On April 26, 2007, the Company issued a $200,000 unsecured promissory note to Camden Learning, LLC, an affiliate. The note was interest bearing at an annual rate of 4.9% and both principal and interest were payable on the earlier of April 26, 2008 or the consummation of the Offering of the Company. The note was fully repaid on December 5, 2007 and no further amounts are due.

On May 16, 2007, we entered into an agreement with certain of our initial stockholders for the sale of 2,800,000 warrants in a private placement. Each warrant entitles the holder to purchase from us one share of our common stock on a cashless basis to Camden Learning, LLC. On November 24, 2007, the warrants were sold at a price of $1.00 per warrant, generating net proceeds of $2,800,000.

On December 5, 2007, we consummated our initial public offering of 6,250,000 units. Each unit consists of one share of common stock and one warrant. On December 19, 2007, we consummated the closing of 376,300 additional units subject to the underwriters’ over allotment option. Each warrant entitles the holder to purchase from us one share of our common stock at an exercise price of $5.50.

The net proceeds we received from the private placement and the sale of our units and warrants were $53,181,449 (not including deferred underwriting discounts and commissions of $1,590,312). Of this amount, $52,389,984 was placed in a trust account at JP Morgan Chase Bank, N.A. maintained by Continental Stock Transfer & Trust Company, as trustee. The remaining funds are being held outside of the trust. The funds held outside of trust (together with $600,000 of interest we may earn on funds in the trust account which we are entitled to withdraw in order to cover our operating expenses and the costs associated with our plan of dissolution and liquidation if we do not consummate a business combination) will be used to cover our operating expenses and to cover the expenses incurred in connection with seeking and consummating a business combination.

We will use substantially all of the net proceeds of the initial public offering to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating the business combination. To the extent our capital stock is used in whole or in part as consideration to effect a business combination, the proceeds held in the trust fund as well as any other net proceeds not expended will be used to finance the operations of the target business. We believe we will have sufficient available funds outside of the trust fund to operate through November 29, 2009, assuming a business combination is not consummated during that time. We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, we may need to raise additional funds through a private or public offering of debt or equity securities if such funds are required to consummate a business combination that is presented to us. We would only consummate such a financing simultaneously with the consummation of a business combination.

 

4

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The $1,590,312 of the funds attributable to the deferred underwriting discount and commissions in connection with the offering and private placement will be released to the underwriters less $0.24 per share for any public stockholders exercising their redemption rights, upon completion of a business combination as such term is defined in our prospectus filed on Form 424B4 on November 30, 2007 with the Securities and Exchange Commission.

 

We may need to raise additional funds in order to meet the expenditures required to consummate a business combination before November 29, 2009. Although we believe the net proceeds of the offering and the private placement will be sufficient to allow us to consummate a business combination, in as much as we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of the offering and the private placement prove to be insufficient, either because of the size of the business combination or the depletion of the available net proceeds in search of a target business, or because we become obligated to redeem for cash a significant number of shares from dissenting stockholders, we will be required to seek additional financing. We cannot assure you such financing would be available on acceptable terms, if at all.

 

Commencing on November 29, 2007, we began incurring a fee of $7,500 per month for certain administrative services from Camden Partners Holdings, LLC. In addition, in 2007, Camden Learning, LLC advanced to us an aggregate of $200,000 for payment of offering expenses on our behalf. These advances were repaid on December 5, 2007 from the proceeds of the initial public offering that were allocated to pay offering expenses.

 

We may use all or substantially all of the proceeds held in trust, other than the deferred portion of the underwriter’s fee, to acquire one or more target businesses. We may not use all of the proceeds held in the trust account in connection with a business combination, either because the consideration for the business combination is less than the proceeds in trust or because we finance a portion of the consideration with capital stock or debt securities that we can issue. In that event, the proceeds held in the trust account as well as any other net proceeds not expended, will be used to finance the operations of the target business or businesses. The operating business that we acquire in such business combination must have a fair market value equal to at least 80% of the balance in the trust account (excluding deferred underwriter’s fee of $1,590,312) at the time of such acquisition. If we consummate multiple business combinations that collectively have a fair market value of 80% of our net assets, then we would require that such transactions are consummated simultaneously.

