10-Q 1 file1.htm FORM 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION ~~WASHINGTON, D.C. 20549~~

Washington, D.C. 20549

FORM 10-Q

(Mark One)

~~Quarterly~~QUARTERLY ~~report~~REPORT ~~under~~PURSUANT ~~Section~~TO SECTION 13 orOR 15(d) ofOF ~~the~~THE ~~Securities~~SECURITIES ~~Exchange~~EXCHANGE ~~Act~~ACT ofOF 1934

For the quarterly period ended March 3130, ~~2007~~ 2008

~~Transition report under Section 13 or 15(d) of the Exchange Act~~ OR

~~For~~TRANSITION ~~the~~REPORT ~~transition~~PURSUANT ~~period~~TO ~~from to~~ SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-32549

~~Courtside~~American ~~Acquisition~~Community ~~Corp~~Newspapers Inc. (Exact ~~Name~~name of ~~Issuer~~registrant as ~~Specified~~specified in ~~Its~~its ~~Charter~~charter)

Delaware			20-2521288
(State or other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

~~1700~~14875 ~~Broadway~~Landmark Boulevard, ~~17th~~Suite ~~Floor~~110, ~~New York~~Addison, ~~New~~Texas ~~York 10019~~75254 (Address of ~~Principal~~principal ~~Executive~~executive ~~Office~~offices)

Telephone: (~~212~~972) ~~641~~ 628-~~5000~~4080 (~~Issuer~~Registrant’s ~~Telephone~~telephone ~~Number~~number, ~~Including~~including ~~Area~~area ~~Code~~code)

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

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

Large accelerated filer ~~[ ]~~ Accelerated filer ~~[ ]~~ Non-accelerated filer Smaller ~~[X]~~ reporting company

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

As of ~~May~~April 930, ~~2007~~2008, 1614,~~800~~623,~~000~~445 shares of the registrant’s common stock, par value $.0001 per share, were issued and outstanding.

		Page
Part I	Financial Information:
	Item 1 — Financial Statements (Unaudited):
	Report of Independent Registered Public Accounting Firm		3
	Consolidated Balance Sheets	3
	Condensed Balance Sheet		4
	Consolidated Statements of Operations	4
	Condensed Statements of Operations		5
	Consolidated Statement of Stockholders’ Equity	5
	Condensed Statement of Stockholders’ Equity		6
	Consolidated Statements of Cash Flows	6
	Condensed Statement of Cash Flows		7
	Notes to Consolidated Financial Statements	7
	Notes to Condensed Financial Statements		8
	Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
	Item 3 — Quantitative and Qualitative Disclosures About Market Risk	25
	Item 4 — Controls and Procedures	25	13
Part II Other Information
Part II	Other Information
	Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		17
	Item 1 — Legal Proceedings	27
	Item 6 — Exhibits		17
	Item 1A — Risk Factors	27
Signatures			18
	Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	27
	Item 6 — Exhibits	27
Signatures		28

~~REPORT~~American OFCommunity ~~INDEPENDENT~~Newspapers ~~REGISTERED PUBLIC ACCOUNTING FIRM~~Inc.

ToConsolidated ~~the~~Balance ~~Board of Directors~~Sheets ~~Courtside~~(In ~~Acquisition~~thousands, ~~Corp.~~except share and per share data)

We have reviewed the accompanying condensed balance sheet of Courtside Acquisition Corp. (a corporation in the development stage) as of March 31, 2007, the related condensed statements of operations and cash flows for the three-month periods ended March 31, 2007 and 2006 and the cumulative period from March 18, 2005 (inception) to March 31, 2007 and the related condensed statements of stockholders’ equity for the three-month period ended March 31, 2007 and the period from March 18, 2005 (inception) to March 31, 2007. These financial statements are the responsibility of the company’s management.


	(unaudited) March 30, 2008				December 30, 2007
Assets
Current assets:
Cash and cash equivalents		$	631			$	1,521
Accounts receivable, net of allowance for doubtful accounts of $108 and $88 at March 30, 2008 and December 30, 2007, respectively			7,139				7,010
Inventories			958				618
Other current assets			706				754
Total current assets			9,434				9,903
Property, plant, and equipment, net of accumulated depreciation of $1,352 and $897 at March 30, 2008 and December 30, 2007, respectively			8,912				9,324
Goodwill			90,110				90,110
Intangible assets, net of accumulated amortization of $8,231 and $5,487 at March 30, 2008 and December 30, 2007, respectively			102,390				105,111
Other assets			100				100
Total assets		$	210,946			$	214,548
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	1,734			$	1,401
Accrued expenses			2,055				2,232
Accrued interest			1,910				2,018
Deferred revenue			1,336				1,314
Current portion of long-term liabilities			3,150				2,100
Total current liabilities			10,185				9,065
Long-term liabilities:
Long-term debt			136,826				137,866
Deferred income taxes			2,498				1,862
Redeemable preferred stock, $.0001 par value, Authorized 1,000,000 shares; 42,193 issued and outstanding shares at March 30, 2008 and December 30, 2007			4,744				4,556
Total liabilities			154,253				153,349
Commitments and contingencies
Stockholders’ equity
Common stock, $.0001 par value, Authorized 50,000,000 shares Issued and outstanding 14,623,445 and 16,800,000 shares, respectively			1				1
Additional paid-in capital			64,466				64,329
Retained deficit			(7,774	)			(3,131	)
Total stockholders’ equity			56,693				61,199
Total liabilities and stockholders’ equity		$	210,946			$	214,548

WeThe ~~conducted~~accompanying ~~our~~notes ~~reviews~~should inbe ~~accordance~~read with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in ~~scope~~conjunction ~~than an audit conducted in accordance~~ with ~~the~~these ~~standards~~unaudited ofconsolidated ~~the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the condensed~~ financial statements ~~taken as a whole~~. ~~Accordingly, we do not express such an opinion.~~

Based on our reviews, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with United States generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the balance sheet of Courtside Acquisition Corp. as of December 31, 2006 and the related statements of operations, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated February 28, 2007, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 2006 is fairly stated, in all material aspects, in relation to the balance sheet from which it has been derived.

The accompanying financial statements have been prepared assuming Courtside Acquisition Corp. will continue as a going concern. As discussed in Note 1 to the financial statements, Courtside Acquisition Corp. may face a mandatory liquidation by July 7, 2007 if a business combination is not consummated, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Goldstein Golub Kessler LLP

GOLDSTEIN GOLUB KESSLER LLP New York, New York

May 8, 2007

~~Courtside~~AMERICAN ~~Acquisition~~COMMUNITY ~~Corp~~NEWSPAPERS INC. ~~(a corporation in the development stage) Condensed Balance Sheet~~

	March 31, 2007 (unaudited)			December 31, 2006
Assets
Current assets:
Cash and cash equivalents		$	915		$	1,192,704
Cash equivalents held in Trust Fund (Note 1)			77,682,536			77,036,463
Deferred Federal Income Tax			—			—
Prepaid expenses			37,345			37,566
Current Assets			77,720,796			78,266,733
Deferred acquisition costs and deposit (Notes 1 and 4)			1,212,690			87,500
Total assets		$	78,933,486		$	78,354,233
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities		$	456,928		$	278,348
Deferred dividends			783,315			654,165
Taxes payable			9,884			248,828
Notes payable (Note 4)			180,000			—
Total liabilities			1,430,127			1,181,341
Common stock, subject to possible conversion, 2,758,620 shares at conversion value (Note 1)			14,745,424			14,745,424
Commitments (Note 4)
Stockholders’ equity (Notes 1, 2, and 4)
Preferred stock, $.0001 par value, Authorized 1,000,000 shares; none issued
Common stock, $.0001 par value, Authorized 50,000,000 shares
Issued and outstanding 16,800,000 shares (which includes 2,758,620 subject to possible conversion)			1,680			1,680
Additional paid-in capital			60,969,078			60,969,078
Earnings accumulated in the development stage			1,787,177			1,456,710
Total stockholders’ equity			62,757,935			62,427,468
Total liabilities and stockholders’ equity		$	78,933,486		$	78,354,233

Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)

The accompanying notes should be read in conjunction with these unaudited condensed financial statements.


	Three Months Ended
	March 30, 2008				March 31, 2007
Revenues:
Advertising		$	14,474			$	—
Circulation			676				—
Commercial printing and other			777				—
Total revenues			15,927				—
Operating costs and expenses:
Operating			7,466				—
Selling, general and administrative			5,803				82
Depreciation and amortization			3,047				—
			16,316				82
Operating loss			(389	)			(82	)
Interest expense			(3,618	)			—
Interest income			—				521
(Loss) income from operations before income taxes			(4,007	)			439
Income tax expense			(636	)			(109	)
Net (loss) income		$	(4,643	)		$	330
(Loss) earnings per share:
Basic and diluted		$	(0.32	)		$	0.02
Weighted average shares outstanding			14,623,445				16,800,000

The accompanying notes should be read in conjunction with these unaudited consolidated financial statements.

~~Courtside~~AMERICAN ~~Acquisition~~COMMUNITY ~~Corp~~NEWSPAPERS INC. ~~(a corporation in the development stage) Unaudited Condensed Statements of Operations~~

	Three Months Ended						Cumulative Amounts for Period from March 18, 2005 (inception) to
	March 31, 2007			March 31, 2006			March 31, 2007
Expenses:
Formation and operating costs		$	66,815		$	73,728		$	698,911
State capital taxes			15,000			22,500			121,348
			81,815			96,228			820,259
Interest and dividend income			521,282			430,675			3,229,036
Income for the period before income taxes			439,467			334,447			2,408,777
Income taxes			109,000			91,000			621,600
Net Income for the period		$	330,467		$	243,447		$	1,787,177
Net income per share basic and diluted		$	0.02		$	0.01		$	0.12
Weighted average shares outstanding			16,800,000			16,800,000			14,731,452

Consolidated Statement of Stockholders’ Equity
(In thousands, except share data)
(Unaudited)

The accompanying notes should be read in conjunction with these unaudited condensed financial statements.


	Common Stock					Additional Paid-In Capital			Retained Earnings (Deficit)				Total
	Shares		Amount			Additional Paid-In Capital			Retained Earnings (Deficit)				Total
Balance, December 30, 2007		14,623,445		$	1		$	64,329		$	(3,131	)		$	61,199
Stock based compensation		—			—			137			—				137
Net loss for the three months ended March 30, 2008		—			—			—			(4,643	)			(4,643	)
Balance, March 30, 2008		14,623,445		$	1		$	64,466		$	(7,774	)		$	56,693

The accompanying notes should be read in conjunction with these unaudited consolidated financial statements.

~~Courtside~~AMERICAN ~~Acquisition~~COMMUNITY ~~Corp~~NEWSPAPERS INC. ~~(a corporation in the development stage) Unaudited Condensed Statement of Stockholders’ Equity~~

	Common Stock					Additional Paid-In Capital				Earnings Accumulated in the development stage			Total
	Shares		Amount
Sale of 3,000,000 shares of common stock at $.0083 per share to initial stockholders committed for on March 18, 2005		3,000,000		$	300		$	24,700			$	—		$	25,000
Sale of 12,000,000 units, net of underwriters’ discount and offering expenses on July 7, 2005 (includes 2,398,800 shares subject to possible conversion)		12,000,000			1,200			65,645,882				—			65,647,082
Proceeds subject to possible conversion of 2,398,800 shares		—			—			(12,737,628	)			—			(12,737,628	)
Proceeds from issuance of option		—			—			100				—			100
Sale of 1,800,000 units, net of underwriters’ discount on July 11, 2005 (includes 359,820 shares subject to possible conversion)		1,800,000			180			10,043,820				—			10,044,000
Proceeds subject to possible conversion of 359,820 shares		—			—			(2,007,796	)			—			(2,007,796	)
Net income for the period		—			—			—				411,112			411,112
Balance, December 31, 2005		16,800,000			1,680			60,969,078				411,112			61,381,870
Net income for the year ended December 31, 2006		—			—			—				1,045,598			1,045,598
Balance, December 31, 2006		16,800,000			1,680			60,969,078				1,456,710			62,427,468
Net income for the three months ended March 31, 2007		—			—			—				330,467			330,467
		16,800,000		$	1,680		$	60,969,078			$	1,787,177		$	62,757,935

Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

The accompanying notes should be read in conjunction with these unaudited condensed financial statements.


