UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 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: 1-33285





Dekania Corp.

(Exact Name of Registrant as Specified in Its Charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 84-1703721                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                              |  |           
|--------------------------------------------- |  | ----------
|2929 Arch Street, Suite 1703 Philadelphia, PA |  | 19104     
|(Address of principal executive offices)      |  | (Zip Code)

Registrants telephone number, including area code: (215) 701-9555

None

(Former Name, Former Address
and Former Fiscal Year, if Changed Since Last Report)





Indicate by check mark whether the Registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of accelerated filer, large accelerated filer
and smaller reporting company in Rule 12b-2 of the Exchange. (Check one):

Large Accelerated Filer   ̈                    Accelerated Filer   ̈

Non-Accelerated Filer  x
                     Smaller Reporting Company   ̈

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

The number of outstanding shares of the registrants common stock on
November 13, 2008 was 12,699,900 shares.









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PART I  FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

DEKANIA CORP.

(a corporation in the development stage)

CONDENSED BALANCE SHEETS



|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                                                                                                                                                                           |  | September 30, 2008(unaudited) |            |   | December 31,2007 |  
|ASSETS                                                                                                                                                                                                                                                     |  |                               |            |   |                  |   |            |  
|Current Assets                                                                                                                                                                                                                                             |  |                               |            |   |                  |   |            |  
|Cash                                                                                                                                                                                                                                                       |  | $                             | 6,232      |   |                  | $ | 789,487    |  
|Investment in trust account                                                                                                                                                                                                                                |  |                               | 97,066,289 |   |                  |   | 96,561,519 |  
|Prepaid taxes                                                                                                                                                                                                                                              |  |                               | 23,281     |   |                  |   | 96,509     |  
|Prepaid expenses and other current assets                                                                                                                                                                                                                  |  |                               | 183,304    |   |                  |   | 280,563    |  
|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  
|Total current assets                                                                                                                                                                                                                                       |  |                               | 97,279,106 |   |                  |   | 97,728,078 |  
|Deferred tax asset                                                                                                                                                                                                                                         |  |                               | 1,423,719  |   |                  |   | 1,153,491  |  
|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  
|TOTAL ASSETS                                                                                                                                                                                                                                               |  | $                             | 98,702,825 |   |                  | $ | 98,881,569 |  
|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                       |  |                               |            |   |                  |   |            |  
|Current Liabilities                                                                                                                                                                                                                                        |  |                               |            |   |                  |   |            |  
|Accounts payable and accrued expenses                                                                                                                                                                                                                      |  | $                             | 263,230    |   |                  | $ | 139,804    |  
|Deferred interest on investments                                                                                                                                                                                                                           |  |                               | 126,513    |   |                  |   |           |  
|Due to stockholder                                                                                                                                                                                                                                         |  |                               | 31,512     |   |                  |   | 55,507     |  
|Deferred underwriting fees                                                                                                                                                                                                                                 |  |                               | 2,044,960  |   |                  |   | 2,044,960  |  
|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  
|Total Liabilities                                                                                                                                                                                                                                          |  |                               | 2,466,215  |   |                  |   | 2,240,271  |  
|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  
|Common stock, $.0001 par value, 3,063,719 shares subject to possible redemption, at redemption value of $9.80 per share                                                                                                                                    |  |                               | 30,024,446 |   |                  |   | 30,024,446 |  
|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  
|Commitments                                                                                                                                                                                                                                                |  |                               |            |   |                  |   |            |  
|Stockholders Equity:                                                                                                                                                                                                                                      |  |                               |            |   |                  |   |            |  
|Preferred stock, par value of $0.0001, authorized 1,000,000 shares; none issued or outstanding                                                                                                                                                             |  |                               |           |   |                  |   |           |  
|Common stock, par value of $0.0001, authorized 30,000,000 shares; 12,699,900 issued and outstanding as of September 30, 2008 and
December 31, 2007 (including 3,063,719 shares subject to possible redemption at September 30, 2008 and December 31, 2007) |  |                               | 1,270      |   |                  |   | 1,270      |  
|Additional paid in capital                                                                                                                                                                                                                                 |  |                               | 69,657,497 |   |                  |   | 67,314,497 |  
|Deficit accumulated during the development stage                                                                                                                                                                                                           |  |                               | (3,446,603 | ) |                  |   | (698,915   | )
|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  
|Total Stockholders Equity                                                                                                                                                                                                                                 |  |                               | 66,212,164 |   |                  |   | 66,616,852 |  
|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                 |  | $                             | 98,702,825 |   |                  | $ | 98,881,569 |  
|                                                                                                                                                                                                                                                           |  |                               |            |   |                  |   |            |  

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



---

DEKANIA CORP.

(a corporation in the development stage)

