Granahan Mccourt Acquisition Corp - Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2008

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

	For the transition period from ______________ to ______________.

Commission file number 01-33075

GRANAHAN MCCOURT ACQUISITION CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware		02-0781911
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

179 Stony Brook Road

Hopewell, NJ 08525

(Address of Principal Executive Offices)

(609) 333-1200

(Registrant's Telephone Number, Including Area Code)

Indicate by check whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes x No o

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

Large accelerated filer o

Accelerated filer x

Smaller Reporting Company o

Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes x No o

State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:14,062,500 shares of common stock, par value $0.0001 per share issued and outstanding as of August 8, 2008.

GRANAHAN MCCOURT ACQUISITION CORPORATION

INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION		2

Item 1.	Financial Statements	2

	Balance Sheets	2

	Statements of Operations	3

	Statements of Stockholders' Equity	4

	Statements of Cash Flows	5

Notes to Financial Statements		6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	11
Item 4.	Controls and Procedures	12

PART II. OTHER INFORMATION		12

Item 5.	Exhibits	12

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

Granahan McCourt Acquisition Corporation

(A Development Stage Company)

Balance Sheets

	June 30,
	2008		December 31,
	(unaudited)			2007*
ASSETS
Current Assets
Cash and cash equivalents	$	132,197	$	306,180
Cash and cash equivalents in trust account		93,023,040		91,862,529
Accrued interest receivable in trust account		121,216		233,371
Accrued interest receivable-other		177		1,381
Prepaid expenses		114,772		100,650
Prepaid taxes		108,000		91,000
Total current assets		93,499,402		92,595,111
Property and equipment, net		4,316		5,755
Deferred acquisition costs		1,470,010		-
Deferred tax asset, net		1,182,600		741,600
TOTAL ASSETS	$	96,156,328	$	93,342,466
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses	$	1,670,773	$	312,038
Franchise tax payable		16,169		103,949
Notes Payable to stockholder		1,350,000		-
Deferred underwriting fees		3,600,000		3,600,000
Total current liabilities		6,636,942		4,015,987

Common stock, subject to possible conversion, 2,249,999 shares at conversion value		18,634,330		18,405,423

Commitments and contingencies
Stockholders' equity
Preferred Stock, $0.0001 par value; authorized, 5,000 shares; no shares issued or outstanding		-		-
Common Stock, $0.0001 par value, authorized, 100,000,000 shares, 14,062,500 shares issued and outstanding as of June 30, 2008 and as of December 31, 2007 (which includes 2,249,999 shares subject to possible conversion)		1,406		1,406
Additional paid- in capital		68,359,018		68,587,925
Retained earnings accumulated during the development stage		2,524,632		2,331,725
Total stockholders' equity		70,885,056		70,921,056
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	96,156,328	$	93,342,466

*Derived from audited financial statements

See accompanying notes

Granahan McCourt Acquisition Corporation

(A Development Stage Company)

Statements of Operations

(unaudited)

	For the three months ended June 30, 2008			For the three months ended June 30, 2007			For the six months ended June 30, 2008			For the six months ended June 30, 2007			July 10, 2006 (date of inception) to June 30 , 2008

Interest income	$	446,187		$	817,141		$	1,050,268		$	1,590,839		$	4,823,143
General and administrative expenses		143,352			386,567			1,315,361			761,107			3,309,111
Income (loss) before income taxes		302,835			430,574			(265,093	)		829,732			1,514,032
Income tax (benefit)		(27,000	)		(95,400	)		(458,000	)		(198,000	)		(1,010,600	)
Net income		329,835			525,974			192,907			1,027,732			2,524,632
Accretion of trust account relating to common stock subject to possible conversion		(94,578	)		(146,291	)		(228,907	)		(284,432	)		(904,338	)
Net income (loss) attributable to common stockholders	$	235,257		$	379,683		$	(36,000	)	$	743,300		$	1,620,294
Weighted-average common shares outstanding subject to possible conversion		2,249,999			2,249,999			2,249,999			2,249,999			1,922,329
Basic and diluted net income per share subject to possible conversion	$	0.04		$	0.07		$	0.10		$	0.13		$	0.47
Weighted-average number of shares outstanding - basic and diluted		11,821,501			11,812,501			11,001,203			11,847,463			10,612,410
Basic and diluted net income (loss) per share	$	0.02		$	0.03		$	(0.00	)	$	0.06		$	0.15

