Table of Contents







UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549







FORM
10-K





x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF


THE
SECURITIES EXCHANGE ACT OF 1934


For the
fiscal year ended December 31, 2008





or





 ̈ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF


THE
SECURITIES EXCHANGE ACT OF 1934




For the
transition period from _________ to _________





Commission
File Number 001-33467





COLUMBUS
ACQUISITION CORP.


(Exact
name of registrant as specified in its charter)





Delaware
              20-533217(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.  Employer
      Identification No.)153
      E.  53rd
      Street, 58th
      floorNew
      York, New York
              10022(Address
      of principal executive offices)
              (Zip
      Code)





(212)
418-9600


(Registrant's
telephone number, including area code)





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





Title of each class
                          
                          Name of each exchange on which
      registeredCommon
      Stock, par value $0.0001 per share
                          
                          NYSE
      Alternext US LLCWarrants,
      each exercisable to purchase one share of Common Stock
                          
                          NYSE
      Alternext US LLCUnits,
      each consisting of one share of Common Stock and one
    Warrant
                          
                          NYSE
      Alternext US LLC





Securities
registered pursuant to Section 12(g) of the Act:  None





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





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





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





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  x





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “accelerated filer,” “large
accelerated filer” and smaller reporting company in Rule 12b-2 of the Exchange
Act.





Large
      accelerated filer  ̈
              Accelerated
      filer x
              Non-accelerated
      filer  ̈
              Smaller
      reporting company  ̈





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





There
aggregate market value of the registrant’s voting and non-voting common equity
held by non-affiliates of the registrant was $110,543,750 as of June 30, 2008
(the last business day of the registrant’s most recently completed second fiscal
quarter).  In determining the market value of the voting or non-voting
common equity held by non-affiliates of the registrant, securities of the
registrant beneficially owned by the directors and officers of the registrant
have been excluded.  This determination of affiliate status is not
necessarily a conclusive determination for any other purpose.





The
number of shares of the registrant’s common stock, par value $0.0001 per share,
outstanding as of February 23, 2009 was 17,500,000.





DOCUMENTS
INCORPORATED BY REFERENCE:




None.









Table of Contents






Table of
Contents




PagePART IItem 1.
                Business
                3Item 1A.
                Risk Factors
                18Item 1B.
                Unresolved Staff Comments
                38Item 2.
                Properties
                38Item 3.
                Legal Proceedings
                38Item 4.
                Submission of Matters to a Vote of Security
      Holders
                38PART IIItem 5.
                Market for Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities
                39Item 6.
                Selected Financial Data
                42Item 7.
                Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                43Item 7A.
                Quantitative and Qualitative Disclosures about Market
      Risk
                51Item 8.
                Financial Statements and Supplementary
    Data
                52Item 9.
                Changes in and Disagreements With Accountants on Accounting
      and Financial Disclosure
                53Item 9A(T).
                Controls and Procedures
                53Item 9B.
                Other Information
                54PART IIIItem 10.
                Directors, Executive Officers and Corporate
      Governance
                54Item 11.
                Executive Compensation
                58Item 12.
                Security Ownership of Certain  Beneficial Owners
      and Management and Related Stockholder Matters
                59Item 13.
                Certain Relationships and Related
      Transactions
                62Item 14.
                Principal Accountant Fees and Services
                63PART IVItem 15.
                Exhibits, Financial Statement Schedules
                65SIGNATURES
                68


2
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PART I




Item 1.
            Business




We
refer to Columbus Acquisition Corp. as “we,” “us,” “our” or “Columbus”
throughout this annual report.




Overview




We are a blank check company
incorporated in Delaware on August 1, 2006 to serve as a vehicle to effect a
Merger, capital stock exchange, asset acquisition or similar business
combination with one or more operating businesses, which we refer to as a
“business combination,” that we believe has significant growth
potential.




In August 2006, in connection with our
formation and initial capitalization, Columbus Acquisition Holdings LLC
purchased 3,125,000 shares of our common stock (which we refer to as the
“initial shares”) for a purchase price of approximately $0.008 per share, or an
aggregate purchase price of $25,000.  We refer to Columbus Acquisition
Holdings LLC as “Columbus Holdings” in this annual report.  Andrew
Intrater, our Chairman and Chief Executive Officer, controls Columbus Holdings
in his capacity as its sole managing member. Mr. Intrater, Jason Epstein,
Paul F. Lipari and Michael Sloan, each of whom is a member of our management
team, as well as Jay M. Haft and Marceau Schlumberger, are each members of
Columbus Holdings.  Columbus Holdings subsequently transferred 30,000
of these shares to each of Barry J. Rourke, Eric Zachs, Rolf Zimmermann and
Jason Lustig, each of whom is a member of our board of directors, and 312,500 of
these shares to Michael W. Ernestus, who is also a member of our board of
directors and serves as our President.  Messrs. Intrater,
Epstein, Lipari, Haft and Sloan, through their respective ownership of the
Series A membership interests in Columbus Holdings, may be deemed to
beneficially own 2,692,500, 437,500, 437,500, 281,250 and 376,111 shares of our
common stock, respectively. Columbus Holdings and our officers and directors
have waived their right to receive distributions with respect to their initial
shares upon our liquidation if we are unable to consummate a business
combination on or before May 18, 2009. Accordingly, the initial shares will be
worthless if we do not consummate a business combination on or prior to such
date.  We sometimes refer to Columbus Holdings, the beneficial owners
of Columbus Holdings and Messrs. Ernestus, Rourke, Zachs, Zimmerman and Lustig
as our “Founders” in this annual report.




On May
23, 2007, we completed our initial public offering of 12,500,000 units, and an
additional 1,875,000 units relating to the full exercise of the underwriters'
over-allotment option.  Each unit consists of one share of our common
stock and one warrant.  Each warrant entitles the holder to purchase
one share of our common stock from us at a price of $6.00 commencing on the
later of the date that we complete a business combination with an operating
company and May 18, 2008.  We refer to our shareholders who hold the
common shares issued in our initial public offering as our “public
shareholders.”  At the closing of our initial public offering, we paid
$4,600,000 in underwriting discounts and approximately $600,000 for
offering-related costs and expenses, and the balance of $3,450,000 of
underwriting discounts and commissions was deferred and has been placed in the
trust account as described below.




Columbus
Holdings also purchased 3,650,000 warrants (which we refer to as “insider
warrants”) on a private placement basis simultaneously with the consummation of
our initial public offering, for a purchase price of $1.00 per warrant, or an
aggregate purchase price of $3,650,000.  No underwriting discounts or
commissions were paid with respect to this private placement of our insider
warrants.  Columbus Holdings is not able to exercise its insider
warrants if holders of the warrants issued in our initial public offering are
not able to exercise their warrants.  The insider warrants are
identical to warrants issued in our initial public offering (which we refer to
as “public warrants”), except that if we call the public warrants for
redemption, the insider warrants may be exercised on a “cashless” basis so long
as they are held by Columbus Holdings or its permitted
transferees.  Messrs. Intrater, Epstein, Lipari, Haft and Sloan,
through their respective ownership of the Series B membership interests in
Columbus Holdings, may be deemed to beneficially own 1,456,350, 653,350,
653,350, 467,200 and 419,750 insider warrants, respectively, and the same number
of additional shares of our common stock underlying these insider
warrants.  Additionally, Columbus Holdings has agreed that it will not
sell or otherwise transfer these insider warrants until such time, if any, as we
shall have completed a business combination with an operating
business.   Accordingly, the insider warrants, and any warrants
purchased by our officers or directors in the open market following our initial
public offering, will be worthless if we do not consummate a business
combination on or before May 18, 2009.


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Approximately
$109,750,000 of net proceeds from our initial public offering, plus the
$3,650,000 we received from the sale of our insider warrants, was placed in a
trust account immediately following the completion of our initial public
offering.  This amount includes $3,450,000 (of the total of
$8,050,000) of underwriting discounts and commissions, payable to the
underwriters of our initial public offering.  The underwriters have
agreed that this deferred amount will not be paid to them unless and until we
complete a business combination with one or more operating businesses, and they
have waived their right to receive such payment upon our liquidation if we are
unable to complete a business combination before May 18, 2009.  The
funds held in trust are currently invested in a money market fund that invests
in short-term securities issued or guaranteed by the United
States.  Except with respect to interest income that may be released
to us from time to time upon our request of (i) up to $1,750,000 to fund our
expenses related to investigating and selecting a target business and our other
working capital requirements and (ii) any additional amounts we may need to pay
our income or other tax obligations, the proceeds from our initial public
offering that are held in trust will not be released from the trust account
until the earlier of (A) the time that we complete a business combination with
one or more operating businesses and (B) our liquidation, if we do not complete
a business combination on or before May 18, 2009.  The proceeds held
in the trust account may be used as consideration to pay the sellers of a target
business with which we complete a business combination.  Any amounts
not paid as consideration to the sellers of such target business may be used to
finance operations of the target business or for other valid corporate
purposes.




We will
continue to earn interest on the trust account prior to consummating a business
combination, and will use interest to pay franchise tax and income tax and up to
$1,750,000 of such interest to fund our expenses related to investigating and
selecting a target business and our other working capital
requirements.  Our initial business combination must be with a target
business or businesses with a fair market value of at least 80% of the balance
in the trust account at the time of such business combination (excluding the
deferred underwriting discounts and commissions of approximately $3,450,000
described above).  We currently believe that we have sufficient
available funds to effect a business combination with an operating business on
or prior to May 18, 2009.  However, we cannot assure you that this
will be the case.  Please refer to Item 1A of Part I of this annual
report under the heading “Risk Factors” for a detailed discussion of the many
material risks to which we are subject, a number of which (if they were to
materialize) could adversely impact our company and the value of our
securities.




Our efforts in identifying a
prospective target business have note been limited to a particular
industry.  Instead, we have focused on industries and target business
that may provide significant opportunities for growth.




After
completion of our initial public offering, we began contacting various
unaffiliated sources, including investment bankers, venture capital funds,
private equity funds, leveraged buyout funds, management buyout funds and other
members of the financial community in order to generate opportunities for a
suitable business combination. We also received unsolicited inquiries from
several unaffiliated sources, including investment bankers, venture capital
funds, private equity funds, leveraged buyout funds, management buyout funds and
other members of the financial community.  We informed these contacts
that we were seeking to effect a business combination with an operating
business. We did not retain an investment banking firm or other financial
advisor to conduct a formal search for a business
combination.  Criteria for suitability included our management's
assessment of the competitive strengths and weaknesses of the potential business
targets, the outlook for the sectors in which the targets operated, the strength
of the management team and the quality of the assets to be acquired, as
described in more detail below under the heading “Business
Strategy.”  Certain potential targets were considered unsuitable
because they operated in industries that our management believed did not have
good economic potential.  Other targets were considered by our
management to have too great a level of business risk due to poor asset quality
or poor or erratic financial results.




The
Proposed Business Combination with Integrated Drilling Equipment
Company




General—The
Merger Agreement




On
December 15, 2008, our board of directors approved a business combination with
Integrated Drilling Equipment Company, which we refer to as IDE.  IDE,
through its subsidiaries, is an established participant in the business of
manufacturing new and refurbishing existing land-based drilling rigs, rig
components and rig electrical systems and providing related services to the oil
and gas drilling equipment industry on a global basis.




Under the
terms of an agreement and plan of merger dated as of December 15, 2008 (which we
refer to as the “Merger Agreement”), IDE would merge with and into our wholly
owned subsidiary, IDE Acquisition, LLC (which was newly-formed for this
purpose), and IDE Acquisition, LLC will continue to exist as our wholly owned
subsidiary and the surviving entity of the merger.  We refer to our
proposed merger with IDE as the “Merger” throughout this annual
report.  Upon completion of the Merger, we will acquire all of the
outstanding shares of capital stock of IDE in exchange for:


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·
            $43
      million in cash;




·
            shares
      of our common stock having an aggregate value of $50 million (the value of
      each share will be based on the quotient of (i) the aggregate amount
      in our trust account, inclusive of any interest thereon, as of two
      business days prior to the closing date of the Merger, divided by
      (ii) the number of shares of our common stock issued as part of our
      initial public offering (we refer to this value as the “Trust Value per
      Share”)); and




·
            additional,
      contingent consideration consisting of shares of our common stock having a
      value (based on the Trust Value per Share) of up to $156 million (which we
      refer to as the “Earnout Shares), subject to certain adjustments based on
      the of IDE at the time the Merger is completed and our performance
      following the Merger.  The additional, contingent consideration
      has been divided into two tranches, the first of which represents shares
      having a value of up to $50 million (which we refer to as the “First
      Tranche”) and is contingent on our 2009 earnings, and the second of which
      (which we refer to as the “Second Tranche”) represents shares having a
      value of up to $106 million and is contingent on our 2010
      earnings.  The number of shares that may be issued in both cases
      will be based on the Trust Value per Share which, although presently
      unknown, we estimate as of December 31, 2008 to be approximately
      $8.01.  The issuance of the Earnout Shares is subject to the
      following:




Year Ending December 31,
                                
                                Cumulative
      Earnings2009
                                
                                2010
                                
                                2009 and 2010If
      our Earnout EBITDA (as defined in the Merger Agreement) for the year ended
      December 31, 2009 is equal to or greater than $55,000,000 (which we refer
      to as the “First Target”), then we will issue the First Tranche of the
      Earnout Shares; and
                                  
                                  We
      will also issue additional shares of our common stock (based on the Trust
      Value per Share) for every dollar by which our Earnout EBITDA for the year
      ended December 31, 2009 exceeds $55,000,000 (up to a maximum Earnout
      EBITDA of $80,000,000) (we refer to these additional shares as the
      “Additional First Tranche Earnout Shares”).
                                
                                If
      our Earnout EBITDA for the year ended December 31, 2010 is equal to or
      greater than $78,000,000 (which we refer to as the “Second Target”), then
      we will issue the Second Tranche of the Earnout Shares (less any
      Additional First Tranche Earnout Shares issued because our 2009 Earnout
      EBITDA exceeded $55,000,000, as described above ) (the “Second Target
      Shares”).
                                
                                Notwithstanding
      the foregoing, if our Earnout EBITDA for the year ended December 31, 2009
      was less than $55,000,000, but our cumulative Earnout EBITDA for the two
      years ending December 31, 2010, is equal to or greater than $133,000,000,
      then we will issue the First Tranche of the Earnout
  Shares.




The
maximum number of Earnout Shares that may be issued is subject to further
adjustment, as follows: (i) for every dollar by which (a) a certain
targeted net debt amount exceeds our net debt on the Merger closing date and/or
(b) our net working capital on the Merger closing date exceeds a certain
targeted net working capital amount, the Earnout Shares issuable upon the
achievement of the First Target, or, if the First Target is not achieved, the
Second Target, will be increased (without duplication) by an amount equal to (x)
$1 divided by (y) the Trust Value per Share, and (ii) for every dollar
by which (a) the net debt on the Merger closing date exceeds a certain
targeted net debt amount and/or (b) a certain targeted net working capital
amount exceeds the net working capital on the Merger closing date, the Earnout
Shares issuable upon the achievement of the First Target, or, if the First
Target is not achieved, the Second Target, will be decreased (without
duplication) by an amount equal to (x) $1 divided by (y) the Trust Value
per Share.  We will have the right to offer to pay up to 20% of this
additional, contingent consideration in cash rather than in shares of our common
stock.


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Upon
completion of the Merger, the holders of our shares of common stock, warrants
and units will continue to own their existing shares of common stock, warrants
and units, and we will change our name to “Integrated Drilling Equipment
Company.”  Immediately following the completion of the Merger, we
expect that the former shareholders of IDE will own between 26.3% and 32.1% of
the outstanding shares of our common stock (or between 59.5% and 66.1% if the
additional consideration described above is paid in full in shares of our common
stock), depending on the number of our shareholders that exercise their right to
have their shares converted into cash.  Such percentages do not
include securities that may be purchased by IDE shareholders from third parties
or in the open market at or prior to the closing of the Merger.  We
intend to use our remaining cash following completion of the Merger (after
accounting for shareholders that demand a cash conversion of their shares, for
taxes owing and for transaction expenses) to finance our operations and future
growth, if any, and to provide capital for any acquisitions.




Concurrent
with the closing of the Merger, shares of our common stock having a value of
$12,500,000 (based on the Trust Value per Share) of the shares to be received by
IDE shareholders as Merger consideration at the closing of the Merger will be
placed in escrow until ten (10) business days following the filing of our
annual report on Form 10-K for the year ended December 31, 2009, to provide
for the payment of any indemnification claims that we may make against IDE
shareholders under the Merger Agreement.  The escrowed shares
represent our sole recourse against IDE and its shareholders for indemnification
claims under the Merger Agreement, subject to certain limited
exceptions.




We will
use the amount currently held in the trust account, which was approximately
$115.1 million as of December 31, 2008, as follows:




·
            Our
      shareholders electing to exercise their conversion rights will receive
      their pro rata
      portion of the funds deposited in the trust account;
  and




·
            The
      remaining funds in the trust account after the distributions described
      above will be used to fund the acquisition of IDE as well as to pay
      transaction expenses, the deferred commission payable to the underwriters
      of our initial public offering and provide cash on the balance sheet to be
      used for potential future acquisitions, working capital and other general
      corporate purposes.




Approval
by IDE’s Shareholders




The
approval of the Merger required the affirmative vote of a majority of the
outstanding shares of IDE common stock and IDE preferred stock voting as a
single class.  The Merger was approved by 100% of the shareholders of
IDE.




Conversion
Rights




Pursuant
to our amended and restated certificate of incorporation, as currently in
effect, a holder of shares of our common stock issued in our initial public
offering or purchased in the open market following our initial public offering
may, if the shareholder votes against the Merger, demand that we convert such
shares into cash.  If properly demanded, upon consummation of the
Merger, we will convert each share of common stock as to which such demand has
been made into a pro
rata portion of the trust account which consists of approximately $115.1
million as of December 31, 2008.  Based on the amount of cash held in
the trust account as of December 31, 2008, without taking into account amounts
allowed to be withdrawn for working capital or amounts to pay income and
franchise taxes accrued after such date, our shareholders will be entitled to
convert each share of common stock that they hold into approximately $8.01
(which does not take into account our warrants or any shares of stock owned by
our initial shareholders prior to our initial public offering).  If a
shareholder converts its shares of common stock, it will still have the right to
exercise the warrants received as part of the units in accordance with the terms
thereof.  If the Merger is not completed, then these shares will not
be converted into cash.  If the Merger is not completed, then no
shares will be converted to cash, even if a shareholder has so
elected.  The Merger will not be completed if holders of 4,312,500 or
more shares of our common stock issued in our initial public offering,
representing 30% or more of such shares, vote against the Merger and exercise
their conversion rights.


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Shareholders’
Agreement




Concurrent
with the execution of the Merger Agreement, we, IDE Acquisition, our Founders
and substantially all of the IDE shareholders entered into a shareholders’
agreement.  Under the shareholders’ agreement, the IDE shareholders
have agreed not to transfer any shares of our common stock issued to them in the
Merger and our Founders have agreed not to transfer any shares of our common
stock held by them at the closing of the Merger, or received by them upon
conversion of their warrants, for a period of one year after the closing of the
Merger, with certain limited exceptions for private transfers (e.g., to family members and
affiliates) if the transferee agrees to be bound by the terms of the transfer
restrictions.  In addition, the shareholders’ agreement provides our
Founders and the IDE shareholders with certain rights to require us to register
their shares of our common stock under the applicable U.S. securities
laws.




Also,
pursuant to the shareholders’ agreement, upon the closing of the Merger, our
Founders will have the right to designate one member, the IDE shareholders will
have the right to designate two members to our board of directors, and four
members of our board of directors will be “independent” directors (within the
meaning of applicable stock exchange and Securities and Exchange Commission
rules and regulations), two of which may be designated by our Founders and the
other two of which may be designated by the IDE shareholders.  We
anticipate that after the consummation of the Merger our Chairman, Andrew
Intrater, will serve as the initial director designated by our Founders, and
Stephen D. Cope and Stephen Goodland will serve as the initial directors
designated by the IDE shareholders.




The
director designated by our Founders and one of the directors designated by the
IDE shareholders will be appointed to the class of directors with a term
expiring on our third annual meeting of shareholders after consummation of the
Merger.  One of the independent directors designated by our Founders,
one of the independent directors designated by the IDE shareholders (who need
not be independent) and one of the independent directors designated by the IDE
shareholders will be appointed to the class of directors with a term expiring on
our second annual meeting of shareholders after consummation of the
Merger.  One of the independent directors designated by our Founders
and the other independent directors designated by the IDE shareholders will be
appointed to the class of directors with a term expiring on our first annual
meeting of shareholders after consummation of the Merger.




The
Special Meeting of Shareholders; Other Proposals




We have
called a special meeting of our shareholders to consider and vote upon the
proposed Merger with IDE.  We have filed a proxy statement with the
Securities and Exchange Commission for the purpose of soliciting proxies from
our shareholders for their vote upon the matters to be considered at the special
meeting.  We have asked our shareholders to approve a number of other
matters at the special meeting including (i) amendments to our amended and
restated certificate of incorporation to (A) remove certain provisions
containing procedural and approval requirements applicable to us as a “blank
check company” prior to the consummation of the Merger that will no longer be
operative after the consummation of the Merger; (B) maintain our current
classified board structure following the Merger; and (C) change our name to
“Integrated Drilling Equipment Company”; (ii) a new equity and incentive plan;
and (iii) the right to adjourn the special meeting to a later date or dates, if
necessary, to permit further solicitation and vote of proxies.  We
refer to these other matters as the “Other Proposals” in this annual
report.




Approval
of the Merger by our Shareholders




Under the
requirements of the NYSE Alternext US LLC (which we refer to as the “NYSE
Alternext”) and our amended and restated certificate of incorporation, approval
of the Merger requires: (i) the affirmative vote of a majority of votes cast by
holders of our common stock entitled to vote at the special meeting, (ii) the
affirmative vote of a majority of the shares of our common stock issued in our
initial public offering that are present and entitled to vote at the special
meeting, and (iii) that fewer than 30% of the shares of our common stock issued
in our initial public offering vote against the Merger and demand a cash
conversion of their shares, as described above.  In connection with
the vote required for the Merger, our Founders have agreed to vote the shares of
common stock owned or acquired by them prior to our initial public offering,
representing an aggregate of approximately 17.9% of the outstanding shares of
our common stock, in accordance with the majority of the shares of our common
stock voted by our public shareholders.  In connection with seeking
shareholder approval of the Merger and the other matters described above, we
have filed with the Securities and Exchange Commission and furnished our
shareholders proxy solicitation materials prepared in accordance with the
Securities Exchange Act of 1934, which, among other matters, includes a
description of the operations of IDE and audited historical financial statements
of IDE based on U.S. generally accepted accounting principles.


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Conditions
to the Completion of the Merger




The
obligations of Columbus, IDE and the shareholders of IDE to complete the Merger
are subject to the satisfaction or waiver of specified conditions before or as
of the completion of the Merger, including the approval of the Merger by our
shareholders as described in the immediately preceding paragraph, including that
fewer than 30% of the shares of our common stock issued in our initial public
offering vote against the Merger and properly elect to convert their shares into
cash pursuant to their conversion rights; the receipt of all approvals or
consents of a governmental entity which are required to be obtained in
connection with the Merger; the approval by our shareholders of the amendments
to our amended and restated certificate of incorporation to increase our
authorized capital and to remove the procedural terms relating to our status as
a blank check company; and our board of directors shall have determined that the
fair market value of IDE immediately prior to the consummation of the Merger is
at least 80% of the value of our net assets, including the funds held in the
trust account that holds our initial public offering proceeds (excluding the
deferred underwriting discounts and commissions from our initial public
offering).  In addition, the obligation of each of the parties to the
Merger Agreement to consummate the Merger is subject to the satisfaction or
waiver of a number of other conditions as set forth in the Merger
Agreement.   We cannot assure you that we will be able to
complete the proposed Merger pursuant to the terms of the Merger Agreement, or
at all.  Further, we will not be able to consummate the Merger if our
shareholders do not approve the Merger and certain of the other matters that are
being voted on by them at the special meeting of
shareholders.  Assuming we are not able to consummate another business
combination by May 18, 2009, we will be forced to liquidate our
assets.  Upon any such liquidation, the per-share liquidation
distribution may be less than the initial public offering price of our units
because of the underwriting commissions and expenses related to our initial
public offering, our general and administrative expenses and the costs of
seeking a business combination.




If
permitted under applicable law, either our company or IDE may waive conditions
for our or its own benefit and consummate the Merger, even though one or more of
these conditions have not been met. We cannot assure you that all of the
conditions will be satisfied or waived or that the Merger will
occur.




Termination




The
Merger Agreement may be terminated and the Merger abandoned at any time prior to
the closing of the Merger: by mutual consent of the parties to the Merger
Agreement; if the Merger has not been completed by May 18, 2009; and under
certain other circumstances as set forth in the Merger Agreement.




Determination
of Fair Market Value; Opinion of TM Capital Corp.




The fair
market value of IDE was determined by our board of directors to be in excess of
80% of the value of our net assets, including the funds held in the trust
account that holds our initial public offering proceeds (excluding the deferred
underwriting discounts and commissions from our initial public
offering).  In reaching such decision, our board considered, among
other things, the opinion of TM Capital that, as of that date and based upon and
subject to the factors, limitations and assumptions described in the opinion,
the consideration to be paid by us pursuant to the Merger Agreement was fair
from a financial point of view to the holders of our common stock, and the
opinion of TM Capital that the fair market value of IDE is equal to at least 80%
of the value of our net assets, including the funds held in the trust account
that holds our initial public offering proceeds (excluding the deferred
underwriting discounts and commissions from our initial public
offering).




Recommendation
of our Board of Directors




Our board
of directors has unanimously determined that the Merger Agreement and the
transactions contemplated thereby, including the Merger, are fair to, and in the
best interests of, our company and our shareholders.  Accordingly, our
board of directors has unanimously approved and declared advisable the Merger
Agreement, the amendments to our amended and restated certificate of
incorporation and the proposed equity and incentive plan, and has unanimously
recommended that our shareholders vote or instruct their vote to be cast in
favor of the approval of the Merger and these other matters.


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No
Assurance as to Completion of Merger




We cannot
assure you that we will be able to complete the proposed Merger with IDE
pursuant to the terms of the Merger Agreement, or at all.  Further, if
our shareholders do not approve the Merger and certain of the other matters that
are being voted on by our shareholders at our upcoming special meeting of
shareholders, we will not be able to consummate the Merger.  If we do
not complete the Merger with IDE and we are not able to consummate another
business combination by May 18, 2009, we will be forced to liquidate our assets
and the per-share liquidation distribution may be less than the initial public
offering price of our units because of the underwriting commissions and expenses
related to our initial public offering, our general and administrative expenses
and the costs of seeking a business combination.




About
Integrated Drilling Equipment Company




IDE’s Organizational
History




IDE is a
private company that was formed in 2008 in the State of Delaware to acquire the
businesses of IEC Systems, L.P., which we refer to as “IEC,” and Advanced Rig
Services, LLC, which we refer to as “ARS,” each of which were affiliated
companies engaged in the business of designing, manufacturing, installing and
servicing oil and gas drilling equipment..  Though IEC, IDE designs,
builds and provides Silicon Controller Rectifier, or“SCR,” drive systems and
provides rig electrical system design, installation and repair services for the
land and offshore drilling industry.  Through ARS, IDE is a
full-service provider of drilling rigs and their components used in the domestic
and international land drilling industry




The
following organizational chart illustrates the structure of IDE after giving
effect to certain restructuring transactions effected in 2008:









IDE Business
Overview




IDE and
its predecessor companies have been active in providing services and products to
the land drilling industry since 1991.  IDE’s principal service and
product offering consists of:




·
            providing
      a range of extensive reconfiguration and refurbishment services for land
      rigs, primarily to repair and extend the life of its customers’ rigs, or
      to adapt them for different drilling environments (e.g., international
      use, cold weather use, etc.);


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·
            manufacturing
      a broad range of key mechanical and electrical components for land rigs,
      which are used primarily in its refurbishment and reconfiguration services
      done by its customers, which are the land drilling service providers;
      and




·
            manufacturing
      new land rigs based upon its own designs or customized to its customers’
      specifications. IDE believes it is one of the two vertically-integrated
      land rig manufacturers in the United
States.




IDE’s
customers are primarily land drilling contractors in North America, South
America, the Middle East, Africa, Eurasia and Russia.  IDE is
currently targeting customers who intend to utilize the products and services in
the international markets for the sale of its products and services based on
where services are provided or on the location to which IDE has knowledge of
where a product will be shipped.  During the year ended December 31,
2008, 81.0% of IDE’s revenues were international and is, therefore, less
dependent upon the more volatile North American market.  Most of these
activities are focused on rigs engaged in drilling activities in international
markets (not the U.S. or Canada), or rigs that are being transported to those
markets in the future.




IDE’s
products and services are sold and marketed primarily by its own sales teams in
Houston, Texas. In addition, IDE has a network of agent representatives in South
and Central America, Africa and the Middle East.  IDE is also seeking
to develop its business presence in Russia through relationships held by our
company.




IDE’s
primary operations are based at a 51,000-square-foot facility in Houston, Texas
and a surrounding 30-acre rig yard which is used to execute reconfiguration and
refurbishment services and manufacture and assemble new rigs.  IDE
also has field service teams located in Houston and Odessa, Texas, and Oklahoma
City, Oklahoma to provide diagnostic and repair services to customers
worldwide.




In
June 2008, IDE entered into a supplier agreement with Sherbrooke
Enterprises Ltd., formerly known as FPI Holdings Company Limited (which we refer
to as “Sherbrooke”), a British Virgin Islands holding company with operating
subsidiaries located in the People’s Republic of China that manufactures rig
subsystems and other rig components and parts.  IDE has been granted
the exclusive right to resell a broad range of rig-related products sourced from
Sherbrooke.  IDE believes this relationship with Sherbrooke enables it
to offer additional rig equipment and packages on a cost competitive basis for
customers worldwide.




IDE Products and
Services




IDE is a
full-service, vertically integrated provider of services and products covering
all aspects of the design, manufacture, refurbish, reconfigure, assembly and
testing and field servicing of land-based drilling rigs, rig parts, and rig
control systems.




IDE’s
range of services includes:




·
            Rig
      refurbishment and reconfiguring;


·
            Rig
      assembly and testing;


·
            Rig
      design;


·
            Rig
      field services; and


·
            Full
      rig electrical control system
services.




IDE’s
product suite consists of:




·
            Complete
      drilling rig packages;


·
            Major
      rig components;


·
            Rig
      subsystems and parts;


·
            Rig
      electrical and control systems; and


·
            Rig
      fabrication.




The
principal customers for IDE’s products and services are land-based drilling
contractors in North America, South America, Central America, the Middle East,
Africa, Eurasia and Russia.


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Business
Strategy




We have
identified and used the following guidelines in evaluating prospective target
businesses and business combination opportunities, including IDE.




·
            Established
      companies with positive cash flow.  We have
      generally sought to acquire established companies with a history of
      positive cash earnings before interest, taxes, depreciation and
      amortization.  We have not planned (nor do we currently plan) to
      acquire start-up companies, companies with speculative business plans or
      companies that we believe have significant technology
  risk.




·
            Strong
      competitive position in industry.  We have
      analyzed the strengths and weaknesses of target businesses relative to
      their competitors.  The factors we have considered include
      product quality, customer loyalty, cost impediments associated with
      customers switching to competitors, patent protection, brand positioning
      and capitalization.  We have sought to acquire businesses that
      have developed strong positions within their respective markets, are well
      positioned to capitalize on growth opportunities and operate businesses or
      in industries with significant barriers to entry.  We have
      sought to acquire businesses that demonstrate advantages when compared to
      their competitors, which may help to protect their market position and
      profitability.




·
            Experienced
      management team.  We have sought to acquire businesses
      that have experienced management teams with a proven track record for
      delivering growth and profits through strategic business management and
      effective team building.




·
            Diversified
      customer and supplier base.  We have
      sought to acquire businesses that have a diversified customer and supplier
      base.  We believe that companies with a diversified customer and
      supplier base are generally better able to endure economic downturns,
      industry consolidation, changing business preferences and other factors
      that may negatively impact their customers, suppliers and
      competitors.




Transaction
Structures




We
believe the majority of the transactions we have reviewed, including IDE, fall
into one or more of the following categories:




·
            Growth
      Scenarios—situations where companies have the opportunity for
      growth through market development, incremental marketing, or increases in
      working capital.




·
            Fragmented
      Industries—industries characterized by a large number of small to
      mid-size firms in which opportunities may
arise.




·
            Divisional
      Spin-outs—operating units or
      subsidiaries of companies that may have been neglected by the parent in
      terms of focus, resources or funding and may no longer be considered
      strategic or core business units.




Effecting
a Business Combination




General




We intend
to structure the Merger with IDE and the payment of the Merger consideration as
described above under the heading “The Proposed Business Combination with
Integrated Drilling Equipment Company—General—The Merger Agreement.” However, we
cannot assure you that we will be able to complete the proposed Merger with IDE
pursuant to the terms of the Merger Agreement, or at all.  If we are
unable to complete our Merger with IDE, because our shareholders fail to approve
the Merger or for any other reason, it is unlikely that we will have enough time
to negotiate and consummate another business combination and would, therefore,
be forced to liquidate our assets.