CONDENSED STATEMENTS OF OPERATIONS



|                                                                                                                                                                                                                                                                                                                                                |  |                                                |            |   |                                                |   |            |                                               |  |   |                                               |   |  |                                                                      |            |   |  |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------- | ---------- | - | ---------------------------------------------- | - | ---------- | --------------------------------------------- |  | - | --------------------------------------------- | - |  | -------------------------------------------------------------------- | ---------- | - |  | - | ---------- | -
|                                                                                                                                                                                                                                                                                                                                                |  | Three monthsendedSeptember 30, 2008(unaudited) |            |   | Three monthsendedSeptember 30, 2007(unaudited) |   |            | Nine monthsendedSeptember 30, 2008(unaudited) |  |   | Nine monthsendedSeptember 30, 2007(unaudited) |   |  | February 28, 2006(date of inception)to September 30, 2008(unaudited) |           
|Formation and operating costs (including stock-based compensation of $781,000 for the three months ended September 30, 2008 and 2007,
$2,343,000 for the nine months ended September 30, 2008, $2,017,582 for the nine months ended September 30, 2007, and $5,141,582 for the period from February 28, 2006 (inception) to September 30, 2008) |  | $                                              | 1,509,516  |   |                                                | $ | 1,240,155  |                                               |  | $ | 3,548,937                                     |   |  | $                                                                    | 2,956,290  |   |  | $ | 7,712,222  |  
|Interest income                                                                                                                                                                                                                                                                                                                                 |  |                                                | 244,556    |   |                                                |   | 883,969    |                                               |  |   | 801,249                                       |   |  |                                                                      | 2,654,410  |   |  |   | 4,265,619  |  
|                                                                                                                                                                                                                                                                                                                                                |  |                                                |            |   |                                                |   |            |                                               |  |   |                                               |   |  |                                                                      |            |   |  |   |            |  
|Net (loss) before provision for income taxes                                                                                                                                                                                                                                                                                                    |  |                                                | (1,264,961 | ) |                                                |   | (356,186   | )                                             |  |   | (2,747,688                                    | ) |  |                                                                      | (301,880   | ) |  |   | (3,446,603 | )
|Provision for income taxes                                                                                                                                                                                                                                                                                                                      |  |                                                |           |   |                                                |   | (18,682    | )                                             |  |   |                                              |   |  |                                                                      |           |   |  |   |           |  
|                                                                                                                                                                                                                                                                                                                                                |  |                                                |            |   |                                                |   |            |                                               |  |   |                                               |   |  |                                                                      |            |   |  |   |            |  
|Net (loss)                                                                                                                                                                                                                                                                                                                                      |  | $                                              | (1,264,961 | ) |                                                | $ | (337,504   | )                                             |  | $ | (2,747,688                                    | ) |  | $                                                                    | (301,880   | ) |  | $ | (3,446,603 | )
|                                                                                                                                                                                                                                                                                                                                                |  |                                                |            |   |                                                |   |            |                                               |  |   |                                               |   |  |                                                                      |            |   |  |   |            |  
|Weighted average shares outstanding (basic and diluted)                                                                                                                                                                                                                                                                                         |  |                                                | 12,699,900 |   |                                                |   | 12,699,900 |                                               |  |   | 12,699,900                                    |   |  |                                                                      | 11,281,843 |   |  |   | 8,983,367  |  
|                                                                                                                                                                                                                                                                                                                                                |  |                                                |            |   |                                                |   |            |                                               |  |   |                                               |   |  |                                                                      |            |   |  |   |            |  
|Net income (loss) per share (basic and diluted)                                                                                                                                                                                                                                                                                                 |  | $                                              | (0.10      | ) |                                                | $ | (0.03      | )                                             |  | $ | (0.22                                         | ) |  | $                                                                    | (0.03      | ) |  | $ | (0.38      | )
|                                                                                                                                                                                                                                                                                                                                                |  |                                                |            |   |                                                |   |            |                                               |  |   |                                               |   |  |                                                                      |            |   |  |   |            |  

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



---

DEKANIA CORP.

(a corporation in the development stage)

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY



|                                                                           |  |              |  |                           |       |  |                                               |             |   |                     |   |            |   |  |   |             |  
|-------------------------------------------------------------------------- |  | ------------ |  | ------------------------- | ----- |  | --------------------------------------------- | ----------- | - | ------------------- | - | ---------- | - |  | - | ----------- | -
|                                                                           |  | Common Stock |  | Additionalpaid-in capital |       |  | DeficitAccumulatedDuring theDevelopment Stage |             |   | StockholdersEquity |  
|                                                                           |  | Shares       |  | Amount                    |       |  |                                              
|February 28, 2006 (inception) to September 30, 2008                        |  |              |  |                           |       |  |                                               |             |   |                     |   |            |   |  |   |             |  
|Common shares issued March 17, 2006 at $.0001 per share                    |  | 2,487,500    |  | $                         | 249   |  | $                                             | 24,626      |   |                     | $ |           |   |  | $ | 24,875      |  
|Net loss for the period February 28, 2006 (inception) to December 31, 2006 |  |             |  |                           |      |  |                                               |            |   |                     |   | (647       | ) |  |   | (647        | )
|                                                                           |  |              |  |                           |       |  |                                               |             |   |                     |   |            |   |  |   |             |  
|Balance, December 31, 2006                                                 |  | 2,487,500    |  | $                         | 249   |  | $                                             | 24,626      |   |                     | $ | (647       | ) |  | $ | 24,228      |  
|                                                                           |  |              |  |                           |       |  |                                               |             |   |                     |   |            |   |  |   |             |  
|Private placement issued at January 31, 2007 at $10 per share              |  | 250,000      |  |                           | 25    |  |                                               | 2,499,975   |   |                     |   |           |   |  |   | 2,500,000   |  
|Common shares issued at February 7, 2007 at $10 per share                  |  | 9,700,000    |  |                           | 970   |  |                                               | 96,999,030  |   |                     |   |           |   |  |   | 97,000,000  |  
|Common shares issued at March 21, 2007 at $10 per share                    |  | 262,400      |  |                           | 26    |  |                                               | 2,623,974   |   |                     |   |           |   |  |   | 2,624,000   |  
|Expenses of offerings                                                      |  |             |  |                           |      |  |                                               | (7,607,244  | ) |                     |   |           |   |  |   | (7,607,244  | )
|Proceeds subject to possible conversion of 3,063,719 shares                |  |             |  |                           |      |  |                                               | (30,024,446 | ) |                     |   |           |   |  |   | (30,024,446 | )
|Stock - based compensation                                                 |  |             |  |                           |      |  |                                               | 2,798,582   |   |                     |   |           |   |  |   | 2,798,582   |  
|Net loss for the year ended December 31, 2007                              |  |             |  |                           |      |  |                                               |            |   |                     |   | (698,268   | ) |  |   | (698,268    | )
|                                                                           |  |              |  |                           |       |  |                                               |             |   |                     |   |            |   |  |   |             |  
|Balance, December 31, 2007                                                 |  | 12,699,900   |  | $                         | 1,270 |  | $                                             | 67,314,497  |   |                     | $ | (698,915   | ) |  | $ | 66,616,852  |  
|                                                                           |  |              |  |                           |       |  |                                               |             |   |                     |   |            |   |  |   |             |  
|Unaudited:                                                                 |  |              |  |                           |       |  |                                               |             |   |                     |   |            |   |  |   |             |  
|Stock - based compensation                                                 |  |              |  |                           |       |  |                                               | 2,343,000   |   |                     |   |            |   |  |   | 2,343,000   |  
|Net loss for the nine months ended September 30, 2008                      |  |              |  |                           |       |  |                                               |             |   |                     |   | (2,747,688 | ) |  |   | (2,747,688  | )
|                                                                           |  |              |  |                           |       |  |                                               |             |   |                     |   |            |   |  |   |             |  
|Balance, September 30, 2008                                                |  | 12,699,900   |  | $                         | 1,270 |  | $                                             | 69,657,497  |   |                     | $ | (3,446,603 | ) |  | $ | 66,212,164  |  
|                                                                           |  |              |  |                           |       |  |                                               |             |   |                     |   |            |   |  |   |             |  

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



---

DEKANIA CORP.