	Three Months Ended
	March 30, 2008				March 31, 2007
Cash flows from operating activities:
Net (loss) income		$	(4,643	)		$	330
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization			3,047				—
Provision for doubtful accounts			208				—
Non-cash interest expense			1,550				—
Stock based compensation			137				—
Deferred income taxes			636				—
Changes in assets and liabilities, net of effect of acquisition:
Cash held in Trust Fund			—				(646	)
Accounts receivable			(337	)			—
Inventories			(340	)			—
Other current assets			48				—
Accounts payable			333				(162	)
Accrued expenses			(177	)			—
Accrued interest			(108	)			—
Deferred revenue			22				—
Taxes payable			—				(238	)
Deferred dividends			—				129
Net cash provided by (used in) operating activities			376				(587	)
Cash flows from investing activities:
Payment of deferred acquisition costs and deposit			—				(785	)
Purchases of property, plant and equipment			(43	)			—
Net cash used in investing activities			(43	)			(785	)
Cash flows from financing activities:
Payment of debt issuance costs			(23	)			—
Borrowings under Credit Facility			1,300				—
Repayments of Credit Facility			(2,500	)			—
Borrowings from related parties			—				180
Net cash (used in) provided by financing activities			(1,223	)			180
Net decrease in cash and cash equivalents			(890	)			(1,192	)
Cash and cash equivalents at beginning of period			1,521				1,193
Cash and cash equivalents at end of period		$	631			$	1
Supplemental disclosures:
Interest paid		$	2,170			$	—
Income taxes paid		$	—			$	340
Non-cash investing and financing activities:
Common stock issued at conversion		$	—			$	—
Accrual of acquisition costs		$	—			$	341

The accompanying notes should be read in conjunction with these unaudited consolidated financial statements.

~~Courtside~~AMERICAN ~~Acquisition~~COMMUNITY ~~Corp~~NEWSPAPERS INC. ~~(a corporation in the developmental stage) Unaudited Condensed Statement of Cash Flows~~

	Three Months Ended								Cumulative Amounts For Period from March 18, 2005 (inception) to
	March 31, 2007				March 31, 2006				March 31, 2007
Cash Flows from Operating Activities
Net income		$	330,467			$	243,447			$	1,787,177
Adjustments to reconcile net income (loss) used in operating activities:
Increase in value of Trust Fund			(646,073	)			(518,717	)			(3,918,536	)
Increase (Decrease) in prepaid expenses			221				(41,174	)			(37,345	)
Increase (Decrease) in accounts payable and accrued expenses			(162,026	)			40,406				72,572
Increase (Decrease) in taxes payable			(238,944	)			8,961				9,884
Increase in deferred dividends			129,150				103,691				783,315
Net cash (used) in operating activities			(587,205	)			(163,366	)			(1,302,933	)
Cash Flows from Investing Activities
Payment of deferred acquisition costs and deposit			(784,584	)			—				(828,334	)
Cash deposited in Trust Fund			—				—				(73,764,000	)
			(784,584	)			—				(74,592,334	)
Cash Flows from Financing Activities
Gross proceeds of public offering			—				—				82,800,000
Proceeds from sale of shares of common stock			—				—				25,000
Proceeds from issuance of option			—				—				100
Proceeds from notes payable, stockholders			180,000				—				280,000
Payment of notes payable, stockholder			—				—				(100,000	)
Payment of offering costs			—				—				(7,108,918	)
Net cash provided by financing activities			180,000				—				75,896,182
Net increase (decrease) in cash and cash equivalents			(1,191,789	)			(163,366	)			915
Cash and cash equivalents at beginning of the period			1,192,704				1,692,748				—
Cash and cash equivalents at end of the period			915				1,529,382				915
Supplemental Schedule of Non-Cash Investing Activities
Accrual of acquisition costs		$	340,606			$	—			$	384,356

Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)

~~The~~1. Organization ~~accompanying~~and ~~notes~~Basis ~~should~~of ~~be read in conjunction with these unaudited condensed financial statements.~~Presentation

Courtside Acquisition Corp. (‘‘Courtside’’) was incorporated in Delaware on March 18, 2005, as a blank check company whose objective was to acquire an operating business. During the year ended December 31, 2006, Courtside was a corporation in the development stage. On June 20, 2007, Courtside formed a wholly-owned subsidiary, ACN OPCO LLC (the ‘‘Operating Company’’). On July 2, 2007, in connection with the acquisition of an operating business described in Note 2, Courtside changed its name to American Community Newspapers Inc. (the ‘‘Parent’’), and the Operating Company changed its name from ACN OPCO LLC to American Community Newspapers LLC. The Parent is now a holding company operating its business through its wholly-owned subsidiary, American Community Newspapers LLC and its wholly-owned subsidiary, Amendment I, Inc. (collectively, the ‘‘Company’’).

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (‘‘GAAP’’) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in comprehensive annual financial statements presented in accordance with GAAP have generally been condensed or omitted pursuant to Securities and Exchange Commission (‘‘SEC’’) rules and regulations. The Company operates on a 52/53 week fiscal year generally ending on the Sunday closest to the end of the calendar year. Each quarter is 13/14 weeks, also generally ending on the Sunday closest to the end of the calendar quarter. The periods presented for both 2008 and 2007 encompass 13 week periods. The periods presented are hereinafter referred to as either ‘‘the thirteen weeks’’, ‘‘quarter ended’’ or ‘‘three months ended.’’

Management believes that the accompanying consolidated financial statements contain all adjustments (which include normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the Company’s consolidated financial condition, results of operations and cash flows for the periods presented. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 30, 2007, included in the Company’s Annual Report on Form 10-K. The December 30, 2007 balance sheet has been derived from the audited financial statements.

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

For the period ended March 30, 2008, the Company has used the same significant accounting policies and estimates which are discussed in the Company’s Annual Report on Form 10-K for the year ended December 30, 2007.

2. Acquisition

Courtside entered into an Asset Purchase Agreement (‘‘APA’’) with MOTV LLC (‘‘MOTV’’) (formerly known as American Community Newspapers LLC, not the same company as the Operating Company) on January 24, 2007 (subsequently amended on May 2, 2007) providing for the purchase by Courtside of the business and substantially all of the assets of MOTV and the assumption by Courtside of certain of MOTV’s liabilities (the ‘‘MOTV Acquisition’’). Prior to Courtside’s consummation of the MOTV Acquisition, MOTV acquired the publishing assets of CM Media, Inc. on April 30, 2007.

~~Courtside~~AMERICAN ~~Acquisition~~COMMUNITY ~~Corp~~NEWSPAPERS INC. ~~(a corporation in the developmental stage) Note to Unaudited Condensed Financial Statements~~

1. Notes ~~Organization~~to ~~and~~Consolidated ~~Business~~Financial ~~Operations Courtside Acquisition Corp.~~ Statements (~~the~~In ~~‘‘Company’’) was incorporated in Delaware on March 18~~thousands, ~~2005~~except asshare aand ~~blank~~per ~~check~~share ~~company whose objective is to acquire an operating business.~~data) (Unaudited)

On July 2, 2007, Courtside consummated the MOTV Acquisition (the ‘‘Closing’’), for an aggregate cash purchase price, including transaction fees and expenses, of approximately $208,833. The ~~financial~~purchase ~~information~~price was subject to certain post-closing adjustments, including for working capital. This adjustment amounted to $427 and is included in ~~this~~the ~~report~~aforementioned ~~has~~price. ~~not~~In ~~been~~addition, ~~audited~~Courtside incurred $4,096 ~~but~~of indebt issuance costs, which are being amortized over the ~~opinion~~life of ~~management~~the respective Credit Facility and Subordinated Credit Facility on a straight line basis, ~~all~~which ~~adjustments~~approximates the interest method. The Company will also pay to MOTV (~~consisting~~i) ~~only~~$1,000 ofif ~~normal~~newspaper ~~recurring~~cash ~~adjustments~~flow (as defined in the APA) ~~considered~~for ~~necessary~~2008 is equal to ~~present~~or ~~fairly~~greater than $19,000, with such ~~information~~payment ~~have~~increasing ~~been~~to ~~included.~~up ~~See~~to ~~the~~$15,000 ~~Company’s~~in ~~Annual~~specified ~~Report~~increments, onif ~~Form~~newspaper ~~10-KSB~~cash ~~for~~flow (as defined in the ~~year~~APA) ~~ended~~for ~~December~~2008 31equals or exceeds $21,000 ~~2006~~and ~~for~~(ii) an additional ~~disclosure~~$10,000 ~~relating~~if, toduring any 20 trading days within any 30 trading day period from the Closing through July 7, 2009, the last reported sale price of the Company’s ~~condensed~~common ~~financial~~stock ~~statements~~exceeds $8.50 per share. The ~~December~~acquisition 31included three daily and 83 weekly newspapers, ~~2006~~as ~~balance~~well ~~sheet~~as ~~has~~14 niche ~~been~~publications ~~derived~~serving ~~from~~Minneapolis ~~the~~– ~~audited~~St. ~~financial~~Paul, ~~statements~~Minnesota, Dallas, Texas, Northern Virginia (suburban Washington, D.C.) and Columbus, Ohio.

~~All~~ The ~~activity~~Company ~~from~~has ~~March~~accounted ~~18,~~for ~~2005~~the ~~(inception)~~MOTV ~~through~~Acquisition ~~July~~under 7the purchase method of accounting. Accordingly, ~~2005~~the ~~relates~~cost toof the ~~Company’s~~acquisition ~~formation~~has been allocated to the assets and ~~initial~~liabilities ~~public~~based ~~offering~~upon ~~described~~their ~~below~~respective fair values. ~~Subsequent~~The toresults ~~July~~of 7,operations ~~2005,~~have ~~the~~been ~~Company~~included ~~has~~in ~~been~~the ~~seeking~~Company’s aconsolidated ~~business~~financial ~~combination~~statements ~~with~~since anthe ~~operating~~date ~~business~~of ~~(‘‘Business~~the ~~Combination’’)~~acquisition.

The ~~registration~~following ~~statement~~table ~~for~~summarizes the ~~Company’s~~fair ~~initial~~values ~~public~~of ~~offering (‘‘Offering’’) was declared effective June 30, 2005. The Company consummated~~ the ~~Offering~~assets ~~for~~acquired ~~12,000,000 units on July 7, 2005~~ and, onliabilities ~~July~~assumed ~~11,~~as ~~2005, the representative~~ of the ~~underwriters~~acquisition ~~(‘‘Representative’’)~~date ~~exercised~~adjusted ~~its~~through over-allotment option for 1,800,000 units, with the Company receiving total net proceeds of approximately $75,691,000 (Note 2). The Company’s management has broad discretion with respect to the specific application of the net proceeds of this Offering, although substantially all of the net proceeds of this Offering are intended to be generally applied toward consummating a Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination. An amount of $73,764,000 of the net proceeds was placed in an interest-bearing trust account (‘‘Trust Account’’) until the earlier of (i) the consummation of a Business Combination or (ii) liquidation of the Company. Under the agreement governing the Trust Account, funds will only be invested in United States ‘‘government securities’’ within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 with a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940. At March 31 30, 2007, the value of the Trust Account amounted to $77,682,536. The placing of funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, prospective target businesses or other entities it engages, execute agreements with the Company waiving any right, title, interest or claim of any 2008:


Current assets	$	10,395
Property, plant and equipment		10,048
Other long-term assets		100
Mastheads		22,594
Advertiser relationships		77,379
Subscriber relationships		3,528
Customer relationships		3,024
Goodwill		90,110
Total assets		217,178
Current liabilities		(5,957	)
Long-term liabilities		(2,114	)
Cash acquired		(274	)
Net purchase price	$	208,833

It is expected that substantially all intangible assets, including goodwill, will be deductible for federal income tax purposes over a 15 year period.

~~Courtside~~AMERICAN ~~Acquisition~~COMMUNITY ~~Corp~~NEWSPAPERS INC. ~~(a corporation in the developmental stage) Note to Unaudited Condensed Financial Statements~~

~~kind~~ Notes ~~in or~~ to ~~any~~Consolidated ~~monies~~Financial held in the Trust Account, there is no guarantee that they will execute such agreements. Two of the Company’s officers have severally agreed that they will be personally liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for services rendered or contracted for or products sold to the Company. However, there can be no assurance that these officers will be able to satisfy those obligations. The remaining net proceeds Statements (~~not~~In ~~held in the Trust Account) may be used for tax payments and business~~thousands, ~~legal~~except ~~and~~share ~~accounting due diligence on prospective acquisitions~~ and ~~continuing~~per ~~general~~share ~~and administrative expenses.~~data) (Unaudited)

The ~~Company,~~unaudited ~~after~~pro ~~signing~~forma ainformation ~~definitive~~for ~~agreement~~2008 ~~for~~and 2007, set forth below, presents the ~~acquisition~~results of aoperations ~~target~~as ~~business,~~if ~~will~~the ~~submit~~MOTV ~~such~~Acquisition ~~transaction~~and ~~for~~MOTV’s ~~stockholder~~acquisition ~~approval.~~of In the ~~event~~publishing ~~that~~assets ~~stockholders~~of ~~owning~~CM Media, ~~20%~~Inc. oron ~~more~~April 30, 2007 ofhad occurred on the ~~shares~~first ~~sold~~day inof the ~~Offering~~reporting ~~vote~~period. ~~against~~These ~~the~~amounts ~~Business~~are ~~Combination~~not ~~and~~necessarily ~~exercise~~indicative ~~their~~of ~~conversion~~future ~~rights~~results ~~described~~or ~~below,~~actual results that would have been achieved had the ~~Business~~MOTV ~~Combination~~Acquisition ~~will~~occurred ~~not~~as beof ~~consummated~~the beginning of such period.

