UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





ý Annual Report Pursuant
to Section 13 or 15(d)


of
the Securities Exchange Act of 1934





For
the fiscal year ended December 31, 2007





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 000-51510





INTERAMERICAN
ACQUISITION GROUP INC.


(Exact
name of registrant as specified in its charter)





Delaware
            
            20-2828369(State
      or other jurisdiction of
            
            (I.R.S.
      Employerincorporation
      or organization)
            
            Identification
      No.)2918
      Fifth Avenue South, Suite 209
              San
      Diego, California
            
            92103(Address
      of principal executive office)
            
            (Zip
      Code)




Registrant’s
telephone number, including area code:(619) 298-9883




Securities
of the Registrant registered pursuant to Section 12(b) of the Act:





None




Securities
of the Registrant registered pursuant to Section 12(g) of the Act:




Title of
Each Class




Common
Stock, par value $.0001 per share


Warrants


Units




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yeso Noý




Indicated
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yeso Noý




Indicate
by checkmark whether the 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
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.


Yesý
Noo












Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.


Yesý
Noo




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.




Large
accelerated filero                                           Accelerated
filero                                           Non-accelerated
filero                                           Smaller
Reporting Companyý




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


Yes ýNo o




The
aggregate market value of the registrant's voting common equity held by
non-affiliates of the registrant on the last business day of the registrant’s
most recently completed second fiscal quarter, computed by reference to the last
sale price of such stock of $7.42 per share as of March 31, 2008, was
approximately $42,665,000 million. The registrant has no non-voting common
equity issued and outstanding.  The determination of affiliate status for
purposes of this paragraph is not necessarily a conclusive determination for any
other purpose.





The
number of shares outstanding of the registrant's common stock as of March 28,
2008 was 7,000,000 shares.







DOCUMENTS
INCORPORATED BY REFERENCE:


Exhibit
Index is listed on Pages 38 and 39









TABLE
OF CONTENTS




Item
      1:
            Business
            2Item
      1A:
            Risk
      Factors
            9Item
      1B:
            Unresolved
      Staff Comments
            20Item
      2:
            Properties
            21Item
      3:
            Legal
      Proceedings
            21Item
      4:
            Submission
      of Matters to a vote of Security Holders
            21Item
      5:
            Market
      for Registrant’s Common Equity, Related
              Stockholder
      Matters and Issuer Purchases of Equity Securities
            21Item
      6:
            Selected
      Financial Date
            23Item
      7:
            Management’s
      Discussion and Analysis of Financial Condition
              and
      Results of Operations
            25Item
      7A:
            Quantitative
      and Qualitative Disclosures About Market Risk
            29Item
      8:
            Financial
      Statements and Supplementary Data
            29Item
      9:
            Changes
      in and Disagreements with Accountants on
              Accounting
      and Financial Disclosure
            29Item
      9A
            Controls
      and Procedures
            29Item
      9B:
            Other
      Information
            29Item
      10:
            Directors
      and Executive Officers of the Company
            30Item
      11:
            Executive
      Compensation
            34Item
      12:
            Security
      Ownership of Certain Beneficial Owners and
              Management
      and Related Stockholder Matters
            35Item
      13:
            Certain
      Relationships and Related Transactions
            36Item
      14:
            Principal
      Accountant Fees and Services
            38Item
      15:
            Exhibits
      and Financial Statement Schedules
            39

















CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS




This
Annual Report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934;, These forward-looking statements can be
identified by the use of forward-looking terminology, including the words
“believes, “estimates, “anticipates, “expects, “intends,” “plans,” “may,”
“will,” “potential,” “projects,” “predicts, “continue,” or “should,” or, in each
case, their negative or other variations or comparable terminology. Such
statements include, but are not limited to, any statements relating to our
ability to consummate any acquisition or other business combination and any
other statements that are not statements of current or historical facts. These
statements are based on management’s current expectations, but actual results
may differ materially due to various factors, including, but not limited to,
our:




•
            being
      a development stage company with no operating
  history;




•
            dependence
      on key personnel, some of whom may not join us following an initial
      transaction;




•
            personnel
      allocating their time to other businesses andpotentially having
      conflicts of interest with our
business,




•
            potentially
      being unable to obtain additional financing  to complete an
      initial transaction;




•
            limited
      pool of prospective target
businesses;




•
            securities’
      ownership being concentrated;




•
            potential
      change in control if we acquire one or more target businesses for
      stock;




•
            risk
      associated with operating in the services or manufacturing sector or in a
      foreign jurisdiction;




•
            financial
      performance following an initial transaction;
or




•
            those
      other risks and uncertainties detailed in the Registrant’s filings with
      the Securities and Exchange
Commission.




By
their nature, forward-looking statements involve risks and uncertainties because
they relate to events and depend on circumstances that may or may not occur in
the future. We caution you that forward-looking statements are not guarantees of
future performance and that our actual results of operations, financial
condition and liquidity, and developments in the industry sectors in which we
are actually operate following a business combination  may differ
materially from those made in or suggested by the forward-looking statements
contained in this Annual Report on Form 10-K. In addition, even ifour
results or operations, financial condition and liquidity, and developments in
the industry in which we operate are consistent with the forward-looking
statements contained in this Annual Report on Form 10-K,those results or developments
may not be indicative of results or developments in subsequent
periods.




These
forward-looking statements are subject to numerous risks, uncertainties and
assumptions about us described in our filings with the Securities and Exchange
Commission. The forward-looking events we discuss in this Annual Report on Form
10-K speak only as of the date of such statement and might not occur in light of
these risks, uncertainties and assumptions. Except as required by applicable
law, we undertake no obligation and disclaim any obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.




Unless
otherwise provided in this Annual Report on Form 10-K., references to “the
Company,” “the Registrant,” “we,” “us” and “our” refer to InterAmerican
Acquisition Group, Inc.







1


PART
I




Item
1. Business.


Introduction


InterAmericanAcquisition Group, Inc.
(the “Company”, “we”, or “us”) is a blank check company organized under the laws
of the State of Delaware on May 10, 2005. We were formed to acquire, through a
merger, capital stock exchange, asset acquisition or other similar business
combination, one or more domestic or international assets or an operating
business.  To date, our efforts have been limited to organizational
activities, our initial public offering and the search for a suitable business
combination. As of the date of this filing, we have not acquired any business
operations nor entered into by definitive agreement with any target
company.




Our
executive offices are located at 2918 Fifth Ave., Suite 209, San Diego, CA 92103
and our telephone number at that location is (619) 298-9883.




Recent
Developments


The
registration statement for our initial public offering (the “Offering” ) was
declared effective on September 4, 2007. The Company completed the Offering,
including the exercise of the underwriter’s overallotment option, on September
10, 2007 and September 11, 2007, selling 5,750,000 units (“Units”) at a price of
$8.00 per Unit. Each Unit consists of one share of the Company’s common stock,
$.0001 par value, and one redeemable common stock purchase warrant
(“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 and one year from the
effective date of the Offering and expiring four years from the effective date
of the Offering.  The Company may redeem the Warrants 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
$10.00 per share for any 20 trading days within a 30-day period ending on the
third day prior to the date on which notice of redemption is given.In addition, the Company
also consummated a private placement of 1,000,000 warrants at $1.50 per warrant
to an entity affiliated with its management team and one of the Company’s
special advisors (the “Warrant Purchase”).  We received gross proceeds
of $46,000,000 from our initial public offering (including the exercise of the
underwriters’ overallotment option) and $1,500,000 from the Warrant Purchase, of
which $45,160,000 was placed in trust.




On
September 5, 2007, our units commenced trading on the OTC:BB under the symbol
“IAQGU”.  Holders of InterAmerican Acquisition Group, Inc. units were
able to separately trade the common stock and warrants included in such units
commencing September 20, 2007 and the trading in the units has continued under
the symbol IAQGU. The common stock and warrants are quoted on the OTC:BB under
the symbols IAQG and IAQGW, respectively.




Since the
completion of our initial public offering, we have contacted and continue to
contact those industry professionals who we believe can be of strategic
assistance in sourcing potential deals for us, including, investment bankers,
business consultants, accountants and lawyers.  Through the
relationships of our board of directors, officers and directors and senior
advisors, we have also made contact with certain large national and
international concerns to determine if they have any interest in divesting any
of their existing interests.  We have also sought out owners and
institutional owners of companies that we believe could represent suitable
targets for a business combination.




Overview


Our
efforts to identify a prospective target business are focused on companies
operating in the manufacturing or service sectors but are not be limited to a
particular industry.  Our management is concentrating its search for a
target business on companies that have an opportunity to expand or move
operations to one or more lower-cost countries to support U.S. sales or to
generate new sales in those foreign markets.  We are giving particular
attention to the potential of the target business to expand its operating scope
in Mexico/Latin America.  Based on its prior experience, our
management believes that capturing such opportunities in lower-cost countries
might include specific actions such as:




•
            Reallocating
      excess capacity from the U.S. to a low-cost
  country;




•
            Acquiring
      underutilized capacity in a low-cost
country;




•
            Extending
      technology and know-how to realize the full potential of operating in a
      low-cost country;




•
            Acquiring
      complementary businesses or intangibles in low-cost countries to enhance
      effectiveness oflocal
      distribution or accelerate extension of operations to the low-cost
      venue;




•
            Applying
      capital or financing mechanisms from mature capital markets to operations
      in low-costcountries
      to relieve constraints on growth.






2








Alternatively,
we may acquire assets or operations already located in a low-cost foreign
jurisdiction.




We intend
to leverage the extensive contacts and experience of our management in the
manufacturing sector and in Latin America to identify a viable target business
and to structure and effect a robust globalization strategy for the target
business.




Our
Management Team


Our
management team has extensive experience making acquisitions and in guiding
manufacturing businesses operating in Latin America and other low-cost operating
venues.  William C. Morro, our Chairman, Chief Executive Officer and
Chief Financial Officer has participated as an investment principal in 55
acquisition or divestiture transactions since 1991.  He led investment
business units for Heller Financial Inc. and the Bank of Montreal Group of
Companies before becoming a principal in the InterAmerican Group and a founder
of the company.  Dr. Richard Sinkin, our Chief Operating Officer and
Secretary, is also a Partner of the InterAmerican Group and founded its
predecessor entities.  InterAmerican Group specializes in providing
international business consulting services to companies and institutions seeking
to establish a marketing or manufacturing presence in Latin
America.  He is a specialist in setting up offshore manufacturing
operations, particularly in Mexico, where he has directed the start-up of 27
factories.  Prior to forming InterAmerican, Dr. Sinkin was the vice
president of the Institute of the Americas in La Jolla, California and he
continues to serve organizations that are deeply involved with business
development in emerging markets, including as an elected member of the Council
on Foreign Relations in New York.




Effecting
a Business Combination


General


We are
not presently engaged in any substantive commercial business.  We
intend to utilize cash derived from the proceeds of the initial public offering,
our capital stock, debt or a combination of these in effecting a business
combination. A business combination may involve the acquisition of, or merger
with, a company that does not need substantial additional capital but desires to
establish a public trading market for its shares, while avoiding what it may
deem to be adverse consequences of undertaking a public offering
itself.  These include time delays, significant expense, loss of
voting control and compliance with various Federal and state securities laws. In
the alternative, we may seek to consummate a business combination with a company
that is growing rapidly and faces financial uncertainty as a
result.  While we may seek to effect business combinations with more
than one target business, we will probably have the ability, as a result of our
limited resources, to initially effect only a single business
combination.




We
have not entered into any definitive agreement with a target
business


To date,
although we continue to search for a potential candidate for a business
combination, we have not entered into any definitive agreements with any target
business for a business combination.  So long as a target business is
a business in the manufacturing or service sector having a fair market value of
at least 80% of our net assets (excluding any funds held for the benefit of the
underwriters) at the time of the acquisition, as described below
in more detail, and the target business is not a start-up or development-stage
company or an affiliate of management, we will have virtually unrestricted
flexibility in identifying and selecting a prospective acquisition candidate in
any industry.  We can also satisfy the requirement that the business
combination have a fair market value at least equal to 80% of our net assets in
an acquisition transaction where we acquire less than a 100% interest in the
target business, provided that the fair market value of the interest in such
business or businesses is at least equal to 80% of our net assets at the time
such acquisition transaction is consummated.  We have not established any
other specific attributes or criteria (financial, geographic or otherwise) for
prospective target businesses. Accordingly, there is no basis for investors in
this offering to evaluate the possible merits or risks of the target business
with which we may ultimately complete a business combination. Although our
management will endeavor to evaluate the risks inherent in a particular target
business, we cannot assure you that we will properly ascertain or assess all
significant risk factors.




Sources
of target businesses


Target
businesses have been, and we anticipate will continue to be brought to our
attention from various unaffiliated sources, including investment bankers,
venture capital funds, private equity funds, leveraged buyout funds, management
buyout funds and other members of the financial community, who may present
solicited or unsolicited proposals.  Our officers, directors and
special advisors as well as their affiliates may also bring to our attention
target business candidates that they become aware of through their business
contacts.  While we have not engaged the services of professional
firms that specialize in business acquisitions on any formal basis, we may
engage one or more such firms in the future and we may pay a finders fee or
other compensation to be determined in an arm’s length negotiation based on the
terms of the transaction.  Any such arrangement will be disclosed to
our stockholders in the proxy materials we provide in connection with any
proposed business combination. Such finder’s fees or other compensation may be
paid from the proceeds not held in trust.  In no event, however, will
we pay any of our existing officers, directors, special advisors or stockholders
or any entity with which they are affiliated any finder’s fee for services
rendered to us prior to, in connection with or following the consummation of a
business combination. In addition, we will not pay any of our existing officers,
directors, special advisors or stockholders or any entity with which they are
affiliated any consulting fees or other similar compensation other than the
$10,000 per month administrative fee payable to InterAmerican Advisors, LLC and
reimbursable out-of-pocket expenses.






