**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**











**FORM
      10-K**





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


THE
      SECURITIES EXCHANGE ACT OF 1934





For
      the
      year ended December 31, 2007




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 ofCommon
                Stock, $0.001 par value, and one Warrant
            American
                Stock ExchangeCommon
                Stock included in the Units
            American
                Stock ExchangeWarrants
                included in the Units
            American
                Stock Exchange





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





**None**


(Title
      of
      class)





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.


Yes  ̈ No x





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or 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
               ̈Accelerated filerx 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 on March 19, 2008, as reported on the American Stock Exchange
      was
      approximately $398,264,320. (The registrant became subject to the reporting
      requirements of the Exchange Act in October 2007 and, therefore, is not able
      to
      provide information about the market value as of the end of the second quarter
      of 2007.)





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 25, 2008 was
      54,112,000.










**Forward-Looking
      Statements**




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




·
            *ability
                to complete a combination with one or more target
                businesses;*




·
            *success
                in retaining or recruiting, or changes required in, our management
                or
                directors following a business
                combination;*




·
            *potential
                inability to obtain additional financing to complete a business
                combination;*




·
            *limited
                pool of prospective target
                businesses;*




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




·
            *public
                securities’ limited liquidity and
                trading;*




·
            *failure
                to list or the delisting of our securities from the American Stock
                Exchange or an inability to have our securities listed on the American
                Stock Exchange following a business
                combination;*




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




·
            *financial
                performance.*




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







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




*Except
      as otherwise indicated herein, all unit amounts reflect dividends paid by the
      company of (i) 0.15 units for each unit outstanding on August 8, 2007 and (ii)
      one third of a unit for each unit outstanding on September 4,
      2007.*




Table
      of Contents


PageITEM
                  1.
              Business
              1ITEM
                  1A.
              Risk
                  Factors
              19ITEM
                  1B.
              Unresolved
                  Staff Comments
              37ITEM
                  2.
              Properties
              37ITEM
                  3.
              Legal
                  Proceedings
              37ITEM
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              37ITEM
                  5.
              Market
                  for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                  Purchases of Equity Securities
              38ITEM
                  6.
              Selected
                  Financial Data
              40ITEM
                  7.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              40ITEM
                  7A.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              42ITEM
                  8.
              Financial
                  Statements and Supplementary Data
              43ITEM
                  9.
              Changes
                  and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              58ITEM
                  9A.
              Controls
                  and Procedures
              58ITEM
                  9B.
              Other
                  Information
              58ITEM
                  10.
              Directors,
                  Executive Officers and Corporate Governance
              58ITEM
                  11.
              Executive
                  Compensation
              66ITEM
                  12.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              67ITEM
                  13.
              Certain
                  Relationships, Related Transactions and Director
                  Independence
              71ITEM
                  14.
              Principal
                  Accounting Fees and Services
              74ITEM
                  15.
              Exhibits
                  and Financial Statement Schedules
              75




i


**PART
      I**




**ITEM
      1.**  **Business**




**General**




We
      are a
      blank check company organized under the laws of the State of Delaware on
      February 14, 2007. We were formed for the purpose of acquiring, through a
      merger, capital stock exchange, asset acquisition or other similar business
      combination, one or more businesses or assets, which we refer to as our “initial
      business combination.” Our efforts in identifying a prospective target business
      are not limited to a particular industry.





A
      registration statement for our initial public offering was declared effective
      on
      October 10, 2007. On October 16, 2007, we sold 40,000,000 units in our initial
      public offering, and on October 31, the underwriters for our initial public
      offering purchased an additional 3,289,600 units pursuant to an over-allotment
      option. Each unit consists of one share of common stock and one warrant. Each
      warrant entitles the holder to purchase one share of our common stock at a
      price
      of $7.50 commencing on the later of our consummation of a business combination
      or October 10, 2008, provided in each case that there is an effective
      registration statement covering the shares of common stock underlying the
      warrants in effect. The warrants expire on October 10, 2012, unless earlier
      redeemed.




On
      March
      22, 2007, SP Acq LLC, which is controlled by Warren G. Lichtenstein, our
      Chairman, President, and Chief Executive Officer, purchased 11,500,000 of our
      units, which we refer to as founder’s units (and the shares of common stock and
      warrants comprising the founder’s units are referred to founder’s shares and
      initial founder’s warrants, respectively). SP Acq LLC subsequently purchased on
      October 16, 2007 an aggregate of 7,000,000 warrants, which we refer to as
      additional founder’s warrants, at a price of $1.00 per warrant ($7.0 million in
      the aggregate) in a private placement that occurred immediately prior to our
      initial public offering. In addition, Steel Partners II, L.P., an affiliate
      of
      SP Acq LLC, has entered into an agreement with us requiring it to purchase
      3,000,000 of our units, which we refer to as the co-investment units, from
      us at
      a price of $10.00 per unit ($30.0 million in the aggregate) in a private
      placement that will occur immediately prior to the consummation of our initial
      business combination.




We
      received gross proceeds of approximately $439,896,000 from our initial public
      offering and sale of the additional founder’s warrants. Of those gross proceeds,
      approximately $17,315,840 is attributable to the portion of the underwriters’
discount, which has been deferred until the consummation of our initial business
      combination. Net proceeds of approximately $425,909,120 were deposited into
      a
      trust account and will be part of the funds distributed to our public
      stockholders in the event we are unable to complete a business combination.
      Unless and until a business combination is consummated, the proceeds held in
      the
      trust account will not be available to us. For a more complete discussion of
      our
      financial information, see the section appearing elsewhere in our Annual Report
      on Form 10-K entitled “Selected Financial Data.”




Our
      efforts in identifying a prospective acquisition target are not limited to
      a
      particular industry. Instead, we focus on industries and target businesses
      in
      the United States, Europe, and Asia, that may provide significant opportunity
      for value creation. Our investment philosophy is based on the strategies
      employed by Steel Partners, which reflect a value-orientation and investment
      discipline that are the result of having investments in public and private
      debt
      and equity, as well as distressed debt over 17 years in a diverse range of
      industries. This includes investments where Steel Partners has exercised control
      over the portfolio company. Steel Partners focuses on maintaining discipline
      with respect to purchase price, analyzing the business based on long-term value
      creation that can be achieved, extensive business and financial analysis and
      utilizing numerous resources to maximize value post-acquisition.









Similar
      to those strategies employed by Steel Partners, we have identified certain
      criteria and guidelines that we believe are important in evaluating prospective
      target businesses. However, we may decide to enter into an initial business
      combination with a target business or businesses that do not meet all of these
      criteria and guidelines.




We
      intend
      to benefit from the investment criteria employed by Steel Partners. We seek
      to
      acquire established businesses that are easy to understand. Additionally, we
      target businesses that we believe are fundamentally sound but potentially in
      need of certain financial, operational, strategic or managerial redirection
      to
      maximize value. We do not intend to acquire start-up companies, companies with
      speculative business plans or companies that are excessively
      leveraged.




**Competitive
      Strengths**




We
      believe that we have the following competitive strengths:




***Experienced
      management.***




**Warren
      G. Lichtenstein** , *Co-Founder
      of Steel Partners II, L.P.*




·
            Chairman,
                President and Chief Executive Officer of SP Acquisition Holdings,
                Inc.




·
            More
                than 19 years of experience investing globally in public and private
                companies, including debt and equity
                securities.




·
            Co-Founded
                and manages Steel Partners II, L.P., Steel Partners Japan Strategic
                Fund
                (Offshore), L.P., Steel Partners China Access I L.P., with more than
                approximately $5.3 billion under management as of December 31,
                2007.




·
            Managing
                Member of Steel Partners II GP LLC, general partner of Steel Partners
                II,
                L.P.




·
            Chief
                Executive Officer of Steel Partners LLC, a global investment management
                firm.




·
            Extensive
                global experience serving on and leading boards of directors, including
                serving in Chairman and Chief Executive Officer positions of portfolio
                companies.




**Jack
      L. Howard** , *Co-Founder
      of Steel Partners II, L.P.*




·
            Chief
                Operating Officer and Secretary of SP Acquisition Holdings,
                Inc.




·
            More
                than 22 years of experience in sourcing, evaluating, structuring
                and
                managing investments.




·
            Co-Founded
                Steel Partners II, L.P.




·
            President
                of Steel Partners LLC, a global investment management
                firm.




·
            Extensive
                experience serving on and leading boards of directors, including
                serving
                in Chairman and Chief Executive Officer positions of portfolio
                companies.




2




**James
      R. Henderson** , *Managing
      Director and operating partner of Steel Partners LLC*




·
            Executive
                Vice President of SP Acquisition Holdings,
                Inc.




·
            More
                than 26 years of experience as an operating executive in various
                companies, including serving in senior executive
                capacities.




·
            Extensive
                experience serving on and leading boards of directors, including
                serving
                in Chairman and Chief Executive Officer positions of portfolio
                companies.




***Access
      to Steel Partners investment platform.***




The
      senior investment professionals of Steel Partners have extensive experience
      investing in public and private equity and debt, including distressed debt,
      with
      various degrees of control. Steel Partners manages approximately $5.3 billion
      of
      assets as of December 31, 2007. We will have access to the broad capabilities
      of
      Steel Partners and its professionals based in New York, Los Angeles and
      London.




***Deal
      sourcing network.***




We
      believe we are well positioned to source a business combination as a result
      of
      our access to Steel Partners’ extensive infrastructure, which includes its
      offices located in New York, Los Angeles and London and 13 investment
      professionals. We intend to capitalize on the diverse deal-sourcing
      opportunities that we believe Steel Partners brings to us as a result of its
      investment experience, track record and extensive network of relationships
      including private equity sponsors, management teams of public and private
      companies, investment bankers, commercial bankers, brokers, attorneys,
      accountants and investors throughout the United States, Asia and
      Europe.




***Disciplined
      investment process.***




In
      identifying potential target businesses, we apply Steel Partners’ investment
      process. This includes analysis of, among other things: (i) the acquisition
      multiple; (ii) historic and projected financials; (iii) the key drivers of
      revenues and the balance between unit volume and pricing factors; (iv) key
      cost
      components, including raw materials, labor, overhead, insurance, etc.; (v)
      capital expenditures; (vi) working capital needs; (vii) micro and macroeconomic
      trends that impact the business and the industry; (viii) the business’s products
      and its sales channels; (ix) qualitative analysis of company management; (x)
      the
      competitive dynamics of the industry and the target company’s position; and (xi)
      input from third-party consultants.




***Experience
      with middle market companies.***




We
      expect
      to benefit from Steel Partners’ experience, which has historically been focused
      on investments in middle market companies. We use Steel Partners’ network of
      relationships including private equity sponsors, management teams of public
      and
      private companies, investment bankers, commercial bankers, brokers, attorneys,
      accountants and investors throughout the United States, Asia and Europe to
      locate potential target businesses. Through Steel Partners’ experience of
      investing in numerous companies, most of which are middle-market, it has
      developed an extensive network of relationships and possesses valuable insights
      into industry trends.




3




***Access
      to Steel Partners’ infrastructure.***




Steel
      Partners’ offices in New York, Los Angeles and London have more than 25
      employees, including 13 investment and operating professionals, who are
      available to support our operations. Steel Partners’s finance and administration
      function which addresses legal, compliance, and operational matters will also
      be
      available to us.




**Steel
      Partners Senior Management**




In
      addition to Messrs. Lichtenstein, Howard and Henderson, the following members
      of
      Steel Partners senior management are involved in helping us to source, analyze
      and execute a business combination. We have no agreements or understandings
      between us and Steel Partners regarding the use of Steel Partners employees
      (and
      we incur no additional costs with respect to the use of such employees). None
      of
      such employees is required to devote a specific amount of time to efforts on
      our
      behalf.




**Sanford
      Antignas** , *Managing
      Director, Chief Operating Officer, Secretary, and investment professional of
      Steel Partners LLC* —
Mr.
      Antignas has been associated with Steel Partners LLC and its affiliates since
      November 2006. From 1996 to February 2005 he served as a senior investment
      professional of Bassini, Playfair and Associates LLC, an emerging markets
      private equity firm, in various capacities where his last position was Managing
      Director. While there he served as its Chief Financial Officer from 1996 to
      2003
      and as a director of eleven of its portfolio companies in various countries,
      and
      as the interim Chief Executive Officer of one such company. From 1994 to 1996,
      Mr. Antignas was Director of International Investments at American International
      Group Inc. and served as a Managing Director of its AIG Capital Partners
      subsidiary. From 1987 to 1993, he served in various capacities with GE Capital
      Corporation in its Corporate Finance Group where his last position was Vice
      President. From 1983 to 1985, Mr. Antignas was with the Middle/Emerging Markets
      Business Services practice at Deloitte Haskins and Sells, a public accounting
      firm, and then served on the staff of its national office until 1987. Mr.
      Antignas graduated from the University of California, Berkeley with a B.S.
      in
      Business Administration. He earned an M.B.A. from New York University. Mr.
      Antignas is also a degree candidate for a Master of International Affairs from
      Columbia University. He is a Certified Public Accountant.




**Glen
      M. Kassan** , *Managing
      Director and operating partner of Steel Partners LLC* —
Mr.
      Kassan has been associated with Steel Partners LLC and its affiliates since
      August 1999. He served as the Vice President, Chief Financial Officer and
      Secretary of WebFinancial Corporation, which through its operating subsidiaries,
      operates niche banking markets, from June 2000 until April 2007. He has served
      as a director of SL Industries, Inc., a designer and manufacturer of power
      electronics, power motion equipment, power protection equipment, and
      teleprotection and specialized communication equipment, since January 2002,
      its
      Vice Chairman since August 2005 and served as its President from February 2002
      to August 2005. Mr. Kassan has served as a director of WHX Corporation, a
      holding company, since July 2005 and as its Vice Chairman, Chief Executive
      Officer and Secretary since October 2005. Mr. Kassan has previously served
      as a
      director of American Magnetics Corporation, Damon Corporation, Puroflow
      Incorporated, Tandycrafts Inc., United Industrial Corporation and U.S.
      Diagnostic Labs, Inc. Mr. Kassan graduated from Northeastern University with
      a
      B.S. in Accounting. He earned a J.D. from Brooklyn Law School and an LLM in
      Taxation from New York University School of Law. Mr. Kassan is a Certified
      Public Accountant.




**John
      McNamara** , *Managing
      Director-Head Capital Markets and investment professional of Steel Partners
      LLC* —
Mr.
      McNamara has been associated with Steel Partners LLC and its affiliates since
      May 2006. From 1995 to April 2006, Mr. McNamara served in various capacities
      at
      Imperial Capital, an investment banking firm, where his last position was
      Managing Director and Partner. As a member of Imperial Capital’s Corporate
      Finance Group, he provided advisory services for middle market companies in
      the
      areas of mergers and acquisitions, restructurings and financings. From 1988
      to
      1995, Mr. McNamara held various positions with Bay Banks, Inc., a commercial
      bank, where he served in lending and work-out capacities. Mr. McNamara has
      served as a director of WHT Corporation, a holding company, since February
      2008. Mr. McNamara graduated from Ithaca College with a B.S. in
      Economics.




4




**John
      J. Quicke** , *Managing
      Director and operating partner of Steel Partners LLC* —
Mr.
      Quicke has been associated with Steel Partners LLC and its affiliates since
      September 2005. Mr. Quicke has served as a director of Adaptec, Inc., a storage
      solutions provider, since December 2007. He has served as a director of Collins
      Industries, Inc., a subsidiary of BNS Holding, Inc., a manufacturer school
      buses, ambulances and terminal trucks, since October 2006. He has served as
      a
      director of Angelica Corporation, a provider of healthcare linen management
      services, since August 2006. He has served as Chairman of the Board of NOVT
      Corporation, a former developer of advanced medical treatments for coronary
      and
      vascular disease, from January 2008and served as President and Chief Executive
      Officer of NOVT from April 2006 to November 2006. He has served as a director
      of
      WHX Corporation, a holding company, since July 2005 and as a Vice President
      since October 2005. Mr. Quicke served as a director of Layne Christensen
      Company, a provider of products and services for the water, mineral construction
      and energy markets, from October 2006 to June 2007. Mr. Quicke served as a
      director, President and Chief Operating Officer of Sequa Corporation, a
      diversified industrial company, from 1993 to March 2004, and Vice Chairman
      and
      Executive Officer of Sequa from March 2004 to March 2005. As Vice Chairman
      and
      Executive Officer of Sequa, Mr. Quicke was responsible for the Automotive,
      Metal
      Coating, Specialty Chemicals, Industrial Machinery and Other Product operating
      segments of the company. From March 2005 to August 2005, Mr. Quicke occasionally
      served as a consultant to Steel Partners II, L.P. and explored other business
      opportunities. Mr. Quicke graduated from the University of Missouri with a
      B.S.
      in Business Administration. He is a Certified Public Accountant and a member
      of
      the AICPA.




**Joshua
      Schechter** , *Managing
      Director and investment professional of Steel Partners LLC* —
Mr.
      Schechter has been associated with Steel Partners LLC and its affiliates since
      June 2001. Schechter served as a director of Jackson Products, Inc., a safety
      products manufacturer, from February 2004 to December 2007. Mr. Schechter from
      1998 to 2001 held various positions in the Corporate Finance Group of Imperial
      Capital LLC, an investment banking firm. From 1997 to 1998, he was an Analyst
      with Leifer Capital Inc., an investment bank. From 1996 to 1997, Mr. Schechter
      was a Tax Consultant at Ernst & Young LLP. Mr. Schechter previously served
      as a director of Puroflow Incorporated. Mr. Schechter graduated from the
      University of Texas, Austin with both a B.B.A. in Accounting and a Master of
      Professional Accounting.




**Joonho
      Um** , *Managing
      Director and investment professional of Steel Partners LLC* —
Mr.
      Um
      has been associated with Steel Partners LLC and its affiliates since March
      2005.
      He covers Asia excluding Japan and China. From March 2003 to December 2004,
      he
      was the General Manager of Green Fire & Marine Insurance in Seoul, a
      property and casualty insurance company, where he was responsible for the Asset
      Management and Financial Planning departments. From 1999 to 2002, Mr. Um was
      a
      foreign currency trader with Banc of America Securities in San Francisco. From
      1994 to 1997, he was an Analyst at Solomon Brothers in New York and San
      Francisco. From 1992 to 1994 he was in the management training program at
      Primerica Corp., a financial services firm, in New York and Baltimore. Mr.
      Um
      graduated from the Wharton School of the University of Pennsylvania with a
      B.S.
      in Economics in 1992.




**Luke
      Wiseman** , *Managing
      Director and investment professional of Steel Partners (UK)
      Limited* —
Mr.
      Wiseman has been associated with Steel Partners (UK) Limited, the London based
      research subsidiary of an affiliate of Steel Partners LLC, since April 2005.
      He
      has certain responsibilities related to the firm’s European investments. Since
      September 2006 he has served as a non-executive director of API plc, a packaging
      materials manufacturer. From October 2000 to April 2005, Mr. Wiseman was an
      Analyst and Portfolio Manager at Carlson Capital, a Hedge Fund, where he managed
      an equity long/short portfolio of European consumer and industrial stocks.
      From
      1998 to 2000, he was an Analyst with Donaldson Lufkin and Jenrette in London
      in
      equity research covering European retail stocks. From 1995 to 1998, Mr. Wiseman
      served in the European equity sales group of UBS Securities in London. From
      1991
      to 1994, he was with Tayrich Ltd., a privately owned commercial carpet
      distributor in the United Kingdom, where he served as a Board Member and was
      responsible for developing sales in continental Europe. From 1989 to 1991,
      he
      was with the Institutional Sales, European Markets area, of Morgan Stanley.
      From
      1986 to 1988, he was with Hoare Govette, a brokerage firm in London where he
      worked in institutional equity sales. From December 2005 to September 2006
      he
      was a non-executive director of Nettec plc.




5




**Effecting
      a Business Combination**




***General***




We
      are
      not presently engaged in, and we will not engage in, any operations for an
      indefinite period of time. While substantially all of the net proceeds of our
      initial public offering are allocated to completing an initial business
      combination, the proceeds are not otherwise designated for more specific
      purposes. Accordingly, there is no current basis for shareholders to evaluate
      the specific merits or risks of one or more target businesses at the time of
      your investment. If we engage in an initial business combination with a target
      business using our capital stock or debt financing to fund the combination,
      proceeds from our initial public offering, the sale of the additional founder’s
      warrants and the sale of the co-investment units will then be used to undertake
      additional acquisitions or to fund the operations of the target business on
      a
      post-combination basis. We may engage in an initial business combination with
      a
      company that does not require significant additional capital but is seeking
      a
      public trading market for its shares, and which wants to merge with an already
      public company to avoid the uncertainties associated with undertaking its own
      public offering. These uncertainties include time delays, compliance and
      governance issues, significant expense, a possible loss of voting control,
      and
      the risk that market conditions will not be favorable for an initial public
      offering at the time its initial public offering is ready to be commenced.
      We
      may seek to effect a business combination with more than one target business,
      although our limited resources may serve as a practical limitation on our
      ability to do so.




***We
      have not identified a target business***




We
      are
      currently in the process of identifying and evaluating targets for a potential
      transaction. We have not entered into any definitive business combination
      agreement.




Subject
      to the requirement that a target business or businesses have a fair market
      value
      of at least 80% of the sum of the balance in the trust account plus the proceeds
      of the co-investment (excluding deferred underwriting discounts and commissions
      of approximately $17.3 million) at the time of our initial business combination,
      we have virtually unrestricted flexibility in identifying and selecting one
      or
      more prospective target businesses. Accordingly, there is no current basis
      for
      shareholders to evaluate the possible merits or risks of the target business
      with which we may ultimately complete our initial business combination. Although
      our management will assess the risks inherent in a particular target business
      with which we may combine, we cannot assure you that this assessment will result
      in our identifying all risks that a target business may encounter. Furthermore,
      some of those risks may be outside of our control, meaning that we can do
      nothing to control or reduce the chances that those risks will adversely impact
      a target business.




6




***Sources
      of target businesses***




We
      expect
      that our principal means of identifying potential target businesses will be
      through the extensive contacts and relationships of our officers and directors
      and Steel Partners. While our officers are not required to commit to our
      business on a full-time basis and our directors have no commitment to spend
      any
      time in identifying or performing due diligence on potential target businesses,
      our officers and directors believe that the relationships they have developed
      over their careers and their access to Steel Partners professionals will
      generate a number of potential business combination opportunities that will
      warrant further investigation. Various unaffiliated parties, such as private
      equity sponsors, management teams of public and private companies, investment
      bankers, commercial bankers, brokers, attorneys, accountants and investors
      throughout the United States, Asia and Europe and similar sources, may also
      bring potential target businesses to our attention.




We
      may
      pay fees or compensation to third parties for their efforts in introducing
      us to
      potential target businesses that we have not previously identified. Such fees
      or
      compensation may be calculated as a percentage of the dollar value of the
      transaction and/or may involve monthly retainer payments. We will seek to
      negotiate the lowest reasonable percentage fee consistent with the
      attractiveness of the opportunity and the alternatives, if any, that are then
      available to us. Payment of finder’s fees is customarily tied to completion of a
      transaction. Although it is possible that we may pay finder’s fees in the case
      of an uncompleted transaction, we consider this possibility to be extremely
      remote. In no event will we pay any of our officers or directors or any entity
      with which they or we are affiliated, including Steel Partners, any finder’s fee
      or other compensation for services rendered to us prior to or in connection
      with
      the consummation of an initial business combination, other than reimbursement
      for out-of-pocket expenses and an aggregate of $10,000 per month for office
      space, secretarial and administrative services. In addition, none of our
      officers or directors or any entity with which they are affiliated, including
      Steel Partners, will receive any finder’s fee, consulting fees or any similar
      fees from any person or entity in connection with any initial business
      combination involving us other than any compensation or fees that may be
      received for any services provided following such initial business
      combination.