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We have
sought, and continue to seek to have all vendors, except for our independent
accountants, prospective target businesses or other entities with whom we
contract prior to completing a business combination, who we refer to as
potential contracted parties or a potential contracted party, execute agreements
with us waiving any right, title, interest or claim of any kind whatsoever in or
to any funds held in the trust account for the benefit of our public
shareholders.  Such a waiver will apply to any kind of right, title,
interest or claim that a potential contracted party may have.  In the
event that a potential contracted party refuses to execute such a waiver, we
will execute an agreement with that entity only if our management first
determines that we would be unable to obtain, on a reasonable basis,
substantially similar services or opportunities from another entity willing to
execute such a waiver.  Examples of instances where we may engage a
third party that refused to execute a waiver would be the engagement of a third
party consultant whose particular expertise or skills are believed by management
to be superior to those of other consultants that would agree to execute a
waiver or a situation in which management does not believe it would be able to
find a provider of required services willing to provide the
waiver.  If a vendor or service provider or a prospective target
business refuses to execute such a waiver, then Mr. Intrater will be personally
liable to cover the potential claims made by such party, but only if, and to the
extent that, the claims would otherwise reduce the trust account proceeds
payable to our public shareholders in the event of our liquidation.




Subject
to the requirement that a target business has a fair market value of at least
80% of our net assets at the time of the acquisition, as described below in more
detail, our management had virtually unrestricted flexibility in identifying and
selecting a prospective acquisition candidate.  Other than the broad
guidelines described above, we have not established any specific attributes or
criteria for prospective target businesses. Although our management has
endeavored (and, if we do not complete the Merger with IDE, our management will
continue to endeavor) to evaluate the risks inherent in a particular target
business, including IDE, we cannot assure you that we will properly ascertain or
assess all significant risk factors.




Sources
of Target Businesses; Selection of a Target Business and Structuring of a
Business Combination




During
the period immediately subsequent to our initial public offering on May 23,
2007 through December 12, 2008, we were involved in identifying and evaluating
prospective businesses regarding potential business combinations.  On
May 24, 2007, the day after the consummation of our initial public
offering, we convened our management to discuss and begin implementing our
overall plan for identifying, evaluating and, where appropriate, pursuing
potential acquisition opportunities.  After discussing the most
effective means for us to cooperatively solicit opportunities, we determined
that we should plan regular face-to-face meetings or telephonic conferences with
our board, management and representatives to discuss and update our
progress.  Given our commitment to source, review and negotiate a
transaction within the prescribed timeframe, we agreed to immediately identify
and begin the process of making contact with various prospective sources of deal
flow, including business contacts and relationships we have established to
encourage them to contact us with ideas or specific acquisition opportunities
that they might have for us to consider and explore.




We were
able to source opportunities both proactively and reactively, and given the
mandate to find a suitable business combination partner, did not limit ourselves
to any one transaction structure (e.g., cash vs. stock issued to potential
seller, straight merger, corporate spin-out or management
buy-out).  Proactive sourcing involved our management, among other
things:




·
            initiating
      conversations with third-party companies which we believed could make
      attractive combination partners;




·
            attending
      conferences or industry events to meet prospective business combination
      partners;




·
            contacting
      professional service providers (lawyers, accountants, consultants and
      bankers);




·
            utilizing
      our own network of business associates and former colleagues for
      leads;




·
            working
      with third-party intermediaries, including investment bankers;
      and




·
            inquiring
      of business owners, including private equity firms, of their interest in
      selling their business.




Reactive
sourcing involved fielding inquiries or responding to solicitations by either
(i) companies looking for capital or investment alternatives or (ii) investment
bankers or other similar professionals who represented a company engaged in a
sale or fund-raising process. Columbus considered numerous companies in various
industries.




In
considering potential targets for a business combination, our management
considered the following factors as being material to their
decision:




·
            financial
      condition and results of
operations;


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·
            cash
      flow potential;




·
            growth
      potential;




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




·
            capital
      requirements;




·
            competitive
      position;




·
            regulatory
      or technical barriers to entry;




·
            stage
      of development of the products, processes or
  services;




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




·
            contributions
      we could make to the potential target’s
  business;




·
            relative
      valuation to comparable companies;




·
            regulatory
      environment of the industry; and




·
            costs
      associated with effecting the business
  combination.




The
evaluation relating to the merits of each particular business combination that
we considered, including IDE, were based, to the extent relevant, on the above
factors. In evaluating each prospective business target, including IDE, our
management conducted an extensive due diligence review which encompassed, among
other things, business, financial and industry analysis, meetings with
management, and, where applicable, inspection of facilities as well as review of
financial and other information which were available.




As a
result of these efforts, we initiated contact, either directly or through a
third party intermediary, with over 100 potential targets.  We signed
non-disclosure agreements relating to approximately 80 of these potential
business combination opportunities. In addition, we received business plans,
financial summaries or presentation books of at least 75 potential target
companies.  We also had discussions with several target companies with
which a non-disclosure agreement was not signed.  With respect to
several business combination opportunities, discussions among our management and
the targets included financial disclosures, reviews of potential transaction
structures, preliminary estimates of transaction values and discussions of
management objectives, business plans and projections.  Discussions,
including introductory meetings attended by some combination of Messrs. Intrater
and Ernestus, our Chairman and President, respectively, and other designated
individuals on behalf of Mr. Intrater occurred with potential targets on a
regular basis during the period from June 2007 through December
2008.  Our board of directors’ initial review and analysis determined
that a transaction with many of the potential target companies would not be
successful based on purchase price, valuation, industry, conditions and market
concerns.




Based on
their experience in investigating investment opportunities, our management
assessed the competition for quality companies that could be a potential target
for a business combination and determined that a company that our management
identified as a suitable potential business combination partner would typically
have several alternatives to any potential business combination with us,
including remaining independent or selling itself to another third party, as
well as obtaining capital either privately or publicly.  Additionally,
in many cases, our management had to spend time educating a prospective business
combination partner about “blank check” companies and explaining, from our
management’s perspective, the benefits of a combination with our company over
other alternatives that it may have been considering.  The reasons
varied for why we did not reach agreement with any of these other potential
business combination partners.  With respect to certain targets, our
management team did not feel sufficiently comfortable with the target company’s
forecasted financial performance in the likelihood that management could reach
such forecasted performance.  Some of the other alternatives, although
attractive, did not involve a target business with a level of familiarity with
blank check companies equal to the seller’s experience in such
matters.  We believed the Merger with IDE provided the most attractive
option for a business combination, and the choice of the Merger proposed herein
over other alternatives was less a rejection of such alternatives and more a
prioritization among alternatives.


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We were
introduced to IDE by several investment bankers, including Ladenburg Thalmann
& Co. Inc., which acted as one of the underwriters in our initial public
offering and has been serving as our financial advisor since June 2008, and
other third-party intermediaries.  Following extensive meetings in
September 2008 between representatives of our company and IDE, including our
respective financial and legal advisors, we and IDE signed a letter of
non-binding letter of intent on September 18, 2008 setting forth the principal
terms of the proposed Merger between IDE by Columbus, which was amended on
November 12, 2008 to extend the exclusivity provision pursuant to which IDE
agreed not to solicit third parties for alternative
transactions.  Between October 2008 and December 2008, representatives
of our company and IDE, and our respective counsel, negotiated the terms of the
Merger Agreement, the proposed employment agreements for IDE’s senior
executives, the Equity and Incentive Plan, the shareholders’ agreement and other
agreements relating to the proposed transaction.  After the close of
trading on December 12, 2008, our board unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the
Merger.  Following the close of trading on December 15, 2008, the
Merger Agreement and related documents were executed by the parties thereto and
we issued a press release announcing the proposed transaction, the principal
terms of which are described above under the heading “The Proposed Business
Combination with Integrated Drilling Equipment Company—General—The Merger
Agreement” and elsewhere in this annual report.




We
believe it is unlikely that we will have sufficient funds available to us in the
trust account to pay the costs associated with identifying and evaluating
another target business and completing a business combination with another
target business, if we are unable to complete the Merger with IDE.




Fair
Market Value of Target Business




Under our
amended and restated certificate of incorporation, our initial business
combination must have a fair market value equal to at least 80% of the value of
our net assets, including the funds held in the trust account that holds our
initial public offering proceeds (excluding the deferred underwriting discounts
and commissions from our initial public offering) at the time of such
acquisition.  The fair market value of the target business will be
determined by our board of directors based upon standards generally accepted by
the financial community, such as actual and potential sales, earnings, cash
flow, book value and, where appropriate, upon the advice of appraisers or other
professional consultants.  Our board of directors engaged TM Capital
in December 2008 to assist it in evaluating whether the Merger with IDE would
satisfy that requirement and whether the consideration to be paid by us pursuant
to the Merger Agreement is fair, from a financial point of view, to the holders
of our common stock pursuant.  TM Capital has issued their opinion
that (1) the consideration to be paid by us pursuant to the Merger Agreement was
fair, from a financial point of view, to us and the holders of our common stock
and (2) IDE has a fair market value equal to at least 80% of the value of our
net assets, including the funds held in the trust account that holds our initial
public offering proceeds (excluding the deferred underwriting discounts and
commissions from our initial public offering).  Such opinion has been
included in the proxy solicitation materials furnished to our shareholders in
connection with the proposed Merger with IDE.  Based on such opinion
and the evaluation of IDE’s business and prospects by our board of directors,
our board determined that this 80%-requirement was satisfied.




Limited
Ability to Evaluate the Target Business' Management




Although
we have closely scrutinized the management of IDE, we cannot assure you that our
assessment of IDE’s management will prove to be correct, or that the future
management will have the necessary skills, qualifications or abilities to
successfully manage its business or our company.  Assuming that we
complete the Merger with IDE, substantially all of the current management of IDE
will be involved with the management of our company following the Merger and
will for the most part run our day-to-day operations.  In particular,
Stephen D. Cope, IDE’s Chairman, Chief Executive Officer, President and
Secretary, is expected to become a member of our board of directors and our
Chief Executive Officer and Chairman of the Board; Stephen Goodland, IDE’s Chief
Financial Officer and Treasurer, is expected to become our Chief Financial
Officer; and Eric Storm, IDE’s Senior Vice President of Finance, is expected to
become our Senior Vice President of Finance.  Each of
Messrs. Cope, Goodland and Storm entered into employment agreements with
IDE that will, upon the consummation of the Merger, become employment agreements
with us.




Following
a business combination, we may seek to recruit additional managers to supplement
the incumbent management of the target business.  We cannot assure you
that we will have the ability to recruit additional managers, or that any such
additional managers we do recruit will have the requisite skills, knowledge or
experience necessary to enhance the incumbent management.


14
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Conversion
Rights




At the
time we seek shareholder approval of any business combination, including the
proposed Merger with IDE, we will offer each public shareholder the right to
have its shares of common stock converted to cash if such shareholder votes
against the business combination and the business combination is approved and
completed.  Our initial shareholders will not have such conversion
rights with respect to any shares of common stock owned by them, directly or
indirectly, whether included in their initial shares or underlying units
purchased by them in our initial public offering or purchased by them in the
aftermarket (nor will they seek appraisal rights with respect to such shares if
appraisal rights would be available to them).  The actual per-share
conversion price will be equal to the amount in the trust account (a portion of
which is made up of $3,450,000 in deferred underwriting discounts and
commissions), inclusive of any interest thereon not previously released to us
for working capital requirements, as of two business days prior to the proposed
consummation of a business combination, divided by the number of shares of
common stock underlying the units sold in our initial public
offering.  Without taking into account any interest earned on the
trust account, the initial per-share conversion price would be approximately
$7.89, or $0.11 less than the per-unit initial public offering price of
$8.00.




An
eligible shareholder may request conversion at any time after the mailing to our
shareholders of the proxy statement and prior to the vote taken with respect to
a proposed business combination at a meeting held for that purpose, but the
request will not be granted unless the shareholder votes against the business
combination and the business combination is approved and completed.




Any
request for conversion, once made, may be withdrawn at any time up to the date
of the shareholders’ meeting convened to vote upon the related business
combination.  Furthermore, if a shareholder delivered its certificate
for conversion and subsequently decided prior to the meeting not to elect
conversion, it may simply request that the transfer agent return the certificate
(physically or electronically).  We anticipate that the funds to be
distributed to shareholders entitled to convert their shares who elect
conversion will be distributed promptly after completion of a business
combination.  Public shareholders who convert their common shares into
their portion of the trust account still have the right to exercise any warrants
they received that comprised a part of the units.




If a vote
on our initial business combination is held and the business combination is not
approved, we may continue to try to consummate a business combination with a
different target until May 18, 2009.  If the initial business
combination is not approved or completed for any reason, then public
shareholders voting against our initial business combination who exercised their
conversion rights would not be entitled to convert their shares of common stock
into a pro rata share
of the aggregate amount then on deposit in the trust account.  Public
shareholders would be entitled to receive their pro rata share of the
aggregate amount on deposit in the trust account only in the event that the
initial business combination they voted against was duly approved and
subsequently completed, or in connection with our liquidation.  We
will not complete any business combination if public shareholders, owning 30% or
more of the shares underlying the units sold in our initial public offering,
both exercise their conversion rights and vote against the business
combination.  Accordingly, it is our understanding and intention in
every case to structure and consummate a business combination in which public
shareholders owning 29.99% of the shares underlying the units sold in our
initial public offering may exercise their conversion rights and the business
combination will still go forward.  We have set the conversion
percentage at 30% in order to reduce the likelihood that a small group of
investors holding a block of our common stock will be able to stop us from
completing a business combination that may otherwise approved by a large
majority of our public shareholders.




If the
business combination is not approved or completed for any reason, then public
shareholders voting against such business combination will not be entitled to
convert their common shares into a pro rata share of the
aggregate amount then on deposit in the trust account.  Such public
shareholders would only be entitled to convert their common shares into a pro rata share of the
aggregate amount then on deposit in the trust account in the event that such
shareholders elect to vote against a subsequent business combination that is
approved by shareholders and completed, or in connection with our dissolution
and liquidation, discussed below.




Table of Contents




Public
shareholders who convert their common shares into a pro rata share of the trust
account will be paid promptly their conversion price following their exercise of
conversion rights and will continue to have the right to exercise any warrants
they own.  The initial conversion price is approximately $7.89 per
share.  Since this amount is less than the $8.00 per unit price in our
initial public offering and may be lower than the market price of our common
stock on the date of conversion, there may be a disincentive on the part of
public shareholders to exercise their conversion rights, particularly for those
shareholders who do not sell, or receive less than an aggregate of $0.11 of net
sales proceeds for, the warrants included in the units, and persons who purchase
common shares in the aftermarket at a price in excess of $7.89 per
share.  Because converting shareholders will receive their
proportionate share of deferred underwriting compensation at the time of closing
of our business combination, the non-converting shareholders will bear the
financial effect of such payments to both the converting shareholders and the
underwriters as a consequence of the reduction in our net assets resulting from
such distribution.




Liquidation
if No Business Combination




Our
amended and restated certificate of incorporation provides that we will continue
in existence only until May 18, 2009.  If we have not completed a
business combination by such date, our corporate existence will cease except for
the purposes of winding up our affairs and liquidating, pursuant to Section 278
of the Delaware General Corporation Law (which we refer to as the “DGCL” in this
annual report).  This has the same effect as if our board of directors
and shareholders had formally voted to approve our dissolution pursuant to
Section 275 of the DGCL.  Accordingly, limiting our corporate
existence to a specified date as permitted by Section 102(b)(5) of the DGCL
removes the necessity to comply with the formal procedures set forth in Section
275 (which would have required our shareholders to formally vote to approve our
dissolution and liquidation).  We view this provision terminating our
corporate life by May 18, 2009as an obligation to our
shareholders.  This provision will be amended only in connection with,
and upon consummation of, our initial business combination by such
date.




If we are
unable to complete a business combination by May 18, 2009,we will distribute to all of
our public shareholders, in proportion to their respective equity interests, an
aggregate sum equal to the amount in the trust account including:




·
            all
      accrued interest, net of income taxes payable on such interest and
      interest income of up to an aggregate of $1,750,000 on the trust account
      balance that has been released to us prior to such distribution to fund
      our expenses relating to investigating and selecting a target business and
      other working capital requirements, including the costs of liquidation;
      and




·
            all
      deferred underwriting discounts and
commissions,




as well
as any of our remaining net assets (subject to our obligations under Delaware
law to provide for claims of creditors as described below).




We
anticipate notifying the trustee of the trust account to begin liquidating such
assets promptly after such date and anticipate it will take no more than 10
business days to effectuate such distribution.  Our initial
shareholders have waived their rights to participate in any liquidation
distribution with respect to the common shares owned by them immediately prior
to our initial public offering.  There will be no distribution from
the trust account with respect to our warrants, which will expire
worthless.  We will pay the costs of liquidation from our remaining
assets outside of the trust fund.  If such funds are insufficient,
Columbus Holdings has agreed to advance us the funds necessary to complete such
liquidation (currently anticipated to be no more than approximately $10,000) and
has agreed not to seek repayment of such expenses.




If we
were to expend all of the net proceeds of our initial public offering, other
than the proceeds deposited in the trust account, and without taking into
account interest, if any, earned on the trust account , the initial per-share
liquidation price would be $7.89, or $0.11 less than the per unit offering price
of $8.00.  The proceeds deposited in the trust account could, however,
become subject to the claims of our creditors (which could include vendors and
service providers we have engaged to assist us in any way in connection with our
search for a target business and that are owed money by us, as well as target
businesses themselves) which could have higher priority than the claims of our
public shareholders.  Andrew Intrater, our Chairman of the Board and
Chief Executive Officer, has personally agreed, pursuant to an agreement with us
and Lazard Capital Markets LLC that, if we liquidate prior to the consummation
of a business combination, he will be personally liable to pay debts and
obligations to target businesses or vendors or other entities that are owed
money by us for services rendered or contracted for or products sold to us in
excess of the net proceeds of our initial public offering not held in the trust
account.  We cannot assure you, however, that he would be able to
satisfy those obligations in all instances.  Accordingly, the actual
per-share liquidation price could be less than $8.01, plus interest, due to
claims of creditors.  Additionally, if we are forced to file a
bankruptcy case or an involuntary bankruptcy case is filed against us which is
not dismissed, the proceeds held in the trust account could be subject to
applicable bankruptcy laws, and may be included in our bankruptcy estate and
subject to the claims of third parties with priority over the claims of our
shareholders.  To the extent any bankruptcy claims deplete the trust
account, we cannot assure you we will be able to return to our public
shareholders at least $8.01 per share.


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Our
public shareholders will be entitled to receive funds from the trust account
only in the event of the expiration of our corporate existence and our
liquidation or if they seek to convert their respective shares into cash upon a
business combination which the shareholder voted against and which is completed
by us.  In no other circumstances will a shareholder have any right or
interest of any kind to or in the trust account.




Under the
DGCL, shareholders may be held liable for claims by third parties against a
corporation to the extent of distributions received by them in a dissolution. If
the corporation complies with certain procedures set forth in Section 280 of the
DGCL intended to ensure that it makes reasonable provision for all claims
against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the
corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to shareholders, any
liability of shareholders with respect to a liquidating distribution is limited
to the lesser of such shareholder's pro rata share of the claim
or the amount distributed to the shareholder, and any liability of the
shareholder would be barred after the third anniversary of the
dissolution.  However, as stated above, it is our intention to make
liquidating distributions, if required, to our shareholders as soon as
reasonably possible after May 18, 2009and, therefore, we do
not intend to comply with those procedures.  As such, our shareholders
could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our shareholders may extend
well beyond the third anniversary of such date.  Because we will not
be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a
plan that will provide for our payment, based on facts known to us at such time,
of (i) all existing claims, (ii) all pending claims and (iii) all claims that
may be potentially brought against us within the subsequent 10
years.  Accordingly, we would be required to provide for any claims of
creditors known to us at that time or those that we believe could be potentially
brought against us within the subsequent 10 years prior to our distributing the
funds in the trust account to our public shareholders.  However,
because we are a blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target businesses to
acquire, the only likely claims to arise would be from our vendors and service
providers (such as accountants, lawyers, investment bankers, etc.) and potential
target businesses.  As described above, pursuant to the obligation
contained in our underwriting agreement, we have sought, and continue to seek to
have all vendors, service providers and prospective target businesses execute
agreements with us waiving any right, title, interest or claim of any kind
whatsoever they may have in or to any monies held in the trust
account.  Such a waiver will apply to any kind of right, title,
interest or claim that a potential contracted party may have.  As a
result, we believe the claims that could be made against us will be limited,
thereby lessening the likelihood that any claim would result in any liability
extending to the trust.  We believe, therefore, that any necessary
provision for creditors will be reduced and should not have a significant impact
on our ability to distribute the funds in the trust account to our public
shareholders.




If we are
forced to file a bankruptcy case or an involuntary bankruptcy case is filed
against us that is not dismissed, any distributions received by shareholders in
our dissolution could be viewed under applicable debtor/creditor and/or
bankruptcy laws as either a "preferential transfer" or a “fraudulent
conveyance.”  As a result, a bankruptcy court could seek to recover
all amounts received by our shareholders in our
dissolution.  Furthermore, because we intend to distribute the
proceeds held in the trust account to our public shareholders promptly after May
18, 2009 if we are forced to liquidate, this may be viewed or interpreted as
giving preference to our public shareholders over any potential creditors with
respect to access to or distributions from our assets.  Furthermore,
our board may be viewed as having breached their fiduciary duties to our
creditors and/or may have acted in bad faith, and thereby exposing itself and
our company to claims of punitive damages, by paying public shareholders from
the trust account prior to addressing the claims of creditors.  We
cannot assure you that claims will not be brought against us for these
reasons.


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Competition




We have
encountered intense competition in identifying, evaluating and selecting a
target business from other entities having a business objective similar to
ours.  Based upon publicly available information, as of February 12,
2009 approximately we have identified 160 similarly structured companies that
have gone public since August 2003, of which 81 have actually consummated a
business combination, or announced they have entered into a definitive agreement
for a business combination.  The remaining companies have more than
$10.0 billion of proceeds and are seeking to consummate business
combinations.  The fact that only approximately one-half of such
companies that have gone public since August 2003 have either completed a
business combination or have entered into a definitive agreement for a business
combination may be an indication that there are only a limited number of
attractive target businesses available to such entities or that many privately
held target businesses may not be inclined to enter into a business combination
with publicly held blank check companies like us.  We cannot assure
you that we will be able to successfully compete for an attractive business
combination.  Additionally because of this competition, we cannot
assure you that we will be able to effectuate a business combination within the
required time periods.  If we are unable to find a suitable target
business within such time periods, we will be forced to
liquidate.  Further, the following may not have been viewed favorably
by certain target businesses:




·
            our
      obligation to seek shareholder approval of a business combination may
      delay or threaten the completion of a
  transaction;




·
            the
      length of time that may be required to complete a business combination as
      a result of an extensive review process by the Securities and Exchange
      Commission;




·
            our
      obligation to convert into cash shares of common stock held by our public
      shareholders to such holders that both vote against the business
      combination and exercise their conversion rights may reduce the resources
      available to us for a business combination;
and




·
            our
      outstanding warrants, and the potential future dilution they
      represent.




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




If we
succeed in effecting the proposed Merger with IDE, there will be, in all
likelihood, intense competition from competitors of IDE’s
business.  We cannot assure you that, subsequent to the Merger, we
will have the resources or ability to compete effectively.




Facilities




We
maintain our principal executive offices at 153 East 53rd Street,
58th
Floor, New York, New York 10022.  The cost for this space is included
in the $7,500 per-month fee Renova U.S. Management LLC charges us for general
and administrative services.  We believe, based on rents and fees for
similar services in the New York City metropolitan area, that the fee charged by
Renova U.S. Management LLC is at least as favorable as we could have obtained
from an unaffiliated person.  We consider our current office space,
combined with the other office space otherwise available to our executive
officers, adequate for our current operations.




Employees




We have
five executive officers.  These individuals are not obligated to
devote any specific number of hours to our matters and intend to devote only as
much time as they deem necessary to our affairs.  The amount of time
they will devote in any time period will vary based on whether a target business
has been selected for the business combination and the stage of the business
combination process the company is in.  Accordingly, since our
identification of IDE as a suitable target business, our management has spent
more time investigating IDE’s business and negotiating and processing the
Merger.  Andrew Intrater, Paul Lipari, Jason Epstein, Michael Ernestus
and Michael Sloan each devote at least 10 hours per week to our business and we
expect them to continue to do so until we complete the Merger (as to which we
cannot assure you).  We do not intend to have any full time employees
prior to the consummation of the Merger.




Periodic
Reporting and Financial Information




We have
registered our units, common stock and warrants under the Securities and
Exchange Act of 1934, and have reporting obligations thereunder, including the
requirement that we file annual and quarterly reports with the Securities and
Exchange Commission.  In accordance with the requirements of the
Securities and Exchange Act of 1934, this annual report contains financial
statements audited and reported on by our independent public accounting
firm.


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We have
provided our shareholders with audited financial statements of IDE as part of
the proxy solicitation materials sent to shareholders to assist them in
assessing IDE and soliciting their vote on the Merger and the Other
Proposals.  We urge you to read these financial statements and proxy
solicitation materials in their entirety.




We are
required to comply with the internal control requirements of the Sarbanes-Oxley
Act for the fiscal year ended December 31, 2008.  A target company may
not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of their internal controls.  The development of the internal
controls of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such
acquisition.




You may
read and copy any materials we file with the Securities and Exchange Commission
including, without limitation, the proxy solicitation materials relating to the
proposed Merger and the Other Proposals, at the Securities and Exchange
Commission's Public Reference Room at 100 F Street, NE, Washington, DC
20549.  You may obtain information on the operation of the Public
Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330.  The Securities and Exchange Commission maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the Securities and
Exchange Commission at http://www.sec.gov.  While
we do not have a website with available filings, we will provide, at no
additional charge, copies of these reports, proxy and information statements
upon request to our address at 153 East 53rd Street,
58th
Floor, New York, NY 10022, Attention: Michael Sloan, or by telephone to (212)
418-9600.




Item 1A.
            Risk
      Factors




You should consider the following
factors in evaluating our business and prospects, including our proposed Merger
with IDE, in addition to the other information included in this annual
report.  Because we have entered into the Merger Agreement and plan to
effect the Merger with IDE, we have presented these risk factors under four
separate sub-headings:  (i) Risks Related to our Business and Owning
our Securities; (ii) Risks Related to IDE’s Business; (iii) Risks Related to
IDE’s Industry; and (iv) Risks Related to the Merger.




Risks Related to our
Business and Owning our Securities




If
we are unable to complete the Merger with IDE, we will not have enough time to
negotiate and consummate another business combination and will be forced to
liquidate.




We must
complete our business combination on or before May 18, 2009.  However,
we cannot assure you that we will be able to complete the proposed Merger with
IDE pursuant to the terms of the Merger Agreement, or at all, or that the
current terms of the proposed Merger will not be modified prior to the time that
we complete the Merger.If
we are unable to complete our Merger with IDE, because our shareholders fail to
approve the Merger or for any other reason, it is unlikely that we will have
enough time to negotiate and consummate another business combination and we
would, therefore, be forced to liquidate our assets.  If we are forced
to liquidate our assets, the per-share liquidation distribution may be less than
the $8.00 offering price per unit in our initial public offering and may be less
than the price at which any shareholder purchased our shares of common stock in
the open market because of the expenses of our initial public offering, the
expenses relating to our negotiations and completion of the Merger and our other
general and administrative expenses.  Furthermore, there will be no
liquidating distribution with respect to our outstanding warrants, which will
expire worthless if we liquidate before we complete a business combination. We
cannot assure you that we will be able to complete the proposed Merger with IDE
pursuant to the terms of the Merger Agreement, or at all.


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If
third parties bring claims against us, the proceeds held in trust could be
reduced and the per-share liquidation price received by shareholders will be
less than $8.01.




Our
placing of funds in trust may not protect those funds from third party claims
against us.  Although we have sought, and continue to seek to have all
vendors and service providers we engage and prospective target businesses we
negotiate with execute agreements with us waiving any right, title, interest or
claim of any kind whatsoever in or to any monies held in the trust account for
the benefit of our public shareholders, they have not all executed such
agreements and we cannot assure you that they will do so in the
future.  Furthermore, there is no guarantee that, even if such
entities have executed such agreements with us, they will not seek recourse
against the trust account, or that such waivers will be enforceable or otherwise
prevent potential contracted parties from making claims against the trust
account.  Nor is there any guarantee that a court would uphold the
validity of such agreements.  Accordingly, the proceeds held in trust
could be subject to claims which could take priority over those of our public
shareholders and, as a result, the per-share liquidation price could be less
than $8.01 due to claims of such third parties.  If we liquidate
before the completion of a business combination and distribute the proceeds held
in trust to our public shareholders, Andrew Intrater, our Chairman of the Board
and Chief Executive Officer, has agreed that he will be personally liable to
ensure that the proceeds in the trust account are not reduced by the claims of
target businesses or claims of vendors or other entities that are owed money by
us for services rendered or contracted for or products sold to
us.  Because we have sought, and continue to seek to have all vendors
and prospective target businesses execute agreements with us waiving any right,
title, interest or claim of any kind whatsoever they may have in or to any
monies held in the trust account, we believe the likelihood of Mr. Intrater
having any such obligations is minimal.  Notwithstanding the
foregoing, we have questioned Mr. Intrater on his financial net worth and
reviewed his financial information and believe that he will be able to satisfy
any indemnification obligations that may arise.  However, we cannot
assure you that he will be able to satisfy those obligations.Therefore, if we
liquidate, we cannot assure you that the per-share distribution from the trust
fund will not be less than $8.01, plus interest, due to such
claims.




Furthermore,
creditors may seek to interfere with the distribution of the trust account
pursuant to federal or state creditor and bankruptcy laws, which could delay the
actual distribution of such funds or reduce the amount ultimately available for
distribution to our public shareholders.  If we are forced to file a
bankruptcy case or an involuntary bankruptcy case is filed against us which is
not dismissed, the proceeds held in the trust account could be subject to
applicable bankruptcy law, and may be included in our bankruptcy estate and
subject to the claims of third parties with priority over the claims of our
shareholders.  Any claims by creditors could cause additional delays
in the distribution of trust funds to the public shareholders beyond the time
periods required to comply with DGCL procedures and federal securities laws and
regulations.  To the extent any bankruptcy claims deplete the trust
account, we cannot assure you we will be able to return to our public
shareholders at least $8.01 per share.




Our
shareholders may be held liable for claims by third parties against us to the
extent of distributions received by them.




Our
amended and restated certificate of incorporation provides that we will continue
in existence only until May 18, 2009.  If we do not complete the
proposed Merger with IDE by such date and amend this provision in connection
therewith, pursuant to the DGCL, our corporate existence will cease except for
the purposes of winding up our affairs and liquidating.  Under
Sections 280 through 282 of the DGCL, shareholders may be held liable for claims
by third parties against a corporation to the extent of distributions received
by them in dissolution.  If the corporation complies with certain
procedures set forth in Section 280 of the DGCL intended to ensure that it makes
reasonable provision for all claims against it, including a 60-day notice period
during which any third-party claims can be brought against the corporation, a
90-day period during which the corporation may reject any claims brought, and an
additional 150-day waiting period before any liquidating distributions are made
to shareholders, any liability of shareholders with respect to a liquidating
distribution is limited to the lesser of such shareholder's pro rata share of the claim
or the amount distributed to the shareholder, and any liability of the
shareholder would be barred after the third anniversary of the
dissolution.  However, if we are forced to liquidate, it is our
intention to make liquidating distributions to our shareholders as soon as
reasonably possible after May 18, 2009 and, therefore, we do not intend to
comply with those procedures.  Because we will not be complying with
those procedures, we are required, pursuant to Section 281 of the DGCL, to adopt
a plan that will provide for our payment, based on facts known to us at such
time, of (i) all existing claims, (ii) all pending claims and (iii) all claims
that may be potentially brought against us within the subsequent 10
years.  Accordingly, we would be required to provide for any creditors
known to us at that time or those that we believe could be potentially brought
against us within the subsequent 10 years prior to distributing the funds held
in the trust to shareholders.  We cannot assure you that we will
properly assess all claims that may be potentially brought against us, if we are
forced to liquidate.  If Mr. Intrater is not able to satisfy such
claims, as described above, our shareholders could potentially be liable for any
claims to the extent of distributions received by them (but no more) and any
liability of our shareholders may extend well beyond the third anniversary of
such date.Accordingly, we cannot
assure you that third parties will not seek to recover from our shareholders
amounts owed to them by us.