See accompanying notes

Granahan McCourt Acquisition Corporation

(A Development Stage Company)

Statements of Stockholders' Equity

										Retained
										Earnings
										Accumulated
							Additional			During the		Total
	Common Stock						Paid-in			Development		Stockholders'
	Shares			Amount			capital			Stage		Equity
July 10, 2006 (Inception) to June 30, 2008

Issuance of common stock to initial stockholders		3,234,375		$	323		$	1,677		$	-	$	2,000
Issuance of warrants in private placement		-			-			4,000,000			-		4,000,000
Sale of 11,250,000 units, net of underwriters' discount and offering expenses		11,250,000			1,125			82,991,890			-		82,993,015
Net proceeds subject to possible conversion of 2,249,999 shares		-			-			(17,729,992	)		-		(17,729,992	)
Repurchase of 421,875 shares of common stock from initial stockholders		(421,875	)		(42	)		(219	)				(261	)
Accretion of trust fund relating to common stock subject to possible conversion		-			-			(675,431	)		-		(675,431	)
Net income for the period July 10, 2006 (inception) to December 31, 2007		-			-			-			2,331,725		2,331,725

Balance, December 31, 2007		14,062,500		$	1,406		$	68,587,925		$	2,331,725	$	70,921,056

Accretion of trust fund relating to common stock subject to possible conversion								(228,907	)				(228,907	)
Net loss for the period ended June 30, 2008		-			-			-			192,907		192,907
Balance, June 30, 2008 (unaudited)		14,062,500		$	1,406		$	68,359,018		$	2,524,632	$	70,885,056

See accompanying notes

Granahan McCourt Acquisition Corporation

(A Development Stage Company)

Statements of Cash Flows

(unaudited)

	For the six months ended June 30, 2008			For the six months ended June 30, 2007			July 10, 2006 (date of inception) to June 30, 2008
Cash flows from operating activities:
Net income	$	192,907		$	1,027,732		$	2,524,632
Adjustments to reconcile net income to net cash (used in) operating activities:
Depreciation		1,439			946			4,316
Interest earned on cash held in trust		(1,048,356	)		(1,419,016	)		(4,774,256	)
Deferred tax		(441,000	)		(290,000	)		(1,182,600	)
Changes in operating assets and liabilities:
Accrued interest receivable-other		1,204			1,738			(177	)
Prepaid expenses		(14,122	)		11,987			(114,772	)
Prepaid taxes		(17,000	)		(58,000	)		(108,000	)
Accounts payable and accrued expenses		(111,275	)		146,321			200,763
Franchise tax payable		(87,780	)		(26,781	)		16,169
Net cash (used in) operating activities		(1,523,983	)		(605,073	)		(3,433,925	)
Cash flows from investing activities:
Cash and cash equivalents deposited in trust account		-			-			(88,650,000	)
Cash withdrawn from trust for income tax payment		-			-			280,000
Purchase of property and equipment		-			(5,674	)		(8,632	)
Net cash (used in) investing activities		-			(5,674	)		(88,378,632	)

Cash flows from financing activities:
Proceeds from offering, net		-			-			86,593,015
Proceeds from notes payable to stockholder		1,350,000			-			1,568,000
Repayment of note payable to stockholder		-			-			(218,000	)
Proceeds from issuance of common stock to initial stockholders		-			-			2,000
Repurchase of common stock from initial stockholders		-			(261	)		(261	)
Proceeds from issuance of warrants		-			-			4,000,000
Net cash provided by (used in) financing activities		1,350,000			(261	)		91,944,754
Net increase (decrease) in cash and cash equivalents		(173,983	)		(611,008	)		132,197
Cash and cash equivalents, beginning		306,180			1,662,056			-
Cash and cash equivalents, ending	$	132,197		$	1,051,048		$	132,197