***Selection
      of a target business and structuring of a business
      combination***




Subject
      to the requirement that our initial business combination must be with a target
      business with a fair market value that is at least 80% of the sum of the balance
      in the trust account plus the proceeds of the co-investment (excluding deferred
      underwriting discounts and commissions of approximately $17.3 million) at the
      time of such initial business combination, our management will have virtually
      unrestricted flexibility in identifying and selecting a prospective target
      business. We will only consummate a business combination in which we become
      the
      controlling shareholder of the target. The key factors that we will rely on
      in
      determining controlling shareholder status would be our acquisition of at least
      51% of the voting equity interests of the target company and control of the
      majority of any governing body of the target company. We will not consider
      any
      transaction that does not meet such criteria. In addition, we will not enter
      into our initial business combination with any entity in which any of our
      officers, directors or Steel Partners or its affiliates has a financial
      interest.




In
      evaluating a prospective target business, our management will consider a variety
      of criteria and guidelines, including the following:




·
            financial
                condition and results of
                operations;




·
            growth
                potential;




·
            brand
                recognition and potential;




7




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




·
            capital
                requirements;




·
            stage
                of development of the business and its products or
                services;




·
            existing
                distribution arrangements and the potential for
                expansion;




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




·
            proprietary
                aspects of products and the extent of intellectual property or other
                protection for products or
                formulas;




·
            impact
                of regulation on the business;




·
            seasonal
                sales fluctuations and the ability to offset these fluctuations through
                other business combinations, introduction of new products, or product
                line
                extensions;




·
            costs
                associated with effecting the business
                combination;




·
            industry
                leadership, sustainability of market share and attractiveness of
                market
                sectors in which target business
                participates;




·
            degree
                to which Steel Partners professionals have investment and operating
                experience and have had success in the target business’s industry;
                and




·
            macro
                competitive dynamics in the industry within which each company
                competes.




These
      criteria are not intended to be exhaustive. Any evaluation relating to the
      merits of a particular initial business combination will be based, to the extent
      relevant, on the above factors as well as other considerations deemed relevant
      by our management to our business objective. In evaluating a prospective target
      business, we expect to conduct an extensive due diligence review which will
      encompass, among other things, meetings with incumbent management and employees,
      document reviews, interviews of customers and suppliers, inspection of
      facilities, as well as review of financial and other information which will
      be
      made available to us.




The
      time
      required to select and evaluate a target business and to structure and complete
      the initial business combination, and the costs associated with this process,
      are not currently ascertainable with any degree of certainty. We expect that
      due
      diligence of prospective target businesses will be performed by some or all
      of
      our officers, directors and Steel Partners professionals. We may engage market
      research firms or third-party consultants to assist us with performing due
      diligence and valuations of the target company. Any costs incurred with respect
      to the identification and evaluation of a prospective target business with
      which
      a potential or initial business combination is not ultimately completed will
      result in our incurring losses and will reduce the funds we can use to complete
      an initial business combination.




***Fair
      market value of target business or businesses and determination of offering
      amount***




The
      initial target business or businesses with which we combine must have a
      collective fair market value equal to at least 80% of the sum of the balance
      in
      the trust account plus the proceeds of the co-investment (excluding deferred
      underwriting discounts and commissions of approximately $17.3 million) at the
      time of such initial business combination. Accordingly, there is no limitation
      on our ability to raise funds privately or through loans that would allow us
      to
      acquire a target business or businesses with a fair market value considerably
      greater than 80% of the sum of the balance in the trust account plus the
      proceeds of the co-investment (excluding deferred underwriting discounts and
      commissions as described above) at the time of our initial business combination.
      If we acquire less than 100% of one or more target businesses in our initial
      business combination, the aggregate fair market value of the portion or portions
      we acquire must equal at least 80% of the sum of the balance in the trust
      account plus the proceeds of the co-investment (excluding deferred underwriting
      discounts and commissions as described above) at the time of such initial
      business combination. The fair market value of a portion of a target business
      will be calculated by multiplying the fair market value of the entire business
      by the percentage of the target business we acquire. We may seek to consummate
      our initial business combination with a target business or businesses with
      a
      collective fair market value in excess of the balance in the trust account.
      However, we would need to obtain additional financing to consummate such an
      initial business combination, and there is no assurance we would be able to
      obtain such financing.




8




In
      determining the size of our initial public offering, our management concluded,
      based on their collective experience, that the size of our initial public
      offering, together with the proceeds from the sale of the additional founder’s
      warrants and the sale of the co-investment units, will provide us with
      sufficient equity capital to execute our business plan. We believe that this
      amount of equity capital, plus our ability to finance an acquisition using
      stock
      or debt in addition to the cash held in the trust account, will give us
      substantial flexibility in selecting an acquisition target and structuring
      our
      initial business combination. This belief is not based on any research,
      analysis, evaluations, discussions, or compilations of information with respect
      to any particular investment or any such action undertaken in connection with
      our organization. We cannot assure you that our belief is correct, that we
      will
      be able to successfully identify acquisition candidates, that we will be able
      to
      obtain any necessary financing or that we will be able to consummate a
      transaction with one or more target businesses whose fair market value,
      collectively, is equal to at least 80% of the sum of the balance in the trust
      account plus the proceeds of the co-investment (excluding deferred underwriting
      discounts and commissions of approximately $17.3 million) at the time of the
      initial business combination.




In
      contrast to many other blank check companies that must combine with one or
      more
      target businesses that have a fair market value equal to 80% or more of the
      acquiring company’s net assets, we will not combine with a target business or
      businesses unless the fair market value of such entity or entities meets a
      minimum valuation threshold of 80% of the sum of the amount in the trust account
      plus the proceeds of the co-investment (excluding deferred underwriting
      discounts and commissions of approximately $17.3 million). We have used this
      criterion to provide investors and our officers and directors with greater
      certainty as to the fair market value that a target business or businesses
      must
      have in order to qualify for our initial business combination. The determination
      of net assets requires an acquiring company to have deducted all liabilities
      from total assets to arrive at the balance of net assets. Given the ongoing
      nature of legal, accounting, stockholder meeting and other expenses that will
      be
      incurred immediately before and at the time of an initial business combination,
      the balance of an acquiring company’s total liabilities may be difficult to
      ascertain at a particular point in time with a high degree of certainty.
      Accordingly, we have determined to use the valuation threshold of 80% of the
      sum
      of the amount in the trust account plus the proceeds of the co-investment
      (excluding deferred underwriting discounts and commissions of approximately
      $17.3 million) for the fair market value of the target business or businesses
      with which we combine so that our officers and directors will have greater
      certainty when selecting, and our investors will have greater certainty when
      voting to approve or disapprove, a proposed initial business combination with
      a
      target business or businesses that such target business or businesses will
      meet
      the minimum valuation criterion for our initial business
      combination.




9




Our
      board
      of directors will perform its own valuations and analyses in seeking to
      determine that the target has a fair market value of at least 80% of the sum
      of
      the balance in the trust account plus the proceeds of the co-investment
      (excluding deferred underwriting discounts and commissions of approximately
      $17.3 million) at the time of the proposed business combination. Whether or
      not
      the fair market value of a target business or businesses is in excess of 80%
      of
      the sum of the proceeds in the trust account plus the proceeds of the
      co-investment will be determined by our board of directors based upon standards
      generally accepted by the financial community, such as actual and potential
      gross margins, the values of comparable businesses, earnings and cash flow,
      and
      book value. The board of directors will make its valuation assessment based
      on
      all relevant information available at the time, which may differ on a
      case-by-case basis depending on the specific nature of the target and the
      structure of the transaction, including the projected performance of the target
      based on its potential under our business plan (as determined based upon
      standards generally accepted by the financial community, as well as the criteria
      discussed under “Selection of a target business and structuring of a business
      combination” above). Accordingly, we cannot predict at this time the precise
      information that the board of directors intends to provide to stockholders
      regarding the valuation of a particular target, other than whether it meets
      the
      80% threshold criterion. If our board is not able to determine independently
      that the target business has a sufficient fair market value to meet the
      threshold criterion, we will obtain an opinion in that regard from an
      unaffiliated, independent investment banking firm which is a member of the
      Financial Industry Regulatory Authority, Inc. We expect that any such opinion
      would be included in our proxy soliciting materials furnished to our
      stockholders in connection with the stockholder vote on our initial business
      combination, and that such independent investment banking firm will be a
      consenting expert. Although management has not consulted with any investment
      banker in connection with such an opinion, it is possible that the opinion
      would
      only be able to be relied upon by our board of directors and not by our
      stockholders. We will need to consider the cost in making a determination as
      to
      whether to hire an investment bank that will allow our stockholders to rely
      on
      its opinion, and will do so unless the cost is substantially (approximately
      $50,000) in excess of what it would be otherwise. In the event that we obtain
      an
      opinion that we and the investment banker believe cannot be relied on by our
      stockholders, we will include disclosure in the proxy statement providing
      support for that belief. While our stockholders might not have legal recourse
      against the investment banking firm in such case, the fact that an independent
      expert has evaluated, and passed upon, the fairness of the transaction is a
      factor our stockholders may consider in determining whether or not to vote
      in
      favor of the potential business combination. We will not be required to obtain
      an opinion from an investment banking firm as to the fair market value of the
      business if our board of directors independently determines that the target
      business or businesses has sufficient fair market value to meet the threshold
      criterion. In addition, if our board of directors has informed stockholders that
      it believes that a target business meets the 80% threshold criterion, the board
      will provide stockholders with valuations or quantify the value of any target.
      Further, in the event that we issue shares in order to acquire a target and
      such
      issuance causes the investors in our initial public offering to collectively
      become minority stockholders, we will not be required to obtain an opinion
      or
      independently opine on whether the transaction is fair to our stockholders.
      However, any such issuance shall not affect the requirement that a majority
      of
      the shares of common stock voted by our public stockholders must approve any
      initial business combination.




***Lack
      of business diversification***




While
      we
      may seek to effect business combinations with more than one target business,
      our
      initial business combination must involve one or more target businesses whose
      collective fair market value meets the criteria discussed above at the time
      of
      such initial business combination. Consequently, we expect to complete only
      a
      single initial business combination, although this may entail a simultaneous
      combination with several operating businesses. At the time of our initial
      business combination, we may not be able to acquire more than one target
      business because of various factors, including complex accounting or financial
      reporting issues. For example, we may need to present pro forma financial
      statements reflecting the operations of several target businesses as if they
      had
      been combined historically.




10




A
      simultaneous combination with several target businesses also presents logistical
      issues, such as the need to coordinate the timing of negotiations, proxy
      statement disclosure and closings. In addition, if conditions to closings with
      respect to one or more of the target businesses are not satisfied, the fair
      market value of the businesses could fall below the required fair market value
      threshold described above.




Accordingly,
      while it is possible that our initial business combination may involve more
      than
      one target business, we are more likely to choose a single target business
      if
      all other factors appear equal. This means that for an indefinite period of
      time, the prospects for our success may depend entirely on the future
      performance of a single target business. Unlike other entities that have the
      resources to complete business combinations with multiple entities in one or
      several industries, it is probable that we will not have the resources to
      diversify our operations and mitigate the risks of being in a single line of
      business. By consummating our initial business combination with only a single
      entity, our lack of diversification may subject us to negative economic,
      competitive and regulatory developments, in the particular industry in which
      we
      operate after our initial business combination.




If
      we
      complete our initial business combination structured as a merger in which the
      consideration is our stock, we could have a significant amount of cash available
      to make subsequent add-on acquisitions.




***Limited
      ability to evaluate the target business’s management***




We
      will
      independently evaluate the quality and experience of the existing management
      of
      a target business and will make an assessment as to whether or not they should
      be replaced on a case-by-case basis. As an example, a company in weak financial
      condition may be experiencing difficulties because of its capitalization and
      not
      because of its operations, in which case operating management may not need
      to be
      replaced.




Although
      we intend to closely scrutinize the management of a prospective target business
      when evaluating the desirability of effecting an initial business combination
      with that business, we cannot assure you that our assessment of the target
      business’s management will prove to be correct. In addition, we cannot assure
      you that management of the target business will have the necessary skills,
      qualifications or abilities to manage a public company. Furthermore, the future
      role of our officers and directors, if any, in the target business cannot
      presently be stated with any certainty. While it is possible that one or more
      of
      our officers and directors will remain associated in some capacity with us
      following our initial business combination, a final determination of their
      continued involvement with the business upon completion of an initial business
      combination will be made jointly with our board of directors and based on the
      facts and circumstances at the time. The goal of our board of directors will
      be
      to ensure that they select the best management team to pursue our business
      strategy. If they determine that the incumbent management of an acquired
      business should be replaced and that one or more of our officers and directors
      is the best available replacement, it is possible that some of our officers
      or
      directors will devote some or all of their efforts to our affairs subsequent
      to
      our initial business combination.




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




***Opportunity
      for stockholder approval of business combination***




Prior
      to
      the completion of our initial business combination, we will submit the
      transaction to our stockholders for approval, even if the nature of the
      transaction is such as would not ordinarily require stockholder approval under
      applicable state law. At the same time, we will submit to our stockholders
      for
      approval a proposal to amend our amended and restated certificate of
      incorporation to permit our continued corporate existence if the initial
      business combination is approved and consummated. The quorum required to
      constitute this meeting, as for all meetings of our stockholders in accordance
      with our bylaws, is a majority of our issued and outstanding common stock
      (whether or not held by public stockholders). We will consummate our initial
      business combination only if the required number of shares are voted in favor
      of
      both the initial business combination and the amendment to extend our corporate
      life. If a majority of the shares of common stock voted by the public
      stockholders are not voted in favor of a proposed initial business combination,
      we may continue to seek other target businesses with which to effect our initial
      business combination until October 10, 2009, the date that is 24 months from
      the
      date of our final prospectus. In connection with seeking stockholder approval
      of
      our initial business combination, we will furnish our stockholders with proxy
      solicitation materials prepared in accordance with the Exchange Act, which,
      among other matters, will include a description of the operations of the target
      business and audited historical financial statements of the target business
      based on United States generally accepted accounting principles.




11




In
      connection with the stockholder vote required to approve our initial business
      combination, 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 our company, have agreed to vote all of their founder’s shares
      either for or against a business combination, as determined by the totality
      of
      the public stockholder vote. SP Acq LLC, Steel Partners II, L.P. and Messrs.
      Bergamo, LaBow, Lorber, Toboroff and Walker and each of our officers and
      directors have also agreed that if it, he or she acquires shares of common
      stock, it, he or she will vote all such acquired shares in favor of our initial
      business combination. Any such purchases of common stock will be based solely
      upon the judgment of such person or entity (and may be made to impact the
      shareholder vote to approve a business combination) and are expected to be
      effected through open market purchases or privately negotiated transactions.
      As
      a result, neither SP Acq LLC, Steel Partners II, L.P. nor any of our officers
      or
      directors will be able to exercise the conversion rights with respect to any
      of
      our shares that it, he or she may acquire. However, with the exception of the
      co-investment none of SP Acq LLC, Steel Partners II, L.P., our officers or
      our
      directors has indicated to us any intent to purchase our securities. We believe
      that SP Acq LLC, Steel Partners II, L.P. and our officers and directors will
      often be in possession of material non-public information about us that will
      restrict their ability to make purchases of our securities. We will proceed
      with
      our initial business combination only if a quorum is present at the
      stockholders’ meeting and, as required by our amended and restated certificate
      of incorporation, a majority of the shares of common stock voted by the public
      stockholders are voted, in person or by proxy, in favor of our initial business
      combination and stockholders owning no more than 30% of the shares sold in
      our
      initial public offering (minus one share) vote against the business combination
      and exercise their conversion rights. Under the terms of the Company’s amended
      and restated certificate of incorporation, this provision may not be amended
      without the unanimous consent of the Company’s stockholders prior to
      consummation of an initial business consummation. Even though the validity
      of
      unanimous consent provisions under Delaware law has not been settled, neither
      we
      nor our board of directors will propose any amendment to this 30% threshold,
      or
      support, endorse or recommend any proposal that stockholders amend this
      threshold (subject to any fiduciary obligations our management or board may
      have). In addition, we believe we have an obligation in every case to structure
      our initial business combination so that up to 30% of the shares sold in our
      initial public offering (minus one share) may be converted to cash by public
      stockholders exercising their conversion rights and the business combination
      will still go forward. Provided that a quorum is in attendance at the meeting,
      in person or by proxy, a failure to vote on the initial business combination
      at
      the stockholders’ meeting will have no outcome on the transaction. Voting
      against our initial business combination alone will not result in conversion
      of
      a stockholder’s shares into a pro rata share of the trust account. In order to
      convert its shares, a stockholder must have also exercised the conversion rights
      described below.




12




***Conversion
      rights***




At
      the
      time we seek stockholder approval of our initial business combination, we will
      offer our public stockholders the right to have their shares of common stock
      converted to cash if they vote against the business combination and the business
      combination is approved and completed. Stockholders who wish to exercise their
      conversion rights must (i) vote against the business combination, (ii) demand
      that the company convert their shares into cash, (iii) continue to hold their
      shares through the closing of the business combination and (iv) then deliver
      their shares to our transfer agent. In lieu of delivering their certificate,
      shareholders may deliver their shares to the transfer agent electronically
      using
      Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. The
      actual per-share conversion price will be equal to the aggregate amount then
      on
      deposit in the trust account (before payment of deferred underwriting discounts
      and commissions and including accrued interest, net of any income taxes payable
      on such interest, which shall be paid from the trust account, and net of
      interest income of up to $3.5 million previously released to us to fund our
      working capital requirements), calculated as of two business days prior to
      the
      consummation of the proposed initial business combination, divided by the number
      of shares sold in our initial public offering. The initial per-share conversion
      price is expected to be approximately $9.84, or $0.16 less than the per-unit
      offering price of $10.00. A public stockholder may request conversion at any
      time after the mailing to our stockholders of the proxy statement and prior
      to
      the vote taken with respect to a proposed initial business combination at a
      meeting held for that purpose, but the request will not be granted unless the
      stockholder votes against our initial business combination and our initial
      business combination is approved and completed. If stockholders vote against
      our
      initial business combination but do not properly exercise their conversion
      rights, such stockholders will not be able to convert their shares of common
      stock into cash at the conversion price. Additionally, we may require public
      stockholders, whether they are a record holder or hold their shares in “street
      name,” to either tender their certificates to our transfer agent at any time
      through the vote on the business combination or to deliver their shares to
      the
      transfer agent electronically using Depository Trust Company’s DWAC
      (Deposit/Withdrawal At Custodian) System, at the holder’s option. The proxy
      solicitation materials that we will furnish to stockholders in connection with
      the vote for any proposed business combination will indicate whether we are
      requiring stockholders to satisfy such certification and delivery requirements.
      Accordingly, a stockholder would have from the time we send out our proxy
      statement through the vote on the business combination (which we intend would
      be
      a minimum interval of 20 days) to tender his shares if he wishes to seek to
      exercise his conversion rights. This time period varies depending on the
      specific facts of each transaction. However, as the delivery process can be
      accomplished by the stockholder, whether or not he is a record holder or his
      shares are held in “street name,” in a matter of hours by simply contacting the
      transfer agent or his broker and requesting delivery of his shares through
      the
      DWAC System, we believe this time period is sufficient for an average investor.
      However, because we do not have any control over this process, it may take
      significantly longer than we anticipated. Traditionally, in order to perfect
      conversion rights in connection with a blank check company’s business
      combination, a holder could simply vote against a proposed business combination
      and check a box on the proxy card indicating such holder was seeking to convert.
      After the business combination was approved, the company would contact such
      stockholder to arrange for him to deliver his certificate to verify ownership.
      As a result, the stockholder then had an “option window” after the consummation
      of the business combination during which he could monitor the price of the
      stock
      in the market. If the price rose above the conversion price, he could sell
      his
      shares in the open market before actually delivering his shares to the company
      for cancellation. Thus, the conversion right, to which stockholders were aware
      they needed to commit before the stockholder meeting, would survive past the
      consummation of the business combination until the converting holder delivered
      his certificate. For the avoidance of any doubt we will not allow the
      traditional method of conversion for a blank check company. The requirement
      for
      physical or electronic delivery prior to the meeting ensures that a converting
      holder’s election to convert is irrevocable once the business combination is
      approved. There is a nominal cost associated with the above-referenced tendering
      process and the act of certificating the shares or delivering them through
      the
      DWAC system. The transfer agent will typically charge the tendering broker
      $35
      and it would be up to the broker whether or not to pass this cost on to the
      converting holder. However, this fee would be incurred regardless of whether
      or
      not we require holders seeking to exercise conversion rights to tender their
      shares prior to the meeting — the need to deliver shares is a requirement of
      conversion regardless of the timing of when such delivery must be effectuated.
      Accordingly, assuming a business combination is approved, the exercise of
      conversion rights would not result in any increased cost to shareholders when
      compared to the traditional process. However, if a business combination is
      not
      approved, shareholders will have incurred additional costs that they would
      not
      have otherwise incurred as a result of having already converted their
      shares.




13




Any
      request for conversion, once made, may be withdrawn at any time up to the vote
      taken with respect to the proposed business combination. Furthermore, if a
      stockholder delivered his certificate for conversion and subsequently decided
      prior to the meeting not to elect conversion, he may simply request that the
      transfer agent return the certificate (physically or electronically). It is
      anticipated that the funds to be distributed to stockholders entitled to convert
      their shares who elect conversion will be distributed promptly after completion
      of a business combination. Public stockholders who obtained their stock in
      the
      form of units and who subsequently convert their stock into their pro rata
      share
      of the trust account will still have the right to exercise the warrants that
      they received as part of the units. We will not complete our proposed initial
      business combination if public stockholders owning 30% or more of the shares
      sold in our initial public offering exercise their conversion
      rights.




In
      connection with a vote on our initial business combination, public stockholders
      may elect to vote a portion of their shares for and a portion of their shares
      against the initial business combination. If the initial business combination
      is
      approved and consummated, public stockholders who elected to convert the portion
      of their shares voted against the initial business combination will receive
      the
      conversion price with respect to those shares and may retain any other shares
      they own.




We
      expect
      the initial conversion price to be approximately $9.84 per share. As this amount
      is lower than the $10.00 per unit offering price and it may be less than the
      market price of a share of our common stock on the date of conversion, there
      may
      be a disincentive to public stockholders to exercise their conversion
      rights.




If
      a vote
      on an initial business combination is held and the business combination is
      not
      approved, we may continue to try to consummate an initial business combination
      with a different target until October 10, 2009. If the initial business
      combination is not approved or completed for any reason, then public
      stockholders voting against our initial business combination who exercised
      their
      conversion rights would not be entitled to convert their shares of common stock
      into a pro rata share of the aggregate amount then on deposit in the trust
      account. Those public stockholders would be entitled to receive their pro rata
      share of the aggregate amount on deposit in the trust account only in the event
      that the initial business combination they voted against was duly approved
      and
      subsequently completed, or in connection with our dissolution and
      liquidation.




**Liquidation
      if no business combination**




Our
      amended and restated certificate of incorporation provides that we will continue
      in existence only until October 10, 2009. If we consummate our initial business
      combination prior to that date, we will seek to amend this provision in order
      to
      permit our continued existence. If we have not completed our initial business
      combination by that date, our corporate existence will cease except for the
      purposes of winding up our affairs and liquidating pursuant to Section 278
      of
      the Delaware General Corporation Law. Because of this provision in our amended
      and restated certificate of incorporation, no resolution by our board of
      directors and no vote by our stockholders to approve our dissolution would
      be
      required for us to dissolve and liquidate. Instead, we will notify the Delaware
      Secretary of State in writing on the termination date that our corporate
      existence is ceasing, and include with such notice payment of any franchise
      taxes then due to or assessable by the state.