 

If we are unable to find a suitable target business by November 29, 2009, we will be forced to liquidate. If we are forced to liquidate, the per share liquidation amount may be less than the initial per unit offering price because of the underwriting commissions and expenses related to our initial public offering and because of the value of the warrants in the per unit offering price. Additionally, if third parties make claims against us, the initial public offering proceeds held in the trust account could be subject to those claims, resulting in a further reduction to the per share liquidation price. Under Delaware law, our stockholders who have received distributions from us may be held liable for claims by third parties to the extent such claims have not been paid by us. Furthermore, our warrants will expire worthless if we liquidate before the completion of a business combination.

 

RESULTS OF OPERATIONS

 

Through March 31, 2008, our efforts have been primarily organizational activities, activities relating to our initial public offering an active search for a target company to do a business combination. We have neither engaged in any operations nor generated any revenues to date. We currently have no operating business and have not entered into a definitive agreement with any potential target businesses. Beginning December 5, 2007 (the date of the consummation of our initial public offering) until our consummation of a business combination, we expect interest earned on the offering proceeds held in our trust account to be our primary source of income.

 

5

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We received net proceeds from the offering of $47,491,465, before deducting deferred underwriting compensation of $1,500,000. On December 19, 2007, the underwriters for the offering exercised a portion of their over-allotment option, generating additional proceeds of $2,889,984, before deducting deferred underwriting compensation of $90,312.

 

In addition, we may need to raise additional funds through a private offering of debt or equity securities if such funds are required to consummate an initial transaction that is presented to us. Subject to compliance with applicable securities laws, we would only consummate such a fund-raising simultaneously with the consummation of an initial transaction.

 

We currently pay Camden Partners Holdings, LLC an aggregate fee of $7,500 per month which includes the cost of other general and administrative services provided to us by Camden Partners Holdings, LLC.

Contractual Obligations

We do not have any long term debt, capital lease obligations, operating lease obligations, purchase obligations or other long term liabilities. We entered into a Service Agreement with Camden Partners Holdings, LLC requiring us to pay $7,500 per month. The agreement terminates on the earlier of the completion of a business combination or upon our dissolution.

 

The Company has entered into an engagement agreement with Morgan Joseph & Co. Inc. whereby Morgan Joseph & Co. Inc. will provide financial advisory and investment banking services to the Company.

 

Other than contractual obligations incurred in the ordinary course of business, we do not have any other long-term contractual obligations.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not Applicable for Smaller Reporting Companies.

 

Item 4(T). Controls and Procedures.

Disclosure Controls and Procedures

As of the end of the period covered by this report on Form 10-Q, our chief executive officer and chief financial officer conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective in timely alerting them of any material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act.

Internal Control over Financial Reporting

This interim report does not include a report of our management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

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

 

6

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

To the knowledge of our management, there is no litigation currently pending or contemplated against us or any of our officers or directors in their capacity as such.

 

Item 2. Unregsitered Sales of Equity Securities and Use of Proceeds.

 

Recent Sales of Unregistered Securities

None.

Item 3.  Defaults upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

 

Item 6. Exhibits and Financial Statement Schedules.

Exhibit No.		Description
31.1		Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

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7

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 14th day of May, 2008.

 

	CAMDEN LEARNING CORPORATION.
	By:	/s/ David L. Warnock
		Name: David L. Warnock Title: Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Donald W. Hughes
		Name: Donald W. Hughes Title: Chief Financial Officer (Principal Financial Officer)

 

8

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Camden Learning Corporation

(a corporation in the development stage)

Balance Sheets

		March 31,  2008			December 31,  2007*
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	432,232		$	858,347
Prepaid expenses			153,168			—
Total current assets			585,400			858,347
Restricted funds held in trust			53,014,093			52,543,772
Deferred tax asset			79,913			19,141
Prepaid expenses – less current portion			24,278			—
Total assets		$	53,703,684		$	53,421,260
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses		$	57,029		$	104,656
Income tax payable			182,736			47,009
Total current liabilities			239,765			151,665
Deferred underwriting compensation			1,590,312			1,590,312
Total liabilities			1,830,077			1,741,977
Commitments
Common stock, subject to possible redemption 1,987,889 shares			15,744,081			15,744,081
Stockholders’ equity
Preferred Stock, $.0001 par value, 1,000,000 shares authorized; none issued or outstanding			—			—
Common Stock, $.0001 par value, 20,000,000 shares authorized; 8,188,800 shares issued and outstanding (less 1,987,889 shares subject to possible redemption)			620			620
Additional paid-in capital			35,889,005			35,890,392
Retained earnings accumulated during the development stage			239,901			44,190
Total stockholders’ equity			36,129,526			35,935,202
Total liabilities and stockholders’ equity		$	53,703,684		$	53,421,260

* The December 31, 2007 balance sheet was derived from the Company’s audited balance sheet of the same date.

