All of our officers and directors indirectly own shares of our common stock which will not participate in liquidation distributions and therefore they may have a conflict of interest in determining whether a particular target business is appropriate for a business combination.

 

All of our officers and directors indirectly own shares of common stock in our company which were issued prior to this offering, but have waived their right to receive distributions with respect to those shares upon our liquidation. Additionally, St. Albans Global Management, LLLP, an affiliate of Paul Anthony Novelly, our chairman of the board, and Lee E. Mikles, our chief executive officer and a member of our board of directors, have agreed that they and certain of their affiliates or designees will purchase up to an aggregate of 200,000 units in the open market at market prices not to exceed $8.00 per unit within the first ninety days after the date of this prospectus. The shares of common stock indirectly owned by our officers and directors and their affiliates which were issued prior to this offering will be worthless if we do not consummate a business combination. The personal and financial interests of our directors may influence their motivation in identifying and selecting a target business and completing a business combination timely. Consequently, our directors' and officers’ discretion in identifying and selecting a suitable target business 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 existing stockholders, directors and officers 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 unless the business combination is consummated and therefore they may have a conflict of interest in determining whether a particular target business is appropriate for a business combination and in the public stockholders’ best interest.

 

Our existing stockholders, directors and officers 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 unless the business combination is consummated. In such event, our management may, as part of any such combination, negotiate the repayment of some or all of any such expenses, with or without interest or other compensation, which if not agreed to by the target business’ owners, 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 could influence their motivation in selecting a target business and thus, there may be a conflict of interest when determining whether a particular business combination is in the stockholders’ best interest.

 

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If our common stock becomes subject to the SEC's penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.

 

If at any time we have net tangible assets of $5,000,000 or less and our common stock has a market price per share of less than $5.00, transactions in our common stock may be subject to the "penny stock" rules promulgated under the Securities Exchange Act of 1934. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

 

·	make a special written suitability determination for the purchaser;

 

·	receive the purchaser's written agreement to a transaction prior to sale;

 

·	provide the purchaser with risk disclosure documents which identify certain risks associated with investing in "penny stocks" and which describe the market for these "penny stocks" as well as a purchaser's legal remedies; and

 

·	obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a "penny stock" can be completed.

 

If our common stock becomes subject to these rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.

 

It is probable that we will only be able to complete one business combination with the proceeds of this offering, which will cause us to be solely dependent on a single business and a limited number of products or services.

 

The net proceeds from this offering will provide us with approximately $148,300,000 which we may use to complete a business combination. Our initial business combination must be with a business or businesses with a collective fair market value of at least 80% of our net assets at the time of such acquisition. We may further seek to acquire a target business that has a fair market value significantly in excess of 80% of our net assets. Although as of the date of this prospectus we have not engaged or retained, had any discussions with, or entered into any agreements with, any third party regarding any such potential financing transactions, we could seek to fund such a business combination by raising additional funds through the sale of our securities or through loan arrangements. However, if we were to seek such additional funds, any such arrangement would only be consummated simultaneously with our consummation of a business combination.

 

We may not be able to acquire more than one target business because of various factors, including possible complex domestic or international accounting issues, which would include generating pro forma financial statements reflecting the operations of several target businesses as if they had been combined, and numerous logistical issues, which could include attempting to coordinate the timing of negotiations, proxy statement disclosure and closings with multiple target businesses. In addition, we would also be exposed to the risk that conditions to closings with respect to the acquisition of one or more of the target businesses would not be satisfied bringing the fair market value of the initial business combination below the required fair market value of 80% of net assets threshold. Consequently, it is probable that, unless the purchase price consists substantially of our equity, we will have the ability to complete only the initial business combination with the proceeds of this offering. Accordingly, the prospects for our ability to effect our business strategy may be:

 

·	solely dependent upon the performance of a single business, or

 

·	dependent upon the development or market acceptance of a single or limited number of products, processes or services.

 

 

Our existing stockholders paid an aggregate of $25,000, or approximately $0.005 per share, for their shares and, accordingly, you will experience immediate and substantial dilution from the purchase of our common stock.

 

The difference between the public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering constitutes the dilution to you and the other investors in this offering. The fact that our existing stockholders acquired their shares of common stock at a nominal price has significantly contributed to this dilution. Assuming the offering is completed, you and the other new investors will incur an immediate and substantial dilution of approximately 29.3% or $2.34 per share (the difference between the pro forma net tangible book value per share of $5.66, and the initial offering price of $8.00 per unit).

 

Our outstanding warrants may have an adverse effect on the market price of common stock and make it more difficult to effect a business combination.

 

In connection with this offering, as part of the units, we will be issuing warrants to purchase 20,000,000 shares of common stock. We will also issue an option to purchase 3,000,000 units to the representative of the underwriters which, if exercised, will result in the issuance of an additional 3,000,000 warrants. To the extent we issue shares of common stock to effect a business combination, the potential for the issuance of substantial numbers of additional shares upon exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target business as such securities, when exercised, will increase the number of issued and outstanding shares of our common stock and reduce the value of the shares issued to complete the business combination. Accordingly, our warrants may make it more difficult to effectuate a business combination or increase the cost of the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants could have an adverse effect on the market price for our securities or on our ability to obtain future public financing. If and to the extent these warrants are exercised, you may experience dilution to your holdings.

 

Our existing stockholders’ obligation to purchase units in the open market within the first ninety days after the date of this prospectus pursuant to agreements with The Shemano Group, Inc. may support the market price of the units during such period and, accordingly, the termination of the support provided by such purchases may materially adversely affect the trading price of the units.