All of the Company’s stockholders prior to the Offering, including all of the officers and directors of the Company (‘‘Initial Stockholders’’), have agreed to vote their 3,000,000 founding shares of common stock in accordance with the vote of the majority in interest of all other stockholders of the Company (‘‘Public Stockholders’’) with respect to any Business Combination. After consummation of a Business Combination, these voting safeguards will no longer be applicable.


	Three Months Ended
	March 30, 2008				March 31, 2007
Total revenues		$	15,927			$	18,038
Net loss			(4,469	)			(4,248	)
Loss per common share – basic and diluted			(0.31	)			(0.29	)

~~With respect to a Business Combination which is approved and consummated, any Public Stockholder who voted against the Business Combination may demand that the Company convert his or her shares~~ 3. ~~The per share conversion price will equal the amount in the Trust Account~~ Property, ~~calculated~~Plant as of two business days prior to the consummation of the proposed Business Combination, divided by the number of shares of common stock held by Public Stockholders at the consummation of the Offering. Accordingly, Public Stockholders holding 19.99% of the aggregate number of shares owned by all Public Stockholders may seek conversion of their shares in the event of a Business Combination. Such Public Stockholders are entitled to receive their per share interest in the Trust Account computed without regard to the shares held by Initial Stockholders. In this respect, $14,745,424 (19.99% of the original amount placed in the Trust Account) has been classified as common stock subject to possible conversion at March 31, 2007 and ~~$783,315 (19.99% of the dividend income held in the Trust Account) has been classified as deferred dividends at March 31, 2007.~~Equipment

Property, plant and equipment consist of the following:


	March 30, 2008
Land		$	338
Buildings			975
Leasehold improvements			150
Equipment and vehicles			8,322
Furniture and fixtures			479
			10,264
Less accumulated depreciation			(1,352	)
Property, plant and equipment, net		$	8,912

Depreciation and amortization expense of $455 was recorded for the three months ended March 30, 2008.

4. Goodwill and Other Intangible Assets

Intangible assets consist of the following:


	March 30, 2008
	Gross carrying Amount			Accumulated Amortization				Net carrying amount
Amortized intangible assets:
Advertiser relationships		$	77,379		$	(7,271	)		$	70,108
Customer relationships			3,024			(227	)			2,797
Subscriber relationships			3,528			(277	)			3,251
Deferred financing costs			4,096			(456	)			3,640
			88,027			(8,231	)			79,796
Nonamortized intangible assets:
Mastheads			22,594			—				22,594
Intangible assets, net		$	110,621		$	(8,231	)		$	102,390

~~Courtside~~AMERICAN ~~Acquisition~~COMMUNITY ~~Corp~~NEWSPAPERS INC. ~~(a corporation in the developmental stage) Note to Unaudited Condensed Financial Statements~~

~~The~~ Notes Company’s Certificate of Incorporation, as amended, provides for mandatory liquidation of the Company in the event that the Company does not consummate a Business Combination within 18 months from the date of the consummation of the Offering (January 7, 2007), or 24 months from the consummation of the Offering if certain extension criteria have been satisfied. The extension criteria have been met; however, there is no assurance that the Company will be able to ~~successfully~~Consolidated ~~effect~~Financial a Business Combination during this period. This factor raises substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements are prepared assuming the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Statements (In ~~the event of liquidation~~thousands, itexcept ~~is likely that the per~~ share ~~value~~and ~~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 sold~~ data) (~~Note 2~~Unaudited).

~~Deferred~~ Amortization ~~acquisition~~expense ~~costs~~for ~~and~~the ~~deposit~~three ~~consist~~months ~~primarily~~ended ~~of legal~~March 30, 2008 ~~appraisal~~was $2,744, ~~due~~of ~~diligence~~which ~~and~~$152 ~~other~~is ~~third-party~~recorded ~~fees~~in ~~and~~interest ~~expenses~~expense. ~~directly~~The ~~associated~~average ~~with~~amortization ~~the~~period ~~negotiation~~for ~~and~~amortizable ~~execution~~intangible ofassets ~~the~~is ~~Asset~~approximately ~~Purchase~~8 ~~Agreement~~years. ~~(‘‘APA’’)~~Estimated ~~with~~future ~~American~~amortization ~~Community~~expense ~~Newspapers~~as ~~LLC~~of ~~(‘‘ACN’’)~~March 30, 2008, ~~and~~is ~~the~~as ~~deposit paid pursuant to the APA. See Note 4.~~follows:

2. Initial Public Offering On July 7, 2005, the Company sold 12,000,000 units (‘‘Units’’) in the Offering. On July 11, 2005, the Company sold an additional 1,800,000 Units pursuant to the Representative’s over-allotment option. Each Unit consists of one share of the Company’s common stock, $.0001 par value, and two Redeemable Common Stock Purchase Warrants (‘‘Warrants’’). Each Warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.00 commencing the later of the completion of a Business Combination or one year from the effective date of the Offering and expiring four years from the effective date of the Offering. The Warrants will be redeemable at a price of $.01 per Warrant upon 30 days’ notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $8.50 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given.


For the fiscal year ending
2008	$	8,230
2009		10,974
2010		10,974
2011		10,974
2012		10,974
Thereafter		27,670
Total	$	79,796

In The ~~connection~~changes ~~with~~in the ~~Offering,~~carrying ~~the~~amount ~~Company paid the underwriters an underwriting discount~~ of 7%goodwill ofare ~~the~~as ~~gross proceeds of the Offering and a non-accountable expense allowance of 1% of the gross proceeds of the Offering. In~~follows:

The Company will make its annual impairment assessment during the second quarter of 2008.

5. Long Term Debt

The Company’s long-term debt is summarized as follows:


	March 30, 2008
Revolving Credit Facility		$	1,500
Term Loan Facility
Term A Loans			35,000
Term B Loans			70,000
Subordinated Credit Facility			33,476
			139,976
Less current portion			(3,150	)
		$	136,826

The Company’s Credit Facility with a group of banks and other commercial lenders (the ‘‘Credit Facility’’) provides for a revolving credit facility (the ‘‘Revolving Credit Facility’’) and a term loan facility (the ‘‘Term Loan Facility’’). Proceeds from the Term Loan Facility of $105,000 and proceeds from the Revolving Credit Facility of $6,500 were used to fund the MOTV Acquisition. Substantially all of the Company’s assets and investment in its subsidiaries are pledged as collateral for loans under the Credit Facility. The Operating Company is the borrower under the Credit Facility.

The Credit Facility contains certain restrictive covenants which require the Company to maintain certain financial ratios, including consolidated total debt to earnings before interest, taxes, depreciation and amortization (‘‘EBITDA’’), consolidated interest coverage and consolidated fixed charge coverage, as defined. In addition, the Credit Facility contains various covenants which, among other things, limit capital expenditures and limit the Company’s ability to incur additional

~~Courtside~~AMERICAN ~~Acquisition~~COMMUNITY ~~Corp~~NEWSPAPERS INC. ~~(a corporation in the developmental stage) Note to Unaudited Condensed Financial Statements~~

~~connection~~ Notes ~~with the Offering, the Company also issued an option, for $100,~~ to ~~the~~Consolidated ~~Representative~~Financial toStatements (In ~~purchase 600~~thousands,~~000~~ ~~Units at an exercise price of $7.50 per Unit. The Units issuable upon exercise of this purchase option are identical to the Units sold in the Offering~~ except ~~that~~share ~~the~~and ~~Warrants included in the option have an exercise price of $6.65~~ per share. ~~The Company estimated that the fair value of this option was approximately $1,224,000 ($2.04 per Unit underlying such option~~data) ~~using a Black-Scholes option-pricing model. The fair value of the option was estimated as of the date of grant using the following assumptions:~~ (1Unaudited) expected volatility of 40.995%, (2) risk-free interest rate of 3.72% and (3) expected life of 5 years. 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 option may be exercised for cash or on a ‘‘cashless’’ basis, at the holder’s option, such that the holder may use the appreciated value of the option (the difference between the exercise prices of the option and the underlying Warrants and the market price of the Units and underlying securities) to exercise the option without the payment of any cash.

~~On October 25~~ indebtedness, ~~2006,~~pay ~~the~~distributions ~~Company entered into a Warrant Clarification Agreement to clarify the terms of the Warrant Agreement, dated as of June 30, 2005 (the ‘‘Warrant Agreement’’) by~~ and ~~between~~other ~~the Company and Continental Stock Transfer & Trust Company, as Warrant Agent~~items. The ~~Warrant~~Company ~~Clarification~~was ~~Agreement~~in ~~clarified,~~compliance ~~consistent~~ with the terms of the ~~Warrant~~Credit ~~Agreement~~Facility ~~and~~at ~~the disclosure contained in the Company’s Prospectus, dated June~~ March 30, 2005, that if the Company is unable to deliver securities pursuant to the exercise of a warrant because a registration statement under the Securities Act of 1933, as amended, with respect to the common stock is not effective, then in no event would the Company be obligated to pay cash or other consideration to the holders of warrants or otherwise ‘‘net-cash settle’’ any warrant exercise and the warrants may expire unexpired and unredeemed 2008.

On Borrowings ~~October~~under 25the Revolving Credit Facility are limited to $20,000 ~~2006~~through the scheduled maturity date of July 2, 2013, subject to mandatory prepayments related to defined excess cash flows, asset dispositions, equity investments and other items. The Revolving Credit Facility currently bears interest at either the ~~Company~~higher ~~entered~~of ~~into~~the aprime ~~similar~~rate ~~clarification~~or ~~agreement~~the ~~with~~Federal funds rate plus 0.50% plus an additional interest rate margin of 1.75% or the ~~holders~~London Interbank Offered (‘‘LIBOR’’) rate plus 3.00%. The interest rate on the Revolving Credit Facility was 6.0% at March 30, 2008. The Company incurs commitment fees of 0.5% on the ~~unit~~unused ~~purchase~~portion ~~options~~of ~~issued~~the inRevolving ~~connection~~Credit ~~with~~Facility. The additional interest rate margin on the Revolving Credit Facility is subject to decrease based on the Company’s ~~initial~~ratio ~~public~~of ~~offering~~consolidated total debt to EBITDA. As of March 30, 2008, we had $18,500 of additional committed capacity under the Revolving Credit Facility, $700 of which could be borrowed based on our current EBITDA, as defined in the Credit Facility. If such additional borrowings were used to invest in or acquire EBITDA generating assets, the amount of such additional borrowings could be greater than $700, based on the additional EBITDA acquired, up to the $18,500 maximum additional availability under the Revolving Credit Facility.

3. The ~~Impact~~Term A Loans consist of ~~Recently~~a ~~Issued~~series ~~Accounting~~of ~~Standards~~term Inloans ~~July~~currently ~~2006~~bearing interest at either the higher of the prime rate or the federal funds rate plus 0.50% plus an additional interest rate margin of 1.75%, or the ~~Financial~~LIBOR ~~Accounting~~rate ~~Standards~~plus ~~Board~~3.00%. ~~(‘‘FASB’’)~~The ~~issued~~interest ~~Financial~~rate ~~Accounting~~on ~~Standards~~the ~~Interpretation~~individual NoTerm A Loans was 7.5625% 48at March 30, 2008. ~~Accounting~~The ~~for~~Term ~~Uncertainty~~A Loans are due in ~~Income~~quarterly ~~Taxes~~installments ~~(‘‘FIN~~from ~~48’’).~~September 30, ~~FIN~~2008 48through ~~prescribes~~June 30, a2013, ~~recognition~~subject ~~threshold~~to mandatory prepayments related to defined excess cash flows, asset dispositions, equity investments and other items. The additional interest rate margin on the Term A Loans is subject to decrease based on the Company’s ratio of consolidated total debt to EBITDA.

The Term B Loans consist of a series of term loans currently bearing interest at either the higher of the prime rate or the federal funds rate plus 0.50% plus an additional interest rate margin of 2.00%, or the LIBOR rate plus 3.25%. The interest rate on the individual Term B Loans was 7.8125% at March 30, 2008. The Term B Loans are due in quarterly installments from September 30, 2008 through December 31, 2013, subject to mandatory prepayments related to defined excess cash flows, asset dispositions, equity investments and other items. The additional interest rate margin on the Term B Loans is not subject to decrease.