(a corporation in the development stage)

CONDENSED STATEMENTS OF CASH FLOWS



|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|------------------------------------------------------------------------------------- |  | ---------------------------------------------- | ---------- | - | ---------------------------------------------- | - | ----------- | -------------------------------------------------------------------- |  | - | ----------- | -
|                                                                                      |  | Nine months endedSeptember 30, 2008(unaudited) |            |   | Nine months endedSeptember 30, 2007(unaudited) |   |             | February 28, 2006(date of inception)to September 30, 2008(unaudited) | 
|CASH FLOW FROM OPERATING ACTIVITIES                                                   |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Net (loss)                                                                            |  | $                                              | (2,747,688 | ) |                                                | $ | (301,880    | )                                                                    |  | $ | (3,446,603  | )
|Adjustment to reconcile net loss to net cash provided by (used in) operating expenses |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Stock-based compensation                                                              |  |                                                | 2,343,000  |   |                                                |   | 2,017,582   |                                                                      |  |   | 5,141,582   |  
|Changes in operating assets and liabilities:                                          |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|(Increase) Decrease in prepaid expenses and other current assets                      |  |                                                | 97,259     |   |                                                |   | (193,000    | )                                                                    |  |   | (183,304    | )
|Increase in deferred interest                                                         |  |                                                | 126,513    |   |                                                |   | 66,144      |                                                                      |  |   | 126,513     |  
|(Increase) in deferred tax asset                                                      |  |                                                | (270,228   | ) |                                                |   | (907,988    | )                                                                    |  |   | (1,423,719  | )
|Increase in trust account due to earned interest                                      |  |                                                | (927,762   | ) |                                                |   | (88,266     | )                                                                    |  |   | (4,392,132  | )
|Increase (decrease) in prepaid taxes                                                  |  |                                                | 73,228     |   |                                                |   |            |                                                                      |  |   | (23,281     | )
|Increase in income taxes payable                                                      |  |                                                |           |   |                                                |   | 7,988       |                                                                      |  |   |            |  
|Increase in accounts payable and accrued expenses                                     |  |                                                | 123,426    |   |                                                |   | 144,982     |                                                                      |  |   | 263,230     |  
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Net cash provided by (used in) operating activities                                   |  |                                                | (1,182,252 | ) |                                                |   | 745,562     |                                                                      |  |   | (3,937,713  | )
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|CASH FLOW FROM INVESTING ACTIVITIES                                                   |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Payment to trust account                                                              |  |                                                |           |   |                                                |   | (96,571,520 | )                                                                    |  |   | (96,571,520 | )
|Cash withdrawn from trust account                                                     |  |                                                | 422,992    |   |                                                |   |             |                                                                      |  |   | 3,897,363   |  
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Net cash provided by (used in) investing activities                                   |  |                                                | 422,992    |   |                                                |   | (96,571,520 | )                                                                    |  |   | (92,674,157 | )
|CASH FLOW FROM FINANCING ACTIVITIES                                                   |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Payment of notes payable, stockholder                                                 |  |                                                |           |   |                                                |   | (300,000    | )                                                                    |  |   | (300,000    | )
|Gross proceeds from note payable stockholder                                          |  |                                                |           |   |                                                |   |            |                                                                      |  |   | 300,000     |  
|Gross proceeds from sale of common stock                                              |  |                                                |           |   |                                                |   |            |                                                                      |  |   | 24,875      |  
|Gross proceeds (repayment of) from stockholders advance                              |  |                                                | (23,995    | ) |                                                |   | (36,297     | )                                                                    |  |   | 31,512      |  
|Gross proceeds from public offering                                                   |  |                                                |           |   |                                                |   | 99,624,000  |                                                                      |  |   | 99,624,000  |  
|Gross proceeds from private placement                                                 |  |                                                |           |   |                                                |   | 2,500,000   |                                                                      |  |   | 2,500,000   |  
|Payment of offering costs                                                             |  |                                                |           |   |                                                |   | (5,399,686  | )                                                                    |  |   | (5,562,284  | )
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Net cash provided by (used in) financing activities                                   |  |                                                | (23,995    | ) |                                                |   | 96,388,017  |                                                                      |  |   | 96,618,103  |  
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Net increase (decrease) in cash                                                       |  |                                                | (783,255   | ) |                                                |   | 562,059     |                                                                      |  |   | 6,232       |  
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Cash at beginning of period                                                           |  |                                                | 789,487    |   |                                                |   | 253,138     |                                                                      |  |   |            |  
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Cash at end of period                                                                 |  | $                                              | 6,232      |   |                                                | $ | 815,197     |                                                                      |  | $ | 6,232       |  
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Supplemental disclosure of non cash financing activities:                             |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Decrease in accrued offering costs                                                    |  | $                                              |           |   |                                                | $ | (235,000    | )                                                                    |  | $ |            |  
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Accrual of deferred underwriting fees                                                 |  | $                                              | 2,044,960  |   |                                                | $ | 2,044,960   |                                                                      |  | $ | 2,044,960   |  
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Supplemental disclosure of cash flow information:                                     |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  
|Cash paid for income taxes                                                            |  | $                                              | 155,000    |   |                                                | $ | 900,000     |                                                                      |  | $ | 1,447,000   |  
|                                                                                      |  |                                                |            |   |                                                |   |             |                                                                      |  |   |             |  

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



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DEKANIA CORP.

(a corporation in the development stage)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

September 30, 2008

1.
Organization and Proposed Business Operations

Nature of Operations

Dekania Corp. (the Company) was incorporated in the State of Delaware on February 28, 2006 as a blank check company formed to acquire through a merger, capital stock exchange, asset acquisition or
other similar business combination, one or more businesses in the insurance industry in the United States, Canada, Bermuda or the Cayman Islands. The Company has not generated any material revenues. The Company has selected December 31 as
its fiscal year-end. The Company is considered to be in the development stage and is subject to the risks associated with activities of development stage companies. The Company has not acquired an entity as of September 30, 2008.

