UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549







FORM
10-K/A


Amendment
No. 1





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


THE
SECURITIES EXCHANGE ACT OF 1934





For the
year ended December 31, 2008




Commission
File Number 001-33711





SP Acquisition Holdings, Inc.





(Exact
name of Registrant as specified in its charter)





Delaware
                (State
      or other jurisdiction of incorporation)
              
              20-8523583
                (IRS
      Employer Identification
Number)





590
Madison Avenue


32 nd Floor


New
York, New York 10022


(Address
of principal executive offices)




(212)
520-2300


(Registrant’s
telephone number, including area code)







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





Title
      of each class
                  
                  Name
      of each exchange
                    on
      which registeredUnits,
      each consisting of one share of Common Stock, $0.001 par value, and one
      Warrant
                  
                  NYSE
      Alternext USCommon
      Stock included in the Units
                  
                  NYSE
      Alternext USWarrants
      included in the Units
                  
                  NYSE
      Alternext US





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





None


(Title of
class)




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





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





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





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




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





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




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





The
aggregate market value of the voting common stock held by non-affiliates of the
registrant computed by reference to the closing sales price for the registrant’s
common stock as of June 30, 2008, the last day of the registrant’s most recently
completed second quarter, as reported on the NYSE Alternext US was approximately
$402,593,280.





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





The
number of shares of common stock outstanding as of March 9, 2009 was
54,112,000.












EXPLANATORY
NOTE





In accordance with Rule 12b-15 under
the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), we are
filing this abbreviated Amendment No.1 to the Annual Report on Form 10-K (this
“Form 10-K/A No. 1”) of SP Acquisition Holdings, Inc. (the “Company”) for the
year ended December 31, 2008 (the “2008 Form 10-K”), to effect the amendments
described below:





Part II,
Item 8. Financial Statements and Supplementary Data – We have obtained and are
filing a revised Report of Independent Registered Public Accounting Firm to
include the city and state where the report was issued to comply with Article
2-02 of Regulation S-X.





Part II,
Item 9A. Controls and Procedures – We have obtained and are filing a revised
Report of Independent Registered Public Accounting Firm on Internal Control Over
Financial Reporting to include the city and state where the report was issued to
comply with Article 2-02 of Regulation S-X.





Part IV,
Item 15. Exhibits and Financial Statement Schedules – We have revised the
certifications contained in Exhibits 31.1 and 31.2 to include reference to
“other certifying officers” to comply with item 601(31) of Regulation
S-K.





Except for the amendments described
above, this Form 10-K/A No.1 does not revise, update, or in any way affect any
information or disclosure contained in the 2008 Form 10-K and we have not
updated the disclosures contained herein to reflect events that occurred at a
later date.





ITEM 8.   Financial Statements and
Supplementary Data




Report
of Independent Registered Public Accounting Firm


To the
Board of Directors and Stockholders


SP
Acquisition Holdings, Inc.





We have
audited the accompanying balance sheets of SP Acquisition Holdings, Inc. (a
corporation in the development stage) as of December 31, 2008 and 2007, and
the related statements of operations, stockholders’ equity and cash flows for
the year ended December 31, 2008, for the period from February 14, 2007
(inception) to December 31, 2007, and for the period from February 14, 2007
(inception) to December 31, 2008. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.





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





In our
opinion, such financial statements present fairly, in all material respects, the
financial position of SP Acquisition Holdings, Inc. (a corporation in the
development stage) as of December 31, 2008 and 2007, and its results of
operations and cash flows for the year ended December 31, 2008, for the period
from February 14, 2007 (inception) to December 31, 2007, and for the period from
February 14, 2007 (inception) to December 31, 2008, in conformity with
accounting principles generally accepted in the United States of
America.





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of SP Acquisition
Holdings, Inc.'s (a corporation in the development stage) internal control over
financial reporting as of December 31, 2008, based on criteria established
in “Internal Control — Integrated Framework” issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated March
10, 2009 expressed an unqualified opinion thereon.




/s/ J.H.
Cohn LLP




Jericho,
New York


March 10,
2009








SP
ACQUISITION HOLDINGS, INC.


(a
corporation in the development stage)




BALANCE
SHEETS





December 31,
                  2008
                
                
                December 31,
                  2007Current assets
      :Cash
      and cash equivalents
                
                $
                2,431,303
                
                
                $
                1,317,688Trust
      account, interest available for working capital and taxes:Cash and cash equivalents held in
      trust account, interest available for working capital and
      taxes
                
                
                —
                
                
                
                989,183Accrued
      interest receivable
                
                
                —
                
                
                
                469,705Total
      trust account, interest available for working capital and
      taxes
                
                
                —
                
                
                
                1,458,888Trust
      account attributable to deferred underwriter’s fee,
    restricted
                
                
                17,315,840
                
                
                
                17,315,840Other
      receivable
                
                
                —
                
                
                
                26,323Prepaid
      expenses
                
                
                30,757
                
                
                
                108,024Total
      current assets
                
                
                19,777,900
                
                
                
                20,226,763Non current assets
      :Cash
      and cash equivalents, restricted
                
                
                429,194
                
                
                
                —Trust
      account, restrictedCash
      and cash equivalents held in Trust account
                
                
                409,438,479
                
                
                
                408,593,280Tax
      overpayment due to Trust account
                
                
                130,641
                
                
                
                —Trust
      account, restricted
                
                
                409,569,120
                
                
                
                408,593,280Deferred
      tax assets
                
                
                —
                
                
                
                125,406Total
      assets
                
                $
                429,776,214
                
                
                $
                428,945,449Current liabilities
      :Accounts
      payable
                
                $
                22,743
                
                
                $
                449,194Note
      payable to affiliate
                
                
                —
                
                
                