On July 2, 2007, in connection with the MOTV Acquisition, the Company also consummated a $30,000 unsecured term loan credit facility agreement (the ‘‘Subordinated Credit Facility’’) with a commercial lender. The Parent is the borrower under the Subordinated Credit Facility. The Subordinated Credit Facility matures on July 2, 2014 and has a leverage ratio based floating rate of payment-in-kind interest of between 14.25% and 17% (with a cash payment discount option). There is no amortization of the Subordinated Credit Facility. The interest rate on the Subordinated Credit facility will increase from 15.0% to 17.0% in May 2008 based on the leverage ratio as of March 30, 2008. The term loan may not be prepaid in the first two years and is subject to a prepayment premium of 3%, 2% and 1% in the third, fourth and fifth year, respectively, following the closing date and at par thereafter. The entire amount was immediately drawn down and used to fund the MOTV Acquisition and transaction costs and provide for the purchase of the Conversion Shares.

On November 30, 2007, the Company executed two interest rate swaps, one in the notional amount of $30,000 and one in the notional amount of $25,000, with a spot starting date of December 4, 2007. The interest rate swaps have identical terms of two years. Under these swaps, the Company pays an amount to the swap counterparty representing interest on a notional amount at a rate of 3.91% and receives an amount from the swap counterparty representing interest on the notional amount at a rate equal to the three-month LIBOR.

~~Courtside~~AMERICAN ~~Acquisition~~COMMUNITY ~~Corp~~NEWSPAPERS INC. ~~(a corporation in the developmental stage) Note to Unaudited Condensed Financial Statements~~

~~measurement~~ Notes ~~process for recording in the the financial statements uncertain tax positions taken or expected~~ to beConsolidated ~~taken~~Financial inStatements (In ~~a tax return. FIN 48 also provides guidance on derecognition~~thousands, ~~classification,~~except ~~interest~~share and ~~penalties,~~per ~~accounting~~share in interim periods, disclosures and transitions. The Company adopted FIN 48 and has determined that the adoption does not have a material impact on the Company’s financial position or results of operations.data) (Unaudited)

4. Scheduled ~~Asset~~maturities Purchase Agreement and Subsequent Event The Company entered into an Asset Purchase Agreement (‘‘APA’’) Purchase Agreement with American Community Newspapers LLC (‘‘ACN’’) on January 24, 2007 (subsequently amended on May 2, 2007) providing for the purchase by the Company (or a subsidiary of ~~the~~long-term ~~Company~~debt to be formed for such purchase) of substantially all of ACN’s assets and the assumption by the Company (or such subsidiary, without the release of the Company from its obligations) of certain of ACN’s liabilities. ACN is a community newspaper publisher having operations within four major U.S. markets — Minneapolis — St. Paul, Dallas, Northern Virginia (suburban Washington, D.C.) and Columbus, Ohio. ACN Holding LLC, the sole member of ACN, is also a party to the APA Purchase Agreement. The total consideration is approximately $206,000,000, subject to working capital adjustments (of which up to $12,500,000 may be paid in shares of Courtside common stock valued at $5.70 per share with the balance to be paid in cash plus, if certain newspaper cash flow and Courtside stock price targets are ~~achieved,~~as ~~up to an additional $25,000,000.~~follows:

To fund the purchase of ACN, Courtside has received commitments, subject to execution of definitive agreements and other conditions, for up to $125,000,000 of senior secured credit facilities and $27,000,000 of senior notes. The senior facilities may also be used for working capital, acquisitions and general corporate purposes. Courtside believes it will have sufficient available funds outside of the trust account to operate through July 7, 2007, assuming that a business combination is not consummated during that time, because two of Courtside’s officers have agreed with Courtside to advance funds (without recourse to the trust account) to meet Courtside’s reasonable out-of-pocket expenses when available funds held outside the trust account are insufficient for that purpose. Through May 8, 2007, $318,000 (of which $180,000 was advanced as of March 31, 2007) has been advanced in exchange for notes payable due no later that July 8, 2007, bearing interest at 5% per annum.


2008	$	2,100
2009		4,200
2010		5,950
2011		6,825
2012		8,575
Thereafter		112,326
Total	$	139,976

~~Effective March 14, 2007, the Company filed with the SEC a preliminary proxy statement~~ 6. Share-Based Compensation

The Company recognized compensation cost for share-based payments of $137 during the three months ended March 30, 2008. The total compensation cost not yet recognized related to non-vested awards as of March 30, 2008 was $1,801 which is expected to be recognized over a weighted average vesting period of approximately four years.

In connection with the MOTV Acquisition, on July 2, 2007, the Company adopted the expense recognition provisions of SFAS No. 123, Accounting for Stock Based Compensation, as revised in December 2004 (‘‘SFAS 123R’’). The adoption of SFAS 123R did not have a material impact on our results of operations, financial position or cash flows. All share-based compensation is accounted for in accordance with the fair-value based method of SFAS 123R.

The Company’s 2007 Long-Term Incentive Equity Plan (the ‘‘Plan’’), which is shareholder-approved, was established to grant stock options, stock appreciation rights, restricted stock, deferred stock and other stock based awards to its employees. Under the Plan, all stock option awards are granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. During 2007, the Company granted stock options with respect to 1,513,000 shares of the Company’s common stock that vest over a four year period. No stock options were issued during the three months ended March 30, 2008. Such stock options expire ten years after the date of grant. Shares issued as a result of future stock option exercises, if any, will be newly issued shares. As of March 30, 2008, 115,979 stock options have vested and are exercisable.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model that uses various assumptions for inputs, which are noted below. Generally, the Company uses expected volatilities and risk-free interest rates that correlate with the expected term of the option when estimating an option’s fair value. To determine the expected life of the option, the Company uses the simplified method for average life over the option vesting period due to lack of historical data. Expected volatility is based on historical volatility of comparable newspaper stocks, given the lack of trading history of our stock, and the expected risk-free interest rate is based on the U.S. Treasury yield curve at the time of the grant. The assumptions used for the fiscal 2007 grants were: (1) expected volatility ranging from 24.50% to 28.45%, (2) risk-free interest rates ranging from 3.42% to 4.90%, (3) expected dividends of 0.0% and (4) average life of 6.125 years.

~~ITEM~~AMERICAN 2COMMUNITY —NEWSPAPERS ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~INC.

~~The~~Notes ~~following~~to ~~discussion should be read in conjunction with the Company’s unaudited~~ Consolidated Financial Statements (In ~~and~~thousands, ~~footnotes~~except ~~thereto~~share ~~contained~~and inper ~~this~~share ~~report.~~data) (Unaudited)

~~Forward~~The ~~Looking~~following ~~Statements~~table summarizes common stock option activity during the three months ended March 30, 2008:

The statements discussed herein include forward looking statements that involve risks and uncertainties detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission.


	Options		Weighted Average Exercise Price
Outstanding stock options, December 30, 2007		1,260,500		$	4.82
Granted		—			—
Exercised		—			—
Forfeited		—			—
Outstanding stock options, March 30, 2008		1,260,500		$	4.82
Exercisable stock options, March 30, 2008		115,979		$	5.30
Weighted average grant date fair value of options granted				$	1.73
Weighted average remaining contractual life (years)					9.4

~~Overview~~7. Redeemable Preferred Stock

WeOn ~~were formed on March~~July 182, ~~2005~~2007, tothe ~~serve~~Company asand acertain ~~vehicle~~investors toentered ~~effect~~into aan ~~merger,~~investment ~~capital~~and ~~stock~~funding ~~exchange,~~agreement ~~asset~~with ~~acquisition~~respect orto ~~other~~the ~~similar~~issuance ~~business~~of ~~combination~~up ~~with~~to an45,000 ~~operating~~shares ~~business~~of Series A Preferred Stock. WeOn ~~intend~~July 3, 2007, tothe ~~utilize~~Company made a ~~combination~~funding ofrequest ~~cash~~with ~~derived~~respect ~~from~~to ~~the~~42,193 Preferred Shares for aggregate gross proceeds of ~~our~~$4,219 ~~public~~and ~~offering~~the purchase and ~~loans,~~sale ~~and~~of ~~our~~such ~~capital~~Series ~~stock~~A inPreferred ~~effecting~~Stock ~~the~~was ~~ACN~~consummated ~~business~~on ~~combination~~July 9, 2007.

~~Comparison~~Each preferred share entitles the holder to receive cumulative dividends payable on the last day of December, March, June and September in each year in an amount determined at a rate per annum of the accreted value of a preferred share that is 150 basis points higher than the then highest applicable interest rate of the Subordinated Credit Facility; provided, however, that the dividend rate shall not be lower than 15.75% or higher than 16.5%, except in the case of an increase in the interest rate on the Subordinated Credit Facility above 15.0%. During the three months ended March 3130, ~~2007~~2008, the dividend rate was equal to 16.5%. In May 2008, the ~~three~~dividend ~~months~~rate ~~ended~~on the Series A Preferred Stock will increase to 18.5% in connection with the increase in the interest rate on the Subordinated Credit facility from 15.0% to 17.0% based on the Company’s leverage ratio, as defined, as of March 3130, ~~2006~~2008. Any portion of the dividends for a dividend period that is paid in cash when due shall be paid at a rate equal to the applicable dividend rate less 50 basis points.

~~For the three months ended March 31, 2007, we had net income of $330,467 consisting of interest and dividend income less operating expenses and state and local income and capital taxes~~8. Income Our interest and dividend income includes dividend income of $516,923 and $415,026 for the three months ended March 31, 2007 and March 31, 2006, respectively, and our deferred dividends of $783,315 and $654,165 at March 31, 2007 and December 31, 2006, respectively, were derived from money market funds which are exempt from federal income taxes. The increase in dividend income was attributable to the increase in funds held in the Trust Fund, as well as the increase in interest rates in the 2007 quarter as compared to the 2006 quarter. For the quarter ended March 31, 2007, our expenses consisted of operating costs, which were $66,815, state capital taxes in the quarter of $15,000, and state and local income taxes of $109,000, compared to such expenses of $73,728, $22,500, and $91,000, respectively for the quarter ended March 31, 2006.Taxes

~~Discussion~~The ofCompany ~~the~~utilizes ~~period~~SFAS ~~from~~No. 109, ‘‘Accounting for Income Taxes’’ for its accounting for income taxes. At March 30, 2008, the Company provided for a valuation allowance on the net deferred tax asset less the deferred tax liability recorded for the indefinite-lived intangible assets. Pursuant to SFAS No. 109, the indefinite-lived intangible assets cannot be considered as a source of 18taxable income in making any valuation allowance adjustments. Accordingly, the change in the ~~2005~~deferred ~~(inception)~~balance tofor these assets for the three months ended March 31 30, 2008, resulted in a $636 ~~2007~~increase in deferred income tax liability and $636 of deferred income tax expense.

For the period from March 18, 2005 (inception) through March 31, 2007 we had net income of $1,787,177 attributable to dividend and interest income less formation and operating expenses and state and local income and capital taxes9. Recently ~~Courtside’s~~Issued ~~interest~~Accounting and dividend income of $3,229,036 and Courtside’s deferred dividends of $783,315 were principally derived from money market funds which are exempt from federal income taxes. Courtside’s expenses consisted of formation and operating costs of $698,911, state capital taxes of $121,348 and state and local income taxes of $621,600.Standards

WeIn ~~consummated our initial public offering on July~~September 72006, ~~2005.~~ ~~On July 11, 2005, we consummated~~ the ~~closing~~FASB ofissued anSFAS ~~additional~~No. 1157,~~800,000~~ ~~units~~Fair ~~that~~Value ~~were~~Measurements ~~subject~~(‘‘SFAS ~~to the underwriters~~157’ ~~over-allotment option. Gross proceeds from our initial public offering were $82~~’),~~800,000.~~ Wewhich ~~paid~~defines afair ~~total of $6~~value,~~516,000~~ inestablishes ~~underwriting~~guidelines ~~discounts and commissions, and approximately $593,000 was paid~~ for ~~costs~~measuring ~~and~~fair ~~expenses~~value ~~related to the offering. After deducting the underwriting discounts~~ and ~~commissions~~expands ~~and~~disclosures ~~the~~regarding ~~offering~~fair ~~expenses,~~value ~~the~~measurements. ~~total~~SFAS ~~net~~157 ~~proceeds~~does tonot usrequire ~~from~~any ~~the~~new ~~offering~~fair ~~were~~value ~~approximately~~measurements ~~$75,691,000~~but ofrather ~~which~~eliminates ~~$73,764,000~~inconsistencies ~~was deposited~~ in ~~the~~guidance ~~trust~~found ~~account (or approximately $5.35 per share sold~~ in ~~the~~various ~~offering).~~prior Asaccounting ~~of March 31, 2007, there was $77,682,536 held in trust or approximately $5~~pronouncements.63 ~~per share sold in the offering).~~

~~Courtside~~AMERICAN ~~has~~COMMUNITY ~~incurred~~NEWSPAPERS ~~the following expenses through March 31, 2007 as compared to the Use of Proceeds disclosure in Courtside’s S-1 dated June 30, 2005:~~INC.