14




If
      we are
      unable to complete a business combination by October 10, 2009, we will
      automatically dissolve and as promptly as practicable thereafter adopt a plan
      of
      distribution in accordance with Section 281(b) of the Delaware General
      Corporation Law. Section 278 provides that our existence will continue for
      at
      least three years after its expiration for the purpose of prosecuting and
      defending suits, whether civil, criminal or administrative, by or against us,
      and of enabling us gradually to settle and close our business, to dispose of
      and
      convey our property, to discharge our liabilities and to distribute to our
      stockholders any remaining assets, but not for the purpose of continuing the
      business for which we were organized. Our existence will continue automatically
      even beyond the three-year period for the purpose of completing the prosecution
      or defense of suits begun prior to the expiration of the three-year period,
      until such time as any judgments, orders or decrees resulting from such suits
      are fully executed. Section 281(b) will require us to pay or make reasonable
      provision for all then-existing claims and obligations, including all
      contingent, conditional, or unmatured contractual claims known to us, and to
      make such provision as will be reasonably likely to be sufficient to provide
      compensation for any then-pending claims and for claims that have not been
      made
      known to us or that have not arisen but that, based on facts known to us at
      the
      time, are likely to arise or to become known to us within 10 years after the
      date of dissolution. Under Section 281(b), the plan of distribution must provide
      for all of such claims to be paid in full or make provision for payments to
      be
      made in full, as applicable, if there are sufficient assets. If there are
      insufficient assets, the plan must provide that such claims and obligations
      be
      paid or provided for according to their priority and, among claims of equal
      priority, ratably to the extent of legally available assets. Any remaining
      assets will be available for distribution to our stockholders.




We
      expect
      that all costs and expenses associated with implementing our plan of
      distribution, as well as payments to any creditors, will be funded from amounts
      remaining out of the $100,000 of proceeds held outside the trust account and
      from the $3.5 million in interest income on the balance of the trust account
      that may be released to us to fund our working capital requirements. However,
      if
      those funds are not sufficient to cover the costs and expenses associated with
      implementing our plan of distribution, to the extent that there is any interest
      accrued in the trust account not required to pay income taxes on interest income
      earned on the trust account balance, we may request that the trustee release
      to
      us an additional amount of up to $75,000 of such accrued interest to pay those
      costs and expenses. Should there be no such interest available or should those
      funds still not be sufficient, SP Acq LLC and Mr. Lichtenstein have agreed
      to
      reimburse us for our out-of-pocket costs associated with our dissolution and
      liquidation, excluding any special, indirect or consequential costs, such as
      litigation, pertaining to the dissolution and liquidation.




Upon
      its
      receipt of notice from counsel that our existence has terminated, the trustee
      will commence liquidating the investments constituting the trust account and
      distribute the proceeds to our public stockholders. SP Acq LLC, Steel Partners
      II, L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker have waived
      their right to participate in any liquidation distribution with respect to
      the
      founder’s shares. As the proceeds from the sale of the co-investment units will
      not be received by us until immediately prior to our consummation of a business
      combination, these proceeds will not be deposited into the trust account and
      will not be available for distribution to our public stockholders in the event
      of a dissolution and liquidation. Additionally, if we do not complete an initial
      business combination and the trustee must distribute the balance of the trust
      account, the underwriters have agreed to forfeit any rights or claims to their
      deferred underwriting discounts and commissions then in the trust account,
      and
      those funds will be included in the pro rata liquidation distribution to the
      public stockholders. There will be no distribution from the trust account with
      respect to any of our warrants, which will expire worthless if we are
      liquidated, and as a result purchasers of our units will have paid the full
      unit
      purchase price solely for the share of common stock included in each
      unit.




15




The
      proceeds deposited in the trust account could, however, become subject to claims
      of our creditors that are in preference to the claims of our stockholders,
      and
      we therefore cannot assure you that the actual per-share liquidation price
      will
      not be less than approximately $9.84, the conversion price at the closing of
      the
      initial public offering, including the over-allotment option. Although prior
      to
      completion of our initial business combination, we will seek to have all third
      parties (including any vendors or other entities we engage) and any prospective
      target businesses enter into valid and enforceable agreements with us waiving
      any right, title, interest or claim of any kind in or to any monies held in
      the
      trust account, there is no guarantee that they will execute such agreements.
      We
      have not engaged any such third parties or asked for or obtained any such waiver
      agreements at this time. It is also possible that such waiver agreements would
      be held unenforceable, and there is no guarantee that the third parties would
      not otherwise challenge the agreements and later bring claims against the trust
      account for monies owed them. If a target business or other third party were
      to
      refuse to enter into such a waiver, we would enter into discussions with such
      target business or engage such other third party only if our management
      determined that we could not obtain, on a reasonable basis, substantially
      similar services or opportunities from another entity willing to enter into
      such
      a waiver. In addition, there is no guarantee that such entities will agree
      to
      waive any claims they may have in the future as a result of, or arising out
      of,
      any negotiations, contracts or agreements with us and will not seek recourse
      against the trust account for any reason.




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. To the extent that SP Acq LLC refuses
      to
      indemnify us for a claim we believe should be indemnified, our officers and
      directors by virtue of their fiduciary obligation will be obligated to bring
      a
      claim against SP Acq LLC to enforce such indemnification. Based on the
      representation as to its accredited investor status (as such term is defined
      in
      Regulation D under the Securities Act), we currently believe that SP Acq LLC
      is
      capable of funding its indemnity obligations, even though we have not asked
      it
      to reserve for such an eventuality. We cannot assure you, however, that it
      would
      be able to satisfy those obligations.




Under
      Delaware law, creditors of a corporation have a superior right to stockholders
      in the distribution of assets upon liquidation. Consequently, if the trust
      account is liquidated and paid out to our public stockholders shares prior
      to
      satisfaction of the claims of all of our creditors, it is possible that our
      stockholders may be held liable for third parties’ claims against us to the
      extent of the distributions received by them.




If
      we are
      forced to file a bankruptcy case or an involuntary bankruptcy case is filed
      against us that is not dismissed, the proceeds held in the trust account could
      be subject to applicable bankruptcy law, and may be included in our bankruptcy
      estate and subject to the claims of third parties with priority over the claims
      of our stockholders. To the extent any bankruptcy claims deplete the trust
      account, we cannot assure you that we will be able to return at least
      approximately $9.84 per share to our public stockholders.




16




A
      public
      stockholder will be entitled to receive funds from the trust account only in
      the
      event that we do not consummate an initial business combination by October
      10,
      2009 or if the stockholder converts its shares into cash after voting against
      an
      initial business combination that is actually completed by us and exercising
      its
      conversion rights. In no other circumstances will a stockholder have any right
      or interest of any kind to or in the trust account. Prior to our completing
      an
      initial business combination or liquidating, we are permitted to have released
      from the trust account only (i) interest income to pay income taxes on interest
      income earned on the trust account balance and (ii) interest income earned
      of up
      to $3.5 million to fund our working capital requirements.




**Certificate
      of Incorporation**




Our
      amended and restated certificate of incorporation sets forth certain provisions
      designed to provide certain rights and protections to our stockholders prior
      to
      the consummation of a business combination, including that:




·
            prior
                to the consummation of our initial business combination, we shall
                submit
                the initial business combination to our stockholders for
                approval;




·
            we
                may consummate our initial business combination if approved by a
                majority
                of the shares of common stock voted by our public stockholders at
                a duly
                held stockholders meeting, and public stockholders owning up to 30%
                of the
                shares (minus one share) sold in our initial public offering vote
                against
                the business combination and exercise their conversion
                rights;




·
            if
                a proposed initial business combination is approved and consummated,
                public stockholders who exercised their conversion rights and voted
                against the initial business combination may convert their shares
                into
                cash at the conversion price on the closing date of the initial business
                combination;




·
            if
                our initial business combination is not consummated by October 10,
                2009,
                then our existence will terminate and we will distribute all amounts
                in
                the trust account (except for such amounts as are paid to creditors
                or
                reserved for payment to creditors in accordance with Delaware law)
                and any
                net assets remaining outside the trust account on a pro rata basis
                to all
                of our public stockholders;




·
            we
                may not consummate any other business combination, merger, capital
                stock
                exchange, asset acquisition, stock purchase, reorganization or similar
                transaction prior to our initial business
                combination;




·
            prior
                to our initial business combination, we may not issue additional
                stock
                that participates in any manner in the proceeds of the trust account,
                or
                that votes as a class with the common stock sold in our initial public
                offering on a business combination;




·
            our
                audit committee shall monitor compliance on a quarterly basis with
                the
                terms of our initial public offering and, if any noncompliance is
                identified, the audit committee is charged with the immediate
                responsibility to take all action necessary to rectify such noncompliance
                or otherwise cause compliance with the terms of our initial public
                offering; and




·
            the
                audit committee shall review and approve all payments made to our
                officers, directors and our and their affiliates, other than the
                payment
                of an aggregate of $10,000 per month to Steel Partners, Ltd. for
                office
                space, secretarial and administrative services, and any payments
                made to
                members of our audit committee will be reviewed and approved by our
                board
                of directors, with any interested director abstaining from such review
                and
                approval.




17




Our
      amended and restated certificate of incorporation requires that prior to the
      consummation of our initial business combination we obtain unanimous consent
      of
      our stockholders to amend these provisions. However, the validity of unanimous
      consent provisions under Delaware law has not been settled. A court could
      conclude that the unanimous consent requirement constitutes a practical
      prohibition on amendment in violation of the stockholders’ statutory rights to
      amend the corporate charter. In that case, these provisions could be amended
      without unanimous consent, and any such amendment could reduce or eliminate
      the
      protection these provisions afford to our stockholders. However, we view all
      of
      the foregoing provisions as obligations to our stockholders. Neither we nor
      our
      board of directors will propose any amendment to these provisions, or support,
      endorse or recommend any proposal that stockholders amend any of these
      provisions at any time prior to the consummation of our initial business
      combination (subject to any fiduciary obligations our management or board may
      have).




**Competition**




In
      identifying, evaluating and selecting a target business for our initial business
      combination, we may encounter intense competition from other entities having
      a
      business objective similar to ours, including other blank check companies,
      private equity groups and leveraged buyout funds, as well as operating
      businesses seeking acquisitions. Many of these entities are well established
      and
      have extensive experience identifying and effecting business combinations
      directly or through affiliates. Moreover, many of these competitors possess
      greater financial, technical, human and other resources than us. While we
      believe there are numerous potential target businesses with which we could
      combine, our ability to acquire larger target businesses will be limited by
      our
      available financial resources. This inherent limitation gives others an
      advantage in pursuing the acquisition of a target business.
      Furthermore:




·
            our
                obligation to seek stockholder approval of our initial business
                combination or obtain necessary financial information may delay the
                completion of a transaction;




·
            our
                obligation to convert into cash shares of common stock held by our
                public
                stockholders who vote against the initial business combination and
                exercise their conversion rights may reduce the resources available
                to us
                for an initial business
                combination;




·
            our
                outstanding warrants and the future dilution they potentially represent
                may not be viewed favorably by certain target businesses;
                and




·
            the
                requirement to acquire an operating business that has a fair market
                value
                equal to at least 80% of the sum of the balance of the trust account
                plus
                the proceeds of the co-investment at the time of the acquisition
                (excluding deferred underwriting discounts and commissions of
                approximately $17.3 million) could require us to acquire the assets
                of
                several operating businesses at the same time, all of which sales
                would be
                contingent on the closings of the other sales, which could make it
                more
                difficult to consummate the business
                combination.




Any
      of
      these factors may place us at a competitive disadvantage in successfully
      negotiating a business combination.




18




**Employees**




We
      currently have three officers. These individuals are not our employees and
      are
      not obligated to devote any specific number of hours to our business and intend
      to devote only as much time as they deem necessary to our business. We do not
      expect to have any full-time employees prior to the consummation of a business
      combination.




**ITEM
      1A.**  **Risk
      Factors**




*An
      investment in our securities involves a high degree of risk. You should consider
      carefully all of the material risks described below, together with the other
      information contained in this report before making a decision to invest in
      our
      securities. If any of the following events occur, our business, financial
      condition and operating results may be materially adversely affected. In that
      event, the trading price of our securities could decline, and you could lose
      all
      or part of your investment. This report also contains forward-looking statements
      that involve risks and uncertainties. Our actual results could differ materially
      from those anticipated in the forward-looking statements as a result of specific
      factors, including the risks described below.*




**We
      may proceed with a business combination if public stockholders owning less
      than
      30% of the shares sold in our initial public offering properly exercise their
      conversion rights. This requirement may make it easier for us to have a business
      combination approved over stockholder dissent.**




When
      we
      seek stockholder approval of a business combination or any extension of the
      time
      period within which we must complete our business combination, we will offer
      each public stockholder the right to have his, her or its shares of common
      stock
      converted to cash if the stockholder votes against the business combination
      or
      extension and the business combination is approved and consummated or the
      extension is approved. We will consummate the business combination only if
      the
      following two conditions are met: (i) a majority of the shares of common stock
      voted by the public stockholders are voted in favor of the business combination
      and (ii) public stockholders owning less than 30% of the shares sold in our
      initial public offering cumulatively vote against the business combination
      or an
      extension of the time period within which we must consummate our business
      combination and exercise their conversion rights. There can be no assurance
      that
      any converting stockholder will receive an amount that is equal to or more
      than
      his, her or its full invested amount.




**We
      are a development stage company with no operating history and no revenues,
      and
      you have no basis on which to evaluate our ability to achieve our business
      objective.**




We
      are a
      recently incorporated development stage company with no operating results to
      date. Because we lack an operating history, you have no basis on which to
      evaluate our ability to achieve our business objective of completing an initial
      business combination with one or more target businesses, as described in this
      report. We are currently in the process of evaluating and identifying
      prospective target businesses concerning an initial business combination but
      may
      be unable to complete an initial business combination. We will not generate
      any
      revenues from operating activities until, at the earliest, after completing
      an
      initial business combination. We cannot assure you as to when, or if, an initial
      business combination will occur. If we expend all of the $100,000 in proceeds
      from our initial public offering not held in trust and interest income earned
      of
      up to $3.5 million on the balance of the trust account that may be released
      to
      us to fund our working capital requirements in seeking an initial business
      combination, but fail to complete such an initial combination, we may never
      generate any operating revenues.




19




**We
      may not be able to consummate our initial business combination within the
      required time frame, in which case we would be forced to dissolve and
      liquidate.**




We
      must
      complete our initial business combination with one or more target businesses
      that have a fair market value of at least 80% of the sum of the amount held
      in
      our trust account at the time of the initial business combination plus the
      proceeds of the co-investment at the time of our initial business combination
      (excluding deferred underwriting discounts and commissions of approximately
      $17.3 million) by October 10, 2009. If we fail to consummate a business
      combination within the required time frame, we will be forced to dissolve and
      liquidate. We may not be able to find suitable target businesses within the
      required time frame. In addition, our negotiating position and our ability
      to
      conduct adequate due diligence on any potential target may be reduced as we
      approach the deadline for the consummation of an initial business
      combination.




**If
      we liquidate before concluding an initial business combination, our public
      stockholders will receive less than $10.00 per share on distribution of trust
      account funds and our warrants will expire worthless.**




If
      we are
      unable to complete an initial business combination and must liquidate our
      assets, the per-share liquidation distribution will be less than $10.00 because
      of the expenses of our initial public offering, our general and administrative
      expenses and the planned costs of seeking an initial business combination.
      Furthermore, our outstanding warrants are not entitled to participate in a
      liquidation distribution and the warrants will therefore expire worthless if
      we
      liquidate before completing an initial business combination; and as a result
      purchasers of our units will have paid the full unit purchase price solely
      for
      the share of common stock included in each unit.




**An
      effective registration statement must be in place in order for a warrant holder
      to be able to exercise the warrants.**




No
      warrants will be exercisable and we will not be obligated to issue shares of
      common stock upon exercise of warrants by a holder unless, at the time of such
      exercise, we have 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 we have undertaken
      in
      the warrant agreement, and therefore have a contractual obligation, to use
      our
      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 we intend to comply with
      our undertaking, we cannot assure you that we will be able to do so. Our initial
      founder’s warrants are identical to the warrants sold in our initial public
      offering except that (i) they only become exercisable after our consummation
      of
      our initial business combination if and when the last sales price of our common
      stock exceeds $14.25 per share for any 20 trading days within a 30 trading
      day
      period beginning 90 days after such business combination and (ii) they are
      non-redeemable. Our additional founder’s warrants are identical to the warrants
      sold in our initial public offering except that they are non-redeemable. Our
      co-investment warrants are identical to the warrants sold in our initial public
      offering except that they will be non-redeemable. Holders of warrants may not
      be
      able to exercise their warrants, the market for the warrants may be limited
      and
      the warrants may be deprived of any value if there is no effective registration
      statement covering the shares of common stock issuable upon exercise of the
      warrants or the prospectus relating to the common stock issuable upon the
      exercise of the warrants is not current. In such event, the holder of a unit
      will have paid the entire unit purchase price for the common stock contained
      in
      the unit as the warrant will be worthless. Holders of warrants will not be
      entitled to a cash settlement for their warrants if we fail to have an effective
      registration statement or a current prospectus available relating to the common
      stock issuable upon exercise of the warrants, and the holders’ only remedies in
      such event will be those available if we are found by a court of law to have
      breached our contractual obligation to them by failing to do so.




20




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




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




**You
      will not be entitled to protections normally afforded to investors in blank
      check companies.**




Since
      the
      net proceeds of our initial public offering are intended to be used to complete
      a business combination with a target business that has not been identified,
      we
      may be deemed a “blank check” company under the United States securities laws.
      However, because upon the consummation of our initial public offering we had
      net
      tangible assets in excess of $5 million and at that time filed a Form 8-K with
      the SEC that included an audited balance sheet demonstrating this fact, the
      SEC
      has taken the position that we are exempt from Rule 419 under the Securities
      Act
      which is designed to protect investors in blank check companies. Accordingly,
      our public stockholders will not receive the benefits or protections of Rule
      419. Among other things, this means we will have a longer period of time to
      complete a business combination in some circumstances than do companies subject
      to Rule 419. Moreover, offerings subject to Rule 419 would prohibit the release
      of any interest earned on funds held in the trust account to us unless and
      until
      the funds in the trust account were released to us in connection with our
      consummation of an initial business combination.




21




**Under
      Delaware law, a court could invalidate the requirement that certain provisions
      of our amended and restated certificate of incorporation be amended only by
      unanimous consent of our stockholders; amendment of those provisions could
      reduce or eliminate the protections they afford to our
      stockholders.**




Our
      amended and restated certificate of incorporation contains certain requirements
      and restrictions that will apply to us until the consummation of our initial
      business combination. Specifically, our amended and restated certificate of
      incorporation provides, among other things, that:




·
            prior
                to the consummation of our initial business combination, we shall
                submit
                the initial business combination to our stockholders for
                approval;




·
            we
                may consummate our initial business combination if approved by a
                majority
                of the shares of common stock voted by our public stockholders at
                a duly
                held stockholders meeting, and public stockholders owning up to 30%
                of the
                shares (minus one share) sold in our initial public offering vote
                against
                the business combination and exercise their conversion
                rights;




·
            if
                a proposed initial business combination is approved and consummated,
                public stockholders who exercised their conversion rights and voted
                against the initial business combination may convert their shares
                into
                cash at the conversion price on the closing date of the initial business
                combination;




·
            if
                our initial business combination is not consummated by October 10,
                2009,
                then our existence will terminate and we will distribute all amounts
                in
                the trust account (except for such amounts as are paid to creditors
                or
                reserved for payment to creditors in accordance with Delaware law)
                and any
                net assets remaining outside the trust account on a pro rata basis
                to all
                of our public stockholders;




·
            we
                may not consummate any other business combination, merger, capital
                stock
                exchange, asset acquisition, stock purchase, reorganization or similar
                transaction prior to our initial business
                combination;




·
            prior
                to our initial business combination, we may not issue additional
                stock
                that participates in any manner in the proceeds of the trust account,
                or
                that votes as a class with the common stock sold in our initial public
                offering on a business combination;




·
            our
                audit committee shall monitor compliance on a quarterly basis with
                the
                terms of our initial public offering and, if any noncompliance is
                identified, the audit committee is charged with the immediate
                responsibility to take all action necessary to rectify such noncompliance
                or otherwise cause compliance with the terms of our initial public
                offering; and




·
            the
                audit committee shall review and approve all payments made to our
                officers, directors and our and their affiliates, other than the
                payment
                of an aggregate of $10,000 per month to Steel Partners, Ltd. for
                office
                space, secretarial and administrative services, and any payments
                made to
                members of our audit committee will be reviewed and approved by our
                board
                of directors, with any interested director abstaining from such review
                and
                approval.




22




Our
      amended and restated certificate of incorporation requires that prior to the
      consummation of our initial business combination we obtain unanimous consent
      of
      our stockholders to amend these provisions. However, the validity of unanimous
      consent provisions under Delaware law has not been settled. A court could
      conclude that the unanimous consent requirement constitutes a practical
      prohibition on amendment in violation of the stockholders’ statutory rights to
      amend the corporate charter. In that case, these provisions could be amended
      without unanimous consent, and any such amendment could reduce or eliminate
      the
      protection these provisions afford to our stockholders. However, we view all
      of
      the foregoing provisions as obligations to our stockholders. Neither we nor
      our
      board of directors will propose any amendment to these provisions, or support,
      endorse or recommend any proposal that stockholders amend any of these
      provisions at any time prior to the consummation of our initial business
      combination (subject to any fiduciary obligations our management or board may
      have). In addition, we believe we have an obligation in every case to structure
      our initial business combination so that not less than 30% of the shares sold
      in
      our initial public offering (minus one share) have the ability to be converted
      to cash by public stockholders exercising their conversion rights and the
      business combination will still go forward.




**If
      third parties bring claims against us, or if we go bankrupt, the proceeds held
      in trust could be reduced and the per-share liquidation price received by you
      will be less than approximately $9.84 per share.**




Our
      placing of funds in the trust account may not protect those funds from
      third-party claims against us. Although prior to completion of our initial
      business combination, we will seek to have all third parties (including any
      vendors or other entities we engage) and any prospective target businesses
      enter
      into valid and enforceable agreements with us waiving any right, title, interest
      or claim of any kind in or to any monies held in the trust account, there is
      no
      guarantee that they will execute such agreements. It is possible that such
      waiver agreements would be held unenforceable and there is no guarantee that
      the
      third parties would not otherwise challenge the agreements and later bring
      claims against the trust account for monies owed them. In addition, there is
      no
      guarantee that such entities will agree to waive any claims they may have in
      the
      future as a result of, or arising out of, any negotiations, contracts or
      agreements with us and will not seek recourse against the trust account for
      any
      reason. Accordingly, the proceeds held in trust could be subject to claims
      that
      would take priority over the claims of our public stockholders and, as a result,
      the per-share liquidation price could be less than approximately $9.84, the
      conversion price at the closing of our initial public offering including the
      over-allotment exercise. SP Acq LLC and Mr. Lichtenstein have agreed that they
      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 business
      target. However, the agreement entered into by SP Acq LLC and Mr. Lichtenstein
      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 and Mr. Lichtenstein, such as shareholders and other
      claimants who are not parties in contract with us who file a claim for damages
      against us. To the extent that SP Acq LLC and Mr. Lichtenstein refuse to
      indemnify us for a claim we believe should be indemnified, our officers and
      directors by virtue of their fiduciary obligations will be obligated to bring
      a
      claim against SP Acq LLC and Mr. Lichtenstein to enforce such indemnification.
      Based on representations as to its status as an accredited investor (as such
      term is defined in Regulation D under the Securities Act), we currently believe
      that SP Acq LLC and Mr. Lichtenstein are capable of funding their indemnity
      obligations, even though we have not asked them to reserve for such an
      eventuality. We cannot assure you, however, that they would be able to satisfy
      those obligations.




23


In
      addition, if we are forced to file a bankruptcy case or an involuntary
      bankruptcy case is filed against us that is not dismissed, the proceeds held
      in
      the trust account could be subject to applicable bankruptcy law, and may be
      included in our bankruptcy estate and subject to the claims of third parties
      with priority over the claims of our stockholders. To the extent any bankruptcy
      claims deplete the trust account, we cannot assure you that we will be able
      to
      return at least approximately $9.84 per share to our public
      stockholders.