Supplemental disclosure of taxes paid and non-cash investing and financing transactions
Cash paid for income taxes	$	-		$	150,000		$	280,000
Accrual of deferred underwriting fees		-			-			3,600,000
Accretion of trust fund relating to common stock subject to possible conversion		228,907			284,431			904,338
Accrual of deferred acquisition costs		1,470,010			-			-

See accompanying notes

Granahan McCourt Acquisition Corporation

(A Development Stage Company)

Notes to Financial Statements

(unaudited)

Note A - Organization and Business Operations

Granahan McCourt Acquisition Corporation (the “Company”) was incorporated in Delaware on July 10, 2006 as a blank check company for the purpose of acquiring, or acquiring control of, one or more assets or operating businesses in the telecommunications and media industries through a merger, capital stock exchange, asset or stock acquisition or other similar business transaction. As of June 30, 2008, the Company had not commenced any operations. All activity through June 30, 2008 relates to the Company's formation, the sale of shares of common stock in a private placement, the initial public offering (the “Offering”) described below, and efforts to identify an acquisition target. The Company has selected December 31 as its fiscal year end.

The registration statement for the Company's initial public offering was declared effective on October 18, 2006. The Company consummated the Offering of 11,250,000 Units (as defined in Note C) on October 24, 2006 for net proceeds of approximately $83 million. On October 24, 2006, the Company consummated a private placement of 4 million warrants for an aggregate purchase price of $4 million.

The Company's management has broad discretion with respect to the specific application of the net proceeds of the Offering and the private placement, although substantially all of the net proceeds of the Offering and the private placement 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. Upon the closing of the private placement and the Offering, $88.65 million (including $3.6 million of underwriters' fees which have been deferred by the underwriters as described in Note C) was placed in a trust account (“Trust Account”) and will continue to be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 having a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 until the earlier of (i) the consummation of the company’s first business combination in which the fair market value of the assets or operating businesses acquired is at least 80% of our net assets (excluding the amount held in the Trust Account representing a portion of the underwriters' discount) at the time of the acquisition and (ii) liquidation of the Company. The remaining proceeds may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.

The Company, after signing a definitive agreement for the acquisition of a target business, will submit such transaction for stockholder approval. In the event that 20% or more of the outstanding stock (excluding, for this purpose, those shares of common stock issued prior to the Offering) vote against the business combination and exercise their conversion rights described below, the business combination will not be consummated. 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 the event that the Company does not consummate a business combination within 18 months from the date of the consummation of the Offering (April 24, 2008), or 24 months from the consummation of the Offering (October 24, 2008) if certain extension criteria have been satisfied, the proceeds held in the Trust Account will be distributed to the Company's public stockholders, excluding the existing stockholders to the extent of their initial stock holdings. In the event of such distribution, the per share value of the residual assets remaining available for distribution (including Trust Account assets) may be less than the price per share in the Offering (assuming no value is attributed to the Warrants contained in the Units sold in the Offering discussed in Note C).

The Company's Fourth Amended and Restated Certificate of Incorporation provides for liquidation of the Company in the event that the Company does not consummate a business combination within 18 months after the date of the consummation of the Offering (April 24, 2008), or within 24 months after the consummation of the Offering (October 24, 2008) if certain extension criteria have been satisfied. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In the event of liquidation, it is likely that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the price per share in the Offering (assuming no value is attributed to the Warrants contained in the Units sold in the Offering discussed in Note C).

On April 24, 2008, we announced that we had met the condition under our Fourth Amended and Restated Certificate of Incorporation that permits us until October 24, 2008 to complete an appropriate acquisition meeting the criteria set forth therein. We entered into an Agreement and Plan of Merger (“Merger Agreement”), dated as of April 24, 2008, with Satellite Merger Corp., a Georgia corporation and our wholly-owned subsidiary (“Merger Sub”), Pro Brand International, Inc., a Georgia corporation (“PBI”) and certain equity holders of PBI (collectively, “Sellers”). Pursuant to the Merger Agreement, Merger Sub will be merged with and into PBI, with PBI continuing as the surviving corporation and as our wholly-owned subsidiary.