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Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is
filed against us which is not dismissed, any distributions received by
shareholders in our dissolution could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a "preferential transfer" or a “fraudulent
conveyance.”  As a result, a bankruptcy court could seek to recover
all amounts received by our shareholders in our dissolution.  Because
we intend to distribute the proceeds held in the trust account to our public
shareholders promptly after May 18, 2009, this may be viewed or interpreted as
giving preference to our public shareholders over any potential creditors with
respect to access to or distributions from our assets.  Furthermore,
our board may be viewed as having breached their fiduciary duties to our
creditors and/or may have acted in bad faith, and thereby exposing itself and
our company to claims of punitive damages, by paying public shareholders from
the trust account prior to addressing the claims of creditors.  We
cannot assure you that claims will not be brought against us for these
reasons.




An
effective registration statement may not be in place when an investor desires to
exercise warrants, thus precluding such investor from being able to exercise
his, her or its warrants and causing such warrants to be practically
worthless




No
warrant will be exercisable and we will not be obligated to issue our common
shares unless at the time a holder seeks to exercise such warrant, a prospectus
relating to the common stock issuable upon exercise of the warrant is current
and the common stock has been registered with the Securities and Exchange
Commission or qualified or deemed to be exempt under the applicable state and
federal securities laws.  Under the terms of the warrant agreement, we
have agreed to use our best efforts to meet these conditions and to maintain a
current prospectus relating to the common stock issuable upon exercise of the
warrants until the expiration of the warrants.  However, we cannot
assure you that we will be able to do so, and if we do not maintain a current
prospectus related to the common stock issuable upon exercise of the warrants,
holders will be unable to exercise their warrants and we will not be required to
settle any such warrant exercise.  If the prospectus relating to the
common stock issuable upon the exercise of the warrants is not current or if the
common stock is not exempt from registration, the warrants may have no value,
the market for the warrants may be limited and the warrants may expire
worthless.




An
investor will only be able to exercise a warrant if the issuance of common stock
upon such exercise has been registered or qualified or is deemed exempt under
the securities laws of the state of residence of the holder of the
warrants.




No
warrants will be exercisable and we will not be obligated to issue common shares
underlying the warrants unless the common shares issuable upon such exercise
have been registered or qualified or deemed to be exempt from registration or
qualification under the securities laws of the state of residence of the holder
of such warrants.  Because the exemptions from qualification in
certain states for resales of warrants and for issuances of common stock by the
issuer upon exercise of a warrant may be different, a warrant may be held by a
holder in a state where an exemption is not available for issuance of common
stock upon an exercise and the holder will be precluded from exercise of the
warrant.  At the time that the warrants become exercisable (following
our completion of a business combination), we expect to either continue to be
listed on a national securities exchange, which (under current laws) would
provide an exemption from registration in every state, or we would register the
warrants in every state (or seek another exemption from registration in such
states).  Accordingly, we believe holders in every state will be able
to exercise their warrants as long as our prospectus relating to the common
stock issuable upon exercise of the warrants is current.  However, we
cannot assure you of this fact.  As a result, the warrants may be
deprived of any value, the market for the warrants may be limited and the
holders of warrants may not be able to exercise their warrants if the common
stock issuable upon such exercise is not qualified or exempt from qualification
in the jurisdiction in which the holders of the warrants
reside.


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There
is no limit on the total amount of out-of-pocket expenses that may be incurred
by our officers and directors in connection with identifying and investigating
possible target businesses and business combinations.




We will
reimburse our officers and directors for any reasonable out-of-pocket expenses
incurred by them in connection with identifying and investigating possible
target businesses and business combinations.  There is no limit on the
total amount of out-of-pocket expenses reimbursable by us; provided that members
of our management team will not receive reimbursement for any out-of-pocket
expenses incurred by them to the extent that such expenses exceed the amount
held outside of the trust account and interest income of up to $1,750,000 on the
trust account balance that may be released to us to fund our expenses relating
to investigating and selecting a target business and other working capital
requirements, unless a business combination is
consummated.  Additionally, there will be no review of the
reasonableness of the expenses other than by our audit committee and, in some
cases, by our board of directors, or if such reimbursement is challenged, by a
court of competent jurisdiction.  As out-of-pocket expenses incurred
by our officers and directors will not be subject to any dollar limit or any
review of the reasonableness of such expenses other than by our audit committee
or our board of directors, the aggregate business expenses incurred by our
officers and directors in connection with identifying and investigating possible
target businesses may be greater than if such expenses were subject to a more
extensive review, which would reduce the amount of working capital available to
us for a business combination.  Further, if such out-of-pocket
expenses exceed the available funds held outside of the trust and the interest
income of up to $1,750,000 earned on the funds held in the trust account, our
members of management will not be reimbursed for such excess unless we
consummate a business combination.  As described in more detail below,
this may create a conflict of interest for members of our management in
determining whether a particular target business is appropriate for a business
combination and in the public shareholders' best interest.




We
may issue additional equity securities which may dilute your interest in
us.




In order
to expand our business, we may consider offering and issuing additional equity
and equity-linked securities.  Holders of our securities may
experience a dilution in the net tangible book value per share held by them if
this occurs.  The number of shares that we may issue for cash without
shareholder approval will be limited by the rules of the exchange on which our
securities are listed.  However, there are generally exceptions which
allow companies to issue a limited number of equity securities which would
dilute your ownership.




The
value of our common stock, warrants and units may be adversely affected by
market volatility.




Even if
an active trading market develops, the market price of our shares, warrants and
units may be highly volatile and could be subject to wide
fluctuations.  In addition, the trading volume in our shares, warrants
and units may fluctuate and cause significant price variations to
occur.  If the market prices of our shares, warrants and units decline
significantly, you may be unable to resell your shares, warrants and units at or
above your purchase price, if at all.  We cannot assure you that the
market price of our shares, warrants and units will not fluctuate or decline
significantly in the future.  Some of the factors that could
negatively affect the price of our shares, warrants and units or result in
fluctuations in the price or trading volume of our shares and warrants
include:




·
            variations
      in our quarterly operating results or
dividends;




·
            failure
      to meet analysts’ earnings estimates or failure to meet, or the lowering
      of, our own earnings guidance;




·
            departure
      of key personnel;




·
            adverse
      market reaction to any indebtedness we may incur or securities we may
      issue in the future;




·
            actions
      by shareholders;




·
            changes
      in market valuations of similar
companies;




·
            speculation
      in the press or investment
community;




·
            changes
      or proposed changes in laws or regulations or differing interpretations
      thereof affecting our business or enforcement of these laws and
      regulations, or announcements relating to these matters;
    and




·
            general
      market and economic conditions.


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Failure
of our internal control over financial reporting could harm our business and
financial results.




We are
obligated to establish and maintain adequate internal control over financial
reporting. Internal control over financial reporting is a process to provide
reasonable assurance regarding the reliability of financial reporting in
accordance with U.S. generally accepted accounting principles, which we refer to
as “GAAP”.  Internal control over financial reporting includes
maintaining records that in reasonable detail accurately and fairly reflect our
transactions and dispositions of assets, providing reasonable assurance that
transactions are recorded as necessary for preparation of the financial
statements in accordance with GAAP, providing reasonable assurance that our
receipts and expenditures are made only in accordance with management
authorization and providing reasonable assurance that unauthorized acquisition,
use or disposition of our assets that could have a material effect on our
financial statements would be prevented or detected on a timely
basis.  IDE’s growth and entry into new markets will place significant
additional pressure on our system of internal control over financial
reporting.  Any failure to maintain an effective system of internal
control over financial reporting could limit our ability to report financial
results accurately and timely or to detect and prevent fraud, which in turn
would harm our business and financial results.




An
impairment of goodwill could reduce our earnings.




We may
record goodwill on our consolidated balance sheet to the extent we consummate
acquisitions after the Merger.  Goodwill is recorded when the purchase
price of a business exceeds the fair market value of the tangible and separately
measurable intangible net assets.  GAAP requires us to test goodwill
for impairment on an annual basis or when events or circumstances occur
indicating that goodwill might be impaired.  If we were to determine
that any of our remaining balance of goodwill was impaired, we would record an
immediate charge to earnings with a corresponding reduction in shareholders’
equity and increase in balance sheet leverage as measured by debt to total
capitalization.




We
may choose to redeem our outstanding warrants at a time that is disadvantageous
to warrant holders.




If we
seek to redeem our warrants, the holders of our warrants could be forced to (i)
exercise the warrants and pay the exercise price at a time when it may be
disadvantageous for them to do so, (ii) sell their warrants at the then current
market price when they might otherwise wish to hold the warrants or (iii) accept
the nominal redemption price which, at the time the warrants are called for
redemption, is likely to be substantially less than the market value of the
warrants.  We expect most purchasers of warrants will hold their
securities through one or more intermediaries and consequently you may not
receive notice directly from us that the warrants are being
redeemed.  If you hold our warrants and fail to receive notice of
redemption from a third party and your warrants are redeemed for nominal value,
you will not have recourse against us.




Persons
who were shareholders prior to our initial public offering, including our
officers and directors, control a substantial interest in us and thus may
influence certain actions requiring shareholder vote.




Persons
who were shareholders prior to our initial public offering (including all of our
officers and directors) collectively own 3,125,000 shares of our common stock,
representing an aggregate of approximately 17.9% of the outstanding shares of
our common stock.  Our officers and directors, or their designees,
also purchased 3,650,000 warrants directly from us concurrently with the closing
of our initial public offering at a price per warrant of $1.00, or an aggregate
of $3,650,000.  The purchase of these insider warrants, together with
any other acquisitions of our shares (or warrants which are subsequently
exercised), could allow the persons who were shareholders prior to our initial
public offering to influence the outcome of matters requiring shareholder
approval, including the election of directors, approval of the Merger and the
Other Proposals and approval of significant corporate transactions after
completion of the Merger.  These warrants cannot be sold until 90 days
after consummation of the Merger; however, our Founders may be able to transfer
such warrants in certain limited circumstances such as by will in the event of
their death, but the transferees receiving such warrants will be subject to the
same sale restrictions imposed on our Founders and their designees.




The
insider warrants are non-redeemable provided they are held by the initial
purchasers or their permitted transferees, which could provide such purchasers
the ability to realize a larger gain than the holders of our publicly-held
warrants.




The
warrants included in the units that we sold in our initial public offering may
be called for redemption at any time after the warrants become exercisable in
whole and not in part, at a price of $0.01 per warrant upon 90 days’ notice
after the warrants become exercisable, only in the event that the last sale
price of the common stock is at least $11.50 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 to warrant holders.


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As a
result of the insider warrants not being subject to the redemption features to
which the publicly-held warrants are subject, holders of the insider warrants,
or their permitted transferees, could realize a larger gain than holders of the
warrants included in the units that we sold in our initial public
offering.




The
NYSEAlternextUS may delist our securities from trading on its exchange which
could limit investors’ ability to make transactions in our securities and
subject us to additional trading restrictions.




Our
common stock and warrants are listed on the NYSEAlternextUS, a national
securities exchange.  On February 10, 2009, we received notification
from the NYSEAlternextUS that we did not hold an annual meeting of stockholders
during 2008 in accordance with Section 704 of the NYSEAlternextUS Company Guide
(“Section 704”). The NYSEAlternextUS has requested us to submit a plan of
compliance by March 10, 2009 (the “Plan”) in order for us to be in compliance
with Section 704 by August 11, 2009. We intend to submit a Plan advising the
NYSEAlternextUS that the upcoming meeting of stockholders to vote on the merger
will also serve as our annual meeting of stockholders, at which a class of
directors will be subject to election. If this Plan is accepted by the
NYSEAlternextUS, we expect that we will be able to continue our listing on the
Exchange. If this Plan is not accepted, we could be subject to delisting.We cannot assure you that
our securities will continue to be listed on the NYSEAlternextUS, or on any
other national securities exchange in the future.  If the
NYSEAlternextUS delists our securities from trading on its exchange and we are
unable to list our securities on another exchange, or to have them quoted on
NASDAQ, our securities could be quoted on the OTC Bulletin Board or “pink
sheets”.  As a result, the holders of our securities could face
significant material adverse consequences including, but not limited to, the
following:




·
            a
      limited availability of market quotations for our
    securities;




·
            a
      determination that our common stock is a “penny stock” which will require
      brokers trading in our common stock to adhere to more stringent rules and
      possibly result in a reduced level of trading activity in the secondary
      trading market;




·
            a
      limited amount of news coverage;




·
            a
      limited amount of financial analyst
coverage;




·
            a
      decreased ability to obtain new financing or issue new securities on
      favorable terms in the future;
and/or




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




The
National Securities Markets Improvement Act of 1996, which is a federal statute,
prevents or preempts the states from regulating the sale of certain securities,
which are referred to as “covered securities.”  Since we are listed on
the NYSEAlternextUS, our securities are covered securities.  Although
the states are preempted from regulating the sale of our securities, the federal
statute does allow the states to investigate a company if there is a suspicion
of fraud. If there is a finding of fraudulent activity the states may regulate
or bar the sale of covered securities in a particular case.  While we
are not aware of a state having used these powers to prohibit or restrict the
sale of securities issued by blank check companies generally, certain state
securities regulators view blank check companies unfavorably and might use these
powers, or threaten to use these powers, to hinder the sale of securities of
blank check companies in their states.




Risks Related to IDE’s
Business




IDE
has a limited operating history and, therefore, it may be difficult for you to
evaluate IDE’s business.




IDE’s
operating history is limited, so it may be difficult for you to evaluate IDE’s
business in making a decision regarding the ownership of our
securities.  IDE was incorporated in January 2008 as a holding company
and commenced operations in its current lines of business in December 2008 when
it acquired IEC and ARS.  IEC is a company that commenced operations
through a predecessor company in 1991.  ARS is a company that
commenced operations in 2005.  In addition, IDE’s subsidiaries have
been engaged in the manufacture and refurbishment of drilling rigs since only
2006 and their focus has been primarily on rig refurbishment.  To
date, IDE has constructed 28 rigs, two of which were complete rigs and 26 of
which were rig refurbishments.  IDE is still in the early stages of
its development, which makes the evaluation of IDE’s business operations and
prospects difficult.  IDE is subject to the risks and difficulties
frequently encountered by early stage companies.  These risks and
difficulties, as they apply to IDE in particular, include:


23
 Table of Contents


·
            potential
      fluctuations in operating results and uncertain growth
    rates;




·
            limited
      history of IDE selling fully integrated rig
  products;




·
            concentration
      of IDE’s revenues in a limited number of predominantly international
      markets;




·
            availability
      of candidate rigs that require
refurbishment;




·
            IDE’s
      dependence on the oil and gas industry for all of its
    revenue;




·
            IDE’s
      need to manage rapidly expanding operations;
and




·
            IDE’s
      need to attract, train and retain qualified
  personnel.




IDE’s
international business exposes it to instability and changes in economic and
political conditions and other risks inherent to international business, which
could have a material adverse effect on its operations or financial
condition.




IDE has
significant international business, with approximately 12.6%, 41.7% and 81.0% of
IDE’s revenues derived from foreign sales in each of 2006, 2007 and 2008,
respectively, based on the location to which IDE’s products are shipped or IDE
has been informed will be shipped or at which IDE’s services are
performed.  IDE markets its products and services in all of the
significant oil and gas producing areas in the world and is, therefore, subject
to the risks customarily attendant to international operations and investments
in foreign countries. Risks associated with IDE’s international operations
include:




·
            volatility
      in general economic, social and political
  conditions;




·
            terrorist
      acts, war and civil disturbances;




·
            expropriation
      or nationalization of assets;




·
            renegotiation
      or nullification of existing
contracts;




·
            foreign
      taxation, including changes in law or interpretation of existing
      law;




·
            assaults
      on property or personnel;




·
            restrictive
      action by local governments;




·
            foreign
      and domestic monetary policies;




·
            limitations
      on repatriation of earnings;




·
            travel
      limitations or operational problems caused by public health threats;
      and




·
            changes
      in currency exchange rates.




Any of
these risks could have an adverse effect on the demand for IDE’s products and
services in some locations.  To date, IDE has not experienced any
significant problems in foreign countries arising from local government actions
or political instability, but there is no assurance that such problems will not
arise in the future. Interruption of IDE’s international operations could have a
material adverse effect on IDE’s overall operations.


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 Table of Contents


IDE
does business in international jurisdictions whose regulatory environments and
compliance regimes differ from those in the United States. IDE’s business may
suffer because its efforts to comply with United States laws and regulations
could restrict its ability to do business in international jurisdictions,
relative to IDE’s competitors who are not subject to United States laws and
regulations.




IDE’s
international business operations include projects in countries where
governmental corruption has been known to exist and where IDE’s competitors who
are not subject to United States laws and regulations, such as the U.S. Foreign
Corrupt Practices Act, can gain competitive advantages over IDE by securing
business awards, licenses or other preferential treatment in those jurisdictions
using methods that United States law and regulations prohibit IDE from
using.  For example, IDE’s non-U.S. competitors may not be subject to
the anti-bribery restrictions of the U.S. Foreign Corrupt Practices Act, which
make it illegal to give anything of value to foreign officials or employees or
agents of nationally owned oil companies in order to obtain or retain any
business or other advantage.  IDE may be subject to competitive
disadvantages to the extent that IDE’s competitors are able to secure business,
licenses or other preferential treatment by making payments to government
officials and others in positions of influence.




While IDE
and its subsidiaries are committed to conducting business in a legal and ethical
manner, there is a risk of violating the U.S. Foreign Corrupt Practices Act or
other applicable anti-corruption regulations that generally prohibit the making
of improper payments to foreign officials for the purpose of obtaining or
retaining business.  Violations of these laws could result in monetary
penalties against IDE or its subsidiaries and could damage IDE’s reputation and,
therefore, its ability to do business.




IDE’s
inability to deliver its backlog on time could affect its future sales and
profitability and its relationships with its customers.




At
December 31, 2008, IDE’s backlog was approximately $35.5 million. The ability to
meet customer delivery schedules for this backlog is dependent on a number of
factors including, but not limited to:




·
            access
      to the raw materials required for
production;




·
            an
      adequately trained and capable
workforce;




·
            project
      engineering expertise for certain large
  projects;




·
            sufficient
      manufacturing plant capacity; and




·
            appropriate
      planning and scheduling of manufacturing and personnel
      resources.




IDE’s
failure to deliver in accordance with customer expectations may result in damage
to existing customer relationships and result in the loss of future
business.  Failure to deliver backlog in accordance with expectations
could negatively impact its financial performance. In addition, the cancellation
by IDE’s customers of existing backlog orders, as a result of an economic
downturn or otherwise, could adversely affect IDE’s business.




If
IDE is not able to manage its anticipated future growth successfully, IDE may
not be able to maintain or increase its revenues and profitability, and IDE’s
business reputation could be materially adversely affected.




Managing
its growth may be one of IDE’s greatest challenges.  Between 2004 and
2008, IDE’s annual revenue increased from $10.9 million to $177.9
million.  During this same period, IDE’s total worldwide headcount
increased from 48 employees at January 1, 2004 to 528 employees (including
contract employees) at December 31, 2008.




Past and
future growth will continue to place significant demands on IDE’s management,
financial and accounting systems, information technology systems, real estate
and other components of IDE’s infrastructure.  To meet IDE’s growth
and related demands, IDE continues to invest in enhanced or new systems,
including enhancements to its accounting, billing and information technology
systems.  IDE may acquire or lease additional real estate to increase
the number of rigs pads it has available.  In addition, IDE may also
need to hire additional personnel, particularly in IDE’s sales, marketing,
professional services, finance, administrative and information technology
groups.  IDE’s success will depend in part upon the activities of
IDE’s current management team, including IDE’s Chief Executive Officer and IDE’s
Chief Financial Officer, to effectively manage this growth and transition to
being part of a publicly traded company. IDE’s management will be required to
devote considerable time to this process, which will reduce the time its
management will have to implement its business and expansion plans.




If IDE
does not correctly anticipate its needs as it grows, if IDE fails to
successfully implement its enhanced or new systems and other infrastructure
improvements effectively and timely or if IDE encounters delays or unexpected
costs in hiring, integrating, training and guiding its new employees, IDE may be
unable to maintain or increase its revenues and profitability and its business
reputation could be materially adversely affected.  Furthermore, if
IDE is unable to effectively manage its growth, IDE’s expenses may increase more
than expected, its revenues could decline or grow more slowly than expected and
IDE may be unable to implement its business strategy.


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 Table of Contents


If
IDE does not develop and commercialize new competitive products and expand IDE’s
service offerings, IDE’s revenues may decline.




To remain
competitive in the market for oil field products and services, IDE must continue
to develop and commercialize new products and expand IDE’s service
offerings.  If IDE is not able to develop commercially competitive
products in a timely manner or expand its service offerings in response to
industry demands, IDE’s business and revenues will be adversely
affected.  IDE’s future ability to develop new products and expand
services depends on its ability to:




·
            design
      and commercially produce products that meet the needs of its
      customers;




·
            incorporate
      and implement services that meet the needs of its
    customers;




·
            expand
      into new facilities and expand existing
  infrastructure;




·
            successfully
      market new products and services;
and




·
            protect
      its proprietary designs from its
competitors.




IDE may
encounter resource constraints or technical or other difficulties that could
delay introduction of new products and services.  IDE’s competitors
may introduce new products and services before IDE does and achieve a
competitive advantage.  Additionally, the time and expense invested in
product development may not result in commercial products or provide
revenues.  Moreover, IDE may experience operating losses after new
products are introduced and commercialized because of high start-up costs,
unexpected manufacturing costs or problems, lack of demand, or increased costs,
including materials, labor and overhead.




IDE
plans to pursue acquisitions and joint ventures that by their nature present
risks and that may not be successful.




Acquisition
Strategy.  IDE’s growth strategy includes the acquisition of,
and formation of joint ventures with, additional manufacturers of drilling rigs,
oilfield products and providers of services to the oil and gas industry, both
domestically and internationally.   IDE’s ability to accomplish
its acquisition strategy will depend upon a number of factors, including, among
others, its ability to:




·
            identify
      acceptable acquisition and joint venture
  candidates;




·
            consummate
      the acquisition of or joint venture with such businesses on terms that IDE
      finds acceptable;




·
            retain,
      hire and train professional management and sales personnel at each such
      business; and




·
            promptly
      and profitably integrate the acquired business operations into IDE’s
      then-existing business.




We cannot
assure you that IDE will be successful with respect to such factors or that any
acquired operations will be profitable or be successfully integrated into IDE’s
then-existing business without substantial costs, delays or other
problems.  In addition, to the extent that consolidation becomes more
prevalent in the oilfield products and services industry, the prices for
attractive acquisition candidates may increase.  In any event, we
cannot assure you that businesses acquired in the future will achieve sales and
profitability levels that justify the investments IDE makes
therein.  Acquisitions also could result in the accumulation of
substantial goodwill and intangible assets, which may result in substantial
impairment charges that could reduce IDE’s reported earnings.




Capital Requirements of
Acquisitions.  Acquiring additional businesses in the oil and
gas products and services industries will require additional capital and may
have a significant impact on IDE’s financial position.  If the Merger
is completed, IDE may finance future acquisitions by using our common stock for
all or a portion of the consideration to be paid.  In the event our
common stock does not maintain sufficient value, or potential acquisition
candidates are unwilling to accept our common stock as consideration for the
sale of their businesses, IDE may be required to utilize more of its cash
resources, if available, in order to continue its acquisition
program.  If IDE does not have sufficient cash resources, IDE’s growth
could be limited unless it is able to obtain capital through the issuance of
additional debt or the issuance of one or more series or classes of its equity
securities, which could have a dilutive effect on its then-outstanding capital
stock.  IDE does not currently have a line of credit or other lending
arrangement with a lending financial institution that can be utilized for
acquisitions, and we cannot assure you that IDE will be able to obtain such an
arrangement on terms it finds acceptable or sufficient for its needs, if at all,
should it determine to do so.


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 Table of Contents


Environmental Risks Associated with
Acquisitions.Although IDE intends to perform a detailed
investigation of each business that IDE acquires, there may nevertheless be
liabilities that IDE fails or is unable to discover, including liabilities
arising from non-compliance with environmental laws by prior owners, and for
which IDE, as a successor owner, may be responsible.  IDE will seek to
minimize the impact of these liabilities by obtaining indemnities and warranties
from the seller that may be supported by deferring payment of a portion of the
purchase price.  However, these indemnities and warranties, if
obtained, may not fully cover the liabilities due to their limited scope, amount
or duration, the financial limitations of the indemnitor or warrantor, or other
reasons.




ARS’s
and IEC’s failure to comply with restrictive covenants under their credit
facilities could trigger prepayment obligations.




IDE’s or
its subsidiaries’ failure to comply with the restrictive covenants under its
credit facilities in the future could result in an event of default under such
facilities, which, if not cured or waived, would give Prospect the right to
declare the debt due and payable.  If this occurs and IDE or its
subsidiaries are forced to refinance their borrowings, IDE’s results of
operations and financial condition could be adversely affected by increased
debt, costs and interest rates.




IDE
may lose money on fixed-price contracts.




A
significant portion of IDE’s business consists of designing, manufacturing,
selling and installing equipment for major projects pursuant to competitive
bids, and is performed on a fixed-price basis.  Under these contracts,
IDE is typically responsible for all cost overruns, other than the amount of any
cost overruns resulting from requested changes in order
specifications.  IDE’s actual costs and any gross profit realized on
these fixed-price contracts will often vary from the estimated amounts on which
these contracts were originally based.  This may occur for various
reasons, including:




·
            errors
      in estimates or bidding;




·
            changes
      in availability and cost of labor and materials;
  and




·
            variations
      in productivity from IDE’s original
estimates.




These
variations and the risks inherent in IDE’s projects may result in reduced
profitability or losses on projects.  Depending on the size of a
project, variations from estimated contract performance could have a material
adverse impact on IDE’s (and, following the Merger, our) operating
results.




IDE
may experience fluctuations in its quarterly operating results.




IDE’s
quarterly operating results may fluctuate significantly in the
future.  Significant annual and quarterly fluctuations in IDE’s
results of operations may be caused by, among other factors:




·
            the
      volume of revenues IDE has
generated;




·
            the
      timing of IDE’s announcements for the distribution of new products, and
      any such announcements by IDE’s
competitors;




·
            the
      acceptance of the products IDE manufactures and sells in the oil and gas
      equipment and services marketplace;
and




·
            general
      economic conditions.




We cannot
assure you that the level of revenues and profits, if any, achieved by IDE in
any particular fiscal period will not be significantly lower than in other,
including comparable, fiscal periods.  IDE believes quarter-to-quarter
comparisons of its revenues and operating results are not necessarily meaningful
and should not be relied on as indicators of future
performance.  Operating expenses are based on management’s
expectations of future revenues and are relatively fixed in the short
term.  IDE plans to increase operating expenses to:




·
            expand
      its product line;


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 Table of Contents


·
            expand
      its sales and marketing operations;




·
            increase
      its services and support capabilities;
and




·
            improve
      its operational and financial
systems.




If IDE’s
revenues do not increase along with these expenses, IDE’s business could be
seriously harmed and net profits, if any, in a given quarter may be smaller than
expected.  This could cause a reduction in the price of our common
stock following the Merger.




IDE
derives a significant portion of its revenues from a small number of customers
and a loss of any of its major customers may cause significant declines in IDE’s
revenues.




IDE
derives a significant portion of its revenues from a small number of customers,
and IDE may be unable to maintain and expand IDE’s current customer
relationships.  For 2006, 2007 and 2008, IDE’s four largest customers
in each such period represented approximately 58%, 71% and 75% of IDE’s total
revenues, respectively, while IDE’s largest customer represented approximately
28%, 53% and 40% of its total revenues, respectively.  IDE’s customers
that represented 10% or more of IDE’s consolidated revenues were Mountain
Drilling Company, Nabors Industries, Inc. and Pioneer Drilling Company for 2006,
Nabors Industries, Inc. for 2007 and Nabors Industries, Inc. and Petrex S.A. for
2008.  While IDE expects to expand its client base in the future, in
the near term IDE expects it will continue to depend on a relatively small
number of customers for a significant portion of its sales volume and
revenues.  If IDE loses any of its major customers for any reason,
including, for example, if IDE’s reputation declines, a customer materially
reduces its orders from them, IDE’s relationship with one or more of its major
customers deteriorates, or a major customer becomes insolvent or otherwise
unable to pay for IDE’s products, IDE’s business and results of operations may
be materially and adversely affected.




IDE’s
ability to finance its business activities will require it to generate
substantial cash flow.




IDE’s
business activities require substantial capital.  IDE intends to
finance its operations and growth in the future through cash flows from
operations (including customer deposits), cash on the balance sheet, proceeds
from warrant exercises, the incurrence of additional indebtedness and/or the
issuance of additional equity securities.  IDE cannot be sure that its
business will continue to generate cash flow at or about current
levels.




If IDE is
unable to generate sufficient cash to fund its business and service its debt,
IDE may have to obtain additional financing through the issuance of debt and/or
equity.  IDE cannot be sure that any additional financing will be
available to it on acceptable terms.  Issuing equity securities to
satisfy IDE’s financing requirements could cause substantial dilution to IDE’s
existing shareholders.




If IDE’s
revenues were to decrease due to lower demand for its products and services as a
result of lower oil and nature gas prices or for other reasons, and if IDE could
not obtain capital through its revolving credit facility or otherwise, IDE’s
ability to operate and grow its business could be materially adversely
affected.




IDE
has in the past borrowed money to make a one-time distribution, and may in the
future borrow money under a new loan facility to fund its operations and growth,
which exposes IDE to certain risks that may materially impact its
operations.




As of
December 31, 2008, IDE had $36.2 million outstanding under credit facilities
with Prospect Capital Corporation (“Prospect”).  The proceeds were
used to make a one-time distribution to the members and partners of IEC and ARS
and to pay fees and expenses related to closing the loan.  This
indebtedness matures on November 20, 2012 and is secured and guaranteed by ARS
and IEC.  The annual cost to service this indebtedness is, based upon
current rates, approximately $5.2 million of cash interest costs and
approximately $3.8 million of annual required principal
repayments.  IDE is also required to make certain prepayments of this
indebtedness in the event that IDE issues or incurs additional indebtedness or
sells specified assets.  Unless waived by Prospect, consummation of
the Merger would be an event of default which would give Prospect the right to
declare the debt due and payable.  If this is the case, we will
finance our activities using cash on our balance sheet and/or seek alternative
financing for the combined company.  We may also in the future seek to
borrow money under a new loan facility to fund our operations and
growth.  Given the recent credit crisis, there is no assurance that we
will be able to obtain such financing, or, if obtained, that the terms of such
financing will be as favorable to us.


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 Table of Contents


IDE’s
ability to meet its debt obligations and to reduce its level of debt depends on
its future performance, which is affected by general economic conditions and
financial, business and other factors.  Many of these factors are
beyond IDE’s control.  IDE’s level of debt affects its operations in
several important ways, including the following:




·
            a
      significant portion of IDE’s cash flow from operations must be used to pay
      interest on borrowings and is therefore not available to re-invest in
      IDE’s business;




·
            the
      covenants contained in the agreements governing IDE’s debt limit its
      ability to borrow additional funds, pay dividends, make capital
      expenditures, dispose of assets and issue shares of preferred stock and
      otherwise may affect IDE’s flexibility in planning for, and reacting to,
      changes in business conditions;




·
            a
      high level of debt may impair IDE’s ability to obtain additional financing
      in the future for working capital, capital expenditures, acquisitions or
      general corporate or other
purposes;




·
            a
      highly-leveraged financial position would make IDE more vulnerable to
      economic downturns and could limit its ability to withstand competitive
      pressures; and




·
            any
      debt that IDE incurs under its term credit facility will be at variable
      rates, which makes it vulnerable to increases in interest
      rates.




IDE
may be required to recognize a charge against current earnings because of
percentage-of-completion accounting.




Revenues
and profits on long-term project contracts are recognized on a
percentage-of-completion method based on the ratio of costs incurred to the
total estimated costs.  Accordingly, purchase order price and cost
estimates are reviewed periodically as the work progresses, and adjustments
proportionate to the percentage complete are reflected in the period when such
estimates are revised.  To the extent that these adjustments result in
a reduction or elimination of previously reported profits, IDE would have to
recognize a charge against current earnings, which could be significant
depending on the size of the project or the adjustment.




IDE’s
businesses and IDE’s customers’ businesses are subject to environmental laws and
regulations that may increase IDE’s costs, limit the demand for IDE’s products
and services or restrict IDE’s operations.




IDE’s
operations and the operations of IDE’s customers are also subject to federal,
state and local and foreign laws and regulations relating to the protection of
the environment.  These environmental laws and regulations affect the
products and services IDE designs, markets and sells, as well as the facilities
where IDE manufactures its products.  In addition, environmental laws
and regulations could limit IDE’s customers’ exploration and production
activities.  IDE is required to invest financial and managerial
resources to comply with environmental laws and regulations and anticipates that
it will continue to be required to do so in the future.  These laws
and regulations change frequently, which makes it impossible for IDE to predict
its cost or impact on its future operations.  The modification of
existing laws or regulations or the adoption of new laws or regulations imposing
more stringent environmental restrictions could adversely affect IDE’s
operations.