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

 

F-1

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Camden Learning Corporation

(a corporation in the development stage)

Statements of Operations

For the three months ended March 31, 2008 and for the period from

April 10, 2007 (inception) through March 31, 2008

(Unaudited)

 

		Three months ended March 31, 2008			April 10, 2007 (inception) through March 31, 2008
Operating expenses:
Operating and formation expenses		$	152,833		$	212,380
Loss from operations			(152,833	)		(212,380	)
Other income:
Interest income, net of expense of $0 and $23,556			473,499			605,104
Income before provision for taxes			320,666			392,724
Provision for income taxes			(124,955	)		(152,823	)
Net income		$	195,711		$	239,901
Net income per share
Basic		$	0.03
Diluted		$	0.02
Weighted average shares outstanding
Basic			6,626,300
Diluted			8,218,809

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

 

F-2

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Camden Learning Corporation

(a corporation in the development stage)

Statements of Stockholders’ Equity

For the period from April 10, 2007 (inception) to March 31, 2008

 

		Common Stock						Additional Paid-In			Retained Earnings Accumulated During the Development			Total Stockholders’
		Shares			Amount			Capital			Stage			Equity
Initial capital from founding stockholders			1,562,500		$	156		$	24,844		$	—		$	25,000
Sale of private placement warrants			—			—			2,800,000			—			2,800,000
Sale of 6,626,300 units, net of underwriters’ discount and offering expenses of $507,248 (including 1,987,889 shares subject to possible redemption)			6,626,300			663			48,791,861			—			48,792,524
Net proceeds subject to possible redemption of 1,987,889 shares						(199	)		(15,743,882	)					(15,744,081	)
Discount on note payable to affiliate			—			—			17,569			—			17,569
Net income			—			—			—			44,190			44,190
Balance at December 31, 2007			8,188,800		$	620		$	35,890,392		$	44,190		$	35,935,202
Additional offering expenses									(1,387	)					(1,387	)
Net income			—			—			—			195,711			195,711
Balance at March 31, 2008 (unaudited)			8,188,800		$	620		$	35,889,005		$	239,901		$	36,129,526

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

 

F-3

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Camden Learning Corporation

(a corporation in the development stage)

Statements of Cash Flows

For the three months ended March 31, 2008 and for the period from

April 10, 2007 (inception) through March 31, 2008

(unaudited)

		Three months ended March 31, 2008			April 10, 2007 (inception) through March 31, 2008
Cash flows from operating activities:
Net income		$	195,711		$	239,901
Adjustments to reconcile net income to net cash provided by operating activities
Accretion of interest on note payable			—			17,569
Deferred income taxes			(60,772	)		(79,913	)
Changes in assets and liabilities
Increase in prepaid expenses			(177,446	)		(177,446	)
Increase in accounts payable and accrued expenses			8,551			57,029
Increase in income tax payable			135,727			182,736
Net cash provided by operating activities			101,771			239,876
Cash flows from investing activities:
Restricted funds held in trust account			(470,321	)		(53,014,093	)
Cash flows from financing activities:
Proceeds from sale of stock to initial stockholders			—			25,000
Proceeds from note payable to affiliate			—			200,000
Repayment of note payable to affiliate			—			(200,000	)
Proceeds from public offering, net			(57,565	)		50,381,449
Proceeds from issuance of warrants			—			2,800,000
Net cash (used in)/provided by financing activities			(57,565	)		53,206,449
Net (decrease)/increase in cash			(426,115	)		432,232
Cash and cash equivalents at beginning of period			858,347			—
Cash and cash equivalents at end of period		$	432,232		$	432,232
Supplemental Disclosures:
Cash paid for interest			—		$	5,987
Cash paid for income taxes		$	50,000		$	50,000
Non-cash financing activities:
Deferred underwriting compensation			—		$	1,590,312