 

St. Albans Global Management, LLLP, an affiliate of Paul Anthony Novelly, our chairman of the board, and Lee E. Mikles, our chief executive officer and a member of our board of directors, have agreed, pursuant to agreements with The Shemano Group, Inc., that they and certain of their affiliates or designees will purchase up to an aggregate of 200,000 units at market prices not to exceed $8.00 per unit within the first ninety days after the date of this prospectus. Messrs. Novelly and Mikles will not have any discretion or influence with respect to such purchases. Such purchases made pursuant to the agreements may serve to support the market price of the units during such ninety day period at a price above that which would prevail in the absence of such purchases. However, the agreements shall terminate at the end of the ninety days after the date of this prospectus or the earlier purchase of the 200,000 units. The termination of the support provided by the purchases under the agreements with The Shemano Group, Inc. may materially adversely affect the trading price of the units.

 

If our existing stockholders exercise their registration rights, it may have an adverse effect on the market price of our common stock and the existence of these rights may make it more difficult to effect a business combination.

 

Our existing stockholders are entitled to demand that we register the resale of their shares of common stock at any time after the date on which their shares are released from escrow, which, except in limited circumstances, will not be before three years from the date of this prospectus. If our existing stockholders exercise their registration rights with respect to all of their shares of common stock, then there will be an additional 5,000,000 shares of common stock eligible for trading in the public market. The presence of this additional number of shares of common stock eligible for trading in the public market may have an adverse effect on the market price of our common stock. In addition, the existence of these rights may make it more difficult to effectuate a business combination or increase the cost of the target business, as the stockholders of the target business may be discouraged from entering into a business combination with us or request a higher price for their securities as a result of these registration rights and the potential future effect their exercise may have on the trading market for our common stock.

 

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If you are not an institutional investor, you may purchase our securities in this offering only if you reside within certain states and may engage in resale transactions only in those states and a limited number of other jurisdictions.

 

We have applied to register our securities, or have obtained or will seek to obtain an exemption from registration, in Colorado, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Indiana, New York, Rhode Island and Wyoming. If you are not an "institutional investor," you must be a resident of these jurisdictions to purchase our securities in the offering. Institutional investors in every state except Idaho and Oregon may purchase units in this offering pursuant to exemptions provided to such entities under the Blue Sky laws of various states. The definition of an "institutional investor" varies from state to state but generally includes financial institutions, broker-dealers, banks, insurance companies and other qualified entities. In order to prevent resale transactions in violation of states' securities laws, you may engage in resale transactions only in the states referred to in the section of this prospectus entitled “Underwriting -- State Blue Sky Information,” if you are not an institutional investor, and in all states other than Idaho and Oregon, if you are an institutional investor, and the other jurisdictions in which an applicable exemption is available or a Blue Sky application has been filed and accepted. This restriction on resale may limit your ability to resell the securities purchased in this offering and may impact the price of our securities. For a more complete discussion of the Blue Sky state securities laws and registrations affecting this offering, please see the section entitled " Underwriting --State Blue Sky Information" below.

 

There is currently no market for our securities and a market for our securities may not develop, which could adversely affect the liquidity and price of our securities.

 

 There is no market for our securities. Therefore, investors should be aware that they cannot benefit from information about prior market history as to their decisions to invest which means they are at further risk if they invest. In addition, the price of the securities, after the offering, can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports.

 

 Furthermore, an active trading market for our securities may never develop or, if developed, it may not be maintained. Investors may be unable to sell their securities unless a market can be established or maintained.

 

We intend to have our securities quoted on the OTC Bulletin Board, which will limit the liquidity and price of our securities more than if our securities were quoted or listed on The Nasdaq Stock Market or a national exchange.

 

We expect our securities to be traded in the over-the-counter market. It is anticipated that they will be quoted on the OTC Bulletin Board, an NASD-sponsored and operated inter-dealer automated quotation system for equity securities not included in The Nasdaq Stock Market. Quotation of our securities on the OTC Bulletin Board will limit the liquidity and price of our securities more than if our securities were quoted or listed on The Nasdaq Stock Market or a national exchange. We cannot assure you, however, that such securities will be approved for quotation or continue to be authorized for quotation on the OTC Bulletin Board or any other market in the future. Lack of liquidity will limit the price at which you may be able to sell our securities or your ability to sell our securities at all.

 

If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination.

 

If we are deemed to be an investment company under the Investment Company Act of 1940, our activities may be restricted, including:

 

·	restrictions on the nature of our investments; and

 

·	restrictions on the issuance of securities,

 

which may make it difficult for us to complete a business combination.

 

In addition, we may have imposed upon us burdensome requirements, including:

 

·	registration as an investment company;

 

·	adoption of a specific form of corporate structure; and

 

·	reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.

 

We do not believe that our anticipated principal activities will subject us to the Investment Company Act of 1940. To this end, the proceeds held in trust may only be invested by the trust agent in Treasury Bills issued by the United States with maturity dates 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. By restricting the investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940. If we were deemed to be subject to the act, compliance with these additional regulatory burdens would require additional expense that we have not allotted for.

 

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Because we may be deemed to have no "independent" directors, actions taken and expenses incurred by our officers and directors on our behalf will generally not be subject to "independent" review.

Each of our directors owns shares of our common stock and, although no salary or other compensation will be paid to them for services rendered prior to or in connection with a business combination, they may receive reimbursement for out-of-pocket expenses incurred by them in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than our board of directors, which includes persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Because none of our directors may be deemed "independent," we will generally not have the benefit of independent directors examining the propriety of expenses incurred on our behalf and subject to reimbursement. Although we believe that all actions taken by our directors on our behalf will be in our best interests, we cannot assure you that this will be the case. If actions are taken, or expenses are incurred that are not in our best interests, it could have a material adverse effect on our business and operations and the price of our securities held by the public stockholders.