The financial statements at September 30, 2008 and for the three and nine months ended September 30, 2008 and 2007, and for the period from
February 28, 2006 (inception) to September 30, 2008 are unaudited. In the opinion of management, all adjustments (consisting of normal adjustments) have been made that are necessary to present fairly the financial position of the Company
as of September 30, 2008, the results of its operations and its cash flows for the periods then ended. Operating results for the interim period presented are not necessarily indicative of the results to be expected for the full year. The
condensed balance sheet at December 31, 2007 has been derived from the audited financial statements.

The statements and related notes
have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the financial statements and other information included in the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2007, as filed with Securities and Exchange Commission.

The registration
statement for the Companys initial public offering (the Public Offering) was declared effective on February 1, 2007. On January 30, 2007, the Company completed a private placement (the Private Placement) and
received net proceeds of $2,500,000. The Company consummated the Public Offering on February 7, 2007 and received net proceeds of $89,600,000. On February 5, 2007, Cohen Bros. Acquisitions, LLC (Cohen Bros.), the Companys
sponsor, delivered a letter of credit in the amount of $3,291,000 which may be drawn upon in specified circumstances to increase available amounts so the Trust Account (as defined below) will have sufficient funds to distribute at least $10.00 per
share with respect to shares included as part of the units sold in the Public Offering if the Trust Account is liquidated. On March 21, 2007, the Company completed the sale of an



---

additional 262,400 units which were subject to the over-allotment option of the underwriters in the Public Offering and received net proceeds of $2,466,560
(the Over-allotment). On May 2, 2007, the Company commenced separate trading of the common stock and warrants included in the Companys outstanding units on the American Stock Exchange. The Companys management has broad
discretion with respect to the specific application of the net proceeds of the Private Placement, the Public Offering and the Over-allotment (collectively the Offerings) although substantially all of the net proceeds of the Offerings are
intended to be generally applied toward consummating a business combination with a target business. As used herein, a target business includes an operating business in the insurance industry in the United States, Canada, Bermuda or the
Cayman Islands, and a business combination means the acquisition by the Company of such a target business.

Of the proceeds of
the Offerings, $96,571,520 was deposited in a trust account (Trust Account) at Deutsche Bank Trust Company Americas maintained by American Stock Transfer and Trust Company, and invested until the earlier of (i) the consummation of
the Companys first business combination or (ii) the liquidation of the Trust Account as part of a stockholder-approved plan of dissolution and liquidation. The amount in the Trust Account includes $2,044,960 of deferred underwriting
compensation (the Deferred Compensation) which will be paid to the underwriters if a business combination is consummated, but which will be forfeited in part to the extent that holders of shares of common stock sold in the Public
Offering, other than the Initial Stockholders (as defined below) and their nominees (the Public Stockholders) elect to have their shares redeemed for cash and in full if a business combination is not consummated. If a business
combination is consummated, the proceeds remaining after amounts used to complete the business combination may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative
expenses.

The Company, after signing a definitive agreement for the acquisition of a target business, must submit such transaction for
stockholder approval. If Public Stockholders owning 30% or more of the outstanding common stock sold in the Offerings vote against the business combination and elect to have the Company redeem their shares for cash, the business combination will not
be consummated. All of the Companys stockholders prior to the Offerings, including all of the officers and directors of the Company (Initial Stockholders), have agreed to vote their 2,487,500 founding shares of common stock in
accordance with the vote of the majority in interest of all other stockholders of the Company with respect to any business combination and to vote any shares they acquired in the Public Offering or in the aftermarket in favor of the business
combination. Cohen Bros. has also agreed to vote all 250,000 shares that it purchased in the Private Placement in favor of a business combination. After consummation of the Companys first business combination, these voting agreements will
terminate.

With respect to the first business combination which is approved and consummated, Public Stockholders who voted against the
business combination may demand that the Company redeem their shares. The per share redemption price will equal $10.00 per share (inclusive of a pro rata portion of the Deferred Compensation of approximately $0.20 per share) plus any interest
earned on their portion of the Trust Account (net of taxes payable), excluding interest to pay taxes and Trust Account interest used to fund working capital needs and expenses up to a maximum of $2,500,000. Accordingly, Public Stockholders holding
29.99% of the aggregate number of shares sold in the Offerings may seek redemption of their shares in the event of a business combination.

The Companys Second Amended and Restated Certificate of Incorporation provides for mandatory liquidation of the Trust Account as part of a stockholder-approved plan of dissolution and liquidation in the event that the Company does not
consummate a business combination within 18 months from the date of the consummation of the Public Offering, or 24 months from the consummation of the Public Offering if certain extension criteria have been satisfied. The Initial Stockholders have
waived their right to



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liquidation distributions with respect to the shares of common stock included in units purchased in the Private Placement and shares of common stock received
upon formation of the Company. Accordingly, in the event of such liquidation, the amount in the Trust Account will be distributed to the holders of the shares sold in the Public Offering.

On September 12, 2008, the Company entered into an Agreement and Plan of Merger with Advanced Equities Financial Corp. (AEFC) pursuant
to which AEFC would merge with and into the Company. Subsequently, the Company was advised by AEFC that a majority of its shareholders had taken action by consent disapproving and rejecting the merger between the Company and AEFC. See
Note 7, Subsequent Events.

If the Company cannot complete a business combination by February 7, 2009, it will be required to
liquidate. No adjustments have been made to the accompanying financial statements to reflect this uncertainty.

2. Recently Issued Accounting
Pronouncements

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 141(R) Business Combinations. This statement 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 noncontrolling interest in the acquiree. The Statement 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. The guidance will become effective as of the beginning of a companys fiscal year beginning after December 15, 2008. The
Company is currently evaluating the potential impact of the adoption of FAS 141R on its financial position, results of operations or cash flows.