 

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

F-4

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Camden Learning Corporation

(a corporation in the development stage)

Notes to Financial Statements

March 31, 2008

(unaudited)

Note 1 – Organization and Nature of Business Operations

Camden Learning Corporation (the “Company”) is a blank check company incorporated in the state of Delaware on April 10, 2007 for the purpose of effecting a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination with one or more operating businesses in the education industry. In April 2007, the Company issued 1,562,500 shares of common stock to the Initial Stockholders for an aggregate amount of $25,000. The Company is 20.4% owned by Camden Learning, LLC, whose members are Camden Partners Strategic Fund III, LP and Camden Partners Strategic Fund III-A, LP (see Note 4).

At March 31, 2008, the Company had not commenced any operations. All activity through March 31, 2008 relates to the Company’s formation, initial public offering (the “Offering”) and efforts to identify prospective target businesses described below and in Note 3. The Company has selected December 31 as its fiscal year end.

The financial statements give retroactive effect to a common stock split in the form of a stock dividend of 0.3888888 shares of common stock for each outstanding share of common stock declared and paid as of November 20, 2007.

The registration statement for the Offering was declared effective November 29, 2007. The Company consummated the Offering on December 5, 2007 and received proceeds of $45,991,465, net of underwriting discounts and commissions of $3,500,000 (including $1,500,000 of deferred underwriting discounts and commissions placed in the trust account pending completion of a business combination). In addition, on December 19, 2007 the underwriters for the Offering exercised a portion of their over-allotment option, generating proceeds of $2,799,672, net of underwriting discounts and commissions of $210,728 (including $90,312 of deferred underwriting discounts and commissions placed in the trust account pending completion of a business combination). 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 applied toward effecting a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination with one or more operating businesses in the education industry. As used herein, a “Business Combination” shall mean the merger, capital stock exchange, asset acquisition or other similar business combination with one or more operating businesses in the education industry having, collectively, a fair market value of at least 80.0% of the amount in the Company’s trust account, less the deferred underwriting discount and commissions and taxes payable at the time of such transaction.

The trust account is maintained by Continental Stock Transfer & Trust Company, as Trustee, and is invested in the Morgan Stanley Government Institutional Fund. The portfolio invests in short-term debt securities issued by the U.S. government and its federal agencies, including: U.S. Treasury obligations; Federal agency securities; and repurchase agreements collateralized by the obligations of the U.S. government and its agencies and instrumentalities.

F-5

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Upon the closing of the Offering, the Over-Allotment Option Exercise by the underwriters and the private placement of warrants (see Note 4), $52,389,984 was placed in a trust account invested until the earlier of (i) the consummation of the Company’s initial Business Combination or (ii) the dissolution of the Company. The proceeds in the trust account include the deferred underwriting discount of $1,590,312 that will be released to the underwriters if the initial Business Combination is completed (subject to a $0.24 per share reduction for public stockholders who exercise their redemption rights). Interest (after taxes) earned on assets held in the trust account will remain in the trust. However, up to $600,000 of the interest earned on the trust account, and amounts required for payment of taxes on interest earned, may be released to the Company to cover a portion of the Company’s operating expenses and expenses incurred in connection with the Company’s dissolution and liquidation, if a Business Combination is not consummated.

The Company will seek stockholders’ approval before it will effect the initial Business Combination. In connection with the stockholder vote required to approve the initial Business Combination, the Company’s holders of common stock prior to the Offering including all of the Company’s officers and directors, have agreed to vote the shares of common stock owned by them prior to the Offering in accordance with the majority of the shares of common stock voted by the Public Stockholders. “Public Stockholders” is defined as the holders of common stock sold as part of the units in the Offering or in the aftermarket. The Company will proceed with the initial Business Combination only if a majority of the shares of common stock voted by the Public Stockholders are voted in favor of such Business Combination and Public Stockholders owning less than 30% of the shares sold in the Offering exercise their right to convert their shares into a pro rata share of the aggregate amount then on deposit in the trust account. 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 but 24 months has not yet passed since the date of the prospectus, the Company may combine with another Target Business meeting the fair market value criterion described above.