These
laws may provide for “strict liability” for damages to natural resources or
threats to public health and safety, rendering a party liable for environmental
damage without regard to negligence or fault on the part of such
party.  Sanctions for noncompliance may include revocation of permits,
corrective action orders, administrative or civil penalties, and criminal
prosecution.  Some environmental laws and regulations provide for
joint and several strict liability for remediation of spills and releases of
hazardous substances.  In addition, IDE may be subject to claims
alleging personal injury or property damage as a result of alleged exposure to
hazardous substances, as well as damage to natural resources.  These
laws and regulations also may expose IDE to liability for the conduct of or
conditions caused by others, or for IDE’s acts that were in compliance with all
applicable laws and regulations at the time such acts were
performed.  Any of these laws and regulations could result in claims,
fines or expenditures that could be material to IDE’s earnings, financial
condition or cash flow.


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 Table of Contents


Uninsured
or underinsured claims or litigation or an increase in IDE’s insurance premiums
could adversely impact IDE’s results.




IDE
maintains insurance to cover potential claims and losses, including claims for
personal injury or death resulting from the use of IDE’s
products.  IDE carries comprehensive insurance, including business
interruption insurance, subject to deductibles, at levels IDE believes are
sufficient to cover existing and future claims.  It is possible an
unexpected judgment could be rendered against IDE in cases in which IDE could be
uninsured or underinsured and beyond the amounts IDE currently has reserved or
anticipate incurring.  Significant increases in the cost of insurance
and more restrictive coverage may have an adverse impact on IDE’s results of
operations.  In addition, IDE may not be able to maintain adequate
insurance coverage at rates IDE believes are reasonable.




IDE
could be subject to substantial liability claims that could harm its financial
condition.




IDE’s
operations involve hazardous activities that involve an extraordinarily high
degree of risk.  Hazardous operations are subject to accidents
resulting in personal injury and the loss of life or property, environmental
mishaps and mechanical failures, and litigation arising from such events may
result in IDE being named a defendant in lawsuits asserting large
claims.  IDE may be held liable in certain circumstances, including if
IDE fails to exercise reasonable care in connection with its activities, and IDE
may also be liable for injuries to agents, employees and contractors who are
acting within the course and scope of their duties.  IDE currently
maintains liability insurance coverage with aggregate policy limits that IDE
believes to be adequate for its operations.  However:




·
            IDE
      may not be able to continue to obtain insurance on commercially reasonable
      terms;




·
            IDE
      may be faced with types of liabilities that will not be covered by IDE’s
      insurance, such as damages from environmental contamination;
      and




·
            the
      dollar amount of any liabilities may exceed IDE’s policy
      limits.




A
successful claim for which IDE is not fully insured could have a material
adverse effect on IDE.  We cannot assure you that IDE will not be
subject to future claims in excess of the amount of insurance coverage that IDE
deems appropriate to maintain.




IDE
may be faced with product liability claims.




Most of
IDE’s products are used in hazardous drilling and production applications in
which an accident or a failure of a product can cause personal injury, loss of
life, damage to property, equipment or the environment or suspension of
operations.  Despite IDE’s quality assurance measures, defects may
occur in IDE’s products.  Any defects could give rise to liability for
damages, including consequential damages, and could impair the market’s
acceptance of IDE’s products.  IDE generally attempts to contractually
disclaim responsibility for consequential damages, but IDE’s disclaimers may not
be effective.  IDE carries product liability insurance as a part of
IDE’s commercial general liability coverage of $2 million per occurrence with a
$5 million general aggregate annual limit.  Additional coverage may
also be available under IDE’s umbrella policy.  IDE’s insurance may
not adequately cover IDE’s costs arising from defects in IDE’s products or
otherwise.




The
loss of the services of one or more of IDE’s executive officers or key employees
could harm IDE’s business.  IDE is a small and rapidly-growing company
that relies upon a few key employees to ensure its business operates
efficiently.




IDE’s
success will be dependent to a significant degree upon the business expertise
and continued contributions of IDE’s senior management team, including in
particular the efforts of Stephen Cope, IDE’s Chairman, Chief Executive Officer,
President and Secretary.  Because IDE is a small and rapidly growing
company, IDE believes the loss of key personnel would be more disruptive to it
than it would be to a large, multinational manufacturer.  While IDE
currently has employment agreements with its senior executives, many of its
employees could with little or no prior notice, voluntarily terminate their
employment with IDE at any time.  IDE does not maintain key person
life insurance on the life of any of its employees.  The loss of the
services of Mr. Cope or any of IDE’s other senior officers, or an inability to
attract and retain other qualified personnel, may adversely affect IDE’s
business and prospects.


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In
addition, IDE’s senior management team may not be able to successfully manage
IDE’s company as it grows larger.  If they are unable to handle these
increased responsibilities and IDE is unable to identify, hire and integrate new
personnel, IDE’s business, results of operations and financial condition would
suffer.  Even if IDE is able to identify new personnel, the
integration of new personnel into IDE’s business will inevitably occur over an
extended period of time.  During that time, the lack of sufficient
senior management personnel would cause IDE’s results of operations to
suffer.




Being
a public company could place a strain on IDE’s management.




The
requirements associated with being part of a public company could place a strain
on IDE’s senior management team.  IDE may hire additional persons to
assist with investor relations, or outsource this function, either of which will
increase our costs.  Further, management’s attention may be diverted
from other business concerns, which could adversely affect our
business.  IDE has made, and will continue to make, changes to IDE’s
corporate governance standards, disclosure controls and financial reporting and
accounting systems to meet its reporting obligations.  However, the
measures IDE takes may not be sufficient to satisfy our obligations as a public
company.  Any failure to provide reliable financial reports or prevent
fraud would harm our business and operating results and cause us to fail to meet
our reporting obligations which would cause our stock price to
suffer.




Risks Related to IDE’s
Industry




Recent
worldwide financial and credit crisis could have a negative effect on our
operating results and financial condition.




Recent
events have paralyzed credit markets and resulted in a significant downturn in
the global banking industry.  Most economists foresee a slow and
uncertain recovery of credit markets, and an emerging global
recession.  A slowdown in worldwide economic activity has reduced
demand for energy and resulted in lower oil and natural gas
prices.  Any prolonged reduction in oil and natural gas prices may
reduce oil and natural gas drilling and production activity from certain
customers and may result in a corresponding decline from these customers in the
demand for IDE’s products and services, which could adversely impact IDE’s (and,
following the Merger, our) operating results and financial
condition.




Furthermore,
many of IDE’s customers and competitors who rely on the credit markets may not
have access to financing for their oil and natural gas drilling and production
activity.  If the recent crisis reduces the availability of credit to
certain of IDE’s customers, they may reduce their drilling and production
expenditures, thereby decreasing demand for IDE’s products and
services.  Any such reduction in spending by IDE’s customers could
adversely impact IDE’s (and, following the Merger, our) operating results and
financial condition.




Demand
for IDE’s products and services depends on oil and natural gas industry activity
and expenditure levels that are directly affected by trends in oil and natural
gas prices.




Demand
for IDE’s products and services is particularly sensitive to the level of
exploration, development and production activity of, and the corresponding
capital spending by, oil and natural gas companies, including national oil
companies.  Prices for oil and natural gas are subject to large
fluctuations in response to relatively minor changes in the supply of, and
demand for, oil and natural gas, market uncertainty and speculation, and a
variety of other factors that are beyond IDE’s control.  Any prolonged
reduction in oil and natural gas prices may depress the immediate levels of
exploration, development and production activity.  Perceptions of
longer-term lower oil and natural gas prices by oil and gas companies may result
in the reduction or deferral of major expenditures given the long-term nature of
many large-scale development projects.  Lower levels of activity may
result in a corresponding decline in the demand for IDE’s products and services
that could have a material adverse effect on IDE’s revenue and
profitability.  Many factors affect the supply and demand for oil and
natural gas and therefore influence the demand for IDE’s products and services,
including:




·
            the
      level of production;




·
            the
      levels of oil and natural gas
inventories;




·
            domestic
      and worldwide demand for oil and natural
gas;




·
            the
      expected cost of developing new
reserves;




·
            the
      actual cost of finding and producing oil and natural
  gas;


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·
            the
      availability of attractive oil and gas field prospects, which may be
      affected by governmental actions and regulations or environmental
      activists;




·
            the
      availability of transportation infrastructure and refining
      capacity;




·
            the
      level of drilling activity;




·
            global
      weather conditions and natural
disasters;




·
            worldwide
      political, military and economic conditions and economic activity,
      including growth in underdeveloped
countries;




·
            national
      government political objectives, including the ability of the Organization
      of Petroleum Exporting Countries (OPEC) to set and maintain production
      levels and prices for oil;




·
            the
      cost and timing of the development of alternate energy sources;
      and




·
            tax
      policies.




If demand
for drilling services or drilling rig utilization rates decrease significantly,
demand for IDE’s products and services may decrease, which could affect IDE’s
result of operations.




The
oil and gas industry is undergoing continuing consolidation that may impact
IDE’s results of operations.




The oil
and gas industry is rapidly consolidating and, as a result, some of IDE’s
largest customers have consolidated and are using their size and purchasing
power to seek economies of scale and pricing concessions.  This
consolidation may result in reduced capital spending by some of IDE’s customers
or the acquisition of one or more of IDE’s primary customers, which may lead to
decreased demand for IDE’s products and services.  IDE cannot assure
you that it will be able to maintain its level of sales to a customer that has
consolidated or replace that revenue with increased business activity with other
customers.  As a result, the acquisition of one or more of IDE’s
primary customers may have a significant negative impact on IDE’s results of
operations or IDE’s financial condition.  IDE is unable to predict
what effect consolidations in the industry may have on price, capital spending
by its customers, its selling strategies, its competitive position, its ability
to retain customers or its ability to negotiate favorable agreements with its
customers.




IDE
must successfully compete for the services of highly-trained technical or trade
personnel.




Many of
the services that IDE provides are complex and require a high level of expertise
and often must be performed in harsh conditions.  IDE’s success
depends in part upon its ability to employ and retain technical personnel with
the ability to produce and enhance these services.  In addition, IDE’s
ability to expand IDE’s operations depends in part on IDE’s ability to increase
IDE’s skilled labor force.  The demand for skilled workers in IDE’s
industry is high and the supply is limited.  A significant increase in
the wages paid by competing employers could result in a reduction of IDE’s
skilled labor force, increases in the wage rates that IDE must pay, or
both.  If these events were to occur, IDE’s cost structure could
increase, IDE’s margins could decrease, and IDE’s growth potential could be
impaired.




The
intense competition in IDE’s industry could result in IDE’s reduced
profitability and loss of market share.




In all of
IDE’s business segments, IDE competes with the energy industry’s largest
equipment and service providers, including, in particular, National Oilwell
Varco, which is by far the largest manufacturer in the industry and has reported
revenues in 2007 of nearly $10 billion.  Some of these companies have
substantially greater financial resources and larger operations than IDE
does.  In addition, some of these companies may be better able to
compete because of their broader geographic dispersion or their product and
service diversity.  As a result, IDE could lose customers and market
share to those competitors.  These companies may also be better
positioned than IDE is to successfully endure downturns in the energy
industry.  IDE’s operations may be adversely affected if IDE’s current
competitors or new market entrants introduce new products or services with
better prices, features, performance or other competitive characteristics than
IDE’s products and services.  Competitive pressures or other factors
also may result in significant price competition that could harm IDE’s revenue
and IDE’s business.  Additionally, IDE may face competition in its
efforts to acquire other businesses.


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The
high cost or unavailability of materials, equipment, supplies and personnel
could adversely affect IDE’s ability to execute IDE’s operations on a timely
basis.




IDE’s
manufacturing operations are dependent on having sufficient raw materials,
component parts and manufacturing capacity available to meet its manufacturing
plans at a reasonable cost while minimizing inventories.  IDE’s
ability to effectively manage its manufacturing operations and meet these goals
can have an impact on IDE’s business, including IDE’s ability to meet its
manufacturing plans and revenue goals, control costs and avoid shortages of raw
materials and component parts.  Raw materials, component parts and
equipment of particular concern include steel, copper, engine generator sets,
drill pipe and electronic components.  A lack of manufacturing
capacity could result in increased backlog, which may limit IDE’s ability to
respond to short lead-time orders or opportunities.




People
are a key resource to developing, manufacturing and delivering IDE’s products
and services to IDE’s customers around the world.  IDE’s ability to
manage the recruiting, training and retention of the highly-skilled workforce
required by IDE’s plans and to manage the associated costs could impact IDE’s
business.  A well-trained, motivated work force has a positive impact
on IDE’s ability to attract and retain business.  Rapid growth
presents a challenge to IDE and its industry to recruit, train and retain its
employees while managing the impact of wage inflation and potential lack of
available qualified labor in its market.  Labor-related actions,
including strikes, work slowdowns and facility occupations, can also have a
negative impact on IDE’s business.




IDE
depends on third-party suppliers for timely deliveries of raw materials at a
reasonable cost, and IDE’s results of operations could be adversely affected if
IDE is unable to obtain adequate supplies in a timely manner.




IDE’s
manufacturing operations depend upon obtaining adequate supplies of raw
materials from third parties.  The ability of these third parties to
deliver raw materials may be affected by events beyond IDE’s
control.  Any interruption in the supply or increase in the prices of
raw materials needed to manufacture IDE’s products could adversely affect IDE’s
business, results of operations and reputation with its
customers.  Fluctuations in commodity prices may affect IDE’s margins
and its earnings.




If
IDE’s arrangements with its suppliers were to be adversely affected, its
equipment sales and parts and service businesses may suffer.




IDE
currently depends on a limited number of suppliers for certain important
components for its products.  IDE’s purchases from most of these
suppliers are not made pursuant to long-term contracts and its arrangements with
these suppliers may be terminated, in the case of certain arrangements, upon
certain notifications and, otherwise, upon the occurrence of certain events,
many of which may be beyond IDE’s control.  The loss of any of these
suppliers could have a material adverse effect on IDE’s business, financial
condition and results of operations.




IDE’s
business may be adversely affected by severe weather.




IDE’s
operations are located in Houston, Texas and are directly affected by seasonal
differences in weather due to hurricanes and other storms prevalent in the
region.  Repercussions of severe weather conditions may
include:




·
            evacuation
      of personnel and curtailment of
services;




·
            weather-related
      conditions resulting in suspension of
  operations;




·
            weather-related
      damage to IDE’s facilities;




·
            increase
      in insurance cost and reduction in its
  availability;




·
            inability
      to receive or delays in receiving required equipment or materials at IDE’s
      facilities; and




·
            loss
      of productivity.


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 Table of Contents


Risks Related to the
Merger




If
30% or more of the holders of our common stock issued in its initial public
offering decide to vote against the proposed acquisition, we may be forced to
liquidate, shareholders may receive less than $8.01 per share and the warrants
will expire worthless.




Under the
terms of our amended and restated certificate of incorporation, if 30% or more
of the shares issued in our initial public offering decide to vote against the
proposed Merger and demand to convert their shares to cash, we cannot close the
Merger with IDE and may ultimately be forced to liquidate.  While we
would continue to search to acquire another operating company, if we do not
consummate a business combination by May 18, 2009, we will be forced to
liquidate.  Our public shareholders will be entitled to receive funds
from the trust account only in the event of the expiration of our corporate
existence and our liquidation or if they seek to convert their respective shares
into cash upon a business combination that the shareholder voted against and
which is completed by us.  If we are forced to liquidate our assets,
the per-share liquidation will be the amount deposited in the trust account at
the time of our initial public offering, plus interest accrued thereon, less any
amounts released for working capital or other expense requirements, until the
date of any liquidation.  As of December 31, 2008, before amounts
remaining to be withdrawn for working capital and taxes, there was approximately
$8.01 per share (which does not take into account our warrants or any shares of
stock acquired by our initial shareholders at or prior to our initial public
offering) in the trust account.  Furthermore, there will be no
distribution with respect to our outstanding warrants and, accordingly, our
warrants will expire worthless.  Our working capital could be reduced,
and our shareholders could own less than 67.9 % of our outstanding common stock
(or 33.9% if the additional consideration is paid in full in shares of our
common stock), if our shareholders exercise their right to convert their shares
into cash.




Pursuant
to our amended and restated certificate of incorporation, holders of shares
issued in our initial public offering may vote against the Merger and demand
that we convert their shares into cash.  We will not consummate the
Merger if holders of 30% or more of the shares of common stock issued in our
initial public offering exercise these conversion rights.  To the
extent the Merger is consummated and holders of less than 30% of our common
stock issued in our initial public offering have demanded to convert their
shares, there will be a corresponding reduction in the amount of funds available
to us following the Merger and a reduction in the aggregate percentage of our
company that is owned by our shareholders after the
Merger.  Additionally, if holders demand to convert their shares,
there may be a corresponding reduction in the value of each share of our common
stock.  As of December 31, 2008, assuming the Merger is approved, the
maximum amount of funds that could be disbursed to our shareholders upon the
exercise of their conversion rights is approximately $34.5 million, or
approximately 29.99% of the funds currently held in trust before accounting for
taxes and our working capital draw.  If no funds are disbursed to our
shareholders upon the exercise of their conversion rights, the percentage of our
common stock that would be owned by our shareholders will be approximately
73.7%, excluding any potential issuance based on 2009 or 2010 performance
targets.  If the maximum amount of funds is disbursed, the percentage
of our common stock that will be owned by our shareholders who do not exercise
their conversion right will be approximately 67.9%, excluding any potential
issuance based on 2009 or 2010 performance targets.




A
substantial number of our shares will become eligible for future resale in the
public market after the Merger which could result in dilution and an adverse
effect on the market price of those shares.




If the
Merger is consummated, warrants to purchase 18,025,000 shares of our common
stock issued in connection with our initial public offering will become
exercisable on the date the Merger is consummated, as described under “Business
—Overview.” Additionally, 3,125,000 shares of our common stock purchased by
shareholders prior to our initial public offering will be held in escrow until
the first anniversary of the consummation of the Merger, at which time they will
be released from escrow and be eligible for resale in the public market subject
to compliance with applicable law.  Moreover, shares having a value of
$12,500,000 (based on a value per share equal to the Trust Value per Share) of
our common shares to be received by IDE shareholders as Merger consideration at
the closing of the Merger will be will be held in escrow until two business days
following ten (10) business days following the filing of our Annual Report on
Form 10-K for the year ended December 31, 2009, at which time they will be
released from escrow and be eligible for resale in the public market subject to
compliance with applicable law.  Consequently, at various times after
completion of the Merger, a substantial number of additional shares of our
common stock will be eligible for resale in the public market.  Sales
of substantial numbers of such shares in the public market could adversely
affect the market price of such shares and of the warrants.


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 Table of Contents


Our
existing shareholders will incur immediate and substantial dilution of their
ownership and voting interests upon completion of the Merger.




After
completion of the Merger, through the issuance of additional shares of our
common stock to the shareholders of IDE, our existing shareholders’ voting
interest will be diluted from 100% to approximately 73.7% of our voting
interests assuming maximum approval (or 40.5% if all of the additional
consideration is paid in full in additional shares of our common stock), and
approximately 67.9% of our voting interests assuming minimum approval (or 33.9%
if all of the additional consideration is paid in full in additional shares of
our common stock).




If the
benefits of the Merger do not meet the expectations of financial or industry
analysts, the market price of our common stock may decline.




The
market price of our common stock may decline as a result of the Merger
if:




·
            we
      do not achieve the perceived benefits of the Merger as rapidly, or to the
      extent anticipated by, financial or industry analysts;
  or




·
            the
      effect of the Merger on our financial results is not consistent with the
      expectations of financial or industry
analysts.




Accordingly,
investors may experience a loss as a result of a decline in the market price of
our common stock.  In addition, a decline in the market price of our
common stock could adversely affect our ability to issue additional securities
and our ability to obtain additional financing in the future.




Failure
to complete the Merger could negatively impact the market price of our common
stock and may make it more difficult for us to attract another acquisition
candidate, resulting, ultimately, in the disbursement of the trust proceeds,
causing investors to experience a loss of their investment.




If the
Merger is not completed for any reason, we may be subject to a number of
material risks, including:




·
            it
      is unlikely that we will have enough time to negotiate and consummate
      another business combination and we would, therefore, be forced to
      liquidate our assets;




·
            the
      market price of our common stock may substantially
  decline;




·
            costs
      related to the Merger, such as legal and accounting fees and certain costs
      related to the fairness opinion, must be paid even if the Merger is not
      completed; and




·
            charges
      will be made against earnings for transaction-related expenses, which
      could be higher than expected.




Such
decreased market price and added costs and charges of the failed Merger,
together with the history of failure in consummating a Merger, may make it more
difficult for us to attract another acquisition candidate, resulting,
ultimately, in the disbursement of the trust proceeds, which may result in
investors experiencing a loss of their investment.




In
connection with the Merger, we will be required to submit a new listing
application to NYSEAlternextUS, which will subject it to NYSEAlternextUS’s
initial listing requirements.  Our securities may also be delisted
from trading on its exchange, which could limit investors’ ability to effect
transactions in our securities and subject us to additional trading
restrictions.




Our
securities are listed on NYSEAlternextUS, a national securities
exchange.  We cannot guarantee that our securities will continue to be
listed on NYSEAlternextUS in the future.  In addition, in connection
with the Merger, we will be required to file a new listing application and
satisfy NYSEAlternextUS’s initial listing requirements, as opposed to its more
lenient continued listing requirements.  We cannot guarantee that we
will be able to meet those initial listing requirements at the time of the
closing of the Merger.


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If
NYSEAlternextUS delists our securities from trading in the future, we could face
significant material adverse consequences, including:




·
            a
      limited availability of market quotations for our
    securities;




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




·
            more
      limited amount of news and analyst coverage for
  us;




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




·
            decreased
      ability of our security holders to sell their securities in certain
      states.




If
we do not consummate the Merger with IDE and we are unable to consummate any
business combination by May 18, 2009, and are forced to dissolve and liquidate,
payments from the trust account to our public shareholders may be
delayed.




If we do
not consummate the business combination with IDE and we does not consummate a
business combination by May 18, 2009, we will dissolve and
liquidate.




We
currently expect that the costs associated with the implementation and
completion of the plan of dissolution and liquidation would not be more than
approximately $10,000.  Andrew Intrater has personally agreed that, if
we liquidate prior to the consummation of a business combination, he will be
personally liable to pay debts and obligations to target businesses or vendors
or other entities that are owed money by us for services rendered or contracted
for or products sold to us in excess of the net proceeds of our initial public
offering not held in the trust account; however, there is no guarantee that the
assets of Mr. Intrater will be sufficient to satisfy our dissolution and/or
liquidation expenses.




Our
amended and restated certificate of incorporation also provides that our
corporate existence will cease on May 18, 2009 except for the purposes of
winding up our affairs and liquidating pursuant to Section 278 of the
DGCL.  This has the same effect as if our board of directors and
shareholders had formally voted to approve our dissolution pursuant to Section
275 of the DGCL.  Accordingly, limiting our corporate existence to a
specified date as permitted by Section 102(b)(5) of the DGCL removes the
necessity to comply with the formal procedures set forth in Section 275 (which
would have required our shareholders to formally vote to approve our dissolution
and liquidation).  We view this provision terminating our corporate
life by May 18, 2009 as an obligation to our shareholders.




Accordingly,
the foregoing procedures may result in substantial delays in our liquidation and
the distribution to public shareholders of the funds in the trust account and
any remaining net assets as part of the plan of dissolution and
liquidation.  In addition, even though our amended and restated
certificate of incorporation requires our corporate existence to cease on May
18, 2009, the liquidation and dissolution will occur after May 18,
2009.




If
we do not complete the Merger, it is not likely that we will be able to identify
and consummate an acquisition with another company prior to May 18,
2009.




If we do
not consummate a business combination by May 18, 2009, we will be forced to
dissolve and liquidate.  If the Merger with IDE is not consummated, we
will attempt to identify and consummate another business combination, but given
the limited amount of time available, the possibilities of finding and
consummating another business combination prior to May 18, 2009 are
limited.




Our
shareholders may be held liable for claims by third parties against it to the
extent of distributions received by them.




If we are
unable to complete the Merger with IDE and we do not consummate a business
combination by May 18, 2009, we will promptly adopt a plan of dissolution and
initiate procedures for a dissolution and liquidation.  Under the
DGCL, shareholders may be held liable for claims by third parties against a
corporation to the extent of distributions received by them in a
dissolution.  If we complied with certain procedures set forth in
Section 280 of the DGCL intended to ensure that we make reasonable provision for
all claims against us, including a 60-day notice period during which any
third-party claims can be brought against us, a 90-day period during which we
may reject any claims brought, and an additional 150-day waiting period before
any liquidating distributions are made to shareholders, any liability of a
shareholder with respect to a liquidating distribution would be limited to the
lesser of such shareholder’s pro rata share of the claim
or the amount distributed to the shareholder, and any liability of the
shareholder would be barred after the third anniversary of the
dissolution.  However, it is our intention to make liquidating
distributions to our shareholders as soon as reasonably possible after
dissolution and, therefore, we do not intend to comply with those
procedures.  As such, our shareholders could potentially be liable for
any claims to the extent of distributions received by them in a dissolution and
any such liability of our shareholders will likely extend beyond the third
anniversary of such dissolution.  Accordingly, we cannot assure you
that third parties will not seek to recover from our public shareholders amounts
owed to them by us.


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 Table of Contents


Andrew
Intrater has personally agreed that, if we liquidate prior to the consummation
of a business combination, he will be personally liable to pay debts and
obligations to target businesses or vendors or other entities that are owed
money by us for services rendered or contracted for or products sold to us in
excess of the net proceeds of our initial public offering not held in the trust
account; however, there is no guarantee that the assets of Mr. Intrater will be
sufficient to satisfy our dissolution and/or liquidation
expenses.  Despite this agreement by Mr. Intrater, the amounts in
trust could be reduced by claims by our directors and officers for
indemnification under the amended and restated certificate of incorporation and
their indemnification agreements with us.




Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is
filed against us which is not dismissed, any distributions received by
shareholders in the dissolution could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent
conveyance.” As a result, a bankruptcy court could seek to recover all amounts
received by the shareholders in the dissolution.




Escrowed
securities represent the sole recourse for us against IDE and its shareholders
for indemnification under the Merger Agreement.




Except in
the case of fraud, willful misrepresentation, or intentional breach, the
escrowed securities represent the sole recourse for us against IDE and its
shareholders for indemnification under the Merger Agreement.  As a
result, it is possible that we may not be fully indemnified for the losses that
we may incur in respect of breaches by IDE or other items that are subject to
indemnification under the Merger Agreement.




If
third parties bring claims against us or if IDE has breached any of its
representations, warranties or covenants set forth in the Merger Agreement, we
may not be adequately indemnified for any losses arising therefrom.




Shares
having a value of $12,500,000 (based on a value per share equal to the Trust
Value per Share) of the shares of our common stock to be received by IDE
shareholders as Merger consideration at the closing of the Merger will be placed
in escrow to secure the indemnity obligations of IDE under the Merger
Agreement.  The Merger Agreement provides that IDE shareholders will
indemnify us for losses arising from:




·
            an
      inaccuracy or breach of its representations and
  warranties;




·
            the
      non-fulfillment or breach of any covenant or agreement by
    IDE;




·
            certain
      pre-closing taxes of IDE and its subsidiaries and taxes of other persons
      for which IDE or its subsidiaries may be liable under tax law, as a
      transferee or successor, by contact or
  otherwise;




·
            certain
      taxes of IDE, we or our respective subsidiaries resulting from a failure
      of the Merger and certain other transactions to qualify for tax-free
      treatment; and




·
            any
      amounts paid pursuant to any judgment or settlement entered in connection
      with certain pre-existing
litigation.




Such
indemnification is limited to the aggregate amount of the value of the escrow in
excess of specified thresholds and deductibles.  In addition, the
survival period for any claims under the Merger Agreement is ten (10) business
days following the filing of our Annual Report on Form 10-K for the year ended
December 31, 2009 and we will have no indemnification for claims arising after
ten (10) business days following the filing of our Annual Report on Form 10-K
for the year ended December 31, 2009.


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Certain
officers and directors of IDE and our company may have different interests in
the Merger than our shareholders.




Our board
of directors considered the fact that certain officers and directors of IDE and
our company may have interests in the Merger that are different from, or are in
addition to, the interests of our shareholders generally, including the matters
described under “Interests of our Directors and Officers in the Merger”
above.  However, this fact would exist with respect to a Merger with
any target company.




The
purchases of common stock by our or IDE’s officers and directors or their
affiliates could impact the shareholder vote in favor of the Merger
Proposal.  In open market purchases, our and IDE’s officers and
directors or their affiliates may be purchasing common stock from shareholders
who (unknown to such purchasers) may have otherwise voted against the Merger
Proposal.  In private transactions with large block holders, our
affiliates may be purchasing common stock from shareholders who may have
intended to vote against the Merger Proposal.  Further, these block
holders may, together, own more than 30% of the outstanding shares of our common
stock issued in our initial public offering or open market
shares.  Accordingly, such purchases make it more likely – but not
assured – that: (i) a majority of shares will be voted in favor of the Merger
Proposal, and (ii) that the 30% threshold of shareholders that must exercise
their conversion rights in order to defeat the proposal to approve the Merger
and cause the liquidation of us would not be reached.




Item
1B.                 Unresolved
Staff Comments




Not applicable.





Item
2.                    Properties




We do not own any real estate or other
physical properties materially important to our operation.  We
maintain our principal executive offices at 153 East 53rd Street,
58th
Floor, New York, New York 10022.  We believe, based on rents and fees
for similar services in the New York City metropolitan area, that the fee
charged by Renova U.S. Management LLC is at least as favorable as we could have
obtained from an unaffiliated person.  We consider our current office
space, combined with the other office space available to our executive officers,
adequate for our current operations.




Item
3.                    Legal
Proceedings




We are
currently not subject to any material legal proceedings, nor, to our knowledge,
is any material legal proceeding threatened against us.  From time to
time, we may be a party to certain legal proceedings incidental to the normal
course of our business.  While the outcome of these legal proceedings
cannot be predicted with certainty, we do not expect that these proceedings will
have a material effect upon our financial condition or results of
operation.




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




No
matters were submitted to a vote of our shareholders during the three months
ended December 31, 2008.


38
 Table of Contents


PART II




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




Price
Range of Common Stock




Our common stock, warrants and units
are listed on NYSEAlternextUS under the symbols BUS, BUS-WS and BUS-U,
respectively. The closing prices per share of our common stock, warrant and unit
on February 17, 2009 were $7.88, $0.05 and $7.75, respectively. Each of our
units consists of one share of our common stock and one warrant to purchase one
share of our common stock. Our warrants will expire at 5:00 p.m., New York City
time, on May 18, 2011, or earlier upon redemption. Prior to May 23,
2007, there was no established public trading market for our common stock,
warrants or units.




The
following table sets forth, for the calendar quarter indicated, the quarterly
high and low closing prices of our common stock, warrants and units as reported
on NYSEAlternextUS since our initial public offering on May 23,
2007.





Common
      Stock
                    
                    
                    Units
                    
                    
                    WarrantsHigh
                    
                    
                    Low
                    
                    
                    High
                    
                    
                    Low
                    
                    
                    High
                    
                    
                    LowYEAR
      ENDED DECEMBER 31, 2007Second
      Quarter (since May 23, 2007)
                    
                    $
                    7.45
                    
                    
                    $
                    7.30
                    
                    
                    $
                    8.27
                    
                    
                    $
                    8.01
                    
                    
                    $
                    0.90
                    
                    
                    $
                    0.80Third
      Quarter
                    
                    $
                    7.61
                    
                    
                    $
                    7.30
                    
                    
                    $
                    8.32
                    
                    
                    $
                    8.00
                    
                    
                    $
                    0.90
                    
                    
                    $
                    0.64Fourth
      Quarter
                    
                    $
                    7.50
                    
                    
                    $
                    7.35
                    
                    
                    $
                    8.20
                    
                    
                    $
                    7.93
                    
                    
                    $
                    0.82
                    
                    
                    $
                    0.58YEAR
      ENDED DECEMBER 31, 2008First
      Quarter
                    
                    $
                    7.58
                    
                    
                    $
                    7.40
                    
                    
                    $
                    8.10
                    
                    
                    $
                    7.71
                    
                    
                    $
                    0.63
                    
                    
                    $
                    0.20Second
      Quarter
                    
                    $
                    7.70
                    
                    
                    $
                    7.48
                    
                    
                    $
                    8.75
                    
                    
                    $
                    7.80
                    
                    
                    $
                    0.44
                    
                    
                    $
                    0.21Third
      Quarter
                    
                    $
                    7.78
                    
                    
                    $
                    7.46
                    
                    
                    $
                    8.13
                    
                    
                    $
                    7.70
                    
                    
                    $
                    0.25
                    
                    
                    $
                    0.15Fourth
      Quarter
                    
                    $
                    7.69
                    
                    
                    $
                    7.20
                    
                    
                    $
                    7.60
                    
                    
                    $
                    7.25
                    
                    
                    $
                    0.21
                    
                    
                    $
                    0.04YEAR
      ENDED DECEMBER 31, 2009First
      Quarter (through February 17, 2009)
                    
                    $
                    7.88
                    
                    
                    $
                    7.63
                    
                    
                    $
                    7.75
                    
                    
                    $
                    7.60
                    
                    
                    $
                    0.09
                    
                    
                    $
                    0.02




On February 17, 2009, the closing
prices of our common stock, warrants and units were $7.88, $0.05 and $7.75,
respectively.