In December 2007, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 110 (SAB 110) to permit entities, under certain circumstances, to continue to use the simplified method in developing
estimates of the expected term of plain-vanilla share options in accordance with SFAS No. 123R, Share-Based Payments (SFAS 123R). SAB 110 amended prior guidance to permit the use of the simplified
method beyond December 31, 2007. The Company believes that the adoption of SAB 110 does not have a material impact on its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS No. 157 clarifies the principle that fair value should be based on the assumptions market
participants would use when pricing an assets or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. On February 12, 2008, the FASB issued FASB Staff Position (FSP)
FAS 157-2, Effective Date of FASB Statement No. 157, which amended SFAS 157 to delay the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (that is, at least annually), to fiscal years beginning after November 15, 2008. The Company adopted SFAS No. 157 for financial assets and liabilities on January 1, 2008. SFAS 157
utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. A brief description of those three levels is as follows:



| |  |  | Level 1: Observable inputs such as quoted prices in active markets for identical assets of liabilities.
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3: Significant unobservable inputs.
| | - |  | -----------------------------------------



---

The Companys financial assets subject to fair value measurements are as follows:



|                                  |  |                                  |            |                                                                        |         |            |         |   |  |  
|--------------------------------- |  | -------------------------------- | ---------- | ---------------------------------------------------------------------- | ------- | ---------- | ------- | - |  | -
|                                  |  | Fair Valueas ofSeptember 30,2008 |            | Fair Value Measurements atSeptember 30, 2008Using Fair
Value Hierarchy
|                                  |  |                                  | Level 1    |                                                                        | Level 2 |            | Level 3
|Cash and cash equivalents         |  | $                                | 6,232      |                                                                        | $       | 6,232      |         |  |  | 
|                                  |  |                                  |            |                                                                        |         |            |         |   |  |  
|Investments held in trust account |  |                                  | 97,066,289 |                                                                        |         | 97,066,289 |         |  |  | 
|                                  |  |                                  |            |                                                                        |         |            |         |   |  |  
|Total                             |  | $                                | 97,072,521 |                                                                        | $       | 97,072,521 |         |  |  | 
|                                  |  |                                  |            |                                                                        |         |            |         |   |  |  

As of September 30, 2008, the Company does not have any financial liabilities. No gains or losses resulting
for the fair value measurement of financial assets were included in the Companys earnings. The adoption of SFAS No. 157 has not impacted the Companys results of operations and financial position.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS
159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 also establishes presentation and disclosure
requirements designed to facilitate comparisons between entities that chose different measurement attributes for similar assets and liabilities. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15,
2007. The Company has elected not to measure any eligible items at fair value. Accordingly, the adoption of SFAS 157 has not impacted the Companys results of operations and financial position.

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

3. Share-Based Payments

SFAS 123R requires all share-based payments, including grants of employee stock options to employees to be recognized in the financial statements based on their fair values. Total stock-based compensation for the nine
months ended September 30, 2008 and 2007 was $2,343,000 and $2,017,582 respectively. Stock-based compensation for the period February 28, 2006 (inception) to September 30, 2008 was $5,141,582.

4. Income Taxes

The Company accounts for income
taxes under SFAS No. 109, Accounting for Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and
liabilities.

Significant components of the Companys deferred tax asset are as follows:



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|                                           |  |                   |           |   |                  |   |           |  
|------------------------------------------ |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                                           |  | September 30,2008 |           |   | December 31,2007 |  
|Expenses deferred for income tax purposes: |  |                   | 2,329,774 |   |                  |   | 1,390,509 |  
|Less: valuation allowance                  |  |                   | (906,055  | ) |                  |   | (237,018  | )
|                                           |  |                   |           |   |                  |   |           |  
|Totals                                     |  | $                 | 1,423,719 |   |                  | $ | 1,153,491 |  
|                                           |  |                   |           |   |                  |   |           |  

5. Commitments

The Company has agreed to pay to Cohen Brothers, LLC, the parent of Cohen Bros. and a related party, $7,500 a month for no more than 24 months for office space and general and administrative expenses, commencing on
February 7, 2007 and terminating upon the date the Company consummates a business combination.

6. Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences, as may be
determined from time to time by the Board of Directors.

7. Subsequent Events

On September 12, 2008, the Company entered into an Agreement and Plan of Merger with AEFC pursuant to which AEFC would merge with and into the
Company. The Company announced on October 7, 2008 that it had been advised by AEFC that a majority of AEFCs shareholders had taken action by consent disapproving and rejecting the merger between the Company and AEFC. The
Company is currently evaluating the effectiveness of the alleged shareholder action, as well as the alternatives available to it with respect to the merger and AEFC.

On October 17, 2008, Opportunity Partners L.P., a shareholder of the Company, filed a
petition in the Court of Chancery in the State of Delaware to compel an annual meeting of shareholders. Opportunity Partners L.P. alleged that the Company is unable to consummate a merger with AEFC within 24 months of its Public Offering and has not
entered into any other agreement which can lead to the consummation of a business combination within such time period. It further alleged that more than 13 months have elapsed since the Companys organization, its last annual meeting or the
last action by written consent to elect directors in lieu of an annual meeting. Opportunity Partners L.P. sought an order from the court requiring the Company to hold an annual meeting of shareholders to elect directors to fill all director
positions. On November 10, 2008, the Company filed an answer to the petition. On November 18, 2008, the parties agreed, among other things, to cancel a hearing on the petition, which had been scheduled for November 19, 2008, and to
hold an annual stockholders meeting of the Company not later than February 7, 2009. The stipulation provides that the Companys proxy materials for the meeting will include a dissolution proposal and plan of liquidation for
consideration by the shareholders. If such dissolution proposal is approved, the Company will use its best efforts to distribute within 10 days of the shareholder meeting $10 per share to the Public Stockholders in accordance with and subject to the
limitations in the Registration Statement dated February 1, 2007. The stipulation further provides that the proxy materials for the meeting may include a business strategy proposal as an alternative to liquidation. Upon approval of the
stipulation by the Court of Chancery, the petition will be considered settled and dismissed. The Company also agreed to pay the Petitioners attorneys fees and costs of $8,300.00 in connection with bringing the action.

On November 14, 2008, the Company entered into a letter agreement with Cohen Brothers, LLC, the parent of Cohen Bros., whereby Cohen Brothers, LLC agreed
to loan us up to $500,000 to fund the Companys expenses and use as working capital. The amounts that the Company draws will not bear interest and will be repaid upon the consummation of a business combination. Cohen Brothers, LLC has agreed to
waive the repayment of the funds if we are required to dissolve and liquidate.



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Forward-Looking Statements

Statements in Managements Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this Quarterly Report on Form 10-Q with respect to our beliefs, plans, objectives, goals, expectations, anticipations, intentions, financial condition, results of operations,
future performance and business constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We have based these forward-looking statements on
managements current expectations about future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts, and by words such as may, could, should,
would, believe, expect, anticipate, estimate, intend, plan or other similar words or expressions.