**Since
      we have not yet selected a particular industry or any target business with
      which
      to complete our initial business combination, you will be unable to currently
      ascertain the merits or risks of the industry or business in which we may
      ultimately operate.**




We
      may
      consummate an initial business combination with a company in any industry we
      choose and we are not limited to any particular industry or type of business.
      Accordingly, there is no current basis for you to evaluate the possible merits
      or risks of the particular industry in which we may ultimately operate or the
      target business or businesses with which we may ultimately enter an initial
      business combination. Although the members of our management team will evaluate
      the risks inherent in a particular target business, we cannot assure you that
      we
      will properly ascertain or assess all of the significant risks present in that
      target business. Even if we properly assess those risks, some of them may be
      outside of our control or ability to affect. We also cannot assure you that
      an
      investment in our securities will not ultimately prove to be less favorable
      our
      public stockholders than a direct investment, if an opportunity were available,
      in a target business.




**Our
      stockholders may be held liable for third parties’ claims against us to the
      extent of distributions received by them following our
      dissolution.**




Our
      amended and restated certificate of incorporation provides that we will continue
      in existence only until October 10, 2009. If we consummate our initial business
      combination prior to that date, we will seek to amend this provision to permit
      our continued existence. If we have not completed our initial business
      combination by that date, our corporate existence will cease except for the
      purposes of winding up our affairs and liquidating pursuant to Section 278
      of
      the Delaware General Corporation Law. Under the Delaware General Corporation
      Law, stockholders may be held liable for claims by third parties against a
      corporation to the extent of distributions received by those stockholders in
      a
      dissolution. However, if the corporation complies with certain procedures
      intended to ensure that it makes reasonable provision for all claims against
      it,
      the liability of stockholders with respect to any claim against the corporation
      is limited to the lesser of such stockholder’s pro rata share of the claim or
      the amount distributed to the stockholder. In addition, if the corporation
      undertakes additional specified procedures, including a 60-day notice period
      during which any third-party claims can be brought against the corporation,
      a
      90-day period during which the corporation may reject any claims brought, and
      an
      additional 150-day waiting period before any liquidation distributions are
      made
      to stockholders, any liability of stockholders would be barred with respect
      to
      any claim on which an action, suit or proceeding is not brought by the third
      anniversary of the dissolution (or such longer period directed by the Delaware
      Court of Chancery). While we intend to adopt a plan of distribution making
      reasonable provision for claims against the company in compliance with the
      Delaware General Corporation Law, we do not intend to comply with these
      additional procedures, as we instead intend to distribute the balance in the
      trust account to our public stockholders as promptly as practicable following
      termination of our corporate existence. Accordingly, any liability our
      stockholders may have could extend beyond the third anniversary of our
      dissolution. We cannot assure you that any reserves for claims and liabilities
      that we believe to be reasonably adequate when we adopt our plan of dissolution
      and distribution will suffice. If such reserves are insufficient, stockholders
      who receive liquidation distributions may subsequently be held liable for claims
      by creditors of the company to the extent of such distributions.




24




**We
      depend on the limited funds available outside of the trust account and a portion
      of the interest earned on the trust account balance to fund our search for
      a
      target business or businesses and to complete our initial business
      combination.**




Of
      the
      net proceeds of our initial public offering, $100,000 was available to us
      initially outside the trust account to fund our working capital requirements.
      We
      depend on sufficient interest being earned on the proceeds held in the trust
      account to provide us with the additional working capital we will need to
      identify one or more target businesses and to complete our initial business
      combination. While we are entitled to have released to us for such purposes
      interest income of up to a maximum of $3.5 million, a substantial decline in
      interest rates may result in our having insufficient funds available with which
      to structure, negotiate or close an initial business combination. In such event,
      we could seek to borrow funds or raise additional investments from our officers
      and directors or others to operate, although our officers and directors are
      under no obligation to advance funds to, or to invest in, us. If we have
      insufficient funds available, we may be forced to liquidate.




**Because
      of our limited resources and the significant competition for business
      combination opportunities we may not be able to consummate an attractive initial
      business combination.**




We
      expect
      to encounter intense competition from other entities having a business objective
      similar to ours, including venture capital funds, leveraged buyout funds,
      private equity funds and public and private companies (including blank check
      companies like ours). Many of these entities are well established and have
      extensive experience in identifying and effecting business combinations directly
      or through affiliates. Many of these competitors possess greater technical,
      human and other resources than we do and our financial resources will be
      relatively limited when contrasted with those of many of these competitors.
      While we believe that there are numerous potential target businesses that we
      could acquire, our ability to compete in acquiring certain sizable target
      businesses will be limited by our available financial resources. This inherent
      competitive limitation gives others an advantage in pursuing the acquisition
      of
      certain target businesses. In addition, the fact that only a limited number
      of
      blank check companies have completed a business combination may be an indication
      that there are only a limited number of attractive target businesses available
      to such entities or that many privately held target businesses may not be
      inclined to enter into business combinations with publicly held blank check
      companies like ours. Further:




·
            our
                obligation to seek shareholder approval of a business combination
                may
                materially delay the consummation of a
                transaction;




·
            our
                obligation to convert into cash not less than 30% of the shares of
                common
                stock held by public stockholders (minus one share) in certain instances
                may materially reduce the resources available for a business combination;
                and




·
            our
                outstanding warrants, and the future dilution they potentially represent,
                may not be viewed favorably by certain target
                businesses.




Any
      of
      these obligations may place us at a competitive disadvantage in successfully
      negotiating a business combination. We cannot assure you that we will be able
      to
      successfully compete for an attractive business combination. Additionally,
      because of these factors, we cannot assure you that we will be able to
      effectuate a business combination within the required time periods. If we are
      unable to find a suitable target business within the required time periods,
      we
      will be forced to liquidate.




25




**We
      may be unable to obtain additional financing if necessary to complete our
      initial business combination or to fund the operations and growth of a target
      business, which could compel us to restructure or abandon a particular business
      combination.**




We
      believe that the net proceeds of our initial public offering, the sale of the
      founder’s units and the sale of the additional founder’s warrants and the
      proceeds we will receive from the sale of the co-investment units will be
      sufficient to allow us to consummate our initial business combination. However,
      because we have no oral or written agreements or letters of intent to engage
      in
      a business combination with any entity, we cannot assure you that we will be
      able to complete our initial business combination or that we will have
      sufficient capital with which to complete a combination with a particular target
      business. If the net proceeds of our initial public offering, and the sale
      of
      the additional founder’s warrants and the proceeds we will receive from the sale
      of the co-investment units are not sufficient to facilitate a particular
      business combination because:




·
            of
                the size of the target business;




·
            the
                offering proceeds not in trust and funds available to us from interest
                earned on the trust account balance are insufficient to fund our
                search
                for and negotiations with a target business;
                or




·
            the
                amount of cash that we will have available to be used as consideration
                in
                connection with our initial business combination will be directly
                affected
                by the amount of cash we must use to convert into cash the number
                of
                shares of common stock owned by public stockholders who elect to
                exercise
                their conversion rights,




we
      will
      be required to seek additional financing. We cannot assure you that such
      financing will be available on acceptable terms, if at all. If additional
      financing is unavailable to consummate a particular business combination, we
      would be compelled to restructure or abandon the combination and seek an
      alternative target business.




In
      addition, it is possible that we could use a portion of the funds not in the
      trust account (including amounts we borrowed, if any) to make a deposit, down
      payment or fund a “no-shop” provision with respect to a particular proposed
      business combination, although we do not have any current intention to do so.
      In
      the event that we were ultimately required to forfeit such funds, and we had
      already used up the funds allocated to due diligence and related expenses in
      connection with the aborted transaction, we could be left with insufficient
      funds to continue searching for, or conduct due diligence with respect to,
      other
      potential target businesses.




Even
      if
      we do not need additional financing to consummate an initial business
      combination, we may require additional capital — in the form of debt, equity, or
      a combination of both — to operate or grow any potential business we may
      acquire. There can be no assurance that we will be able to obtain such
      additional capital if it is required. If we fail to secure such financing ,
      this
      failure could have a material adverse effect on the operations or growth of
      the
      target business. Other than the co-investment, none of our officers or directors
      or any other party is required to provide any financing to us in connection
      with, or following, our initial business combination.




26




**If
      we issue capital stock or convertible debt securities to complete our initial
      business combination, your equity interest in us could be reduced or there
      may
      be a change in control of our company.**




Our
      amended and restated certificate of incorporation authorizes the issuance of
      up
      to 200,000,000 shares of common stock, par value $0.001 per share, and 1,000,000
      shares of preferred stock, par value $0.001 per share. There are 84,776,000
      authorized but unissued shares of our common stock available for issuance (after
      appropriate reservation for the issuance of shares upon full exercise of our
      outstanding warrants, including the initial founder’s warrants and the
      additional founder’s warrants), and all of the shares of preferred stock
      available for issuance. Upon consummation of the co-investment, there will
      be
      78,776,000 authorized but unissued shares of our common stock available for
      issuance (after appropriate reservation for the issuance of shares upon full
      exercise of our outstanding warrants, including the initial founder’s warrants,
      the additional founder’s warrants and the co-investment warrants). We have no
      other commitments to date to issue any additional securities. We may issue
      a
      substantial number of additional shares of our common stock or may issue
      preferred stock, or a combination of both, including through convertible debt
      securities, to complete an initial business combination. Our issuance of
      additional shares of common stock or any preferred stock:




·
            may
                significantly reduce your equity interest in
                us;




·
            will
                likely cause a change in control if a substantial number of our shares
                of
                common stock are issued, which may among other things limit our ability
                to
                use any net operating loss carry forwards we have, and may result
                in the
                resignation or removal of our officers and directors;
                and




·
            may
                adversely affect the then-prevailing market price for our common
                stock.




The
      value
      of your investment in us may decline if any of these events occur.




**If
      we issue debt securities to acquire or finance a target business, our liquidity
      may be adversely affected and the combined business may face significant
      interest expense.**




We
      may
      elect to enter into a business combination that requires us to issue debt
      securities as part of the purchase price for a target business. If we issue
      debt
      securities, such issuances may result in an increase in interest expense for
      the
      post-combination business and may adversely affect our liquidity in the event
      of:




·
            a
                default and foreclosure on our assets if our operating cash flow
                after a
                business combination were insufficient to pay principal and interest
                obligations on our debt;




·
            an
                acceleration, which could occur even if we are then current in our
                debt
                service obligations if the debt securities have covenants that require
                us
                to meet certain financial ratios or maintain designated reserves,
                and such
                covenants are breached without waiver or
                renegotiation;




·
            a
                required immediate payment of all principal and accrued interest,
                if any,
                if the debt securities are payable on demand;
                or




·
            our
                inability to obtain any additional financing, if necessary, if the
                debt
                securities contain covenants restricting our ability to incur
                indebtedness.




27




**SP
      Acq LLC, Steel Partners II, L.P. and our Directors collectively own
      approximately 20% of our shares of common stock and may influence certain
      actions requiring a stockholder vote.**




SP
      Acq
      LLC, Steel Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff and
      Walker collectively own approximately 20% of our issued and outstanding shares
      of common stock (and together with its affiliate Steel Partners II, L.P., SP
      Acq
      LLC will own approximately 24.2% of our issued and outstanding shares of common
      stock upon consummation of the co-investment). SP Acq LLC, Steel Partners II,
      L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker have agreed, in
      connection with the stockholder vote required to approve our initial business
      combination, to vote all of their founder’s shares either for or against the
      initial business combination as determined by the totality of the stockholder
      vote and each of them together with our officers and directors has agreed that
      if it, he or she acquires additional shares of common stock, it, he or she
      will
      vote all such acquired shares in favor of our initial business combination.
      Accordingly, shares of common stock owned by SP Acq LLC, Steel Partners II,
      L.P.
      and Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker will not have the same
      voting or conversion rights as our public stockholders with respect to a
      potential initial business combination, and none of SP Acq LLC, Steel Partners
      II, L.P., nor any of our officers or directors will be able to exercise the
      conversion rights with respect to any of our shares that it, he or she may
      acquire. Any purchases of stock will be based solely upon the judgment of such
      person or entity (and may be made to impact the shareholder vote to approve
      a
      business combination) and are expected to be effected through open market
      purchases or privately negotiated transactions. However, with the exception
      of
      the co-investment none of SP Acq LLC, Steel Partners II, L.P., our officers
      or
      our directors has indicated to us any intent to purchase our securities We
      believe that SP Acq LLC, Steel Partners II, L.P. and our officers and directors
      will often be in possession of material non-public information about us that
      will restrict their ability to make purchases of our securities.




**Some
      of our current officers and directors may resign upon consummation of our
      initial business combination.**




Our
      ability to effect our initial business combination successfully will be largely
      dependent upon the efforts of our officers and directors. However, while it
      is
      possible that some of our officers and directors will remain associated with
      us
      in various capacities following our initial business combination, some of them
      may resign and some or all of the management of the target business may remain
      in place.




**We
      may have only limited ability to evaluate the management of the target
      business.**




We
      may
      have only limited ability to evaluate the management of the target business.
      Although we intend to closely scrutinize the management of a prospective target
      business in connection with evaluating the desirability of effecting a business
      combination, we cannot assure you that our assessment of management will prove
      to be correct. These individuals may be unfamiliar with the requirements of
      operating a public company and the securities laws, which could increase the
      time and resources we must expend to assist them in becoming familiar with
      the
      complex disclosure and financial reporting requirements imposed on U.S. public
      companies, including the requirement to maintain an effective system of internal
      controls. This could be expensive and time-consuming and could lead to various
      regulatory issues that may adversely affect the price of our stock.




**We
      may seek to effect our initial business combination with one or more privately
      held companies, which may present certain challenges to us, including the lack
      of available information about these companies.**




In
      pursuing our acquisition strategy, we may seek to effect our initial business
      combination with one or more privately held companies. By definition, very
      little public information exists about these companies, and we could be required
      to make our decision on whether to pursue a potential initial business
      combination on the basis of limited information.




28




**We
      will not be required to obtain an opinion from an investment banking firm as
      to
      the fair market value of a proposed business combination if our board of
      directors independently determines that the target business has sufficient
      fair
      market value and it is possible that any opinion that we obtain would only
      be
      able to be relied upon by our board of directors and not by our
      stockholders.**




The
      initial target business that we acquire must have a fair market value equal
      to
      at least 80% of the sum of the balance in the trust account plus the proceeds
      of
      the co-investment (excluding deferred underwriting discounts and commissions
      of
      approximately $17.3 million) at the time of our initial business combination.
      There is no limitation on our ability to raise funds privately or through loans
      that would allow us to acquire a target business or businesses with a fair
      market value in an amount considerably greater than 80% of the sum of the
      balance in the trust account plus the proceeds of the co-investment (excluding
      deferred underwriting discounts and commissions as described above) at the
      time
      of our initial business combination. Other than the co-investment, we have
      not
      had any preliminary discussions, nor have any plans, agreements or commitments,
      with respect to financing arrangements with any third party. The fair market
      value of such business will be determined by our board of directors based on
      all
      relevant information available at the time, which may differ on a case-by-case
      basis depending on the specific nature of the target and the structure of the
      transaction, including the projected performance of the target based on its
      potential under our business plan (as determined in part upon standards
      generally accepted by the financial community). If our board is not able to
      independently determine that the target business has a sufficient fair market
      value, we will obtain an opinion from an unaffiliated, independent investment
      banking firm which is a member of the Financial Industry Regulatory Authority,
      Inc. with respect to the satisfaction of such criteria. We expect that any
      such
      opinion would be included in our proxy solicitation materials furnished to
      our
      stockholders in connection with the stockholder vote on our initial business
      combination, and that such independent investment banking firm will be a
      consenting expert. Although management has not consulted with any investment
      banker in connection with such an opinion, it is possible that the opinion
      would
      only be able to be relied upon by our board of directors and not by our
      stockholders. We will need to consider the cost in making a determination as
      to
      whether to hire an investment bank that will allow our stockholders to rely
      on
      its opinion, and will do so unless the cost is substantially (approximately
      $50,000) in excess of what it would be otherwise. In the event that we obtain
      an
      opinion that we and the investment banker believe cannot be relied on by our
      stockholders, we will include disclosure in the proxy statement providing
      support for that belief. While our stockholders might not have legal recourse
      against the investment banking firm in such case, the fact that an independent
      expert has evaluated, and passed upon, the fairness of the transaction is a
      factor our stockholders may consider in determining whether or not to vote
      in
      favor of the potential business combination. We will not be required to obtain
      an opinion from an investment banking firm as to the fair market value of the
      business if our board of directors independently determines that the target
      business or businesses has sufficient fair market value to meet the threshold
      criteria. In addition, if our board of directors has informed stockholders
      that
      it believes that a target business meets the 80% threshold criterion, the board
      will provide stockholders with valuations or quantify the value of any target.
      Further, in the event that we issue shares in order to acquire a target and
      such
      issuance causes our public stockholders to collectively become minority
      stockholders, we will not be required to obtain an opinion or independently
      opine on whether the transaction is fair to our stockholders.




We
      may
      require stockholders who wish to convert their shares in connection with a
      proposed business combination to comply with specific requirements for
      conversion that may make it more difficult for them to exercise their conversion
      rights prior to the deadline for exercising their rights.




We
      may
      require public stockholders who wish to convert their shares in connection
      with
      a proposed business combination to either tender their certificates to our
      transfer agent at any time prior to the vote taken at the stockholder meeting
      relating to such initial business combination or to deliver their shares to
      the
      transfer agent electronically using the Depository Trust Company’s DWAC
      (Deposit/Withdrawal At Custodian) System. In order to obtain a physical stock
      certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer
      agent will need to act to facilitate this request. It is our understanding
      that
      stockholders should generally allot at least two weeks to obtain physical
      certificates from the transfer agent. However, because we do not have any
      control over this process or over the brokers or DTC, it may take significantly
      longer than two weeks to obtain a physical stock certificate. While we have
      been
      advised that it takes a short time to deliver shares through the DWAC System,
      we
      cannot assure you of this fact. Accordingly, if it takes longer than we
      anticipate for stockholders to deliver their shares, stockholders who wish
      to
      convert may be unable to meet the deadline for exercising their conversion
      rights and thus may be unable to convert their shares. In addition, there is
      a
      nominal cost associated with the above-referenced tendering process and the
      act
      of certificating the shares or delivering them through the DWAC system. The
      transfer agent will typically charge the tendering broker $35 and it would
      be up
      to the broker whether or not to pass this cost on to the converting
      holder.




29




**We
      may compete with investment vehicles of Steel Partners for access to Steel
      Partners.**




Certain
      of the entities comprising Steel Partners sponsor and currently manage various
      investment vehicles, and may in the future sponsor or manage additional
      investment vehicles which, in each case, could result in us competing for access
      to the benefits that we expect our relationship with Steel Partners to provide
      to us.




**We
      expect to rely upon our access to Steel Partners investment professionals in
      completing an initial business combination.**




We
      expect
      that we will depend, to a significant extent, on our access to the investment
      professionals of Steel Partners and the information and deal flow generated
      by
      Steel Partners investment professionals in the course of their investment and
      portfolio management activities to identify and complete our initial business
      combination. Consequently, the departure of a significant number of the
      investment professionals of Steel Partners, could have a material adverse effect
      on our ability to consummate an initial business combination.




**Members
      of our management team and our directors are and may in the future become
      affiliated with entities engaged in business activities similar to those
      intended to be conducted by us, and may have conflicts of interest in allocating
      their time and business opportunities.**




Members
      of our management and our directors may in the future become affiliated with
      other entities including other blank check companies engaged in business
      activities similar to those intended to be conducted by us. As a result, members
      of our management team may become aware of business opportunities that may
      be
      appropriate for presentation to us as well as the other entities with which
      they
      are or may be affiliated. Moreover, members of our management team are not
      obligated to expend a specific number of hours per week or month on our
      affairs.




Howard
      M.
      Lorber, a director of our company, is also the Chairman of the Board of Open
      Acquisition Corp., which is a blank check company that intends to engage in
      activities similar to those conducted by us. While the registration statement
      filed by Open Acquisition has not been declared effective by the SEC and Open
      Acquisition’s registration statement states that it intends to have
      approximately $118.75 million in its trust account to fund acquisitions (as
      opposed to over $400 million in our trust account), if and when the registration
      statement of Open Acquisition is declared effective by the SEC Mr. Lorber may
      owe fiduciary duties to present Open Acquisition with business opportunities
      before presenting such opportunities to us.




30




**Our
      business opportunity right of first review agreement with Mr. Lichtenstein
      and
      Steel Partners II GP LLC (formerly Steel Partners, L.L.C.), does not apply
      to
      companies targeted for acquisition by any business in which Steel Partners
      II,
      L.P. directly or indirectly has an investment.**




We
      have
      entered into a business opportunity right of first review agreement with Mr.
      Lichtenstein and Steel Partners II GP LLC (formerly Steel Partners, L.L.C.)
      that
      provides that from the date of our initial public offering until the earlier
      of
      the consummation of our initial business combination or our liquidation in
      the
      event we do not consummate an initial business combination, we will have a
      right
      of first review with respect to business combination opportunities of Steel
      Partners relating to companies that are not publicly traded on a stock exchange
      or over-the-counter market with an enterprise value of between $300 million
      and
      $1.5 billion. However, this right of first review does not apply to companies
      targeted for acquisition by any businesses in which Steel Partners II, L.P.
      directly or indirectly has an investment (including Steel Partners Japan
      Strategic Fund (Offshore), L.P. or businesses headquartered in or organized
      under the laws of China. Currently, members of our management team are officers
      or directors of the following entities in which Steel Partners II, L.P.,
      directly or indirectly, has an investment: Adaptec, Inc., Angelica Corporation,
      BNS Holding, Inc., Collins Industries, Inc., CoSine Communications, Inc., Del
      Global Technologies Corp., Gateway Industries, Inc., GenCorp, Inc., Nathan’s
      Famous Inc., NOVT Corporation, SL Industries, Inc., Vector Group Ltd., WebBank,
      WebFinancial Corporation and WHX Corporation. In addition, such members of
      our
      management team could in the future become officers or directors of other
      entities in which Steel Partners II, L.P., directly or indirectly, has an
      investment. Due to those existing and future affiliations, members of our
      management team and our directors may have fiduciary obligations to present
      potential business opportunities to those entities prior to presenting them
      to
      us which could cause additional conflicts of interest. Accordingly, members
      of
      our management team may have conflicts of interest in determining to which
      entity a particular business opportunity should be presented.




**We
      may use resources in researching acquisitions that are not consummated, which
      could materially and adversely affect subsequent attempts to effect our initial
      business combination.**




We
      expect
      that the investigation of each specific target business and the negotiation,
      drafting, and execution of relevant agreements, disclosure documents, and other
      instruments will require substantial management time and attention and
      substantial costs for accountants, attorneys, and others. If a decision is
      made
      not to complete a specific business combination, the costs incurred up to that
      point for the proposed transaction likely would not be recoverable. Furthermore,
      even if an agreement is reached relating to a specific target business, we
      may
      fail to consummate the transaction for any number of reasons, including reasons
      beyond our control, such as that 30% or more of our public stockholders vote
      against the transaction and opt to convert their stock into a pro rata share
      of
      the trust account even if a majority of our stockholders approve the
      transaction. Any such event will result in a loss to us of the related costs
      incurred, which could materially and adversely affect subsequent attempts to
      consummate an initial business combination.




**Because
      the founder’s shares will not participate in liquidation distributions by us, SP
      Acq LLC, directors and our management team may have a conflict of interest
      in
      deciding if a particular target business is a good candidate for an initial
      business combination.**




SP
      Acq
      LLC, Steel Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff and
      Walker have waived their right to receive distributions with respect to the
      founder’s shares if we liquidate because we fail to complete a business
      combination. Those shares of common stock and all of the warrants owned by
      SP
      Acq LLC, Steel Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff
      and Walker will be worthless if we do not consummate our initial business
      combination. Since Mr. Lichtenstein may be deemed the beneficial owner of shares
      held by SP Acq LLC and Steel Partners II, L.P., he may have a conflict of
      interest in determining whether a particular target business is appropriate
      for
      us and our stockholders. This ownership interest may influence his motivation
      in
      identifying and selecting a target business and timely completing an initial
      business combination.




31




The
      exercise of discretion by our officers and directors in identifying and
      selecting one or more suitable target businesses may result in a conflict of
      interest when determining whether the terms, conditions and timing of a
      particular business combination are appropriate and in our stockholders’ best
      interest.