 

Because our initial stockholders' initial equity investment was only $25,000, our offering may be disallowed by state administrators that follow the North American Securities Administrators Association, Inc. Statement of Policy on development stage companies.

 

Pursuant to the Statement of Policy Regarding Promoter's Equity Investment promulgated by The North American Securities Administrators Association, Inc., an international organization devoted to investor protection, any state administrator may disallow an offering of a development stage company if the initial equity investment by a company's promoters does not equal a certain percentage of the aggregate public offering price. Our initial stockholders' initial investment of $25,000 is less than the required $4,110,000 minimum amount pursuant to this policy. Accordingly, a state administrator would have the discretion to disallow our offering if it wanted to. We cannot assure you that our offering would not be disallowed pursuant to this policy. Thus, we may not be able to offer our securities in a particular state if the state securities administrator for such state chooses to disallow the offering pursuant to this policy.

 

Risks related to the petroleum or oil and gas industries

The petroleum or oil and gas industries are highly competitive.

The petroleum or oil and gas industries are highly competitive. There is competition within the industries and also with other industries in supplying the energy, fuel and chemical needs of industry and individual consumers. A target business will compete with other firms in the sale or purchase of various goods or services in many national and international markets. Although we anticipate that the target business will employ all methods of competition which are lawful and appropriate for such purposes, no assurances can be made that they will be successful. A key component of a target business’ competitive position, particularly given the expected commodity-based nature of many of its products, will be its ability to manage expenses successfully, which requires continuous management focus on reducing unit costs and improving efficiency. No assurances can be given that a target business will be able to successfully manage such expenses.

The petroleum or oil and gas industries are affected by certain political factors.

The operations and earnings of a target business may be affected from time to time in varying degree by political instability and by other political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; war or other international conflicts; civil unrest and local security concerns that threaten the safe operation of company facilities; price controls; tax increases and retroactive tax claims; expropriation of property; cancellation of contract rights; and environmental regulations. Both the likelihood of such occurrences and their overall effect upon a target business will vary greatly from country to country and are not predictable.

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Fluctuations in energy prices may cause a reduction in the demand or profitability of the products or services we may ultimately produce or offer.

Prices for energy sources such as oil and natural gas tend to fluctuate widely based on a variety of political and economic factors. These price fluctuations heavily influence the petroleum or oil and gas industries. Lower energy prices for existing products tend to limit the demand for alternate forms of energy services and related products and infrastructure. Historically, the markets for oil and gas have been volatile and they are likely to continue to be volatile. Wide fluctuations in oil and gas prices may result from relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty and other factors that are beyond our control, including:

·	worldwide and domestic supplies of oil and gas;

·	weather conditions;

·	the level of consumer demand;

·	the price and availability of alternative fuels;

·	the availability of pipeline and refining capacity;

·	the price and level of foreign imports;

·	domestic and foreign governmental regulations and taxes;

·	the ability of the members of the Organization of Petroleum Exporting Countries (OPEC) to agree to and maintain oil price and production controls;

·	political instability or armed conflict in oil-producing regions; and

·	the overall economic environment.

These factors and the volatility of the energy markets make it extremely difficult to predict future oil and gas price movements with any certainty. If we complete a business combination with a target business that is involved with an energy source that is affected by these or other factors, there may be a decrease in the demand for the products or services we may ultimately produce or offer and our profitability could be adversely affected.

Changes in technology may render our products or services obsolete following a business combination.

The petroleum or oil and gas industries is substantially affected by rapid and significant changes in technology. These changes may render obsolete certain existing energy sources, services and technologies currently used. We cannot assure you that the technologies used by or relied upon by a target business with which we effect a business combination will not be subject to such obsolescence. While we may attempt to adapt and apply the services provided by the target business to newer technologies, we cannot assure you that we will have sufficient resources to fund these changes or that these changes will ultimately prove successful.

Failure to comply with governmental regulations could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities.

The petroleum or oil and gas industries is subject to extensive federal, state, local and foreign laws and regulations related to the general population's health and safety and those associated with compliance and permitting obligations (including those related to the use, storage, handling, discharge, emission and disposal of municipal solid waste and other waste, pollutants or hazardous substances or waste, or discharges and air and other emissions) as well as land use and development. Existing laws also impose obligations to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination. Compliance with these laws, regulations and obligations could require substantial capital expenditures. Failure to comply could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities. These costs and liabilities could adversely affect our operations following a business combination. These laws, regulations and obligations could change with the promulgation of new laws and regulations or a change in the interpretation of existing laws and regulations, which could result in substantially similar risks. We cannot assure you that we will be able to comply with existing or new regulations.

Our target business following a business combination and any future acquisitions may prove to be worth less than we paid because of uncertainties in evaluating recoverable reserves and potential liabilities.

 

Successful acquisitions may require an assessment of a number of factors, including estimates of recoverable reserves, exploration potential, future oil and gas prices, operating costs and potential environmental and other liabilities. Such assessments are inexact and their accuracy is inherently uncertain. In connection with our assessments, we intend to perform a review of the acquired properties which we believe is generally consistent with industry practices. However, such a review will not reveal all existing or potential problems. In addition, our review may not permit us to become sufficiently familiar with the properties to fully assess their deficiencies and capabilities. As a result of these factors, we may not be able to acquire oil and gas or other energy properties that contain economically recoverable reserves or be able to complete such acquisitions on acceptable terms.