Any or all of the forward-looking statements in this report and in any other public statements we make may turn out to be wrong. This can occur as a
result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. We discuss many of the risks and uncertainties that may impact our business in Item 1A, Risk Factors, in our Annual Report on Form
10-K for the year ended December 31, 2007. Because of these risks and uncertainties, our actual results may differ materially from those that might be anticipated from our forward-looking statements. Other factors beyond those referred to above
could also adversely affect us. Therefore, you are cautioned not to place undue reliance on our forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable law.

General

We were formed on February 28, 2006 as a blank check company for the purpose of effecting a business combination with one or more businesses in the insurance industry.

On September 12, 2008, we entered into an Agreement and Plan of Merger with Advanced Equities Financial Corp. (AEFC) pursuant to which
AEFC would merge with and into us. We announced on October 7, 2008 that we had been advised by AEFC that a majority of AEFCs shareholders had taken action by consent disapproving and rejecting the merger between us and AEFC.
We are currently evaluating the effectiveness of the alleged shareholder action, as well as the alternatives available to us with respect to the merger and AEFC.

If we issue additional shares of our capital stock as consideration in a business combination it may result in:



| |  |  | significant dilution of the interest of our public investors in our company;
| | - |  | ----------------------------------------------------------------------------



| |  |  | a change in control of our company (if we issue a sufficient number of shares), which may among other things, result in the resignation or removal of our existing
officers and directors and could reduce or eliminate our ability to use our net operating loss carry-forwards, if any, for tax purposes; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reduced market prices for our common stock and warrants.
| | - |  | --------------------------------------------------------



---

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



| |  |  | increased expenses to pay debt service;
| | - |  | ---------------------------------------



| |  |  | if the debt has a variable rate, increased vulnerability to changes in market interest rates, since our revenues may not increase, or may decrease, if interest
rates rise;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | default and foreclosure on our assets if our operating revenues after a business combination are insufficient to service our debt obligations;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | our inability, or limitations on our ability, to obtain additional financing, if necessary, if the debt contains covenants restricting our ability to obtain
additional financing while the debt is outstanding;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | prohibitions or limitations on our ability to pay dividends on our common stock;
| | - |  | --------------------------------------------------------------------------------



| |  |  | requirements that we dedicate a substantial portion of our cash flow to pay principal and interest on our debt, which would reduce the funds available for dividends
on our common stock, working capital, capital expenditures, business combinations and other general corporate purposes; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limitations or prohibitions on business combinations, capital expenditures or other business operations unless we meet particular financial or operational tests.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

Results of Operation and Liquidity

Our entire activity since inception has been limited to organizational activities, activities relating to our initial public offering and, since our initial public offering, activities relating to identifying and
evaluating prospective acquisition targets. We have neither engaged in any operations nor generated any revenues to date, other than interest income earned on the proceeds of our initial public offering and private placement.

For the three months ended September 30, 2008 and 2007, our net loss was $(1,264,961) and $(337,504), respectively. Since we did not have any
operations, all of our income was derived from interest income, all of which was earned on funds held in the trust account. Our interest income for the three months ended September 30, 2008 was $244,556, as compared to $883,969 for the three
months ended September 30, 2007. The reduction in interest income was due to a decrease in yields obtainable on the Treasury Bills in which we invested the funds held in the trust account during the three months ended September 30, 2008,
resulting from the significant changes in the credit markets beginning in the second half of 2008. Our operating expenses during the three months ended September 30, 2008 and 2007 were $1,509,516 and $1,240,155, respectively, consisting
primarily of stock based compensation of $781,000 for the three months ended September 30, 2008 and 2007, expenses related to pursuing potential business combinations, professional fees, and the monthly administrative fee of $7,500 paid to
Cohen Brothers, LLC, d/b/a Cohen & Company, the parent of our sponsor, Cohen Bros. Acquisitions, which we refer to as our Sponsor.



---

For the nine months ended September 30, 2008 and 2007, our net loss was $(2,747,688) and $(301,880),
respectively. Since we did not have any operations, all of our income was derived from interest income, all of which was earned on funds held in the trust account. Our interest income for the nine months ended September 30, 2008 was $801,249 as
compared to $2,654,410 for the nine months ended September 30, 2007. The reduction in interest income was due to reduced yields on the Treasury Bills, as referred to in the preceding paragraph. Our operating expenses during the nine months
ended September 30, 2008 and 2007 were $3,548,936 and $2,956,290, respectively, consisting primarily of stock based compensation of $2,343,000 and $2,017,582, respectively, expenses related to pursuing a business combination, professional fees,
and the monthly administrative fee of $7,500 paid to Cohen Brothers, LLC.

For the period February 28, 2006 (date of inception) to
September 30, 2008, our net loss was $3,446,603. Since we did not have any operations, all of our income was derived from interest income, all of which was earned on funds held in the trust account. Our operating expenses during the period were
$7,712,222, consisting primarily of stock based compensation of $5,141,582, expenses related to pursuing a business combination, professional fees, and the monthly administrative fee of $7,500 paid to Cohen Brothers, LLC. On January 30, 2007,
we sold 250,000 units in a private placement to our Sponsor and on February 7, 2007, we consummated our initial public offering of 9,700,000 units. Each unit in the private placement and the public offering consisted of one share of common
stock and one redeemable common stock purchase warrant. Each warrant entitles the holder to purchase from us one share of our common stock at an exercise price of $8.00. Our common stock and warrants started trading separately as of May 2,
2007. The gross proceeds from the sale of the units in our initial public offering and the private placement were $99,500,000. Of that amount, after deducting offering expenses of $610,000 (including reimbursement of $300,000 advanced by our Sponsor
to pay offering expenses), underwriting discounts and commissions of $4,850,000, deferred underwriting compensation of $1,940,000 and working capital of $40,000, we deposited $92,060,000 in the Trust Account maintained by American Stock
Transfer & Trust Company, as trustee, which we refer to as the Trust Account. In addition, we deposited $1,940,000 of deferred underwriting compensation into the Trust Account. The gross proceeds from the sale of the additional 262,400
units to the underwriters of our initial public offering in connection with the exercise of their overallotment option were $2,624,000. Of that amount, after deducting the underwriters discount of $52,480, we deposited $2,571,520 into the
Trust Account (including $104,960 of deferred underwriting compensation). The funds deposited in the Trust Account will be used to effectuate a business combination or, if we do not complete a business combination, returned to our public
stockholders upon the implementation of a stockholder-approved plan of dissolution and liquidation. We also have a $3,291,000 irrevocable letter of credit from our Sponsor issued by Commerce Bank held for the benefit of the Trust Account and the
stockholders whose shares were issued in our initial public offering, who we refer to as our public stockholders, which may be drawn upon by the trustee of our Trust Account to provide a pro rata payment to our public stockholders, if we do not
complete a business combination within the required time periods, and funds in the Trust Account are less than $10.00 per share. As of September 30, 2008, there was $97,066,289 held in the Trust Account, or approximately $9.74 per share of
common stock issued in our initial public offering (including $2,044,960 of deferred underwriting compensation).