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




Unless
      we
      consummate our initial business combination, our officers and directors and
      Steel Partners and its employees will not receive reimbursement for any
      out-of-pocket expenses incurred by them to the extent that such expenses exceed
      the amount of available proceeds not deposited in the trust account and the
      amount of interest income from the trust account up to a maximum of $3.5 million
      that may be released to us as working capital. These amounts are based on
      management’s estimates of the funds needed to finance our operations until the
      consummation of our initial business combination and to pay expenses in
      identifying and consummating our initial business combination. Those estimates
      may prove to be inaccurate, especially if a portion of the available proceeds
      is
      used to make a down payment in connection with our initial business combination
      or pay exclusivity or similar fees or if we expend a significant portion in
      pursuit of an initial business combination that is not consummated. Our officers
      and directors may, as part of any business combination, negotiate the repayment
      of some or all of any such expenses. If the target business’s owners do not
      agree to such repayment, this could cause our management to view such potential
      business combination unfavorably, thereby resulting in a conflict of interest.
      The financial interest of our officers and directors and Steel Partners could
      influence our officers’ and directors’ motivation in selecting a target business
      and therefore there may be a conflict of interest when determining whether
      a
      particular business combination is in the stockholders’ best interest. In
      addition, the proceeds we receive from the co-investment (as well as the
      proceeds of our initial public offering not being placed in the trust account
      or
      the income interest earned on the trust account balance) may be used to repay
      the expenses for which our directors may negotiate repayment as part of our
      initial business combination.




**We
      will probably complete only one business combination with the proceeds of our
      initial public offering and the sale of the additional founder’s warrants and
      the co-investment units, meaning our operations will depend on a single
      business.**




The
      net
      proceeds from our initial public offering and the sale of the additional
      founder’s warrants provided us with approximately $408,497,676 that we may use
      to complete our initial business combination ($438,497,676 after the
      consummation of the co-investment). Our initial business combination must be
      with a target business or businesses with a fair market value of at least 80%
      of
      the sum of the balance in the trust account plus the proceeds of the
      co-investment at the time of such business combination (excluding deferred
      underwriting discounts and commissions of approximately $17.3 million). We
      may
      not be able to acquire more than one target business because of various factors,
      including the existence of complex accounting issues and the requirement that
      we
      prepare and file pro forma financial statements with the SEC that present
      operating results and the financial condition of several target businesses
      as if
      they had been operated on a combined basis. Additionally, we may encounter
      numerous logistical issues if we pursue multiple target businesses, including
      the difficulty of coordinating the timing of negotiations, proxy statement
      disclosure and closings. We may also be exposed to the risk that our inability
      to satisfy conditions to closing with one or more target businesses would reduce
      the fair market value of the remaining target businesses in the combination
      below the required threshold of 80% of the sum of the amount held in our trust
      account plus the proceeds of the co-investment (excluding deferred underwriting
      discounts and commissions of approximately $17.3 million). Due to these added
      risks, we are more likely to choose a single target business with which to
      pursue a business combination than multiple target businesses. Unless we combine
      with a target business in a transaction in which the purchase price consists
      substantially of common stock and/or preferred stock, it is likely we will
      complete only our initial business combination with the proceeds of our initial
      public offering and the sale of the additional founder’s warrants and the
      co-investment units. Accordingly, the prospects for our success may depend
      solely on the performance of a single business. If this occurs, our operations
      will be highly concentrated and we will be exposed to higher risk than other
      entities that have the resources to complete several business combinations,
      or
      that operate in diversified industries or industry segments.




32




**If
      we do not conduct an adequate due diligence investigation of a target business
      with which we combine, we may be required subsequently to take write downs
      or
      write-offs, restructuring, and impairment or other charges that could have
      a
      significant negative effect on our financial condition, results of operations
      and our stock price, which could cause you to lose some or all of your
      investment.**




In
      order
      to meet our disclosure and financial reporting obligations under the federal
      securities laws, and in order to develop and seek to execute strategic plans
      for
      how we can increase the profitability of a target business, realize operating
      synergies or capitalize on market opportunities, we must conduct a due diligence
      investigation of one or more target businesses. Intensive due diligence is
      time
      consuming and expensive due to the operations, accounting, finance and legal
      professionals who must be involved in the due diligence process. We may have
      limited time to conduct such due diligence due to the requirement that we
      complete our initial business combination by October 10, 2009. Even if we
      conduct extensive due diligence on a target business with which we combine,
      we
      cannot assure you that this diligence will uncover all material issues relating
      to a particular target business, or that factors outside of the target business
      and outside of our control will not later arise. If our diligence fails to
      identify issues specific to a target business or the environment in which the
      target business operates, we may be forced to write-down or write-off assets,
      restructure our operations, or incur impairment or other charges that could
      result in our reporting losses. Even though these charges may be non-cash items
      and not have an immediate impact on our liquidity, the fact that we report
      charges of this nature could contribute to negative market perceptions about
      us
      or our common stock. In addition, charges of this nature may cause us to violate
      net worth or other covenants to which we may be subject as a result of assuming
      pre-existing debt held by a target business or by virtue of our obtaining
      post-combination debt financing.




**Our
      outstanding warrants may adversely affect the market price of our common stock
      and make it more difficult to effect our initial business
      combination.**




The
      units
      sold in our initial public offering included warrants to purchase 43,289,600
      shares of common stock. SP Acq LLC, Steel Partners II, L.P. and Messrs. Bergamo,
      LaBow, Lorber, Toboroff and Walker collectively hold warrants to purchase an
      aggregate of 17,822,400 shares of our common stock (comprising the shares of
      stock purchasable upon exercise of the 10,822,400 initial founder’s warrants and
      the shares of common stock purchasable upon exercise of the 7,000,000 additional
      founder’s warrants), and upon consummation of the co-investment Steel Partners
      II, L.P. will hold an additional 3,000,000 co-investment warrants to purchase
      shares of our common stock. If we issue common stock to complete our initial
      business combination, the potential issuance of additional shares of common
      stock on exercise of these warrants could make us a less attractive acquisition
      vehicle to some target businesses. This is because exercise of any warrants
      will
      increase the number of issued and outstanding shares of our common stock and
      reduce the value of the shares issued to complete our initial business
      combination. Our warrants may make it more difficult to complete our initial
      business combination or increase the purchase price sought by one or more target
      businesses. Additionally, the sale or possibility of the sale of the shares
      underlying the warrants could have an adverse effect on the market price for
      our
      common stock or our units, or on our ability to obtain other financing. If
      and
      to the extent these warrants are exercised, you may experience dilution to
      your
      holdings.




33




**The
      grant of registration rights to SP Acq LLC, Steel Partners II, L.P. and certain
      of our directors may make it more difficult to complete our initial business
      combination, and the future exercise of such rights may adversely affect the
      market price of our common stock.**




Pursuant
      to an agreement we have entered into, (i) SP Acq LLC, Steel Partners II, L.P.
      and Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker can demand that we
      register the resale of the founder’s units, the founder’s shares and the initial
      founder’s warrants, and the shares of common stock issuable upon exercise of the
      initial founder’s warrants, (ii) SP Acq LLC and Messrs. Bergamo, LaBow, Lorber,
      Toboroff and Walker can demand that we register the additional founder’s
      warrants and the shares of common stock issuable upon exercise of the additional
      founder’s warrants and (iii) Steel Partners II, L.P. can demand that we register
      the resale of the co-investment units, the co-investment shares and the
      co-investment warrants and the shares of common stock issuable upon exercise
      of
      the co-investment warrants. The registration rights will be exercisable with
      respect to the founder’s units, the founder’s shares, the initial founder’s
      warrants and shares of common stock issuable upon exercise of such warrants,
      the
      co-investment units, the co-investment shares and co-investment warrants and
      shares of common stock issuable upon exercise of such warrants at any time
      commencing three months prior to the date on which the relevant securities
      are
      no longer subject to transfer restrictions, and with respect to the additional
      founder’s warrants and the underlying shares of common stock at any time after
      the execution of a definitive agreement for an initial business combination.
      We
      will bear the cost of registering these securities. If SP Acq LLC, Steel
      Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker
      exercise their registration rights in full, there will be an additional
      13,822,400 shares of common stock (including 3,000,000 co-investment shares)
      and
      up to 20,822,400 shares (including 3,000,000 shares issuable upon the exercise
      of co-investment warrants) of common stock issuable on exercise of the warrants
      eligible for trading in the public market. The registration and availability
      of
      such a significant number of securities for trading in the public market may
      have an adverse effect on the market price of our common stock. In addition,
      the
      existence of the registration rights may make our initial business combination
      more costly or difficult to conclude. This is because the stockholders of the
      target business may increase the equity stake they seek in the combined entity
      or ask for more cash consideration to offset the negative impact on the market
      price of our common stock that is expected when the securities owned by SP
      Acq
      LLC, Steel Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff and
      Walker are registered.




**If
      adjustments are made to the warrants, you may be deemed to receive a taxable
      distribution without the receipt of any cash.**




U.S.
      holders of units or warrants may, in certain circumstances, be deemed to have
      received distributions includible in income if adjustments are made to the
      warrants, even though holders would have not received any cash or property
      as a
      result of such adjustments. In certain circumstances, the failure to provide
      for
      such an adjustment may also result in a constructive distribution to you. In
      addition, non-U.S. holders of units or warrants may, in certain circumstances,
      be deemed to have received a distribution subject to U.S. federal withholding
      tax requirements.




34




**If
      we are deemed to be an investment company, we must meet burdensome compliance
      requirements and restrictions on our activities, which may increase the
      difficulty of completing a business combination.**




If
      we are
      deemed to be an investment company under the Investment Company Act of 1940
      (the
“Investment Company Act”), the nature of our investments and the issuance of our
      securities may be subject to various restrictions. These restrictions may make
      it difficult for us to complete our initial business combination. In addition,
      we may be subject to burdensome compliance requirements and may have
      to:




·
            register
                as an investment company;




·
            adopt
                a specific form of corporate structure;
                and




·
            report,
                maintain records and adhere to voting, proxy, disclosure and other
                requirements.




We
      do not
      believe that our principal activities will subject us to the Investment Company
      Act. In this regard, our agreement with the trustee states that proceeds in
      the
      trust account will be invested only in “government securities” and one or more
      money market funds, selected by us, which invest principally in either
      short-term securities issued or guaranteed by the United States having a rating
      in the highest investment category granted thereby by a recognized credit rating
      agency at the time of acquisition or tax exempt municipal bonds issued by
      governmental entities located within the United States. This investment
      restriction is intended to facilitate our not being considered an investment
      company under the Investment Company Act. If we are deemed to be subject to
      the
      Investment Company Act, compliance with these additional regulatory burdens
      would increase our operating expenses and could make our initial business
      combination more difficult to complete.




**The
      loss of Mr. Lichtenstein could adversely affect our ability to complete our
      initial business combination.**




Our
      ability to consummate a business combination is dependent to a large degree
      upon
      Mr. Lichtenstein. We believe that our success depends on his continued service
      to us, at least until we have consummated a business combination. Due to his
      ownership of SP Acq LLC and his relationship with Steel Partners II, L.P.,
      Mr.
      Lichtenstein has incentives to remain with us. Nevertheless, we do not have
      an
      employment agreement with him, or key-man insurance on his life. He may choose
      to devote his time to other affairs, or may become unavailable to us for reasons
      beyond his control, such as death or disability. The unexpected loss of his
      services for any reason could have a detrimental effect on us.




**The
      American Stock Exchange may delist our securities, which could limit investors’
ability to transact in our securities and subject us to additional trading
      restrictions.**




While
      our
      securities are currently listed on the American Stock Exchange, we cannot assure
      you that our securities will continue to be listed. Additionally, it is likely
      that the American Stock Exchange would require us to file a new initial listing
      application and meet its initial listing requirements, as opposed to its more
      lenient continued listing requirements, at the time of our initial business
      combination. We cannot assure you that we will be able to meet those initial
      listing requirements at that time.




If
      the
      American Stock Exchange does not list our securities, or subsequently delists
      our securities from trading, we could face significant consequences,
      including:




·
            a
                limited availability for market quotations for our
                securities;




35




·
            reduced
                liquidity with respect to our
                securities;




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




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




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




In
      addition, we would no longer be subject to American Stock Exchange rules,
      including rules requiring us to have a certain number of independent directors
      and to meet other corporate governance standards.




**If
      we acquire a target business with operations located outside the United States,
      we may encounter risks specific to other countries in which such target business
      operates.**




If
      we
      acquire a company that has operations outside the United States, we will be
      exposed to risks that could negatively impact our future results of operations
      following our initial business combination. The additional risks we may be
      exposed to in these cases include, but are not limited to:




·
            tariffs
                and trade barriers;




·
            regulations
                related to customs and import/export
                matters;




·
            tax
                issues, such as tax law changes and variations in tax laws as compared
                to
                the U.S.;




·
            cultural
                and language differences;




·
            foreign
                exchange controls;




·
            crime,
                strikes, riots, civil disturbances, terrorist attacks and
                wars;




·
            deterioration
                of political relations with the United States;
                and




·
            new
                or more extensive environmental
                regulation.




**Foreign
      currency fluctuations could adversely affect our business and financial
      results.**




In
      addition, a target business with which we combine may do business and generate
      sales within other countries. Foreign currency fluctuations may affect the
      costs
      that we incur in such international operations. It is also possible that some
      or
      all of our operating expenses may be incurred in non-U.S. dollar currencies.
      The
      appreciation of non-U.S. dollar currencies in those countries where we have
      operations against the U.S. dollar would increase our costs and could harm
      our
      results of operations and financial condition.




36




**Because
      we must furnish our stockholders with target business financial statements
      prepared in accordance with and reconciled to U.S. generally accepted accounting
      principles, we will not be able to complete an initial business combination
      with
      some prospective target businesses unless their financial statements are first
      reconciled to U.S. generally accepted accounting
      principles.**




The
      federal securities laws require that a business combination meeting certain
      financial significance tests include historical and/or pro forma financial
      statement disclosure in periodic reports and proxy materials submitted to
      stockholders. Our initial business combination must be with a target business
      that has a fair market value of at least 80% of the sum of the balance in the
      trust account plus the proceeds of the co-investment (excluding deferred
      underwriting discounts and commissions of approximately $17.3 million) at the
      time of our initial business combination. We will be required to provide
      historical and/or pro forma financial information to our stockholders when
      seeking approval of a business combination with one or more target businesses.
      These financial statements must be prepared in accordance with, or be reconciled
      to, U.S. generally accepted accounting principles, or GAAP, and the historical
      financial statements must be audited in accordance with the standards of the
      Public Company Accounting Oversight Board (United States), or PCAOB. If a
      proposed target business, including one located outside of the U.S., does not
      have financial statements that have been prepared in accordance with, or that
      can be reconciled to, U.S. GAAP and audited in accordance with the standards
      of
      the PCAOB, we will not be able to acquire that proposed target business. These
      financial statement requirements may limit the pool of potential target
      businesses with which we may combine.




**ITEM
      1B.**  **Unresolved
      Staff Comments**




Not
      applicable




**ITEM
      2.**  **Properties**




We
      currently maintain our executive offices at 590 Madison Avenue, 32nd Floor,
      New
      York, New York 10022. The cost for this space is included in the $10,000
      per-month fee described above that Steel Partners, Ltd. charge us for office
      space, administrative services and secretarial support from the consummation
      of
      our initial public offering until the earlier offer consummation of a business
      combination or our liquidation. Prior to the consummation of our initial public
      offering, Steel Partners, Ltd. provided us with office space, administrative
      services and secretarial support at no charge. We believe, based on rents and
      fees for similar services in the New York City metropolitan area, that the
      fee
      that will be charged by Steel Partners, Ltd. is at least as favorable as we
      could have obtained from an unaffiliated person. We consider our current office
      space adequate for our current operations.




**ITEM
      3.**  **Legal
      Proceedings**




None




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




Not
      applicable.






37


**PART
        II**


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




Our
      equity securities trade on the American Stock Exchange. Each of our units
      consists of one share of common stock and one warrant and trades on the American
      Stock Exchange under the symbol “DSP.U.” On November 2, 2007, the warrants and
      common stock underlying our units began to trade separately on the American
      Stock Exchange under the symbols “DSP.WS” and “DSP,” respectively. Each warrant
      entitles the holder to purchase one share of our common stock at a price of
      $7.50 commencing on the later of our consummation of a business combination
      or
      October 16, 2008, provided in each case that there is an effective registration
      statement covering the shares of common stock underlying the warrants in effect.
      The warrants expire on October 16, 2012, unless earlier redeemed.




The
      following table sets forth, for the fourth quarter of the year ended December
      31, 2007, the high and low sales price of our units, common stock and warrants
      as reported on the American Stock Exchange. Prior to October 10, 2007, there
      was
      no established public trading market for our securities.




**Quarter
              Ended**
            
            **Units**
            
            **Common
                Stock**
            
            **Warrants****High**
            
            **Low**
            
            **High**
            
            **Low**
            
            **High**
            
            **Low**Fourth
                Quarter of year ended December 31, 2007 (from October 10,
                2007)
            
            $
            10.11
            
            $
            9.76
            
            $
            9.25
            
            $
            9.00
            
            $
            1.00
            
            $
            0.87





**Holders
      of Common Equity**




On
      March
      20, 2008, there were eight holders of record of our common stock, one holder
      of
      record of our units and eight holders of record of our warrants. Such numbers
      do
      not include beneficial owners holding shares, warrants or units through nominee
      names.




**Dividends**




Except
      for the unit dividend of 0.15 units for each unit outstanding that was effected
      on August 8, 2007 and the unit dividend of one-third of a unit for each
      unit that was outstanding that was effected on September 4, 2007, we have
      not paid any dividends on our common stock to date and we do not intend to
      pay
      cash dividends prior to the consummation of a business combination. After we
      complete our initial business combination, the payment of dividends will depend
      on our revenues and earnings, if any, capital requirements and general financial
      condition. The payment of dividends after our initial business combination
      will
      be within the discretion of our then-board of directors. Our board of directors
      currently intends to retain any earnings for use in our business operations
      and,
      accordingly, we do not anticipate the board declaring any dividends in the
      foreseeable future.




**Recent
      Sales of Unregistered Securities**




On
      March
      22, 2007, SP Acq LLC, which is controlled by Mr. Lichtenstein, purchased
      11,500,000 of our units.




On
      June
      25, 2007, a total of 500,000 founder’s units were sold by SP Acq LLC to Anthony
      Bergamo, Ronald LaBow, Howard M. Lorber, Leonard Toboroff and S. Nicholas
      Walker, in private transactions and subject to the succeeding sentence, SP
      Acq
      LLC agreed to sell 662,791 founder’s units to Steel Partners II, L.P., an
      affiliate of SP Acq LLC, pursuant to the purchase agreement dated March 30,
      2007.




38




On
      August
      8, 2007, we declared a unit dividend of 0.15 units for each outstanding share
      of
      common stock. On September 4, 2007, we declared a unit dividend of one-third
      of
      a unit for each outstanding share of common stock. Pursuant to an adjustment
      agreement we entered with SP Acq LLC, Steel Partners II, L.P. and Messrs.
      Bergamo, LaBow, Lorber, Toboroff and Walker each of whom agreed to assign their
      right to receive the additional founder’s units they received pursuant to the
      dividend to SP Acq LLC.




On
      March
      22, 2007, SP Acq LLC entered into an agreement with us to purchase 5,250,000
      warrants at a price of $1.00 per warrant, upon the consummation of the offering.
      Subsequent to this agreement, Messrs. Bergamo, LaBow, Lorber, Toboroff and
      Walker agreed that they would purchase a total of 500,000 of the additional
      founder’s warrants from SP Acq LLC. These warrants were purchased on October 16,
      2007, the date of the Company’s initial public offering.




On
      October 4, 2007, SP Acq LLC agreed to purchase an additional 1,750,000
      additional founder’s warrants at a price of $1.00 per warrant immediately prior
      to the consummation of our initial public offering resulting in an aggregate
      purchase of 7,000,000 additional founder’s warrants. The additional founder’s
      warrants are non-redeemable so long as they are held by SP Acq LLC or its
      permitted transferees. These warrants were purchased on October 16, 2007, the
      date of the Company’s initial public offering.




On
      October 31, 2007 SP Acq LLC transferred 6,197 units to Steel Partners II, L.P.
      in connection with the partial exercise of the underwriters’ over-allotment
      option pursuant to the purchase agreement dated March 30, 2007. In addition,
      pursuant to an adjustment agreement, SP Acq LLC forfeited a total of 667,600
      units.




**Securities
      Authorized for Issuance Under Equity Compensation Plans**




We
      have
      no compensation plans under which equity securities are authorized for
      issuance.




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




On
      October 16, 2007, we closed our initial public offering of 40,000,000 units
      with each unit consisting of one share of common stock and one warrant, each
      to
      purchase one share of our common stock at a price of $7.50 per share. On
      October 31, 2007 the underwriters purchased an additional 3,289,600 units
      pursuant to an over-allotment option. All of the units registered were sold
      at
      an offering price of $10.00 per unit and generated gross proceeds of
      $432,896,000. The securities sold in our initial public offering were registered
      under the Securities Act of 1933 on a registration statement on Form S-1 (No.
      333-142696). The SEC declared the registration statement effective on
      October 10, 2007. UBS Investment Bank acted as sole bookrunning manager and
      representative of Ladenburg Thalmann & Co. Inc. and Jefferies &
Company.




We
      received net proceeds of approximately $426,909,120 from our initial public
      offering (including proceeds from the exercise by the underwriters of their
      over-allotment option). Of those net proceeds, approximately $17,315,840 is
      attributable to the deferred underwriters’ discount. We retained $1,000,000 of
      the proceeds to pay offering expenses and for working capital purposes and
      deposited $425,909,120 into a trust account. The funds in the trust account
      will
      be part of the funds distributed to our public stockholders in the event we
      are
      unable to complete a business combination. Unless and until a business
      combination is consummated, and except for a portion of the interest earned
      on
      the funds in the trust account that is available to the company, the proceeds
      held in the trust account will not be available to us. The net proceeds
      deposited into the trust account remain on deposit in the trust account and
      earned $2,944,393 in interest through December 31, 2007. Pursuant to the
      terms of the investment management trust agreement, $1,485,505 of trust interest
      income has been released to the Company through December 31, 2007. The balance
      in the trust account at December 31, 2007 was $426,898,303.




39




**ITEM
      6.**  **Selected
      Financial Data**




The
      following table summarizes the relevant financial data for our business and
      should be read with our financial statements, which are included in this
      report.




**Statement
                of Income Data:**
            
            **For
                the period from**
              **February
                14, 2007**
              **(date
                of inception) to**
              **December
                31, 2007**Formation
                and operating costs
            
            $
            264,373Loss
                from operations
            
            
            (264,373
            )Interest
                income
            
            
            2,950,473Interest
                expense
            
            
            9,435Income
                before tax
            
            
            2,676,665Provision
                for taxes on income
            
            
            (1,210,372
            )Net
                income
            
            $
            1,466,293Net
                income per common share, basic and diluted
            
            $
            0.09Shares
                used in computing net income per share, basic and diluted
            
            
            17,245,726







**Balance
                Sheet Data:**
            
            **As
                of**
              **December
                31, 2007**Working
                capital
            
            $
            409,863,563Total
                assets
            
            
            428,945,449Total
                liabilities
            
            
            18,956,480Value
                of common stock which may be redeemed for cash at conversion
                value
            
            
            127,772,726Stockholders’
                equity
            
            
            282,216,243





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




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




·
            may
                significantly reduce the equity interest of our
                stockholders;




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




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




40




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




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




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




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




·
            our
                inability to obtain additional financing, if necessary, if the debt
                security contained covenants restricting our ability to do
                so.