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Oil and gas drilling and producing operations can be hazardous and may expose us to environmental liabilities.

 

If our target business with which we effect a business combination has oil and gas operations, we will be subject to many risks, including well blowouts, cratering and explosions, pipe failure, fires, formations with abnormal pressures, uncontrollable flows of oil, natural gas, brine or well fluids, and other environmental hazards and risks. If any of these risks occurs, we could sustain substantial losses as a result of:

·	injury or loss of life;

·	severe damage to or destruction of property, natural resources and equipment;

·	pollution or other environmental damage;

·	clean-up responsibilities;

·	regulatory investigations and penalties; and

·	suspension of operations.

 

Our liability for environmental hazards could include those created either by the previous owners of properties that we purchase or lease or by acquired companies prior to the date we acquire them. We expect to maintain insurance against some, but not all, of the risks described above. Our insurance may not be adequate to cover casualty losses or liabilities. Also, we may not be able to obtain insurance at premium levels that justify its purchase.

Our target business following a business combination may engage in hedging transactions in an attempt to mitigate exposure to price fluctuations in oil and natural gas transactions and other portfolio positions which may not ultimately be successful.

  Our target business following a business combination may engage in short sales and utilize derivative instruments such as options, futures, forward contracts, interest rate swaps, caps and floors, both for investment purposes and to seek to hedge against fluctuations in the relative values of oil and natural gas, other energy portfolio positions and currency exchange and interest rates. Hedging against a decline in the value of a portfolio position does not eliminate fluctuations in the values of portfolio positions or prevent losses if the values of such positions decline, but establishes other positions designed to gain from those same developments, thus potentially moderating the decline in the value of positions held in the portfolio. Such hedge transactions also limit the opportunity for gain if the value of a portfolio position should increase. Moreover, it may not be possible for us to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at a price sufficient to protect us from the decline in value of the portfolio position anticipated as a result of such a fluctuation. The success of any hedging transactions will be subject to our ability to correctly assess the relationships between groupings of securities within our portfolio, as well as, in the case of hedges designed to address currency exchange rate and interest rate fluctuations, to correctly predict movements in the direction of such rates. Therefore, while we may enter into such transactions to seek to reduce market currency exchange rate and interest rate risks, incorrect assessments of relationships between groupings of securities and unanticipated changes in currency or interest rates may result in a poorer overall performance than if we had not engaged in any such hedging transaction. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio position being hedged may vary. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Such imperfect correlation may prevent us from achieving the intended hedge or expose us to risk of loss.

 

Since we may acquire a company located or that has operations outside of the United States, we may be subject to various risks of the foreign jurisdiction in which we ultimately operate.

 

If we acquire a company that has operations outside the United States, we will be exposed to risks that could negatively impact our future revenues or results of operations following a business combination. Additionally, if the acquired company is in a developing country or a country that is not fully market-oriented, our operations may not develop in the same way or at the same rate as might be expected in the United States or another country with an economy similar to the market-oriented economies of member countries of the Organization for Economic Cooperation and Development, or OECD. The OECD is an international organization helping governments tackle the economic, social and governance challenges of a globalized economy. 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 United States;

 

·	cultural and language differences;

 

·	an inadequate banking system;

 

·	foreign exchange controls;

 

·	restrictions on the repatriation of profits or payment of dividends;

 

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

 

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·	nationalization or expropriation of property;

 

·	law enforcement authorities and courts that are inexperienced in commercial matters; and

 

·	deterioration of political relations with the United States.

 

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

 

We may do business and generate revenue in other countries. Foreign currency fluctuations may affect the costs that we incur in our operations. 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 cost of doing business and could hurt our results of operations and financial condition.

 

Exchange controls and withholding taxes may restrict our ability to utilize our cash flow.

 

If we acquire a company that has operations outside the United States, we may be subject to existing or future rules and regulations on currency conversion or corporate withholding taxes on dividends which may affect our ability to utilize our cash flow effectively, repatriate profits or pay dividends.

 

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DILUTION

 

The difference between the public offering price per share of common stock, assuming no value is attributed to the warrants included in the units, and the pro forma net tangible book value per share of our common stock after this offering constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of common stock which may be converted into cash if voted against the business combination), by the number of outstanding shares of our common stock.

 

At August 29, 2005, our net tangible book value was a deficiency of $65,608 or approximately $(0.01) per share of common stock. After giving effect to the sale of 20,000,000 shares of common stock included in the units, and the deduction of underwriting discounts and estimated expenses of this offering, our pro forma net tangible book value (as decreased by the value of 3,998,000 shares of common stock which may be converted into cash) at August 29, 2005 would have been $118,934,072 or $5.66 per share, representing an immediate increase in net tangible book value of $5.67 per share to the existing stockholders and an immediate dilution of $2.34 per share or 29.29% to new investors not exercising their conversion rights.

 

For purposes of presentation, our pro forma net tangible book value after this offering is approximately $29,345,320 less than it otherwise would have been because if we effect a business combination, the conversion rights to the public stockholders may result in the conversion into cash of up to approximately 19.99% of the aggregate number of the shares sold in this offering at a per-share conversion price equal to the amount in the trust as of the record date for the determination of stockholders entitled to vote on the business combination, inclusive of any interest, divided by the number of shares sold in this offering.