3






Selection
of a target business and structuring of a business combination


Based on
our management’s acquisition experience in the manufacturing and service sectors
(described in the section below entitled “Management”), we have determined that
it is in our best interest to set only a few firm criteria to guide selection of
a target business.Subject to the requirement
that our initial business combination be with a target business or businesses in
the manufacturing or services sector with a collective fair market value that is
at least 80% of our net assets (excluding any funds held for the benefit of the
underwriters) at the time of such transaction and it is not a start-up or
development-stage business or an affiliate of our management, our management has
virtually unrestricted flexibility in identifying and selecting a prospective
target business.  In evaluating a prospective target business, we will
conduct a due diligence review which will encompass, among other things,
meetings with incumbent management and inspection of facilities as well as
review of financial and other information which is made available to us. In
evaluating a target business, our management will consider, among other factors,
the following:


·
                financial
      condition and results of operations;·
                growth
      potential;·
                experience
      and skill of management and availability of additional
      personnel;


·
                capital
      requirements;


·
                competitive
      position;


·
                barriers
      to entry in the
industry;


·
                stage
      of development of the products, processes or
  services;


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


·
                regulatory
      environment of the industry;
and


·
                costs
      associated with the business
combination.


These
criteria for evaluating a prospective target business are not intended to be
exhaustive or definitive.  In addition, we will seek to structure the
tax aspects of any potential business combination as favorably as possible to
our company and our stockholders, although we cannot assure you that we will be
able to achieve such a result.  Any evaluation relating to the merits
of a particular business combination will be based, to the extent relevant, on
the above factors as well as other considerations deemed relevant by our
management in effecting a business combination consistent with our business
objectives.




We will
seek to have all prospective target businesses execute agreements with us
waiving any right, title, interest or claim of any kind in or to any monies held
in the trust account.  If any prospective target business refuses to
execute such agreement, it is unlikely we would continue negotiations with such
target business due to the possibility that such target business would seek to
bring a claim against the trust account.  Nevertheless, if our
management deemed it in our best interests, we could elect to pursue
negotiations in the absence of receiving such a waiver.




Working
capital requirements


Our
management has not had experience completing an acquisition on behalf of a blank
check company and the time and costs required to select and evaluate a target
business and to structure and complete the business combination cannot presently
be ascertained with any degree of certainty.  Any costs incurred with
respect to the identification and evaluation of a prospective target business
with which a business combination is not ultimately completed will result in a
loss to us and reduce the amount of capital available to otherwise complete a
business combination.  In addition, we will not pay any of our
existing officers, directors, special advisors or stockholders or any entity
with which they are affiliated any consulting fees or other similar compensation
other than the $10,000 per month administrative fee payable to InterAmerican
Advisors, LLC and reimbursable out-of-pocket expenses.




Fair
market value of target business


The
initial target business that we acquire must have a fair market value equal to
at least 80% of our net assets (excluding any funds held for the benefit of the
underwriters) at the time of such acquisition, including any amount held in the
trust account subject to the redemption rights described below.  There
is no limitation on our ability to raise funds privately or through loans that
would allow us to acquire a target business or businesses with a fair market
value in an amount considerably greater than 80% of our net assets at the time
of acquisition.  We can also satisfy the requirement that the business
combination have a fair market value at least equal to 80% of our net assets in
an acquisition transaction where we acquire less than a 100% interest in the
target business, provided that the fair market value of the interest in such
business or businesses is at least equal to 80% of our net assets at the time
such acquisition transaction is consummated.  The fair market value of
such business will be determined by our board of directors based upon standards
generally accepted by the financial community, such as actual and potential
sales, earnings and cash flow and book value.  If our board is not
able to independently determine that the target business has a sufficient fair
market value, we will obtain an opinion from an unaffiliated, independent
investment banking firm that is a member of the National Association of
Securities Dealers, Inc. with respect to the satisfaction of such criteria.
Since any opinion, if obtained, would merely state that fair market value meets
the 80% of net assets threshold, it is not anticipated that copies of such
opinion would be distributed to our stockholders, although copies will be
provided to stockholders who request it.  We will not be required to
obtain an opinion from an investment banking firm as to the fair market value if
our board of directors independently determines that the target business
complies with the 80% threshold.






4






Lack
of business diversification


While we
may seek to effect business combinations with more than one target business, our
initial business combination must be with a target business which satisfies the
minimum valuation standard at the time of such acquisition, as discussed above.
Consequently, initially it is probable that we will have the ability to effect
only a single business combination although this may entail the acquisition of
several operating businesses.  Accordingly, the prospects for our
success may be entirely dependent upon the future performance of a single
business.  Unlike other entities which may have the resources to
complete several business combinations of entities operating in multiple
industries or multiple areas of a single industry, it is probable that we will
not have the resources to diversify our operations or benefit from the possible
spreading of risks or offsetting of losses. By consummating a business
combination with only a single entity, our lack of diversification
may:




•
            subject
      us to numerous economic, competitive and regulatory developments, any or
      all of which may have a substantial adverse impact upon the particular
      industry in which we may operate subsequent to a business combination;
      and


•
            result
      in our dependency upon the development or market acceptance of a single or
      limited number of products, processes or
  services.




Limited
ability to evaluate the target business’ management


Although
we intend to closely scrutinize the management of a prospective target business
when evaluating the desirability of effecting a business combination, we cannot
assure you that our assessment of the target business’ management will prove to
be correct.  In addition, we cannot assure you that the future
management will have the necessary skills, qualifications or abilities to manage
a public company.  Furthermore, the future role of our officers and
directors, if any, in the target business following a business combination
cannot presently be stated with any certainty.  While it is possible
that certain of our officers and directors may remain associated in senior
management or advisory positions with us following a business combination, they
may not devote their full efforts to our affairs subsequent to a business
combination. Additionally, we cannot assure you that they would have significant
experience or knowledge relating to the operations of the particular target
business.  Moreover, they would only be able to remain
with the company after the consummation of a business combination if they are
able to negotiate employment or consulting agreements in connection with the
business combination.  Such employment or consulting agreements would
be negotiated at the same time as the business combination negotiations are
being conducted and may be a term of the business combination and could provide
for such individuals to receive compensation in the form of cash payments and/or
our securities for services they would render to the company after the
consummation of the business combination.  While the personal and
financial interests of such individuals may influence their motivation in
identifying and selecting a target business, the ability of such individuals to
remain with the company after the consummation of a business combination will
not be the determining factor in our decision as to whether or not we will
proceed with any potential business combination.




Following
a business combination, we may seek to recruit additional managers to supplement
the incumbent management of the target business.  We cannot assure you
that we will have the ability to recruit additional managers, or that any such
additional managers we do recruit will have the requisite skills, knowledge or
experience necessary to enhance the incumbent management.




Opportunity
for stockholder approval of business combination


Prior to
the completion of our initial business combination, we will submit the
transaction to our stockholders for approval, even if the nature of the business
combination is such as would not ordinarily require stockholder approval under
applicable state law.  In connection with seeking stockholder approval
of a business combination, we will furnish our stockholders with proxy
solicitation materials prepared in accordance with the Securities Exchange Act
of 1934, which, among other matters, will include a description of the
operations of the target business and audited historical financial statements of
the business.




In
connection with the vote required for any business combination, all of our
existing stockholders, including all of our officers and directors, have agreed
to vote their respective shares of common stock owned by them immediately prior
to the initial public offering in accordance with the majority of the shares of
common stock voted by the public stockholders.  This voting
arrangement shall also apply to shares included in units purchased in this
offering or purchased following this offering in the open market by any of our
existing stockholders, officers and directors.  Accordingly, they will
vote these shares in accordance with the majority of the shares of common stock
voted by the public stockholders.  We will proceed with the business
combination only if a majority of the shares of common stock voted by the public
stockholders are voted in favor of the business combination and public
stockholders owning less than 20% of the shares sold in the initial public
offering both exercise their redemption rights and vote against the business
combination.




Redemption
rights


At the
time we seek stockholder approval of any business combination, we will offer
each public stockholder the right to have such stockholder’s shares of common
stock redeemed for cash if the stockholder votes against the business
combination and the business combination is approved and
completed.  The redemption rights do not apply to shares outstanding
prior to the initial public offering.  The actual per-share redemption
price will be equal to the amount in the trust account, inclusive of any
interest (net of taxes payable and interest earned on the trust account up to a
maximum amount of $950,000 that will be released to us to fund our working
capital), calculated as of two business days prior to the consummation of the
proposed








5




business
combination, divided by the number of shares sold in the initial public
offering. Without taking into any account interest earned on the trust account,
the initial per-share redemption price would be $7.85 or $0.15 less than the
per-unit offering price of $8.00.  Because the per-share redemption
price may be lower than the market price of the common stock on the date of the
redemption, there may be a disincentive on the part of public stockholders to
exercise their redemption rights.




An
eligible stockholder may request redemption at any time after the mailing to our
stockholders of the proxy statement and prior to the vote taken with respect to
a proposed business combination at a meeting held for that purpose, but the
request will not be granted unless the stockholder votes against the business
combination and the business combination is approved and
completed.  If a stockholder votes against the business combination
but fails to properly exercise its redemption rights, such stockholder will not
have its shares of common stock redeemed for its pro rata distribution of the
trust account.  Any request for redemption, once made, may be
withdrawn at any time up to the date of the meeting.  It is
anticipated that the funds to be distributed to stockholders entitled to redeem
their shares who elect redemption will be distributed promptly after completion
of a business combination.  Public stockholders who redeem their stock
for their share of the trust account still have the right to exercise any
warrants they still hold.




We will
not complete any business combination if public stockholders, owning 20% or more
of the shares sold in this offering, exercise their redemption
rights.  These redemption provisions, which are contained in our
certificate of incorporation, cannot be amended without the affirmative vote of
95% of the shares sold in this offering.  We view these provisions as
obligations to our investors and neither we nor our board of directors will
propose, or seek stockholder approval of, any amendment of these
provisions.  Accordingly, we view it as our obligation to structure
and consummate a business combination in which up to 19.99% of the public
stockholders may exercise their redemption rights and the business combination
will still go forward.  We will not seek to increase or decrease this
threshold.




Plan
of dissolution and liquidation if no business combination


Pursuant
to the terms of the trust agreement between us and Continental Stock Transfer
& Trust Company, if we do not complete a business combination within 18
months after the consummation of this offering, or within 24 months after the
consummation of our initial public is offering if the extension criteria
described below have been satisfied, we will as promptly as practicable in
accordance with the Delaware General Corporation Law dissolve, liquidate and
distribute only to our public stockholders, in proportion to their respective
equity interests, an aggregate sum equal to the amount in the trust account,
inclusive of any interest (net of taxes payable and net of interest earned on
the trust account up to a maximum amount of $950,000 that will be released to us
to fund our working capital), plus any remaining net assets.  These
liquidation provisions, which are contained in the investment management trust
agreement, cannot be amended without the affirmative vote of 100% of the public
stockholders.  The provisions are also set forth in our certificate of
incorporation, an amendment to which requires the affirmative vote of 95% of the
shares sold in this offering.  We view these provisions as obligations
to our investors and neither we nor our board of directors will propose, or seek
stockholder approval of, any amendment of these provisions. Our existing
stockholders have waived their rights to participate in any liquidation of our
trust account in connection with our dissolution with respect to shares of
common stock owned by them immediately prior to this offering and to vote their
shares of common stock in favor of any plan of dissolution and distribution
which we will submit to a vote of our stockholders.  There will be no
distribution from the trust account with respect to our warrants which will
expire worthless.  We will pay the costs of dissolution, which we
currently estimate to be approximately $50,000 to $75,000, from our remaining
assets outside of the trust account.  To the extent such funds are not
available, InterAmerican Capital Partners II LLC has agreed to advance us the
necessary funds and has agreed not to seek repayment for such expenses, though
it has not taken a reserve for this possibility and there can be no assurance
that it will be able to meet its obligations under this agreement.