Note B - Summary of Significant Accounting Policies

Interim Financial Statements

The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and should be read in conjunction with the Company's audited financial statements and footnotes thereto for the period from inception (July 10, 2006) to December 31, 2007 included in the Company's Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management necessary for a fair presentation of the Company's financial position, results of operations and cash flows. The operating results for the six months from January 1, 2008 to June 30, 2008 are not indicative of the results to be expected for any other interim period of any future year.

Cash and Cash Equivalents

The Company considers all marketable debt securities with original maturities of three months or less to be cash equivalents.

Use of Estimates

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

Income Taxes

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

Recently Issued Accounting Standards

In June 2006, the FASB issued Interpretation No. 48, “ Accounting for Uncertainty in Income Taxes-an Interpretation of SFAS No. 109 ” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in tax positions recognized in a company's financial statements in accordance with SFAS No. 109, “ Accounting for Income Taxes ” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of the tax position taken or expected to be taken in a tax return. The Company adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 did not have any impact on the accompanying financial statements since we have not identified any uncertain tax positions as defined by FIN 48.

We recognize interest and penalties related to uncertain tax positions in income tax expense. The tax years 2007 and 2006 remain open to examination by the major taxing jurisdictions to which we are subject.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

Note C - Offering

In the Offering, the Company sold to the public 11,250,000 units (“Units”). The underwriters were paid fees equal to 3% of the gross proceeds of the Offering, or $2,700,000, at the closing of the Offering and have agreed to defer an additional $3,600,000 of their underwriting fees until the consummation of a business combination. Upon the consummation of a business combination, the Company will pay such deferred fees out of the proceeds of the Offering held in the Trust Account. The underwriters will not be entitled to any interest accrued on the deferred fees. The underwriters have agreed to forfeit any rights to, or claims against, such proceeds if the Company does not successfully complete a business combination.

Each Unit consists of one share of the Company's common stock, $0.0001 par value, and one redeemable common stock purchase warrant (each a “Warrant”). Each Warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of $6.00 commencing on the later of (a) the completion of a business combination with a target business and (b) October 18, 2007. The Warrants will expire on October 18, 2010. No Warrant may be exercised unless, at the time of exercise, a post effective amendment to the registration statement, or a new registration statement, is effective that includes a current prospectus relating to the common stock issuable upon exercise of the Warrant and the common stock underlying the Warrant has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the Warrant. The Company is not required to net-cash settle any Warrant if it is unable to maintain a current prospectus. The Warrants will be redeemable at a price of $0.01 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 $11.50 per share for any 20 trading days within a 30 trading day period ending three business days prior to the date on which notice of redemption is given. The Company does not need the consent of the underwriters in order to redeem the outstanding Warrants.

Mr. David C. McCourt purchased from the Company in a private placement 4,000,000 Warrants, at a purchase price of $1.00 per Warrant, for an aggregate purchase price of $4,000,000. The $4,000,000 proceeds from the private placement were placed in the Trust Account and are part of the liquidating distribution to the public stockholders in the event of a liquidation prior to a business combination. The Warrants sold in the private placement can be exercised on a cashless basis. The Warrants sold in the private placement have terms and provisions that are otherwise identical to those of the Warrants being sold in the Offering but the Warrants issued in connection with the private placement will not be transferable by Mr. McCourt until after the consummation of the initial business combination, except that Mr. McCourt is permitted to transfer the Warrants sold in the private placement in certain limited circumstances, such as by will in the event of his death or to other of the Company's officers and directors. However, the transferees receiving such Warrants will be subject to the same transfer restrictions imposed on Mr. McCourt. In the event of liquidation prior to a business combination, the Warrants sold in the private placement will be worthless.

Since the underwriters' over-allotment option was not exercised, on January 16, 2007 the Company repurchased 421,875 shares of common stock from David C. McCourt, the President, Chief Executive Officer and Chairman of the Company, at a total aggregate cost of $261.