As of February 17, 2009, there were 7
holders of record of our common stock, 2 holders of record of our warrants and 1
holder of record of our units.




Dividends




We have not paid any dividends on our
common stock to date and do not intend to pay dividends prior to the completion
of a business combination.  The payment of dividends in the future
will be contingent upon our revenues, earnings (if any) capital requirements,
and general financial condition subsequent to completion of a business
combination. The payment of any dividends subsequent to the Merger will be
within the discretion of our board of directors at that time.


39
 Table of Contents


Performance
Graph




The following graph compares the
cumulative total return for our common stock from May 30, 2007, the date our
common stock started trading separately, through December 31, 2008 with the
comparable cumulative return of two indices, the Dow Jones Industrial Average
Index and the S&P 500 Index.  The graph assumes $100 invested on
May 30, 2007 in our common stock and $100 invested at that same time in each of
the two listed indices.   The stock price performance shown on
the graph is not necessarily indicative of future price
performance.










Recent
Sales of Unregistered Securities




In August
2006, in connection with our formation and initial capitalization, we issued
3,125,000 shares of our common stock to Columbus Holdings, at a purchase price
of approximately $0.008 per share, or an aggregate of $25,000.  Such
shares, which we refer to as the “initial shares,” were issued in a private
placement pursuant to the exemption from registration contained in Section 4(2)
of the Securities Act of 1933.  Andrew Intrater, our Chairman and
Chief Executive Officer, controls Columbus Holdings in his capacity as its sole
managing member.  Mr. Intrater, together with certain members of our
management team, are members of Columbus Holdings, and own in the aggregate
approximately 79% of the Series Amembership interests of Columbus Holdings, which series represent rights
in and to the initial shares (but not the insider warrants described below)
owned of record by Columbus Holdings.  Columbus Holdings subsequently
transferred 312,500 of these shares to Michael W. Ernestus, our Executive
Director and President, and 30,000 of these shares to each of the four
independent members of our board of directors, for the same price that Columbus
Holdings paid for these shares.  No underwriting discounts or
commissions were paid with respect to such sales.  Columbus Holdings
made such transfers in reliance upon exemptions from registration pursuant to
Section 4(1) under the Securities Act of 1933.


40
 Table of Contents


We also
issued 3,650,000 warrants (which we refer to as the “insider warrants”) to
Columbus Holdings simultaneously with the consummation of our initial public
offering, for a purchase price of $1.00 per warrant, or an aggregate of
$3,650,000.  These insider warrants are identical to the warrants
underlying the Units that we issued in our initial public offering (which we
refer to as “public warrants”), except that if we call the public warrants for
redemption, the insider warrants may be exercisable on a “cashless” basis so
long as such insider warrants are held by Columbus Holdings or its permitted
transferees.  Additionally, Columbus Holdings has agreed that the
insider warrants will not be sold or transferred by it until such time, if any,
as we shall have completed a business combination with an operating
business.  No underwriting discounts or commissions were paid with
respect to the sale of our insider warrants.  The insider warrants
were issued in a private placement pursuant to the exemption from registration
contained in Section 4(2) of the Securities Act of 1933.  Andrew
Intrater, our Chairman and Chief Executive Officer, controls Columbus Holdings
in his capacity as its sole managing member.  Mr.  Intrater,
together with certain members of our management team, are members of Columbus
Holdings, and own in the aggregate approximately 87% of the Series B membership
interests of Columbus Holdings, which series represent rights in and to the
insider warrants (but not the initial shares described above) owned of record by
Columbus Holdings.




Use
of Proceeds from Registered Offering




Approximately
$109,750,000 of net proceeds from our initial public offering, plus the
$3,650,000 we received from the sale of the insider warrants (described above),
has been placed in a trust account at Morgan Stanley, maintained by Continental
Stock Transfer & Trust Company, acting as trustee. This amount includes
$3,450,000 (of the total of $8,050,000) of underwriting discounts and
commissions payable to the underwriters in our initial public
offering.  The underwriters have agreed that such amount will not be
paid to them unless and until we complete a business combination with one or
more operating businesses, and they have waived their right to receive such
payment upon our liquidation if we are unable to complete a business combination
before May 18, 2009.  The funds held in trust may be invested only 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, so that we are not deemed to be an
investment company under the Investment Company Act of 1940.  Except
with respect to interest income that may be released to us from time to time
upon our request of (i) up to $1,750,000 to fund our expenses related to
investigating and selecting a target business and our other working capital
requirements and (ii) any additional amounts we may need to pay our income or
other tax obligations, the proceeds from our initial public offering that are
held in trust will not be released from the trust account until the earlier of
(i) the time that we complete a business combination and (ii) our liquidation,
if we do not complete a business combination on or prior to May 18,
2009.  The proceeds held in the trust account may be used as
consideration to pay the sellers of a target business with which we complete a
business combination.  Any amounts not paid as consideration to the
sellers of such target business may be used to finance operations of the target
business.




On May
23, 2007, Lazard Capital Markets LLC, the representative of the underwriters for
our initial public offering, exercised its over-allotment option and purchased
1,875,000 additional units from us, which units are identical to the units we
issued and sold in our initial public offering.  The net proceeds from
the exercise of the over-allotment option were approximately $13,950,000, after
deducting underwriting discounts and commissions of $1,050,000.  All
the net proceeds from the exercise of the over-allotment option and $450,000 of
deferred underwriting discounts and commissions relating to the exercise of the
over-allotment option, or a total of $14,400,000, have been placed in
trust.




On May
23, 2007, we granted to the underwriters in our initial public offering, for
$100, an option to purchase up to a total of 625,000 units at a price of $10.00
per unit.  The units issuable upon exercise of these options are
identical to the units that we issued in our initial public
offering.  This option is exercisable at $10.00 per unit commencing on
the later of our consummation of a business combination and May 18, 2008, and
expires on May 18, 2012.  The purchase option is exercisable on a
cashless basis.  This option, as well as the units issuable upon
exercise of this option, the common shares and warrants underlying the units
subject to this option, and the common shares issuable upon exercise of the
warrants included in such units, were registered under the Securities Act of
1933 on the same registration statement on Form S-1 that we filed with the
Securities and Exchange Commission in connection with out initial public
offering.




Approximately
$155,000 of the expenses relating to our initial public offering, including the
Securities and Exchange Commission registration fee, the NASD filing fee, the
non-refundable portion of the American Stock Exchange listing fee and a portion
of the legal and audit fees, were paid from a loan made by Columbus Holdings
totaling $150,000 and from the proceeds from the sale of 3,125,000 of our common
shares to our initial shareholders.  We repaid the loan in full on May
23, 2007.


41
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Item
6.                    Selected
Financial Data




The following table sets forth selected
historical financial information derived from our audited consolidated financial
statements included elsewhere in this Report. The following data should be read
in conjunction with “Management's Discussion and Analysis of Financial Condition
and Results of Operations” and our audited financial statements including the
notes thereto, included elsewhere in this annual report.





Statement of Operations
                    Information:
                  
                  For the year
                    December 31, 2008
                  
                  
                  For the year
                    December 31, 2007
                  
                  
                  August 1, 2006
                    (inception) through
                    December 31, 2006
                  
                  
                  August 1, 2006
                    (inception) through
                    December 31, 2008Interest
      Income
                  
                  $
                  2,268,452
                  
                  
                  $
                  3,434,578
                  
                  
                  $
                  —
                  
                  
                  $
                  5,703,030Expenses
                  
                  
                  (2,470,422
                  )
                  
                  
                  (432,000
                  )
                  
                  
                  (1,453
                  )
                  
                  
                  (2,903,875
                  )Net
      (loss) income before income taxes
                  
                  
                  (201,970
                  )
                  
                  
                  3,002,578
                  
                  
                  
                  —
                  
                  
                  
                  2,799,155Provision
      for income taxes
                  
                  
                  (171,000
                  )
                  
                  
                  (1,438,000
                  )
                  
                  
                  —
                  
                  
                  
                  (1,609,000
                  )Net
      (loss) income
                  
                  $
                  (372,970
                  )
                  
                  $
                  1,564,578
                  
                  
                  
                  (1,453
                  )
                  
                  $
                  1,190,155Net
      (loss) income per share basic and diluted
                  
                  $
                  (0.02
                  )
                  
                  $
                  0.13
                  
                  
                  $
                  (0.00
                  )
                  
                  $
                  0.09Weighted
      average shares outstanding
                  
                  
                  17,500,000
                  
                  
                  
                  12,065,068
                  
                  
                  
                  3,125,000
                  
                  
                  
                  13,231,275





Balance Sheet
      Information:
                  
                  As of
                    December 31, 2008
                  
                  
                  As of
                    December 31, 2007Working
      Capital
                  
                  $
                  110,039,398
                  
                  
                  $
                  111,428,368Total
      Assets
                  
                  
                  116,431,625
                  
                  
                  
                  116,713,426Total
      liabilities
                  
                  
                  5,232,227
                  
                  
                  
                  5,141,058Common
      stock, subject to possible conversion
                  
                  
                  32,979,628
                  
                  
                  
                  32,979,628Stockholders’
      equity
                  
                  $
                  78,219,770
                  
                  
                  $
                  78,592,740





Total
assets as of December 31, 2008, includes the $115,081,369 being held in the
trust account, which except for remaining amounts allowed to be withdrawn for
working capital purposes and to pay income and franchise taxes (see liquidity
section) will be available to use only upon the consummation of a business
combination within the time period described in this annual
report.  If a business combination is not so consummated, we will be
dissolved and the proceeds held in the trust account will be distributed solely
to our public shareholders.




We will not proceed with a business
combination if public shareholders owning 30% or more of the common shares
included in the units sold in our initial public offering exercise their
conversion rights and vote against the business
combination.  Accordingly, we may effect a business combination if
public shareholders owning less than 30% of the common shares included in the
units sold in our initial public offering exercise their conversion
rights.  If this occurred, we would be required to convert to cash up
to approximately 29.99% of the 14,375,000 common shares included in the units
sold in our initial public offering (which includes 1,875,000 units relating to
the exercise in full of the underwriter’s over-allotment option), or 4,311,063
common shares, at an initial per share conversion price of approximately $7.89
(for a total of approximately $34,014,287 including $1,034,655, or $0.24 per
share, payable from the deferred underwriting discounts and commissions),
without taking into account interest earned on the trust account.  The
actual per share conversion price will be equal to the amount in the trust
account, before payment of deferred underwriting discounts and commissions and
including all accrued interest after distribution of interest income on the
trust account balance to us, as of two business days prior to the proposed
consummation of the business combination, divided bythe number of shares of
common stock sold in the initial public offering.


42
 Table of Contents


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




Forward-
Looking Statements




We
believe that some of the information in this annual report constitutes
forward-looking statements.  You can identify these statements by
forward-looking words such as “may,” “expect,” “anticipate,” “contemplate,”
“believe,” “estimate,” “intends,” and “continue” or similar
words.  You should read statements that contain these words carefully
because they:




·
            discuss
      future expectations;




·
            contain
      projections of future results of operations or financial condition;
      and




·
            state
      other “forward-looking”
information.




We
believe it is important to communicate our expectations to our
shareholders.  However, there may be events in the future that we are
not able to accurately predict or over which we have no control.  The
risk factors and cautionary language discussed in this annual report provide
examples of risks, uncertainties and events that may cause actual results to
differ materially from the expectations described by us in our forward-looking
statements, including among other things:




·
            changing
      interpretations of GAAP;




·
            the
      general volatility of the market price of our
  securities;




·
            the
      availability of qualified
personnel;




·
            the
      ability of Columbus to consummate the Merger and related transactions
      within the expected timeframe;




·
            changes
      in interest rates or the debt securities
  markets;




·
            outcomes
      of government reviews, inquiries, investigations and related
      litigation;




·
            continued
      compliance with government
regulations;




·
            legislation
      or regulatory environments, requirements or changes adversely affecting
      the businesses in which IDE is
engaged;




·
            statements
      about industry trends;




·
            general
      economic conditions; and




·
            geopolitical
      events and regulatory changes.




We
caution you to not to place undue reliance on these forward-looking statements,
which speak only as of the date of this annual report.




All
forward-looking statements included herein attributable to us or any person
acting on our behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section.  We have based
the forward-looking statements included in this annual report on information
available to us on the date of this annual report and, except to the extent
required by applicable laws and regulations, we undertake no obligation to
update these forward-looking statements to reflect events or circumstances after
the date of this annual report or to reflect the occurrence of unanticipated
events.  Although we undertake no obligation to revise or update any
forward-looking statements, whether as a result of new information, future
events or otherwise, you are advised to consult any additional disclosures that
we make directly to you or through reports that we in the future may file with
the Securities and Exchange Commission, including annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K.  Our
actual results could differ materially from those expressed or implied by the
forward looking statements as a result of various factors including, but not
limited to, those presented under “Risk Factors” included in Item 1A and
elsewhere in this annual report.


43
 Table of Contents


Overview




We are a
blank check company incorporated in Delaware on August 1, 2006 to serve as a
vehicle to effect a Merger, capital stock exchange, asset acquisition or similar
business combination with one or more operating businesses, which we refer to as
a “business combination,” that we believe has significant growth
potential.  We intend to use the cash derived from the net proceeds of
the private placement of our insider warrants, our initial public offering and
the exercise by the underwriters of their over-allotment option, together with
any additional financing arrangements that we undertake, to effect a business
combination.  While we are actively seeking to identify a target
business, we have not limited ourselves to particular industries and/or types of
businesses that may provide such opportunities.




In August
2006, in connection with our formation and initial capitalization, we issued
3,125,000 shares of our common stock to Columbus Acquisition Holdings LLC, at a
purchase price of approximately $0.008 per share, or an aggregate of
$25,000.  Columbus Acquisition Holdings LLC is a limited liability
company formed under the laws of Delaware that is controlled by Andrew Intrater,
our Chairman and Chief Executive Officer, and principally owned by Mr. Intrater
and certain other members of our management team.  We refer to
Columbus Acquisition Holdings LLC as “Columbus Holdings” in this annual
report.




On May
23, 2007, we completed our initial public offering of 12,500,000 units, plus the
1,875,000 units that were attributable to the full exercise of the underwriters'
over-allotment option.  Each unit consists of one share of our common
stock and one warrant.  Each warrant entitles the holder to purchase
from us one share of our common stock at a price of $6.00 commencing on the
later of the date that we complete a business combination with an operating
company and May 18, 2008.  We paid $4,600,000 in underwriting
discounts and approximately $600,000 for costs and expenses related to our
initial public offering at the closing of the offering, and the balance of
$3,450,000 of underwriting discounts and commissions has been deferred and
placed in the trust account as described below.




On May
23, 2007, we also completed a private placement of 3,650,000 warrants to
Columbus Holdings for a purchase price of $1.00 per warrant, or an aggregate of
$3,650,000.  These insider warrants are identical to the warrants
underlying the units that we issued in our initial public offering (which we
refer to as “public warrants”), except that if we call the public warrants for
redemption, the insider warrants may be exercisable on a “cashless” basis so
long as such insider warrants are held by Columbus Holdings or its permitted
transferees.  Additionally, Columbus Holdings has agreed that it will
not sell or otherwise transfer these insider warrants until such time, if any,
as we shall have completed a business combination with an operating
business.  No underwriting discounts or commissions were paid with
respect to the sale of our insider warrants.




Approximately
$109,750,000 of net proceeds from our initial public offering, plus the
$3,650,000 we received from the sale of the insider warrants (described below),
has been placed in a trust account.  This amount includes $3,450,000
(of the total of $8,050,000) of underwriting discounts and commissions, payable
to the underwriters in our initial public offering.  The underwriters
have agreed that such amount will not be paid to them unless and until we
complete a business combination with one or more operating businesses, and they
have waived their right to receive such payment upon our liquidation if we are
unable to complete a business combination before May 18, 2009.




All of
the funds held in the trust account have been invested in a money market fund
maintained by Morgan Stanley Investment Management.  Specifically,
this money market fund is held within the “Government Portfolio” of one of the
Morgan Stanley Institutional Liquidity Funds, a money market fund that invests
exclusively in obligations of the U.S. government and its agencies and
instrumentalities, and in repurchase agreements collateralized by such
securities.  We have been advised by Morgan Stanley that the money
market fund in which we have invested the funds held in the trust account is
held in a separate stand-alone investment company with an independent board of
directors or trustees, and the trust account assets are held in a separate
segregated account for this money market fund at a custodian bank (J.P. Morgan
Chase & Co. in our case).  Our investment of the trust account
funds in this money market fund remains separate from the assets of Morgan
Stanley and its subsidiaries, and cannot be commingled at any time with assets
of Morgan Stanley or its subsidiaries.  However, an investment in this
money market fund is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.  We are exposed to credit
risk in the event that the financial position of the financial institution that
holds the trust account assets deteriorates and such financial institution is no
longer able to satisfy its financial obligations.


44
 Table of Contents


Except
with respect to interest income that may be released to us from time to time
upon our request of (i) up to $1,750,000 to fund our expenses related to
investigating and selecting a target business and our other working capital
requirements and (ii) any additional amounts we may need to pay our income or
other tax obligations, the proceeds from our initial public offering that are
held in trust will not be released from the trust account until the earlier of
(i) the time that we complete a business combination with one or more operating
businesses and (ii) our liquidation, if we do not complete a business
combination on or prior to May 18, 2009.  The proceeds held in the
trust account may be used as consideration to pay the sellers of a target
business with which we complete a business combination.  Any amounts
not paid as consideration to the sellers of such target business may be used to
finance operations of the target business.




Through
December 31, 2008, our efforts have been limited to organizational activities,
activities relating to our initial public offering, activities relating to
identifying and evaluating prospective acquisition candidates, including IDE,
and activities relating to general corporate matters; we have neither engaged in
any operations nor generated any revenues, other than interest income earned on
the proceeds of our private placement and initial public
offering.  For the year ended December 31, 2008, we earned $2,268,452
in interest income, all of which was received as of December 31,
2008.




For the
period from August 1, 2006 (inception) through December 31, 2006, we paid $1,453
in expenses.    For the year ended December 31, 2007, we
paid or incurred approximately $432,000 in expenses.  For the year
ended December 31, 2008, we paid or incurred approximately $2,470,422 in
expenses.  For the period from August 1, 2006 (inception) through
December 31, 2008, we paid or incurred an aggregate of $2,903,875 in expenses,
for the following purposes:




·
            premiums
      associated with our directors and officers liability
      insurance;




·
            estimated
      taxes incurred as a result of interest income earned on funds currently
      held in the trust account;




·
            franchise
      tax incurred in the State of
Delaware;




·
            monthly
      fee paid to Renova U.S. Management, LLC for office and administrative
      services;




·
            due
      diligence and investigation of prospective target
    businesses;




·
            legal
      and accounting fees relating to our reporting obligations under U.S.
      securities laws and general corporate matters;
  and




·
            other
      miscellaneous expenses.




We will
continue to earn interest on the trust account to finance our operations
(limited to $1,750,000 plus any amounts we may need to pay our income or other
tax obligations) prior to consummating a business combination.  We
currently believe that we have sufficient available funds to complete our
efforts to effect a business combination with one or more operating businesses
on or prior to May 18, 2009.  However, we cannot assure you that this
will be the case.  Please see the section entitled “Risk Factors” in
this annual report for a detailed discussion of the many risks to which we are
subject, a number of which (if they were to materialize) could adversely impact
our ability to effect a business combination.  As of December 31,
2008, $1,445,000 of working capital has been funded from the interest earned
from the funds held in the trust account, and an additional $305,000 from
interest earned on the funds held in the trust account will be available to fund
our future working capital requirements until such time, if any, that we
complete a business combination.  We have incurred, and expect to
continue to incur, expenses principally for the following purposes:




·
            premiums
      associated with our director’s and officer’s
  insurance;




·
            estimated
      taxes incurred as a result of interest income earned on funds currently
      held in the trust account;




·
            franchise
      tax incurred in the State of
Delaware;




·
            monthly
      fee paid to Renova U.S. Management, LLC for office and administrative
      services;




45
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·
            due
      diligence and investigation of prospective target
    businesses;




·
            legal
      and accounting fees relating to our reporting obligations under U.S.
      securities laws and general corporate
matters;




·
            structuring
      and negotiating a business combination, including the making of a down
      payment or the payment of exclusivity or similar fees and
      expenses;




·
            legal
      and accounting fees relating to our proposed Merger with IDE;
      and




·
            other
      miscellaneous expenses.




To the
extent we incur expenses prior to the completion of a business combination in
excess of the $1,750,000 (plus any amounts we may need to pay our income or
other tax obligations) available to us from the interest earned on the trust
account, we intend to pay such excess expenses from working capital available to
us following the consummation of a business combination.  If we do not
complete a business combination, one of our directors has agreed to indemnify us
against any claims by any vendor, prospective target business, or other entities
that are owed money from us for services rendered or products sold to us that
would reduce the amount of the funds in the trust account.




Since
June 1, 2007, we have paid a monthly fee of $7,500 to Renova U.S. Management
LLC, an affiliate of certain members of our management team, for office space
and certain administrative, technology and secretarial services provided to us
by that company.  We expect to continue to pay this monthly fee until
the time, if any, that we effect a business combination.




We may
use substantially all of the proceeds held in trust, other than the deferred
underwriting discounts and commissions of $3,450,000 and amounts used for
working capital and for taxes, to acquire one or more operating
businesses.  However, we may not use all the proceeds held in the
trust account in connection with a business combination, either because the
consideration for the business combination is less than the total proceeds that
are then held in the trust account or because we finance a portion of the
consideration by issuing our capital stock or debt securities, if the business
combination is structured in that manner and such alternative is then available
and deemed suitable.  In that event, the proceeds held in the trust
account as well as any other net proceeds not expended will be used to finance
the operations of the target business or businesses.  The operating
business or businesses that we acquire in such business combination or business
combinations must have, individually or collectively, a fair market value equal
to 80% of the value of our net assets, including the funds held in the trust
account that holds our initial public offering proceeds (excluding the deferred
underwriting discounts and commissions from our initial public
offering).  If we complete multiple business combinations that
collectively have a fair market value of 80% of the value our net assets, then
we would require that such transactions be completed
simultaneously.  We do not currently anticipate that we will complete
a business combination with more than one operating business; however, we cannot
assure you at this time that we will not do so.




As
described in this annual report, on December 15, 2008 our board of directors
approved a business combination with IDE.  IDE, through its
subsidiaries, is an established participant in the business of manufacturing new
and refurbishing existing land-based drilling rigs, rig components and rig
electrical systems and providing related services to the oil and gas drilling
equipment industry on a global basis.  Please refer to the section of
this annual report entitled “The Proposed Business Combination with Integrated
Drilling Equipment Company—General—The Merger Agreement,” for a detailed
description of the structure of the proposed Merger with IDE, including the
Merger consideration that we will pay and deliver at the closing of the Merger
and following the closing, subject to the terms and conditions described in that
section, related expenses and the sources of such Merger consideration and
related expenses.




We are
unable to assure you that our plans to consummate a business combination will be
successful or successful within the target business acquisition period, which
ends on May 18, 2009.  This factor, among others, raises substantial
doubts about our ability to continue operations as a going
concern.  Our financial statements, which are included in this annual
report, do not include any adjustments that may result from the outcome of this
uncertainty.




46
 Table of Contents




Critical
Accounting Policies




The
preparation of financial statements and related disclosures in conformity with
U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosures of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported.  Our actual results could materially
differ from those estimates.  We refer you to Note 2 of our financial
statements in this annual report for a summary of our significant accounting
policies.




Results
of Operations




Our net
loss of $372,970 for the year ended December 31, 2008 was comprised of
$2,268,452 of interest income on investments held in trust, offset by formation
and operating costs of $2,470,422 and a provision for income taxes of
$171,000.




Our net
income of $1,564,578 for the year ended December 31, 2007 was comprised of
$3,434,578 of interest income on investments held in trust, offset by formation
and operating costs of $432,000 and a provision for income taxes of
$1,438,000.




Our net
loss of $1,453 for the period from inception (August 1, 2006) through December
31, 2006 was comprised of formation and operating costs of $1,453.




Our net
income of $1,190,155 for the period from inception (August 1, 2006) through
December 31, 2008 was comprised of $5,703,030 of interest income on investments
held in trust, offset by formation and operating costs of $2,903,875 and a
provision for income taxes of $1,609,000.




Liquidity
and Capital Resources




As of
December 31, 2008, $115,081,369 was held in trust and $305,000 was available to
us to pay for fees and expenses relating to business, legal and accounting due
diligence on prospective target companies and continuing general and
administrative expenses, after giving effect to our withdrawal of approximately
$4,482,613 (of a total of $6,163,982) of interest earned on the funds held in
the trust account through such date.  Of the total amount held in the
trust account, $3,450,000 will be paid to the underwriters of our initial public
offering at such time, if any, as we complete a business combination with one or
more operating businesses, less up to approximately $1,034,655 that will be
distributed to our public shareholders who elect to receive their pro rata share of the trust
fund and do not approve the business combination that we complete, as described
in Note 1 of our financial statements in this annual report.  If we do
not complete a business combination with a target company and are forced to
liquidate, the entire deferred underwriters’ discounts and commissions of
$3,450,000 will remain in the trust fund and be distributed to our public
shareholders.  We have used $1,445,000 of the $4,482,613 that we have
withdrawn from the trust account through December 31, 2008 to pay fees and
expenses relating to our activities in connection with identifying and
conducting the related due diligence with respect to companies that we have
considered as possible candidates with which we would complete a business
combination, and for general corporate purposes.  The balance of
$3,037,613 of interest that we have withdrawn from the trust account has been
used to fund our franchise taxes and our actual and estimated income taxes
relating to interest income earned on the funds held in the trust
account.  The following table shows the total funds held in the trust
account as of December 31, 2008:





Net
      proceeds from our initial public offering and private placement of
      warrants toColumbus
      Holdings placed in trust
                
                $
                109,950,000Deferred
      underwriters’ discounts and commissions
                
                $
                3,450,000Total
      interest received to date
                
                $
                6,163,982Less:Interest
      income disbursed to us for working capital through December 31,
      2008
                
                $
                (1,445,000
                )Interest
      income disbursed to us to fund our income and other tax obligations with
      respect to interest income on the funds held in the trust
      account
                
                $
                (3,037,613
                )Total
      funds held in trust account through December 31, 2008
                
                $
                115,081,369





47
 Table of Contents




We
believe that the net proceeds that are held in trust and the amounts available
to us for working capital will be sufficient to allow us to consummate a
business combination before May 18, 2009.  If the net proceeds held in
trust prove to be insufficient, either because of the size of the target
business, the depletion of the available net proceeds expended in search of a
target business, or our obligation to convert into cash up to 29.99% of our
common shares held by the public shareholders that elect to receive their pro rata share of the trust
fund and do not approve the business combination as described in Note 1 of our
financial statements, we may be required to seek additional financing through
the issuance of additional shares of our common or preferred stock, or obtain
acquisition financing from a commercial or other lender, to complete a business
combination.  As of the date of this annual report and since at least
mid-2007, the financial markets generally, and the credit markets in particular,
are and have been experiencing substantial turbulence and turmoil, and extreme
volatility, both in the United States and in other markets
worldwide.  The current market situation has resulted generally in
substantial reductions in available loans to a broad spectrum of businesses,
increased scrutiny by lenders of the credit-worthiness of borrowers, more
restrictive covenants imposed by lenders upon borrowers under credit and similar
agreements and, in some cases, increased interest rates under commercial and
other loans, and decreased availability of equity capital.  We cannot
predict whether the current situation in the credit and equity markets will
improve or whether it will deteriorate further.  If we require or are
relying upon additional financing to complete a business combination, we cannot
assure you that such financing will be available upon commercially acceptable
terms or at all.  To the extent that additional financing proves to be
unavailable when needed to consummate a particular business combination, we
would be compelled to either restructure the transaction or abandon that
particular business combination and seek to effect a business combination with
an alternative target business.  If we fail to complete a specific
business combination after expending substantial management time and attention
and incurring substantial costs for accountants, attorneys, and others, such
costs likely would not be recoverable, which could have a material adverse
effect our subsequent ability to locate and engage in a business combination
with another target business on or before May 18, 2009.  In addition,
even if we do not need additional financing to consummate a business
combination, we may require additional financing to fund the operations or
growth of the target business.  The failure to secure such financing
could have a material adverse effect on the continued development or growth of
the business or businesses with which we effect a business
combination.  None of our officers, directors or shareholders is
required to provide any financing to us in connection with, or following, a
business combination.




The
initial operating business or businesses with which we effect a business
combination must have a total fair market value equal to at least 80% of the
value of our net assets, including the funds held in the trust account that
holds our initial public offering proceeds (excluding the deferred underwriting
discounts and commissions from our initial public offering).  However,
we may not use all of the proceeds held in the trust account in connection with
a business combination, either because the consideration for the business
combination is less than the proceeds held in trust or because we finance a
portion of the consideration through the issuance of our equity or debt
securities.  In that event, the proceeds held in the trust account as
well as any other net proceeds not expended to complete the business combination
will be used to finance the operations of the business or businesses with which
we effect a business combination.




We may
issue additional shares of our capital stock or our debt securities to finance a
business combination.  The issuance of additional capital stock
(currently 2,225,000 authorized but unissued and unreserved common shares
available for issuance), including upon conversion of any convertible debt
securities we may issue, or the incurrence of debt, could have material
consequences on our business and financial condition.  The issuance of
additional shares of our capital stock (including upon conversion of convertible
debt securities, if any):




·
            may
      significantly reduce the equity interest of our
    shareholders;




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




48
 Table of Contents




·
            may
      adversely affect the prevailing market price of our common
      stock.




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




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




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




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




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




We will
be forced to liquidate if we are unable to complete the Merger with IDE or any
other business combination on or prior to May 18, 2009 (24 months from the
effective date of our initial public offering).  If we are forced to
liquidate, the per share liquidation amount may be less that the initial per
unit public offering price of our units because of the underwriting commissions
and expenses related to our public offering and because of the value of the
warrants included in the units we sold in our initial public
offering.  Additionally, if third parties make claims against us, the
offering proceeds held in the trust account could be subject to those claims,
resulting in a further reduction in the per share liquidation
price.  Under Delaware law, our shareholders who have received
distributions from us may be held liable for claims by third parties to the
extent such claims are not paid by us.  Furthermore, our warrants will
expire worthless if we liquidate before we complete a business
combination.




In
addition, McGladery & Pullen, LLP, our independent registered public
accounting firm, has included a going concern explanatory paragraph in their
report of independent registered public accounting firm and we have disclosed in
Note 1 to our financial statements that our ability to continue as a going
concern is dependent upon the completion of a business combination and our
ability to defer payments to certain vendors.




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




The
following table summarizes Columbus’s contractual obligations and commitments as
of December 31, 2008:




Payments
      Due by Period
                      
                      Less
      than
                      
                      
                      1 -
      3
                      
                      
                      3 -
      5
                      
                      
                      More
      than1
      Year
                      
                      
                      Years
                      
                      
                      Years
                      
                      
                      5
      YearsContractual
      Obligations (1)(2)
                      
                      
                      172,500
                      
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —Total
                      
                      
                      172,500
                      
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —





49
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(1)                   Represents
sums payable to Renova U.S. Management LLC, a company that is controlled by
Andrew Intrater, for office space, office and secretarial services commencing
June 2007 and continuing at $7,500 per month and terminating upon the earlier of
the time that we either (i) consummate a business combination or (ii) liquidate;
and includes certain legal and advisory fees related to the proposed Merger as
described in Item 1.




(2)                   Does
not include obligations which are contingent upon the consummation of a business
combination.  Such obligations would include approximately $3,450,000
which the underwriters in Columbus’s initial public offering deposited in the
trust account at Morgan Stanley, maintained by Continental Stock Transfer &
Trust Company, as trustee, and which fees will be deferred and paid to such
underwriters only upon consummation of a business combination by May 18, 2009
and various consulting and advisory fees of approximately $1,435,000 payable
upon successful completion of the merger. In the event a business combination is
not completed, the Company will not be obligated to pay the majority of such
fees.




Impact
of Recent Accounting Pronouncements




The
preparation of financial statements and related disclosures in conformity with
generally accepted accounting principles in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosures of contingent assets and liabilities at the
date of the financial statements, and income and expenses during the periods
reported.  Our actual results could materially differ from those
estimates.  We refer you to Note 2 of our financial statements
included in Item 8 of Part II of this annual report for a summary of our
significant accounting policies.




Reference
is made to Note 2 of our Financial Statements for a discussion of recently
issued accounting pronouncements that could potentially impact us.




In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements,
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements.  SFAS 157 is effective in fiscal years beginning
after November 15, 2007.  The Company's adoption of SFAS 157 as of
January 1, 2008 did not have a material effect on the Company's financial
condition or results of operations.