If we
were to expend all of the net proceeds of the initial public offering and the
private placement, other than the proceeds deposited in the trust account, and
without taking into account interest, if any, earned on the trust account, the
initial per-share liquidation price would be $7.85 or $0.15 less than the
per-unit offering price of $8.00.  The proceeds deposited in the trust
account could, however, become subject to the claims of our creditors which
could be prior to the claims of our public stockholders. We cannot assure you
that the actual per-share liquidation price will not be less than $7.85, plus
interest (net of taxes payable and net of interest earned on the trust account
up to a maximum amount of $950,000 that will be released to us to fund our
working capital), due to claims of creditors.  Although we will seek
to have all third parties we engage for services rendered to us or products sold
to us (which includes, for example, accountants, lawyers, investment bankers,
consultants and analysts), prospective target businesses or other entities we
engage execute agreements with us waiving any right, title, interest or claim of
any kind in or to any monies held in the trust account for the benefit of our
public stockholders, there is no guarantee that they will execute such
agreements or even if they execute such agreements that they would be prevented
from bringing claims against the trust account including but not limited to
fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each
case in order to gain an advantage with a claim against our assets, including
the funds held in the trust account.  If any third party refused to
execute an agreement waiving such claims to the monies held in the trust
account, we would perform an analysis of the alternatives available to us if we
chose not to engage such third party and evaluate if such engagement would be in
the best interest of our stockholders if such third party refused to waive such
claims.  Examples of possible instances where we may engage a third
party that refused to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be
significantly superior to those of other consultants that would agree to execute
a waiver or in cases where management is unable to find a provider of required
services willing to provide the waiver.  In any event, our management
would perform an analysis of the alternatives available to it and would only
enter into an agreement with a third party that did not execute a waiver if
management believed that such third party’s engagement would be significantly
more beneficial to us than any alternative.  In addition, there is no
guarantee that such entities will agree to waive any claims they may have in the
future as a result of, or arising out of, any negotiations, contracts or
agreements with us and will not seek






6




recourse
against the trust account for any reason.  Our two executive officers,
William C. Morro and Dr. Richard N. Sinkin, have severally (but not jointly)
agreed, pursuant to agreements with us and Chardan Capital Markets, LLC, that
they will be personally liable, severally (but not jointly), which means they
will be personally liable only for 60% and 40% respectively (as an example, if
there is a valid third party claim of $1,000,000, Mr. Morro will be responsible
for $600,000 of such claim and Dr. Sinkin will be responsible for $400,000 of
such claim), to pay claims of third parties that are owed money for services
rendered to us or products sold to us (which includes, for example, accountants,
lawyers, investment bankers, consultants and analysts) that would reduce the
amount of the trust, provided that such third party has not executed a valid and
enforceable waiver to rights or claims against the trust account and only to the
extent necessary to ensure that such claims do not reduce the amount in the
trust account.  The indemnification provided by Messrs. Morro and
Sinkin would not cover tort claims brought against us for some unforseen event,
claims against us brought by a target business for breach of contract or breach
of a confidentiality agreement with a potential target.  We will bring
an action against either of our executive officers in the event that such
individual asserts that he is not able to cover any of the expenses that would
deplete the trust proceeds or that either is not liable pursuant to their
indemnification obligations as described above. Based on the information
provided to us in the director and officer questionnaires provided to us in
connection with this offering as well as the representations as to their
accredited investor status (as such term is defined in Regulation D), we
currently believe that such persons are of substantial means and capable of
funding their indemnity obligations.  However, because the amount of
any such indemnification obligations cannot be estimated, we have not asked
Messrs. Morro or Sinkin to reserve for such an eventuality and there can be no
assurance that they will satisfy their indemnification obligations if and when
they arise.  Accordingly, the proceeds held in trust could be subject
to claims which could take priority over the claims of our public stockholders
and the per-share liquidation price could be less than approximately $7.85, plus
interest (net of taxes payable and net of interest earned on the trust account
up to a maximum amount of $950,000 that will be released to us to fund our
working capital), due to claims of such creditors.




We
believe the likelihood of a member of our management having to make an
indemnification payment to the trust account is limited because we will endeavor
to have all vendors and prospective target businesses as well as other entities
execute agreements with us waiving any right, title, interest or claim of any
kind in or to monies held in the trust account.  We also have access
to $350,000 in funds initially available outside the trust account plus interest
earned on funds in the trust account, up to a maximum amount of $950,000, that
will be released to us, with which to pay any such potential claims (including
costs and expenses incurred in connection with our plan of dissolution and
distribution currently estimated at approximately $50,000 to
$75,000).  The indemnification provisions are set forth in the amended
and restated insider letters, dated as of June 27, 2007, executed by each of our
officers.  The insider letters were amended to specifically set forth
that in the event we obtain a valid and enforceable waiver of any right, title,
interest or claim of any kind in or to any monies held in the trust account for
the benefit of our stockholders from a third party we engage for services
rendered to us or products sold to us (which includes, for example, accountants,
lawyers, investment bankers, consultants and analysts), the indemnification will
not be available.  The amended and restated insider letters executed
by each of our officers, dated as of June 27, 2007, are exhibits to the
registration statement of which this prospectus forms a part. In the event that
the board recommends and our stockholders approve a plan of dissolution and
distribution where it is subsequently determined that the reserve for claims and
liabilities is insufficient, stockholders who received a return of funds from
the liquidation of our trust account could be liable for such amounts to
creditors.




Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is
filed against us which is not dismissed, the funds held in our trust account
will be subject to applicable bankruptcy law, and may be included in our
bankruptcy estate and subject to the claims of third parties with priority over
the claims of our stockholders.  To the extent any bankruptcy claims
deplete the trust account we cannot assure you we will be able to return to our
public stockholders the liquidation amounts due them.




If we
enter into either a letter of intent, an agreement in principle or a definitive
agreement to complete a business combination prior to the expiration of 18
months after the consummation of this offering, but are unable to complete the
business combination within the 18-month period, then we will have an additional
six months in which to complete the business combination contemplated by the
letter of intent, agreement in principle or definitive agreement.  If
we are unable to consummate a transaction within 24 months following the
consummation of this offering our purpose and powers will be limited to
dissolving, liquidating and winding up.  Upon notice from us, the
trustee of the trust account will liquidate the investments constituting the
trust account and will turn over the proceeds to our transfer agent for
distribution to our public stockholders as part of our plan of dissolution and
distribution.  Concurrently, we shall pay, or reserve for payment,
from funds not held in trust, our liabilities and obligations, although we
cannot assure you that there will be sufficient funds for such purpose or that
our executive officers will be able to satisfy their indemnification
obligations.




Under the
Delaware General Corporation Law, stockholders may be held liable for claims by
third parties against a corporation to the extent of distributions received by
them in a dissolution.  If the corporation complies with certain
procedures set forth in Section 280 of the Delaware General Corporation Law
intended to ensure that it makes reasonable provision for all claims against it,
including a 60-day notice period during which any third-party claims can be
brought against the corporation, a 90-day period during which the corporation
may reject any claims brought, and an additional 150-day waiting period before
any liquidating distributions are made to stockholders, any liability of
stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution.  Although we will make
liquidating distributions to our stockholders as soon as reasonably possible as
part of our plan of dissolution and distribution, we do not intend to comply
with those procedures. As such, our stockholders could potentially be liable for
any claims to the extent of distributions received by them in a dissolution and
any such liability of our stockholders will likely extend beyond the third
anniversary of such dissolution. Because we will not be complying with Section
280, we will seek stockholder approval to






7






comply
with Section 281(b) of the Delaware General Corporation Law, requiring us to
adopt a plan of dissolution that will provide for our payment, based on facts
known to us at such time, of (i) all existing claims, (ii) all pending claims
and (iii) all claims that may be potentially brought against us within the
subsequent 10 years. However, because we are a blank check company, rather than
an operating company, and our operations will be limited to searching for
prospective target businesses to acquire, the only likely claims to arise would
be from third parties we engage for services rendered to us or products sold to
us (which includes, for example, accountants, lawyers, investment bankers,
consultants and analysts) (such as accountants, lawyers, investment bankers,
consultants, analysts, etc.) or potential target businesses. As described above,
we intend to have all such third parties and prospective target businesses
execute agreements with us waiving any right, title, interest or claim of any
kind in or to any monies held in the trust account. As a result of this, the
claims that could be made against us are significantly limited and the
likelihood that any claim that would result in any liability extending to the
trust account is minimal.




We expect
that all costs associated with the implementation and completion of our plan of
dissolution and distribution, which we currently estimate to be approximately
$50,000 to $75,000, will be funded by any funds not held in our trust account,
although we cannot assure you that there will be sufficient funds for such
purpose.  To the extent such funds are not available, the principals
of InterAmerican Capital Partners II LLC have agreed to advance us the necessary
funds and have agreed not to seek repayment for such expenses. However, there
can be no assurance that they will be able to meet their obligations under this
agreement.




We
currently believe that any plan of dissolution and distribution subsequent to
the expiration of the 18 and 24 month deadlines would proceed in the following
manner:




•
            our
      board of directors will, consistent with its obligations described in our
      amended and restated certificate of incorporation to dissolve, prior to
      the passing of such deadline, convene and adopt a specific plan of
      dissolution and distribution, which it will then vote to recommend to our
      stockholders; at such time it will also cause to be prepared a preliminary
      proxy statement setting out such plan of dissolution and distribution and
      the board’s recommendation of such
plan;




•
            upon
      such deadline, we would file the preliminary proxy statement with the
      Securities and Exchange Commission;
      •
      if
      the Securities and Exchange Commission does not review the preliminary
      proxy statement, then 10 days following the passing of such deadline, we
      will mail the proxy statements to our stockholders, and 30 days following
      the passing of such deadline we will convene a meeting of our stockholders
      at which they will either approve or reject our plan of dissolution and
      distribution; and




•
            if
      the Securities and Exchange Commission does review the preliminary proxy
      statement, we currently estimate that we will receive their comments 30
      days following the passing of such deadline. We will mail the proxy
      statements to our stockholders following the conclusion of the comment and
      review process (the length of which we cannot predict with any certainty),
      and we will convene a meeting of our stockholders at which they will
      either approve or reject our plan of dissolution and
      distribution.




In the
event we seek stockholder approval for a plan of dissolution and distribution
and do not obtain such approval, we will nonetheless continue to pursue
stockholder approval for our dissolution. Pursuant to the terms of our second
amended and restated certificate of incorporation, our powers following the
expiration of the permitted time periods for consummating a business combination
will automatically thereafter be limited to acts and activities relating to
dissolving and winding up our affairs, including  liquidation. The funds
held in our trust account may not be distributed except upon our dissolution
and, unless and until such approval is obtained from our stockholders, the funds
held in our trust account will not be released.  Consequently, holders of a
majority of our outstanding stock must approve our dissolution in order to
receive the funds held in our trust account and the funds will not be available
for any other corporate purpose. In addition, if we seek approval from our
stockholders to consummate a business combination within 90 days of the
expiration of 24 months (assuming that the period in which we need to consummate
a business combination has been extended, as provided in our second amended and
restated certificate of incorporation) from the date of this offering, the proxy
statement related to such a business combination will also seek stockholder
approval for our board’s recommended plan of distribution and dissolution, in
the event our stockholders do not approve such a business combination. If no
proxy statement seeking the approval of our stockholders for a business
combination has been filed 30 days prior to the date which is 24 months from the
date of this offering, our board will, prior to such date, convene, adopt and
recommend to our stockholders a plan of dissolution and distribution, and on
such date file a proxy statement with the Securities and Exchange Commission
seeking stockholder approval for such plan. Immediately upon the approval by our
stockholders of our plan of dissolution and distribution, we will liquidate our
trust account to our public stockholders.




Competition
for target businesses


In
identifying, evaluating and selecting a target business, we may encounter
intense competition from other entities having a business objective similar to
ours. Many of these entities are well established and have extensive experience
identifying and effecting business combinations directly or through affiliates.
Many of these competitors possess greater technical, human and other resources
than us and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe there may be numerous
potential target businesses that we could acquire with the net
proceeds






8




of the
initial public offering, our ability to compete in acquiring certain sizable
target businesses will be limited by our available financial resources. This
inherent competitive limitation gives others an advantage in pursuing the
acquisition of a target business. Further:




•
            our
      obligation to seek stockholder approval of a business combination may
      delay or prevent the completion of a
  transaction;




•
            our
      obligation to redeem for cash shares of common stock held by our public
      stockholders to such holders that both vote against the business
      combination and exercise their redemption rights may reduce the resources
      available to us for a business combination;
and




•
            our
      outstanding warrants, and the potential future dilution they represent,
      may not be viewed favorably by certain target
  businesses.




Any of
these factors may place us at a competitive disadvantage in successfully
negotiating a business combination. Our management believes, however, that our
status as a public entity and potential access to the United States public
equity markets may give us a competitive advantage over privately-held entities
having a similar business objective as ours in acquiring a target business with
significant growth potential on favorable terms.




If we
succeed in effecting a business combination, there will be, in all likelihood,
intense competition from competitors of the target business. We cannot assure
you that, subsequent to a business combination, we will have the resources or
ability to compete effectively.




Periodic
reporting and audited financial statements


We have
registered our units, common stock and warrants under the Securities Exchange
Act of 1934, as amended, and have reporting obligations, including the
requirement that we file annual, quarterly and current reports with the SEC. In
accordance with the requirements of the Securities Exchange Act of 1934, our
annual reports will contain financial statements audited and reported on by our
independent registered public accountants.




We will
not acquire a target business if audited financial statements based on United
States or applicable international generally accepted accounting principles
cannot be obtained for the target business. Additionally, our management will
provide stockholders with audited financial statements, prepared in accordance
with United States or applicable international generally accepted accounting
principles, of the prospective target business as part of the proxy solicitation
materials sent to stockholders to assist them in assessing the target business.
We cannot assure you that any particular target business
identified by us as a potential acquisition candidate will have financial
statements prepared in accordance with United States or applicable international
generally accepted accounting principles or that the potential target business
will be able to prepare its financial statements in accordance with United
States or applicable international generally accepted accounting principles. The
financial statements of a potential target business will be required to be
audited in accordance with United States or applicable international generally
accepted accounting standards. To the extent that this requirement cannot be
met, we will not be able to acquire the proposed target business. While this may
limit the pool of potential acquisition candidates, given the broad range of
companies with which we may consummate a business combination, we do not believe
that the narrowing of the pool will be material.




Available
Information


We are
subject to the information requirements of the Exchange Act. Therefore, we file
periodic reports, proxy statements and other information with the SEC. Such
reports, proxy statements and other information may be obtained by visiting the
Public Reference Room of the SEC at 100 F Street, NW, Washington, DC 20549. You
may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. In addition, theSEC maintains an Internet
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding issuers that file
electronically.




Employees


We have
two executive officers. These individuals are not obligated to devote any
specific number of hours to our matters and intend to devote only as much time
as they deem necessary to our affairs. The amount of time they will devote in
any time period will vary based on the availability of suitable target
businesses to investigate, although we expect Messrs. Morro and Sinkin to each
devote an average of approximately ten hours per week to our business. At such
time that management locates a suitable target business, these individuals will
devote additional time as is necessary. We do not have any full time employees,
nor do we intend to have any full time employees prior to the consummation of a
business combination.




Item
1A. Risk Factors


An
investment in our securities involves a high degree of risk. You should consider
carefully all of the material risks described below, together with the other
information contained elsewhere in this Annual Report before making a decision
to invest in our securities.






9






RISKS
ASSOCIATED WITH OUR BUSINESS




WE
ARE A DEVELOPMENT STAGE COMPANY WITH NO OPERATING HISTORY AND, ACCORDINGLY, YOU
WILL NOT HAVE ANY BASIS ON WHICH TO EVALUATE OUR ABILITY TO ACHIEVE OUR BUSINESS
OBJECTIVE.