Note D - Notes Payable to Stockholder

On March 14, 2008, Mr. McCourt loaned $250,000 to the Company in exchange for a demand note from the Company in such amount. The principal balance of this note is payable on the earlier of (a) one business day following Mr. McCourt's written demand for payment and (b) upon consummation of a business combination. The demand note bears no interest and has no recourse against the funds in the trust account.

On May 5, 2008, David C. McCourt loaned the Company $500,000 in exchange for a demand note from the Company in such amount. The principal balance of this note is payable on the earlier of (a) one business day following Mr. McCourt’s written demand for such payment, (b) consummation of a business combination and (c) liquidation of the trust fund pursuant to our fourth amended and restated certificate of incorporation. The demand note bears no interest and has no recourse against the funds in the trust account.

On June 10, 2008, David C. McCourt loaned the Company $600,000 in exchange for a demand note from the Company in such amount. The principal balance of this note is payable on the earlier of (a) one business day following Mr. McCourt’s written demand for such payment, (b) consummation of a business combination and (c) liquidation of the trust fund pursuant to our fourth amended and restated certificate of incorporation. The demand note bears no interest and has no recourse against the funds in the trust account.

Note E - Commitments

Pursuant to an administrative services agreement, commencing on October 18, 2006, the effective date of the registration statement for the Offering (See Note C), through the earlier of the consummation of a business combination or the liquidation of the Company, the Company pays a fee of $10,000 per month to an affiliate of Mr. McCourt for certain administrative services, including office space, utilities and secretarial support.

In connection with the Offering, the Company has committed to pay a fee equal to 7% of the gross Offering proceeds to the underwriters, of which 4% ($3,600,000) is to be deferred until the consummation of an initial business combination.

Note F - Common Stock

On October 24, 2006, the Company affected a 0.72 to 1 reverse stock split of its common stock. Following this reverse stock split, and prior to the Offering, there were 3,234,375 shares of common stock outstanding. All references in the accompanying financial statements to the number of shares of common stock and loss per share have been retroactively restated to reflect the reverse stock split.

Note G - Preferred Stock

The Company is authorized to issue 5,000 shares of blank check preferred stock with such designation, voting and other rights and preferences as may be determined from time to time by the Board of Directors.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “ may ,” “ should ,” “ could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue ,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission filings.

We were formed on July 10, 2006 for the purpose of acquiring, or acquiring control of, one or more assets or operating businesses in the telecommunications and media industries through a merger, capital stock exchange, asset or stock acquisition or other similar business combination. Our initial business combination must be with a business or businesses whose collective fair market value is at least equal to 80% of our net assets (excluding the amount held in the trust account representing a portion of the underwriters' discount) at the time of the acquisition.

On October 24, 2006, we consummated our initial public offering of 11,250,000 Units. Each Unit consists of one share of our common stock, par value $0.0001 per share, and one warrant entitling the holder to purchase one share of our common stock at a price of $6.00. The public offering price of each Unit was $8.00, and we generated gross proceeds of $90,000,000 in the initial public offering. Of the gross proceeds: (i) we deposited $88,650,000 into a trust account at Lehman Brothers Inc., maintained by Continental Stock Transfer & Trust Company, as trustee, which included $3,600,000 of contingent underwriting discount and $4,000,000 that we received from the issuance and sale of 4,000,000 warrants to David C. McCourt, our President, Chief Executive Officer and Chairman of the Board, on October 18, 2006 in a private placement; (ii) the underwriters received $2,700,000 as underwriting discount (excluding the contingent underwriting discount); and (iii) we retained $550,000 for offering expenses.

The proceeds deposited in the trust account will not be released from the trust account until the earlier of the completion of a business combination or the expiration of the time period during which we may complete a business combination. The proceeds held in the trust account (other than the contingent underwriting discount) may be used as consideration to pay the sellers of a target business with which we complete a business combination. To the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the proceeds held in the trust account (other than the contingent underwriting discount) will be used to finance the operations of the target business.