In
December, 2007, the FASB issued SFAS No. 141R, Business Combinations, which
requires an acquirer to recognize the assets acquired, the liabilities assumed,
and any noncontrolling interest in the acquiree at the acquisition date,
measured at their fair market values as of that date.  Adoption of
SFAS 141(R) is required for combinations with an acquisition date on or after
the beginning of the first annual reporting period beginning on or after
December 15, 2008.  Early adoption and retroactive application of SFAS
141(R) to fiscal years preceding the effective date are not permitted. SFAS
141(R) will apply to us with respect to any acquisitions that we complete on or
after January 1, 2009.




In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements- an amendment of ARB No. 51,which
amends ARB No. 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary.  SFAS 160 clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements.  The
effective date for SFAS 160 is for annual periods beginning on or after December
15, 2008.  Early adoption and retroactive application of SFAS 160 to
fiscal years preceding the effective date are not permitted.  SFAS 160
will apply to us with respect to any acquisition that we complete on or after
January 1, 2009, which result in a noncontrolling interest.




50
 Table of Contents





Item 7A.
            Quantitative
      and Qualitative Disclosures about Market
Risk




To date,
our efforts have been limited to organizational activities and activities
relating to our initial public offering and the identification of a target
business; we have neither engaged in any operations nor generated any
revenues.  As the proceeds from our initial public offering held in
trust have been invested in short term investments, our only market risk
exposure relates to fluctuations in interest rates.




The
proceeds of $113,400,000 from our initial public offering, including $3,650,000
of proceeds from the private placement sale of 3,650,000 insider warrants to
certain of our officers, directors and initial shareholders, that are held in
trust (including approximately $3,450,000 of deferred underwriting discounts and
commissions) have been invested in a money market fund that invests principally
in short-term securities issued or guaranteed by the United
States.  As of February 17, 2009, the effective annualized interest
rate payable on our investment was approximately 0.34%. Assuming no other
changes to our holdings as of February 17, 2009, a 1% decrease in the underlying
interest rate payable on our investment as of February 17, 2009 would result in
a decrease of approximately $283,400 in the interest earned on our investment
for the following 90-day period, and a corresponding decrease in our net
increase in shareholders’ equity resulting from operations, if any, for that
period.




We have
not engaged in any hedging activities since our inception on August 1,
2006.  We do not expect to engage in any hedging activities with
respect to the market risk to which we are exposed.




51
 Table of Contents




Item 8.
            Financial
      Statements and Supplementary Data




Index to Financial
Statements




Document
                                        
                                        PageReports of Independent Registered Public Accounting
      Firms
                                        
                                        F-1Report of Independent Registered Public Accounting Firm (on
      internal control over financial reporting)
                                        
                                        F-3Consolidated Balance Sheets at December 31, 2008 and December
      31, 2007
                                        
                                        F-4ConsolidatedStatements of Operations for
      the years ended December 31, 2008 and 2007, and the periods from August 1,
      2006 (inception) through December 31, 2006 and December 31,
      2008
                                        
                                        F-5ConsolidatedStatements of Stockholders’
      Equity for the period from August 1, 2006 (inception) though December 31,
      2008
                                        
                                        F-6ConsolidatedStatements of Cash Flows for the
      years ended December 31, 2008 and 2007, and the periods from August 1,
      2006 (inception) through December 31, 2006 and December 31,
      2008
                                        
                                        F-7Notes to Financial Statements
                                        
                                        F-8





52
 Table of Contents




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM





To the
Board of Directors and Stockholders


Columbus
Acquisition Corp.





We have
audited the accompanying statements of operations, shareholders’ equity and cash
flows of Columbus Acquisition Corp. (a development stage corporation) for the
period from August 1, 2006 (inception) to December 31, 2006.  These
financial statements are the responsibility of the Company’s
management.  Our responsibility is to express an opinion on these
financial statements based on our audit.





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





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the results of operations and cash flows of Columbus
Acquisition Corp for the period from August 1, 2006 (inception) to December 31,
2006 of. in conformity with United States generally accepted accounting
principles.




The
accompanying financial statements have been prepared assuming Columbus
Acquisition Corp. will continue as a going concern. Columbus Acquisition Corp.
has a net loss, working capital deficiency and has no operations. This raises
substantial doubt about Columbus Acquisition Corp.’s ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.






/s/ GOLDSTEIN GOLUB KESSLER LLP




GOLDSTEIN
GOLUB KESSLER LLP


New York,
New York





January
31, 2007





F-1
 Table of Contents




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors and Stockholders


Columbus
Acquisition Corp.





We have
audited the accompanying consolidated balance sheets of Columbus Acquisition
Corp. and Subsidiary (a development stage company) (the “Company”) as of
December 31, 2008 and 2007, and the related consolidated statements of
operations, stockholders’ equity and cash flows for the years then ended, and
the amounts included in the cumulative columns in the consolidated statements of
operations and cash flows for the period from August 1, 2006 (inception) to
December 31, 2008. These consolidated financial statements are the
responsibility of the Company’s management.  Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.  The financial statements for the period from August 1, 2006
(inception) to December 31, 2006 were audited by other auditors and our opinion,
insofar as it relates to cumulative amounts included for such periods is based
solely on the report of such auditors.





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





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Columbus
Acquisition Corp. and Subsidiary as of December 31, 2008 and 2007, and the
consolidated results of its operations and their cash flows for the years then
ended, and for the amounts included in the cumulative columns in the statements
of operations and cash flows for the period from August 1, 2006 (inception)
to  December 31, 2008, in conformity with U.S. generally accepted
accounting principles.





The
accompanying consolidated financial statements have been prepared assuming that
Columbus Acquisition Corp. will continue as a going concern. As discussed in
Note 1 to the consolidated financial statements, the Company will face a
mandatory liquidation by May 18, 2009 if a business combination is not
consummated, and the Company has a working capital deficiency without including
funds held in trust, which raise substantial doubt about its ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.





We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Columbus Acquisition Corp. and
Subsidiary’s   internal control over financial reporting as of
December 31, 2008, based on criteria established in Internal Control —
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission, and our report dated February 20, 2009 expressed an
unqualified opinion on the effectiveness of Columbus Acquisition Corp. and
Subsidiary’s internal control over financial reporting.






/s/McGLADREY
& PULLEN,
LLP


McGLADREY
& PULLEN, LLP


New
York, New York





February
20, 2009





F-2
 Table of Contents




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM





To the
Board of Directors and Stockholders


Columbus
Acquisition Corp.





We have
audited Columbus Acquisition Corp.’s internal control over financial reporting
as of December 31, 2008, based on criteria established in Internal Control —
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.  Columbus Acquisition Corp.’s management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Form 10-K.  Our responsibility
is to express an opinion on the company's internal control over financial
reporting based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects.  Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk.  Our
audit also included performing such other procedures as we considered necessary
in the circumstances.  We believe that our audit provides a reasonable
basis for our opinion.





A
company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.  A company's internal
control over financial reporting includes those policies and procedures that (a)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company;
(b) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (c) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial
statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





In our
opinion, Columbus Acquisition Corp. maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2008,
based on criteria established in Internal Control — Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission.





We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Columbus
Acquisition Corp. at December 31, 2008 and 2007, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
then ended, and the amounts included in the cumulative columns in the
consolidated  statements of operations, and cash flows for the period
from August 1, 2006 (inception) to December 31, 2008, and our report dated
February 20, 2009 expressed an unqualified opinion.






/s/McGLADREY
& PULLEN,
LLP




McGLADREY
& PULLEN, LLP


New
York, New York





February
20, 2009





F-3
 Table of Contents




COLUMBUS
ACQUISITION CORP. and SUBSIDIARY


(A
Development Stage Company)




CONSOLIDATED BALANCE SHEETS




December 31,
                  2008
              
              
              December 31,
                  2007ASSETSCurrent
      assets:Cash
              
              $
              1,672
              
              
              $
              84,716Investments held
      in trust
              
              
              111,631,369
              
              
              
              113,015,340Deferred
      underwriter commissions held in trust
              
              
              3,450,000
              
              
              
              3,450,000Prepaid
      expenses
              
              
              188,584
              
              
              
              19,370Total
      current assets
              
              
              115,271,625
              
              
              
              116,569,426Deferred
      tax asset
              
              
              1,160,000
              
              
              
              144,000Total
      assets
              
              $
              116,431,625
              
              
              $
              116,713,426LIABILITIES
      AND STOCKHOLDERS' EQUITYLiabilities:Accrued
      expenses
              
              $
              1,321,275
              
              
              $
              83,296Current
      income tax liabilities
              
              
              —
              
              
              
              1,582,000Deferred
      interest
              
              
              460,952
              
              
              
              25,762Due
      to underwriter
              
              
              3,450,000
              
              
              
              3,450,000Total
      liabilities
              
              
              5,232,227
              
              
              
              5,141,058Common
      stock subject to possible conversion - 4,311,063 shares
              
              
              32,979,628
              
              
              
              32,979,628CommitmentsStockholders'
      equity:Preferred
      stock, $0.0001 par value, 1,000,000 shares authorized; none issued or
      outstandingCommon
      stock, $0.0001 par value, 39,000,000 shares authorized; 17,500,000 shares
      (which includes 4,311,063 subject to possible conversion)
              
              
              1,750
              
              
              
              1,750Additional
      paid-in capital
              
              
              77,027,865
              
              
              
              77,027,865Retained
      earnings accumulated during the development stage
              
              
              1,190,155
              
              
              
              1,563,125Total
      stockholders' equity
              
              
              78,219,770
              
              
              
              78,592,740Total
      liabilities and stockholders' equity
              
              $
              116,431,625
              
              
              $
              116,713,426





See
Notes to Financial Statements





F-4
 Table of Contents





COLUMBUS
ACQUISITION CORP. and
SUBSIDIARY


(A
Development Stage Company)





CONSOLIDATED STATEMENTS OF OPERATIONS





Year Ended
                  December 31,
                  2008
              
              
              Year Ended
                  December 31,
                  2007
              
              
              Period from
                August 1, 2006
                (Inception) to
                December 31,
                  2006
              
              
              Period from
                August 1, 2006
                (Inception) to
                December 31,
                  2008Interest
      income
              
              $
              2,268,452
              
              
              $
              3,434,578
              
              
              $
              —
              
              
              $
              5,703,030Formation
      and operating costs
              
              
              (2,470,422
              )
              
              
              (432,000
              )
              
              
              (1,453
              )
              
              
              (2,903,875
              )(Loss)
      income before provision for income taxes
              
              
              (201,970
              )
              
              
              3,002,578
              
              
              
              —
              
              
              
              2,799,155Provision
      for income taxes
              
              
              (171,000
              )
              
              
              (1,438,000
              )
              
              
              —
              
              
              
              (1,609,000
              )Net
      (loss) income
              
              $
              (372,970
              )
              
              $
              1,564,578
              
              
              $
              (1,453
              )
              
              $
              1,190,155Net
      (loss) income per common share – basic and diluted
              
              $
              (0.02
              )
              
              $
              0.13
              
              
              $
              (0.00
              )
              
              $
              0.09Weighted
      average number of common shares outstanding – basic and
      diluted
              
              
              17,500,000
              
              
              
              12,065,068
              
              
              
              3,125,000
              
              
              
              13,231,975




See
Notes to Financial Statements




F-5
 Table of Contents




COLUMBUS
ACQUISITION CORP. and
SUBSIDIARY


(A
Development Stage Company)





CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY




Common Stock
              
              
              Additional
                  Paid-in
              
              
              Retained
                  Earnings
                  (Deficit)
                  Accumulated
                  During the
                  Development
              
              
              Stock-
                  holders'Shares
              
              
              Amount
              
              
              Capital
              
              
              Stage
              
              
              EquityIssuance
      of common stock on August 10, 2006 at $0.008 per share to initial
      shareholders
              
              
              3,125,000
              
              
              $
              313
              
              
              $
              24,687
              
              
              
              —
              
              
              $
              25,000Net
      loss for the period from August 1, 2006 (inception) to December 31,
      2006
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (1,453
              )
              
              
              (1,453
              )Balance
      at December 31, 2006
              
              
              3,125,000
              
              
              
              313
              
              
              
              24,687
              
              
              
              (1,453
              )
              
              
              23,547Sale
      of private placement warrants at $1.00 per warrant
              
              
              —
              
              
              
              —
              
              
              
              3,650,000
              
              
              
              —
              
              
              
              3,650,000Sale
      of 14,375,000 units net of underwriter discount and offering
      expenses(including 4,311,063 shares subject to possible conversion) at
      $8.00 per unit
              
              
              14,375,000
              
              
              
              1,437
              
              
              
              106,332,706
              
              
              
              —
              
              
              
              106,334,143Reclassification
      from stockholders’ equity of proceeds from sale of 4,311,063 shares
      subject to possible conversion
              
              
              —
              
              
              
              —
              
              
              
              (32,979,628
              )
              
              
              —
              
              
              
              (32,979,628
              )Sale
      of underwriters' purchase option
              
              
              —
              
              
              
              —
              
              
              
              100
              
              
              
              —
              
              
              
              100Net
      income for the year ended December 31, 2007
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              1,564,578
              
              
              
              1,564,578Balance,
      December 31, 2007
              
              
              17,500,000
              
              
              $
              1,750
              
              
              $
              77,027,865
              
              
              $
              1,563,125
              
              
              $
              78,592,740Net
      loss for the year ended December 31, 2008
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (372,970
              )
              
              
              (372,970
              )Balance,
      December 31, 2008
              
              
              17,500,000
              
              
              $
              1,750
              
              
              $
              77,027,865
              
              
              $
              1,190,155
              
              
              $
              78,219,770




See
Notes to Financial Statements
  F-6
 Table of Contents





COLUMBUS
ACQUISITION CORP. and
SUBSIDIARY


(A
Development Stage Company)





CONSOLIDATED STATEMENTS OF CASH FLOWS




Year Ended,
                                                                        December 31,
                                                                          2008
                                                                      
                                                                      
                                                                      Year Ended,
                                                                        December 31,
                                                                          2007
                                                                      
                                                                      
                                                                      Period from
                                                                          August 1, 2006
                                                                          (Inception) to
                                                                          December 31,
                                                                          2006
                                                                      
                                                                      
                                                                      Period from
                                                                          August 1, 2006
                                                                          (Inception) to
                                                                          December 31,
                                                                          2008Cash
      flows from operating activities:Net
      (loss) income
                                                                      
                                                                      $
                                                                      (372,970
                                                                      )
                                                                      
                                                                      $
                                                                      1,564,578
                                                                      
                                                                      
                                                                      $
                                                                      (1,453
                                                                      )
                                                                      
                                                                      $
                                                                      1,190,155Adjustments
      to reconcile net (loss) income to net cash provided by (used in) operating
      activities:Interest
      on investments held in trust
                                                                      
                                                                      
                                                                      (2,703,642
                                                                      )
                                                                      
                                                                      
                                                                      (3,460,340
                                                                      )
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (6,163,982
                                                                      )Deferred
      tax asset
                                                                      
                                                                      
                                                                      (1,016,000
                                                                      )
                                                                      
                                                                      
                                                                      (144,000
                                                                      )
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (1,160,000
                                                                      )Prepaid
      expenses
                                                                      
                                                                      
                                                                      2,536
                                                                      
                                                                      
                                                                      
                                                                      (19,370
                                                                      )
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (16,834
                                                                      )Accrued
      expenses
                                                                      
                                                                      
                                                                      1,237,979
                                                                      
                                                                      
                                                                      
                                                                      83,296
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      1,321,275Current
      tax liabilities
                                                                      
                                                                      
                                                                      (1,753,750
                                                                      )
                                                                      
                                                                      
                                                                      1,582,000
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (171,750
                                                                      )Deferred
      interest
                                                                      
                                                                      
                                                                      435,190
                                                                      
                                                                      
                                                                      
                                                                      25,762
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      460,952Net
      cash used in operating activities
                                                                      
                                                                      
                                                                      (4,170,657
                                                                      )
                                                                      
                                                                      
                                                                      (368,074
                                                                      )
                                                                      
                                                                      
                                                                      (1,453
                                                                      )
                                                                      
                                                                      
                                                                      (4,540,184
                                                                      )Cash
      flows from investing activities:Cash
      deposit in trust accounts
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (113,400,000
                                                                      )
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (113,400,000
                                                                      )Disbursement
      of interest earned on investments held in trust
                                                                      
                                                                      
                                                                      4,087,613
                                                                      
                                                                      
                                                                      
                                                                      395,000
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      4,482,613Net
      cash provided by (used in) investing activities
                                                                      
                                                                      
                                                                      4,087,613
                                                                      
                                                                      
                                                                      
                                                                      (113,005,000
                                                                      )
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (108,917,387
                                                                      )Cash
      flows from financing activities:Proceeds
      from public offering
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      115,000,000
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      115,000,000Payments
      of public offering costs
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (5,085,330
                                                                      )
                                                                      
                                                                      
                                                                      (130,527
                                                                      )
                                                                      
                                                                      
                                                                      (5,215,857
                                                                      )Proceeds
      from private placement of warrants
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      3,650,000
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      3,650,000Proceeds
      from note payable to shareholder
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      150,000
                                                                      
                                                                      
                                                                      
                                                                      150,000Repayment
      of note payable to shareholder
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (150,000
                                                                      )
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (150,000
                                                                      )Proceeds
      from sale of shares of common stock
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      25,000
                                                                      
                                                                      
                                                                      
                                                                      25,000Proceeds
      from underwriters purchase option
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      100
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      100Net
      cash provided by financing activities
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      113,414,770
                                                                      
                                                                      
                                                                      
                                                                      44,473
                                                                      
                                                                      
                                                                      
                                                                      113,459,243Net
      (decrease) increase in cash
                                                                      
                                                                      
                                                                      (83,044
                                                                      )
                                                                      
                                                                      
                                                                      41,696
                                                                      
                                                                      
                                                                      
                                                                      43,020
                                                                      
                                                                      
                                                                      
                                                                      1,672Cash,
      beginning of period
                                                                      
                                                                      
                                                                      84,716
                                                                      
                                                                      
                                                                      
                                                                      43,020
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —Cash,
      end of period
                                                                      
                                                                      $
                                                                      1,672
                                                                      
                                                                      
                                                                      $
                                                                      84,716
                                                                      
                                                                      
                                                                      $
                                                                      43,020
                                                                      
                                                                      
                                                                      $
                                                                      1,672Supplemental
      disclosure of non-cash financing activities:Accrual
      of deferred underwriting fees
                                                                      
                                                                      $
                                                                      —
                                                                      
                                                                      
                                                                      $
                                                                      3,450,000
                                                                      
                                                                      
                                                                      $
                                                                      —
                                                                      
                                                                      
                                                                      $
                                                                      3,450,000Accrual
      of deferred offering costs
                                                                      
                                                                      $
                                                                      —
                                                                      
                                                                      
                                                                      $
                                                                      —
                                                                      
                                                                      
                                                                      $
                                                                      211,500
                                                                      
                                                                      
                                                                      $
                                                                      —


See
Notes to Financial Statements
  F-7
 Table of Contents




NOTES TO FINANCIAL STATEMENTS




Note
1 - Organization and nature of business operations:





Columbus
Acquisition Corp. (the "Company") was incorporated in Delaware on August 1, 2006
as a blank check company whose objective is to acquire through a Merger, stock
exchange, asset acquisition or similar business combination a currently
unidentified operating business or businesses.




Going
concern consideration – There is substantial doubt about the Company’s ability
to continue as a going concern due to the requirement that the Company completes
a business combination by May 18, 2009 or it will be forced to liquidate and as
a result of a working capital deficiency, without including funds held in trust,
as of December 31, 2008.  The Company plans to address these matters
by making efforts to complete a business combination by May 18, 2009 and has
entered into a Merger Agreement with Integrated Drilling Equipment Company,
which is subject to stockholder approval as discussed in Notes 1 and
11.  The Company plans to fund its operations by deferring payments to
certain vendors.  There is no assurance that the Company will complete
a business combination by May 18, 2009.  The accompanying financial
statements do not include any adjustments that may result from the outcome of
this uncertainty.




The
registration statement for the Company's initial public offering for the sale of
units of shares of common stock and warrants to purchase common stock (the
"Public Offering") was declared effective May 18, 2007 (see Note 3). The Company
consummated the Public Offering on May 23, 2007 and received net proceeds of
approximately $113,400,000, including $3,650,000 of proceeds from the private
placement (the "Private Placement") sale of 3,650,000 insider warrants to
certain officers, directors and shareholders of the Company. The warrants sold
in the Private Placement were identical to the warrants sold in the Public
Offering, but the purchasers in the Private Placement have waived their rights
to receive any distributions on liquidation in the event the Company does not
complete a business combination (as described below).




The
Company's management has broad discretion with respect to the specific
application of the net proceeds of this Public Offering, although substantially
all of the net proceeds of the Public Offering are intended to be generally
applied toward consummating a business combination with an operating business
("Business Combination"), which may not constitute a business combination for
accounting purposes. Furthermore, there is no assurance that the Company will be
able to successfully effect a Business Combination. Upon the closing of the
Public Offering and Private Placement, $113,400,000, including $3,450,000
applicable to the underwriters' discounts and commissions as described in Note 3
was deposited in a trust account ("Trust Account") in a money market fund
invested in government securities. The trust account will be maintained until
the earlier of (i) the consummation of its first Business Combination or (ii)
the liquidation of the Company. The placement of funds in the Trust Account may
not protect those funds from third party claims against the Company. Although
the Company will seek to have all vendors, prospective target businesses or
other entities it engages, execute agreements with the Company waiving any
right, title, interest or claim of any kind in or to any amounts held in the
Trust Account, there is no guarantee that they will execute such agreements. One
of the Company's directors has agreed that he will be personally liable under
certain circumstances to ensure that the proceeds in the Trust Account are not
reduced by the claims of target businesses or vendors or other entities that are
owed money by the Company for services rendered, contracted for or products sold
to the Company. However, there can be no assurance that the director will be
able to satisfy those obligations. The remaining net proceeds (not held in the
Trust Account),  may be used to pay for business, legal and accounting
due diligence on prospective acquisitions and continuing general and
administrative expenses.  In addition the Company is allowed to use
income earned on trust to pay franchise and income taxes and up to $1,750,000
for working capital purposes.




The
Company, after signing a definitive agreement for an acquisition, is required to
submit such transaction for shareholder approval. In the event that shareholders
owning 30% or more of the shares sold in the Public Offering vote against the
Business Combination and exercise their conversion rights described below, the
Business Combination will not be consummated. All of the Company's shareholders
prior to the Public Offering, including all of the officers and directors of the
Company (the "Initial Stockholders"), have agreed to vote
their 3,125,000 founding shares of common stock, as well as any shares of common
stock acquired inother
shareholders of the Company (the "Public Stockholders") with respect to any
Business Combination. After consummation of a Business Combination, these voting
safeguards will no longer be applicable.




F-8
 Table of Contents




Note
1 - Organization and nature of business operations (continued):




With
respect to a Business Combination which is approved and consummated, any Public
Stockholder who voted against the Business Combination may demand that the
Company redeem his or her shares for cash. The per share redemption price will
equal the amount in the Trust Account, calculated as of two business days prior
to the consummation of the proposed Business Combination, divided by the number
of shares of common stock held by Public Stockholders at the consummation of the
Public Offering. Accordingly, Public Stockholders holding 29.99% of the
aggregate number of shares owned by all Public shareholders may seek redemption
of their shares in the event of a Business Combination. Such Public Stockholders
are entitled to receive their per share interest in the Trust Account (subject
to distributions for working capital and amounts paid or accrued for taxes)
computed without regard to the shares held by Initial Stockholders. Accordingly,
a portion of the net proceeds from the Public Offering (29.99% of the amount
held in Trust Fund, excluding the deferred portion of the underwriters' discount
and commission) has been classified as common stock subject to possible
conversion on the accompanying December 31, 2008 balance sheet. In addition,
such shareholders would be entitled to a portion of the deferred portion of the
underwriters' discount and commission held in trust (see Note 3).




The
Company's Certificate of Incorporation provides that the Company will continue
in existence only until 24 months from the Effective Date of the Public
Offering. If the Company has not completed a Business Combination by such date,
its corporate existence will cease and it will dissolve and liquidate for the
purposes of winding up its affairs. In the event of liquidation, it is likely
that the per share value of the residual assets remaining available for
distribution (including Trust Fund assets) will be less than the offering price
per share in the Public Offering (assuming no value is attributed to the
Warrants contained in the Units sold in the Public Offering as discussed in Note
3).




Note
2 - Summary of significant accounting policies:





Basis
of Presentation:


The
consolidated financial statements include the accounts of Columbus Acquisition
Corp. and its wholly owned subsidiary IDE Acquisition, LLC (collectively
referred to as the “Company”). All significant intercompany transactions and
balances have been eliminated. The statements and related notes have been
prepared on the accrual basis of accounting in accordance with accounting
principals generally accepted in the United States.




Investments
held in trust:


Investments
held in trust consist of taxable and tax-free investments in a money market fund
that invests exclusively in obligations of the U.S. government and its agencies
and instrumentalities, and in repurchase agreements collateralized by such
securities.





Deferred
Interest:


A portion
(29.99%) of the interest earned on the Trust Account has been deferred on the
balance sheet as it represents interest attributable to the common stock subject
to possible conversion. (See Note 1).




Concentration
of credit risk:


Financial
instruments that potentially subject us to a significant concentration of credit
risk consist primarily of cash and investments held in trust. All of the funds
held in the Trust Account have been invested in a money market fund maintained
by Morgan Stanley Investment Management. Specifically, this money market fund is
held within the “Government Portfolio” of one of the Morgan Stanley
Institutional Liquidity Funds, a money market fund that invests exclusively in
obligations of the U.S. government and its agencies and instrumentalities, and
in repurchase agreements collateralized by such securities. We have been advised
by Morgan
Stanley that the money market fund in which we have invested the funds held in
the Trust Account is held in a separate stand-alone investment company with an
independent board of directors or trustees, and theTrust
Account assets are held in a separate segregated account for this money market
fund at a custodian bank(J.P.
Morgan Chase & Co. in our case). Our investment of the Trust Account funds
in this money market fund remains separate from the assets of Morgan Stanley and
its subsidiaries, and cannot be commingled at any time with assets of Morgan
Stanley or its subsidiaries. However, an investment in this money market fund is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. We are exposed to credit risk in the event that the
financial position of the financial institution that holds the Trust Account
assets deteriorates and such financial institution is no longer able to satisfy
its financial obligations.




F-9
 Table of Contents




Note
2 - Summary of significant accounting policies (continued):





Fair
value of financial instruments:


The fair
values of the Company's assets and liabilities that are defined as financial
instruments under Statement of Financial Accounting Standards ("SFAS") No. 107
"Disclosures about Fair Value of Financial Instrument," approximate their
carrying amounts presented in the balance sheets at December 31, 2008 and
December 31, 2007.





New
accounting pronouncements:





In
December 2007, the FASB
issued SFAS No. 141(R), Business Combinations (“SFAS 141R”), which establishes principles
and requirements for how the acquirer of a business recognizes and measures in
its financial statements the identifiable assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree.  SFAS 141R
also provides guidance for recognizing and measuring the goodwill acquired in
the business combination and determines what information to disclose to enable
users of the financial statements to evaluate the nature and financial effects
of the business combination.  SFAS 141R will apply to us with respect to any
acquisitionsthat we
complete on or after January 1, 2009.




In
December 2007, the FASB released SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB No. 51 (“SFAS 160”), which
establishes accounting and reporting standards for the ownership interests in
subsidiaries held by parties other than the parent and for the deconsolidation
of a subsidiary.  SFAS 160 also establishes disclosure requirements
that clearly identify and distinguish between the interest of the parent and the
interests of the non-controlling owners. SFAS 160 is effective for financial
statements issued for fiscal years beginning after December 15,
2008.  SFAS 160 will apply to us with respect to any acquisitions,
that we complete on or after January 1, 2009, which will result in a
noncontrolling interest.




In June
2008, the FASB ratified EITF Issue No. 07-5, “Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock” (“EITF
07-5”).  EITF 07-5 provides guidance on how to determine if certain
instruments or embedded features are considered indexed to our own stock,
including instruments similar to our convertible notes and warrants to purchase
our stock.  EITF 07-5 requires companies to use a two-step approach to
evaluate an instrument’s contingent exercise provisions and settlement
provisions in determining whether the instrument is considered to be indexed to
its own stock and exempt from the application of SFAS No. 133, “Accounting for
Derivative Instruments and Hedging Activities”.  Although EITF 07-5 is
effective for fiscal years beginning after December 15, 2008, any outstanding
instrument at the date of adoption will require a retrospective application of
the accounting through a cumulative effect adjustment to retained earnings upon
adoption.  The Company is currently evaluating the impact that
adoption of EITF 07-5 will have on its consolidated financial
statements.




In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS
157”), which defines fair value, establishes a framework for measuring fair
value in accordance with generally accepted accounting principles, and expands
disclosures about fair value measurements.  SFAS 157 does not require
any new fair value measurements; rather, it applies under other accounting
pronouncements that require or permit fair value measurements.  The
provisions of SFAS 157 are to be applied prospectively as of the beginning of
the fiscal
year in which it is initially applied, with any transition adjustment recognized
as a cumulative-effect adjustment to the opening balance of retained
earnings.  The provisions of SFAS 157 are effective for fiscal years
beginning after November 15, 2007.  The Company adopted the provisions
of SFAS 157 on January 1, 2008.  The Company’s adoption of SFAS 157
did not have a material effect on the Company’s consolidated financial
statements.  See Fair Value of Financial Instruments and Investments
below in Note 2.




F-10
 Table of Contents




Note
2 - Summary of significant accounting policies (continued):




No other
recently issued accounting pronouncements that became effective during the year
ended December 31, 2008 or that will become effective in a subsequent period has
had or is expected to have a material impact on our financial
statements.




Net
(loss) income per common share:





Basic net
(loss) income per common share is computed by dividing net (loss) income by the
weighted average number of shares outstanding during each period. Diluted net
(loss) income per common share reflects the additional dilution for all
potentially dilutive securities such as outstanding warrants and the
underwriters' option described in Note 3. The effect of the warrants outstanding
as of December 31, 2008 for the purchase of 18,025,000 shares issued in
connection with the Public Offering described in Note 3 have not been considered
in the computation of diluted net (loss) income per share since the ability of
the holders to exercise the warrants is contingent upon the consummation of a
Business Combination. The effects of the 625,000 units (1,250,000 shares of
common stock and equivalents) included in the underwriters’ option has not been
considered in the calculation of diluted earnings per common share since the
average market price of a unit through December 31, 2008 was less than the
exercise price per unit.




Income taxes:





The
Company accounts for income taxes pursuant to the asset and liability method
which requires deferred income tax assets and liabilities to be computed
annually for temporary differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future 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. The income tax provision or benefit is the tax
payable (including any interest and penalties incurred during the period) or
refundable for the period plus or minus the change during the period in deferred
tax assets and liabilities.




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 disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those
estimates.




Fair
Value of Financial Instruments and Investments:





Pursuant
to the provisions as prescribed in SFAS 157, the Company categorizes its
financial instruments into a three-level hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value into three broad
levels.  The fair value hierarchy gives the highest priority to quoted
prices in active markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3).  If the inputs used
to measure fair value fall within different levels of the hierarchy, the
category level is based on the lowest priority level input that is significant
to the fair value measurement of the instrument.





F-11
 Table of Contents




Note
2 - Summary of significant accounting policies (continued):





Financial
assets recorded at fair value on the Company’s consolidated balance sheets are
categorized as follows:





Level 1:
Unadjusted quoted prices for identical assets in an active market.





Level 2:
Quoted prices in markets that are not active or inputs that are observable
either directly or indirectly for substantially the full term of the
asset.  Level 2 inputs include the following:




·
            Quoted
      prices for similar assets in active
markets,





·
            Quoted
      prices for identical or similar assets in non-active
    markets,





·
            Inputs
      other than quoted market prices that are observable,
  and





·
            Inputs
      that are derived principally from or corroborated by observable market
      data through correlation or other
means.





Level 3:
Prices or valuation techniques that require inputs that are both unobservable
and significant to the overall fair value measurement.  They reflect
management’s own assumptions about the assumptions a market participant would
use in pricing the asset.