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




We
      have
      neither engaged in any operations nor generated any revenues to date. We will
      not generate any operating revenues until after completion of our initial
      business combination, at the earliest. We will continue to generate
      non-operating income in the form of interest income on cash and cash
      equivalents. Net income for the period from February 14, 2007 (inception)
      through December 31, 2007 was $1,466,293, which consisted of $2,950,473 in
      interest income partially offset by $264,373 in formation and operating
      expenses, $9,435 in interest expense and $1,210,372 in taxes on income. The
      trustee of the trust account will pay any taxes resulting from interest accrued
      on the funds held in the trust account out of the funds held in the trust
      account. In addition, we will incur expenses as a result of being a public
      company (for legal, financial reporting, accounting and auditing compliance),
      as
      well as for due diligence expenses.




**Off-Balance
      Sheet Arrangements**




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




**Contractual
      Obligations**




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




**Liquidity
      and Capital Resources**




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




41




We
      do not
      believe we will need additional financing in order to meet the expenditures
      required for operating our business prior to our initial business combination.
      However, we will rely on interest earned of up to $3.5 million on the trust
      account to fund such expenditures and, to the extent that the interest earned
      is
      below our expectation, we may have insufficient funds available to operate
      our
      business prior to our initial business combination. Moreover, in addition to
      the
      co-investment we may need to obtain additional financing to consummate our
      initial business combination. We may also need additional financing because
      we
      become obligated to convert into cash a significant number of shares of public
      stockholders voting against our initial business combination, in which case
      we
      may issue additional securities or incur debt in connection with such business
      combination. Following our initial business combination, if cash on hand is
      insufficient, we may need to obtain additional financing in order to meet our
      obligations.




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




The
      net
      proceeds of our initial public offering, including amounts in the trust account,
      will be invested in U.S. government treasury bills with a maturity of 180 days
      or less or in money market funds meeting certain conditions under Rule 2a-7
      under the Investment Company Act. Due to the short-term nature of these
      investments, we believe there will be no associated material exposure to
      interest rate risk.




42




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




REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To
      the
      Board of Directors and Stockholders of SP
      Acquisition Holdings, Inc.




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




We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, assessing the accounting principles used and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.




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






/s/
      GRANT
      THORNTON LLP




New
      York,
      New York


March
      2 5,
      2008




43


**SP
      ACQUISITION HOLDINGS, INC.**


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




**BALANCE
      SHEET**




**December
                31,**
              **2007****Current
                Assets**:Cash
            
            $
            1,317,688Cash
                and cash equivalents, held in Trust
            
            
            426,898,303Accrued
                interest receivable on Trust assets
            
            
            469,705Other
                receivable
            
            
            26,323Prepaid
                expenses
            
            
            108,024Total
                current assets
            
            
            428,820,043Deferred
                tax assets - non current
            
            
            125,406$
            428,945,449**Current
                Liabilities**:Accounts
                payable
            
            $
            449,194Note
                payable to affiliate
            
            
            250,000Advances
                payable to affiliate
            
            
            26,818Interest
                payable to affiliate
            
            
            9,435Accrued
                expenses
            
            
            96,915Income
                taxes payable
            
            
            808,278Other
                payables- deferred underwriting fee
            
            
            17,315,840**Total
                current liabilities**
            
            
            18,956,480**Common
                stock, subject to possible conversion, 12,986,879 shares at conversion
                value**
            
            
            127,772,726**Commitments
                and contingencies**
            
            
            —**Stockholders’
                equity**:Preferred
                stock, $.001 par value; 1,000,000 authorized, none issued
            
            
            —Common
                stock, $.001 par value, 200,000,000 shares authorized; 41,125,121
                shares
                issued and outstanding (excluding 12,986,879 shares subject to possible
                conversion) at December 31, 2007
            
            
            41,125Additional
                paid-in capital
            
            
            280,708,825Retained
                earnings accumulated during the development stage
            
            
            1,466,293Total
                stockholders’ equity
            
            
            282,216,243$
            428,945,449




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




44


**SP
      ACQUISITION HOLDINGS, INC.**


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




**STATEMENT
      OF INCOME**




**For
                the period from**
              **February
                14, 2007**
              **(date
                of inception) to**
              **December
                31, 2007**Formation
                and operating costs
            
            $
            264,373Loss
                from operations
            
            
            (264,373
            )Interest
                income - Trust
            
            
            2,944,393Interest
                income - other
            
            
            6,080Interest
                expense
            
            
            (9,435
            )Income
                before tax
            
            
            2,676,665Provision
                for income taxes
            
            
            (1,210,372
            )Net
                income
            
            $
            1,466,293Net
                income per common share, basic and diluted
            
            $
            0.09Weighted
                average number of common shares outstanding, basic and
                diluted
            
            
            17,245,726





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




45


**SP
      ACQUISITION HOLDINGS, INC.**


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




**STATEMENT
      OF CASH FLOWS**




**February
                14, 2007 (date of inception) to December 31, 2007**Cash
                flows from operating activities:Net
                income
            
            $
            1,466,293Changes
                in asset and liability accounts:Interest
                receivable
            
            
            (469,705
            )Other
                receivable
            
            
            (26,323
            )Prepaid
                expenses
            
            
            (108,024
            )Deferred
                tax asset - non current
            
            
            (125,406
            )Accounts
                payable
            
            
            65,203Advances
                payable to affiliate
            
            
            26,818Interest
                payable to affiliate
            
            
            9,435Accrued
                expenses
            
            
            96,915Income
                taxes payable
            
            
            808,278Net
                cash provided by operating activities
            
            
            1,743,484Cash
                flows from investing activities:Cash
                and cash equivalents held in Trust
            
            
            (426,898,303
            )Net
                cash used in investing activities
            
            
            (426,898,303
            )Cash
                flows from financing activities:Proceeds
                from issuance of founder’s units
            
            
            25,000Proceeds
                from issuance of additional founder’s warrants
            
            
            7,000,000Proceeds
                from note payable to affiliate
            
            
            250,000Proceeds
                from initial public offering
            
            
            432,896,000Payment
                of offering costs
            
            
            (13,698,493
            )Net
                cash provided by financing activities
            
            
            426,472,507Net
                increase in cash
            
            
            1,317,688Cash
                at the beginning of the period
            
            
            —Cash
                at the end of the period
            
            $
            1,317,688Supplemental
                disclosure of non-cash financing activities:Unpaid
                offering costs
            
            $
            383,991Accrual
                of deferred underwriters’ discount
            
            $
            17,315,840Supplemental
                disclosure of cash flow information:Cash
                payments for taxes on income
            
            $
            527,500





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




46


**SP
      ACQUISITION HOLDINGS, INC.**


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




**STATEMENT
      OF STOCKHOLDERS’ EQUITY**




**Common**
              **Stock
                Shares**
            
            **Common
                Stock**
              **Amount**
            
            **Additional
                Paid-in Capital**
            
            **Retained
                Earnings Accumulated During the Development Stage**
            
            **Total
                Stockholders’ Equity**Proceeds
                from founder’s units issued on March 22, 2007
            
            
            11,500,000
            
            $
            11,500
            
            $
            13,500
            
            $
            —
            
            $
            25,000Proceeds
                from issuance of 40,000,000 units, net of underwriters’ commissions and
                offering expenses of $29,030,049 on October 16, 2007
            
            
            40,000,000
            
            
            40,000
            
            
            370,929,951
            
            
            —
            
            
            370,969,951Net
                proceeds subject to possible conversion of 11,999,999
                shares
            
            
            (11,999,999
            )
            
            (12,000
            )
            
            (118,187,990
            )
            
            
            
            
            (118,199,990
            )Proceeds
                from issuance of 7,000,000 warrants on October 16, 2007
            
            
            —
            
            
            —
            
            
            7,000,000
            
            
            —
            
            
            7,000,000Proceeds
                from issuance of 3,289,600 units, net of underwriters’ commissions and
                offering expenses of $2,368,275 on October 31, 2007
            
            
            3,289,600
            
            
            3,290
            
            
            30,524,435
            
            
            
            
            
            30,527,725Net
                proceeds subject to possible conversion of 986,880 shares
            
            
            (986,880
            )
            
            (987
            )
            
            (9,571,749
            )
            
            
            
            
            (9,572,736
            )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
            
            $
            282,216,243





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




47


**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 revenue to date. All activity through December 31,
      2007
      relates to the formation of the Company and its initial public offering
      described below and in Note C. 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 the Continental Stock Transfer & Trust Company as trustee (the “Trust”)
      which is to be invested in United States “government securities” within the
      meaning of Section 2(a)(16) of the Investment Company Act of 1940 having a
      maturity of 180 days or less or in money market funds meeting certain conditions
      under Rule 2a-7 promulgated under the Investment Company Act of 1940. Except
      for
      up to $3,500,000 of Trust interest income to be released to the Company to
      fund
      expenses relating to investigating and selecting a target business and other
      working capital requirements, and any additional amounts needed to pay income
      taxes on the Trust earnings, the proceeds held in the Trust will not be released
      from the Trust until the earlier of the completion of the Company’s Business
      Combination or the liquidation of the Company. As of December 31, 2007, the
      balance in the Trust account was $426,898,303, interest receivable on trust
      assets was $469,705 and the Trust has released $1,485,505 of interest income
      to
      the Company.




48




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 on or before
      October 10, 2009, the proceeds held in the Trust, including the unpaid portion
      of the underwriters’ commission (See Note D) will be distributed to the
      Company’s public stockholders (excluding SP Acq LLC, Steel Partners II, L.P. and
      Anthony Bergamo, Ronald LaBow, Howard M. Lorber, Leonard Toboroff and S.
      Nicholas Walker, each a director of the Company), to the extent of their
      pre-Offering stock holdings.




49




**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 plans and expects to incur additional costs in pursuit of
      its
      acquisition plans. As of December 31, 2007, the Company had cash on hand of
      $1,317,688 as well as $426,898,303 of cash and cash equivalents in the Trust.
      Under terms of the investment management trust agreement, up to $3,500,000
      of
      interest may be released to the Company in such amounts and such intervals
      as we
      request, subject to availability. At December 31, 2007 $1,485,505 of Trust
      interest has been released to the Company. Management has reviewed its cash
      requirements as of December 31, 2007 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.




As
      discussed in Note D, the note with Steel Partners Ltd. has a due date of
      December 31, 2007. Steel Partners Ltd. has confirmed that the promissory note
      is
      not in default at December 31, 2007 and that the payment may be made on or
      before December 31, 2008.




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




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




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




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




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




***4.***  ***Net
      Income 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 shares 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 outstanding Warrants in the
      calculation of diluted earnings per share since the exercise of the Warrants
      is
      contingent upon the occurrence of future events.




50




***5.***  ***Concentration
      of Credit Risk:***




Financial
      instruments that potentially subject the Company to concentrations of credit
      risk consist of cash accounts in a financial institution, which at times,
      exceeds the Federal depository insurance coverage of $100,000. As of December
      31, 2007 the Company had $428,215,991 in cash and cash equivalents which
      exceeded Federally insured limits.




***6.***  ***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.




***7.***  ***Use
      of Estimates:***




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




***8.***  ***Trust
      Account:***




The
      Trust
      (See Note A) is invested in T Bills with a 30 day maturity as of December 31,
      2007.




***9.***  ***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.




***10.***  ***Stock-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.





51





***11.***  ***Recent***  **Accounting
      Pronouncements:**




In
      September 2006, the FASB issued FASB Statement No. 157, "Fair Value
      Measurements," or ("SFAS 157"). The standard provides guidance for using fair
      value to measure assets and liabilities. The standard also responds to
      investors’ requests for expanded information about the extent to which companies
      measure assets and liabilities at fair value, the information used to measure
      fair value, and the effect of fair value measurements on earnings. The standard
      applies whenever other standards require or permit assets or liabilities to
      be
      measured at fair value. The standard does not expand the use of fair value
      in
      any new circumstances. SFAS 157 must be adopted prospectively as of the
      beginning of the year it is initially applied. SFAS 157 is effective for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years. The Company is evaluating the
      impact that this standard may have on its financial position and results of
      operations.




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 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. SFAS 159 is effective for
      us
      beginning with fiscal year 2008. The Company has evaluated SFAS 159 and expects
      that adoption will have no significant impact on its financial statements or
      results of operations.




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.  The Company is evaluating the impact that this standard
      may have on its financial position and results of operations.




In
      December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of Accounting Research Bulletin
      No. 51,” (“SFAS 160”).  SFAS 160 amends Accounting Research Bulletin
      No. 51 to establish accounting and reporting standards for the noncontrolling
      interest, also referred to as minority interest, in a subsidiary and for the
      deconsolidation of a subsidiary.  SFAS 160 requires that the
      noncontrolling interest in a subsidiary be clearly identified and presented
      within the equity section of the consolidated statement of financial position
      but separate from the company’s equity.  Consolidated net income
      attributable to the parent and to the noncontrolling interest must be clearly
      identified and presented on the face of the consolidated statement of
      income.  SFAS 160 requires that any subsequent changes in a parent’s
      ownership interest while still retaining its controlling financial interest
      in
      its subsidiary must be accounted for as equity transactions on a consistent
      basis.  In addition, SFAS 160 requires that upon the deconsolidation
      of a subsidiary, both the gain or loss arising from the deconsolidation and
      any
      retained noncontrolling equity investment in the former subsidiary be measured
      at fair value.  SFAS 160 is effective commencing with the Company’s
      first fiscal quarter of 2009.  Early adoption is not
      permitted.  The Company is evaluating the impact that this standard
      may have on its financial position and results of operations.




52




**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,
      2007, the remaining underwriting commitment of $17,315,840 is included as Other
      Payables - deferred underwriters’ fee.




**NOTE
      D — RELATED PARTY TRANSACTIONS**




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




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




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




53




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




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




On
      March
      28, 2007 the Company issued a $250,000 unsecured promissory note to Steel
      Partners, Ltd., an affiliate of SP Acq LLC and the Company. This note bears
      interest at a rate of 5% per annum, is unsecured and principal and interest
      payments were due on December 31, 2007. Interest payable of $9,435 has been
      accrued on this note through December 31, 2007. Steel Partners, Ltd. has
      confirmed that the promissory note is not in default at December 31, 2007 and
      that payment may be made on or before December 31, 2008.




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




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




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.




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




54




**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, 2007.




**NOTE
      F — UNIT DIVIDENDS**




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




**NOTE
      G — WARRANTS**




The
      following table presents warrants outstanding:




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





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




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




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




55




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




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




**NOTE
      H — TAXES ON INCOME**




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




**12/31/2007**Deferred
                Tax AssetsStart
                up and organization costs
            
            $
            125,406Net
                Deferred Taxes
            
            $
            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:




**12/31/2007**Tax
                at Federal Statutory Rate
            
            
            34.0
            %State
                and Local Taxes, net of federal benefit
            
            
            11.2
            %Provision
                for Taxes
            
            
            45.2
            %





The
      provision for income taxes consists of the following:




**12/31/2007**CurrentFederal
            
            $
            831,812State
                and Local
            
            
            503,966Total
                Current Tax Expense
            
            
            1,335,778DeferredFederal
            
            
            (93,094
            )State
                and Local
            
            
            (32,312
            )Total
                Deferred Tax Expense (Benefit)
            
            
            (125,406
            )Total
                Tax Expense
            
            $
            1,210,372





Deferred
      income tax assets and liabilities are computed for 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 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.




56




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, 2007. 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, 2007. The Company has not yet filed its initial tax returns and 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, 2007. 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 Period from February 14, 2007 (date of 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, 2007**Formation
                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 tax
            
            
            (25,436
            )
            
            (3,317
            )
            
            (14,375
            )
            
            2,719,793Provision
                for taxes on income
            
            
            —
            
            
            —
            
            
            —
            
            
            (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




57





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




None.




**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, 2007. 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.






This
      annual report does not include a report of management's assessment regarding
      internal control over financial reporting or an attestation report of the
      company's registered public accounting firm due to a transition period
      established by rules of the Securities and Exchange Commission for newly public
      companies.




With
      respect to the most recently completed fiscal quarter, other than certain
      augmentation of the company's internal controls over financial reporting in
      connection with the company becoming a public company, including supplementing
      the reporting and review processes with respect to applicable United States
      generally accepted accounting principles and SEC rules, there has been no
      changes to the company's internal controls which has materially affected, or
      is
      reasonably likely to materially affect, the company's internal control over
      financial reporting.




**ITEM
      9B.**  **Other
      Information**




Not
      applicable.




**PART
      III**




**ITEM
      10.**  **Directors,
      Executive Officers and Corporate Governance**




**Directors
      and Executive Officers**




Our
      directors and executive officers as of the date of this report are as
      follows:




**Name**
            
            **Age**
            
            **Position(s)**Warren
                G. Lichtenstein
            
            42
            
            Chairman
                of the Board of Directors, President and Chief Executive
                OfficerJack
                L. Howard
            
            45
            
            Chief
                Operating Officer and SecretaryJames
                R. Henderson
            
            50
            
            Executive
                Vice PresidentAnthony
                Bergamo
            
            61
            
            DirectorRonald
                LaBow
            
            73
            
            DirectorHoward
                M. Lorber
            
            59
            
            DirectorLeonard
                Toboroff
            
            75
            
            DirectorS.
                Nicholas Walker
            
            53
            
            Director




58




**Warren
      G. Lichtenstein** , *Chairman
      of the Board of Directors, President and Chief Executive
      Officer* —
Mr.
      Lichtenstein has been our Chairman of the Board, President and Chief Executive
      Officer since February 2007. Mr. Lichtenstein co-founded Steel Partners II,
      L.P.
      in 1993. He has been Managing Member since 1996 of Steel Partners II GP LLC,
      which is the General Partner of Steel Partners II, L.P. and Steel Partners
      II
      Master Fund L.P. He is Chief Executive Officer of Steel Partners LLC, a global
      investment management firm, which is the Investment Manager to Steel Partners
      II, L.P. and Steel Partners II Master Fund L.P. He is also a Co-Founder of
      Steel
      Partners Japan Strategic Fund (Offshore), L.P., a private investment partnership
      investing in Japan, and Steel Partners China Access I LP, a private equity
      partnership investing in China. Mr. Lichtenstein has served as a director of
      GenCorp Inc., a technology-based manufacturer of aerospace and defense products
      and systems with a real estate business segment, since March 5, 2008. He has
      been a director (currently Chairman of the Board) of SL Industries, Inc., a
      designer and manufacturer of power electronics, power motion equipment, power
      protection equipment, and teleprotection and specialized communication
      equipment, since January 2002 and served as Chief Executive Officer from
      February 2002 to August 2005. He has served as Chairman of the Board of WHX
      Corporation, a holding company, since July 2005. He served as a director of
      WebFinancial Corporation, which through its operating subsidiaries, operates
      niche banking markets, from 1996 to June 2005, as Chairman and Chief Executive
      Officer from December 1997 to June 2005 and as President from December 1997
      to
      December 2003. Prior to the formation of Steel Partners II, L.P. in 1993, Mr.
      Lichtenstein co-founded Steel Partners, L.P., an investment partnership, in
      1990
      and co-managed its business and operations. From 1988 to 1990, Mr. Lichtenstein
      was an acquisition/arbitrage analyst with Ballantrae Partners, L.P., which
      invested in risk arbitrage, special situations, and undervalued companies.
      From
      1987 to 1988, he was an analyst at Para Partners, L.P., a partnership that
      invested in arbitrage and related situations. Mr. Lichtenstein has previously
      served as a director of the following companies: Alpha Technologies Group,
      Inc.
      (Synercom Technology), Aydin Corporation (Chairman), BKF Capital Group
      Inc., CPX Corp. (f/k/a CellPro, Incorporated), ECC International Corporation,
      Gateway Industries, Inc., KT&G Corporation, Layne Christensen Company, PLM
      International, Inc. Puroflow Incorporated, Saratoga Beverage Group, Inc.,
      Synercom Technology, Inc., TAB Products Co., Tandycrafts Inc., Tech-Sym
      Corporation, United Industrial Corporation (Chairman) and U.S. Diagnostic Labs,
      Inc. Mr. Lichtenstein graduated from the University of Pennsylvania with a
      B.A.
      in Economics.




**Jack
      L. Howard** , *Chief
      Operating Officer and Secretary* —
Mr.
      Howard was a Director from February 2007 until June 2007, was Vice-Chairman
      from
      February 2007 until August 2007 and has been our Secretary since February 2007.
      Since June 2007, he has been our Chief Operating Officer. Mr. Howard co-founded
      Steel Partners II, L.P. in 1993. He has been a registered principal of Mutual
      Securities, Inc., a NASD registered broker-dealer since 1989. He is the
      President of Steel Partners LLC, a global investment management firm. He has
      been associated with Steel Partners LLC and its affiliates since December 2003.
      He served as Chairman of the Board and Chief Executive Officer of Gateway
      Industries, Inc., a provider of database development and web site design and
      development services, from February 2004 to April 2007 and as Vice President
      from December 2001 to April 2007. He has been a director of Adaptec, Inc.,
      a
      storage solutions provider, since December 2007. Mr. Howard has served as
      Chairman of the Board of WebFinancial Corporation, which through its operating
      subsidiaries, operates niche banking markets, since June 2005, as a director
      of
      WebFinancial since 1996 and its Vice President since 1997. From 1997 to May
      2000, he also served as Secretary, Treasurer and Chief Financial Officer of
      WebFinancial. He has been a director of WHX Corporation, a holding company,
      since July 2005. He has served as a director of NOVT Corporation, a former
      developer of advanced medical treatments for coronary and vascular disease,
      since April 2006. He has been a director of CoSine Communications, Inc., a
      holding company, since July 2005. He has been a director of BNS Holding, Inc.,
      a
      holding company that owns the majority of Collins Industries, Inc., a
      manufacturer of school buses, ambulances and terminal trucks, since June 2004.
      From 1984 to 1989, Mr. Howard was with First Affiliated Securities, a NASD
      broker dealer. Mr. Howard has previously served as a director of Scientific
      Software-Intercomp, Inc., Pubco Corporation and Investors Insurance Group,
      Inc.
      Mr. Howard graduated from the University of Oregon with a B.A. in Finance.
      He
      currently holds the securities licenses of Series 7, Series 24, Series 55 and
      Series 63.




59




**James
      R. Henderson** , *Executive
      Vice President* —
Mr.
      Henderson has been our Executive Vice President since February 2007. Mr.
      Henderson is a Managing Director and operating partner of Steel Partners LLC,
      a
      global investment management firm. He has been associated with Steel Partners
      LLC and its affiliates since August 1999. He has served as a director of GenCorp
      Inc., a technology-based manufacturer of aerospace and defense products and
      systems with a real estate business segment, since March 5, 2008. Mr. Henderson
      has served as Chief Executive Officer of WebFinancial Corporation, which through
      its operating subsidiaries, operates niche banking markets, since June 2005,
      as
      President and Chief Operating Officer of WebFinancial since November 2003,
      and
      was the Vice President of Operations from September 2000 through December 2003.
      He has served as Chief Executive Officer of WebBank, a wholly-owned subsidiary
      of WebFinancial, from November 2004 to May 2005. Mr. Henderson has served as
      a
      director of Angelica Corporation, a provider of healthcare linen management
      services, since August 2006. He has served as a director of BNS Holding, Inc.,
      a
      holding company that owns the majority of Collins Industries, Inc., a
      manufacturer of school buses, ambulances and terminal trucks, since June 2004.
      He has served as a director (currently Chairman of the Board) of Del Global
      Technologies Corp., a designer and manufacturer of medical imaging and
      diagnostic systems, since November 2003. He has served as a director of SL
      Industries, Inc., a designer and producer of proprietary advanced systems and
      equipment for the power and data quality industry, since January 2002. Mr.
      Henderson has served as President of Gateway Industries, Inc., a provider of
      database development and web site design and development services, since
      December 2001. He served as a director of ECC International Corp., a
      manufacturer and marketer of computer-controlled simulators for training
      personnel to perform maintenance and operator procedures on military weapons,
      from December 1999 to September 2003 and as acting Chief Executive Officer
      from
      July 2002 to March 2003. From January 2001 to August 2001, he served as
      President of MDM Technologies, Inc., a direct mail and marketing company. From
      1996 to 1999, Mr. Henderson was employed in various positions with Aydin
      Corporation, a defense electronics manufacturer, which included a tenure as
      President and Chief Operating Officer. From 1980 to 1996, Mr. Henderson was
      employed with UNISYS Corporation, an e-business solutions provider. Mr.
      Henderson has previously served as a director of Tech-Sym Corporation. Mr.
      Henderson graduated from the University of Scranton with a B.S. in
      Accounting.