We are a
development stage company with no operating results to date. Since we do not
have any operations or an operating history, you will have no basis upon which
to evaluate our ability to achieve our business objective, which is to acquire
one or more operating businesses in the media, entertainment or
telecommunications industries. To date, although we continue to search for a
potential candidate for a business combination, we have not entered into any
definitive agreements with any target business for a business combination. We
will not generate any revenues or income, other than interest on the trust
account funds, until, at the earliest, after the consummation of a business
combination. The financial statements do not include any adjustments that might
result from our ability to consummate the initial public offering or our ability
to operate as a going concern.




IF
WE ARE FORCED TO DISSOLVE BEFORE THE COMPLETION OF A BUSINESS COMBINATION, OUR
PUBLIC STOCKHOLDERS WILL RECEIVE LESS THAN $8.00 PER SHARE UPON DISTRIBUTION OF
THE TRUST ACCOUNT AND OUR WARRANTS WILL EXPIRE WORTHLESS.




If we are
unable to complete a business combination within the prescribed time frames and
are forced to liquidate the trust account as part of our plan of dissolution and
distribution (which will include the full amount in the trust account, including
the $2,070,000 held for the benefit of the underwriters and any interest earned
thereon (net of taxes payable) and the $1,500,000 from the warrant purchase),
the per-share liquidation distribution received by our public stockholders from
the trust account will be (unless there are claims not otherwise satisfied by
the amounts not held in the trust account or the indemnification provided by our
two executive officers) approximately $7.85, plus interest, if any (net of taxes
payable and net of interest earned on the trust account up to a maximum amount
of $950,000 that will be released to us to fund our working capital) because of
the expenses of this offering, our general and administrative expenses and the
anticipated costs of seeking a business combination. In the event that our board
recommends and our stockholders approve a plan of dissolution and distribution
where it is subsequently determined that the reserve for claims and liabilities
is insufficient, stockholders who received a return of funds from the
liquidation of our trust account could be liable for claims made by our
creditors. Additionally, we could use a portion of the funds not being placed in
trust as a down payment or lock-up payment in connection with a proposed
business combination, although we do not have any current intention to do so. If
we did and were subsequently required to forfeit such funds (whether as a result
of a breach of the terms of the agreement containing the requirement of a down
payment or lock-up payment or otherwise), we might not have sufficient funds to
continue our search for a target business. Furthermore, there will be no
distribution with respect to our outstanding warrants which will expire
worthless if we liquidate the trust account as part of our plan of dissolution
and distribution in the event we do not complete a business combination within
the required time periods. For a more complete discussion of the effects on our
stockholders if we are unable to complete a business combination, see the
section below entitled ‘‘Effecting a business combination — plan of dissolution
and liquidation if no business combination.’’




IF
THIRD PARTIES BRING CLAIMS AGAINST US, THE PROCEEDS HELD IN TRUST COULD BE
REDUCED AND THE PER-SHARE LIQUIDATION PRICE RECEIVED BY STOCKHOLDERS FROM THE
TRUST ACCOUNT AS PART OF OUR PLAN OF DISSOLUTION AND DISTRIBUTION WILL BE LESS
THAN $7.85 PER SHARE AND THE PER SHARE REDEMPTION PRICE FOR REDEEMING
STOCKHOLDERS COULD BE LESS THAN $7.85.




Our
placing of funds in trust may not protect those funds from third party claims
against us. Although we will seek to have all third parties we engage for
services rendered to us or products sold to us (which includes, for example,
accountants, lawyers, investment bankers, consultants and analysts), prospective
target businesses or other entities we engage, execute agreements with us
waiving any right, title, interest or claim of any kind in or to any monies held
in the trust account for the benefit of our public stockholders, there is no
guarantee that they will execute such agreements or even if they execute such
agreements that they would be prevented from bringing claims against the trust
account including, but not limited to, fraudulent inducement, breach of
fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain an advantage
with a claim against our assets, including the funds held in the trust account.
If any third party refuses to execute an agreement waiving such claims to the
monies held in the trust account, we would perform an analysis of the
alternatives available to us if we chose not to engage such third party and
evaluate if such engagement would be in the best interest of our stockholders if
such third party refused to waive such claims. Examples of possible instances
where we may engage a third party that refuses to execute a waiver include the
engagement of a third party consultant whose particular expertise or skills are
believed by management to be significantly superior to those of other
consultants that would agree to execute a waiver or in cases where management is
unable to find a provider of required services willing to provide the waiver. In
addition, there is no guarantee that such entities will agree to waive any
claims they may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek recourse against
the trust account for any reason. Accordingly, the proceeds held in trust could
be subject to claims which could take priority over the claims of our public
stockholders. We cannot assure you that the per-share distribution from the
trust account will not be less than $7.85, plus interest, (net of taxes payable
and interest earned on the trust account up to a maximum amount of $950,000 that
will be released to us to fund our working capital), due to claims of such
creditors. If we liquidate before the completion of a business combination and
distribute the proceeds held in trust to our public stockholders, William C.
Morro, our chief executive officer, chief financial officer and chairman of our
board of directors and Dr. Richard N. Sinkin, our chief operating officer,
secretary and a member of our board of directors, have severally (but not
jointly) agreed, pursuant to agreements with








10




us and
Chardan Capital Markets, LLC, that they will be personally liable, severally
(but not jointly), which means they will be personally liable only for 60% and
40%, respectively (as an example, if there is a valid third party claim of
$1,000,000, Mr. Morro will be responsible for $600,000 of such claim and
Dr. Sinkin will be responsible for $400,000 of such claim), to pay claims
of third parties that are owed money for services rendered to us or products
sold to us (which includes, for example, accountants, lawyers, investment
bankers, consultants and analysts) that would reduce the amount of the trust,
provided that such third party has not executed a valid and enforceable waiver
to rights or claims against the trust account and only to the extent necessary
to ensure that such claims do not reduce the amount in the trust account. The
indemnification provided by Messrs. Morro and Sinkin would not cover tort claims
brought against us for some unforseen event, claims against us brought by a
target business for breach of contract or breach of a confidentiality agreement
with a potential target. We will bring an action against either of our executive
officers in the event that such individual asserts that he is not able to cover
any of the expenses that would deplete the trust proceeds or that either is not
liable pursuant to their indemnification obligations as described above. Based
on the information provided to us in the director and officer questionnaires
provided to us in connection with this offering as well as the representations
as to their accredited investor status (as such term is defined in
Regulation D), we currently believe that such persons are of substantial
means and capable of funding their indemnity obligations. However, because the
amount of any such indemnification obligations cannot be estimated, we have not
asked Messrs. Morro or Sinkin to reserve for such an eventuality and there can
be no assurance that they will satisfy their indemnification obligations if and
when they arise. Further, they will not be personally liable to pay debts and
obligations to prospective target businesses, if a business combination is not
consummated with such prospective target businesses, or for claims from any
entity other than as described above. Accordingly, the proceeds held in trust
could be subject to claims which could take priority over the claims of our
public stockholders and the per-share liquidation price could be less than
approximately $7.85, plus interest (net of taxes payable and net of interest
earned on the trust account up to a maximum amount of $950,000 that will be
released to us to fund our working capital), due to claims of such creditors. In
addition, such third party claims could result in the per share redemption price
received by stockholders who vote against a business combination and elect to
redeem their shares for cash being less than approximately $7.85, plus interest
(net of taxes payable and net of interest previously released to us). In the
event that our board recommends and our stockholders approve a plan of
dissolution and distribution where it is subsequently determined that the
reserve for claims and liabilities is insufficient, stockholders who received a
return of funds from our trust account as part of its liquidation could be
liable for claims made by creditors.




Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is
filed against us which is not dismissed, the funds held in our trust account
will be subject to applicable bankruptcy law, and may be included in our
bankruptcy estate and subject to the claims of third parties with priority over
the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account we cannot assure you we will be able to return to our public
stockholders the liquidation amounts due them.




OUR
PUBLIC STOCKHOLDERS ARE NOT ENTITLED TO PROTECTIONS NORMALLY AFFORDED TO
INVESTORS OF BLANK CHECK COMPANIES.




Since the
net proceeds of this offering are intended to be used to complete a business
combination with a target business that has not been identified, we are deemed
to be a ‘‘blank check’’ company under the United States securities laws.
However, since we have net tangible assets in excess of $5,000,000 and filed a
Current Report on Form 8-K with the SEC upon consummation of our initial public
offering including an audited balance sheet demonstrating this fact, we are
exempt from rules promulgated by the SEC to protect investors of blank check
companies such as Rule 419. Accordingly, investors will not be afforded the
benefits or protections of those rules.




BECAUSE
THERE ARE NUMEROUS COMPANIES WITH A BUSINESS PLAN SIMILAR TO OURS SEEKING TO
EFFECTUATE A BUSINESS COMBINATION, IT MAY BE MORE DIFFICULT FOR US TO DO
SO.




Since
2003, based upon publicly available information, approximately 156 similarly
structured blank check companies have completed initial public offerings in the
United States. Of these companies, only 48 companies have consummated a
business combination, while 23 other companies have announced they have entered
into a definitive agreement for a business combination, but have not consummated
such business combination, and 14 companies have failed to complete
business combinations and have either dissolved or announced their intention to
dissolve and return trust proceeds to their stockholders. Accordingly, there are
approximately 71 blank check companies with more than $13.2 billion in
trust that are seeking to carry out a business plan similar to our business
plan.  Furthermore, there are a number of additional offerings for
blank check companies that are still in the registration process but have not
completed initial public offerings and there are likely to be more blank check
companies filing registration statements for initial public offerings after the
date of this annual report and prior to our completion of a business
combination.  While some of those companies must complete a business
combination in specific industries, a number of them may consummate a business
combination in any industry they choose. Therefore, we may be subject to
competition from these and other companies seeking to consummate a business plan
similar to ours. Because of this competition, we cannot assure you that we will
be able to effectuate a business combination within the required time
periods.  If we are unable to consummate a business combination within
the prescribed time period, we will be forced to liquidate.




IF
THE CASH NOT HELD IN TRUST IS INSUFFICIENT TO ALLOW US TO OPERATE FOR AT LEAST
24 MONTHS FROM THE CONSUMMATION OF OUR INITIAL PUBLIC OFFERING, WE MAYBE UNABLE
TO COMPLETE A BUSINESS COMBINATION






11






We
believe that the funds held by us outside the trust account (including the
$950,000 available to us from interest earned on the funds in the trust account)
are sufficient to allow us to operate until at least September 4, 2009 (which is
24 months from our initial public offering), assuming that a business
combination is not consummated during that time. However, we cannot assure you
that our estimates are accurate. We could use a portion of these funds to engage
consultants to assist us with our search for a target business.  We
could also use a portion of these funds as a down payment or to fund a “no-shop”
provision (a provision in letters of intent designed to prevent a target
businesses from “shopping” around for transactions with other companies on terms
more favorable to such target businesses) with respect to a particular proposed
business combination, although we do not have any current intention to do
so.  If we entered into such a letter of intent where we paid for the
right to receive exclusivity from a target business and were subsequently
required to forfeit such funds (whether as a result of our breach or otherwise),
we may not have sufficient funds to continue searching for, or conduct due
diligence with respect to, a target business and we might be forced to
liquidate.




WE
ARE DEPENDENT UPON INTEREST EARNED ON THE TRUST ACCOUNT TO FUND OUR SEARCH FOR A
TARGET COMPANY AND CONSUMMATION OF A BUSINESS COMBINATION




Following
our initial public offering, we had only approximately $350,000 available to us
outside the trust account to fund our working capital requirements, including
meeting certain accrued expenses of the offering.  We are dependent
upon sufficient interest being earned on the proceeds held in the trust account
to provide us with the additional working capital we will need to search for a
target company and consummate a business combination.  While we are
entitled to the interest earned on the trust account (net of taxes payable) up
to a maximum of $950,000 for such purpose, if interest rates do not increase
from the low levels prevailing as of March 2008, we may not have sufficient
funds available to complete a business combination. In such event, we would need
to borrow funds from our insiders or others or be forced to
liquidate.




BECAUSE
OF THE SIGNIFICANT COMPETITION FOR BUSINESS COMBINATION OPPORTUNITIES AND OUR
LIMITED RESOURCES, WE MAY NOT BE ABLE TO CONSUMMATE AN ATTRACTIVE BUSINESS
COMBINATION.




We expect
to encounter intense competition from other entities having a business objective
similar to ours, including other similar blank check companies as well as
venture capital funds, leveraged buyout funds and operating businesses competing
for acquisitions. Many of these entities are well established and have extensive
experience in identifying and effecting business combinations directly or
through affiliates. Many of these competitors possess greater technical, human
and other resources than we do and our financial resources will be relatively
limited when contrasted with those of many of these competitors. While we
believe that there are numerous potential target businesses that we could
acquire with the net proceeds of this offering, our ability to compete in
acquiring certain sizable target businesses will be limited by our available
financial resources. This inherent competitive limitation gives others an
advantage in pursuing the acquisition of certain target businesses. In addition,
we may not have enough cash available from funds outside of the trust account to
make deposits or fund a ‘‘no-shop’’ provision in connection with a particular
business combination which may cause us to be at a competitive disadvantage in
pursuing the acquisition of target businesses. Further, the obligation we have
to seek stockholder approval of a business combination may delay the
consummation of a transaction. Additionally, our outstanding warrants, and the
future dilution they potentially represent, may not be viewed favorably by
certain target businesses. Any of these obligations may place us at a
competitive disadvantage in or preclude us from successfully negotiating a
business combination.




