1330446--3/31/2006--Cold_Spring_Capital

related topics

{interest, director, officer}

{loan, real, estate}

{investment, property, distribution}

{stock, price, share}

{acquisition, growth, future}

{debt, indebtedness, cash}

{stock, price, operating}

{control, financial, internal}

Risks Related to Our Business We are a development stage company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective. If we are unable to complete an initial transaction and are forced to liquidate and distribute the trust account, our public stockholders will receive less than $6.00 per share upon distribution of the trust account and our warrants will expire worthless. Since we have not yet selected any target with which to complete an initial transaction, we are unable to currently ascertain the merits or risks of any particular target's operations or the performance of any particular portfolio of financial assets or real estate asset or the industry or business in which we may ultimately operate. Our officers and directors are not required to devote any specified percentage of their working time to our affairs. Our officers and directors will allocate some of their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs, which could have a negative impact on our ability to consummate a business combination or portfolio or real estate acquisition or results of operations following any such acquisition. Our chief executive officer is a party to a non-competition agreement that will limit the types of companies we can target for an initial transaction and may make us a less attractive buyer to certain target companies. Our current officers and directors may resign upon consummation of an initial transaction and we will have only limited ability to evaluate the management of the target. Our officers and directors may not have significant experience or knowledge of the industry of the target. Only one of our officers or directors has ever been a principal of, or has ever been affiliated with, a company formed with a business purpose similar to ours. Some of our officers and directors are currently, and may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. All of our officers and directors directly or indirectly own shares of our common stock that will not participate in liquidation distributions, and therefore they may have a conflict of interest in determining whether a particular target is appropriate for an acquisition. Our directors' and officers' interests in obtaining reimbursement for out-of-pocket expenses incurred by them or indemnity payments made by them may lead to a conflict of interest in determining whether a particular target is appropriate for a business combination and in the public stockholders' best interest. Our initial stockholders, including our officers and directors, control a substantial interest in us and this may influence certain actions requiring a stockholder vote. We may not be able to consummate an initial transaction within the required time frame, in which case we would be forced to liquidate. Any attempt to consummate more than one transaction as our initial transaction will make it more difficult to consummate our initial transaction. You will not be entitled to protections normally afforded to investors of blank check companies under federal securities laws. Because there are numerous companies with a business plan similar to ours seeking to effectuate a business combination or acquisition, it may be more difficult for us to complete a transaction. Because of our limited resources and the significant competition for business combination and portfolio or real estate acquisition opportunities, we may not be able to consummate an attractive business combination or portfolio or real estate acquisition. We may have insufficient resources to cover our operating expenses, the costs and expenses of litigation and the expenses of consummating an initial transaction. We are subject to litigation and in the future may face additional third party claims. As a result of these third party claims, the proceeds held in trust could be reduced and the per share liquidation price received by stockholders would be less than $5.49 per share. We may issue shares of our capital stock or debt securities to complete a business combination or portfolio or real estate acquisition, which would reduce the equity interest of our stockholders and could likely cause a change in control of our ownership. If additional financing is required, we may be unable to complete an acquisition or to fund the operations and growth of the target of an acquisition or the management and servicing of the portfolio of financial assets or real estate asset or the acquisition of additional portfolios or assets, which could compel us to restructure the transaction or abandon a particular business combination or portfolio or real estate acquisition. The ability of our stockholders to exercise their conversion rights may not allow us to effectuate the most desirable initial transaction or optimize our capital structure. If our common stock becomes subject to the Securities and Exchange Commission's penny stock rules, broker-dealers may experience difficulty in completing customer transactions, and trading activity in our securities may be adversely affected. It is possible that we will only be able to complete one business combination or portfolio or real estate acquisition, which will cause us to be solely dependent on a single business and a limited number of products, services or assets. The American Stock Exchange may delist our securities from quotation on its exchange which could limit investors' ability to make transactions in our securities and subject us to additional trading restrictions. We may not provide audited financial statements to our stockholders in seeking approval of an initial transaction, which may make it more difficult for stockholders to analyze the transaction in making their voting decisions. Because our business may involve our holding real estate assets or loans secured by real estate assets, a downturn in the real estate market could result in a material diminution in the value of our assets, an increase in the rate of default on loans we hold, and/or a material diminution of the value of the collateral securing our loans. To the extent we acquire one or more real estate assets, we will be subject to significant and customary risks relating to the ownership of real estate. Consumer and Commercial Finance Industry If we hold loan portfolios, changes in interest rates and our inability to effectively protect against changes in those rates may result in our being less profitable than anticipated or not profitable at all or in our being unable to meet our obligations under borrowing arrangements. We will need to continually originate or acquire portfolios of loans and, if we are unable to do so, we will be unable to grow our business. We expect to incur significant indebtedness and be subject to customary risks relating to leverage. As an originator or owner of loan portfolios, we will be subject to a number of risks beyond our control. Some of our target borrowers may be more susceptible to financial difficulties than larger businesses. Risks Related to Our Securities Our outstanding warrants may have an adverse effect on the market price of our common stock and make it more difficult to effect a business combination or portfolio or real estate acquisition using our common stock as consideration. If our initial stockholders or Deutsche Bank Securities Inc. 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 an initial transaction. 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 an initial transaction. Acquisitions that we may undertake would involve a number of inherent risks, any of which could cause us not to realize the benefits anticipated to result. The inability of the sellers of businesses or assets that we may acquire to fulfill their indemnification obligations to us under our combination or acquisition agreements could increase our liabilities and adversely affect our results of operations and financial position.

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1330446--3/31/2006--Cold_Spring_Capital_Inc.