                250,000Advances
      payable to affiliate
                
                
                5,132
                
                
                
                26,818Interest
      payable to affiliate
                
                
                —
                
                
                
                9,435Accrued
      expenses
                
                
                223,588
                
                
                
                96,915Income
      taxes payable
                
                
                21,306
                
                
                
                808,278Other
      payables - deferred underwriters’ fee
                
                
                17,315,840
                
                
                
                17,315,840Total
      current liabilities
                
                
                17,588,609
                
                
                
                18,956,480Common
      stock, subject to possible conversion, 12,986,879 shares at conversion
      value:
                
                
                127,772,726
                
                
                
                127,772,726Deferred
      interest, attributable to common stock subject to possible
      conversion
                
                
                421,510
                
                
                
                —Commitments
      and contingencies:Stockholders’ equity
      :Preferred
      stock, $.001 par value; 1,000,000 authorized, none issued
                
                
                —
                
                
                
                —Common
      stock, $.001 par value, 200,000,000 shares authorized; 54,112,000 shares
      issued and outstanding (including 12,986,879 shares subject to possible
      conversion)
                
                
                41,125
                
                
                
                41,125Additional
      paid-in capital
                
                
                280,287,315
                
                
                
                280,708,825Retained
      earnings accumulated during the development stage
                
                
                3,664,929
                
                
                
                1,466,293Total
      stockholders’ equity
                
                
                283,993,369
                
                
                
                282,216,243Total
      liabilities and stockholders’ equity
                
                $
                429,776,214
                
                
                $
                428,945,449





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


2





SP
ACQUISITION HOLDINGS, INC.


(a
corporation in the development stage)




STATEMENTS
OF INCOME




For the Year
                    Ended
                    December 31,
                    2008
                  
                  
                  For the Period
                    from February 14,
                    2007 (inception) to
                    December 31,
                    2007
                  
                  
                  For the Period
                    from February 14,
                    2007 (inception) to
                    December 31,
                    2008Formation
      and operating costs
                  
                  $
                  1,052,648
                  
                  
                  $
                  264,373
                  
                  
                  $
                  1,317,021Loss
      from operations
                  
                  
                  (1,052,648
                  )
                  
                  
                  (264,373
                  )
                  
                  
                  (1,317,021
                  )Interest
      income – Trust
                  
                  
                  6,376,306
                  
                  
                  
                  2,944,393
                  
                  
                  
                  9,320,699Interest
      income - other
                  
                  
                  37,689
                  
                  
                  
                  6,080
                  
                  
                  
                  43,769Interest
      expense
                  
                  
                  (6,146
                  )
                  
                  
                  (9,435
                  )
                  
                  
                  (15,581
                  )Income
      before income taxes
                  
                  
                  5,355,201
                  
                  
                  
                  2,676,665
                  
                  
                  
                  8,031,866Provision
      for income taxes
                  
                  
                  (3,156,565
                  )
                  
                  
                  (1,210,372
                  )
                  
                  
                  (4,366,937
                  )Net
      income
                  
                  
                  2,198,636
                  
                  
                  
                  1,466,293
                  
                  
                  
                  3,664,929Deferred
      interest, attributable to common stock subject to possible
      conversion
                  
                  
                  (421,510
                  )
                  
                  
                  —
                  
                  
                  
                  (421,510
                  )Net
      income attributable to common stock
                  
                  $
                  1,777,126
                  
                  
                  $
                  1,466,293
                  
                  
                  $
                  3,243,419Net
      income attributable to common stock per common share, basic and
      diluted
                  
                  $
                  0.04
                  
                  
                  $
                  0.09Weighted
      average number of common shares outstanding - excluding shares subject to
      possible conversion, basic and diluted
                  
                  
                  41,125,121
                  
                  
                  
                  17,245,726





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


3





SP
ACQUISITION HOLDINGS, INC.


(a
corporation in the development stage)




STATEMENTS
OF CASH FLOWS




For the Year ended
                    December 31,
                    2008
                  
                  
                  For the Period from
                    February 14,
                    2007 (inception) to
                    December 31, 2007
                  
                  
                  For the Period
                    from February
                    14,
                    2007 (inception) to
                    December 31,
                    2008Cash
      flows from operating activities:Net
      income
                  
                  $
                  2,198,636
                  
                  
                  $
                  1,466,293
                  
                  
                  $
                  3,664,929Adjustments
      to reconcile net income to net cash provided by operating
      activities:Deferred
      tax assets
                  
                  
                  125,406
                  
                  
                  
                  (125,406
                  )
                  
                  
                  -Changes
      in operating asset and liability accounts:Accrued
      interest receivable
                  
                  
                  469,705
                  
                  
                  
                  (469,705
                  )
                  
                  
                  -Other
      receivable
                  
                  
                  26,323
                  
                  
                  
                  (26,323
                  )
                  
                  
                  -Prepaid
      expenses
                  
                  
                  77,267
                  
                  
                  
                  (108,024
                  )
                  
                  
                  (30,757
                  )Accounts
      payable
                  
                  
                  (42,460
                  )
                  
                  
                  65,203
                  
                  
                  
                  22,743Advances
      payable to affiliate
                  
                  
                  (21,686
                  )
                  
                  
                  26,818
                  
                  
                  
                  5,132Interest
      payable to affiliate
                  
                  
                  (9,435
                  )
                  
                  
                  9,435
                  
                  
                  
                  -Accrued
      expenses
                  
                  
                  126,673
                  
                  
                  
                  96,915
                  
                  
                  
                  223,588Income
      taxes payable
                  
                  
                  (786,972
                  )
                  
                  
                  808,278
                  
                  
                  
                  21,306Net
      cash provided by operating activities
                  
                  
                  2,163,457
                  
                  
                  