WE
WILL DISSOLVE AND LIQUIDATE IF WE DO NOT CONSUMMATE A BUSINESS COMBINATION
WITHIN THE ALLOWED PERIOD AND OUR STOCKHOLDERS MAY BE HELD LIABLE FOR CLAIMS BY
THIRD PARTIES AGAINST US TO THE EXTENT OF DISTRIBUTIONS RECEIVED BY
THEM.




We will
dissolve and liquidate our trust account to our public stockholders if we do not
complete a business combination within 18 months after the consummation of this
offering (or within 24 months after the consummation of this offering if certain
extension criteria are satisfied). Under Sections 280 through 282 of the
Delaware General Corporation Law, stockholders may be held liable for claims by
third parties against a corporation to the extent of distributions received by
them in a dissolution. If the corporation complies with certain procedures
intended to ensure that it makes reasonable provision for all claims against it,
including a 60-day notice period during which any third-party claims can be
brought against the corporation, a 90-day period during which the corporation
may reject any claims brought, and an additional 150-day waiting period before
any liquidating distributions are made to stockholders, any liability of
stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution. Although we will seek stockholder approval
to liquidate the trust account to our public stockholders as part of our plan of
dissolution and distribution, we do not intend to comply with those procedures.
In the event that the board recommends and the stockholders approve a plan of
dissolution and distribution where it is subsequently determined that the
reserve for claims and liabilities was insufficient, stockholders who received a
return of funds could be liable for claims made by creditors. As such, our
stockholders could potentially be liable for any claims to the extent of
distributions received by them in a dissolution and any such liability of our
stockholders will likely extend beyond the third anniversary of such
dissolution. Accordingly, we cannot assure you that third parties will not seek
to recover from our stockholders amounts owed to them by us.




THE
PROCEDURES WE MUST FOLLOW UNDER DELAWARE LAW AND OUR SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION IF WE DISSOLVE AND LIQUIDATE MAY RESULT IN
SUBSTANTIAL DELAYS IN THE LIQUIDATION OF OUR TRUST ACCOUNT TO OUR PUBLIC
STOCKHOLDERS AS PART OF OUR PLAN OF DISSOLUTION AND DISTRIBUTION






12






Pursuant
to, among other documents, our second amended and restated certificate of
incorporation, if we do not complete a business combination within 18 months
after the consummation of this offering, or within 24 months after the
consummation of this offering if the extension criteria have been satisfied, we
will be required to dissolve, liquidate and wind up in compliance with the
provisions of the Delaware General Corporation Law. In addition, in the event we
seek stockholder approval for a plan of dissolution and distribution and do not
obtain such approval, we will nonetheless continue to pursue stockholder
approval for our dissolution. The funds held in our trust account may not be
distributed except upon our dissolution and, unless and until such approval is
obtained from our stockholders, the funds held in our trust account will not be
released.  Consequently, holders of a majority of our outstanding stock
must approve our dissolution in order to receive the funds held in our trust
account and the funds will not be available for any other corporate purpose. The
procedures required for us to liquidate under the Delaware General Corporation
Law, or a vote to reject any plan of dissolution and distribution by our
stockholders, may result in substantial delays in the liquidation of our trust
account to our public stockholders as part of our plan of dissolution and
distribution.




SINCE
WE HAVE NOT YET SELECTED A PARTICULAR INDUSTRY OR TARGET BUSINESS WITH WHICH TO
COMPLETE A BUSINESS COMBINATION, WE ARE UNABLE TO CURRENTLY ASCERTAIN THE MERITS
OR RISKS OF THE INDUSTRY OR BUSINESS IN WHICH WE MAY ULTIMATELY
OPERATE




We may
consummate a business combination with a manufacturing or service company in any
industry we choose and are not limited to any particular industry or
geographical location. Accordingly, there is no current basis for you to
evaluate the possible merits or risks of the particular industry in which we may
ultimately operate or the target business which we may ultimately acquire. If we
complete a business combination with an entity in an industry characterized by a
high level of risk, we may be affected by the currently unascertainable risks of
that industry. Although our management will endeavor to evaluate the risks
inherent in a particular industry or target business, we cannot assure you that
we will properly ascertain or assess all of the significant risk factors. We
also cannot assure you that an investment in our units will not ultimately prove
to be less favorable to investors in this offering than a direct investment, if
an opportunity were available, in a target business




WE
MAY ISSUE SHARES OF OUR CAPITAL STOCK TO COMPLETE A BUSINESS COMBINATION, WHICH
WOULD REDUCE THE EQUITY INTEREST OF OUR STOCKHOLDERS AND LIKELY CAUSE A CHANGE
IN CONTROL OF OUR OWNERSHIP




Our
certificate of incorporation authorizes the issuance of up to 90,000,000 shares
of common stock, par value $.0001 per share, and 1,000,000 shares of preferred
stock, par value $.0001 per share. Following our initial public offering, there
are 76,250,000 authorized but unissued shares of our common stock available for
issuance (after appropriate reservation for the issuance of shares upon full
exercise of our outstanding warrants) and all of the 1,000,000 shares of
preferred stock available for issuance. Although we have no commitments as of
the date of this offering to issue our securities, we will, in all likelihood,
issue a substantial number of additional shares of our common stock or preferred
stock, or a combination of common and preferred stock, to complete a business
combination. The issuance of additional shares of our common stock or any number
of shares of our preferred stock:




·
            may
      significantly reduce the equity interest of current
    investors;


·
            may
      subordinate the rights of holders of common stock if preferred stock is
      issued with rights senior to those afforded to our common
      stock;


·
            will
      likely cause a change in control if a substantial number of our shares of
      common stock are issued, which may affect, among other things, our ability
      to use our net operating loss carry forwards, if any, and most likely also
      result in the resignation or removal of our present officers and
      directors; and


·
            may
      adversely affect prevailing market prices for our common
      stock.




WE
MAY ISSUE DEBT SECURITIES TO COMPLETE A BUSINESS COMBINATION, WHICH COULD CAUSE
A DEFAULT AND FORECLOSURE ON OUR ASSETS IF OUR OPERATING REVENUES AFTER A
BUSINESS COMBINATION ARE INSUFFICIENT TO PAY OUR DEBT OBLIGATIONS AND MAY
RESTRICT US FROM OBTAINING ADDITIONAL FINANCING IF NECESSARY




If we
issue our debt securities to complete a business combination, it could result
in:




·
            default
      and foreclosure on our assets if our operating revenues after a business
      combination are insufficient to pay our debt
  obligations;


·
            acceleration
      of our obligations to repay the indebtedness even if we have made all
      principal and interest payments when due if the debt security contains
      covenants that require the maintenance of certain financial ratios or
      reserves and any such covenant is breached without a waiver or
      renegotiation of that covenant;


·
            our
      immediate payment of all principal and accrued interest, if any, if the
      debt security is payable on demand;
and


·
            our
      inability to obtain additional financing, if necessary, if the debt
      security contains covenants restricting our ability to obtain additional
      financing while such security is
outstanding.




WE
MAY BE UNABLE TO OBTAIN ADDITIONAL FINANCING, IF REQUIRED, TO COMPLETE A
BUSINESS COMBINATION OR TO FUND THE OPERATIONS AND GROWTH OF THE TARGET
BUSINESS, WHICH COULD COMPEL US TO RESTRUCTURE OR ABANDON A PARTICULAR BUSINESS
COMBINATION.






13






Although
we believe that the net proceeds of our initial public offering and the warrant
purchase will be sufficient to allow us to consummate a business combination,
inasmuch as we have not yet identified any prospective target business, we
cannot ascertain the capital requirements for any particular transaction. If the
net proceeds of the initial public offering and the warrant purchase prove to be
insufficient, either because of the size of the business combination or the
depletion of the available net proceeds (including interest earned on the trust
account released to us) in search of a target business, or because we become
obligated to redeem for cash a significant number of shares from dissenting
stockholders, we will be required to seek additional financing. We cannot assure
you that such financing would be available on acceptable terms, if at all. To
the extent that additional financing proves to be unavailable when needed to
consummate a particular business combination, we would be compelled to
restructure the transaction or abandon that particular business combination and
seek an alternative target business candidate. It is also possible that we could
use a portion of such excess working capital to make a deposit, a down payment,
a lock-up payment or fund a ‘‘no-shop’’ provision with respect to a particular
proposed business combination, although we do not have any current intention to
do so. If we did, the amount that would be used as a down payment or lock-up
payment would be determined based on the terms of the specific business
combination and the amount of our available funds at the time. In the event that
we were ultimately required to forfeit such funds (whether as a result of our
breach of the agreement relating to such payment or otherwise), we may not have
a sufficient amount of working capital available outside of the trust account to
conduct due diligence and pay other expenses related to finding another suitable
business combination without securing additional financing. Thus, if we were
unable to secure additional financing, we would most likely fail to consummate a
business combination in the allotted time and would dissolve and liquidate the
trust account as part of our plan of dissolution and distribution, resulting in
a loss of a portion of your investment. In addition, if we consummate a business
combination, we may require additional financing to fund the operations or
growth of the target business. The failure to secure additional financing could
have a material adverse effect on the continued development or growth of the
target business. None of our officers, directors or stockholders is required to
provide any financing to us in connection with or after a business
combination.




INITIALLY,
IT IS PROBABLE THAT WE WILL ONLY BE ABLE TO COMPLETE ONE BUSINESS COMBINATION,
WHICH WILL CAUSE US TO BE SOLELY DEPENDENT ON A SINGLE BUSINESS AND A LIMITED
NUMBER OF PRODUCTS OR SERVICES.




The net
proceeds from our initial public offering and the warrant purchase provide us
with only approximately $43,090,000 in the trust account (before giving effect
to shares subject to redemption) which we may use to complete a business
combination. Our initial business combination must be with a business with a
fair market value of at least 80% of our net assets at the time of such
acquisition. We can also satisfy the requirement that the business combination
have a fair market value at least equal to 80% of our net assets in an
acquisition transaction where we acquire less than a 100% interest in the target
business, provided that the fair market value of the interest in such business
or businesses is at least equal to 80% of our net assets at the time such
acquisition transaction is consummated. Consequently, initially it is probable
that we will have the ability to complete a business combination with only a
single operating business. Accordingly, the prospects for our success may
be:




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


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


In this
case, we will not be able to diversify our operations or benefit from the
possible spreading of risks or offsetting of losses, unlike other entities which
may have the resources to complete several business combinations in different
industries or different areas of a single industry.




THE
ABILITY OF OUR STOCKHOLDERS TO EXERCISE THEIR REDEMPTION RIGHTS MAY NOT ALLOW US
TO EFFECTUATE THE MOST DESIRABLE BUSINESS COMBINATION OR OPTIMIZE OUR CAPITAL
STRUCTURE.




At the
time we seek stockholder approval of any business combination, we will offer
each public stockholder the right to have such stockholder’s shares of common
stock redeemed for cash if the stockholder votes against the business
combination and the business combination is approved and completed. Accordingly,
if our business combination requires us to use substantially all of our cash to
pay the purchase price, because we will not know how many stockholders may
exercise such redemption rights, we may either need to reserve part of the trust
account for possible payment upon such redemption, or we may need to arrange
third party financing to help fund our business combination in case a larger
percentage of stockholders exercise their redemption rights than we expected.
Therefore, we may not be able to consummate a business combination that requires
us to use all of the funds held in the trust account as part of the purchase
price, or we may end up having a leverage ratio that is not optimal for our
business combination. This may limit our ability to effectuate the most
attractive business combination available to us.




OUR
OUTSTANDING WARRANTS MAY HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF COMMON
STOCK AND MAKE IT MORE DIFFICULT TO EFFECT A BUSINESS COMBINATION.




In
connection with our initial public offering, as part of the units, we will be
issued warrants to purchase 5,750,000 shares of common stock. In addition,
contemporaneous with the initial public offering, we sold an aggregate of
1,000,000 warrants to InterAmerican Capital Partners II LLC and affiliates and
to one of our special advisors. To the extent we issue shares of common stock to
effect a business combination, the potential for the issuance of substantial
numbers of additional shares upon exercise of these warrants could make us a
less attractive acquisition vehicle in the eyes of a target business as such
securities, when exercised, will increase the number of issued and outstanding
shares of our common stock and reduce the value of the shares issued to complete
the business combination. Accordingly, our warrants may make it more difficult
to effectuate a






14






business
combination or increase the cost of the target business. Additionally, the sale,
or even the possibility of sale, of the shares underlying the warrants could
have an adverse effect on the market price for our securities or on our ability
to obtain future financing. If and to the extent the above-mentioned warrants
are exercised, our shareholders will experience dilution to their
holdings.




IF
OUR EXISTING STOCKHOLDERS EXERCISE THEIR REGISTRATION RIGHTS, IT MAY HAVE AN
ADVERSE EFFECT ON THE MARKET PRICE OF OUR COMMON STOCK AND THE EXISTENCE OF
THESE RIGHTS MAY MAKE IT MORE DIFFICULT TO EFFECT A BUSINESS
COMBINATION.




Our
existing stockholders are entitled to make a demand that we register the resale
of their shares of common stock at any time commencing three months prior to the
date on which their shares are released from escrow.  If our existing
stockholders exercise their registration rights with respect to all of their
shares of common stock, then there will be an additional 1,250,000 shares of
common stock eligible for trading in the public market.  The presence
of this additional number of shares of common stock eligible for trading in the
public market may have an adverse effect on the market price of our common
stock. In addition, the existence of these rights may make it more difficult to
effectuate a business combination or increase the cost of acquiring the target
business, as the stockholders of the target business may be discouraged from
entering into a business combination with us or will request a higher price for
their securities as a result of these registration rights and the potential
future effect their exercise may have on the trading market for our common
stock.




IF
WE ARE DEEMED TO BE AN INVESTMENT COMPANY, WE MAY BE REQUIRED TO INSTITUTE
BURDENSOME COMPLIANCE REQUIREMENTS AND OUR ACTIVITIES MAY BE RESTRICTED, WHICH
MAY MAKE IT MORE DIFFICULT FOR US TO COMPLETE A BUSINESS
COMBINATION.