Public Stockholders voting against a Business Combination will be entitled to redeem their stock for a pro rata share of the total amount on deposit in the trust account including the $0.24 per share deferred underwriter’s compensation, and including any interest earned net of income taxes on their portion of the trust account, net of up to $600,000 of the interest earned on the trust account which may be released to the Company to cover a portion of the Company’s operating expenses. Public Stockholders who convert their stock into their share of the trust account will continue to have the right to exercise any Warrants they may hold.

If holders of more than 20% of the shares sold in the Offering vote against a proposed Business Combination and seek to exercise their redemption rights and the Business Combination is consummated, the Company’s initial stockholders have agreed to forfeit, on a pro rata basis, a number of the initial 1,562,500 shares of the Company’s common stock purchased, up to a maximum of 112,997 shares, so that the initial stockholders will collectively own no more than 23.81% (without regard to any purchase of units in the Offering, any open market purchases or private purchases of units directly from the Company) of the Company’s outstanding common stock immediately prior to the consummation of the Business Combination.

The Company’s amended and restated certificate of incorporation filed with the State of Delaware includes a requirement that the initial Business Combination be presented to Public Stockholders for approval; a prohibition against completing a Business Combination if 30% or more of the Company’s Public Stockholders exercise their redemption rights in lieu of approving a Business Combination; a provision giving Public Stockholders who vote against a Business  Combination the right to redeem their shares for a pro rata portion of the trust account in lieu of participating in a proposed Business Combination; and a requirement that if the Company does not consummate a Business Combination within 24 months from the date of the prospectus for the Offering, the Company will dissolve and liquidate, including liquidation of the trust account for the benefit of the Public Stockholders. The amended and restated certificate of incorporation includes a limitation on the Company’s corporate existence of November 29, 2009.

F-6

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The Company will dissolve and promptly distribute only to its Public Stockholders the amount in the trust account, less any income taxes payable on interest income, plus any remaining net assets if the Company does not effect a Business Combination within 24 months after consummation of the Offering.

In the event of dissolution, it is likely that the per share value of the residual assets remaining available for distribution (including trust account assets) will be less than the initial public offering price per share in the Offering (assuming no value is attributed to the Warrants contained in the units in the Offering discussed in Note 3).

The Company’s initial stockholders placed the shares they owned before the Offering into an escrow account, and with limited exceptions, these shares will not be transferable and will not be released from escrow until one year after consummation of a Business Combination. If the Company is forced to dissolve or liquidate, these shares will be cancelled. Additionally, the insider warrants (see Note 4) have been placed into the escrow account, and subject to limited exceptions, will not be transferable and will not be released from escrow until the 90^th day following the completion of a Business Combination. The compensatory portion of the escrowed shares, generally shares held by or attributable to officers and directors, will be recognized as a charge to income in the period in which a Business Combination is consummated, based upon the price of the units in the Company’s Initial Public Offering. The escrowed warrants were issued at or above fair value, and will not generate a charge to income upon their release from escrow.

Note 2 – Summary of Significant Accounting Policies

Income per Common Share – Three Months Ended March 31, 2008

 

Basic and diluted net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period, exclusive of 1,562,500 shares which have been placed into an escrow account, the release of which is contingent upon the completion of a Business Combination. Diluted net income per common share includes the dilutive effect of shares issuable pursuant to the Company’s outstanding warrants which are exercisable on the later of (i) the completion of a Business Combination or (ii) one year after consummation of the Company’s Initial Public Offering, but excludes the effect of 2,800,000 warrants issued in the private placement which are in escrow.

Weighted average shares outstanding for computation of basic per share results			6,626,300
Incremental shares from assumed exercise of warrants			1,592,509
Weighted average shares for computation of diluted per share results			8,218,809

 

F-7

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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 expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Income Taxes

Deferred income taxes are provided for the differences between the bases of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Recently issued accounting pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), which addresses the accounting for uncertainty in income taxes recognized in the financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 provides guidance on the financial statement recognition and measurement of a tax position taken on the Company’s tax return. FIN 48 also provides guidance on classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for interim periods of fiscal years beginning after December 15, 2006. Adoption of Fin 48 did not have a material impact on the Company’s financial position or results of operations. The Company intends to classify any future expense for income tax related interest and penalties as component of tax expense.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. Adoption by the Company of SFAS No. 157 as of January 1, 2008 did not have a material effect on the accompanying financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” including an amendment of FASB Statement 115. This statement provides companies with an option to report selected financial assets and liabilities at fair value. This statement is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. Adoption by the Company of SFAS No. 159 did not have a material effect on the accompanying financial statements.