Use of net proceeds not held in trust	Actual			Per S-1
Legal, accounting and other expenses attendant to the due diligence investigations, structuring and negotiation of a business combination (recorded as deferred acquisition cost ) (1)		$	512,690		$	300,000
Due diligence of prospective target businesses			267,360			300,000
Payment of administrative fee to Alpine Capital LLC ($7,500 per month for two years)			157,750			180,000
Legal and accounting fees relating to SEC reporting obligations			48,274			40,000
Working capital to cover miscellaneous expenses, D&O insurance, taxes and reserves			968,475			1,095,000	(2)
Total			1,954,549			1,915,000

Notes to Consolidated Financial Statements
(In thousands, except share and per share data)
(Unaudited)

~~(1)~~ SFAS 157 ~~Excludes~~is ~~$700~~effective for fiscal years beginning after November 15,~~000~~ 2007. ~~paid~~The asCompany aadopted ~~deposit~~SFAS 157 in ~~escrow~~the incurrent ~~accordance~~fiscal ~~with~~quarter, ~~the~~and ~~purchase~~it ~~agreement~~did not have a material impact on its consolidated financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (2‘‘SFAS 159’’), ~~Actual~~which ~~net~~permits ~~proceeds~~all ~~amounted~~entities to $1choose,~~927~~ at specified election dates,~~000~~ to measure eligible items at fair value that currently are not measured at fair value. Any business entity electing to measure eligible items at fair value would report unrealized gains and losses in earnings in subsequent periods and all up front costs and fees related to the fair value item are to be recognized in earnings as incurred and not deferred. The option is applied instrument by instrument with certain exceptions, is irrevocable, and applied to the entire financial instrument. SFAS 159 is effective for fiscal years beginning after November 15, 2007 and is applied prospectively with the exception that a business entity may elect to value existing eligible items and shall report the effect of this re-measurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. The Company adopted SFAS 159 in the current fiscal quarter, and it did not have a material impact on its consolidated financial position, results of operations or cash flows.

~~All~~In ofDecember 2007, the ~~expenditures~~FASB ~~incurred~~issued toSFAS ~~March 31,~~ 141R (revised 2007), ~~have~~Business ~~been~~Combinations ~~consistent~~(‘‘SFAS 141R’’). ~~with~~SFAS ~~the~~141R ~~estimates~~established ~~made~~principles and requirements for ~~the~~how ~~Use~~an entity which obtains control of ~~Proceeds~~one inor ~~Courtside’s~~more ~~S-1~~businesses ~~except~~(i) ~~for~~recognizes and measures the ~~costs~~identifiable ofassets acquired, the ~~ACN~~liabilities ~~acquisition.~~assumed ~~Costs~~and ofany non-controlling interest in the ~~ACN~~acquiree, ~~acquisition~~(ii) ~~have~~recognizes ~~exceeded~~and ~~Courtside’s~~measures ~~original~~the ~~estimate~~goodwill ~~because~~acquired ofin ~~Courtside’s~~the ~~decision~~business combination and (iii) determines what information to ~~obtain~~disclose aregarding ~~fairness~~business ~~opinion~~combinations. ~~and~~SFAS ~~because~~141R ~~legal~~applies ~~and~~prospectively ~~accounting~~to ~~fees~~business combinations for ~~due~~which ~~diligence~~the ~~and~~acquisition ~~negotiating~~date is on or after the ~~asset~~beginning ~~purchase~~of ~~agreement~~the first annual report period beginning on or after December 15, 2008. ~~employment~~The ~~agreements~~Company ~~and~~has ~~preparing~~not completed its evaluation on the ~~proxy~~effect ~~have~~of ~~exceeded~~SFAS ~~Courtside’s~~141R ~~original~~on ~~estimates~~its Consolidated Financial Statements.

~~Liquidity~~In December 2007, the FASB issued SFAS 160, Non-controlling Interests in Consolidated Financial Statements (‘‘SFAS 160’’), an amendment of Accounting Research Bulletin No. 51. SFAS 160 establishes accounting and ~~Capital~~reporting ~~Resources~~standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Additionally, SFAS 160 requires expanded disclosures in the consolidated financial statements. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. The Company has not completed its evaluation on the effect of SFAS 160 on its Consolidated Financial Statements.

We have used the net proceeds of our initial public offering not held in trust to identify and evaluate prospective acquisition candidates, select our target business, and structure, negotiate and consummate our business combination10. Subsequent At March 31, 2007, we had cash outside of the trust account of $915, prepaid expenses of $37,345, current liabilities of $1,430,127 and deferred acquisition costs of $1,212,690. Richard D. Goldstein, our chairman of he board and chief executive officer, and Bruce M. Greenwald, our president, have agreed that, if we are unable to complete the business combination with ACN and are forced to liquidate, they will be personally liable to pay debts and obligations to vendors or other entities that are owed money by us for services rendered or products sold to us, or to any target business, to the extent they have successful claims against the funds in our trust account.Event

AsEffective ~~of March~~May 311, ~~2007~~2008, ~~Courtside~~the ~~had~~Company ~~accounts~~accepted ~~payable~~the ~~and~~resignation ~~accrued~~of ~~liabilities~~its ~~that~~Chief ~~totaled~~Financial ~~approximately $457,000~~Officer. ~~Courtside~~In ~~estimates~~connection ~~that~~with itthis ~~will incur additional expenses of approximately $700~~resignation,~~000~~ ~~that~~there ~~would~~was beno ~~required~~severance toor beother ~~paid~~benefits ~~if the acquisition is not consummated~~paid. OfOn ~~such~~this ~~total of approximately $1~~date,~~157,000,~~ ~~vendors~~stock ~~and~~options ~~service~~with ~~providers~~respect to ~~whom $680~~376,~~829~~500 isshares ~~or would be owed (~~of ~~which $32,250 would be owed to Alpine Capital for rent and reimbursement of expenses advanced on behalf of Courtside) have waived their rights to make claims for payment from amounts in~~ the ~~trust~~Company’s ~~account.~~common ~~Messrs.~~stock ~~Goldstein~~will ~~and Greenwald would~~ be ~~obligated~~forfeited toby ~~indemnify Courtside for~~ the ~~balance~~Chief Financial ofOfficer ~~approximately~~in ~~$476,000~~connection ~~that~~with ~~would~~his ~~be owed to vendors and service providers who have not given such waivers to the extent that they successfully claim against the trust account funds~~resignation. ~~Any~~This ~~obligations~~officer ofwill ~~Messrs. Goldstein and Greenwald to pay such amounts would~~ be ~~reduced by payments to them from amounts~~ available tothereafter ~~Courtside from the return~~ to ~~it of all or part of~~ the ~~$700,000~~Company ~~deposit it has made~~ on ~~the~~a ~~purchase~~consulting ~~price~~basis ofas ~~the~~needed ~~acquisition~~to ~~and~~ensure ~~funds~~an ~~provided~~appropriate bytransition ~~Messrs. Goldstein and Greenwald~~ to ~~fund~~his ~~Courtside’s operating expenses~~successor. ~~Any~~The ofCompany ~~Courtside’s~~has ~~accounts~~commenced ~~payable~~an ~~and~~executive ~~accrued~~search ~~liabilities~~to ~~that~~fill ~~are outstanding upon~~ the ~~consummation~~position ofon ~~the~~a ~~acquisition~~permanent ~~will~~basis ~~be paid by the combined company following the acquisition. If the acquisition is consummated, Courtside will also incur further additional expenses of approximately $3,664,000 for fees~~ and ~~other~~has ~~expenses~~named ~~related~~its toCorporate ~~financing~~Controller ~~for~~as ~~the~~Acting ~~acquisition~~Chief ~~and~~Financial ~~completing the transaction, which will be paid by the combined company following the acquisition~~Officer.

The Company’s Subordinated Credit Facility with Ares Capital Corporation (‘‘Ares’’) and the Operating Company’s Credit Facility with various lenders (the ‘‘ACN Lenders’’) for which Bank of Montreal, Chicago Branch (‘‘BMO’’) is administrative agent (together, the ‘‘Credit Agreements’’), contain covenants based on financial ratios, including in each case, a Total Debt Leverage Ratio (as defined in each of the Credit Agreements) covenant. Based on the Company’s current and anticipated

OnAMERICAN ~~January 24, 2007,~~COMMUNITY ~~Courtside~~NEWSPAPERS signed the purchase agreement (which was amended on May 2, 2007) to acquire the business and substantially all of the assets of American Community Newspapers LLC, a publisher of community newspapers now operating within the following markets: Minneapolis - StINC. Paul, Dallas, Northern Virginia (suburban Washington D.C.) and Columbus, Ohio. The purchase price is approximately $206,000,000, subject to working capital adjustments (of which up to $12,500,000 may be paid in shares of Courtside common stock valued at $5.70 per share and the balance will be paid in cash) plus up to $15,000,000 based on 2008 newspaper cash flow and $10,000,000 if during any 20 trading days within any 30 trading day period through July 7, 2009 the last reported sale price of our common stock exceeds $8.50 per share. Concurrently with the execution of the purchase agreement, Courtside placed $700,000 in escrow as a deposit on the purchase price.

WeNotes ~~consummated~~to ~~our~~Consolidated ~~initial~~Financial ~~public~~Statements (In ~~offering of 12~~thousands,~~000,000~~ ~~units~~except ~~on July 7, 2005. On July 11, 2005, we consummated the closing of an additional 1,800,000 units that were subject to the over-allotment option. Each unit consisted of one~~ share ~~of our common stock~~ and ~~two warrants, each to purchase one share of our common stock at an exercise price of $5.00~~ per share. Under the terms of the warrant agreement governing the terms of the warrants between us and the Continental Stock Transfer & Trust Company, as warrant agent, we are required to use our best efforts to register these warrants and maintain such registration. After evaluating our financial statement treatment with respect to the accounting for derivative financial instruments pursuant to the Financial Accounting Standards Board’s Emerging Issues Task Force Issue No. 00-19, we entered into a clarification agreement dated October 25, 2006 with Continental Stock Transfer & Trust Company. The clarification agreement made explicit that effective as of the date of our initial public offering, we are not obligated to pay cash or other consideration to the holders of warrants or otherwise ‘‘net-cash settle’’ any warrant exercise if we are unable to deliver securities pursuant to the exercise of a warrant because a registration statement under the Securities Act of 1933 as amended with respect to the common stock is not effective. The clarification agreement clarifies that net-cash settlement was never intended to be a remedy for registered warrant holders, based on the intent of the parties as set forth in the warrant agreement and our final prospectus for our initial public offering. Such clarification is entirely consistent with the terms of the warrant agreement and the disclosure contained in our prospectus. Based on the foregoing, we believe our accounting of our warrants as permanent equity is fully justified and supported.data) (Unaudited)