If we are
deemed to be an investment company under the Investment Company Act of 1940, we
may be subject to certain restrictions that may make it more difficult for us to
complete a business combination, including:




•
            restrictions
      on the nature of our investments;
and




•
            restrictions
      on the issuance of securities.




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




•
            registration
      as an investment company;




•
            adoption
      of a specific form of corporate structure;
and




•
            reporting,
      record keeping, voting, proxy compliance policies and procedures and
      disclosure requirements and otherrules
      and regulations.




We do not
believe that our anticipated principal activities will subject us to the
Investment Company Act of 1940, as amended. To this end, the proceeds held in
trust may only be invested by the trust agent in Treasury Bills issued by the
United States with maturity dates of 180 days or less or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the Investment
Company Act of 1940. By restricting the investment of the proceeds to these
instruments, we intend to avoid being deemed an investment company within the
meaning of the Investment Company Act of 1940. This offering is not intended for
persons who are seeking a return on investments in government securities. The
trust account and the purchase of government securities for the trust account is
intended as a holding place for funds pending the earlier to occur of either:
(i) the consummation of our primary business objective, which is a business
combination, or (ii) absent a business combination, our dissolution and
return of the funds held in this trust account to our public stockholders as
part of our plan of dissolution and distribution. Notwithstanding our belief
that we are not required to comply with the requirements of such act, in the
event that the stockholders do not approve a plan of dissolution and
distribution and the funds remain in the trust account for an indeterminable
amount of time, we may be considered to be an investment company and thus
required to comply with such act. If we were deemed to be subject to that act,
compliance with these additional regulatory burdens would require additional
expense for which we have not allotted.




OUR
ABILITY TO SUCCESSFULLY EFFECT A BUSINESS COMBINATION AND TO BE SUCCESSFUL
AFTERWARDS WILL BE TOTALLY DEPENDENT UPON THE EFFORTS OF OUR KEY PERSONNEL, SOME
OF WHOM MAY CONTINUE WITH US FOLLOWING A BUSINESS COMBINATION.




Our
ability to successfully effect a business combination will be totally dependent
upon the efforts of our key personnel. The future role of our key personnel in
the target business, however, cannot presently be ascertained. Although it is
possible that some of our key personnel, William C. Morro and Richard N. Sinkin,
will remain associated in various capacities with the target business in senior
management or advisory positions following a business combination, it is likely
that some or all of the management of the target business at the time of the
business combination will remain in place. Moreover, our current management will
only be able to remain with the combined company after the consummation of a
business combination if they are able to negotiate the same as part of any such
combination. If we acquire a target business in an all-cash transaction, it
would be more likely that current members of management would remain with us if
they chose to do so. If a business combination were structured as a merger
whereby the stockholders of the target company were to control the combined
company following a business combination, it may be less likely that management
would remain with the combined company because control of the company will rest
with the target company and not current management unless it was negotiated as
part of the transaction in the acquisition agreement, an employment agreement or
other arrangement. In making the determination as to whether current management
should remain with us following the business combination, management will
analyze the






15




experience
and skill set of the target business’ management and negotiate as part of the
business combination that certain members of current management remain if it is
believed that it is in the best interests of the combined company post-business
combination. Depending on the industry in which we acquire a business, our
management team may not have the experience to remain with the combined company.
The terms of any employment or consulting arrangements of our current management
with the combined company post-business combination will be determined at the
time management negotiates the terms of the business combination with the target
business. Since our current management will be negotiating the terms of the
business combination as well as the terms of their employment or consulting
arrangements, our current management may have a conflict of interest in
negotiating terms favorable to the company in the acquisition agreement and at
the same time negotiating terms in their employment or consulting arrangements
that are favorable to them. Although management intends to fully exercise its
fiduciary duty to negotiate terms in the acquisition agreement that will be in
the best interests of the combined-company and its public stockholders, members
of management will be negotiating terms in their employment or consulting
agreements that are favorable to them. Although we intend to closely scrutinize
the management of a prospective target business in connection with evaluating
the desirability of effecting a business combination, we cannot assure you that
our assessment of management will prove to be correct.




OUR
OFFICERS AND DIRECTORS WILL ALLOCATE THEIR TIME TO OTHER BUSINESSES THEREBY
CAUSING CONFLICTS OF INTEREST IN THEIR DETERMINATION AS TO HOW MUCH TIME TO
DEVOTE TO OUR AFFAIRS. THIS CONFLICT OF INTEREST COULD HAVE A NEGATIVE IMPACT ON
OUR ABILITY TO CONSUMMATE A BUSINESS COMBINATION.




Our
officers and directors are not required to commit their full time to our
affairs, which may result in a conflict of interest in allocating their time
between our operations and other businesses. We do not currently and do not
intend to have any full time employees prior to the consummation of a business
combination. All of our executive officers are engaged in several other business
endeavors and are not obligated to contribute any specific number of hours to
our affairs. If our executive officers’ other business affairs require them to
devote more substantial amounts of time to such affairs, it could limit their
ability to devote time to our affairs and could have a negative impact on our
ability to consummate a business combination. For additional discussion of the
potential conflicts of interest that you should be aware of, see Part III below
‘‘Conflicts of interest.’’ We cannot assure you that these conflicts will be
resolved in our favor.




OUR
OFFICERS, DIRECTORS AND THEIR AFFILIATES MAY IN THE FUTURE BECOME AFFILIATED
WITH ENTITIES ENGAGED IN BUSINESS ACTIVITIES SIMILAR TO THOSE INTENDED TO BE
CONDUCTED BY US AND ACCORDINGLY, MAY HAVE CONFLICTS OF INTEREST IN DETERMINING
WHICH ENTITY A PARTICULAR BUSINESS OPPORTUNITY SHOULD BE PRESENTED
TO.




None of
our directors, officers or their affiliates has been a principal of, or
affiliated or associated with, a blank check company and none of such
individuals is currently affiliated with any such entity. However, our officers
and directors may in the future become affiliated with entities, including other
‘‘blank check’’ companies, engaged in business activities similar to those
intended to be conducted by us. Additionally, our officers and directors may
become aware of business opportunities which may be appropriate for presentation
to us as well as the other entities to which they owe fiduciary duties.
Accordingly, they may have conflicts of interest in determining to which entity
a particular business opportunity should be presented. For additional discussion
of our management’s affiliations and the potential conflicts of interest that
you should be aware of, see Part III below ‘‘Conflicts of
interest.’’




ALL
OF OUR OFFICERS, DIRECTORS AND SPECIAL ADVISORS OWN SHARES OF OUR COMMON STOCK
WHICH WILL NOT PARTICIPATE IN THE LIQUIDATION OF THE TRUST ACCOUNT AND THEREFORE
THEY MAY HAVE A CONFLICT OF INTEREST IN DETERMINING WHETHER A PARTICULAR TARGET
BUSINESS IS APPROPRIATE FOR A BUSINESS COMBINATION.




All of
our officers, directors and special advisors own shares of our common stock that
were issued prior to this offering, but have waived their right to receive
distributions with respect to those shares upon the liquidation of the trust
account if we are unable to consummate a business combination. Additionally,
InterAmerican Capital Partners II LLC and affiliates, together with one of our
special advisors, purchased $1,500,000 of warrants from us in a private
placement contemporaneous with the consummation of our initial public offering.
Our officers and directors and certain of their affiliates or designees may
purchase securities in the open market (although they are not obligated to do
so). If they units or shares of common stock in the open market, they have
agreed to vote such shares of common stock in accordance with the majority of
the shares of common stock voted by the public stockholders on a proposal to
approve a business combination and exercise redemption rights in connection
therewith. The shares and warrants owned by our directors, officers, special
advisors and InterAmerican Capital Partners II LLC and affiliates (other than
those purchased in this offering or the aftermarket) will be worthless if we do
not consummate a business combination. The personal and financial interests of
our directors, officers and special advisors may influence their motivation in
identifying and selecting a target business and completing a business
combination timely. Consequently, our directors’, officers’ and special
advisors’ discretion in identifying and selecting a suitable target business may
result in a conflict of interest when determining whether the terms, conditions
and timing of a particular business combination are appropriate and in our
stockholders’ best interest.




OUR
EXISTING STOCKHOLDERS WILL NOT BE REIMBURSED FOR ANY OUT-OF-POCKET EXPENSES
INCURRED BY THEM TO THE EXTENT THAT SUCH EXPENSES EXCEED THE AVAILABLE FUNDS
OUTSIDE THE TRUST ACCOUNT UNLESS THE BUSINESS COMBINATION IS CONSUMMATED AND
THEREFORE THEY MAY HAVE A CONFLICT OF INTEREST IN DETERMINING WHETHER A
PARTICULAR TARGET BUSINESS IS APPROPRIATE FOR A BUSINESS COMBINATION AND IN THE
PUBLIC STOCKHOLDERS’ BEST INTEREST.






16






Our
existing stockholders, including all of our officers and directors, will not be
reimbursed for any out-of-pocket expenses incurred by them to the extent that
such expenses exceed the available funds held outside the trust account and the
portion of the interest earned on the trust account released to us (which,
because interest rates are unknown, may be insufficient to fund all of our
working capital requirements) unless the business combination is consummated.
The financial interest of our officers and directors could influence their
motivation in selecting a target business and thus, there may be a conflict of
interest when determining whether a particular business combination is in the
stockholders’ best interest. We would note, however, that such expenses are
likely to be insignificant compared to the value of management’s equity
stake.




OUR
EXISTING STOCKHOLDERS, INCLUDING OUR OFFICERS AND DIRECTORS, CONTROL A
SUBSTANTIAL INTEREST IN US AND THUS MAY INFLUENCE CERTAIN ACTIONS REQUIRING A
STOCKHOLDER VOTE.




Following
our initial public offering, our existing stockholders (including all of our
officers and directors) collectively owned 17.9% of our issued and outstanding
shares of common stock. None of our existing stockholders, officers and
directors has indicated to us that he intends to purchase additional securities
in the open market, but they are not precluded from doing so. Any shares of
common stock acquired by existing stockholders in the offering or the
aftermarket will be considered part of the holding of the public stockholders
and will have the same rights as other public stockholders, including voting and
redemption rights with respect to a potential business combination. However,
they have agreed to vote such shares of common stock in accordance with the
majority of the shares of common stock voted by the public
stockholders.




Because
InterAmerican Capital Partners II LLC and affiliates and one of our special
advisors purchased $1,500,000 of warrants from us in a private placement
completed contemporaneously with the initial public offering, certain of our
existing stockholders have an even larger ownership block of our common stock
upon exercise of the warrants which could permit them to effectively influence
the outcome of all matters requiring approval by our stockholders at such time,
including the election of directors and approval of significant corporate
transactions, following the consummation of our initial business
combination.




Our board
of directors is divided into three classes, each of which will generally serve
for a term of two years with only one class of directors being elected in each
year. It is unlikely that there will be an annual meeting of stockholders to
elect new directors prior to the consummation of a business combination, in
which case all of the current directors will continue in office at least until
the consummation of the business combination. If there is an annual meeting, as
a consequence of our ‘‘staggered’’ board of directors, only a minority of the
board of directors will be considered for election and our existing
stockholders, because of their ownership position, will have considerable
influence regarding the outcome. Accordingly, our existing stockholders will
continue to exert control at least until the consummation of a business
combination. In addition, our existing stockholders and their affiliates and
relatives are not prohibited from purchasing units in the open market. If they
do, we cannot assure you that our existing stockholders will not have
considerable influence upon the vote in connection with a business
combination.




IF
OUR COMMON STOCK BECOMES SUBJECT TO THE SEC’S PENNY STOCK RULES, BROKER-DEALERS
MAY EXPERIENCE DIFFICULTY IN COMPLETING CUSTOMER TRANSACTIONS AND TRADING
ACTIVITY IN OUR SECURITIES MAY BE ADVERSELY AFFECTED.




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





•
            make
      a special written suitability determination for the
    purchaser;•
            receive
      the purchaser’s written agreement to a transaction prior to
      sale;•
            provide
      the purchaser with risk disclosure documents that identify certain risks
      associated with investing in “penny stocks” and that describe the market
      for these “penny stocks” as well as a purchaser’s legal remedies;
      and


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




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




OUR
SECURITIES ARE QUOTED ON THE OTC BULLETIN BOARD, WHICH MAY LIMIT THE LIQUIDITY
AND PRICE OF OUR SECURITIES MORE THAN IF OUR SECURITIES WERE QUOTED OR LISTED ON
THE NASDAQ STOCK MARKET OR A NATIONAL EXCHANGE.




Our
securities are traded in the over-the-counter market and are quoted on the OTC
Bulletin Board, an NASD-sponsored and operated inter-dealer automated quotation
system for equity securities not included on The Nasdaq Stock Market. Quotation
of our securities on the OTC Bulletin Board may limit the liquidity and price of
our securities more than if our securities were






17






quoted or
listed on The Nasdaq Stock Market or a national exchange.  We cannot
assure you that our securities will continue to be traded on the OTC Bulletin
Board in the future or following the completion of a business
combination.  If the company were to loose the right to have its
securities traded on the OTC Bulletin Board, we could face significant material
adverse consequences, including:




•
            a
      more limited availability of market quotations for our
      securities;


•
            a
      determination that our common stock is a “penny stock,” which would
      require brokers trading in our common stock
to


•
            adhere
      to more stringent rules and possibly resulting in a reduced level of
      trading activity in the secondary trading
market


•
            for
      our common stock;


•
            a
      more limited amount of news and analyst coverage for our
      company;


•
            a
      decreased ability to issue additional securities or obtain additional
      financing in the future; and


•
            a
      decreased ability of our stockholders to sell their securities in certain
      states.