                  1,743,484
                  
                  
                  
                  3,906,941Cash
      flows from investing activities:Cash
      and cash equivalents, restricted
                  
                  
                  (429,194
                  )
                  
                  
                  -
                  
                  
                  
                  (429,194
                  )Cash
      and cash equivalents held in Trust account, interest available for working
      capital and taxes
                  
                  
                  989,183
                  
                  
                  
                  (989,183
                  )
                  
                  
                  -Trust
      account, restricted
                  
                  
                  (975,840
                  )
                  
                  
                  (425,909,120
                  )
                  
                  
                  (426,884,960
                  )Net
      cash used in investing activities
                  
                  
                  (415,851
                  )
                  
                  
                  (426,898,303
                  )
                  
                  
                  (427,314,154
                  )Cash
      flows from financing activities:Proceeds
      from issuance of founder’s units
                  
                  
                  -
                  
                  
                  
                  25,000
                  
                  
                  
                  25,000Proceeds
      from issuance of additional founder’s warrants
                  
                  
                  -
                  
                  
                  
                  7,000,000
                  
                  
                  
                  7,000,000Proceeds
      from note payable to affiliate
                  
                  
                  -
                  
                  
                  
                  250,000
                  
                  
                  
                  250,000Repayment
      of note payable to affiliate
                  
                  
                  (250,000
                  )
                  
                  
                  -
                  
                  
                  
                  (250,000
                  )Proceeds
      from initial public offering
                  
                  
                  -
                  
                  
                  
                  432,896,000
                  
                  
                  
                  432,896,000Payment
      of offering costs
                  
                  
                  (383,991
                  )
                  
                  
                  (13,698,493
                  )
                  
                  
                  (14,082,484
                  )Net
      cash provided by (used in) financing activities
                  
                  
                  (633,991
                  )
                  
                  
                  426,472,507
                  
                  
                  
                  425,838,516Net
      increase in cash and cash equivalents
                  
                  
                  1,113,615
                  
                  
                  
                  1,317,688
                  
                  
                  
                  2,431,303Cash
      and cash equivalents at the beginning of the period
                  
                  
                  1,317,688
                  
                  
                  
                  -
                  
                  
                  
                  -Cash
      and cash equivalents at the end of the period
                  
                  $
                  2,431,303
                  
                  
                  $
                  1,317,688
                  
                  
                  $
                  2,431,303Supplemental
      disclosure of non-cash financing activities:Deferred
      offering costs included in accounts payable
                  
                  $
                  -
                  
                  
                  $
                  383,991
                  
                  
                  $
                  383,991Accrual
      of deferred underwriters’ discount
                  
                  $
                  -
                  
                  
                  $
                  17,315,840
                  
                  
                  $
                  17,315,840Cash
      payments for Federal, state and local income taxes
                  
                  $
                  3,997,500
                  
                  
                  $
                  527,500
                  
                  
                  $
                  4,525,000





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


4





SP
ACQUISITION HOLDINGS, INC.


(a
corporation in the development stage)




STATEMENT
OF STOCKHOLDERS’ EQUITY




Common
                      Stock Shares
                    
                    
                    Common
                      Stock
                      Amount
                    
                    
                    Additional Paid-
                      in Capital
                    
                    
                    Retained
                      Earnings
                      Accumulated
                      During the
                      Development
                      Stage
                    
                    
                    Total
                      Stockholders’
                      EquityProceeds
      from founder’s units issued at $0.003 per unit on March 22,
      2007
                    
                    
                    7,500,000
                    
                    
                    $
                    7,500
                    
                    
                    $
                    17,500
                    
                    
                    $
                    —
                    
                    
                    $
                    25,000Unit
      dividend of 0.15 units issued for each outstanding share of common stock
      declared on August 8, 2007
                    
                    
                    1,125,000
                    
                    
                    
                    1,125
                    
                    
                    
                    (1,125
                    )
                    
                    
                    —
                    
                    
                    
                    —Unit
      dividend of one third of a unit issued for each outstanding share of
      common stock declared on September 4, 2007
                    
                    
                    2,875,000
                    
                    
                    
                    2,875
                    
                    
                    
                    (2,875
                    )
                    
                    
                    —
                    
                    
                    
                    —Proceeds
      from issuance of 40,000,000 units, net of underwriters’ commissions and
      offering expenses of $29,030,049 at $10.00 per unit on October 16,
      2007
                    
                    
                    40,000,000
                    
                    
                    
                    40,000
                    
                    
                    
                    370,929,951
                    
                    
                    
                    —
                    
                    
                    
                    370,969,951Net
      proceeds subject to possible conversion of 11,999,999
    shares
                    
                    
                    (11,999,999
                    )
                    
                    
                    (12,000
                    )
                    
                    
                    (118,187,990
                    )
                    
                    
                    
                    
                    
                    
                    (118,199,990
                    )Proceeds
      from issuance of 7,000,000 warrants on October 16, 2007
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    7,000,000
                    
                    
                    
                    —
                    
                    
                    
                    7,000,000Proceeds
      from issuance of 3,289,600 units, net of underwriters’ commissions and
      offering expenses of $2,368,275 at $10.00 per unit on October 31,
      2007
                    
                    
                    3,289,600
                    
                    
                    
                    3,290
                    
                    
                    
                    30,524,435
                    
                    
                    
                    —
                    
                    
                    
                    30,527,725Net
      proceeds subject to possible conversion of 986,880 shares
                    
                    
                    (986,880
                    )
                    
                    
                    (987
                    )
                    
                    
                    (9,571,749
                    )
                    
                    
                    —
                    
                    
                    
                    (9,572,736
                    )Founder’s
      Units forfeited on October 31, 2007
                    
                    
                    (677,600
                    )
                    