 

The following table illustrates the dilution to the new investors on a per-share basis, assuming no value is attributed to the warrants included in the units:

Public offering price					$	8.00
Net tangible book value before this offering		$	(0.01	)
Increase attributable to new investors			5.67
Pro forma net tangible book value after this offering						5.66
Dilution to new investors					$	2.34

The following table sets forth information with respect to our existing stockholders and the new investors:

 

		Shares Purchased						Total Consideration						Average
		Number			Percentage			Amount			Percentage			Price per share
Existing Stockholders			5,000,000			20.00	%	$	25,000			0.02	%	$	0.01
New Investors			20,000,000			80.00	%	$	160,000,000			99.98	%	$	8.00
			25,000,000			100.00	%	$	160,025,000			100.00	%

 

We have also agreed to sell to The Shemano Group, Inc., for $100, an option to purchase up to a total of 1,000,000 units, consisting of one share of common stock and one warrant, at $10 per unit, commencing on the later of the consummation of the business combination and one year after the date of this prospectus and expiring five years after the date of this prospectus. The warrants underlying such units will have terms that are identical to those being issued in this offering, with the exception of the exercise price, which will be set at $7.50 per warrant. The sale of the option will be accounted for as a cost attributable to the proposed offering. Accordingly, there will be no net impact on our financial position or results of operations, except for the recording of the $100 proceeds from the sale.

 

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PROPOSED BUSINESS

 

Introduction

 

We are a Delaware blank check company incorporated on August 12, 2005 to serve as a vehicle for the acquisition of an operating business in the petroleum or oil and gas industries.

 

The petroleum or oil and gas industries generally include the exploration, development, extraction, production, refining, storage, transportation and/or marketing of petroleum, petroleum products and natural gas. We believe that the petroleum or oil and gas industries represent both a favorable environment for making acquisitions and an attractive operating environment for a target business because demand for oil and natural gas is increasing worldwide. According to the International Energy Outlook 2005 (IEO2005), released by the U.S. Energy Information Administration in July 2005, world oil use is expected to grow from 78 million barrels per day in 2002 to 103 million barrels per day in 2015 and 119 million barrels per day in 2025. The IEO2005 projects that natural gas will be the fastest growing primary energy source worldwide, maintaining expected average growth of 2.3% annually from 2002 to 2025. Total world natural gas consumption is projected to increase from 92 trillion cubic feet in 2002 to 128 trillion cubic feet in 2015 and 156 trillion cubic feet in 2025.

 

We expect that this increase in demand for oil and gas will result in business opportunities in all areas of the exploration, development, extraction, production, refining, storage, transportation and marketing of petroleum, petroleum products and natural gas.

 

Given the experience and background of our management, our strategic initiative will be to identify target business candidates that we believe possess characteristics that would show enhanced value through the repositioning and combination with future petroleum or oil and gas assets. Our management has extensive experience in acquiring, building and enhancing properties within the petroleum or oil and gas industries as well as years of experience in the financial markets.

 

Petroleum or Oil and Gas Industries

 

The U.S. petroleum industry consists of many firms of varying sizes that operate in one or more of three broad segments: the exploration and production segment (upstream); the refining and marketing segment (downstream); and a third segment typically referred to as the midstream, which consists of the infrastructure used to transport and store crude oil, petroleum products and natural gas. Some of the petroleum companies in the United States operate in all segments of the industry--that is, they are fully vertically integrated. Others that operate in one or more but not all segments are generally called partially vertically integrated or independents.

 

Upstream Segment

 

The activities of the upstream segment consist essentially of exploration for and production of crude oil and natural gas. Hence, the upstream is also referred to as the exploration and production segment. Participants in the U.S. upstream include fully vertically integrated companies and independent producers. The U.S. upstream segment is characterized by a large number of independent producers and a smaller number of fully vertically integrated oil companies.

 

The activities of companies in the upstream segment include: (i) the acquisition and development of producing properties, leasehold acreage and drilling prospects with exploitation and exploration potential; (ii) accelerated development of existing proved properties and identified exploration prospects; (iii) participation in third-party generated development, exploitation and exploration projects; and (iv) disposition of marginally performing and other non-core business assets.

 

The Energy Information Administration (EIA)--the independent statistical and analytical agency within the U.S. Department of Energy (DOE)--has classified U.S. upstream operators into three main categories according to the size of their production, not according to whether they are integrated or independent:

 

·	large operators--who produced a yearly total of 1.5 million barrels or more of crude, 15 billion cubic feet of natural gas, or both;

 

·	intermediate operators--who produced a yearly total of at least 400,000 barrels of crude oil, 2 billion cubic feet of natural gas, or both, but less than the large operators; and

 

·	small operators--who produced less than the intermediate operators.

 

Based on this classification, EIA estimated that as of 2001, there were 179 large operators, which accounted for 84.2% of crude oil production; 430 intermediate operators, which accounted for 5.8% of crude oil production; and 22,519 small operators, which accounted for 10% of crude oil production.

 

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Fully vertically integrated companies are generally large operators, while independent producers are generally small operators, with a few medium and large operators. While the fully vertically integrated companies are generally multibillion dollar companies that are publicly traded, the independent producers include many extremely small, privately owned operations as well as a few multibillion dollar and publicly traded companies. In general, the fully vertically integrated companies have upstream operations both in the United States and overseas and accounted for about 60% of U.S. crude oil production in 2002. The exploration and production activities of the independents occur mostly in the United States and accounted for about 40% of the crude oil produced in the United States in 2002.

 

Midstream Segment

 

The midstream segment transports and stores crude oil, petroleum products and natural gas. Transportation facilities include pipelines, marine tankers and barges, railways and trucks. Pipelines and, to a lesser extent, the other carriers transport domestically produced crude oil from the production points to the refineries, while marine carriers generally transport imported oil. Pipelines also transport natural gas from the well head to gathering facilities and from gathering facilities to wholesalers and consumers. Refined products, such as gasoline, are also carried via these modes from refineries to storage terminals, from which they are generally transported by trucks to retail stations.