F-8

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Note 3 – Initial Public Offering

On December 5, 2007, the Company sold to the public 6,250,000 units (“Units”) at a price of $8.00 per unit. Each Unit consists of one share of the Company’s common stock, $.0001 par value, and one warrant. Each warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of $5.50 commencing the later of the completion of a Business Combination with a Target Business or one year from the date of the prospectus for the Offering and expiring four years from the date of the prospectus, unless earlier redeemed. The warrants will be redeemable at the Company’s option, at a price of $0.01 per warrant upon 30 days’ written notice after the warrants become exercisable, only in the event that the last price of the common stock is at least $11.50 per share for any 20 trading days within a 30 trading day period ending on the third business day prior to the date on which notice of redemption is given.

In accordance with the Warrant Agreement related to the warrants (the “Warrant Agreement”), the Company is only required to use its best efforts to effect the registration of the shares of common stock underlying the Warrants. The Company will not be obligated to deliver securities, and there are no contractual penalties for failure to deliver securities, if a registration statement is not effective at the time of exercise.

Additionally, in the event that a registration statement is not effective at the time of exercise, the holder of a warrant shall not be entitled to exercise such warrant and in no event (whether in the case of a registration statement not being effective or otherwise) will the Company be required to net cash settle the warrant exercise. Consequently, the warrants may expire unexercised.

On December 19, 2007 the Company sold an additional 376,300 Units pursuant to the Over-Allotment Option Exercise.

The Company sold to the underwriters, for $100, an option to purchase up to a total of 625,000 units exercisable on a cashless basis at $9.60 per unit commencing one year from the date of the prospectus and expiring five years from the date of the prospectus. The units issuable upon exercise of this option are identical to those that were sold in the Offering, except that the warrants in these units have an exercise price of $6.71. The sale of the option was accounted for as a cost attributable to the Offering. Accordingly, there was no net impact on the Company’s financial position or results of operations, except for the recording of the $100 proceeds from the sale. The Company has estimated, based upon a Black-Scholes model, that the fair value of the option on the date of sale would be approximately $2,430,000, using an expected life of five years, volatility of 59.4%, and a risk-free interest rate of 3.08%. However, because the units do not have a trading history, the volatility assumption is based on information currently available to the Company. The Company believes the volatility estimate calculated is a reasonable benchmark to use in estimating the expected volatility of the units. The volatility calculation is based on the most recent trading day average volatility of publicly traded companies providing educational services with market capitalizations less than $500 million. Although an expected life of five years was used in the calculation, if the Company does not consummate a Business Combination within the prescribed time period and automatically dissolves and subsequently liquidates the trust account, the option will become worthless.

F-9

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Note 4 – Note Payable to Affiliate and Related Party Transactions

The Company issued a $200,000 unsecured promissory note to Camden Learning, LLC, its principal stockholder, on April 26, 2007. The note was interest bearing at an annual rate of 4.9% and both principal and interest were payable on the earlier of April 26, 2008 or the consummation of the Offering of the Company. The note was fully repaid on December 5, 2007 and no further amounts are due. On April 26, 2007 the note was recorded as a liability in the amount of $182,431, net of a discount in the amount of $17,569, which has been credited to additional paid-in capital, based on an imputed interest rate of 15% per annum. The $17,569 discount was accreted by charges to interest expense over the term of the note using the interest method. The amount of interest expense recorded through December 5, 2007 totaled $23,556, including amounts accrued at 4.9% per annum. In its computations of the discount on the note, the Company considered that the loan was unsecured, the Company had no operations and the Company would be able to repay the loan only in the event of a successful public offering, as to which there could be no assurance. In making its computation, the Company also considered the related party nature of the note, the below-market stated interest rate, the equity-like risks associated with the note and the higher interest rates commonly associated with bridge financings.