The amount of the letter
of credit is the amount that, together with the proceeds of our initial public offering and the amount of the underwriters deferred compensation, will result in the Trust Account and, to the extent required, American Stock Transfer &
Trust Company, as trustee for the Trust Account, having available $10.00 per share for distribution to our public stockholders. However, there is a risk that if third parties bring claims against us and seek reimbursement from the Trust Account, the
amount in the Trust Account, together with amounts drawn on the letter of credit, will be less than $10.00 per share. In order to protect the Trust Account to the extent necessary to ensure that claims by creditors do not reduce



---

the amount in the Trust Account, our Sponsor has agreed to indemnify us for all claims of creditors that have not executed a valid and binding waiver of
their right to seek payment of amounts due to them out of the Trust Account, provided and to the extent that (with the approval of our Chief Executive Officer and the vote or written consent of no less than a majority of our board of directors,
including all of the non-independent directors) we have elected to forego obtaining valid and enforceable waivers from such creditors. We have not asked our Sponsor to reserve for such an eventuality, and we cannot assure you that our Sponsor will
be able to satisfy those obligations, despite the fact that Cohen & Company, the parent of our Sponsor, has agreed with our Sponsor to provide our Sponsor with any funds our Sponsor may require to satisfy these obligations.

The fees charged by Commerce Bank in connection with the issuance of the letter of credit and all periodic and other fees related to the letter of credit
are being paid by our Sponsor and reimbursed by us from amounts we are permitted to draw from the interest earned on the Trust Account. However, any amounts drawn under the letter of credit will be the sole responsibility of our Sponsor. Under the
terms of the letter of credit, it expires on the earlier to occur of:



| |  |  | completion of a business combination;
| | - |  | -------------------------------------



| |  |  | completion of our dissolution or liquidation; or
| | - |  | ------------------------------------------------



| |  |  | accrual of $5,600,000 of interest income, after payment of or reserves for taxes, on funds held in the Trust Account, including up to $2,500,000 of the interest
income that we may withdraw for working capital and, if necessary, up to $100,000 of the interest income that we may withdraw for expenses of dissolution and liquidation.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, the letter of credit will expire if on August 1, 2008 (or, if by August 1, 2008 a letter of intent or definitive agreement with
respect to a business combination has been executed but the business combination contemplated by such letter of intent or definitive agreement has not been consummated, on February 1, 2009) there is at least $99,624,000 in the Trust Account,
including interest earned on funds in the Trust Account but net of payment of or reserves for taxes, outstanding claims and accrued expenses payable out of the $2,500,000 we are permitted to draw as working capital and, if necessary, payment of up
to $100,000 for dissolution and liquidation expenses. To the extent that there is less than $99,624,000 in the Trust Account on August 1, 2008 or February 1, 2009, as applicable, our Sponsor may cause termination of the letter of credit by
contributing to the Trust Account an amount in cash equal to the difference between $99,624,000 and the amount then available in the Trust Account. Our Sponsor will receive no additional consideration for such contribution other than the termination
of its letter of credit obligations. On July 16, 2008, we met the condition under our Amended and Restated Certificate of Incorporation that permitted us until February 7, 2009 to complete an appropriate acquisition.

The funds held in the Trust Account are currently invested in Treasury Bills issued by the United States government having a maturity of 180 days or
less. We also have the option to invest the funds in money market funds meeting the criteria under Rule 2a-7 under the Investment Company Act of 1940, as amended. Interest earned will be applied in the following order of priority:



| |  |  | payment of taxes on Trust Account interest;
| | - |  | -------------------------------------------



| |  |  | our working capital requirements before we complete a business combination, to a maximum of $2,500,000, and, if necessary, funding up to $100,000 of the costs of
our potential dissolution and liquidation;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

| |  |  | solely if we complete a business combination, payment of interest on the amount of deferred underwriters compensation payable to the underwriters in our
initial public offering; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the balance, if any, to us if we complete a business combination or to our public stockholders if we do not complete a business combination.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------

Through September 30, 2008, we have withdrawn all of the $2,500,000 of interest income on funds in the Trust
Account we are permitted to withdraw for working capital, and hold $6,232 in cash and cash equivalents. We believe that the funds we have on hand will not be sufficient to fund our ongoing operations and costs relating to the acquisition of a target
business or to fund the costs and expenses relating to our liquidation and dissolution if we do not consummate a business combination. On November 14, 2008, we entered into a letter agreement with Cohen Brothers, LLC, the parent of Cohen Bros. and a
related party, whereby Cohen Brothers, LLC agreed to loan us up to $500,000 to fund our expenses and use as working capital. The amounts that we draw will not bear interest and will be repaid upon the consummation of a business combination. Cohen
Brothers, LLC has agreed to waive the repayment of the funds if we are required to dissolve and liquidate.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Refer to our Annual Report on Form 10-K for the year ended December 31, 2007 for a discussion of our critical accounting policies. During the nine months ended September 30, 2008, there were no material changes to these policies.

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No., or FIN, 48 Accounting for
Uncertainty in Income Taxes, an interpretation of SFAS No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in tax positions recognized in a companys financial statements in accordance Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of the tax position taken or
expected to be taken in a tax return. The Company adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 did not have any impact on the accompanying financial statements since we have not identified any uncertain tax positions as
defined by FIN 48.

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payments (SFAS 123R). SFAS
123R requires all share-based payments, including grants of employee stock options to employees to be recognized in the financial statements based on their fair values. We adopted SFAS 123R effective January 1, 2006.

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

Off-Balance Sheet Arrangements

We have issued warrants in conjunction with our initial public offering and private placement, and have also issued incentive warrants. These warrants may
be deemed to be equity-linked derivatives and, accordingly, represent off balance sheet arrangements. As more particularly discussed in Note 2 to the notes to our audited financial statements contained in our annual report on Form 10-K for the year
ended December 31, 2007, and as permitted under Emerging Issues Task Force Issue 00-19, Accounting for



---

Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock, we account for these warrants as
stockholders equity and not as derivatives.