OUR
DIRECTORS MAY NOT BE CONSIDERED “INDEPENDENT” UNDER THE POLICIES OF THE NORTH
AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION, INC. AND WE THUS MAY NOT HAVE
THE BENEFIT OF INDEPENDENT DIRECTORS EXAMINING OUR FINANCIAL STATEMENTS AND THE
PRIORITY




OF
EXPENSES INCURRED ON OUR BEHALF SUBJECT TO REIMBURSEMENT




Although
each of our directors owns shares of our common stock, no salary or other
compensation will be paid to our directors for services rendered by them on our
behalf prior to or in connection with a business combination. Accordingly, we
believe our non-executive directors would be considered “independent” as that
term is commonly used. However, under the policies of the North American
Securities Administrators Association, Inc., an international organization
devoted to investor protection, because each of our directors own shares of our
securities and may receive reimbursement for out-of-pocket expenses incurred by
them in connection with activities on our behalf such as identifying potential
target businesses and performing due diligence on suitable business
combinations, state securities administrators could take the position that all
of such individuals are not “independent.” If this were the case, they would
take the position that we would not have the benefit of any independent
directors examining the propriety of expenses incurred on our behalf and subject
to reimbursement. Additionally, there is no limit on the amount of out-of-pocket
expenses that could be incurred and there will be no review of the
reasonableness of the expenses by anyone other than our board of directors,
which would include persons who may seek reimbursement, or a court of competent
jurisdiction if such reimbursement is challenged. Although we believe that all
actions taken by our directors on our behalf will be in our best interests,
whether or not they are deemed to be “independent,” we cannot assure you that
this will actually be the case. If actions are taken, or expenses are incurred
that are actually not in our best interests, it could have a material adverse
effect on our business and operations.




WE
MAY CHOOSE TO REDEEM OUR OUTSTANDING WARRANTS AT A TIME THAT OUR WARRANT HOLDERS
MAY NOT WISH TO EXERCISE THEIR WARRANTS OR MAY NOT HAVE THE FINANCIAL CAPABILITY
TO EXERCISE THEIR WARRANTS.




Subject
to there being a current prospectus under the Securities Act of 1933 with
respect the shares of common stock issuable upon exercise of the warrants, we
may redeem the warrants issued as a part of our units at any time after the
warrants become exercisable in whole and not in part, at a price of $.01 per
warrant, upon a minimum of 30 days prior written notice of redemption, if and
only if, the last sales price of our common stock equals or exceeds $10.00 per
share for any 20 trading days within a 30 trading day period ending three
business days before we send the notice of redemption. Redemption of the
warrants could force the warrant holders (i) to exercise the warrants and pay
the exercise price therefore at a time when the holders may not wish to do so or
do not have the financial capability to do so, (ii) to sell the warrants at the
then current market price when they might otherwise wish to hold the warrants,
or (iii) to accept the nominal redemption price which, at the time the warrants
are called for redemption, is likely to be substantially less than the market
value of the warrants.




ALTHOUGH
WE ARE REQUIRED TO USE OUR BEST EFFORTS TO HAVE AN EFFECTIVE REGISTRATION
STATEMENT COVERING THE ISSUANCE OF THE SHARES UNDERLYING THE WARRANTS AT THE
TIME THAT OUR WARRANT HOLDERS EXERCISE THEIR WARRANTS, WE CANNOT GUARANTEE THAT
A REGISTRATION STATEMENT WILL BE EFFECTIVE, IN WHICH CASE OUR WARRANT HOLDERS
MAY NOT BE ABLE TO EXERCISE OUR WARRANTS.




Holders
of our warrants will be able to receive shares upon exercise of the warrants
only if (i) a current registration statement under the Securities Act of 1933
relating to the shares of our common stock underlying the warrants is then
effective and (ii) such shares are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of warrants reside. Although we have agreed in the warrant
agreement, and therefore have a contractual obligation, to use our best efforts
to maintain a current registration statement covering the shares underlying the
warrants following completion of this offering to the extent required by federal
securities laws, and we intend to comply with such agreement, we cannot assure
that we will be able to do so. If we fail to register the shares of common stock
underlying the warrants or have them qualified for an exemption under the
securities laws of the states of residence of the holders of our warrants, the
warrants may be deprived of any value and the market for the warrants may be
limited. In such a circumstance, we are not obligated to pay cash or other
consideration to the holders of the warrants and the warrants could become
worthless and later expire unexercised and unredeemed.






18






In addition, we have agreed to use our
reasonable efforts to register the shares underlying the warrants under the blue
sky laws of the states of residence of the exercising warrant holders, to the
extent an exemption is not available and if permitted by the blue sky laws of
such jurisdictions. However, some states may not permit us to register the
shares issuable upon exercise of our warrants for sale. The value of the
warrants will be greatly reduced if a registration statement covering the shares
issuable upon the exercise of the warrants is not kept current or if the
securities are not qualified, or exempt from qualification, in the states in
which the holders of warrants reside. Holders of warrants who reside in
jurisdictions in which the shares underlying the warrants are not qualified and
in which there is no exemption will be unable to exercise their warrants and
would either have to sell their warrants in the open market or allow them to
expire unexercised. If and when the warrants become redeemable by us, we may
exercise our redemption right even if we are unable to qualify the underlying
securities for sale under all applicable state securities
laws.




THE
HOLDERS OF THE WARRANTS PURCHASED IN THE PRIVATE PLACEMENT MAY EXERCISE THEIR
WARRANTS EVEN IF HOLDERS OF THE WARRANTS PURCHASED IN THIS OFFERING MAY NOT BE
ABLE TO EXERCISE THEIR WARRANTS.




Because
the warrants we sold in the private placement to InterAmerican Capital Partners
II LLC (an entity wholly-owned by certain of our officers) and affiliates,
together with one of our special advisors will be issued pursuant to an
exemption from the registration requirements under the federal securities laws,
the holders of the warrants will be able to exercise their warrants even if, at
the time of exercise, a prospectus relating to the common stock issuable upon
exercise of such warrants is not current. As a result, the holders of the
warrants purchased in the private placement will not have any restrictions with
respect to the exercise of their warrants. The holders of the warrants purchased
in this offering will not be able to exercise them unless we have a current
registration statement covering the shares issuable upon their exercise. As a
result, the exercise of the warrants issued in the private placement would have
a dilutive effect on the warrants purchased in this offering and could cause the
price of our common stock to drop below the exercise price of the warrants and
cause the trading price of the warrants to decline or make the warrants
worthless.




RISKS ASSOCIATED WITH OPERATING A
TARGET BUSINESS IN A FOREIGN COUNTRY


IF
SOCIAL UNREST, ACTS OF TERRORISM, REGIME CHANGES, CHANGES IN LAWS AND
REGULATIONS, POLITICAL UPHEAVAL, OR POLICY CHANGES OR ENACTMENTS OCCUR IN A
COUNTRY IN WHICH WE MAY OPERATE AFTER WE EFFECT A BUSINESS COMBINATION, IT MAY
RESULT IN A NEGATIVE IMPACT ON OUR BUSINESS.




Political events in another country may
significantly affect our business, assets or operations. Social unrest, acts of
terrorism, regime changes, changes in laws and regulations, political upheaval,
and policy changes or enactments could negatively impact our business in a
particular country.




ANY
DEVALUATION IN CURRENCIES, HIGH LEVELS OF INFLATION OR INCREASE IN INTEREST
RATES IN A COUNTRY IN WHICH WE MAY OPERATE AFTER WE EFFECT A BUSINESS
COMBINATION COULD NEGATIVELY IMPACT OUR RESULTS OF OPERATIONS AND COULD CAUSE
THE COST OF A TARGET BUSINESS AS MEASURED IN DOLLARS TO INCREASE.




After we
effect a business combination, our business may be significantly affected by the
general condition of another country’s economy, including, among other things,
the rate of inflation, interest rates, and exchange rates for, or exchange
controls affecting, local currencies. Decreases in the growth rate of a
country’s economy, periods of negative growth and/or increases in inflation or
interest rates may result in lower demand for products, lower real pricing of
our products or a shift to lower margin products. To the extent that a large
percentage of our costs and expenses are fixed, we may not be able to reduce
costs and expenses upon the occurrence of any of these events, and our profit
margins may suffer as a result.




A
substantial increase in a country’s inflation rate could have the effect of
increasing our costs, including salaries, raw materials and supplies, purchased
services and other costs denominated in local currency, which could adversely
affect our results of operations and financial condition. High levels of
inflation may also affect the balance of trade between the United States and the
country at issue, which could also adversely affect our results of
operations.




Currency
fluctuations may have an adverse effect on our financial position, results of
operations and cash flows in future periods. Marked depreciation or appreciation
of the local currency relative to the U.S. dollar could increase costs in the
U.S. or in another country or expose us to risk with respect to our assets and
liabilities denominated in a particular currency, and thereby may negatively
affect our financial position and results of operations. A severe devaluation or
depreciation of a local currency may also result in disruption of the
international foreign exchange markets and may limit our ability to transfer or
to convert such currency into U.S. dollars for the purpose of making timely
payments of interest and principal on any U.S. dollar-denominated debt or
obligations in other currencies.




BECAUSE
OF THE COSTS AND DIFFICULTIES INHERENT IN MANAGING CROSS-BORDER BUSINESS
OPERATIONS, OUR RESULTS OF OPERATIONS MAY BE NEGATIVELY IMPACTED.




Managing
a business, operations, personnel or assets in another country is challenging
and costly. Any management that we may have (whether based abroad or in the
U.S.) may be inexperienced in cross-border business practices and unaware of
significant differences in accounting rules, legal regimes and labor practices.
In addition, language difficulties and






19






technological
barriers, such as issues relating to computer and phone systems, can greatly
exacerbate the problems that result from this lack of experience. Even with a
seasoned and experienced management team located in both the U.S. and any
country in which we may acquire a business or move its operations, the costs and
difficulties inherent in managing cross-border business operations, personnel
and assets can be significant (and much higher than in a purely domestic
business) and may negatively impact our financial and operational
performance.




BECAUSE
MANY COUNTRIES HAVE DIFFICULT AND UNPREDICTABLE LEGAL SYSTEMS AND UNDERDEVELOPED
LAWS AND REGULATIONS THAT ARE UNCLEAR AND SUBJECT TO CORRUPTION AND
INEXPERIENCE, IT MAY ADVERSELY IMPACT OUR RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.




Many
countries have difficult and unpredictable legal systems and underdeveloped laws
and regulations that are unclear and subject to corruption and inexperience. Our
ability to seek and enforce legal protections, including with respect to
intellectual property and other property rights, or to defend ourselves with
regard to legal actions taken against us in a given country, may be difficult or
impossible, which could adversely impact our operations, assets or financial
condition. Rules and regulations in many countries are often ambiguous or open
to differing interpretation by responsible individuals and agencies at the
municipal, state, regional and federal levels. The attitudes and actions of such
individuals and agencies are often difficult to predict and inconsistent. Delay
with respect to the enforcement of particular rules and regulations, including
those relating to customs, tax, environmental and labor, could cause serious
disruption to operations abroad and negatively impact our results.




IF
RELATIONS BETWEEN THE UNITED STATES AND A FOREIGN GOVERNMENT DETERIORATE, IT
COULD CAUSE POTENTIAL TARGET BUSINESSES OR THEIR GOODS AND SERVICES TO BECOME
LESS ATTRACTIVE.




The
relationship between the United States and foreign governments is subject to
sudden fluctuation and periodic tension. For instance, the United States may
announce its intention to impose quotas on certain imports. Such import quotas
may adversely affect political relations between the two countries and result in
retaliatory countermeasures by the foreign government in industries that may
affect our ultimate target business. Changes in political conditions in foreign
countries and changes in the state of U.S. relations with such countries are
difficult to predict and could adversely affect our operations or cause
potential target businesses or their goods and services to become less
attractive. Because we are not limited to any specific industry, there is no
basis for investors in this offering to evaluate the possible extent of any
impact on our ultimate operations if relations are strained between the United
States and a foreign country in which we acquire a target business or move our
principal manufacturing operations.




IF
WE DETERMINE TO CHANGE DOMICILES IN CONNECTION WITH A BUSINESS COMBINATION, THE
NEW JURISDICTION’S LAWS WILL LIKELY GOVERN ALL OF OUR MATERIAL AGREEMENTS AND WE
MAY NOT BE ABLE TO ENFORCE OUR LEGAL RIGHTS.




In
connection with a business combination, we may determine to relocate the home
jurisdiction of our business from Delaware to a jurisdiction outside of the
United States. If we determine to do this, the new jurisdiction’s corporate law
will control our corporate governance requirements and will determine the rights
of our stockholders. The new jurisdiction’s corporate law may provide less
protection to our stockholders than is afforded by Delaware law. In addition,
upon reincorporation, we may become a ‘‘foreign private issuer’’ for purposes of
United States securities laws, which means that we may be subject to less
stringent reporting requirements and that some provisions of the United States
securities laws (such as the proxy rules and the short-swing trading rules)
would not apply to us. In addition, if we were to relocate to a foreign
jurisdiction, whether or not we reincorporate outside the United States, the new
jurisdiction’s laws will likely govern all of our material agreements. We cannot
assure you that the system of laws and the enforcement of existing laws in such
jurisdiction would be as certain in implementation and interpretation as in the
United States. The inability to enforce or obtain a remedy under any of our
future agreements in a new jurisdiction could result in a significant loss of
business, business opportunities or capital. Any such reincorporation will
likely subject us to foreign regulation, including foreign
taxation.




BECAUSE
WE MAY ACQUIRE AN OPERATING BUSINESS OR CONDUCT OPERATIONS OUTSIDE OF THE UNITED
STATES, WE MAY BE UNABLE TO ENFORCE OUR LEGAL RIGHTS AGAINST FOREIGN
PERSONS.