In future ~~connection~~operating ~~with our initial public offering we issued to the underwriters~~results, ~~for~~reflecting ~~$100~~in anmanagement’s ~~option to purchase up to a total of 600~~judgment,~~000~~ ~~units. The units issuable upon exercise of this purchase option are identical to~~ the ~~units~~significant weeconomic ~~sold~~downturn in ~~our~~all ~~initial~~markets ~~public offering except that the warrants included~~ in ~~the~~which ~~option have an exercise price of $6.65. We estimated that~~ the ~~fair~~Company ~~value of this option was approximately $1~~operates,~~224,000~~ ~~($2.04~~the ~~per~~Company ~~unit~~will ~~underlying~~not ~~such~~be ~~option)~~in ~~using~~compliance awith ~~Black-Scholes option-pricing model. The fair value of~~ the ~~option~~Total ~~granted~~Debt toLeverage ~~the~~Ratio ~~underwriter~~covenants ~~was~~for ~~estimated as of~~ the ~~date~~second ofquarter ~~grant using the following assumptions: (1) expected volatility~~ of ~~40.995%,~~fiscal ~~(2)~~2008 ~~risk-free interest rate of 3.72%~~ and ~~(3)~~will ~~expected life of 5 years. The option may~~ be ~~exercised~~in ~~for~~default ~~cash~~under oreach onof ~~a ‘‘cashless’’ basis at~~ the ~~holder’s~~Credit ~~option,~~Agreements. ~~such~~While ~~that~~ the ~~holder~~Company ~~may~~would ~~use~~not ~~the~~expect ~~appreciated~~its ~~value~~lenders ofto ~~the~~immediately ~~option~~terminate ~~(the~~either ~~difference~~Credit ~~between~~Agreement ~~the exercise prices of the option~~ and/or ~~the~~demand ~~underlying~~immediate ~~warrants~~repayment ~~and the market price~~ of ~~the~~outstanding ~~units~~debt and ~~underlying securities) to exercise the option without the~~ payment of ~~any~~accrued ~~cash. On October 25~~interest, ~~2006,~~ ~~in connection with~~ the ~~clarification~~ACN ~~agreement~~Lenders ~~with~~would ~~respect~~have ~~to our warrants discussed above, we similarly clarified~~ the ~~terms~~right ~~of the options granted~~ to ~~the~~do ~~underwriters. In doing~~ so, ~~we clarified,~~ as ~~the~~a ~~date~~result of ~~our~~such ~~initial~~defaults. ~~public offering~~Alternatively, ~~that~~the ~~(i)~~ACN ifLenders wecould ~~are~~take ~~unable~~other ~~to deliver any securities pursuant to the exercise of the options~~actions, ~~we will have no obligation to pay~~ such ~~holder~~as ~~any~~restricting ~~cash or otherwise ‘‘net-cash settle’’ the option or the warrants underlying the option and (ii) there was no specified liability for~~ our ~~failure~~access to ~~satisfy~~additional ~~our~~revolving ~~registration~~loan ~~requirements.~~borrowings ~~As discussed above, the foregoing clarification was based on the disclosure set forth in the warrant agreement~~ and ~~the~~letters ~~final~~of ~~prospectus~~credit. Such ~~clarification~~actions iswould ~~entirely~~materially ~~consistent with the terms of the warrant agreement~~ and ~~the~~negatively ~~disclosure~~impact ~~contained in our prospectus. Based on~~ the ~~foregoing~~Company’s liquidity, weresults ~~believe our accounting~~ of ~~the~~operations ~~option as permanent equity is fully justified~~ and ~~supported~~financial condition.

AsThe Company has begun discussions with each of ~~May 4, 2007,~~Ares ~~Courtside~~and ~~has~~BMO ~~borrowed~~to ~~$318,000~~obtain ~~from~~waivers ~~Messrs.~~of ~~Goldstein~~the ~~and~~anticipated ~~Greenwald.~~covenant ~~The~~defaults, ~~loan~~which ismay ~~unsecured~~result, ~~bears~~among other things, in increases in the interest atrates on its indebtedness under the ~~rate~~Credit ofAgreements 5%and ~~per~~additional ~~annum,~~loan isrestrictions. ~~non-recourse~~There tocan be no assurance that the ~~trust~~Company ~~account~~will ~~and~~be able to obtain such waivers on reasonable terms, or at all.

~~will~~ITEM be2 ~~paid~~— onMANAGEMENT’S ~~the~~DISCUSSION ~~consummation~~AND byANALYSIS ~~Courtside~~OF ofFINANCIAL aCONDITION ~~business~~AND ~~combination.~~RESULTS ~~However,~~OF if a business combination is not consummated, it is not expected that Courtside will have any remaining non-trust account funds to pay the loan except that, under certain circumstances, all or a portion of the $700,000 deposit may be returned to Courtside. As of April 30, 2007, approximately $370,000 of the $700,000 was reserved for payment of ACN’s reimbursable expenses.OPERATIONS

AsCautionary ~~indicated~~Note inRegarding ~~our~~Forward ~~accompanying~~Looking financial statements, such financial statements have been prepared assuming that we will continue as a going concern. We are required to consummate a business combination by July 7, 2007. The possibility that our acquisition with ACN will not be consummated raises substantial doubt about our ability to continue as a going concern, and the financial statements do not include any adjustments that might result from the outcome of this uncertainty.Information

~~Commencing~~The onfollowing ~~June 30, 2005~~discussion ~~and~~of ~~ending~~our ~~upon~~financial ~~the~~condition ~~acquisition~~and results of aoperations ~~target~~should ~~business,~~be weread ~~began~~in ~~incurring~~conjunction awith ~~fee~~our ~~from~~historical ~~Alpine~~consolidated ~~Capital~~financial ~~LLC,~~statements anand ~~affiliate~~notes ofto ~~Richard~~those D.statements ~~Goldstein,~~appearing ~~our~~in ~~chairman~~this ofreport. ~~the~~The ~~board~~discussion and ~~the~~analysis ~~chief~~below ~~executive~~includes ~~officer,~~certain ~~Bruce~~forward-looking ~~M. Greenwald,~~statements ~~our~~that ~~president~~are ~~and~~subject ato ~~member of our board of directors~~risks, ~~Gregg~~uncertainties H.and ~~Mayer,~~other ~~our~~factors ~~vice~~described ~~president~~under ~~and~~the ~~controller,~~heading ~~and~~‘‘Risk Factors’’ ~~Oded~~in ~~Aboodi,~~ our ~~special~~2007 ~~advisor,~~Annual ofReport ~~$7,500~~on ~~per~~Form ~~month~~10-K for ~~providing~~the usyear ~~with~~ended ~~office~~December 30, 2007 ~~space~~that ~~and~~could ~~certain~~cause ~~general~~actual ~~and~~future ~~administrative~~growth, ~~services.~~results Inof ~~addition~~operations, inperformance ~~April~~ and ~~May 2005,~~business ~~Richard~~prospects D.and ~~Goldstein~~opportunities ~~advanced an aggregate of $100,000~~ to usdiffer ~~for~~materially ~~payment~~from onthose ~~our~~expressed ~~behalf~~in, ofor ~~offering~~implied ~~expenses.~~by, ~~These~~such ~~loans~~forward ~~were~~looking ~~repaid following our initial public offering from the proceeds of the offering~~information.

~~Courtside~~Certain ~~reimburses~~statements ~~its~~in ~~officers~~this ~~and~~Quarterly ~~directors~~Report ~~for~~on ~~any~~Form ~~reasonable out~~10-~~of-pocket~~Q ~~expenses~~may ~~incurred~~constitute byforward-looking ~~them~~statements inwithin ~~connection~~the ~~with~~meaning ~~certain~~of ~~activities~~the onPrivate ~~Courtside’s~~Securities ~~behalf~~Litigation ~~such~~Reform asAct ~~identifying~~of ~~and~~1995 ~~investigating~~that ~~possible~~reflect ~~target~~our ~~businesses~~current ~~and~~views ~~business~~regarding, ~~combinations.~~among ~~From~~other ~~Courtside’s~~things, ~~inception~~our infuture ~~March 2005~~growth, ~~through~~results ~~March 31~~of operations, ~~2007,~~ ~~Courtside~~performance ~~reimbursed~~and ~~its~~business ~~officers~~prospects and ~~directors~~opportunities, inas ~~the~~well ~~aggregate~~as ~~amount~~other ofstatements ~~approximately~~that ~~$55,000~~are ~~for~~other ~~expense~~than ~~incurred~~historical byfact. ~~them~~Words onsuch ~~its~~as ~~behalf~~‘‘anticipate(s),’’ ~~including~~‘‘expect(s)’’, ~~travel~~‘‘intend(s)’’, ~~meals~~‘‘plan(s)’’, ‘‘target(s)’’, ‘‘project(s)’’, ‘‘believe(s)’’, ‘‘will’’, ‘‘would’’, ‘‘seek(s)’’, ‘‘estimate(s)’’ and ~~entertainment~~similar expressions are intended to identify such forward-looking statements.

~~Off~~Forward-~~Balance~~looking ~~Sheet~~statements ~~Arrangements~~are based on management’s current expectations and beliefs and are subject to a number of known and unknown risks, uncertainties and other factors that could lead to actual results materially different from those described in the forward-looking statements. We can give no assurance that our expectations will be attained. Factors that could cause actual results to differ materially from our expectations include, but are not limited to the risks identified by us under the heading ‘‘Risk Factors’’ included in our 2007 Annual Report on Form 10-K. Such forward-looking statements speak only as of the date on which they are made. Except to the extent required by law, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

Options and warrants issued in conjunction with our IPO are equity-linked derivatives and accordingly represent off-balance sheet arrangements. The options and warrants meet the scope exception in paragraph 11(a) of Financial Accounting Standard (FAS) 133 and are accordingly not accounted for as derivatives for purposes of FAS 133 but instead are accounted for as equity. See Note 2 of the notes to our financial statements for more information.Overview

We are one of the largest community newspaper publishers in the United States, operating within four major U.S. markets: Minneapolis – St. Paul, Minnesota; Dallas, Texas; Northern Virginia (suburban Washington, D.C.); and Columbus, Ohio. Our goal is to be the preeminent provider of local content and advertising in any market we serve.

We were formed on March 18, 2005, to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business. On July 2, 2007, we utilized a combination of cash derived from the proceeds of the Offering and newly issued preferred stock and loans, in effecting the MOTV Acquisition. The MOTV Acquisition was accounted for using the purchase method of accounting.

A key element of our business strategy is geographic clustering of publications to realize operating efficiencies, revenue opportunities and provide consistent management. The clustering strategy has helped allow us to launch numerous new products in our existing clusters, leveraging off of our existing fixed cost base. We believe that these advantages, together with the generally lower overhead costs associated with operating in our markets, allow us to generate high operating profit margins and create an advantage against competitors and potential entrants in our markets.

We generate revenues principally from advertising, and to a smaller extent, from circulation and commercial printing. Advertising revenue is recognized upon publication of the advertisements. Circulation revenue from subscribers, which is billed to customers at the beginning of the subscription period, is recognized on a straight-line basis over the term of the related subscription. In addition, circulation revenue from single copy and newspaper rack sales is recognized upon collection from the

~~PART~~ customer. IIThe revenue for commercial printing is recognized upon delivery of the printed product to the customers. Deferred revenue arises as a normal part of business principally from advance circulation payments.

~~OTHER~~Factors ~~INFORMATION~~affecting our advertising revenues include, among others, the size and demographic characteristics of the local population, local economic conditions in general and the economic condition of the retail segments of the communities that our publications serve. If the local economy, population or prevailing retail environment of a community we serve experiences a downturn, our publications, revenues and profitability in that market would be adversely affected. Our advertising revenues are also susceptible to negative trends in the general economy that affect consumer spending. The advertisers in our newspapers and other publications and related websites include many businesses that can be significantly affected by regional or national economic downturns and other developments.

~~ITEM~~Our 2:advertising ~~UNREGISTERED~~revenue ~~SALES~~tends OFto ~~EQUITY~~follow ~~SECURITIES~~a ~~AND~~seasonal ~~USE~~pattern. OFOur ~~PROCEEDS~~first quarter is, historically, our weakest quarter of the year in terms of revenue. Correspondingly, our second and third fiscal quarters are, historically, our strongest quarters, because they include heavy seasonal and certain holiday advertising, including Easter, Mother’s Day, Graduation, back to school and other special events. We expect that this seasonality will continue to affect our advertising revenue in future periods.

OnOur ~~July 7, 2005,~~operating wecosts ~~consummated~~consist ~~our~~primarily ~~initial public offering~~ of 12newsprint,~~000,000~~ ~~Units,~~labor ~~with each unit consisting of one share of our common stock~~ and ~~two~~delivery ~~warrants, each to purchase one share of our common stock at an exercise price of $5~~costs.00 ~~per~~Our ~~share. On July 11~~selling, ~~2005,~~ wegeneral ~~closed~~and onadministrative anexpenses ~~additional~~consist ~~1,800,000~~primarily ~~units that were subject to the over-allotment option. The units were sold at an offering price~~ of ~~$6.00~~labor ~~per unit, generating total gross proceeds of $82,800,000~~costs. EarlyBirdCapital, Inc. acted as lead underwriter. The securities sold in the offering were registered under the Securities Act of 1933 on a registration statement on Form S-1 (No. 333-124380). The Securities and Exchange Commission declared the registration statement effective on June 30, 2005.

We ~~paid~~have anot ~~total~~been significantly impacted by general inflationary pressures over the last several years. We anticipate that changing costs of $6newsprint,~~516~~ our basic raw material,~~000~~ inmay ~~underwriting~~impact ~~discounts~~future ~~and~~operating ~~commissions~~costs. We are a member of a newsprint-buying consortium, which enables us to obtain favorable newsprint pricing. Price increases (or decreases) for our products are implemented when deemed appropriate by management. We continuously evaluate price increases, productivity improvements, sourcing efficiencies and ~~approximately~~other ~~$593~~cost reductions to mitigate the impact of inflation. Additionally,~~000has~~ ~~been~~we orhave ~~will~~taken besteps ~~paid~~to ~~for~~cluster ~~costs~~our operations geographically, thereby increasing the usage of facilities and ~~expenses~~equipment ~~related~~while increasing the productivity of our labor force. We expect to continue to employ these steps as part of our business and clustering strategy. Other factors that affect our quarterly revenues and operating results include changes in the ~~offering~~pricing policies of our competitors, the hiring and retention of key personnel, wage and cost pressures, distribution costs and general economic factors.