**Anthony
      Bergamo** , *Director* —
Mr.
      Bergamo has been a Director since July 2007. He has held various positions
      with
      MB Real Estate, a property management company based in New York City and
      Chicago, since April 1996, including the position of Vice Chairman since May
      2003. Mr. Bergamo served as managing director with Milstein Hotel Group, a
      hotel
      operator, from April 1996 until July 2007. He has also served as the Chief
      Executive Officer of Niagara Falls Redevelopment, LLC, a real estate development
      company, since August 1998. Mr. Bergamo was a director of Lone Star Steakhouse
      & Saloon, Inc., an owner and operator of restaurants, from May 2002 until
      December 2006, at which time such company was sold to a private equity fund.
      At
      the time of such sale, Mr. Bergamo was the Chairman of the Audit Committee
      of
      Lone Star Steakhouse & Saloon, Inc. He has also been a director since 1995,
      a Trustee since 1986 and currently is Chairman of the Audit Committee of Dime
      Community Bancorp. Mr. Bergamo is also the Founder of the Federal Law
      Enforcement Foundation, a foundation that provides economic assistance to both
      federal and local law enforcement officers suffering from serious illness and
      to
      communities recovering from natural disasters, and has served as its Chairman
      since 1988. Mr. Bergamo serves on the New York State Commission for Sentencing
      Reform and the New York State Judicial Screening Committee. He earned a BS
      in
      history from Temple University, and a JD from New York Law School. He is
      admitted to the New York, New Jersey, Federal Bars, US Court of Appeals and
      the
      US Supreme Court.




60




**Ronald
      LaBow** , *Director* —
Mr.
      LaBow has been a Director since June 2007. He has served as President of
      Stonehill Investment Corp., an investment fund, since February 1990. From
      January 1991 to February 2004, Mr. LaBow served as Chairman of the Board of
      WHX
      Corporation, a holding company. Mr. LaBow currently is the President of WPN
      Corp., a financial consulting company, and is a director of BKF Capital Group,
      Inc. He earned a BS from University of Illinois, an MS from Columbia University
      School of Business, an LLB from New York Law School and a Master of Law from
      New
      York University Law School. He is admitted to the bar of the state of New
      York.




**Howard
      M. Lorber** , *Director* —
Mr.
      Lorber has been a Director since June 2007. Mr. Lorber has served as Chairman
      of
      the Board of Open Acquisition Corp. since January 2008, a blank check company
      that has filed its initial registration statement with the SEC. Mr. Lorber
      has
      served as the Executive Chairman of Nathan’s Famous Inc. since January 2007 and
      prior to that served as its Chairman from 1987 until December 2006 and as its
      Chief Executive Officer from November 1993 until December 2006. Also, Mr. Lorber
      has been the President and Chief Executive Officer of Vector Group Ltd. since
      January 2006 and has served as a director since January 2001. Mr. Lorber served
      as the President and Chief Operating Officer of Vector Group Ltd. from January
      2001 until January 2006. Mr. Lorber was President, Chief Operating Officer
      and a
      Director of New Valley Corporation from November 1994 until its merger with
      Vector Group in December 2005. For more than the past five years, Mr. Lorber
      has
      been a stockholder and a registered representative of Aegis Capital Corp. Mr.
      Lorber served as Chairman of the Board of Ladenburg Thalmann Financial Services,
      the parent of Ladenburg Thalmann & Co. Inc., one of the underwriters of our
      initial public offering, from May 2001 until July 2006 when he became
      Vice-Chairman in which capacity he currently serves. Mr. Lorber currently serves
      as a director of United Capital Corp., a real estate investment and diversified
      manufacturing company.




**Leonard
      Toboroff** , *Director* —
Mr.
      Toboroff has been a Director since June 2007. Mr. Toboroff has served as a
      Vice
      Chairman of the Board of Allis-Chalmers Energy Inc., a provider of products
      and
      services to the oil and gas industry, since May 1988 and served as Executive
      Vice President from May 1989 until February 2002. He served as a director and
      Vice President of Varsity Brands, Inc. (formerly Riddell Sports Inc.), a
      provider of goods and services to the school spirit industry, from April 1998
      until it was sold in September 2003. Mr. Toboroff has been an Executive Director
      of Corinthian Capital Group, LLC, a private equity fund, since October 2005.
      He
      is also a director of Engex Corp., a closed-end mutual fund. He has been a
      director of NOVT Corporation, a former developer of advanced medical treatments
      for coronary and vascular disease, since April 2006. Mr. Toboroff has previously
      served as a director of American Bakeries Co., Ameriscribe Corporation and
      Saratoga Spring Water Co. Mr. Toboroff is a graduate of Syracuse University
      and
      The University of Michigan Law School.




**S.
      Nicholas Walker** , *Director* —
Mr.
      Walker has been a director since June 2007. Mr. Walker is the Chief Executive
      Officer of the York Group Limited (“York”) a financial services company. York
      provides investment management services and securities brokerage services to
      institutional and high net worth individual clients. Mr. Walker has served
      as
      CEO of York since 2000. From 1995 until 2000 Mr. Walker served as Senior Vice
      President of Investments of PaineWebber Inc. in New York. From 1982 until 1995,
      he served as Senior Vice President of Investments of Prudential Securities
      Inc.
      in New York. From 1977 to 1981 he served as an assistant manager at Citibank
      NA,
      merchant banking group, in New York and from 1976 to 1977 as a syndication
      manager with Sumitomo Finance International Limited in London. Mr. Walker served
      as a director of the Cronos Group, a leading lessor of intermodal marine
      containers, from 1999 until it was sold in July 2007 (Nasdaq symbol “CRNS”). Mr.
      Walker holds an M.A. degree in Jurisprudence from Oxford University,
      England.




61




**Number
      and Terms of Office of Directors**




Our
      board
      of directors consists of six directors. These individuals will play a key role
      in identifying and evaluating prospective acquisition candidates, selecting
      the
      target business, and structuring, negotiating and consummating our initial
      business combination. However, none of these individuals has been a principal
      of
      or affiliated with a blank check company that executed a business plan similar
      to our business plan and other than Mr. Lorber, none of these individuals is
      currently affiliated with any such entity. Nevertheless, we believe that the
      skills and expertise of these individuals, their collective access to potential
      target businesses, and their ideas, contacts, and acquisition expertise should
      enable them to successfully identify and assist us in completing our initial
      business combination. However, there is no assurance such individuals will,
      in
      fact, be successful in doing so.




**Executive
      Officer Compensation**




None
      of
      our executive officers or directors has received any compensation for service
      rendered. After our initial business combination, our executive officers and
      directors who remain with us may be paid consulting, management or other fees
      from the combined company with any and all amounts being fully disclosed to
      stockholders, to the extent then known, in the proxy solicitation materials
      furnished to our stockholders. It is unlikely, however, that the amount of
      such
      compensation will be known at the time of a stockholder meeting held to consider
      an initial business combination, as it will be up to the directors of the
      post-combination business to determine executive and director
      compensation.




**Director
      Independence**




Our
      board
      of directors has determined that Messrs. Bergamo, LaBow, Toboroff and Walker
      are
“independent directors” as such term is defined in the rules of the American
      Stock Exchange and Rule 10A-3 of the Exchange Act.




**Board
      Committees**




Our
      board
      of directors has formed an audit committee and a governance and nominating
      committee. Each committee is composed of four directors.




**Audit
      Committee**




Our
      audit
      committee consists of Messrs. Bergamo, Toboroff , Walker and LaBow with Mr.
      Bergamo serving as chair. As required by the rules of the American Stock
      Exchange, each of the members of our audit committee is able to read and
      understand fundamental financial statements, and we consider Mr. Bergamo to
      qualify as an “audit committee financial expert” and as “financially
      sophisticated” as defined under SEC and American Stock Exchange rules,
      respectively. The responsibilities of our audit committee include:




·
            meeting
                with our management periodically to consider the adequacy of our
                internal
                control over financial reporting and the objectivity of our financial
                reporting;




·
            appointing
                the independent registered public accounting firm, determining the
                compensation of the independent registered public accounting firm
                and
                pre-approving the engagement of the independent registered public
                accounting firm for audit and non-audit
                services;




62




·
            overseeing
                the independent registered public accounting firm, including reviewing
                independence and quality control procedures and experience and
                qualifications of audit personnel that are providing us audit
                services;




·
            meeting
                with the independent registered public accounting firm and reviewing
                the
                scope and significant findings of the audits performed by them, and
                meeting with management and internal financial personnel regarding
                these
                matters;




·
            reviewing
                our financing plans, the adequacy and sufficiency of our financial
                and
                accounting controls, practices and procedures, the activities and
                recommendations of the auditors and our reporting policies and practices,
                and reporting recommendations to our full board of directors for
                approval;




·
            establishing
                procedures for the receipt, retention and treatment of complaints
                regarding internal accounting controls or auditing matters and the
                confidential, anonymous submissions by employees of concerns regarding
                questionable accounting or auditing
                matters;




·
            following
                the completion of our initial public offering, preparing the report
                required by the rules of the SEC to be included in our annual proxy
                statement;




·
            monitoring
                compliance on a quarterly basis with the terms of our initial public
                offering and, if any noncompliance is identified, immediately taking
                all
                action necessary to rectify such noncompliance or otherwise causing
                compliance with the terms of our initial public offering;
                and




·
            reviewing
                and approving all payments made to our officers, directors and affiliates,
                including Steel Partners, Ltd., other than the payment of an aggregate
                of
                $10,000 per month to Steel Partners, Ltd. for office space, secretarial
                and administrative services. Any payments made to members of our
                audit
                committee will be reviewed and approved by our board of directors,
                with
                the interested director or directors abstaining from such review
                and
                approval.




**Governance
      and Nominating Committee**




Our
      governance and nominating committee consists of Messrs. Bergamo, LaBow, Toboroff
      and Walker with Mr. LaBow serving as chair. The functions of our governance
      and
      nominating committee include:




·
            recommending
                qualified candidates for election to our board of
                directors;




·
            evaluating
                and reviewing the performance of existing
                directors;




·
            making
                recommendations to our board of directors regarding governance matters,
                including our certificate of incorporation, bylaws and charters of
                our
                committees; and




·
            developing
                and recommending to our board of directors governance and nominating
                guidelines and principles applicable to
                us.




63




**Code
      of Ethics and Committee Charters**




We
      have
      adopted a code of ethics that applies to our officers, directors and employees.
      We have filed copies of our code of ethics and our board committee charters
      as
      an exhibit to the registration statement in connection with our initial public
      offering. You will be able to review these documents by accessing our public
      filings at the SEC’s web site at www.sec.gov. In addition, a copy of the code of
      ethics will be provided without charge upon request to us. We intend to disclose
      any amendments to or waivers of certain provisions of our code of ethics in
      a
      current report on Form 8-K.




**Conflicts
      of Interest**




Investors
      should be aware of the following potential conflicts of interest:




·
            Members
                of our management team are not required to commit their full time
                to our
                affairs and, accordingly, they will have conflicts of interest in
                allocating management time among various business
                activities.




·
            The
                members of our management team as well as the entities in the Steel
                Partners may in the future become affiliated with entities, including
                other blank check companies, engaged in business activities similar
                to
                those we intend to conduct.




·
            Our
                business opportunity right of first review agreement does not apply
                to
                companies targeted for acquisition by any business in which Steel
                Partners
                II, L.P. directly or indirectly has an investment (including Steel
                Partners Japan Strategic Fund (Offshore), L.P. or businesses headquartered
                in or organized under the laws of China. and accordingly, members
                of our
                management team may become aware of business opportunities that are
                not
                subject to this agreement. Currently, members of our management team
                are
                officers or directors of the following entities in which Steel Partners
                II, L.P., directly or indirectly, has an investment: Adaptec, Inc.,
                Angelica Corporation, BNS Holding, Inc., Collins Industries, Inc.,
                CoSine
                Communications, Inc., Del Global Technologies Corp., Gateway Industries,
                Inc., GenCorp Inc., Nathan’s Famous Inc., NOVT Corporation, SL Industries,
                Inc., Vector Group Ltd., WebBank, WebFinancial Corporation and WHX
                Corporation. In addition, such members of our management team could
                in the
                future become officers or directors of other entities in which Steel
                Partners II, L.P., directly or indirectly, has an investment. Due
                to those
                existing and future affiliations, members of our management team
                may have
                fiduciary obligations to present potential business opportunities
                to those
                entities prior to presenting them to us which could cause conflicts
                of
                interest. Accordingly, members of our management team and our directors
                may have conflicts of interest in determining to which entity a particular
                business opportunity should be
                presented.




·
            Since
                Mr. Lichtenstein may be deemed the beneficial owner of shares held
                by SP
                Acq LLC and Steel Partners II, L.P., he may have a conflict of interest
                in
                determining whether a particular target business is appropriate for
                us and
                our stockholders. This ownership interest may influence his motivation
                in
                identifying and selecting a target business and timely completing
                an
                initial business combination. The exercise of discretion by our officers
                and directors in identifying and selecting one or more suitable target
                businesses may result in a conflict of interest when determining
                whether
                the terms, conditions and timing of a particular business combination
                are
                appropriate and in our stockholders’ best
                interest.




64




·
            Unless
                we consummate our initial business combination, our officers and
                directors
                and Steel Partners and its employees will not receive reimbursement
                for
                any out-of-pocket expenses incurred by them to the extent that such
                expenses exceed the amount of available proceeds not deposited in
                the
                trust account and the amount of interest income from the trust account
                that may be released to us as working capital. These amounts were
                calculated based on management’s estimates of the funds needed to finance
                our operations for 24 months and to pay expenses in identifying and
                consummating our initial business combination. Those estimates may
                prove
                to be inaccurate, especially if a portion of the available proceeds
                is
                used to make a down payment in connection with our initial business
                combination or pay exclusivity or similar fees or if we expend a
                significant portion in pursuit of an initial business combination
                that is
                not consummated. Our officers and directors may, as part of any business
                combination, negotiate the repayment of some or all of any such expenses.
                The financial interest of our officers and directors and Steel Partners
                could influence our officers’ and directors’ motivation in selecting a
                target business, and therefore they may have a conflict of interest
                when
                determining whether a particular business combination is in the
                stockholders’ best interest. Specifically, our officers and directors may
                tend to favor potential initial business combinations with target
                businesses that offer to reimburse any expenses that we did not have
                the
                funds to reimburse ourselves.




·
            Our
                officers and directors may have a conflict of interest with respect
                to
                evaluating a particular initial business combination if the retention
                or
                resignation of any such officers and directors were included by a
                target
                business as a condition to any agreement with respect to an initial
                business combination.




·
            Howard
                M. Lorber, a director of our company, is also the Chairman of the
                Board of
                Open Acquisition Corp., which is a blank check company that intends
                to
                engage in activities similar to those conducted by us. While the
                registration statement filed by Open Acquisition has not been declared
                effective by the SEC and Open Acquisition’s registration statement states
                that it intends to have approximately $118.75 million in its trust
                account
                to fund acquisitions (as opposed to over $400 million in our trust
                account), if and when the registration statement of Open Acquisition
                is
                declared effective by the SEC Mr. Lorber may owe fiduciary duties
                to
                present Open Acquisition with business opportunities before presenting
                such opportunities to us.




In
      general, officers and directors of a corporation incorporated under the laws
      of
      the State of Delaware are required to present business opportunities to a
      corporation if:




·
            the
                corporation could financially undertake the
                opportunity;




·
            the
                opportunity is within the corporation’s line of business;
                and




·
            it
                would not be fair to the corporation and its stockholders for the
                opportunity not to be brought to the attention of the
                corporation.




Accordingly,
      as a result of multiple business affiliations, our officers and directors may
      have similar legal obligations relating to presenting business opportunities
      meeting the above-listed criteria to multiple entities. In addition, conflicts
      of interest may arise when our board of directors evaluates a particular
      business opportunity with respect to the above-listed criteria. We cannot assure
      you that any of the above mentioned conflicts will be resolved in our
      favor.




65




Each
      of
      our officers and directors has, or may come to have, to a certain degree, other
      fiduciary obligations. Members of our management team have fiduciary obligations
      to other companies on whose board of directors they presently sit, or may have
      obligations to companies whose board of directors they may join in the future.
      To the extent that they identify business opportunities that may be suitable
      for
      us or other companies on whose board of directors they may sit, our directors
      will honor those fiduciary obligations. Accordingly, they may not present
      opportunities to us that come to their attention in the performance of their
      duties as directors of such other entities unless the other companies have
      declined to accept such opportunities or clearly lack the resources to take
      advantage of such opportunities.




We
      will
      not enter into our initial business combination with any entity in which any
      of
      our officers, directors or Steel Partners or its affiliates has a financial
      interest.




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




Section
      16(a) of the Securities Exchange Act of 1934 requires our officers, directors
      and persons who own more than ten percent of a registered class of our equity
      securities to file reports of ownership and changes in ownership with the SEC.
      Officers, directors and ten percent stockholders are required by regulation
      to
      furnish us with copies of all Section 16(a) forms they file. Based solely on
      copies of such forms received, we believe that, during the year ended December
      31, 2007, all filing requirements applicable to our officers, directors and
      greater than ten percent beneficial owners were complied with.




**ITEM
      11.**  **Executive
      Compensation**




**Compensation
      Discussion and Analysis**




None
      of
      our officers or directors has received any cash compensation for services
      rendered. In June 2007, each of our independent directors purchased 100,000
      founder’s units for a purchase price of $330, and purchased 100,000 additional
      founder’s warrants for an aggregate purchase price of $100,000 upon the
      consummation of our initial public offering. However, none of them serve as
      officers of ours nor receive any compensation for serving in such role, other
      than reimbursement of actual out-of-pocket expenses. As the price paid for
      the
      founder’s units and additional founder’s warrants was fair market value at the
      time, we do not consider the value of the units at the offering price to be
      compensation. Rather, we believe that because they own such shares, no
      compensation (other than reimbursement of out of pocket expenses) is necessary
      and such persons agreed to serve in such role without compensation.




We
      have
      agreed to pay Steel Partners, Ltd., an affiliate of Mr. Lichtenstein, a total
      of
      $10,000 per month for office space, administrative services and secretarial
      support until the earlier of our consummation of a business combination or
      our
      liquidation. This arrangement is being agreed to by Steel Partners, Ltd. for
      our
      benefit and is not intended to provide Steel Partners, Ltd. compensation in
      lieu
      of a management fee. We believe that such fees are at least as favorable as
      we
      could have obtained from an unaffiliated third party.




Other
      than this $10,000 per-month fee, no compensation of any kind, including finder’s
      and consulting fees, will be paid to any of our officers or directors, or any
      of
      their respective affiliates, for services rendered prior to or in connection
      with a business combination. However, these individuals and SP Acq LLC will
      be
      reimbursed for any out-of-pocket expenses incurred in connection with activities
      on our behalf such as identifying potential target businesses and performing
      due
      diligence on suitable business combinations. After a business combination,
      any
      of our officers or directors who remain with us may be paid consulting,
      management or other fees from the combined company with any and all amounts
      being fully disclosed to stockholders, to the extent then known, in the proxy
      solicitation materials furnished to our stockholders. It is unlikely the amount
      of such compensation will be known at the time of a stockholder meeting held
      to
      consider a business combination, as it will be up to the directors of the
      post-combination business to determine executive and director
      compensation.




66




Other
      than the securities described above and in the section appearing elsewhere
      in
      this Annual Report on Form 10-K entitled “Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder Matters”, neither our
      officers nor our directors has received any of our equity
      securities.




**Compensation
      Committee Interlocks and Insider Participation**




None.




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




**Principal
      stockholders**




The
      following table sets forth information regarding the direct and indirect
      beneficial ownership of our common stock as of March 20, 2008 by:




·
            each
                beneficial owner of more than 5% of our outstanding shares of common
                stock;




·
            each
                of our officers and directors; and




·
            all
                our officers and directors as a
                group.




Unless
      otherwise indicated, we believe that all persons named in the table have sole
      voting and investment power with respect to all shares of common stock
      beneficially owned by them. The following table does not reflect record or
      beneficial ownership of the co-investment shares or the initial founder’s
      warrants, the additional founder’s warrants, or the co-investment warrants, as
      these warrants are not exercisable within 60 days of the date of this
      report.




**Name
                and Address of Beneficial Owner****(1)**
            
            **Number
                of Shares of Common Stock Beneficially Owned**
            
            **Approximate
                Percentage of Outstanding Common Stock Beneficially
                Owned**Warren
                G. Lichtenstein(2)(3)
            
            10,322,400
            
            19.0%SP
                Acq LLC
            
            9,653,412
            
            17.8%Steel
                Partners II LP.
            
            668,988
            
            1.2%Steel
                Partners II GP LLC(3)
            
            668,988
            
            1.2%Steel
                Partners II Master Fund L.P.(3)
            
            668,988
            
            1.2%Steel
                Partners LLC(3)
            
            668,988
            
            1.2%Anthony
                Bergamo(4)
            
            109,653
            
            *Ronald
                LaBow(4)
            
            109,653
            
            *Howard
                M. Lorber(4)
            
            109,653
            
            *Leonard
                Toboroff(4)
            
            109,653
            
            *S.
                Nicholas Walker(4)
            
            109,653
            
            *Jack
                L. Howard(5)
            
            —
            
            —James
                R. Henderson(5)
            
            —
            
            —QVT
                Financial LP(6)
              1177
                Avenue of the Americas, 9th Floor
              New
                York, New York 10036
            
            3,733,800
            
            6.9%HBK
                Investments L.P.(7)
              300
                Crescent Court, Suite 700
              Dallas,
                Texas, 75201
            
            5,383,000
            
            9.9%The
                Baupost Group, L.L.C.(8)
              10
                St. James Avenue, Suite 1700
              Boston,
                Massachusetts 02116
            
            4,000,000
            
            7.4%Fir
                Tree, Inc.(9)
              505
                Fifth Avenue, 23rd Floor
              New
                York, New York 10017
            
            4,001,000
            
            7.4%Millenco
                LLC(10)
              666
                Fifth Avenue
              New
                York, New York 10103
            
            3,731,050
            
            6.9%All
                executive officers and directors as a group
              (8
                individuals)(2)(3)
            
            10,822,400
            
            20.0%





*
            Less
                than one percent




67




(1)
            Unless
                otherwise indicated, the business address of each of the individuals
                or
                entities is 590 Madison Avenue, 32nd Floor, New York, New York
                10022.




(2)
            Mr.
                Lichtenstein is the managing member of SP Acq LLC and may be considered
                to
                have beneficial ownership of SP Acq LLC’s interest in us. Mr. Lichtenstein
                disclaims beneficial ownership of any shares in which he does not
                have a
                pecuniary interest.




(3)
            Steel
                Partners II Master Fund L.P. is the sole limited partner of Steel
                Partners
                II, L.P. Steel Partners II GP LLC is the general partner of Steel
                Partners
                II, L.P. and Steel Partners II Master Fund L.P. Steel Partners LLC
                is the
                investment manager of Steel Partners II and Steel Partners II Master
                Fund
                L.P. Warren G. Lichtenstein is the manager of Steel Partners LLC
                and the
                managing member of Steel Partners II GP LLC. By virtue of these
                relationships, each of Steel Partners II GP LLC, Steel Partners II
                Master
                Fund L.P., Steel Partners LLC and Mr. Lichtenstein may be deemed
                to
                beneficially own the Shares owned by Steel Partners II, L.P. Mr.
                Lichtenstein also has sole voting and dispositive power over the
                reported
                shares. Mr. Lichtenstein disclaims beneficial ownership of any shares
                in
                which he does not have a pecuniary
                interest.




(4)
            Each
                of the following persons is a member of SP Acq LLC: Anthony Bergamo,
                Ronald LaBow, Howard M. Lorber, Leonard Toboroff and S. Nicholas
                Walker.
                Such persons have each been granted voting power over the number
                of shares
                equal to each of his respective percentage ownership in SP Acq LLC
                multiplied by the number of shares owned by SP Acq LLC. Accordingly,
                each
                of such persons has been attributed 9,653 shares and such shares
                are also
                included in the shares held by SP Acq
                LLC.