Pursuant to the merger agreement, the aggregate consideration to be paid by us at closing would be $75 million, consisting of shares of our common stock with an aggregate value of $20 million and $55 million in cash in immediately available funds. However, shares with an aggregate value of $3 million and $8.25 million in cash will be placed into escrow to satisfy any indemnification claims that may be asserted by us. In addition, if PBI attains certain annual performance targets, through the end of 2010 (specifically, attaining certain levels of adjusted earnings before interest, taxation, depreciation and amortization in each annual period until the end of 2010), we will pay an annual earnout beginning in 2009 to the holders of PBI common stock and options. The adoption of the merger agreement and the transactions contemplated by the merger agreement are subject to customary closing conditions as well as the approval of the holders of our common stock.

We cannot assure you that we will be able to consummate a business combination with PBI on or prior to October 24, 2008. If we are not able to consummate a business combination by then, we will be required to liquidate.

Recent Developments

On May 12, 2008, we filed with the Securities and Exchange Commission a registration statement on Form S-4, including a preliminary proxy statement/prospectus, in connection with the registration of shares of the Company’s common stock and the solicitation by the Company of proxies from holders of our common stock relating to a special meeting of the Company’s shareholders to approve, among other things, the Merger Agreement and related transactions.

On June 10, 2008, David C. McCourt loaned to us $600,000 in exchange for a demand note from us in such amount. The principal balance of this note is payable on the earlier of (a) one business day following Mr. McCourt’s written demand for such payment, (b) consummation of a business combination and (c) liquidation of the trust fund pursuant to our fourth amended and restated certificate of incorporation. The demand note bears no interest and has no recourse against the funds in the trust account.

Results of Operations

Income, before income taxes, for the quarter ended June 30, 2008 was $302,835 and consisted of interest income of $446,187 earned predominantly on the trust account, offset by an aggregate of $143,352 in expenses, which consist of $36,828 for director and officer insurance and other insurance, $19,415 for registration and filing fees, $(56,184) for legal and accounting fees, $41,250 for Delaware franchise taxes, $30,000 for administrative services expense paid to Granahan McCourt Capital, LLC for our office space and other general and administrative services, $68,785 for travel expenses, consulting fees and other expenses incurred in connection with due diligence investigations of potential acquisition targets and $3,258 for other expenses.

Loss, before income taxes, for the six months ended June 30, 2008 was $265,093 and consisted of interest income of $1,050,268 earned predominantly on the trust account, offset by an aggregate of $1,315,361 in expenses, which consist of $74,536 for director and officer insurance and other insurance, $27,257 for registration and filing fees, $892,681 for legal and accounting fees, $82,500 for Delaware franchise taxes, $59,817 for administrative services expense paid to Granahan McCourt Capital, LLC for our office space and other general and administrative services, $171,755 for travel expenses, consulting fees and other expenses incurred in connection with due diligence investigations of potential acquisition targets and $6,815 for other expenses.

Income, before income taxes, for the period since inception on July 10, 2006 until June 30, 2008 was $1,514,032 and consisted of interest income of $4,823,143 earned predominantly on the trust account, offset by an aggregate of $3,309,111 in expenses, which consist of $256,964 for director and officer insurance and other insurance, $62,579 for registration and filing fees, $1,803,788 for legal and accounting fees, $323,159 for Delaware franchise taxes, $204,333 paid to Granahan McCourt Capital, LLC, for our office space and other general and administrative services, $606,948 for travel expenses, consulting fees and other expenses incurred in connection with due diligence investigations of potential acquisition targets and $51,340 for other expenses. The net remaining proceeds from the initial public offering after deducting the underwriting discounts and commissions (excluding the contingent underwriting discount), the offering expenses and all other income and expenditures through June 30, 2008 were $93,276,453, which consist of $132,197 of cash held outside the trust account and $93,144,256 held in the trust account, including accrued interest.

On May 5, 2008 and June 10, 2008, Davie C. McCourt loaned to us $500,000 and $600,000 respectively, in each case in return for a demand note from us in such amount. See Note D to our financials contained herein.