 

In general, pipelines are the dominant and most efficient mode of transporting crude oil, petroleum products and natural gas in the United States. According to data from the Association of Oil Pipelines, pipelines transported 67.8% of all the crude and petroleum products in the United States in 2002. Marine tankers and barges transported 28%, while trucks and railways hauled 3.6% and 2.3%, respectively. According to the DOE’s Office of Transportation Technology, there are more than 200,000 miles of oil pipelines in the United States.

 

Downstream Segment

 

Refining and marketing are the main activities of the downstream segment. Refining is the process of transforming crude oil into petroleum products ranging from gasoline and distillate fuel oil (heating oil) to heavier products such as asphalt. Gasoline accounted for nearly half of U.S. refinery output in 2004.

 

Marketing in the downstream involves selling petroleum products and natural gas to customers, who are generally wholesale and retail purchasers. For gasoline, refiners arrange to move products from the refineries to storage terminals, from which they sell the product to wholesale purchasers. There are different classes of wholesale gasoline purchasers in the United States, and the prices they pay depend, in part, on the type of relationship they have with the refiners. From the terminals, gasoline is distributed to retail stations for sale to final consumers.

 

Governmental regulation

The petroleum or oil and gas industries are subject to extensive national, federal, state and local laws and regulations related to worker, consumer and third-party health and safety and those associated with compliance and permitting obligations (including those related to the use, storage, handling, discharge, emission and disposal of municipal solid waste and other waste, pollutants or hazardous substances or wastes, or discharges and air and other emissions) as well as land use and development. Existing laws also impose obligations to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination.

 

Effecting a business combination

 

General

 

We are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time up to 24 months following this offering. We intend to utilize cash derived from the proceeds of this offering, our capital stock, debt or a combination of these in effecting a business combination. Although substantially all of the net proceeds of this offering are intended to be generally applied toward effecting a business combination as described in this prospectus, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, prospective investors will invest in us without an opportunity to evaluate the specific merits or risks of any one or more business combinations. A business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination with the proceeds of this offering.

 

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We have not identified a target business

 

To date, we have not selected any target business on which to concentrate our search for a business combination. None of our officers, directors, promoters or other affiliates have had any preliminary contact or discussions on our behalf with representatives of any prospective target business regarding the possibility of a potential merger, capital stock exchange, asset acquisition or other similar business combination with us. Additionally, we have not engaged or retained any agent or other representative to identify or locate any suitable acquisition candidate. Finally, we note that there has been no diligence, discussions, negotiations and/or other similar activities undertaken, directly or indirectly, by us, our affiliates or representatives, or by any third party, with respect to a business combination transaction with us.

 

 

Sources of target businesses

 

We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community, who may present solicited or unsolicited proposals. We expect such sources to become aware that we are seeking a business combination candidate by a variety of means, such as publicly available information relating to this offering, public relations and marketing efforts and/or direct contact by management to be commenced following the completion of this offering. Our stockholders, officers and directors as well as their affiliates may also bring to our attention target business candidates. While our officers and directors make no commitment as to the amount of time they will spend trying to identify or investigate potential target businesses, they believe that the various relationships they have developed over their careers together with their direct inquiry of their contacts will generate a number of potential target businesses that will warrant further investigation. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis, and have no arrangements or understandings, preliminary or otherwise, with respect to such engagements, we may engage these firms in the future, in which event we may pay a finder’s fee or other compensation. The terms of any such arrangements will be negotiated with such persons on an arm’s length basis and disclosed to our stockholders in the proxy materials we provide in connection with any proposed business combination. In no event, however, will we pay any of our existing officers, directors or stockholders, or any affiliates of our directors or officers, any finder’s fee or other compensation for services rendered to us prior to or in connection with the consummation of a business combination. In addition, none of our officers, directors or existing stockholders will receive any finder’s fee, consulting fees or any similar fees or other compensation from any other person or entity in connection with any business combination other than any compensation or fees to be received for any services provided following such 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 or businesses in the petroleum or oil and gas industries and have a collective fair market value that is at least 80% of our net assets at the time of such acquisition, our management will have virtually unrestricted flexibility in identifying and selecting a prospective target business. We have not conducted any specific research on the petroleum or oil and gas industries to date nor have we conducted any research with respect to identifying the number and characteristics of the potential acquisition candidates or the likelihood or probability of success of any proposed business combination. In evaluating a prospective target business, our management will conduct the necessary business, legal and accounting due diligence on such target business and will consider, among other factors, the following::

 

·	financial condition and results of operation;

·	growth potential;

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

·	capital requirements;

·	competitive position;

·	barriers to entry into the petroleum or oil and gas industries;

·	stage of development of the petroleum or oil and gas assets;

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

·	proprietary features and degree of intellectual property or other protection of the products, processes or services;

·	regulatory environment of the industry; and

·	costs associated with effecting the business combination.

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

 

 

Executive Compensation

 

No executive officer has received any cash compensation for services rendered. Commencing on the effective date of this prospectus through the acquisition of a target business, we will pay Apex Oil Company, Inc., an affiliate of Paul Anthony Novelly, our chairman of the board, and Douglas D. Hommert, our executive vice president, secretary and a member of our board of directors, a fee of up to $3,750 per month for providing us with office space and certain office and administrative services. In addition, we have agreed to pay Mikles/Miller Management, Inc., an affiliate of Lee E. Mikles, our chief executive officer and a member of our board of directors, a fee of up to $3,750 per month for general and administrative services including secretarial support. However, this arrangement is solely for our benefit and is not intended to provide Mr. Novelly, Mr. Hommert or Mr. Mikles compensation in lieu of a salary. Other than this $7,500 maximum per-month fee, no compensation of any kind, including finder's and consulting fees, will be paid to any of our existing stockholders, including our directors, or any of their respective affiliates, for services rendered prior to or in connection with a business combination. However, our existing stockholders will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than our board of directors, which includes persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Because none of our directors may be deemed "independent," we will generally not have the benefit of independent directors examining the propriety of expenses incurred on our behalf and subject to reimbursement.