The Company has agreed to pay up to $7,500 a month in total for certain general and administrative services, including but not limited to receptionist, secretarial and general office services, to Camden Partners Holdings, LLC. Services commenced on November 29, 2007 and will terminate upon the earlier of (i) the completion of the Company’s Business Combination or (ii) the Company’s dissolution. For the three months ended March 31, 2008, the Company incurred $22,500 in fees to Camden Partners Holdings, LLC. For the period from inception through March 31, 2008, the Company incurred $30,000 in such fees.

On November 29, 2007, Camden Learning, LLC purchased warrants to purchase 2,800,000 shares of Common Stock from the Company at a price of $1.00 per warrant for a total of $2,800,000 in a private placement prior to the completion of the Offering.

The terms of these warrants are identical to the terms of the warrants issued in the Offering, except that these insider warrants will not be subject to redemption and may be exercised on a cashless basis, in each case if held by the initial holder thereof or its permitted assigns, and may not be sold, assigned or transferred prior to the 90^th day following consummation of a Business Combination. The holder of these insider warrants will not have any right to any liquidation distributions with respect to shares underlying these warrants if the Company fails to consummate a Business Combination, in which event these warrants will expire worthless.

Camden Learning, LLC has agreed to indemnify the Company for claims of creditors that have not executed a valid and binding waiver of their rights to seek payments of amounts due to them out of the trust account. The Company believes the likelihood of Camden Learning, LLC having to indemnify the trust account is minimal.

The Company’s principal stockholder has entered into an agreement with the underwriter pursuant to which it will place limit orders to purchase up to an additional $4,000,000 of the Company’s common stock in the open market commencing the later of (i) ten business days after the Company files its current report on Form 8-K announcing its execution of a definitive agreement for a Business Combination and (ii) 60 calendar days after the end of the restricted period in connection with the Offering, as defined under the Securities Exchange Act of 1934, and ending on the business day preceding the record date of the stockholders’ meeting at which a Business Combination is to be approved. In the event the Company’s principal stockholder does not purchase $4,000,000 of the Company’s common stock in the open market, the stockholder has agreed to purchase from the Company in a private placement a number of units identical to the units to be sold in the Offering at a purchase price of $8.00 per unit until it has spent, together with the aforementioned open market purchases, an aggregate of $4,000,000 for purchase of the Company’s common stock.

F-10

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Note 5 – Common Stock Subject to Possible Redemption

The Company will not proceed with a Business Combination if Public Stockholders owning 30% or more of the shares sold in the Offering vote against the Business Combination and exercise their redemption rights. Accordingly, the Company may effect a Business Combination only if stockholders owning one share less than 30% of the shares sold in the Offering exercise their redemption rights. If this occurred, the Company would be required to redeem for cash up to one share less than 30% of the 6,626,300 shares of common stock sold in the Offering, or 1,987,889 shares of common stock, at a per-share redemption price of $7.92 (plus a portion of the interest earned on the trust account, but net of (i) taxes payable on interest earned and (ii) up to $600,000 of interest income released to the Company to fund its working capital), which includes $0.24 per share of deferred underwriting discount and commissions which the underwriters have agreed to forfeit to pay redeeming stockholders.

The actual per-share redemption price will be equal to the initial amount in the trust account ($7.92 per share) which includes the amount attributable to deferred underwriting discounts and commissions and including all accrued interest (less taxes payable and up to $600,000 of interest income released to the Company to fund its working capital), as of two business days prior to the proposed consummation of the Business Combination, divided by the number of shares of common stock sold in the Offering.

Note 6 – Preferred Stock

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

Note 7 – Income Taxes

The Company’s provision for income taxes for the three months ended March 31, 2008 consists of:

Current
Federal		$	156,526
State			29,201
Deferred			(60,772	)
		$	124,955

The difference between the actual income tax expense and that computed by applying the U.S. federal income tax rate of 34% to pretax income from operations for the three months ended March 31, 2008 is summarized below:

Computed expected tax expense			34	%
State income tax net of federal benefit			5	%
Effective tax rate			39	%

 

F-11

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The Company is considered to be in the development stage for income tax reporting purposes. Federal income tax regulations require that the Company defer substantially all of its operating expenses for tax purposes until the Company begins business operations. Therefore, the Company has recorded a deferred income tax asset of $79,913. The Company believes that it is more likely than not that it will be able to realize this deferred tax asset in the future and, therefore, it has not provided a valuation allowance against this deferred tax asset.

 

F-12

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