                    
                    (678
                    )
                    
                    
                    678Net
      income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,466,293
                    
                    
                    
                    1,466,293Balances
      at December 31, 2007
                    
                    
                    41,125,121
                    
                    
                    $
                    41,125
                    
                    
                    $
                    280,708,825
                    
                    
                    $
                    1,466,293
                    
                    
                    $
                    282,216,243Deferred
      interest, attributable to common stock subject to possible
      conversion
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (421,510
                    )
                    
                    
                    —
                    
                    
                    
                    (421,510
                    )Net
      income
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    2,198,636
                    
                    
                    
                    2,198,636Balances
      at December 31, 2008
                    
                    
                    41,125,121
                    
                    
                    $
                    41,125
                    
                    
                    $
                    280,287,315
                    
                    
                    $
                    3,664,929
                    
                    
                    $
                    283,993,369





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


5





SP
Acquisition Holdings, Inc.


(a
corporation in the development stage)




Notes
to Financial Statements




NOTE
A — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS




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




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




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




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




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




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




A total
of $425,909,120 (or approximately $9.84 per share), including $371,000,000 of
the net proceeds from the Offering, $7,000,000 from the sale of warrants to the
founding shareholders (see Note D), $30,593,280 of net proceeds of the over
allotment issuance and $17,315,840 of deferred underwriting discounts and
commissions, has been placed in a trust account at JPMorgan Chase Bank, N.A.,
with Continental Stock Transfer & Trust Company as trustee (the “Trust”)
which is to be invested in United States “government securities” within the
meaning of Section 2(a)(16) of the Investment Company Act of 1940 having a
maturity of 180 days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act of 1940. Except for
up to $3,500,000 of Trust interest income to be released to the Company to fund
expenses relating to investigating and selecting a target business and other
working capital requirements, and any additional amounts needed to pay income
taxes on the Trust earnings, the proceeds held in the Trust will not be released
from the Trust until the earlier of the completion of the Company’s Initial
Business Combination or the liquidation of the Company. As of December 31, 2008,
the balance in the Trust account plus restricted cash and cash equivalents not
held in the Trust account was $427,314,154. Through December 31, 2008, the Trust
has released $3,500,000 of interest income to the Company and the Company has
paid a total of $4,525,000 in taxes of which $4,525,000 has been reimbursed by
the Trust.


6




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




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




The
Company, after signing a definitive agreement for the acquisition of a target
business, will submit such transaction for stockholder approval. In the event
that 30% or more of the outstanding stock (excluding, for this purpose, those
shares of common stock issued prior to the Offering) vote against the Business
Combination and exercise their conversion rights described below, the Business
Combination will not be consummated. Public stockholders voting against a
Business Combination will be entitled to convert their common stock to cash at a
per share conversion price equal to the aggregate amount then in the Trust
account (before payment of deferred underwriters fees and including interest,
net of any income taxes payable on such interest, which shall be paid from the
Trust, and net of interest income of up to $3.5 million earned on the Trust
balance previously released to the Company to fund working capital
requirements), if the Business Combination is approved and consummated. However,
voting against the Business Combination alone will not result in election to
exercise a stockholder’s conversion rights. A stockholder must also
affirmatively exercise such conversion rights at or prior to the time the
Business Combination is voted upon by the stockholders. All of the Company’s
stockholders prior to the Offering, and all of the officers and directors of the
Company have agreed to vote all of the shares of the Company stock held by them
in accordance with the vote of the majority in interest of all other
stockholders of the Company.




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


7




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




1.  
Development
Stage Company:




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




As
indicated in the accompanying financial statements, the Company has incurred
substantial organizational, legal, accounting and offering costs in the pursuit
of its financing and acquisition plans and expects to incur additional costs in
pursuit of its acquisition plans. As of December 31, 2008, the Company had cash
on hand of $2,431,303 as well as an aggregate of $427,314,154 of funds held in
Trust and restricted cash and cash equivalents. Under terms of the investment
management trust agreement, up to $3,500,000 of interest may be released to the
Company in such amounts and such intervals as we request, subject to
availability. At December 31, 2008, $3,500,000 of Trust interest has been
released to the Company. Management has reviewed its cash requirements as of
December 31, 2008 and believes that its cash on hand, along with the funds
available to it from the interest income from the Trust (See Note A) is
sufficient to cover its expenses for the next twelve months.





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




2.  
Cash and
cash equivalents:




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




3.  
Common
Stock and Unit Dividends:




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




4.  
Net Income
Per Common Share:




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


8




5.  
Reclassification:




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





6.  
Concentration of
Credit Risk:




Financial
instruments that potentially subject the Company to concentrations of credit
risk consist of cash accounts in a financial institution, which at times,
exceeds the Federal Depository Insurance Corporation and the Securities Investor
Protection Corporation limits. Management believes the risk of loss to be
minimal.




7.  
Fair Value
of Financial Instruments:




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




8.
  Cash
and Cash Equivalents-Restricted:




Pursuant
to the terms of the investment management trust agreement, The Company is
permitted to have released from the Trust account interest income to pay income
taxes on interest income earned on the Trust account balance.  As of
December 31, 2008, the Company transferred excess amounts from the Trust account
totaling $429,194 for the payment of Federal estimated taxes due on January 15,
2009.  These amounts are reflected as cash and cash equivalents,
restricted in the accompanying balance sheet.