The
following table presents the Company’s hierarchy for its financial instruments
measured at fair value on a recurring basis as of December 31,
2008:





Level 1
                  
                  
                  Level 2
                  
                  
                  Level 3
                  
                  
                  TotalInvestments held
      in trust
                  
                  $
                  115,081,369
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  115,081,369Total
      assets measured at fair value on a recurring basis
                  
                  $
                  115,081,369
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  115,081,369





Note
3 - Initial public offering and value of unit purchase option:





On May
23, 2007, the Company sold 14,375,000 units ("Units"), including 1,875,000 units
pursuant to the over-allotment option granted to the underwriters, in the Public
Offering at a price of $8.00 per unit. Each Unit consists of one share of the
Company's common stock, $0.0001 par value, and one Redeemable Common Stock
Purchase Warrant ("Warrant") and, accordingly, the Company issued 14,375,000
shares of common stock and 14,375,000 warrants to purchasers of the units. Each
Warrant entitles the holder to purchase from the Company one share of common
stock at an exercise price of $6.00 per share commencing on the later of the
completion of a Business Combination with a Target Business or one year from the
effective date of the Public Offering and expires four years from the effective
date of the Public Offering, unless earlier redeemed. The Warrants will be
redeemable at a price of $0.01 per Warrant upon 90 days' notice after the
Warrants become exercisable, only in the event that the last sale price of the
common stock is at least $11.50 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. In accordance with the warrant agreement relating
to the Warrants sold and issued in the Public Offering, the Company is only
required to use its best efforts to maintain the effectiveness of the
registration statement covering the Warrants. The Company will not be obligated
to deliver securities, and there are no contractual penalties for failure to
deliver securities, if a registration statement is not effective at the time of
exercise. Additionally, in the event that a registration is not effective at the
time of exercise, the holder of such Warrant shall not be entitled to exercise
such Warrant and in no event (whether in the case of a registration statement
not being effective or otherwise) will the Company be required to net cash
settle the warrant exercise. Consequently, the Warrants may expire unexercised
and unredeemed.





F-12
 Table of Contents




Note
3 - Initial public offering and value of unit purchase option
(continued):




In
connection with the Public Offering, the Company paid Lazard Capital Markets
LLC, the underwriters of the Public Offering, underwriting discounts and
commissions of 7% of the gross Proceeds of the Offering ($8,050,000), of which
3% of the gross proceeds ($3,450,000) will be held in the Trust Account and
payable only upon the consummation of a Business Combination, less $0.24 per
share paid to converting stockholders (see Note 1). If a Business Combination is
approved and completed, public shareholders who voted against the Business
Combination and have exercised their conversion rights will be entitled to their
pro rata share of the deferred underwriters' discount and
commissions.




On May
30th, 2007,
the Warrants and the Units commenced trading separately.




Simultaneously
with the consummation of the Public Offering, certain of the initial
shareholders purchased 3,650,000 warrants ("Private Placement Warrants") at a
purchase price of $1.00 per warrant, in a private placement. The proceeds of
$3,650,000 were placed in the Trust Account. The Private Placement Warrants are
identical to the Warrants underlying the Units sold in the Public Offering
except that if the Company calls the Warrants for redemption, the Private
Placement Warrants will be exercisable on a cashless basis as long as they are
still held by the initial purchasers. The purchasers have agreed that the
Private Placement Warrants will not be sold or transferred by them until 90 days
after the completion of a Business Combination.




In
connection with this Offering, the Company issued an option to the underwriters,
for $100, to purchase up to a total of 625,000 Units at $10.00 per Unit
("Purchase Option"). The Units issuable upon exercise of this option are
identical to those offered in the Proposed Offering. The Purchase Option and its
underlying securities have been registered under the registration statement. The
Purchase Option has a term of five years.




The sale
of the option was accounted for as an equity transaction on the basis of the
proceeds received of $100 and not on the basis of the fair value of the
securities sold. The Company has determined, based upon a Black-Scholes model,
that the fair market value of the Purchase Option on the date of grant was
approximately $1,762,500, using an expected life of five years, volatility of
41% and a risk-free interest rate of 4.5%.




At the
time of issuance, the Company had no trading history. As a result, it was not
possible to value the Purchase Option based on historical trades. In order to
estimate the value of the Purchase Option for disclosure purposes, the Company
considered the historic volatilities of publicly traded blank check companies
that had completed business combinations. The average volatility of the
representative companies was calculated to be 41%. Management believes that this
volatility is a reasonable benchmark to use in estimating the value of the
Purchase Option. The actual volatility of the Units depended on many factors
that could not be ascertained at the time of issuance.




The
Purchase Option may be exercised for cash or on a "cashless" basis, at the
holder's option, such that the holder may use the appreciated value of the
Purchase Option (the difference between the exercise prices of the Purchase
Option and the underlying Warrants and the market price of the Units and
underlying securities) to exercise the Purchase Option without the payment of
any cash. The Company will have no obligation to net cash settle the exercise of
the Purchase Option or the Warrants underlying the Purchase Option. The holder
of the Purchase Option will not be entitled to exercise the Purchase Option or
the Warrants underlying the Purchase Option unless a registration statement
covering the securities underlying the Purchase Option is effective or an
exemption from a registration is available. If the holder is unable to exercise
the Purchase Option or the underlying Warrants, the Purchase Option or Warrants,
as applicable, will expire worthless.




F-13
 Table of Contents





Note
4 – Investments held in trust:





Investments
held in trust consist of taxable and tax-free investments in money market
funds.  Reconciliation of investments held in trust is as
follows:




For the year
                                                    December 31,
                                                    2008
                                                  
                                                  
                                                  For the year
                                                    December 31,
                                                    2007
                                                  
                                                  
                                                  August 1, 2006
                                                    (inception) to
                                                    December 31, 2008Investments
      held in trust- beginning of period
                                                  
                                                  $
                                                  116,465,340
                                                  
                                                  
                                                  $
                                                  —
                                                  
                                                  
                                                  $
                                                  —Contribution
      to trust (which includes the deferred underwriting discount and commission
      of $3,450,000)
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  113,400,000
                                                  
                                                  
                                                  
                                                  113,400,000Interest
      income received
                                                  
                                                  
                                                  2,703,642
                                                  
                                                  
                                                  
                                                  3,460,340
                                                  
                                                  
                                                  
                                                  6,163,982Withdrawals
      to fund operations
                                                  
                                                  
                                                  (1,050,000
                                                  )
                                                  
                                                  
                                                  (395,000
                                                  )
                                                  
                                                  
                                                  (1,445,000
                                                  )Withdrawals
      to pay taxes
                                                  
                                                  
                                                  (3,037,613
                                                  )
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (3,037,613
                                                  )Total
      investments held in trust
                                                  
                                                  $
                                                  115,081,369
                                                  
                                                  
                                                  $
                                                  116,465,340
                                                  
                                                  
                                                  $
                                                  115,081,369





At
December 31, 2008, $305,000 remains available for working capital purposes from
the investments held in the Trust Account.





Note
5 - Note payable to shareholder and related party transactions:





The
Company issued an unsecured promissory note for $150,000 to Columbus Acquisition
Holdings LLC, its principal initial shareholder, on August 10, 2006. The note
was non-interest bearing and was originally payable on the earlier of March 31,
2007 or the consummation of the Public Offering by the Company. On March 30,
2007, Columbus Acquisition Holdings LLC amended the due date of the loan, and it
became payable on the earlier of June 30, 2007 or the consummation of the Public
Offering. As of December 31, 2006, the balance due on the note payable was
$150,000. On May 23, 2007, the Company repaid the loan in full.




The
Company has agreed to pay up to $7,500 a month in total for office space and
general and administrative services to an affiliate of certain members of the
Company's management team. Services will terminate upon the earlier of (i) the
consummation of a Business Combination or (ii) the liquidation of the
Company.  Payments since inception and for the years ended December
31, 2008 and 2007, relating to this agreement totaled $142,500, $90,000 and
$52,500 respectively.




F-14
 Table of Contents





Note
6 – Income Taxes:




The
provision for income taxes consists of the following:




2008
                  
                  
                  2007Federal
                  
                  $
                  747,000
                  
                  
                  
                  988,000State
      and local
                  
                  
                  440,000
                  
                  
                  
                  594,000Deferred
                  
                  
                  (1,016,000
                  )
                  
                  
                  (144,000
                  )Total
                  
                  $
                  171,000
                  
                  
                  $
                  1,438,000




Significant
components of the Company’s deferred tax assets are as follows:





2008
                          
                          
                          2007Expenses
      deferred for income tax purposes
                          
                          $
                          1,481,000
                          
                          
                          
                          177,000Revenue
      deferred for book purposes
                          
                          
                          —
                          
                          
                          
                          12,000Less:
      Valuation Allowance
                          
                          
                          (321,000
                          )
                          
                          
                          (45,000
                          )Total
                          
                          $
                          1,160,000
                          
                          
                          $
                          144,000




Management
has recorded a valuation allowance against a portion of its state and local
deferred tax asset because it believes that based on current operations at
December 31, 2008 it will not be able to fully utilize this asset.




The
Company’s effective tax rate of approximately (84.5)% (which takes into account
the valuation allowance) differs from the federal rate of 34% due to the
following:




2008
                    
                    
                    2007U.S
      statutory income tax rate
                    
                    
                    34.0
                    %
                    
                    
                    34.0
                    %State
      and local income taxes
                    
                    
                    18.6
                    %
                    
                    
                    11.0
                    %Valuation
      allowance
                    
                    
                    (137.1
                    )
      %
                    
                    
                    1.5
                    %Other
                    
                    
                    —
                    
                    
                    
                    1.4
                    %Effective
      tax rate
                    
                    
                    (84.5
                    )  %
                    
                    
                    47.9
                    %




The
Company paid $2,940,750 in cash payments related to income taxes during fiscal
year 2008.





Note
7 - Preferred stock:





The
Company is authorized to issue up to 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 preferred shares had been issued
as of December 31, 2008.




Note
8 - Reserved shares:





At
December 31, 2008, a total of 19,275,000 shares of common stock were reserved
for issuance upon the exercise of Warrants and the underwriters' Purchase
Option.




Note
9 - Commitments:





The
Company presently occupies office space provided by an affiliate of certain
members of the Company’s management team.  Such affiliate has agreed
that, until the company consummates a Business Combination, it will make
such office space, as well as certain office and secretarial services, available
to the Company, as may be required by the Company from time to
time.




F-15
 Table of Contents




Note
9 - Commitments (continued):


In
addition the company has entered into several agreements for legal and advisory
services associated with the proposed business merger.




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




The
company may have additional obligations which are contingent upon the
consummation of a business combination, as described in Note 11 – “The Proposed Business Combination
with Integrated Drilling Equipment Company”.  Such obligations
consist of: a) $3,450,000 in underwriter fees, which have been deferred and will
be paid to the underwriters (less $0.24 per share paid to converting
stockholders – see Note 1) only upon consummation of a business combination by
May 18, 2009, and b) certain consulting and advisory fees of $1,435,000 payable
upon the successful completion of the proposed business merger. In the event a
business combination is not completed, the Company will not be obligated to pay
the majority of fees.





Note
10 – Selected Quarterly Financial Data (Unaudited)




The
following is a summary of the quarterly results of operations of the Company for
the years ended December 31, 2008 and 2007.





2008
                  First
                  Quarter
                
                
                2008
                  Second
                  Quarter
                
                
                2008
                  Third
                  Quarter
                
                
                2008
                  Fourth
                  Quarter
                
                
                Total
                  2008Revenue
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Interest
      income
                
                $
                868,432
                
                
                $
                584,224
                
                
                $
                540,720
                
                
                $
                275,076
                
                
                $
                2,268,452Operating
      expenses
                
                $
                (268,624
                )
                
                $
                (222,259
                )
                
                $
                (345,803
                )
                
                $
                (1,633,736
                )
                
                $
                (2,470,422
                )Income
      (loss) before income taxes
                
                
                599,808
                
                
                
                361,965
                
                
                
                194,917
                
                
                
                (1,358,660
                )
                
                
                (201,970
                )Net
      income (loss)
                
                
                303,808
                
                
                
                173,965
                
                
                
                71,917
                
                
                
                (922,660
                )
                
                
                (372,970
                )Net
      income (loss) per share-
      basic and diluted
                
                $
                0.02
                
                
                $
                0.01
                
                
                $
                0.00
                
                
                $
                (0.05
                )
                
                $
                (0.02
                )







2007
                  First
                  Quarter
                
                
                2007
                  Second
                  Quarter
                
                
                2007
                  Third
                  Quarter
                
                
                2007
                  Fourth
                  Quarter
                
                
                Total
                  2007Revenue
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Interest
      income
                
                $
                —
                
                
                $
                632,024
                
                
                $
                1,480,836
                
                
                $
                1,321,718
                
                
                $
                3,434,578Operating
      expenses
                
                $
                (1,000
                )
                
                $
                (43,878
                )
                
                $
                (195,675
                )
                
                $
                (191,447
                )
                
                $
                (432,000
                )Income
      (loss) before income taxes
                
                
                (1,000
                )
                
                
                588,146
                
                
                
                1,285,161
                
                
                
                1,130,271
                
                
                
                3,002,578Net
      income (loss)
                
                
                (1,000
                )
                
                
                350,959
                
                
                
                677,348
                
                
                
                537,271
                
                
                
                1,564,578Net
      income (loss) per share-
      basic and diluted
                
                $
                (0.00
                )
                
                $
                0.04
                
                
                $
                0.04
                
                
                $
                0.03
                
                
                $
                0.13





F-16
 Table of Contents




Note
11 – The Proposed Business Combination with Integrated Drilling Equipment
Company




On
December 15, 2008, Columbus Acquisition Corp., a Delaware corporation
(“Columbus”), IDE Acquisition, LLC, a Delware limited liability company and
wholly owned subsidiary of Columbus (“IDE Acquisition”), and Integrated Drilling
Equipment Company, a Delaware corporation (“IDE”), entered into an Agreement and
Plan of Merger (“the Merger Agreement”).  IDE, through its
subsidiaries, is an established participant in the business of manufacturing new
and refurbishing existing land-based drilling rigs, rig components and rig
electrical systems and providing related services to the oil and gas drilling
equipment industry on a global basis.




Consummation
of the Merger is subject to customary closing conditions, including (a) approval
by Columbus stockholders of the acquisition of the Merger; (b) approval by
Columbus stockholders of certain amendments to the certificate of incorporation
of Columbus; and (c) that fewer than 30% of the shares of Columbus common stock
issued in the IPO vote against the Merger and demand to convert their shares for
cash in accordance with Columbus’ amended and restated certificate of
incorporation  (See Note 1 – “Organization and nature of business
operations”.The
Merger Agreement will be terminated under certain circumstances including,
without limitation, if (a) the Closing does not occur on or before May 18, 2009;
(b) the stockholders of Columbus do not approve the Merger; or (c) holders of
30% or more of the shares of Columbus common stock that were issued in the IPO
vote against the Merger and properly elect to convert their shares into
cash.




Under the
terms of the Merger Agreement, IDE will merge with and into the Company’s wholly
owned subsidiary, IDE Acquisition, LLC (which was newly-formed for this
purpose), and IDE Acquisition, LLC will continue to exist as the Company’s
wholly owned subsidiary and the surviving entity of the merger.  The
Company’s proposed merger with IDE is referred to as “Merger”.  Upon
completion of the Merger, the Company will acquire all of the outstanding shares
of capital stock of IDE in exchange for:





·
            $43
      million in cash;




·
            shares
      of the Company’s common stock having an aggregate value of $50 million
      (the value of each share will be based on the quotient of (i) the
      aggregate amount in the Company’s trust account, inclusive of any interest
      thereon, as of two business days prior to the closing date of the Merger,
      divided by (ii) the number of shares of the Company’s common stock
      issued as part of the Company’s initial public offering (we refer to this
      value as the “Trust Value Per Share”));
and




·
            additional,
      contingent consideration consisting of shares of the Company’s common
      stock having a value (based on the Trust Value Per Share) of up to $156
      million (which we refer to as the “Earnout Shares), subject to certain
      adjustments based on the net debt and net working capital of IDE at the
      time the Merger is completed and the Company’s performance following the
      Merger.  The additional, contingent consideration has been
      divided into two tranches, the first of which represents shares having a
      value of up to $50 million (which we refer to as the “First Tranche”) and
      is contingent on the Company’s 2009 earnings, and the second of which
      (which we refer to as the “Second Tranche”) represents shares having a
      value of up to $106 million and is contingent on the Company’s 2010
      earnings.  The shares that may be issued in both cases is based
      on the Trust Value Per Share.  The issuance of the Earnout
      Shares is subject to the following:




2009




·
            If
      the Company’s Earnout EBITDA (as defined in the Merger Agreement) for the
      year ended December 31, 2009 is equal to or greater than $55,000,000, then
      we will issue the First Tranche of the Earnout Shares;
  and




F-17
 Table of Contents




Note
11 – The Proposed Business Combination with Integrated Drilling Equipment
Company (continued):




·
            In
      addition to the foregoing, the Company will issue additional shares of
      common stock (based on the Trust Value Per Share) for every dollar by
      which the Company’s Earnout EBITDA for the year ended December 31, 2009
      exceeds $55,000,000 (up to a maximum Earnout EBITDA of $80,000,000) (we
      refer to these additional shares as the “Additional First Tranche Earnout
      Shares”).




2010




·
            If
      the Company’s Earnout EBITDA for the year ended December 31, 2010 is equal
      to or greater than $78,000,000, then the Company will issue the Second
      Tranche of the




Earnout
Shares (less any Additional First Tranche Earnout Shares issued because the
Company’s 2009 Earnout EBITDA exceeded $55,000,000, as described above ) (the
“Second Target Shares”).




Cumulative
EBITDA




·
            Notwithstanding
      the foregoing, if the Company’s Earnout EBITDA for the year ended December
      31, 2009 was less than $55,000,000, but the Company’s cumulative Earnout
      EBITDA for the two years ending December 31, 2010, is equal to or greater
      than $133,000,000, then the Company will issue the First Tranche of the
      Earnout Shares.




The
Company will have the right to offer to pay up to 20% of this additional,
contingent consideration in cash rather than in shares of common
stock.




Upon
completion of the Merger, the holders of the Company’s shares of common stock,
warrants and units will continue to own their existing common stock, warrants
and units, and the Company will change its name to “Integrated Drilling
Equipment Company.”




Concurrent
with the closing of the Merger, shares of the Company’s common stock having a
value of $12,500,000 (based on the Trust Value Per Share) of the shares to be
received by IDE shareholders as Merger consideration at the closing of the
Merger will be placed in escrow until ten (10) business days following the
filing of the Company’s annual report on Form 10-K for the year ended
December 31, 2009, to provide for the payment of any indemnification claims
that the Company may make against IDE shareholders under the Merger
Agreement.  The escrowed shares represent the Company’s sole recourse
against IDE and its shareholders for indemnification claims under the Merger
Agreement.




F-18
 Table of Contents




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




Not applicable.




Item 9A.
            Controls
      and Procedures




a. Disclosure Controls and
Procedures





As
required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange
Act, the Company’s principal executive officer and principal financial officer
evaluated the Company’s disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the
period covered by this Annual Report on Form 10-K. Based on this
evaluation, these officers concluded that as of the end of the period covered by
this Annual Report on Form 10-K, these disclosure controls and procedures
were effective to ensure that the information required to be disclosed by the
Company in reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission and include controls
and procedures designed to ensure that such information is accumulated and
communicated to the Company’s management, including the Company’s principal
executive officer and principal financial officer, to allow timely decisions
regarding required disclosure.  Because of the inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance
that all control issues, if any, within the Company have been
detected.  These inherent limitations include the realities that
judgments in decision-making can be faulty and that breakdowns can occur because
of simple error or mistake.





b.
Internal Control Over Financial Reporting





The
management of the Company is responsible for establishing and maintaining
effective internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for the
Company.  The Company’s internal control over financial reporting is
designed to provide reasonable assurance, not absolute assurance, regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles in the United States of America.  Internal control over
financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the Company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles in the United States of
America, and that receipts and expenditures of the Company are being made only
in accordance with authorizations of management and directors of the Company;
and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the consolidated financial
statements.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  In addition, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions and that the
degree of compliance with the policies or procedures may
deteriorate.




The
Company’s management assessed the effectiveness of the Company’s internal
control over financial reporting as of as of the end of the period covered by
this Annual Report on Form 10-K, based on the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission in Internal
Control — Integrated Framework.  Based on that assessment and
those criteria, the Company’s management concluded that the Company’s internal
control over financial reporting was effective as of as of the end of the period
covered by this Annual Report on Form 10-K.  The Company’s
independent registered public accounting firm has issued an attestation report
on the Company’s internal control over financial reporting, which is included in
Item 8 of this Annual Report on Form 10-K under the caption entitled
“Report of Independent Registered Public Accounting Firm.”




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c. Changes in Internal Control
Over Financial Reporting.  There were no changes in the
Company’s internal control over financial reporting during the quarter ended
December 31, 2008 that have materially affected, or are reasonably likely
to materially affect, the Company’s internal control over financial
reporting.




d. Certificates.  Certificates
with respect to disclosure controls and procedures and internal control over
financial reporting under Rules 13a-14(a) or 15d-14(a) of the Exchange Act
are attached as exhibits to this Annual Report on
Form 10-K.




Item 9B.
            Other
      Information




None.




PART III




Item 10.
            Directors,
      Executive Officers and Corporate
Governance




Directors
and Executive Officers




Our
current directors and executive officers are as follows:




Name
              
              Age
              
              PositionAndrew
      Intrater
              
              46
              
              Chairman
      of the Board and Chief Executive OfficerMichael
      W. Ernestus
              
              59
              
              Executive
      Director and PresidentJason
      Epstein
              
              35
              
              Senior
      Vice PresidentPaul
      F. Lipari
              
              40
              
              Senior
      Vice PresidentMichael
      Sloan
              
              35
              
              Senior
      Vice President and Chief Financial OfficerBarry
      J. Rourke
              
              58
              
              DirectorEric
      Zachs
              
              49
              
              DirectorRolf
      Zimmermann
              
              62
              
              DirectorJason
      Lustig
              
              46
              
              Director





Andrew
Intrater has been our Chairman of the Board and Chief Executive Officer
since our inception and served as our President from inception until the end of
April 2007.  Since January 2000, Mr. Intrater has been the Chief Executive
Officer of Columbus Nova, a private investment firm with offices in New York,
Los Angeles, Charlotte and Moscow with over $2.0 billion of assets under
management.  Mr. Intrater is a former Director of Renova Management, a
global leader in energy, base metals and mining industries, and also currently a
member of the Executive Board of Renova Management.  Columbus Nova is the
U.S.-based affiliate of the Renova Group of companies, one of the largest
Russian strategic investors in the metallurgical, oil, machine engineering,
mining, chemical, construction, housing & utilities and financial
sectors.  Renova Group of companies is a shareholder of leading mining and
industrial entities in the Russian and global business communities, such as
TNK-BP, UC Rusal and Integrated Energy Systems.  From March 1993 until the
end of 1999, Mr. Intrater served as President and Chief Operating Officer of
Oryx Technology Corp., and its predecessor, ATI, a leading manufacturer of
semi-conductor testing equipment, based in Silicon Valley.  Mr. Intrater
serves as Chairman of the Board of Directors of Moscow Cablecom Corp., a company
listed on the Nasdaq Global Market.  Mr. Intrater is also a member of the
Board of Directors of Oryx Technology Corp., White Energy, Inc., and Ethertouch,
Ltd.  Mr. Intrater received a B.S. in Chemical Engineering from Rutgers
University.




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Michael W.
Ernestus has been our Executive Director since November 2006 and was
appointed as our President in May 2007.  Since October 2001, Mr.
Ernestus has been a Managing Partner of Artus Advisors, LLC, a financial
advisory firm for hedge funds, start-up and second stage investments as well as
leveraged buyout transactions.  Since June 2005, Mr. Ernestus has also
been a Managing Partner of Atlantic European Partners, LLC, a privately-held
investment company with focus on investments in European industrial
manufacturing industries.  From 1997 to 2001, Mr. Ernestus was the
Managing Member of Recovery Asset Management, LLC, an advisory firm to hedge
funds as well as to a Luxemburg-based publicly traded fund.  From 1993
to 1996, Mr. Ernestus served as the Head of Investment Banking and Origination
& Syndication and as a member of the Board of Directors of the German
operation of SBC-Warburg (formerly Schweizerischer Bankverein (Deutschland)
AG).  During that period, Mr. Ernestus was also the Managing Director,
Corporate Finance of SBC-Warburg, London (formerly Swiss Bank Corporation,
London).  From 1991 to 1993, Mr. Ernestus was a Director, Investment
Banking at Salomon Brothers AG in Frankfurt, Germany.  From 1986 to
1991, Mr. Ernestus was a Vice President at Bankers Trust in New York, first in
their Corporate Finance, Foreign Direct Investment Group and later in their
Merchant Banking Origination Group.  From 1983 to 1986, Mr. Ernestus
was a Vice President in the Commercial Banking Division of Deutsche Bank AG's
New York Branch.  From 1978 to 1982, Mr. Ernestus assumed various
positions at Berliner Handels- und Frankfurter Bank (BHF-Bank) in Frankfurt and
New York.  Mr. Ernestus currently serves on the boards and is a member
of the Audit Committees of North Atlantic Holding Corporation, and North
Atlantic Trading Company, Inc. (“NATC”), which are engaged, through NATC and its
subsidiaries, in the smokeless and chewing tobacco, as well as cigarette paper
business.  Mr. Ernestus received a Graduate Degree in Law and a
Doctorate in Law from Johann-Wolfgang-Goethe-Universit’t in Frankfurt, Germany
and an LL.M. from the University of California, Boalt Hall School of Law as well
as an M.B.A. from New York University, Stern School of Business.




Paul
F. Liparihas
been our Senior Vice President since November 2006.  Mr. Lipari has
been a partner of Columbus Nova since July 2006.  Since February 2003,
Mr. Lipari has been a founding partner of Hudson Capital Advisors, an affiliate
of Columbus Nova, focused on providing investment banking advisory services
(including M&A, debt and equity capital raising and restructuring services),
to middle market companies.  From 2001 to 2003, Mr. Lipari worked for
Trimaran Capital Partners, a $1.5 billion private equity fund.  At
Trimaran, Mr. Lipari primarily focused on Media and Telecommunications
investments.  From 1997 to 2001, Mr. Lipari worked as an Executive
Director in the Leveraged Finance Group for CIBC World Markets, and worked on a
variety of senior bank debt, high yield debt and private/public equity
transactions.  While in the Leveraged Finance Group at CIBC, Mr.
Lipari spent considerable time working on numerous financings for Global
Crossing, a provider of telecommunications services, and was involved with
monitoring CIBC's private equity investment in Global Crossing.  Mr.
Lipari sat on the board of Global Crossing prior to 2000.  From 1994
to 1997, Mr. Lipari worked at Salomon Brothers, Inc. where he was an associate
in their High Yield Group and an analyst in their Merchant Banking
Group.  Mr. Lipari currently serves as a Director of White Energy
Inc., in which Columbus Nova holds a 59.67% interest.  Mr. Lipari
received an M.B.A. from The Amos Tuck Business School at Dartmouth and a B.A.
from Yale University.




Jason
Epsteinhas
been our Senior Vice President since August 2006.  Since February
2002, Mr. Epstein has been a partner of Columbus Nova, primarily responsible for
private investment activities.  In 1998, Mr. Epstein founded eLink
Communications, a provider of broadband, networking and application services,
and served as its Chief Executive Officer for three years, until September
2001.  From October 2001 to January 2002, Mr. Epstein was a private
investor.  Mr. Epstein was also the co-founder of Health Extras, Inc.,
a full-service pharmacy management company listed on the Nasdaq Global Select
Market.  Mr. Epstein has twice been a finalist for the Ernst &
Young Entrepreneur of the Year Award and was named one of forty "Rising Stars"
in the Washington Business Forward's "The Next Network."  Mr. Epstein
serves on various Boards of Directors of portfolio companies.  Mr.
Epstein received a B.A. from Tufts University.




Michael
Sloan has been our Senior Vice President since November 2006 and our
Chief Financial Officer since August 2007.  Since February 2002, Mr.
Sloan has been a partner of Columbus Nova, primarily responsible for origination
and management of investments for Columbus Nova's private investment activities,
as well as acting as the principal financial officer and providing financial and
strategic planning advice.  In 1998, Mr. Sloan co-founded eLink
Communications and served as its President and Chief Financial Officer for three
years, until September 2001.  From October 2001 to January 2002, Mr.
Sloan was a private investor.  Mr. Sloan was also the co-founder of
Health Extras, Inc., a full-service pharmacy management company listed on the
Nasdaq Global Select Market.  Mr. Sloan has twice been a finalist for
the Ernst & Young Entrepreneur of the Year
Award.  Mr. Sloan received a B.A. from Cornell
University.




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Barry J.
Rourke has been a member of our Board of Directors since November
2006.  From August 2004 until March 2007, Mr. Rourke served as
Chairman of the Audit Committee of SUAL Holding, the company responsible for the
management of the SUAL Group assets.  The SUAL Group is a fully
vertically integrated aluminum company that ranks amongst the world's top ten
aluminum producers, comprised of 20 businesses that are located in nine Russian
regions and in Ukraine, Zaporozhye City and are involved in the production of
bauxite, alumina, primary aluminum, silicon, semi-finished and finished aluminum
products.  The SUAL Group has recently entered into an agreement with
RUSAL, the world's third largest aluminum producer, and Glencore International
AG, the Swiss natural resources group, to create the "United Company RUSAL," by
merging their respective aluminum and alumina assets.SUAL Holding is
affiliated with Columbus Nova through common ownership.  From April
2001 until March 2007, Mr. Rourke served as Chairman of the Board of Threshold
Housing, a social housing provider with over 6,000 residential
units.  Until December 2006, Mr. Rourke served as non-executive
Chairman of Cadogan Petroleum plc, a company with oil and gas exploration and
development interests in Ukraine.  In April 2007, Mr. Rourke became
Chairman of 3Legs Resources plc, a major shareholder in Cadogan Petroleum plc;
3Legs Resources plc also has significant oil and gas exploration rights in
Poland.  In November 2007, Mr. Rourke became a Director of New World
Resources plc, a company with significant coal mining assets in the Czech
Republic.  Mr. Rourke also serves as an independent member of the
Audit Committee for the Department for Business Enterprise and Regulatory
Reform, formerly the Department of Trade and Industry in the United Kingdom; and
as a non-executive Director of Surrey and Borders Partnership NHS Trust, a
leading mental health and learning disability trust in the United
Kingdom.  Mr. Rourke was an Audit Partner with PricewaterhouseCoopers
in the United Kingdom from 1984 until his retirement in December
2001.




Eric Zachs
has been a member of our Board of Directors since November
2006.  Since August 2007, Mr. Zachs has served as President and member
of Board of Directors of BBV Vietnam S.E.A. Acquisition Corp., a special purpose
acquisition company formed for the purpose of acquiring, or acquiring control
of, one or more operating businesses in Asia with a particular focus on Vietnam
(OTC: BBVVF, BBVWF).  Since October 2004, Mr. Zachs has been a
Managing Partner of Bantry Bay Ventures – Asia, LLC, a private equity firm
focused on investment in Asia.  Since March 2006, Mr. Zachs has also
served as the Chairman of the Board of Shanxi Taiyue Trading and Transportation
Co., Ltd., based in Shanxi Province, China.  Taiyue Trading
facilitates the transportation of coal in Shanxi and nearby provinces through
the rail system as it owns railroad platforms and coal trading licenses. From
2000 to 2004, Mr. Zachs was the General Partner of the Entrust Capital Frontier
Fund. The Frontier Fund is a venture capital fund that focused primarily on
software, semiconductors and the wireless industries. From 1989 to 1995, Mr.
Zachs served in a variety of capacities at Message Center USA, Inc., a
nationwide paging company, including as President and Chief Operating
Officer.  In 1995, Message Center was sold to AirTouch Paging
(currently Vodafone Group Plc) for over $100 million.  In 1993, Mr.
Zachs co-founded Message Center Management, Inc. which, along with its
affiliates, currently owns over 70 antenna sites and manages over 800 antenna
sites for the wireless industry.  Mr. Zachs has been Co-Chairman of
Message Center Management, Inc. since 1993.  Mr. Zachs is the former
President of the Greater Hartford Jewish Community Center and Hartford
Dispensary (providing medical and substance abuse care for the indigent) and
serves on the boards of the Hebrew Health Care, Jewish Federation of Greater
Hartford and Solomon Schechter Day School. Mr. Zachs received a B.A. from Tufts
University and a J.D. from Columbia University School of Law.




Rolf
Zimmermann has been a member of our Board of Directors since November
2006.  Since August 2006, Mr. Zimmermann has been the Chief Executive
Officer of Müller Weingarten AG, Germany, a global leader in the metal forming
business, with particular focus on presses for the automotive
industry.  Since May 2005, Mr. Zimmermann has also been a Managing
Partner of Atlantic European Beratungs GmbH, a privately-held investment company
with focus on restructurings and investments in European industrial
manufacturing industries, notably in the areas of automotive, machine tools, and
aerospace.  In addition, since 2002, Mr. Zimmermann has been the
Managing Partner of his own consulting company, Rolf Zimmermann Consulting GmbH,
focusing on consulting and investing in the automotive supplier and other
manufacturing industries in Germany.  Mr. Zimmermann has over thirty
five years’ experience in automotive manufacturing, having originally trained as
a mechanical engineer.  From 1997 to 2002, Mr. Zimmermann was in
charge of European Manufacturing, serving as the Corporate Vice President of the
Ford Motor Company, Detroit, as well as serving as Chief Executive Officer of
Ford AG, Germany.  From 1996 to 1997, Mr. Zimmermann was a member of
the Board of Managing Directors, in charge of Production and Development at one
of the world’s oldest car manufacturers, the Czech Škoda, founded in 1905 and
owned since 1990 by Volkswagen AG.  Prior to 1996, Mr. Zimmermann held
various management positions in plant and vehicle production divisions at
General Motors and its German subsidiary, Adam Opel AG.  Mr.
Zimmermann is a Non-Executive Director at Wagon Plc, Birmingham, UK, a London
Stock Exchange-listed European automotive supplier, where he serves on the
audit, nomination and remuneration committees.  In addition, Mr.
Zimmermann serves as an outside director to Flexible Solutions Group, Karlsruhe,
Germany, a manufacturer of compensators for the automotive industry and other
industrial applications.  Mr. Zimmermann received a Dipl. Eng. from
the University of Applied Science, Wiesbaden.