~~After~~Recent deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to us from the offering were approximately $75,691,000, of which $73,764,000 was deposited into the trust account (or approximately $5.35 per share sold in the offering) and the remaining proceeds are available to be used to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses.Developments

~~For~~Our aSubordinated ~~description~~Credit Facility with Ares Capital Corporation (‘‘Ares’’) and the Operating Company’s Credit Facility with various lenders (the ‘‘ACN Lenders’’) for which Bank of Montreal, Chicago Branch (‘‘BMO’’) is administrative agent (together, the ~~use~~‘‘Credit Agreements’’), contain covenants based on financial ratios, including in each case, a Total Debt Leverage Ratio (as defined in each of the ~~proceeds~~Credit ~~generated~~Agreements) covenant. Based on our current and anticipated future operating results, reflecting in our ~~initial~~judgment, ~~public~~the ~~offering~~significant economic downturn in all markets in which we operate, ~~see~~we ~~Part~~will Inot be in compliance with the Total Debt Leverage Ratio covenants for the second quarter of fiscal 2008 and we will be in default under each of the Credit Agreements. While we would not expect our lenders to immediately terminate either Credit Agreement and/or demand immediate repayment of outstanding debt and payment of accrued interest, ~~Item~~they 2would have the right to do so as a result of ~~this~~such ~~Form~~defaults. ~~10-Q~~Alternatively, the ACN Lenders could take other actions, such as restricting our access to additional revolving loan borrowings and letters of credit. Such actions would materially and negatively impact our liquidity, results of operations and financial condition.

~~ITEM~~We 6:have ~~EXHIBITS~~begun discussions with each of Ares and BMO to obtain waivers of the anticipated covenant defaults, which may result, among other things, in increases in the interest rates on our indebtedness under the Credit Agreements and additional loan restrictions. There can be no assurance that we will be able to obtain such waivers on reasonable terms, or at all.

~~(a)~~ In ~~Exhibits:~~addition, our current and anticipated future operating results may affect our ability to generate cash flows from operating activities and, subsequently, meet our requirements to fund our ongoing operating needs, capital expenditure requirements and long-term debt obligations.

31.1 – Section 302 Certification by CEO

31.2 – Section 302 Certification by CFO

32.1 – Section 906 Certification by CEO

32.2 – Section 906 Certification by CFO

~~SIGNATURES~~Pro Forma

InOn ~~accordance~~the ~~with~~following page, we have presented our operating results on a pro forma basis for the ~~requirements~~three months ended March 30, 2008 and March 31, 2007, in addition to presenting the information on a historical basis. This pro forma presentation for these periods assumes that the MOTV Acquisition, the acquisitions effected by MOTV during 2007 and the 2007 Financings occurred at the beginning of the ~~Exchange~~pro ~~Act~~forma period. This pro forma presentation is not necessarily indicative of what our operating results would have actually been had the MOTV Acquisition, the ~~registrant~~acquisitions ~~caused~~effected ~~this~~by ~~report~~MOTV toduring be2007 ~~signed~~and the 2007 Financings occurred at the beginning of the pro forma period. However, on ~~its~~an ~~behalf~~actual bybasis, almost all significant fluctuations between the ~~undersigned~~three months ended March 30, 2008 ~~thereunto~~and ~~duly~~March 31, 2007 ~~authorized~~occurred as a result of the MOTV Acquisition. This pro forma presentation is for comparison purposes as the Company had no significant operations in the corresponding three months ended March 31, 2007.

Dated: May 9, 2007			COURTSIDE ACQUISITION CORP.
			/s/ Richard D. Goldstein
			Richard D. Goldstein. Chairman of the Board and Chief Executive Officer
			/s/ Carl D. Harnick
			Carl D. Harnick Vice President and Chief Financial Officer

Critical Accounting Policy Disclosure

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

A summary of our significant accounting policies are described in Note 2 of our consolidated financial statements for the year ended December 30, 2007, as included in our Annual Report on Form 10-K. There have been no changes in critical accounting policies in the current year from those described in Note 2 of our consolidated financial statements for the year ended December 30, 2007.

Results of Operations

The following table summarizes our historical and pro forma results of operations for the three months ended March 30, 2008 and March 31, 2007.


	Unaudited
	(In thousands, except share and per share data)
	Historical								Pro Forma
	Three Months Ended								Three Months Ended
	March 30, 2008				March 31, 2007				March 30, 2008				March 31, 2007
Revenues:
Advertising		$	14,474			$	—			$	14,474			$	16,465
Circulation			676				—				676				924
Commercial printing and other			777				—				777				649
Total revenues			15,927				—				15,927				18,038
Operating costs and expenses:
Operating			7,466				—				7,466				8,497
Selling, general and administrative			5,803				82				5,803				6,546
Depreciation and amortization			3,047				—				3,122				3,072
			16,316				82				16,391				18,115
Operating loss			(389	)			(82	)			(464	)			(77	)
Interest expense			(3,618	)			—				(3,369	)			(3,535	)
Interest income			—				521				—				—
(Loss) income from operations before income taxes			(4,007	)			439				(3,833	)			(3,612	)
Income tax expense			(636	)			(109	)			(636	)			(636	)
Net (loss) income		$	(4,643	)		$	330			$	(4,469	)		$	(4,248	)
(Loss) earnings per share:
Basic and diluted		$	(0.32	)		$	0.02			$	(0.31	)		$	(0.29	)
Weighted average shares outstanding			14,623,445				16,800,000				14,623,445				14,623,445

Three Months Ended March 30, 2008 Compared to Three Months Ended March 31, 2007 (Pro Forma)

The discussion of our results of operations that follows is based upon our pro forma results of operations for (i) the thirteen (13) week period ended March 30, 2008, and (ii) the thirteen (13) week period ended March 31, 2007. These thirteen (13) week periods are referred to as either ‘‘the thirteen weeks’’, ‘‘quarter ended’’ or ‘‘three months ended’’.

Pro Forma Advertising Revenue. Pro forma advertising revenue for the three months ended March 30, 2008 decreased by $1,991, or 12.1%, over the preceding fiscal period. The decrease was due in large part to a revenue decrease from our Minnesota operations associated with a decline in advertising resulting from lower real estate sales and a related downturn in economic activity in the Minneapolis – St. Paul market, although all of our newspaper groups experienced revenue declines during this period. Pro forma national retail revenue decreased $142, or 42.6%, in 2008. This decrease is partially a result of a decline in national retail advertising due to a discontinuation of one-time advertising programs in a number of segments, as well as a downturn in economic activity in our Minneapolis – St. Paul and Dallas regions. Pro forma local retail display revenue decreased $332, or 4.3%, in 2008 and pro forma local classified revenue decreased $1,459, or 22.1%, in 2008. Pro forma internet revenue increased $40, or 10.9%, in 2008. This increase was the result of new internet advertising products launched across all of our web sites, as well as increased visitors and page views from the prior year period.

Pro Forma Circulation Revenue. Pro forma circulation revenue for the three months ended March 30, 2008 decreased by $248, or 26.8%, over the preceding fiscal period. The decrease was primarily due to a decrease of $199 from our Columbus operations. We are reaching an increasingly larger share of the market through our online website growth and our controlled distribution strategy. Circulation represents a small percentage of our pro forma revenue, 4.7% during 2008, due to our focus on controlled distribution products.

Pro Forma Commercial Printing and Other Revenue. Pro forma commercial printing and other revenue for the three months ended March 30, 2008 increased by $128, or 19.7%, over the preceding fiscal period. The increase was primarily due to obtaining new commercial printing jobs in our Columbus and Dallas operations.

Pro Forma Operating Costs. Pro forma operating costs for the three months ended March 30, 2008 decreased by $1,031, or 12.1%, over the preceding fiscal period. Pro forma newsprint expense decreased $352, or 20.2%, due to decreases in the price per short ton of newsprint from $584 in 2007 to $523 in 2008, mainly from purchasing synergies realized as a result of the acquisition of the Columbus newspaper group in April 2007. Other pro forma operating costs, which principally consist of labor, were down $679 in 2008, due to decreased headcount levels. Pro forma salaries and employee benefits relating to pro forma operating costs were 16.8% of our total pro forma revenues for 2008, as compared to 17.5% of our total pro forma revenues for 2007.

Pro Forma Selling, General and Administrative Expenses. Pro forma selling, general and administrative expenses for the three months ended March 30, 2008 decreased by $743, or 11.4%, over the preceding fiscal period. This decrease was the result of declines in pro forma local display and pro forma classified advertising sales expense in the amount of $348 primarily related to the revenue decrease from the prior period. Other decreases were across multiple general and administrative expense categories due to cost containment initiatives put in place by management during 2007 combined with the realization of staffing synergies associated with the acquisition of the Columbus newspaper group in April 2007. Pro forma salaries and employee benefits relating to pro forma selling, general and administrative expenses were 15.1% of our total pro forma revenues for 2008, as compared to 16.6% of our total pro forma revenues for 2007.

Pro Forma Depreciation and Amortization. Pro forma depreciation and amortization expense for the three months ended March 30, 2008 increased $50, or 1.6%, over the preceding fiscal period.

Pro Forma Interest Expense. Pro forma interest expense for the three months ended March 30, 2008 decreased by $166, or 4.7%, over the preceding fiscal period. This decrease was due to decreases in debt levels.

Pro Forma Income Tax Expense. Pro forma income tax expense for the three months ended March 30, 2008 was $636, unchanged from the preceding fiscal period.

Pro Forma Net Loss. Pro forma net loss for the three months ended March 30, 2008 increased $221, or 5.2%, over the preceding fiscal period. The decrease was due to the factors noted above.

Pro Forma Loss Per Share. Pro forma net loss per share for the three months ended March 30, 2008 increased $0.02, or 6.9%, over the preceding fiscal period. The decrease was due to the factors noted above.

Three Months Ended March 30, 2008 Compared to Three Months Ended March 31, 2007 (Historical)

The discussion of our results of operations that follows is based upon our historical results of operations for (i) the thirteen (13) week period ended March 30, 2008, and (ii) the thirteen (13) week period ended March 31, 2007. These thirteen (13) week periods are referred to as either ‘‘the thirteen weeks’’, ‘‘quarter ended’’ or ‘‘three months ended’’. The majority of the changes are the result of the MOTV Acquisition which occurred on July 2, 2007.

Advertising Revenue. Advertising revenue for the three months ended March 30, 2008 increased by $14,474 over the preceding fiscal period. The increase was due to the MOTV Acquisition.

Circulation Revenue. Circulation revenue for the three months ended March 30, 2008 increased by $676 over the preceding fiscal period. The increase was due to the MOTV Acquisition.

Commercial Printing and Other Revenue. Commercial printing and other revenue for the three months ended March 30, 2008 increased by $777 over the preceding fiscal period. The increase was due to the MOTV Acquisition.

Operating Costs. Operating costs for the three months ended March 30, 2008 increased by $7,466 over the preceding fiscal period. The increase was due to the MOTV Acquisition.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended March 30, 2008 increased by $5,721 over the preceding fiscal period. The increase was due to principally as a result of the MOTV Acquisition.

Depreciation and Amortization. Depreciation and amortization expense for the three months ended March 30, 2008 increased $3,047 over the preceding fiscal period. The increase was due to the MOTV Acquisition.

Interest Expense. Interest expense for the three months ended March 30, 2008 increased by $3,618 over the preceding fiscal period. The increase was due to the MOTV Acquisition and 2007 Financings.

Interest Income. Interest income for the three months ended March 30, 2008 decreased by $521 over the preceding fiscal period. The decrease was due to the utilization of the trust fund to fund the MOTV Acquisition on July 2, 2007.

(Loss) Income from Operations Before Income Taxes. Income from operations before income taxes for the three months ended March 30, 2008 decreased $4,446 over the preceding fiscal period, from $439 of income from operations before income taxes in 2007 to a $4,007 loss from operations before income taxes in 2008. This decrease was due to the factors noted above.

Income Tax Expense. Income tax expense for the three months ended March 30, 2008 increased by $527 over the preceding fiscal period. This decrease was due to the MOTV Acquisition.

Net (Loss) Income. Net loss for the three months ended March 30, 2008 increased $4,973 over the preceding fiscal period. The decrease was due to the factors noted above.

(Loss) Earnings Per Share. Loss per share for the three months ended March 30, 2008 decreased $0.34 per share over the preceding fiscal period, from earnings per share of $0.02 in 2007 to a loss per share of $(0.32) in 2008. This decrease was due to the factors noted above.