9.  
Trust
Account-Restricted:




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




10.  
Income
Taxes:




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




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


9




11.  
Share-based
compensation:




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





12.   Recent   Accounting
Pronouncements:




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





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




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





In
December 2007, the FASB issued Statement No.160, “Noncontrolling Interests in
Consolidated Financial Statements – An Amendment of ARB No. 51,” (“SFAS
160”). SFAS 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary (previously referred to as minority
interests). SFAS 160 also requires that a retained noncontrolling interest upon
the deconsolidation of a subsidiary be initially measured at its fair value.
Upon adoption of SFAS 160, the Company would be required to report any
noncontrolling interests as a separate component of stockholders’ equity. The
Company would also be required to present any net income allocable to
noncontrolling interests and net income attributable to the stockholders of the
Company separately in its statements of operations. SFAS 160 is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. SFAS 160 requires retroactive adoption of the
presentation and disclosure requirements for existing minority interests. All
other requirements of SFAS 160 shall be applied prospectively. SFAS 160 would
have an impact on the presentation and disclosure of the noncontrolling
interests of any non wholly-owned businesses acquired in the
future.





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




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




10




NOTE
C — INITIAL PUBLIC OFFERING




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




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




NOTE
D — RELATED PARTY TRANSACTIONS




SP Acq
LLC purchased 11,500,000 of the Company’s founder’s units subject to the terms
of the Founder’s Unit Purchase Agreement (the “Purchase Agreement”) date March
30, 2007 and the Founder’s Unit Adjustment Agreement (the “Adjustment
Agreement”) dated August 8, 2007, each consisting of one common share and one
warrant to purchase a common share, for a price of $25,000 in a private
placement. The units are identical to those sold in the Offering, except that SP
Acq LLC, Steel Partners II, L.P., and Messrs. Bergamo, LaBow, Lorber,
Toboroff and Walker agreed to vote their founder’s shares in the same manner as
a majority of the public stockholders who vote at the special or annual meeting
called for the purpose of approving the Company’s Business Combination. As a
result, they will not be able to exercise conversion rights with respect to the
founder’s shares if the Company’s Business Combination is approved by a majority
of its public stockholders. The founder’s shares included therein will not
participate with the common stock included in the units sold in the Offering in
any liquidating distribution. The founder’s units, including the founder’s
shares and initial founder’s warrants may not be sold or transferred until at
least one year after the completion of a Business Combination.




The
agreements referred to above provide for the Founders to maintain a 20% interest
in the Company after taking into consideration the number of units ultimately
sold in the initial public offering (“IPO”). In order for the founders to hold
the number of shares necessary to maintain a 20% interest in the Company,
677,600 units were forfeited and cancelled on the date of the IPO, leaving the
founders with 10,822,400 or 20% of 54,112,000 units outstanding at that time.
The Company accounted for the transaction employing the price associated with
the original sale because in the opinion of management, the adjustment in the
number of shares was contemplated in the Purchase Agreement and Adjustment
Agreement entered into prior to the IPO.




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




11




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




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





On March
28, 2007, the Company issued a $250,000 unsecured promissory note to Steel
Partners, Ltd., an affiliate of SP Acq LLC and the Company. This note bears
interest at a rate of 5% per annum, is unsecured and principal and interest
payments was due on December 31, 2007. Steel Partners Ltd. confirmed on May 7,
2008 that the promissory note was not in default and that the payment may be
made on or before December 31, 2008. Interest payable of $15,581 had been
accrued on this note through June 27, 2008, at which time the note and accrued
interest were paid in full.




Advances
payable of $5,132 and $26,818 at December 31, 2008 and 2007, respectively,
relate to certain costs paid by Steel Partners, Ltd. on behalf of the Company.
The Company intends to repay such advances and thus such amounts are reflected
as a liability to affiliate. None of the officers and directors of the Company
received compensation for their services to the Company.  The Company
repaid the advance on January 8, 2009.




The
Company presently occupies office space provided by Steel Partners, Ltd. Steel
Partners, Ltd. has agreed that, until the acquisition of a target business by
the Company, it will make such office space, as well as certain office,
administrative and secretarial services, available to the Company, as may be
required by the Company from time to time. The Company has agreed to pay Steel
Partners, Ltd. $10,000 per month for such services that commenced on October 16,
2007. The Company has incurred $120,000 and $25,000 for such services through
December 31, 2008 and 2007, respectively, of which $60,000 and $25,000 are
included in accrued expenses at December 31, 2008 and 2007,
respectively.  The Company remitted payment of $60,000 to Steel
Partners, Ltd on January 8, 2009.




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




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


12




NOTE
E — PREFERRED STOCK




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




NOTE
F — UNIT DIVIDENDS




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




NOTE
G — WARRANTS




The
following table presents warrants outstanding:




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





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




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




Public
warrants entitle the holder to purchase from the Company one share of common
stock for each warrant at an exercise price of $7.50 commencing on the
completion of a Business Combination with a target business, and will expire
five years from the date of the prospectus. The warrants are redeemable at the
option of the Company at a price of $0.01 per warrant upon 30 days prior notice
after the warrants become exercisable, only in the event that the last sale
price of the common stock is at least $14.25 per share for any 20 trading days
within a 30 trading day period ending on the third business day prior to the
date on which notice of redemption is given. The warrants will not be
exercisable and the Company will not be obligated to issue shares of common
stock upon exercise of the warrants by a holder unless, at the time of such
exercise, an effective registration statement under the Securities Act covering
the shares of common stock issuable upon exercise of the warrants and a current
prospectus relating to them is available. Although the Company has undertaken in
the warrant agreement, and therefore has a contractual obligation, to use its
best efforts to have an effective registration statement covering shares of
common stock issuable upon exercise of the warrants from the date the warrants
become exercisable and to maintain a current prospectus relating to that common
stock until the warrants expire or are redeemed, and the Company intends to
comply with its undertaking, the Company cannot assure you that it will be able
to do so. If the Company is unable to deliver registered shares of common stock
to the holder upon exercise of the warrants during the exercise period, there
will be no cash settlement of the warrants and the warrants will expire
worthless.