 

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Conflicts of Interest

 

Potential investors should be aware of the following potential conflicts of interest:

 

·	None of our officers and directors are required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating management time among various business activities.

 

·

In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. They may have conflicts of interest in determining to which entity a particular business opportunity should be presented. For a description of our management's other affiliations, see the previous section entitled "Directors and Executive Officers."

 

·	Our officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by our company.

 

·

Since our directors and their affiliates beneficially own shares of our common stock which will be released from escrow only if a business combination is successfully completed, our board may have a conflict of interest in determining whether a particular target business is appropriate to effect a business combination. The personal and financial interests of our directors and officers may influence their motivation in identifying and selecting a target business, completing a business combination timely and securing the release of their stock.

 

·

Our directors and officers may be paid consulting, management or other fees from target businesses as a result of the business combination, with any and all amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to the stockholders. If management negotiates to be retained post-business combination as a condition to any potential business combination, such negotiations may result in a conflict of interest.

 

·

Because our existing stockholders, including all of our officers and directors, 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 unless the business combination is consummated, they may have a conflict of interest when determining whether a particular business combination is in the public stockholders’ best interest. Specifically, our existing stockholders may view potential business combinations where such excess expenses would be repaid more favorably than those where such excess expenses would not be repaid or any business combination in which such excess expenses would be repaid more favorably than no business combination.

 

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 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.

 

In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, each of our officers and directors has agreed, until the earlier of a business combination, our liquidation or such time as he ceases to be an officer or director, to present to the company for its consideration, prior to presentation to any other entity, any business opportunity which may reasonably be required to be presented to us under Delaware law, subject to any pre-existing fiduciary or contractual obligations they might have. Messrs. Novelly and Hommert are officers and/or directors of other companies that may be involved in similar businesses to those potential acquisition candidates that we may pursue. This may result in a conflict of interest between Messrs. Novelly and Hommert and us.

 

In connection with the vote required for any business combination, all of our existing stockholders, including all of our officers and directors, have agreed to vote their respective shares of common stock which were owned prior to this offering in accordance with the vote of the public stockholders owning a majority of the shares of our common stock sold in this offering. In addition, our existing stockholders have agreed to vote any shares of common stock acquired following this offering in favor of the business combination submitted to our stockholders for approval. Accordingly, they will not be able to exercise conversion rights with respect to a potential business combination. In addition, they have agreed to waive their respective rights to participate in any liquidation distribution occurring upon our failure to consummate a business combination but only with respect to those shares of common stock acquired by them prior to this offering.

 

To further minimize potential conflicts of interest, we have agreed not to consummate a business combination with an entity which is affiliated with any of our existing stockholders unless we obtain an opinion from an independent investment banking firm that the business combination is fair to our stockholders from a financial point of view.

 

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Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors.

 

If we are forced to liquidate prior to a business combination, our public stockholders are entitled to share ratably in the trust account, inclusive of any interest, and any net assets remaining available for distribution to them after payment of liabilities. Our existing stockholders have agreed to waive their rights to share in any distribution with respect to common stock owned by them prior to the offering if we are forced to liquidate.

 

Our stockholders have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock, except that public stockholders have the right to have their shares of common stock converted to cash equal to their pro rata share of the trust account if they vote against the business combination and the business combination is approved and completed. Public stockholders who convert their stock into their share of the trust account still have the right to exercise the warrants that they received as part of the units.

 

Preferred stock

 

Our certificate of incorporation authorizes the issuance of 5,000,000 shares of blank check preferred stock with such designation, rights and preferences as may be determined from time to time by our board of directors. No shares of preferred stock are being issued or registered in this offering. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of common stock, although the underwriting agreement prohibits us, prior to a business combination, from issuing preferred stock which participates in any manner in the proceeds of the trust account, or which votes as a class with the common stock on a business combination. We may issue some or all of the preferred stock to effect a business combination. In addition, the preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us. Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future.

 

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Warrants

 

No warrants are currently outstanding. Each warrant entitles the registered holder to purchase one share of our common stock at a price of $6.00 per share, subject to adjustment as discussed below, at any time commencing on the later of:

 

·	the completion of a business combination; and

 

·	one year from the date of this prospectus.

 

The warrants will expire four years from the date of this prospectus at 5:00 p.m., New York City time.

 

The warrants will trade separately on the 90th day after the date of this prospectus unless The Shemano Group, Inc. determines that an earlier date is acceptable, based upon its assessment of the relative strengths of the securities markets and small capitalization companies in general, and the trading pattern of, and demand for, our securities in particular. In no event will The Shemano Group, Inc. allow separate trading of the common stock and warrants until we file a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the proceeds of this offering including any proceeds we receive from the exercise of the over-allotment option if such option is exercised prior to our filing of the Form 8-K.

 

We may call the warrants for redemption (including any warrants issued upon exercise of our unit purchase option),

 

·	in whole and not in part,

 

·	at a price of $.01 per warrant at any time after the warrants become exercisable,

 

·	upon not less than 30 days' prior written notice of redemption to each warrant holder, and

 

·	if, and only if, the last sales price of the common stock equals or exceeds $11.50 per share, for any 20 trading days within a 30 trading day period ending on the third business day prior to the notice of redemption to warrant holders.