Liquidity and Capital Resources

Our primary cash requirements are for working capital, borrowing obligations and capital expenditures. We have no material outstanding commitments for capital expenditures. Our principal sources of funds have historically been cash provided by operating activities and borrowings under our Revolving Credit Facility. This historical cash flow trend has not held for 2008 as we experience a continued weakness in our print advertising revenue streams.

As of March 30, 2008, we had $18,500 of additional committed capacity under the Revolving Credit Facility, of which $700 could be borrowed based on our current EBITDA, as defined in the Credit Facility. If such additional borrowings were used to invest in or acquire EBITDA generating assets, the amount of such additional borrowings on both dates could be greater than $700, based on the additional EBITDA acquired, up to the $18,500 maximum additional availability at March 30, 2008, under the Revolving Credit Facility.

Our Credit Facility and Subordinated Credit Facility impose upon us certain financial and operating covenants, including, among others, requirements that we satisfy certain quarterly financial tests, including a total leverage ratio, a minimum interest coverage ratio, a minimum fixed charge ratio, and restrictions on our ability to incur debt, pay dividends, take certain other corporate actions and similar items. Our ability to meet these covenants will depend on future operating cash flows, working capital needs and other sources and uses of funds, which in turn will be subject to economic conditions and to financial, market and competitive factors, many of which are beyond our control. Failure to meet these covenants could result in additional costs and fees to amend the Credit Facility

and Subordinated Credit Facility or result in the principal balance of the borrowings under the Credit Facility or Subordinated Credit Facility becoming immediately due and payable. Furthermore, we may need a waiver of our Credit Facility and Subordinated Credit Facility covenants and there can be no assurance that we can receive such waiver. As of March 30, 2008, we are in compliance with these covenants.

As discussed in ‘‘Recent Developments’’, we have initiated discussions with the lenders who are a party to our Senior Credit Facility and Subordinated Credit Facility to explore the possibility of modifying certain terms of our financial covenants contained in the Senior Credit Facility and Subordinated Credit Facility to provide greater flexibility to help manage our operations efficiently during the current challenging times. The Company anticipates that the modifications will reduce borrowing capacity under the Senior Credit Facility and increase our borrowing costs. There can be no assurance that the lenders who are a party to our Senior Credit Facility and Subordinated Credit Facility will agree to any changes to these facilities.

Cash Flows

The following table summarizes our historical cash flows.


	Unaudited (In thousands)
	Three Months Ended
	March 30, 2008				March 31, 2007
Cash provided by (used in) operating activities		$	376			$	(587	)
Cash used in investing activities			(43	)			(785	)
Cash (used in) provided by financing activities			(1,223	)			180

The discussion of our cash flows that follows is based on our historical cash flows for the three months ended March 30, 2008 and March 31, 2007. The majority of the changes are the result of the MOTV Acquisition which occurred on July 2, 2007.

Cash Flows from Operating Activities. Net cash provided by operating activities for the three months ended March 30, 2008 was $376, an increase of $963 when compared to the $587 of cash used in operating activities for the three months ended March 31, 2007. This $963 increase was the result of an increase in cash provided by (i) Trust Fund use of funds of $646 in 2007 and (ii) an increase in non-cash charges of $5,578, partially offset by a decrease in (i) cash provided by working capital of $287, excluding the Trust Fund and (ii) change in net income (loss) of $4,973.

The $287 decrease in cash provided by working capital, excluding the Trust Fund, for the three months ended March 30, 2008 when compared to the three months ended March 31, 2007 is primarily attributable to decreases in accrued interest and accrued expenses and increases in accounts receivable, accounts payable and inventories.

The $4,942 increase in non-cash charges primarily consisted of an increase in depreciation and amortization of $3,047, all of which related to the MOTV Acquisition consummated on July 2, 2007, $1,550 of non-cash interest incurred in connection with the financing of the MOTV Acquisition, an increase in non-cash compensation expense of $136 and a provision for doubtful accounts of $208.

Cash Flows from Investing Activities. Net cash used in investing activities for the three months ended March 30, 2008 was $43. During this period, we used this amount for capital expenditures. We have reviewed our capital expenditure program and have modified it to balance our liquidity needs with what is sufficient to maintain our current level and quality of operations.

Cash Flows from Financing Activities. Net cash used by financing activities for the three months ended March 30, 2008 was $1,223. The net cash used by financing activities resulted from net payments of $1,200 under the Credit Facility and $23 of debt issuance costs in connection with the Credit Facility.

Changes in Financial Position

The discussion that follows highlights significant changes in our financial position and working capital from December 30, 2007 to March 30, 2008.

Accounts Receivable. Accounts receivable increased $129 from December 30, 2007 to March 30, 2008, the majority of which was associated with decreased collections due to a slowdown in economic activity in our markets.

Inventories. Inventories increased $340 from December 30, 2007 to March 30, 2008, the majority of which was associated with increased newsprint inventories to take advantage of anticipated increases in newsprint pricing combined with declining usage.

Property, Plant, and Equipment. Property, plant, and equipment decreased $412 during the period from December 30, 2007 to March 30, 2008. Since yearend, we have incurred $43 in capital expenditures offset by depreciation of $455.

Intangible Assets. Intangible assets decreased $2,721 from December 30, 2007 to March 30, 2008, the majority of which was associated with amortization expense of $2,744.

Accounts Payable. Accounts payable increased $333 from December 30, 2007 to March 30, 2008, due to the timing of vendor payments.

Accrued Expenses. Accrued expenses decreased $177 from December 30, 2007 to March 30, 2008, the majority of which was associated with the timing of payment of accrued payroll and benefits.

Accrued Interest. Accrued interest decreased $108 from December 30, 2007 to March 30, 2008 primarily attributable to borrowings under the Credit Facility.

Other Information

Effective May 1, 2008, the Company accepted the resignation of Daniel J. Wilson, the Chief Financial Officer of the Company. In connection with Mr. Wilson’s resignation, there was no severance or other benefits paid. On this date, stock options with respect to 376,500 shares of the Company’s common stock will be forfeited by Mr. Wilson in connection with his resignation. Mr. Wilson will be available thereafter to the Company on a consulting basis as needed to ensure an appropriate transition to his successor. The Company has commenced an executive search to fill the position on a permanent basis and has named Richard D. Hendrickson, its Corporate Controller, as Acting Chief Financial Officer.

Non-GAAP Financial Measures

A non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. In this Form 10-Q, we define and use Adjusted EBITDA, a non-GAAP financial measure, as set forth below.

Adjusted EBITDA and pro forma Adjusted EBITDA

We define Adjusted EBITDA as follows:

Net income (loss) before:

Income tax expense (benefit)
Income (loss) from discontinued operations
Normal state (non income) taxes
Depreciation and amortization
Net interest expense
Other non operating items; and
Non-cash stock-based compensation expense

We define pro forma Adjusted EBITDA as follows:

Net income (loss) before

Plus/Minus:

Adjustment for acquisitions (dispositions) so that such pro forma EBITDA calculation has been presented as if any acquisitions (dispositions) that occurred in any reporting period were made as of the first day of the fiscal year presented.

Management’s Use of Adjusted EBITDA and pro forma Adjusted EBITDA

Adjusted EBITDA and pro forma EBITDA are not measurements of financial performance under GAAP and should not be considered in isolation or as alternatives to income from operations, net income (loss), cash flow from continuing operating activities or any other measure of performance or liquidity derived in accordance with GAAP. We believe these non-GAAP measures, as we have defined them, are helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance on our day-to-day operations and/or take into account the impact of acquisitions/dispositions to compare over various periods. These measures provide an assessment of controllable expenses and afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance. They provide indicators for management to determine if adjustments to current spending decisions are needed.

Adjusted EBITDA and pro forma Adjusted EBITDA provide us with measures of financial performance, independent of items that are beyond the control of management in the short-term, such as depreciation and amortization, taxation and interest expense associated with our capital structure. These metrics measure our financial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the organization. Adjusted EBITDA and pro forma Adjusted EBITDA are just two of the metrics used by senior management to review the financial performance of the business on a monthly basis.

Limitations of Adjusted EBITDA and pro forma Adjusted EBITDA

Adjusted EBITDA and pro forma Adjusted EBITDA have limitations as analytical tools. They should not be viewed in isolation or as substitutes for GAAP measures of earnings or cash flows. Material limitations in making the adjustments to our earnings to calculate Adjusted EBITDA and pro forma Adjusted EBITDA and using these non-GAAP financial measures as compared to GAAP net income (loss), include: the cash portion of interest expense, income tax (benefit) provision and non-recurring charges related to gain (loss) on sale of facilities and extinguishment of debt activities generally represent charges (gains), which may significantly affect our financial results.

An investor or potential investor may find these items important in evaluating our performance, results of operations and financial position. We use non-GAAP financial measures to supplement our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

Adjusted EBITDA and pro forma Adjusted EBITDA are not alternatives to net income, income from operations or cash flows provided by or used in operations as calculated and presented in accordance with GAAP. You should not rely on Adjusted EBITDA or pro forma Adjusted EBITDA as substitutes for any such GAAP financial measure. We strongly encourage you to review the reconciliation of net income (loss) to Adjusted EBITDA and reconciliation of net income (loss) to

pro forma Adjusted EBITDA, along with our consolidated financial statements included elsewhere in this Form 10-K. We also strongly encourage you to not rely on any single financial measure to evaluate our business. In addition, because Adjusted EBITDA and pro forma Adjusted EBITDA are not measures of financial performance under GAAP and are susceptible to varying calculations, the Adjusted EBITDA and pro forma Adjusted EBITDA measures, as presented in this Form 10-K, may differ from and may not be comparable to similarly titled measures used by other companies.

The table below shows the reconciliation of net (loss) income to Adjusted EBITDA for the periods presented:


	(In thousands)
	Three Months Ended
	March 30, 2008				March 31, 2007
Net (loss) income		$	(4,643	)		$	330
Income tax expense			636				109
Non-cash stock based compensation expense			137				—
Interest income			—				(521	)
Interest expense			3,618				—
Depreciation and amortization			3,047				—
Adjusted EBITDA		$	2,795			$	(82	)

The table below shows the reconciliation of net (loss) income to pro forma Adjusted EBITDA for the periods presented:


	(In thousands)
	Three Months Ended
	March 30, 2008				March 31, 2007
Net (loss) income		$	(4,643	)		$	330
Income tax (benefit) expense			636				109
Non-cash stock based compensation expense			137				—
Interest income			—				(521	)
Interest expense			3,618				—
Depreciation and amortization			3,047				—
Adjustment for MOTV Acquisition			—				3,366
Pro Forma Adjusted EBITDA		$	2,795			$	3,284

Off Balance Sheet Arrangements

Options and warrants issued in conjunction with our initial public offering and the options issued under our 2007 Long-Term Incentive Equity Plan are equity-linked derivatives and accordingly represent off-balance sheet arrangements. The options and warrants meet the scope exception in paragraph 11(a) of Financial Accounting Standard 133 (‘‘SFAS 133’’) and are accordingly not accounted for as derivatives for purposes of SFAS 133, but instead are accounted for as equity.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s Annual Report on Form 10-K for the year ended December 30, 2007 details the Company’s disclosures about market risk. As of March 30, 2008, there have been no material changes in the market risk for the Company from that discussed in the aforementioned Form 10-K.

Item 4. Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities

Exchange Act of 1934 (the ‘‘Exchange Act’’) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our chief executive officer and treasurer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief executive officer and chief financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 30, 2008. Based upon their evaluation, they concluded that our disclosure controls and procedures were effective.

Our internal control over financial reporting is a process designed by, or under the supervision of, our president and treasurer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles (United States). Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles (United States), and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Changes in Internal Controls

There has not been any change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 4T. Controls and Procedures

Not applicable.

Part II. Other Information

Item 1. Legal Proceedings

We are subject to legal proceedings and claims which arise in the ordinary course of our business. Although occasional adverse decisions or settlements may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.

Item 1A. Risk Factors

Management of the Company cautions readers that our business activities involve risks and uncertainties that could cause actual results to differ materially from those currently expected by us. Item 1A — Risk Factors, in our 2007 Annual Report on Form 10-K for the fiscal year ended December 30, 2007, should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. Such risks are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or operating results.

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

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

(a) Exhibits:

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized on the 30^th day of April 2008.


American Community Newspapers Inc. (Registrant)
/s/ Eugene M. Carr
Eugene M. Carr Chairman, President and Chief Executive Officer (Principal Executive Officer)
/s/ Daniel J. Wilson
Daniel J. Wilson Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ Richard D. Hendrickson
Richard D. Hendrickson Corporate Controller (Principal Accounting Officer)

March 30,
2008

Goodwill, beginning of period

Goodwill, additions (retirements)

Goodwill, end of period

Filing Compare · American Community Newspapers Inc.