13




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




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




NOTE
H — INCOME TAXES




Deferred
tax assets reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial statement purposes and
the amounts used for income tax purposes and consist of the
following:




12/31/2008
                  
                  
                  12/31/2007Deferred
      tax assetsStart
      up and organization costs
                  
                  $
                  630,352
                  
                  
                  $
                  125,406Total
      deferred tax asset
                  
                  
                  630,352
                  
                  
                  
                  125,406Less:
      valuation allowance
                  
                  
                  (630,352
                  )
                  
                  
                  —Net
      deferred tax assets
                  
                  $
                  —
                  
                  
                  $
                  125,406





The
difference between the provision for income taxes and the amounts computed by
applying the Federal statutory income taxes to the income before tax are
explained below:




12/31/2008
                
                
                12/31/2007Tax
      at Federal statutory rate
                
                
                34.0
                %
                
                
                34.0
                %State
      and local taxes, net of Federal benefit
                
                
                11.7
                %
                
                
                11.2
                %Change
      in valuation allowance
                
                
                13.2
                %
                
                
                —
                %Provision
      for taxes
                
                
                58.9
                %
                
                
                45.2
                %





The
provision for income taxes consists of the following:




12/31/2008
                  
                  
                  12/31/2007CurrentFederal
                  
                  $
                  1,739,494
                  
                  
                  $
                  831,812State
      and local
                  
                  
                  1,291,665
                  
                  
                  
                  503,966Total
      current tax expense
                  
                  
                  3,031,159
                  
                  
                  
                  1,335,778DeferredFederal
                  
                  
                  93,094
                  
                  
                  
                  (93,094
                  )State
      and local
                  
                  
                  32,312
                  
                  
                  
                  (32,312
                  )Total
      deferred tax expense (benefit)
                  
                  
                  125,406
                  
                  
                  
                  (125,406
                  )Total
      provision for income taxes
                  
                  $
                  3,156,565
                  
                  
                  $
                  1,210,372





Deferred
tax assets and liabilities are computed for temporary differences between the
financial statement and tax bases of assets and liabilities based on enacted tax
laws and rates applicable to the periods in which the temporary differences are
expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be
realized.





14




On
February 14, 2007, the Company adopted the provisions of Financial Accounting
Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). The
Company has identified its federal tax return and its state and city tax returns
in New York as “major” tax jurisdictions, as defined. As per FIN 48, the Company
has evaluated its tax positions and has determined that there are no uncertain
tax positions requiring recognition in the Company’s financial statements. Since
the Company was incorporated on February 14, 2007 the evaluation was performed
for the period from inception through December 31, 2008. The Company believes
that its income tax positions and deductions would be sustained on audit and
does not anticipate any adjustments that would result in a material change to
its financial position. There were no unrecognized tax benefits as of December
31, 2008. The Company has had no tax examinations since its inception, February
14, 2007.




The
Company’s policy for recording interest and penalties associated with audits is
to record such items as a component of income tax expense. There were no amounts
accrued for penalties or interest as of or during the period from February 14,
2007 (inception) through December 31, 2008. The Company does not expect its
unrecognized tax benefit position to change during the next twelve months and is
currently unaware of any issues that could result in significant payments,
accruals or material deviations from its position. The adoption of the
provisions of FIN 48 did not have a material impact on the Company’s financial
position, results of operations and cash flows.




NOTE
I — UNAUDITED QUARTERLY FINANCIAL RESULTS




Quarterly Financial Information:
                  
                  For the Quarter
                    ended
                    March 31, 2008
                  
                  
                  For the
                    Quarter
                    ended
                    June 30,2008
                  
                  
                  For the Quarter
                    ended September
                    30,2008
                  
                  
                  For the Quarter
                    ended December
                    31, 2008Formation
      and operating costs
                  
                  $
                  197,464
                  
                  
                  $
                  301,765
                  
                  
                  $
                  344,539
                  
                  
                  $
                  208,880Loss
      from operations
                  
                  
                  (197,464
                  )
                  
                  
                  (301,765
                  )
                  
                  
                  (344,539
                  )
                  
                  
                  (208,880
                  )Interest
      income
                  
                  
                  2,654,509
                  
                  
                  
                  1,712,747
                  
                  
                  
                  1,716,871
                  
                  
                  
                  329,868Interest
      expense
                  
                  
                  (3,125
                  )
                  
                  
                  (3,021
                  )
                  
                  
                  -
                  
                  
                  
                  -Income
      before income taxes
                  
                  
                  2,453,920
                  
                  
                  
                  1,407,961
                  
                  
                  
                  1,372,332
                  
                  
                  
                  120,988(Provision)
      credit for income taxes
                  
                  
                  (1,477,996
                  )
                  
                  
                  (698,507
                  )
                  
                  
                  (1,088,526
                  )
                  
                  
                  108,464Net
      income
                  
                  
                  975,924
                  
                  
                  
                  709,454
                  
                  
                  
                  283,806
                  
                  
                  
                  229,452Deferred
      interest, attributable to common stock subject to possible
      conversion
                  
                  
                  (342,844
                  )
                  
                  
                  231,809
                  
                  
                  
                  (179,249
                  )
                  
                  
                  (131,226
                  )Net
      income attributable to common stock
                  
                  $
                  633,080
                  
                  
                  $
                  941,263
                  
                  
                  $
                  104,557
                  
                  
                  $
                  98,226Net
      income per common share, basic and diluted
                  
                  $
                  0.02
                  
                  
                  $
                  0.02
                  
                  
                  $
                  0.00
                  
                  
                  $
                  0.00Shares
      used in computing net income per share, basic and diluted
                  
                  
                  41,125,121
                  
                  
                  
                  41,125,121
                  
                  
                  