 

 

Commissions and Discounts

 

The following table shows the public offering price, underwriting discount to be paid by us to the underwriters and the proceeds, before expenses, to us. This information assumes either no exercise or full exercise by the underwriters of their over-allotment option.

 

		Per unit			Without option			With option
Public offering price		$	8.00		$	160,000,000		$	184,000,000
Discount		$	0.48		$	9,600,000		$	11,040,000
Non-accountable expense allowance (1)		$	0.08		$	1,600,000		$	1,600,000
Proceeds before expenses (2)		$	7.44		$	148,800,000		$	171,360,000

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(1)	The non-accountable expense allowance is not payable with respect to the units sold upon exercise of the underwriters' over- allotment option.

(2)	The offering expenses are estimated to be approximately $500,000.

 

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Purchase Option

We have agreed to sell to the representative, for $100, an option to purchase up to a total of 1,000,000 units. The units issuable upon exercise of this option are identical to those offered by this prospectus except that the warrants included in the option have an exercise price of $7.50 (125% of the exercise price of the warrants included in the units sold in the offering). This option is exercisable at $10.00 per unit commencing on the later of the consummation of a business combination and one year from the date of this prospectus and expiring five years from the date of this prospectus. The option and the 1,000,000 units, the 1,000,000 shares of common stock and the 1,000,000 warrants underlying such units, and the 1,000,000 shares of common stock underlying such warrants, have been deemed compensation by the NASD and are therefore subject to a 180-day lock-up pursuant to Rule 2710(g)(1) of the NASD Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of this prospectus. However, the option may be transferred to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. Although the purchase option and its underlying securities have been registered under the registration statement of which this prospectus forms a part of, the option grants to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the date of this prospectus with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the option. We will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The purchase option also contains a cashless exercise provision that allows the holder of the purchase option to receive units on a net exercise basis. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of common stock at a price below its exercise price.

Regulatory Restrictions on Purchase of Securities

Rules of the SEC may limit the ability of the underwriters to bid for or purchase our securities before the distribution of the securities is completed. However, the underwriters may engage in the following activities in accordance with the rules:

·	Stabilizing Transactions. The underwriters may make bids or purchases for the purpose of preventing or retarding a decline in the price of our units, so long as stabilizing bids do not exceed the offering price of $8.00.

 

·

Over-Allotments and Syndicate Coverage Transactions. The underwriters may create a short position in our units by selling more of our units than are set forth on the cover page of this prospectus. If the underwriters create a short position during the offering, the representative may engage in syndicate covering transactions by purchasing our units in the open market. The representative may also elect to reduce any short position by exercising all or part of the over-allotment option.

 

·	Penalty Bids. The representative may reclaim a selling concession from a syndicate member when the units originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

 

Stabilization and syndicate covering transactions may cause the price of the securities to be higher than they would be in the absence of these transactions. The imposition of a penalty bid might also have an effect on the prices of the securities if it discourages resales of the securities.

 

Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the prices of our securities. These transactions may occur on the OTC Bulletin Board, in the over-the-counter market or on any trading market. If any of these transactions are commenced, they may be discontinued without notice at any time.

 

Other Terms

 

Although we are not under any contractual obligation to engage any of the underwriters to provide any services for us after this offering, and have no present intent to do so, any of the underwriters may, among other things, introduce us to potential target businesses or assist us in raising additional capital, as needs may arise in the future. If any of the underwriters provide services to us after this offering, we may pay such underwriters fair and reasonable fees that would be determined at that time in an arm's length negotiation; provided that no agreement will be entered into with any of the underwriters and no fee for future services will be paid to any of the underwriters prior to the date which is 90 days after the date of this prospectus.

 

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Indemnification

 

 

 

        Until                        , 2005, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

        No dealer, salesperson or any other person is authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is unlawful.

 

$160,000,000

 

Viceroy Acquisition Corporation

 

20,000,000 Units

 

__________________________

PROSPECTUS

___________________________

The Shemano Group, Inc.

 

                        , 2005

 

 

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Item 14. Indemnification of Directors and Officers.

 

Our certificate of incorporation provides that all directors, officers, employees and agents of the registrant shall be entitled to be indemnified by us to the fullest extent permitted by Section 145 of the Delaware General Corporation Law.

 

Section 145 of the Delaware General Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.

 

"Section 145. Indemnification of officers, directors, employees and agents; insurance.

 

(a)   A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful.

 

(b)   A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

 

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(c)   To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.

 

(d)   Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.

 

(e)   Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.

 

(f)    The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office.

 

 

Item 15. Recent Sales of Unregistered Securities.

 

(a)   During the past three years, we sold the following shares of common stock without registration under the Securities Act:

 

Stockholders		Number of Shares
St. Albans Global Management, LLLP			2,000,000
Lee E. Mikles Revocable Trust dtd 3.26.96			2,000,000
Lee E. Mikles Gift Trust dtd 10.6.99			100,000
Edwin A. Levy			250,000
Douglas D. Hommert Revocable Trust			250,000
Joe C. Leach			250,000
Mark R. Miller			100,000
RAS, LLC			50,000
			5,000,000

 

Such shares were issued on August 29, 2005 in connection with our organization pursuant to the exemption from registration contained in Section 4(2) of the Securities Act as they were sold to sophisticated, wealthy individuals. The shares issued to the individuals and entities above were sold for an aggregate offering price of $25,000 at an average purchase price of approximately $0.005 per share. No underwriting discounts or commissions were paid with respect to such sales.

 

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