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 Table of Contents




Jason
Lustig has been a member of our Board of Directors since November
2006.  Since 1989, Mr. Lustig has been a prosecuting attorney for the
Los Angeles County District Attorney’s Office.  Since 1989, Mr. Lustig
has also served as Secretary of Magnum Motion Pictures, Inc., a privately-held
motion picture production company with offices in New York and Los Angeles. Mr.
Lustig received a B.A. with high honors from Rutgers University where he was a
member of Phi Beta
Kappa and a J.D. cum
laude from Boston University School of Law.




Number
and Terms of Office of Directors




Our Board
of Directors has formed an audit committee and a nominating and corporate
governance committee.  Each committee is comprised of three
directors.  During 2008, our board of directors held two board
meetings and four audit committee meetings.  No meetings of the
nominating and corporate governance committee were held, as no new candidates
have been sought for election to our board of directors subsequent to our
initial public offering.  All directors attended 100% of the aggregate
number of meetings of the board and of the respective committees on which they
served.  The Company requires each director to make a diligent effort
to attend all board and committee meetings, as well as each annual or special
meeting of shareholders.




Board
Committees




Audit
Committee




Our audit
committee consists of Barry J. Rourke, as Chairman, Eric Zachs and Rolf
Zimmermann, each of whom is an independent director under the NYSE Alternext’s
listing standards. The audit committee's duties, which are specified in our
Audit Committee Charter, include, but are not limited to:




·
            reviewing
      and discussing with management and the independent auditor the annual
      audited financial statements, and recommending to the board whether the
      audited financial statements should be included in our Form
      10-K;




·
            discussing
      with management and the independent auditor significant financial
      reporting issues and judgments made in connection with the preparation of
      our financial statements;




·
            discussing
      with management major risk assessment and risk management
      policies;




·
            monitoring
      the independence of the independent
auditor;




·
            verifying
      the rotation of the lead (or coordinating) audit partner having primary
      responsibility for the audit and the audit partner responsible for
      reviewing the audit as required by
law;




·
            reviewing
      and approving all related-party
transactions;




·
            inquiring
      and discussing with management our compliance with applicable laws and
      regulations;




·
            pre-approving
      all audit services and permitted non-audit services to be performed by our
      independent auditor, including the fees and terms of the services to be
      performed;




·
            appointing
      or replacing the independent
auditor;




57
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·
            determining
      the compensation and oversight of the work of the independent auditor
      (including resolution of disagreements between management and the
      independent auditor regarding financial reporting) for the purpose of
      preparing or issuing an audit report or related work;
  and




·
            establishing
      procedures for the receipt, retention and treatment of complaints received
      by us regarding accounting, internal accounting controls or reports which
      raise material issues regarding our financial statements or accounting
      policies.




Nominating
and Corporate Governance Committee




Our
nominating and corporate governance committee consist of Rolf Zimmermann, as
Chairman, Eric Zachs and Jason Lustig, each of whom is an independent director
under the NYSE Alternext’s listing standards.  The nominating and
corporate governance committee is responsible for overseeing the selection of
persons to be nominated to serve on our board of directors. The nominating and
corporate governance committee considers persons identified by its members,
management, shareholders, investment bankers and others.




Financial
Expert on Audit Committee




The audit
committee will at all times be composed exclusively of "independent directors"
who are "financially literate" as defined under the NYSE Alternext’s listing
standards.  The NYSE Alternext’s listing standards define "financially
literate" as being able to read and understand fundamental financial statements,
including a company's balance sheet, income statement and cash flow
statement.




In
addition, we must certify to the NYSE Alternext that the committee has, and will
continue to have, at least one member who has past employment experience in
finance or accounting, requisite professional certification in accounting, or
other comparable experience or background that results in the individual's
financial sophistication. The board of directors has determined that Mr. Rourke
satisfies the NYSE Alternext’s definition of financial sophistication and also
qualifies as an "audit committee financial expert," as defined under rules and
regulations of the Securities and Exchange Commission.




Code
of Ethics




We have adopted a code of ethics that
applies to our officers, directors and employees.  We have filed a
copy of our code of ethics as an exhibit to the registration
statement.  You may review this document by accessing our public
filings at the Securities and Exchange Commission’s website at www.sec.gov.In addition, a copy of
the code of ethics will be provided without charge upon request to
us.  We intend to disclose any amendments to or waivers of certain
provisions of our code of ethics in a Form 8-K.




Section
16(a) Beneficial Ownership Reporting Compliance




Pursuant to Section 16(a) of the
Securities Act of 1934, the Company’s directors and executive officers are
required to report their beneficial ownership and any changes therein to the
Securities and Exchange Commission and the Company.  Specific due
dates for those reports have been established, and the Company is required to
report herein any failure to file such reports by those due
dates.  Based on the Company’s review of Forms 3, 4 and 5 filed by
such persons, the Company believes that during the fiscal year ended December
31, 2008 all Section 16(a) filing requirements applicable to such persons were
met in a timely manner.




Item 11.
            Executive
      Compensation




Compensation
Discussion and Analysis




No
executive officer has received any cash compensation for services rendered to
us.  Commencing on June 1, 2007, until the consummation of a
business combination, pursuant to a letter agreement, we are obligated to and
have paid Renova U.S. Management LLC, a limited liability company controlled by
Mr. Intrater, our Chairman and Chief Executive Officer, a fee of $7,500 per
month for providing it with administrative services.  Other than the
fees payable to Renova U.S. Management LLC pursuant to that agreement, no
compensation of any kind, including finder’s fees, consulting fees or other
similar compensation, has been or will be paid by us or any other entity to any
of our existing officers, directors, existing stockholders or any of their
respective affiliates, prior to or in connection with a business
combination.  However, such individuals and entities will be
reimbursed for any out-of-pocket expenses incurred in connection with activities
on our behalf such as identifying potential target businesses and performing due
diligence on suitable business combinations.  There is no limit on the
amount of these out-of-pocket expenses and there will be no review of the
reasonableness of the expenses by anyone other than our board of directors,
which includes persons who may seek reimbursement, or a court of competent
jurisdiction if such reimbursement is challenged.  Because of the
foregoing, we will generally not have the benefit of independent directors
examining the propriety of expenses incurred on our behalf and subject to
reimbursement.




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 Table of Contents




Compensation
Committee Interlocks and Insider Participation




Our board
of directors has not established a compensation committee of the board of
directors.




No member
of Columbus’s board of directors has a relationship that would constitute an
interlocking relationship with executive officers or directors of Columbus or
another entity.




Compensation
Committee Report




Our board
of directors has not established a compensation committee of the board of
directors.




Our board
of directors has reviewed and discussed the Compensation Discussion and Analysis
with management, and, based on such review and discussion, the board of
directors determined that the Compensation, Discussion and Analysis be included
in this annual report.




Andrew
Intrater


Barry J.
Rourke


Eric
Zachs


Rolf
Zimmermann


Jason
Lustig


Michael
Ernestus





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




The following table sets forth
information regarding the beneficial ownership of our common stock as of March
15, 2008, by:




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




·
            each
      of our officers and directors; and




·
            all
      our officers and directors as a
group.




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Unless
otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them.




Name and Address of Beneficial
                    Owner(1)
                  
                  Number of Shares
                  
                  
                  Percentage
                    of ClassColumbus
      Acquisition Holdings LLC(3)
                  
                  
                  2,692,500
                  
                  
                  
                  15.4
                  %
 HBK
      Investments L.P.(4)
                    
                    
                    1,668,149
                    
                    
                    
                    9.5
                    %QVT
      Financial L.P.(5)
                    
                    
                    1,652,390
                    
                    
                    
                    9.4
                    %Citigroup
      Global Markets Inc.(6)
                    
                    
                    1,584,888
                    
                    
                    
                    8.8
                    %Polar
      Securities Inc.(7)
                    
                    
                    1,144,350
                    
                    
                    
                    6.5
                    %
 Andrew
      Intrater(8)
                  
                  
                  2,692,500
                  
                  
                  
                  15.4
                  %Michael
      W. Ernestus
                  
                  
                  312,500
                  
                  
                  
                  1.8
                  %Barry
      J. Rourke
                  
                  
                  30,000
                  
                  
                  
                  *Eric
      Zachs
                  
                  
                  30,000
                  
                  
                  
                  *Rolf
      Zimmermann
                  
                  
                  30,000
                  
                  
                  
                  *Jason
      Lustig
                  
                  
                  30,000
                  
                  
                  
                  *Paul
      F. Lipari(9)
                  
                  
                  437,500
                  
                  
                  
                  2.5
                  %Jason
      Epstein(10)
                  
                  
                  437,500
                  
                  
                  
                  2.5
                  %Michael
      Sloan(11)
                  
                  
                  376,111
                  
                  
                  
                  2.1
                  %All
      directors and executive officers as a group (nine
    individuals)
                  
                  
                  3,125,000
                  
                  
                  
                  17.9
                  %





* Less
than 1.0%


(1)
            Unless
      otherwise indicated, the business address of each of the individuals is
      c/o Columbus Acquisition Holdings LLC, 153 East 53rd
      Street, 58th
      Floor, New York, New York 10022.


(2)
            Does
      not reflect 3,650,000 shares of common stock issuable upon exercise of
      warrants held by Columbus Acquisition Holdings LLC, which are not
      exercisable until the later of our completion of a business combination
      and May 18, 2008.


(3)
            The
      principal business address of Columbus Acquisition Holdings LLC is 153
      East 53rd Street, 58th Floor, New York, New York
  10022.


(4)
              Based
      upon information contained in a Schedule 13G (Amendment No.2) filed on
      January 27, 2009 by HBK Investments L.P., HBK Services LLC, HBK New York
      LLC, HBK Partners II L.P., HBK Management LLC and HBK Master Fund L.P.
      Jamiel A. Akhtar, Richard L. Booth, David C. Haley, Lawrence H. Lebowitz,
      and William E. Rose are each managing members (collectively, the
      “Members”) of HBK Management LLC.  The Members expressly declare
      that the filing of the statement on Schedule 13G shall not be construed as
      an admission that they are, for purposes of Section 13(d) or 13(g) of the
      securities Exchange Act of 1934, beneficial owners of the securities. The
      principal business address of each of HBK Investments L.P., HBK Services
      LLC, HBK Partners II L.P., HBK Master Fund L.P., and HBK Management LLC is
      2101 Cedar Springs Road, Suite 700, Dallas, Texas 75201. The principal
      business address for HBK New York LLC is 350 Park Avenue, 20th
      Floor, New York, New York 10022.
  (5)
              Based upon
      information contained in a Schedule 13G (Amendment No. 1) filed on January
      31, 2008 by QVT Financial LP (“QVT Financial”), QVT Financial GP LLC, QVT
      Fund LP (the “Fund”) and QVT Associates GP, LLC. QVT Financial is the
      investment manager for the Fund, which beneficially owns 1,316,418 shares
      of common stock, and for Quintessence Fund L.P. (“Quintessence”),which beneficially owns 147,546 shares of common stock. QVT
      Financial is also the investment manager for a separate discretionary
      account managed for Deutsche Bank AG (the “Separate Account”), which holds
      188,426 shares of common stock. QVT Financial has the power to direct the
      vote and disposition of the common stock held by the Fund, Quintessence
      and the Separate Account. Accordingly, QVT Financial may be deemed to be
      the beneficial owner of an aggregate amount of 1,652,390 shares of common
      stock, consisting of the shares owned by the Fund and Quintessence and the
      shares held in the Separate Account. QVT Financial GP LLC, as General
      Partner of QVT Financial, may be deemed to beneficially own the same
      number of shares of common stock reported by QVT Financial. QVT Associates
      GP LLC, as General Partner of the Fund and Quintessence, may be deemed to
      beneficially own the aggregate number of shares of common stock owned by
      the Fund and Quintessence, and accordingly, QVT Associates GP LLC may be
      deemed to be the beneficial owner of an aggregate amount of 1,463,964
      shares of common stock. The Fund and the Separate Account also own
      warrants to purchase additional shares of common stock, which are not
      exercisable until the later of the Issuer’s completion of a business
      combination and May 18, 2008. Each of QVT Financial and QVT Financial GP
      LLC disclaims beneficial ownership of the shares of common stock owned by
      the Fund and Quintessence and held in the Separate Account. QVT Associates
      GP LLC disclaims beneficial ownership of all shares of common stock owned
      by the Fund and Quintessence, except to the extent of its pecuniary
      interest therein. The principal business address of QVT Financial, QVT
      Financial GP LLC, and QVT Associates GP LLC is 1177 Avenue of the
      Americas, 9th Floor New York, New York 10036. The principal business
      address of the Fund is Walkers SPV, Walkers House, Mary Street, George
      Town, Grand Cayman, KY1 9001 Cayman
Islands.


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(6)
              Based
      upon information contained in a Schedule 13G (Amendment No. 1) filed on
      January 29, 2008 by Citigroup Global Markets Inc. (“CGM”), Citigroup
      Financial Products Inc. (“CFP”), Citigroup Global Markets Holdings Inc.
      (“CGM Holdings”) and Citigroup Inc. (“Citigroup”). The
      principal business address of each of CGM, CFP and CGM Holdings is 388
      Greenwich Street, New York, NY 10013. The principal business address of
      Citigroup is 399 Park Avenue, New York, NY
  10043.
  (7)
              Based
      upon information contained in a Schedule 13G (Amendment No. 2) filed on
      February 17, 2008 by Polar Securities, Inc. (“Polar Securities”) and North
      Pole Capital Master Fund (“North Pole”). Polar Securities serves as the
      investment manager to North Pole and a number of discretionary accounts
      with respect to which it has voting and dispositive authority over the
      shares of common stock. Each of Polar Securities and North Pole disclaims
      any beneficial ownership of any such shares. The principal business
      address of each of Polar Securities and North Pole is 372 Bay Street, 21st
      floor, Toronto, Ontario M5H 2W9,
Canada.


(8)
                Mr.
      Intrater is our Chairman of the Board and Chief Executive
      Officer.  Columbus Acquisition Holdings LLC is the record holder
      of 2,692,500 shares of our common stock.  Columbus Acquisition
      Holdings LLC is controlled by Mr. Intrater, who holds sole voting and
      investment power with respect to the 2,692,500 shares of our common stock
      held by Columbus Acquisition Holdings LLC.  As a result, Mr.
      Intrater may be deemed to beneficially own all the 2,692,500 shares of our
      common stock held by Columbus Acquisition Holdings LLC.  Mr.
      Intrater holds 36.2% of the Series A membership interests of Columbus
      Acquisition Holdings LLC.
 (9)
              Mr.
      Lipari is our Senior Vice President.  Reflects the ownership by
      Mr. Lipari of 16.2% of the Series A membership interests of Columbus
      Acquisition Holdings LLC, which is the record holder of 2,692,500 shares
      of our common stock.  Accordingly, Mr. Lipari may be deemed to
      own 437,500 shares of our common stock.  However, as noted in
      footnote (3) above, Andrew Intrater has sole voting and investment power
      with respect to all of the 2,692,500 shares of our common stock that are
      held by Columbus Acquisition Holdings
LLC.
  (10)
              Mr.
      Epstein is our Senior Vice President.  Reflects the ownership by
      Mr. Epstein of 16.2% of the Series A membership interests of Columbus
      Acquisition Holdings LLC, which is the record holder of 2,692,500 shares
      of our common stock.  Accordingly, Mr. Epstein may be deemed to
      own 437,500 shares of our common stock.  However, as noted in
      footnote (3) above, Andrew Intrater has sole voting and investment power
      with respect to all of the 2,692,500 shares of our common stock that are
      held by Columbus Acquisition Holdings
LLC.


(11)
            Mr.
      Sloan is our Senior Vice President and Chief Financial
      Officer.  Reflects the ownership by Mr. Sloan of 14% of the
      Series A membership interests of Columbus Acquisition Holdings LLC, which
      is the record holder of 2,692,500 shares of our common
      stock.  Accordingly, Mr. Sloan may be deemed to own 376,111
      shares of our common stock.  However, as noted in footnote (3)
      above, Andrew Intrater has sole voting and investment power with respect
      to all of the 2,692,500 shares of our common stock that are held by
      Columbus Acquisition Holdings LLC.




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Item 13.
            Certain
      Relationships and Related
Transactions




Certain
Relationships and Related Transactions




In August
2006, we issued 3,125,000 shares of our common stock to Columbus Holdings
Acquisition LLC for an aggregate of $25,000 in cash, at a purchase price of
approximately $0.008 per share.  Andrew Intrater, our Chairman and
Chief Executive Officer, controls Columbus Holdings in his capacity as its sole
managing member.  Mr. Intrater, Jason Epstein, Paul F. Lipari and
Michael Sloan, each of whom is a member of our management team, as well as Jay
M. Haft (who is affiliated with Columbus Nova, a private investment firm for
which Mr. Intrater serves as Chief Executive Officer) and Marceau Schlumberger,
are each members of Columbus Holdings, and own approximately 36.2%, 16.2%,
16.2%, 14%, 2.28%, 11.6% and 3.5%, respectively, of the Series A membership
interests of Columbus Acquisition Holdings LLC.  Columbus Holdings
subsequently transferred 30,000 of these shares to each of Barry J. Rourke, Eric
Zachs, Rolf Zimmermann and Jason Lustig, members of our board of directors, for
$0.008 per share (for a purchase price of $240 each) and 312,500 of these shares
to Michael W. Ernestus, our President and Executive Director (for a purchase
price of $2,500).  Columbus Holdings, Messrs. Rourke, Zachs,
Zimmermann, Lustig and Ernestus own 2,692,500, 30,000, 30,000, 30,000, 30,000
and 312,500 shares of our common stock, respectively.




On May
23, 2007, Columbus Holdings also purchased insider warrants to purchase
3,650,000 shares of our common stock at a price of $1.00 per
warrant.  The insider warrants are identical to the warrants
underlying the units except that if we call the warrants for redemption, the
insider warrants will be exercisable on a cashless basis so long as such
warrants are held by the purchasers or their affiliates.  Columbus
Holdings has agreed that the insider warrants will not be sold or transferred by
it until 90 days after we have completed a business
combination.  Accordingly, the insider warrants have been placed in
escrow and will not be released until 90 days after the completion of a business
combination.




The
holders of the initial shares, as well as the holders of the insider warrants
(and underlying securities), are entitled to registration rights.  The
holders of the majority of these securities are entitled to make up to two
demands that we register such securities.  As the initial shares will
be released from escrow one year after the consummation of a business
combination, our existing shareholders can make a demand for registration of the
resale of their initial shares at any time commencing nine months after the
consummation of a business combination.  The holders of a majority of
the insider warrants (or underlying securities) can elect to exercise these
registration rights at any time after we consummate a business
combination.  In addition, the holders have certain ‘‘piggy-back’’
registration rights with respect to registration statements filed subsequent to
our consummation of a business combination.  We will bear the expenses
incurred in connection with the filing of any such registration
statements.




Renova
U.S. Management LLC has agreed that, commencing on the effective date of our
initial public offering through the acquisition of a target business, it will
make available to us a small amount of office space and certain office and
secretarial services, as we may require from time to time.  We have
agreed to pay $7,500 per month for these services.  Renova U.S.
Management LLC is a limited liability company controlled by Andrew Intrater, our
Chairman, President and Chief Executive Officer.  Mr. Intrater owns
51% of the membership interests, and Mr. Intrater, Jason Epstein and Michael
Sloan, our Senior Vice Presidents, and Jay M. Haft, one of our shareholders,
collectively own approximately 95% of the membership interests of Renova U.S.
Management LLC.  Mr. Intrater is the chief executive officer of Renova
U.S. Management LLC and, as a result, benefits from the transaction to the
extent of his interest in Renova U.S. Management LLC.  However, this
arrangement is solely for our benefit and is not intended to provide Mr.
Intrater compensation in lieu of a salary.  We believe, based on rents
and fees for similar services in the New York City metropolitan area, that the
fee charged by Renova U.S. Management LLC is at least as favorable as we could
have obtained from an unaffiliated person. However, as our directors may not be
deemed "independent," we did not have the benefit of disinterested directors
approving this transaction.




To fund
pre-offering expenses associated with the our initial public offering, Columbus
Holdings loaned $150,000 to us in to cover expenses related to that offering,
which was repaid on June 30, 2007.




Andrew
Intrater, our Chairman of the Board and Chief Executive Officer, is the brother
of Jonathan Intrater, a Managing Director of Ladenburg Thalmann & Co. Inc.,
which acted as one of the underwriters in our initial public
offering.




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We will
reimburse our officers and directors for any reasonable out-of-pocket business
expenses incurred by them in connection with certain activities on our behalf
such as identifying and investigating possible target businesses and business
combinations.  Our audit committee will review and approve all expense
reimbursements made to members of our management team and any expense
reimbursements payable to members of our audit committee will be reviewed and
approved by our board of directors, with any interested director abstaining from
such review and approval.  There is no limit on the total amount of
out-of-pocket expenses reimbursable by us, provided that members of our
management team will not receive reimbursement for any out-of-pocket expenses
incurred by them to the extent that such expenses exceed the amount held outside
of the trust account and interest income of up to $1,750,000 on the trust
account balance that may be released to us to fund our expenses relating to
investigating and selecting a target business and other working capital
requirements, unless a business combination is
consummated.  Additionally, there will be no review of the
reasonableness of the expenses other than by our audit committee and, in some
cases, by our board of directors as described above, or if such reimbursement is
challenged, by a court of competent jurisdiction.




Other
than the $7,500 per-month administrative fee and any reimbursable out-of-pocket
expenses payable to our officers and directors, no compensation or fees of any
kind, including finder's fees, consulting fees or other similar compensation,
will be paid to any of our existing shareholders, officers or directors who
owned our common stock prior to this offering, or to any of their respective
affiliates, prior to or with respect to the business combination (regardless of
the type of transaction that it is).




All
ongoing and future transactions between us and any of our officers and directors
or their respective affiliates, including loans by our officers and directors,
will be on terms believed by us to be no less favorable to us than are available
from unaffiliated third parties.  Such transactions or loans,
including any forgiveness of loans, will require prior approval by a majority of
our disinterested "independent" directors or the members of our board who do not
have an interest in the transaction, in either case who had access, at our
expense, to our attorneys or independent legal counsel.  We will not
enter into any such transaction unless our disinterested "independent" directors
determine that the terms of such transaction are no less favorable to us than
those that would be available to us with respect to such a transaction from
unaffiliated third parties.




Pursuant
to our audit committee charter, any related party transaction, as defined in
Securities and Exchange Commission Rule S-K 404(a) must be reviewed and
approved by the audit committee.  The transactions described in this
section were not pre-approved by our audit committee as they were entered into
prior to consummation of the our initial public offering.




Director
Independence




The NYSE
Alternext requires that a majority of our board must be composed of "independent
directors," which is defined generally as a person other than an officer or
employee of the company or its subsidiaries or any other individual having a
relationship, which, in the opinion of the company's board of directors would
interfere with the director's exercise of independent judgment in carrying out
the responsibilities of a director.  Our board of directors has
determined that Messrs. Rourke, Zachs, Zimmermann and Lustig are "independent
directors" as such term is defined in Rule 10A-3 of the Exchange Act and the
rules of the NYSE Alternext.  Our independent directors have regularly
scheduled meetings at which only independent directors are present.




Any
affiliated transactions will be on terms no less favorable to us than could be
obtained from independent parties. Any affiliated transactions must be approved
by a majority of our independent and disinterested directors.




Item 14.
            Principal
      Accountant Fees and Services




Description
of Professional Services




As
previously disclosed in our February 4, 2008 8-K filing, a majority of the
partners of Goldstein Golub Kessler LLP (“GGK”) became partners of
McGladrey & Pullen, LLP (“M&P”).  As a result, GGK
resigned as auditors of the Company effective January 31, 2008 and M&P
was appointed as our independent registered public accounting firm in connection
with our annual financial statements for the fiscal year ended December 31,
2008.




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Audit Fees.  The
aggregate fees for professional services rendered by GGK were $153,442, which
includes fees related to the initial public offering and related audits
(including the December 31, 2006 audit) and fees related to the review of
financial statements included in our quarterly reports on Form
10-Q.




We
incurred fees from M&P of approximately $25,000 in connection with our
December 31, 2007 year end audit.  In addition we expect to incur
M&P fees of approximately $55,000 for the audit of our December 31, 2008
financial statements and audit of our internal control over financial reporting
and we have incurred approximately $62,000 of fees from M&P for reviews of
interim financial statements and proxy filings during 2008.




Audit-Related
Fees.  Audit-related fees are for assurance and related
services including, among others, consultation concerning financial accounting
and reporting standards.  There were no aggregate fees billed for
audit-related services rendered by GGK or M&P.




Tax Fees.  There
were no fees paid to GGK or M&P for professional services for tax
compliance, tax planning and tax advice for the fiscal years ended
December 31, 2008 and 2007.




All Other
Fees.  There were no fees paid to GGK or M&P for services
other than audit services and audit-related services rendered by GGK or M&P
for the fiscal years ended December 31, 2008 and 2007.




Policy
on Board Pre-Approval of Audit and Permissible Non-audit Services of Independent
Auditors




The audit
committee is responsible for appointing, setting compensation, and overseeing
the work of the independent auditor.  In recognition of this
responsibility, the audit committee has established a policy to pre-approve all
audit and permissible non-audit services provided by the independent
auditor.




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PART IV




Item 15.
            Exhibits, Financial Statements
      Schedules




1.
      Financial
Statements:
                                            
                                            PageIndex
      to Financial Statements
                                            
                                            52Reports
      of Independent Registered Public Accounting Firms
                                            
                                            F-1Report
      of Independent Registered Public Accounting Firm on Internal Control Over
      Financial Reporting
                                            
                                            F-3Consolidated
      Balance Sheets at December 31, 2008 and 2007
                                            
                                            F-4Consolidated
      Statements of Operations for the years ended December 31, 2008 and 2007,
      and the periods from August 1, 2006 (inception) through December 31, 2006
      and December 31, 2008
                                            
                                            F-5Consolidated
      Statements of Stockholders’ Equity for the period from August 1, 2006
      (inception) through December 31, 2008
                                            
                                            F-6Consolidated
      Statements of Cash Flows for the years ended December 31, 2008 and 2007,
      and the periods from August 1, 2006 (inception) through December 31, 2006
      and December 31, 2008
                                            
                                            F-7Notes
      to Financial Statements
                                            
                                            F-82.
      Financial Statement
      Schedule(s):No
      financial statement schedules are filed herewith because (i) such
      schedules are not required or (ii) the information required has been
      presented in the aforementioned financial statements.




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3.
      Exhibits:2.1
            Agreement
      and Plan of Merger dated as of December 15, 2008, by and among Columbus
      Acquisition Corp., IDE Acquisition, LLC and Integrated Drilling Equipment
      Company*****3.1
            Amended
      and Restated Certificate of Incorporation*3.2
            Bylaws*4.1
            Specimen
      Unit Certificate**4.2
            Specimen
      Common Stock Certificate**4.3
            Specimen
      Warrant Certificate**4.4
            Form
      of Unit Purchase Option to be granted to
  Representative**4.5
            Form
      of Warrant Agreement between Continental Stock Transfer & Trust
      Company and the Registrant**10.1
            Shareholders’
      Agreement, dated as of December 15, 2008, by and among Columbus
      Acquisition Corp., Stephen D. Cope, as escrow representative, certain
      stockholders of Columbus Acquisition Corp. and certain stockholders of
      Integrated Drilling Equipment Company*****10.1
            Letter
      Agreement among the Registrant, Lazard Capital Markets LLC and Columbus
      Acquisition Holdings LLC*10.2
            Letter
      Agreement among the Registrant, Lazard Capital Markets LLC and Andrew
      Intrater*10.3
            Letter
      Agreement among the Registrant, Lazard Capital Markets LLC and Michael
      Ernestus*10.4
            Letter
      Agreement among the Registrant, Lazard Capital Markets LLC and Barry
      J.  Rourke*10.5
            Letter
      Agreement among the Registrant, Lazard Capital Markets LLC and Eric
      Zachs*10.6
            Letter
      Agreement among the Registrant, Lazard Capital Markets LLC and Rolf
      Zimmermann*10.7
            Letter
      Agreement among the Registrant, Lazard Capital Markets LLC and Jason
      Lustig*10.8
            Letter
      Agreement among the Registrant, Lazard Capital Markets LLC and Paul
      F.  Lipari*10.9
            Letter
      Agreement among the Registrant, Lazard Capital Markets LLC and Michael
      Sloan*10.10
            Form
      of Investment Management Trust Agreement between Continental Stock
      Transfer & Trust Company and the Registrant****10.11
            Form
      of Stock Escrow Agreement between the Registrant, Continental Stock
      Transfer & Trust Company and the Initial
  Stockholders**10.12
            Form
      of Warrant Escrow Agreement between the Registrant, Continental Stock
      Transfer & Trust Company and Columbus Acquisition Holdings
      LLC****10.13
            Form
      of Letter Agreement between Renova U.S.  Management LLC and the
      Registrant regarding administrative support**10.14
            Amended
      and Restated Promissory Note, dated August 10, 2006, issued to Columbus
      Acquisition Holdings LLC**10.15
            Form
      of Registration Rights Agreement among the Registrant and the Initial
      Stockholders***10.16
            Warrant
      Purchase Agreement among the Registrant, Lazard Capital Markets LLC,
      LeBoeuf, Lamb, Greene & MacRae LLP and Columbus Acquisition Holdings
      LLC*14
            Form
      of Code of Ethics*




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24.1
                                                                                      Power
      of Attorney31.1
                                                                                      Certification
      of the Chief Executive Officer pursuant to Rule 13a-14 of the Securities
      and Exchange Act of 1934, as amended31.2
                                                                                      Certification
      of the Principal Financial Officer pursuant to Rule 13a-14 of the
      Securities and Exchange Act of 1934, as amended32.1
                                                                                      Certification
      of the Chief Executive Officer pursuant to Rule 906 of the Sarbanes-Oxley
      Act of 200232.2
                                                                                      Certification
      of the Principal Financial Officer pursuant to Rule 906 of the
      Sarbanes-Oxley Act of 200299.1
                                                                                      Form
      of Audit Committee Charter*99.1
                                                                                      Press
      Release of Columbus Acquisition Corp., dated December 15,
      2008*****99.2
                                                                                      Form
      of Nominating and Corporate Governance Committee
  Charter*99.2
                                                                                      Investor
      Presentation of Columbus Acquisition Corp., dated December 15,
      2008*****


*
              Previously
      filed in connection with Columbus Acquisition Corp.'s registration
      statement on Form S-1 (File No. 333-138890) filed on November 22,
      2006.
 
 **
              Previously
      filed in connection with amendment No. 1 to Columbus Acquisition Corp.'s
      registration statement on Form S-1 (File No. 333-138890) filed on February
      13, 2007.
 
 ***
              Previously
      filed in connection with amendment No. 2 to Columbus Acquisition Corp.'s
      registration statement on Form S-1 (File No. 333-138890) filed on April
      11, 2007.
 
 ****
              Previously
      filed in connection with amendment No. 4 to Columbus Acquisition Corp.'s
      registration statement on Form S-1 (File No. 333-138890) filed on May 16,
      2007.
 
 *****
              Previously
      filed in connection with Columbus Acquisition Corp.’s current report Form
      8-K filed on December 15,
2008.




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SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this annual report on Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized.




COLUMBUS
      ACQUISITION
      CORP.By:
                              /s/Andrew
      IntraterAndrew
      IntraterChairman
      and Chief Executive Officer(Principal
      Executive Officer)Date:
      February 23,
2009





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, this annual report on Form 10-K has been signed below by the following on
behalf of the registrant and in the capacities and on the dates
indicated.





/s/Andrew
      IntraterAndrew
      IntraterChairman
      and Chief Executive Officer(Principal
      Executive Officer)Date:
      February 23, 2009/s/Michael
      SloanMichael
      SloanSenior
      Vice President andChief
      Financial Officer(Principal
      Financial and Accounting Officer)Date: February 23,
      2009
  /s/
      Michael
      W. ErnestusMichael
      W. ErnestusExecutive
      Director and PresidentDate: February 23,
      2009/s/
      Barry
      J. RourkeBarry
      J. RourkeDirectorDate: February 23,
      2009/s/
      Eric
      ZachsEric
      ZachsDirectorDate: February 23,
      2009/s/
      Rolf
      ZimmermannRolf
      ZimmermannDirectorDate: February 23,
      2009/s/
      Jason
      LustigJason
      LustigDirectorDate:
      February 23, 2009




68