(5)
            Each
                of Jack L. Howard and James R. Henderson is a member of SP Acq LLC,
                however, neither of such persons has voting or dispositive power
                over the
                shares of common stock owned by SP Acq LLC. Accordingly, the shares
                held
                by SP Acq LLC are not deemed to be beneficially owned by either of
                such
                persons.




68




(6)
            As
                reported in Amendment No. 1 to Schedule 13G filed with the SEC on
                February
                8, 2008, QVT Financial LP is the investment manager for QVT Fund
                LP, which
                beneficially owns 3,075,843 shares of Common Stock, and for Quintessence
                Fund L.P., which beneficially owns 330,410 shares of Common Stock.
                QVT
                Financial LP is also the investment manager for a separate discretionary
                account managed for Deutsche Bank AG, which holds 327,547 shares
                of Common
                Stock. QVT Financial LP has the power to direct the vote and disposition
                of the Common Stock held by QVT Fund LP, Quintessence Fund L.P. and
                Deutsche Bank AG. Accordingly, QVT Financial LP may be deemed to
                be the
                beneficial owner of an aggregate amount of 3,733,800 shares of Common
                Stock, consisting of the shares owned by the Fund and Quintessence
                and the
                shares held in the Deutsche Bank AG. QVT Financial GP LLC, as General
                Partner of QVT Financial LP, may be deemed to beneficially own the
                same
                number of shares of Common Stock reported by QVT Financial LP. QVT
                Associates GP LLC, as General Partner of QVT Fund LP and Quintessence
                Fund
                L.P., may be deemed to beneficially own the aggregate number of shares
                of
                Common Stock owned by QVT Fund LP and Quintessence Fund L.P., and
                accordingly, QVT Associates GP LLC may be deemed to be the beneficial
                owner of an aggregate amount of 3,406,253
                shares.




(7)
            As
                reported in Amendment No. 1 to Schedule 13G filed with the SEC on
                February
                11, 2008, HBK Investments L.P. has delegated discretion to vote and
                dispose of the Securities to HBK Services LLC. HBK Services LLC may,
                from
                time to time, delegate discretion to vote and dispose of certain
                of the
                Securities to HBK New York LLC, a Delaware limited liability company,
                HBK
                Virginia LLC, a Delaware limited liability company, HBK Europe Management
                LLP, a limited liability partnership organized under the laws of
                the
                United Kingdom, and/or HBK Hong Kong Ltd., a corporation organized
                under
                the laws of Hong Kong (collectively, the "Subadvisors"). Each of
                HBK
                Services LLC and the Subadvisors is under common control with HBK
                Investments L.P.




(8)
            As
                reported in Schedule 13G filed with the SEC on February 13, 2008,
                SAK
                Corporation is the Manager of Baupost Group, L.L.C. Seth A. Klarman,
                as
                the sole Director of SAK Corporation and a controlling person of
                Baupost
                Group, L.L.C., may be deemed to have beneficial ownership under Section
                13(d) of the securities beneficially owned by Baupost Group,
                L.L.C.




(9)
            As
                reported in Amendment No. 1 to Schedule 13G filed with the SEC on
                February
                14, 2008, Fir Tree Capital Opportunity Master Fund, L.P. and Sapling
                LLC
                are the beneficial owners of 3,455,400 shares of Common Stock and
                545,600
                shares of Common Stock, respectively. Fir Tree, Inc. may be deemed
                to
                beneficially own the shares of Common Stock held by Sapling LLC and
                Fir
                Tree Capital Opportunity Master Fund, L.P. as a result of being the
                investment manager of Sapling LLC and Fir Tree Capital Opportunity
                Master
                Fund, L.P.




(10)
            As
                reported in Schedule 13G filed with the SEC on March 20, 2008, Millennium
                Management LLC, a Delaware limited liability company, is the manager
                of
                Millenco LLC, and consequently may be deemed to have shared voting
                control
                and investment discretion over securities owned by Millenco LLC.
                Israel A.
                Englander is the managing member of Millennium Management LLC. As
                a
                result, Mr. Englander may be deemed to have shared voting control
                and
                investment discretion over securities deemed to be beneficially owned
                by
                Millennium Management.




Upon
      the
      sale of the co-investment units, SP Acq LLC, Steel Partners II, L.P. and Messrs.
      Bergamo, LaBow, Lorber, Toboroff and Walker will collectively own approximately
      24.2% of our issued and outstanding shares of common stock, which could permit
      them to effectively influence the outcome of all matters requiring approval
      by
      our stockholders at such time, including the election of directors and approval
      of significant corporate transactions, following the consummation of our initial
      business combination.




69




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 Messrs. Bergamo, LaBow, Lorber, Toboroff
      and Walker have agreed to surrender and forfeit their founder’s units to us;
      provided that such surrender and forfeiture will not be required if SP Acq
      LLC
      purchases such co-investment units. In such event, Steel Partners II, L.P.
      has
      agreed to transfer its founder’s units to SP Acq LLC.




SP
      Acq
      LLC is a holding company founded to form our company and hold an investment
      in
      the founder’s securities. Subject to the terms of its operating agreement, SP
      Acq LLC may distribute the initial founder’s securities to its members at any
      time, subject further to the transfer and other restrictions applicable to
      permitted transferees described below and to applicable federal and state
      securities laws.




**Transfer
      Restrictions**




SP
      Acq
      LLC, Steel Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff and
      Walker have agreed not to sell or transfer the founder’s units and the founder’s
      shares and initial founder’s warrants (including the common stock to be issued
      upon the exercise of the initial founder’s warrants) for a period of one year
      from the date we consummate our initial business combination and SP Acq LLC
      and
      Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker have agreed not to sell
      or
      transfer the additional founder’s warrants (including the common stock to be
      issued upon the exercise of the additional founder’s warrants) until after we
      complete our initial business combination, except in each case to permitted
      transferees who agree to be subject to the same transfer restrictions and in
      the
      case of the founder’s shares, waive their right to participate in any
      liquidation distribution if we fail to consummate an initial business
      combination and agree to vote in accordance with the majority of shares of
      common stock voted by the public stockholders in connection with our initial
      business combination and in the case of the founder’s units (including the
      founder’s shares and initial founder’s warrants) agree to surrender and forfeit
      such securities in the event that Steel Partners II, L.P. or SP Acq LLC fails
      to
      purchase the co-investment units; provided that such surrender and forfeiture
      will not be required if SP Acq LLC purchases such co-investment units. Steel
      Partners II, L.P. has agreed not to sell or transfer the co-investment units
      and
      the co-investment warrants or the co-investment shares until one year after
      we
      complete our initial business combination except to permitted transferees who
      agree to be bound by such transfer restrictions. We refer to these agreements
      with SP Acq LLC, Steel Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber,
      Toboroff and Walker and their permitted transferees as a “lock-up
      agreement.”




The
      permitted transferees under the lock-up agreements are our officers, directors
      and employees and other persons or entities associated or affiliated with Steel
      Partners II, L.P. or Steel Partners, Ltd. (other than, in the case of Steel
      Partners II, L.P. and SP Acq LLC, their respective limited partners or members
      in their capacity as limited partners or members). Any transfer to a permitted
      transferee will be in a private transaction exempt from registration under
      the
      Securities Act, pursuant to Section 4(i) thereof.




During
      the lock-up period, SP Acq LLC, Steel Partners II, L.P. and Messrs. Bergamo,
      LaBow, Lorber, Toboroff and Walker and any permitted transferees to whom they
      transfer shares of common stock will retain all other rights of holders of
      our
      common stock, including, without limitation, the right to vote their shares
      of
      common stock (except for the voting agreement described above with respect
      to
      the initial business combination) and the right to receive cash dividends,
      if
      declared. If dividends are declared and payable in shares of common stock,
      such
      dividends will also be subject to the lock-up agreement. If we are unable to
      effect our initial business combination and liquidate, SP Acq LLC, Steel
      Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker have
      waived the right to receive any portion of the liquidation proceeds with respect
      to the founder’s shares. Any permitted transferees to whom the founder’s shares
      are transferred will also agree to waive that right.




70




**ITEM
      13.**  **Certain
      Relationships, Related Transactions and Director
      Independence**




On
      March
      22, 2007, SP Acq LLC, which is controlled by Mr. Lichtenstein, purchased
      11,500,000 of our units. On June 25, 2007, a total of 500,000 founder’s units
      were sold by SP Acq LLC to Anthony Bergamo, Ronald LaBow, Howard M. Lorber,
      Leonard Toboroff and S. Nicholas Walker, each a director of the company, in
      private transactions subject to the succeeding sentence. Pursuant to the
      purchase agreement dated March 30, 2007, SP Acq LLC has agreed to sell 662,791
      founder’s units to Steel Partners II, L.P., an affiliate of SP Acq
      LLC.




On
      August
      8, 2007, we declared a unit dividend of 0.15 units for each outstanding share
      of
      common stock. On September 4, 2007, we declared a unit dividend of one-third
      of
      a unit for each outstanding share of common stock. Pursuant to an adjustment
      agreement we entered with SP Acq LLC, Steel Partners II, L.P. and Messrs.
      Bergamo, LaBow, Lorber, Toboroff and Walker each of whom agreed to assign their
      right to receive the additional founder’s units they received pursuant to the
      dividend to SP Acq LLC. 667,600 of these additional founder’s units were
      subsequently forfeited by SP Acq LLC in connection with the exercise of the
      underwriters’ over-allotment option so that the holders of our founder’s units
      maintained collective ownership of 20% of our units.




Pursuant
      to the terms of the agreement with Steel Partners II, L.P., in the event that
      Steel Partners II, L.P. does not purchase the co-investment units SP Acq LLC
      has
      entered into an agreement with us requiring it to purchase the co-investment
      units. In such event, Steel Partners II, L.P. will transfer its founder’s units
      to SP Acq LLC. Pursuant to the terms of the purchase agreements with Messrs.
      Bergamo, LaBow, Lorber, Toboroff and Walker, SP Acq LLC may repurchase the
      founder’s units owned by Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker in
      the event of their resignation or removal for cause from our Board of
      Directors.




The
      founder’s units are identical to those sold in our initial public offering,
      except that:




·
            SP
                Acq LLC, Steel Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber,
                Toboroff and Walker have agreed to vote all of their founder’s shares
                either for or against a business combination as determined by the
                public
                stockholders who vote at the special or annual meeting called for
                the
                purpose of approving our initial business
                combination;




·
            SP
                Acq LLC, Steel Partners II, L.P. and Messrs. Bergamo, LaBow, Lorber,
                Toboroff and Walker have agreed that the founder’s shares included therein
                will not participate with the common stock included in the units
                sold in
                our initial public offering in any liquidating
                distribution;




·
            the
                initial founder’s warrants included therein
                will:




·
            only
                become exercisable after our consummation of our initial business
                combination if and when the last sales price of our common stock
                exceeds
                $14.25 per share for any 20 trading days within a 30 trading day
                period
                beginning 90 days after such business combination;
                and




·
            be
                non-redeemable so long as they are held by SP Acq LLC or its permitted
                transferees, including Steel Partners II, L.P. and Messrs. Bergamo,
                LaBow,
                Lorber, Toboroff and Walker; and




·
            the
                founder’s units (including the founder’s shares and initial founder’s
                warrants) will be forfeited in the event that Steel Partners II,
                L.P. or
                SP Acq LLC fails to purchase the co-investment
                units.




71




On
      March
      22, 2007, SP Acq LLC entered into an agreement with us to purchase 5,250,000
      warrants at a price of $1.00 per warrant, upon the consummation of the offering.
      Subsequent to this agreement, Messrs. Bergamo, LaBow, Lorber, Toboroff and
      Walker agreed that they would purchase a total of 500,000 of the additional
      founder’s warrants from SP Acq LLC. On October 4, 2007, SP Acq LLC agreed to
      purchase an additional 1,750,000 additional founder’s warrants at a price of
      $1.00 per warrant immediately prior to our initial public offering resulting
      in
      an aggregate purchase of 7,000,000 additional founder’s warrants. We believe the
      purchase price of $1.00 per warrant for the additional founder’s warrants
      represented the fair value of such warrants on the date of purchase and
      accordingly no compensation expense has been recognized with respect to the
      issuance of the additional founder’s warrants. The $7.0 million of proceeds from
      the investment in the 7,000,000 additional founder’s warrants has been placed in
      the trust account pending our completion of an initial business combination.
      If
      we do not complete such an initial business combination, then the $7.0 million
      will be part of the liquidation distribution to our public stockholders, and
      the
      additional founder’s warrants will expire worthless. The additional founder’s
      warrants are non-redeemable so long as they are held by SP Acq LLC or its
      permitted transferees.




On
      March
      22, 2007, Steel Partners II, L.P. agreed to invest $30.0 million in us in the
      form of co-investment units at a price of $10.00 per unit. Steel Partners II,
      L.P. is obligated to purchase such co-investment units from us immediately
      prior
      to the consummation of our initial business combination. The co-investment
      units
      are identical to those sold in the offering except that the co-investment
      warrants included therein will be non-redeemable so long as they are held Steel
      Partners II, L.P. or its permitted transferees.




In
      the
      event that Steel Partners II, L.P. is unable to consummate the co-investment
      when required to do so, SP Acq LLC, Steel Partners II, L.P., Anthony Bergamo,
      Ronald LaBow, Howard M. Lorber, Leonard Toboroff and S. Nicholas Walker have
      agreed to surrender and forfeit their founder’s units to us; provided that such
      surrender and forfeiture will not be required if SP Acq LLC purchases such
      co-investment units.




We
      will
      also enter into an agreement with each of SP Acq LLC, Steel Partners II, L.P.,
      and Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker granting them the right
      to demand that we register the resale, (i) in the case of SP Acq LLC, Steel
      Partners II, L.P., and Messrs. Bergamo, LaBow, Lorber, Toboroff and Walker,
      of
      the founder’s units, the founder’s shares, the initial founder’s warrants and
      the shares of common stock underlying the initial founder’s warrants,
      (ii) in the case of SP Acq LLC and Messrs. Bergamo, LaBow, Lorber, Toboroff
      and Walker, the additional founder’s warrants and the shares of common stock
      underlying the additional founder’s warrants, and (iii) in the case of
      Steel Partners II, L.P., the co-investment units, co-investment shares and
      co-investment warrants and the shares of common stock underlying the
      co-investment warrants, with respect to the founder’s units, the founder’s
      shares, the initial founder’s warrants and shares of common stock issuable upon
      exercise of such warrants, the co-investment units, the co-investment shares
      and
      the co-investment warrants and shares issuable upon exercise of such warrants
      at
      any time commencing three months prior to the date on which they are no longer
      subject to transfer restrictions, and with respect to all of the additional
      founder’s warrants and the underlying shares of common stock, at any time after
      the execution of a definitive agreement for an initial business combination.
      We
      will bear the expenses incurred in connection with the filing of any such
      registration statements.




72




As
      of
      December 31, 2007, Steel Partners, Ltd., had loaned us a total of $250,000
      evidenced by a promissory note, which was used to pay a portion of the expenses
      of our initial public offering and our organization. This note bears interest
      at
      5%, compounded semi-annually and will be paid in full by December 31, 2008.
      This
      loan was made to us by Steel Partners, Ltd. because SP Acq LLC was recently
      formed and has limited capital. We had accrued interest of $9,435 as of December
      31, 2007. In addition, as of December 31, 2007, Steel Partners, Ltd. advanced
      $26,818 to pay expenses that were due before our initial funding. Such amounts
      remained outstanding as of December 31, 2007. Steel Partners, Ltd. regularly
      advances capital on behalf of various affiliated entities.




We
      have
      agreed to pay Steel Partners, Ltd. a monthly fee of $10,000 for office space
      and
      administrative services, including secretarial support. This fee commenced
      upon
      the completion of our initial public offering. We believe that such fees are
      at
      least as favorable as we could have obtained from an unaffiliated third
      party.




We
      will
      reimburse our officers, directors and affiliates, including Steel Partners
      and
      its employees, for any reasonable out-of-pocket business expenses incurred
      by
      them in connection with certain activities on our behalf such as identifying
      and
      investigating possible target businesses and business combinations. Subject
      to
      availability of proceeds not placed in the trust account and interest income
      of
      up to $3.5 million on the balance in the trust account, there is no limit on
      the
      amount of out-of-pocket expenses that could be incurred. Our audit committee
      will review and approve all payments made to our officers, directors and
      affiliates, including Steel Partners, other than the payment of an aggregate
      of
      $10,000 per month to Steel Partners, Ltd. for office space, secretarial and
      administrative services, and any payments made to members of our audit committee
      will be reviewed and approved by our board of directors, with the interested
      director or directors abstaining from such review and approval. To the extent
      such out-of-pocket expenses exceed the available proceeds not deposited in
      the
      trust account and interest income of up to $3.5 million on the balance in the
      trust account, such out-of-pocket expenses would not be reimbursed by us unless
      we consummate an initial business combination.




Members
      of our management team may become aware of business opportunities that may
      be
      appropriate for presentation to us as well as the other entities with which
      they
      are or may be affiliated. We have entered into a business opportunity right
      of
      first review agreement with Mr. Lichtenstein and Steel Partners II GP LLC
      (formerly Steel Partners, L.L.C.), which provides that from the date of our
      initial public offering until the earlier of the consummation of our initial
      business combination or our liquidation in the event we do not consummate an
      initial business combination, we will have a right of first review with respect
      to business combination opportunities of Steel Partners relating to companies
      that are not publicly traded on a stock exchange or over-the-counter market
      with
      an enterprise value of between $300 million to $1.5 billion, excluding companies
      targeted for acquisition by any business in which Steel Partners II, L.P.
      directly or indirectly has an investment (including Steel Partners Japan
      Strategic Fund (Offshore), L.P.) or businesses headquartered in or organized
      under the laws of China. Currently, members of our management team are officers
      or directors of the following entities in which Steel Partners II, L.P.,
      directly or indirectly, has an investment: Adaptec, Inc., Angelica Corporation,
      BNS Holding, Inc., Collins Industries, Inc., CoSine Communications, Inc., Del
      Global Technologies Corp., Gateway Industries, Inc., GenCorp Inc., Nathan’s
      Famous Inc., NOVT Corporation, SL Industries, Inc., Vector Group Ltd., WebBank,
      WebFinancial Corporation and WHX Corporation. In addition, such members of
      our
      management team could in the future become officers or directors of other
      entities in which Steel Partners II, L.P., directly or indirectly, has an
      investment. Due to those existing and future affiliations, members of our
      management team may have fiduciary obligations to present potential business
      opportunities to those entities prior to presenting them to us which could
      cause
      conflicts of interest. In addition, our directors and officers may in the future
      become affiliated with entities, including other blank check companies, engaged
      in activities similar to those intended to be conducted by us. Accordingly,
      members of our management team and our directors may have conflicts of interest
      in determining to which entity a particular business opportunity should be
      presented.




73




Howard
      M.
      Lorber, a director of our company, is also the Chairman of the Board of Open
      Acquisition Corp., which is a blank check company that intends to engage in
      activities similar to those conducted by us. While the registration statement
      filed by Open Acquisition has not been declared effective by the SEC and Open
      Acquisition’s registration statement states that it intends to have
      approximately $118.75 million in its trust account to fund acquisitions (as
      opposed to over $400 million in our trust account), if and when the registration
      statement of Open Acquisition is declared effective by the SEC Mr. Lorber may
      owe fiduciary duties to present Open Acquisition with business opportunities
      before presenting such opportunities to us.




Other
      than reimbursable out-of-pocket expenses payable to our officers and directors
      and Steel Partners II, L.P. and an aggregate of $10,000 per month paid to Steel
      Partners, Ltd. for office space, secretarial and administrative services, no
      compensation or fees of any kind, including finder’s and consulting fees or any
      other forms of compensation, including but not limited to stock options, will
      be
      paid to any of our officers or directors or their affiliates.




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




The
      firm
      of Grant Thornton LLP (“Grant Thornton”) acts as our principal accountant. Grant
      Thornton manages and supervises the audit, and is exclusively responsible for
      the opinion rendered in connection with its examination. The following is a
      summary of fees paid to Grant Thornton for services rendered:




**Audit
      Fees**




The
      aggregate fees billed or expected to be billed for professional services
      rendered by Grant Thornton for the year ended December 31, 2007
      were:




Audit
                fees
            
            $
            135,000Reviews
                of Form S-1 and related filings
            
            
            155,000Total
            
            $
            290,000





**Audit-Related
      Fees**




We
      did
      not receive audit-related services that are not reported as Audit Fees for
      the
      year ended December 31, 2007.




**Tax
      Fees**




There
      were $25,000 fees billed or expected to be billed for professional services
      for tax compliance, tax advice and tax planning by Grant Thornton for the year
      ended December 31, 2007.




**All
      Other Fees**




We
      did
      not receive products and services provided by Grant Thornton, other than those
      discussed above, for the year ended December 31, 2007.




74




**Pre-Approval
      Policy**




Since
      our
      audit committee was not formed until October 2007, the audit committee did
      not
      pre-approve all of the foregoing services, although any services rendered prior
      to the formation of our audit committee were approved by our board of directors.
      Since the formation of our audit committee, and on a going-forward basis, the
      audit committee has and will pre-approve all auditing services and permitted
      non-audit services to be performed for us by Grant Thornton, including the
      fees
      and terms thereof (subject to the *de
      minimus* exceptions for non-audit services described in the Exchange Act which are
      approved by the audit committee prior to the completion of the audit). The
      audit
      committee may form and delegate authority to subcommittees of the audit
      committee consisting of one or more members when appropriate, including the
      authority to grant pre-approvals of audit and permitted non-audit services,
      provided that decisions of such subcommittee to grant pre-approvals shall be
      presented to the full audit committee at its next scheduled meeting. Anthony
      Bergamo, the Chairman of our Audit Committee, approved certain tax services
      to
      be performed by Grant Thornton.




**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.




75




**(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.**
            
            **Description**3.1
            
            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)





76




(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.




77


**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.By:
            /s/
              Warren G. LichtensteinName:
            Warren
                G. LichtensteinTitle:
            Chairman,
                President and Chief Executive
                Officer





**POWER
      OF ATTORNEY**




KNOW
      ALL
      PERSONS BY THESE PRESENTS, that each person whose signature appears below
      constitutes and appoints Warren G. Lichtenstein and Jack L. Howard as true
      and
      lawful attorney-in-fact and agent with full power of substitution and
      resubstitution, for him and in his name, place and stead, in any and all
      capacities to sign any and all amendments to this Annual Report on Form 10-K,
      and to file the same, with all exhibits thereto, and other documents in
      connection therewith, with the SEC granting unto said attorney-in-fact and
      agent
      the full power and authority to do and perform each and every act and thing
      requisite and necessary to be done in and about the foregoing, as to all intents
      and purposes as either of them might or could do in person, hereby ratifying
      and
      confirming all that said attorney-in-fact and agent, or their substitute, may
      lawfully do or cause to be done by virtue hereof.




**Signature**
            
            **Title**
            
            **Date**/s/
                  Warren G. Lichtenstein
            
            
            
            March
                26, 2008Warren
                G. Lichtenstein
            
            Chairman,
                President and Chief Executive Officer (Principal Executive
                Officer)/s/
Jack
              L. Howard
            
            
            
            March
                26, 2008Jack
                L. Howard
            
            Chief
                Operating Officer and Secretary(Principal
                Financial Officer and Principal Accounting Officer)/s/
Anthony
              BergamoAnthony
                Bergamo
            
            Director
            
            March
                26, 2008/s/
Howard
              M. LorberHoward
                M. Lorber
            
            Director
            
            March
                26, 2008/s/
Leonard
              ToboroffLeonard
                Toboroff
            
            Director
            
            March
                26, 2008/s/
S.
              Nicholas WalkerS.
                Nicholas Walker
            
            Director
            
            March
                26, 2008/s/
Ronald
              LaBowRonald
                LaBow
            
            Director
            
            March
                26, 2008




78