                  41,125,121
                  
                  
                  
                  41,125,121




Quarterly Financial Information:
                  
                  For the Period
                    from February
                    14, 2007
                    (inception) to
                    March 31, 2007
                  
                  
                  For the
                    Quarter ended
                    June 30, 2007
                  
                  
                  For the Quarter
                    ended September
                    30, 2007
                  
                  
                  For the Quarter
                    ended December
                    31, 2007Formation
      and operating costs
                  
                  $
                  25,436
                  
                  
                  $
                  132
                  
                  
                  $
                  11,250
                  
                  
                  $
                  227,555Loss
      from operations
                  
                  
                  ( 25,436
                  )
                  
                  
                  (132
                  )
                  
                  
                  (11,250
                  )
                  
                  
                  (227,555
                  )Interest
      income
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,950,473Interest
      expense
                  
                  
                  -
                  
                  
                  
                  (3,185
                  )
                  
                  
                  (3,125
                  )
                  
                  
                  (3,125
                  )Income
      (loss) before income taxes
                  
                  
                  (25,436
                  )
                  
                  
                  (3,317
                  )
                  
                  
                  (14,375
                  )
                  
                  
                  2,719,793Provision
      for income taxes
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,210,372
                  )Net
      income (loss)
                  
                  $
                  (25,436
                  )
                  
                  $
                  (3,317
                  )
                  
                  $
                  (14,375
                  )
                  
                  $
                  1,509,421Net
      income (loss) per common share, basic and diluted
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )
                  
                  $
                  0.04Shares
      used in computing net income (loss) per share, basic and
      diluted
                  
                  
                  10,000,000
                  
                  
                  
                  10,000,000
                  
                  
                  
                  10,000,000
                  
                  
                  
                  35,202,526




15





NOTE
J — SUBSEQUENT EVENT





On
February 10, 2009, SP Acquisition Holdings, Inc. (the “Company”) received a
letter (the “Letter”) from the Corporate Compliance Department of NYSE Alternext
US LLC (the “Exchange”), notifying the Company that it is below certain of the
Exchange’s continued listing standards in that it had failed to hold an annual
meeting of stockholders in 2008, in violation of Section 704 of the NYSE
Alternext US LLC Company Guide (the “Company Guide”).  The Company
submitted a plan to the Exchange on March 10, 2009 advising the Exchange of
actions it has taken or will take that will bring the Company into compliance
with Section 704 of the Company Guide (the “Plan”).





If the
Exchange determines that the Company has made a reasonable demonstration in the
Plan of its ability to regain compliance with all applicable continued listing
standards by August 11, 2009, or such date as the Exchange allows (the
“Deadline”), the Exchange will accept the Plan and the Company will remain
listed.  The Company anticipates that it will be able to regain
compliance with Section 704 of the Company Guide by the Deadline.





ITEM 9A.   Controls and
Procedures




We
maintain disclosure controls and procedures designed to ensure that information
required to be disclosed in our periodic filings with the SEC under the Exchange
Act, including this report, is recorded, processed, summarized and reported on a
timely basis. These disclosure controls and procedures include controls and
procedures designed to ensure that information required to be disclosed under
the Exchange Act is accumulated and communicated to our management on a timely
basis to allow decisions regarding required disclosure. Management, including
our chief executive officer and chief operating officer, has evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined under Rules 13a-15(e) and 15(d)-15(e) of the Exchange
Act) as of December 31, 2008. Based upon that evaluation, management has
concluded that our disclosure controls and procedures were effective as of the
end of the period covered by this report.





Management’s
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. As defined in Exchange Act Rule 13a-15(f),
internal control over financial reporting is a process designed by, or under the
supervision of, our principal executive officer and principal financial officer
and effected by our Board of Directors, management and other personnel, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.





Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we carried out an
evaluation of the effectiveness of our internal control over financial reporting
as of December 31, 2008 based on the criteria in “Internal Control - Integrated
Framework” issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). Based upon this evaluation, our management concluded that
our internal control over financial reporting was effective as of December 31,
2008.  There were no changes in our internal control over financial
reporting during the quarter ended December 31, 2008 that have materially
affected, or are reasonably likely to affect our internal control over financial
reporting.





J.H. Cohn
LLP, the independent registered public accounting firm that audited our
financial statements included in this Annual Report on Form 10-K, has also
audited the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2008 as stated in their report included
herein.


16





Report of
Independent Registered Public Accounting Firm on Internal Control Over Financial
Reporting


To the
Board of Directors and Stockholders


SP
Acquisition Holdings, Inc.





We have
audited SP Acquisition Holdings, Inc. 's  (a corporation in the
development stage) internal control over financial reporting as of
December 31, 2008, based on criteria established in “Internal Control — Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
SP Acquisition Holdings, Inc.'s (a corporation in the development stage)
management is responsible for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting included in the accompanying Management’s
Report on Internal Control Over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting
based on our audit.





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




A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles in the United States of America. A
company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles in the
United States of America, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial
statements.





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





In our
opinion, SP Acquisition Holdings, Inc. (a corporation in the development
stage) maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2008 based on the criteria
established in “Internal Control — Integrated Framework”
issued by the Committee of the Sponsoring Organizations of the Treadway
Commission.





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the balance sheets of SP Acquisition Holdings,
Inc.'s (a corporation in the development stage) as of December 31, 2008 and
2007, and the related statements of operations, stockholders’ equity and cash
flows for the year ended December 31, 2008, for the period from February 14,
2007 (inception) to December 31, 2007, and for the period from February 14, 2007
(inception) to December 31, 2008 and our report dated  March 10,
2009  expressed an unqualified opinion.