We believe that the working capital available to us, in addition to the funds available to us outside of the trust account, will be sufficient to allow us to operate through October, 2008, or until a business combination is consummated. We do not believe we will need to raise additional funds during this time in order to meet the expenditures required to meet our operating expenses. However, we may issue additional capital stock, debt or a combination of capital stock and debt to complete one or more business combinations.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with general accepting accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have determined that we currently are not subject to any critical accounting policies.

Recently Issued Accounting Standards

In June 2006, the FASB issued Interpretation No. 48, “ Accounting for Uncertainty in Income Taxes-an Interpretation of SFAS No. 109 ” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in tax positions recognized in a company's financial statements in accordance with SFAS No. 109, “ Accounting for Income Taxes ,” and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of the tax position taken or expected to be taken in a tax return. The Company adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 did not have any impact on the accompanying financial statements since we have not identified any uncertain tax positions as defined by FIN 48.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” (“SFAS 157”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements. The new guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007, and for interim periods within those fiscal years. The adoption of SFAS No. 157 is not expected to have a material effect on the Company’s financial position and results of operations.

In February 2007, the FASB issued SFAS No.159 “The Fair Value Option for Financial Assets and Financial Liabilities” which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 is effective for the first quarter of 2008. The Company is currently evaluating the impact of SFAS 159.

In December of 2007, the FASB issued SFAS No. 141 (revised 2007) "Business Combinations" (“SFAS 141 (R)”). SFAS 141 (R) retains the fundamental requirements of the original pronouncement requiring that the purchase method be used for all business combinations, but also provides revised guidance for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any non-controlling interest in the acquired. It also requires the recognition of assets acquired and liabilities assumed arising from contingencies, the capitalization of in-process research and development at fair market value, and the expensing of acquisition-related costs as incurred. SFAS 141(R) is effective for the fiscal years beginning after December 15, 2008. The Company is not currently able to estimate the impact of the adoption of SFAS 141(R) on the results of operations if the Company completes acquisition subsequent to its adoption.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (“FAS 160”). SFAS 160 requires ownership interests in subsidiaries held by parties other than the parent, and the amount of consolidated net income, be clearly identified, labeled and presented in the consolidated financial statements. It also requires once a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary be initially measured at fair value. Sufficient disclosures are required to clearly identify and distinguish between the interests of the parent and the interest of the non-controlling owners. It is effective for the fiscal years beginning after December 15, 2008, and requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements are applied prospectively. The Company does not expect the adoption of SFAS to have a material impact on its financial condition or results of operations.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

To date, our efforts have been limited to organizational activities and activities relating to our initial public offering and the identification of a target business. We have neither engaged in any operations nor generated any revenues. As the proceeds from our initial public offering held in the trust account have been invested in short term investments, our primary market risk exposure relates to fluctuations in interest.

As of June 30, 2008, $93,023,040 of the net proceeds of our initial public offering and private placement was held in the trust account for the purposes of consummating a business combination. Continental Stock Transfer & Trust Company, the trustee, has invested the money held in the trust account at JPMorgan Chase Bank, NA, in the Lehman Brothers Tax Free Money Market Fund which invests in securities exempt from federal income taxes. As of June 30, 2008, the effective, annualized, federal tax-free interest rate payable on our investment was 1.68%.

We have not engaged in any hedging activities since our inception on July 10, 2006. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.

Item 4. Controls and Procedures

Our management carried out an evaluation, with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of June 30, 2008. Based upon that evaluation, these officers concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission.

There has not been any change in our internal control over financial reporting in connection with the evaluation required by Rule13a-15(d) under the Exchange Act that occurred during the six months ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.

OTHER INFORMATION

Item 5. Exhibits.

Exhibit Number		Exhibit Description

10.1		Demand Note dated May 5, 2008, in the principal amount of $500,000 issued by the Company to David C. McCourt *

10.2		Demand Note dated June 10, 2008, in the principal amount of $600,000 issued by the Company to David C. McCourt *

31.1		Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification by Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification by Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

________

* Incorporated by reference from Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-150848)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GRANAHAN MCCOURT ACQUISITION CORPORATION

Date: August 8, 2008	By:	/s/ David C. McCourt
		David C. McCourt
		President, Chief Executive Officer and Chairman of the Board