Contractual Obligations

We did not have any long term debt, capital lease obligations, operating lease obligations, purchase obligations or other long term liabilities at
September 30, 2008. On February 1, 2007, in connection with our organizing activities and our public offering, we entered into a Service Agreement with the parent of our Sponsor requiring us to pay $7,500 per month. The agreement
terminates on the earlier of the completion of a business combination or upon our dissolution.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Market risk is the sensitivity of income to changes in interest rates, foreign exchange rates, commodity prices, equity prices, and other market-driven rates or prices. We are not presently engaged in and, unless we consummate a business
combination within the prescribed time periods, we may not engage in, any substantive commercial business. Accordingly, we are not and, until such time as we consummate a business combination, we will not be, exposed to risks associated with foreign
exchange rates, commodity prices, equity prices or other market-driven rates or prices. The net proceeds of our initial public offering held in the Trust Account have been invested only in Treasury Bills issued by the United States having a maturity
of 180 days or less. Thus, we are subject to market risk primarily through the effect of changes in interest rates on government securities. If the interest rate on the Treasury Bills increased or decreased by 1%, our interest income net of deferred
interest on the deferred underwriting compensation would increase or decrease by $2,446 for the three months ended September 30, 2008 and $8,012 for the nine months ended September 30, 2008.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports
pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the periods specified in the SECs rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our
management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.

Our management carried out an evaluation, with the
participation of our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2008. Based upon this evaluation,
our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

Internal Control Over Financial Reporting

During the period covered by this report, there have been no significant changes
in our internal control over financial reporting (as defined in Rule 13-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



---

PART IIOTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS.
|------- | ------------------

On October 17, 2008, Opportunity Partners L.P., a shareholder of the Dekania Corp. (the Company), filed a petition in the Court of Chancery in the State of Delaware to compel an annual meeting of
shareholders. Opportunity Partners L.P. alleged that the Company is unable to consummate a merger with Advanced Equities Financial Corp. within 24 months of its initial public offering and has not entered into any other agreement which can lead to
the consummation of a business combination within such time period. It further alleged that more than 13 months have elapsed since the Companys organization, its last annual meeting or the last action by written consent to elect directors in
lieu of an annual meeting. Opportunity Partners L.P. sought an order from the court requiring the Company to hold an annual meeting of shareholders to elect directors to fill all director positions. On November 10, 2008, the Company filed an
answer to the petition. On November 18, 2008, the parties agreed, among other things, to cancel a hearing on the petition, which had been scheduled for November 19, 2008, and to hold an annual stockholders meeting of the Company not
later than February 7, 2009. The stipulation provides that the Companys proxy materials for the meeting will include a dissolution proposal and plan of liquidation for consideration by the shareholders. If such dissolution proposal is
approved, the Company will use its best efforts to distribute within 10 days of the shareholder meeting $10 per share to the Public Stockholders in accordance with and subject to the limitations in the Registration Statement dated February 1,
2007. The stipulation further provides that the proxy materials for the meeting may include a business strategy proposal as an alternative to liquidation. Upon approval of the stipulation by the Court of Chancery, the petition will be considered
settled and dismissed. The Company also agreed to pay the Petitioners attorneys fees and costs of $8,300.00 in connection with bringing the action.



|ITEM 6. | EXHIBITS
|------- | --------

(a) Exhibits



|            |  |                                                                                                                                                                                               
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                   
|            | 
|2.1         |  | Agreement and Plan of Merger between Dekania Corp. and Advanced Equities Financial Corp. dated as of September 12, 2008(4)                                                                    
|            | 
|3.1         |  | Second Amended and Restated Certificate of Incorporation(1)                                                                                                                                   
|            | 
|3.2         |  | Amended and Restated By-laws(2)                                                                                                                                                               
|            | 
|4.1         |  | Specimen Unit Certificate(3)                                                                                                                                                                  
|            | 
|4.2         |  | Specimen Common Stock Certificate(2)                                                                                                                                                          
|            | 
|4.3         |  | Specimen Warrant Certificate(3)                                                                                                                                                               
|            | 
|4.4         |  | Form of Warrant Agreement between American Stock Transfer & Trust Company and Dekania Corp.(1)                                                                                                
|            | 
|4.5         |  | Form of Incentive Warrant(1)                                                                                                                                                                  
|            | 
|4.6         |  | Form of Subscription Agreement between Dekania Corp. and Cohen Bros. Acquisitions, LLC(1)                                                                                                     
|            | 
|10.1        |  | Letter Agreement dated November 14, 2008, by and among Dekania Corp. and Cohen Brothers, LLC                                                                                                  
|            | 
|10.2        |  | Stipulation and Order of Dismissal filed in the Court of Chancery of the State of Delaware on November 19, 2008                                                                               
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Rules 13a-14a and 15d-14a of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002



---

|     |  |                                                                                                                                                                                               
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Rules 13a-14a and 15d-14a of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
|     | 
|32.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350                                                                                                                   
|     | 
|32.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350                                                                                                                   





|(1) | Incorporated by reference to Dekania Corp.s registration statement on Form S-1/A filed on January 31, 2007) (File No. 333-134776).
|--- | -----------------------------------------------------------------------------------------------------------------------------------



|(2) | Incorporated by reference to Dekania Corp.s registration statement on Form S-1/A filed on August 14, 2006 (File No. 333-134776)
|--- | --------------------------------------------------------------------------------------------------------------------------------



|(3) | Incorporated by reference to Dekania Corp.s registration statement on Form S-1/A filed on October 10, 2006 (File No. 333-134776).
|--- | ----------------------------------------------------------------------------------------------------------------------------------



|(4) | Incorporated by reference to Dekania Corp.s Form 8-K filed on September 15, 2008.
|--- | ----------------------------------------------------------------------------------



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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                  |  |  |  |               |  |                     |  |                                                       
|----------------- |  |  |  | ------------- |  | ------------------- |  | ------------------------------------------------------
|                  |  |  |  | DEKANIA CORP.
|                  |  |  | 
|November 19, 2008 |  |  |  | By:           |  | /s/ DAVID NATHANIEL
|                  |  |  |  |               |  |                     |  | David Nathaniel Chief Investment Officer and
Secretary