/s/ J. H.
Cohn LLP




Jericho,
New York


March 10,
2009


17





PART
IV





ITEM 15.
            Exhibits and Financial Statement
      Schedules




(a)
            The following documents are filed
      as a part of this Report:




1.
            Financial
      Statements:





Report of
Independent Registered Public Accounting Firm





Balance
Sheet





Statement
of Operations





Statement
of Stockholders’ Equity





Statement
of Cash Flows





Notes to
Financial Statements




2.
            Financial
      Statement Schedule(s)





All
schedules are omitted for the reason that the information is included in the
financial statements or the notes thereto or that they are not required or are
not applicable.




(b)
            Exhibits





We hereby
file as part of this Annual Report on Form 10-K the Exhibits listed in the
attached Exhibit Index. Exhibits which are incorporated herein by reference can
be inspected and copied at the public reference facilities maintained by the
SEC, 100 F Street, N.E., Room 1580, Washington D.C. 20549. Copies of such
material can also be obtained from the Public Reference Section of the SEC, 100
F Street, N.E., Washington, D.C. 20549, at prescribed rates.


18




(c)
            Financial Statement
      Schedules





All
schedules are omitted for the reason that the information is included in the
financial statements or the notes thereto or that they are not required or are
not applicable.




Exhibit
      No.
                  
                  Description3.1
                  
                  Amended
      and Restated Certificate of Incorporation (7)3.2
                  
                  Form
      of Bylaws (1)4.1
                  
                  Specimen
      Unit Certificate (3)4.2
                  
                  Specimen
      Common Stock Certificate (3)4.3
                  
                  Amended
      and Restated Warrant Agreement by and between the Registrant and
      Continental Stock Transfer & Trust Company (6)4.4
                  
                  Form
      of Warrant Certificate (1)10.1
                  
                  Form
      of Letter Agreement by and among the Registrant, SP Acq LLC and Steel
      Partners II, L.P. (5)10.2
                  
                  Form
      of Letter Agreement by and among the Registrant and each of the directors
      and executive officers of the Registrant (6)10.3
                  
                  Initial
      Founder’s Securities Purchase Agreement, dated as of March 22, 2007, by
      and between the Registrant and SP Acq LLC (1)10.4
                  
                  Founder’s
      Units Purchase Agreement, dated as of March 30, 2007, by and among the
      Registrant, SP Acq LLC and Steel Partners II, L.P. (4)10.5
                  
                  Form
      of Co-Investment Unit Purchase Agreement between the Registrant and Steel
      Partners II, L.P. (1)10.6
                  
                  Form
      of Registration Rights Agreement by and between the Registrant and the
      founder (4)10.7
                  
                  Form
      of Indemnity Agreement by and between the Registrant and each of its
      directors and executive officers (4)10.8
                  
                  Form
      of Investment Management Trust Agreement by and between the Registrant and
      Continental Stock Transfer & Trust Company (7)10.9
                  
                  Form
      of Right of First Review Agreement by and among the Registrant and Warren
      Lichtenstein and Steel Partners, L.L.C. (4)10.10
                  
                  Form
      of Letter Agreement between SP Acq LLCs, the Registrant and each of
      Anthony Bergamo, Ronald LaBow, Howard M. Lorber, Leonard Toboroff and S.
      Nicholas Walker (2)10.11
                  
                  Escrow
      Agreement by and between the Registrant and SP Acq LLC
  (4)10.12
                  
                  Adjustment
      Agreement by and among the Registrant, SP Acq LLC, Steel Partners II, L.P.
      and each of Anthony Bergamo, Ronald LaBow, Howard M. Lorber, Leonard
      Toboroff and S. Nicholas Walker (5)14
                  
                  Form
      of Code of Conduct and Ethics (1)24.1
                  
                  Powers
      of Attorney31.1
                  
                  Principal
      Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.31.2
                  
                  Principal
      Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.32.1
                  
                  Principal
      Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2
                  
                  Principal Financial
      Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.99.1
                  
                  Form
      of Charter of Audit Committee (1)99.2
                  
                  Form
      of Charter of Governance and Nominating Committee
  (1)




19




(1)
            Incorporated by reference to the
      corresponding exhibit filed with the Registration Statement on Form S-1
      (File No. 333-142696) with the SEC on May 8,
  2007.





(2)
            Incorporated by reference to the
      corresponding exhibit filed with Amendment No. 1 to the Registration
      Statement on Form S-1 (File No. 333-142696) filed with the SEC on June 28,
      2007.





(3)
            Incorporated by reference to the
      corresponding exhibit filed with Amendment No. 2 to the Registration
      Statement on Form S-1 (File No. 333-142696) filed with the SEC on August
      10, 2007.





(4)
            Incorporated by reference to the
      corresponding exhibit filed with Amendment No. 3 to the Registration
      Statement on Form S-1 (File No. 333-142696) filed with the SEC on
      September 14, 2007.





(5)
            Incorporated by reference to the
      corresponding exhibit filed with Amendment No. 4 to the Registration
      Statement on Form S-1 (File No. 333-142696) filed with the SEC on
      September 28, 2007.





(6)
            Incorporated by reference to the
      corresponding exhibit filed with Amendment No. 5 to the Registration
      Statement on Form S-1 (File No. 333-142696) filed with the SEC on October
      5, 2007.





(7)
            Incorporated by reference to the
      corresponding exhibit (with respect to Exhibit 3.1) and 10.1 (with respect
      to Exhibit 10.8) filed with the Current Report on Form 8-K filed with the
      SEC on October 23, 2007.


20





SIGNATURES





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




SP
      Acquisition Holdings, Inc.Dated:
      April 24, 2009By:
              /s/
      Warren G. LichtensteinName:
              Warren
      G. LichtensteinTitle:
              Chairman,
      President and Chief Executive
Officer




21