, for that period. We do
      not believe that the effect of other changes, such as foreign exchange rates,
      commodity prices and/or equity prices currently pose significant market risk
      for
      us.




19




**ITEM
      4. CONTROLS AND PROCEDURES**




Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in company reports filed or
      submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is
      recorded, processed, summarized and reported, within the time periods specified
      in the Securities and Exchange Commission’s rules and forms. Disclosure controls
      and procedures include, without limitation, controls and procedures designed
      to
      ensure that information required to be disclosed in company reports filed or
      submitted under the Exchange Act is accumulated and communicated to management,
      including our Chief Executive Officer and Chief Operating Officer and
      Secretary.




As
      required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive
      Officer and Chief Operating Officer and Secretary carried out an evaluation
      of
      the effectiveness of the design and operation of our disclosure controls as
      of
      June 30, 2008. Based on their evaluation, they concluded that our disclosure
      controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under
      the
      Exchange Act) were effective.





Our
      internal control over financial reporting is a process designed by, or under
      the
      supervision of, our Chief Executive Officer and our Chief Operating Officer
      and
      Secretary and effected by our board of directors, management and other
      personnel, to provide reasonable assurance regarding the reliability of our
      financial reporting and the preparation of our financial statements for external
      purposes in accordance with generally accepted accounting principles (United
      States). Internal control over financial reporting includes policies and
      procedures that pertain to the maintenance of records that in reasonable detail
      accurately and fairly reflect the transactions and dispositions of our assets,
      provide reasonable assurance that transactions are recorded as necessary to
      permit preparation of our financial statements in accordance with generally
      accepted accounting principles (United States), and that our receipts and
      expenditures are being made only in accordance with the authorization of our
      board of directors and management, and provide reasonable assurance regarding
      prevention or timely detection of unauthorized acquisition, use of disposition
      of our assets that could have a material effect on our financial
      statements.





During
      the most recently completed fiscal quarter, there has been no change in our
      internal control over financial reporting that has materially affected, or
      is
      reasonably likely to materially affect, our internal control over financial
      reporting other than the Company engaged  an
      outside accounting firm  to
      assist
      management in the financial reporting process.




**PART
      II. OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**




None.





**ITEM
      1A. RISK FACTORS**





Factors
      that could cause our actual results to differ materially form those in this
      report are any of the risks described in our December 31, 2007 Form 10-K filed
      with the SEC. Any of these factors could result in significant or material
      adverse effect on our results of operations or financial condition. Additional
      risk factors not presently known to us or that we currently deem immaterial
      may
      also impair our business or results of operations.





As
      of
      August 13, 2008 there have been no material changes to the risk factors
      disclosed in our December 31, 2007 Form 10-K, filed with the SEC, except we
      may
      disclose changes to such factors or disclose additional factors from time to
      time in our future filings with the SEC.




20





**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





None.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None.




**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None.





**ITEM** **5. OTHER INFORMATION**





None.





**ITEM** **6.** **EXHIBITS**





An
      index
      of exhibits filed as part of this Report is on page 23.





21





**SIGNATURE**





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


SP
                Acquisition Holdings, Inc.By:
            /s/ Warren
              G. LichtensteinWarren
                G. Lichtenstein
              Chairman,
                  President andChief
                  Executive Officer
                (Principal
                  Executive Officer)


SP
              Acquisition
              Holdings, Inc.By:
            /s/ Jack
              L.
              HowardJack
                  L. Howard
                Chief
                  Operating Officer and Secretary
                (Principal
                  Financial Officer and Principal Accounting
                  Officer)Dated: August 14, 2008




22




**EXHIBIT
      INDEX**





Exhibit
                Number
            
            Description31.1
            
            Certification
                of Principal Executive Officer, pursuant to Rule 13a -14 and 15d-14
                of the
                Securities Exchange Act of 1934.31.2
            
            Certification
                of Principal Financial and Principal Accounting Officer, pursuant
                to Rule
                13a-14 and 15d-14 of the Securities Exchange Act of
                193432.1
            
            Certification
                of Principal Executive Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                200232.2
            
            Certification
                Principal Financial and Principal Accounting Officer pursuant to
                18 U.S.C.
                Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                Act
                of 2002





23