The laws
of a foreign jurisdiction may govern all or many of our material business and
operating agreements. We cannot assure you that we will be able to enforce any
of our material agreements or that sufficient remedies will be available in
applicable foreign jurisdictions. Even if we are able to obtain judgments from a
United States court with regard to a material agreement against a foreign
person, we may not be able to enforce such judgments outside of the United
States. The inability to enforce or obtain a remedy under any of our future
agreements may have a material impact on our future operations. Further, because
certain of our directors reside outside of the United States, it may be
difficult for investors in the United States to effect service of process upon
such directors, to enforce their legal rights under Federal securities laws
against such directors or to enforce judgments of United States courts against
such directors.




Item
lB. Unresolved Staff Comments


Not
applicable.




20
  Item
2. Properties.


We
maintain our principal executive offices at 2918 Fifth Avenue South, Suite 209,
San Diego, California 92103. The cost for this space is included in the $10,000
per-month fee InterAmerican Advisors, LLC charges us for general and
administrative services and which commenced on the effective date of our initial
public offering pursuant to a letter agreement between us and InterAmerican
Advisors, LLC. We believe, based on rents and fees for similar services in the
metropolitan area of San Diego, that the fee charged by InterAmerican Advisors,
LLC is at least as favorable as we could have obtained from an unaffiliated
person. We consider our current office space adequate for our current
operations.




Item
3. Legal Proceedings.


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




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


No
matters were submitted to a vote of security holders during the fourth quarter
of the fiscal period ended December31, 2007.




PART
II




Item
5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.


The
common stock, warrants and units of InterAmerican Acquisition Group, Inc. are
traded in the over-the-counter market and are quoted on the OTC Bulletin Board,
an NASD-sponsored and operated inter-dealer automated quotation system for
equity securities not included on The Nasdaq Stock Market.  Our common
stock, warrants and units trade under the symbols IAQG, IAQGW and IAQGU
respectively. The company’s units commenced public trading on September 5, 2007
and its common stock and warrants commenced public trading on September 20,
2006.  The quantities of our securities and number of shareholders of
record for each are shown in the table below as of the dates shown:


As
      of December 31, 2007
              
              
              As
      of March 28, 2008Number
      Issued
                and
    Outstanding
              
              
              Number of
      Shareholders
                of
      Record
              
              
              Number
      Issued
                and
      Outstanding
              
              
              Number
      Issued
                and
      OutstandingCommon
      Stock
              
              
              5,609,843
              
              
              
              9
              
              
              
              5,766,293
              
              
              
              9Warrants
              
              
              5,359,843
              
              
              
              3
              
              
              
              5,516,293
              
              
              
              3Units
              
              
              1,390,157
              
              
              
              1
              
              
              
              1,233,707
              
              
              
              1


The table
below sets forth, for the calendar quarters indicated, the high and low bid
prices of the InterAmerican Acquisition


Group,
Inc. common stock, warrants and units as reported by NASDAQ. The quotations
merely reflect the prices at which transactions were proposed, and do not
necessarily represent actual transactions.


InterAmerican
      Acquisition Group, IncCommon
      Stock
              
              
              Warrants
              
              
              
              
              
              UnitsHigh
              
              
              Low
              
              
              High
              
              
              Low
              
              
              High
              
              
              Low2007
      Third Quarter
              
              $
              7.24
              
              
              $
              7.19
              
              
              $
              1.06
              
              
              $
              0.99
              
              
              $
              8.11
              
              
              $
              8.072007
      Fourth Quarter
              
              $
              7.24
              
              
              $
              7.19
              
              
              $
              1.23
              
              
              $
              1.20
              
              
              $
              8.40
              
              
              $
              8.39Source: NASDAQ. Prices
      shown reflect inter-dealer prices without retail markup, markdown or
      commissions if applicable


On March
31, 2008, the closing prices of the common stock, units and warrants of
InterAmerican Acquisition Group, Inc. were $7.42, $9.10 and 1.68,
respectively.




We have
not paid any dividends on our common stock to date and do not intend to pay
dividends prior to the completion of a business combination. The payment of
dividends in the future will be contingent upon our revenues and earnings, if
any, capital requirements and general financial condition subsequent to
completion of a business combination. The payment of any dividends subsequent to
a business combination will be within the discretion of our then board of
directors. It is the present intention of our board of directors to retain all
earnings, if any, for use in our business operations and, accordingly, our board
does not anticipate declaring any dividends in the foreseeable
future.






21






Recent
Sales of Unregistered Securities


During
the period of this annual report no sales of unregistered securities occurred
and there were no securities authorized for issuance under any equity
compensation plan.




In May
2005, we issued 1,250,000 shares of our common stock for $15,000 in cash, at a
purchase price of $0.012 per share (giving retroactive effect to a 2-for-5
reverse stock split we effected in December 2005, a reallocation of shares among
our officers and directors, a 1.25-for-1 stock split we effected in April 2006,
a 1.44-for-1 stock split we effected in May 2006, a 1-for-2.16 reverse stock
split effected in June 2007, a transfer of 325,000 shares from our existing
stockholders to our special advisors in June 2007 and a transfer of an aggregate
of 189,000 shares from our special advisor, Richard Propper, to our two
executive officers in August 2007). The shares are now owned by the following
stockholders:




Name
            Number
      of Shares
            
            Relationship
      to UsWilliam
      C. Morro
            
            508,837
            
            Chief
      Executive Officer, Chief Financial Officer and Chairman of the Board of
      DirectorsDr.
      Richard N. Sinkin
            
            339,225
            
            Chief
      Operating Officer, Secretary and DirectorRichard
      M. Wolfson
            
            46,250
            
            DirectorInterAmerican
      Capital Partners II LLC
            
            173,438
            
            StockholderJames
      Bazet
            
            23,125
            
            DirectorDr.
      Herminio A. Blanco Mendoza
            
            23,125
            
            DirectorRichard
      Propper
            
            61,000
            
            Special
      AdvisorSteven
      Oliveira
            
            75,000
            
            Special
      Advisor1,250,000




Use
of Proceeds from our Initial Public Offering


The
effective date of our registration statement, which was filed under the
Securities Act of 1933 (File No. 333-12558), and which related to the initial
public offering of our units, was September 4, 2007. Each unit consisted of one
share of common stock, $.001 par value per share, and one warrant to purchase
one share of common stock. A total of 5,750,000 units were registered at a
proposed maximum aggregate offering price of $46,000,000.




The
company’s initial public offering was consummated on September 10 and 11, 2007.
The underwriters of the offering were Chardan Capital Markets, LLC, Maxim Group
LLC, Early Bird Capital, Inc., Broadband Capital Management LLC and Newbridge
Capital LLC.  A total of 5,750,000 units were sold in the offering for
an aggregate offering price of $46,000,000. Each of our units commenced trading
its component share of common stock and warrant separately on September 20,
2007.




The net
proceeds to us from the sale of our Units, after deducting offering expenses of
$1,021,967 (some of which were not paid at closing) and underwriting discounts
of $3,560,000 (including $2,070,000 placed in the Trust Account representing a
deferred underwriters’ discount) was $41,418,033.  Additionally, we
received $1,500,000 from the contemporaneous sale of warrants to InterAmerican
Capital Partners II, LLC and affiliates and one of our special
advisors.  $45,160,000 plus after-tax interest income earned on that
amount (less up to $950,000 of such after-tax income which may be released to
the Company upon demand) is being held in a Trust Account and the remaining
funds (including up to $950,000 of after-tax income on the funds held in the
Trust Account that may be released to the Company) are being held outside of the
trust. The funds outside the Trust Account are available to be used by us to
provide for business, legal and accounting due diligence on prospective
acquisitions and continuing general and administrative expenses.




We expect
to use substantially all of the net proceeds of the initial public offering and
warrant sale to acquire a target business (including identifying and evaluating
prospective acquisition candidates, selecting the target business, and
structuring, negotiating and consummating the business combination) and to
redeem for cash shares from dissenting stockholders, if any.  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 as well as
any other net proceeds not expended will be used to finance the operations of
the target business.  If we are unable to complete a business
combination within the time allowed, then we would be forced to liquidate and
funds in the Trust Account plus any remaining funds outside the Trust Account
would be liquidated to our public shareholders.




We may
need to raise additional funds through a private or public offering of debt or
equity securities if such funds are required to consummate a business
combination that is presented to us. We anticipate that we would only consummate
such a financing simultaneously with the consummation of a business combination,
although nothing would preclude us from raising more capital in anticipation of
a possible business combination. We cannot assure you that such financing would
be available on acceptable terms, if at all. To the extent that additional
financing proves to be unavailable when needed to consummate a particular
business






22




combination,
we would be compelled to restructure the transaction or abandon that particular
business combination and seek an alternative target business candidate or
liquidate.  None of our officers, directors or stockholders is
required to provide any financing to us in connection with or after a business
combination.




Other
than reimbursement of out-of-pocket expenses totaling $77,323 incurred in
connection with our initial public offering, no expenses of the offering were
paid to any of our officers and directors or any of their respective affiliates.
We did, however, repay InterAmerican Advisors, LLC, an affiliate of our
management, for loans, temporary advances and accrued interest thereon that it
made to us prior to the consummation of the initial public offering. The
aggregate amount of principal on such loans and advances was
$141,000  and the accrued interest was $12,678. All the funds held in
the trust account have been invested in either invested in money market funds
meeting conditions of the Investment Company Act of 1940 or securities
principally issued or guaranteed by the U.S. government Treasury Bills or Money
Market Accounts.




Working
Capital/Liquidation Funding


Based on
the experience of our management, we believe we will have sufficient available
funds outside of the Trust Account that we will not need to raise additional
funds in order to meet all of our expenses incurred while seeking, evaluating
and closing an initial business combination, however, there can be no assurance
that the funds available outside the trust will be sufficient for this
purpose.  If the funds available outside of the Trust Account are not
sufficient for such purpose, we may have to raise additional debt or equity
capital to fund the business operations while we are pursuing a business
combination.  There is no assurance that such financing would be
available on acceptable terms, if at all, and if additional funds are needed but
are not available, we may be forced to liquidate.  Except as described
in the following paragraphs, none of our management or directors or their
affiliates have any obligation or commitment to provide additional financing for
the company.




Pursuant
to the terms of the trust agreement between us and Continental Stock Transfer
& Trust Company, if we are compelled to liquidate, we will seek to do so
through a plan of dissolution and distribution and the company will pay the
costs of such dissolution, which we currently estimate to be approximately
$50,000 to $75,000, from our remaining assets outside of the trust account. To
the extent such funds are not available, InterAmerican Capital Partners II LLC
has agreed to advance us the necessary funds and has agreed not to seek
repayment for such expenses, though it has not taken a reserve for this
possibility and there can be no assurance that it will be able to meet its
obligations under this agreement. In addition, if we liquidate before the
completion of a business combination and distribute the proceeds held in trust
to our public stockholders, William C. Morro, our chief executive officer, chief
financial officer and chairman of our board of directors and Dr. Richard N.
Sinkin, our chief operating officer, secretary and a member of our board of
directors, have severally (but not jointly) agreed, pursuant to agreements with
us and Chardan Capital Markets, LLC, that they will be personally liable,
severally (but not jointly), which means they will be personally liable only for
60% and 40%, respectively (as an example, if there is a valid third party claim
of $1,000,000, Mr. Morro will be responsible for $600,000 of such claim and
Dr. Sinkin will be responsible for $400,000 of such claim), to pay claims
of third parties that are owed money for services rendered to us or products
sold to us (which includes, for example, accountants, lawyers, investment
bankers, consultants and analysts) that would reduce the amount of the trust,
provided that such third party has not executed a valid and enforceable waiver
to rights or claims against the trust account and only to the extent necessary
to ensure that such claims do not reduce the amount in the trust account. The
indemnification provided by Messrs. Morro and Sinkin would not cover tort claims
brought against us for some unforeseen event, claims against us brought by a
target business for breach of contract or breach of a confidentiality agreement
with a potential target. We will bring an action against either of our executive
officers in the event that such individual asserts that he is not able to cover
any of the expenses that would deplete the trust proceeds or that either is not
liable pursuant to their indemnification obligations as described above. Based
on the information provided to us in the director and officer questionnaires
provided to us in connection with this offering as well as the representations
as to their accredited investor status (as such term is defined in
Regulation D), we currently believe that such persons are of substantial
means and capable of funding their indemnity obligations. However, because the
amount of any such indemnification obligations cannot be estimated, we have not
asked Messrs. Morro or Sinkin to reserve for such an eventuality and there can
be no assurance that they will satisfy their indemnification obligations if and
when they arise. Further, they will not be personally liable to pay debts and
obligations to prospective target businesses, if a business combination is not
consummated with such prospective target businesses, or for claims from any
entity other than as described above. Accordingly, the proceeds held in trust
could be subject to claims which could take priority over the claims of our
public stockholders and the per-share liquidation price could be less than
approximately $7.85, plus interest (net of taxes payable and interest earned on
the trust account up to a maximum amount of $950,000 that will be released to us
to fund our working capital), due to claims of such creditors.




Repurchases
of Equity Securities


None




Item
6. Selected Financial Data.


The
following tables should be read in conjunction with our financial statements and
the notes thereto appearing elsewhere in this Annual Report on Form 10-K. The
selected financial data has been derived from our financial statements, which
have been audited for the year ended December 31, 2007 by McGladery &
Pullen, LLP and for the year ended December 31, 2006 by Goldstein Golub Kessler
LLP, independent registered public accounting firms, as indicated in their
reports included elsewhere herein.









23







Year
      Ended December 31, 2007
            
            
            Year
      Ended December 31, 2006Income
      statement dataInterest
      income
            
            $
            565,230
            
            
            $
            -Total
      Expenses
            
            
            314,659
            
            
            
            14,844Net
      profit/(loss) before income tax provision
            
            
            250,571
            
            
            
            (14,844
            )Provision
      for income taxes
            
            
            100,078
            
            
            
            -Net
      Income/(Loss)
            
            $
            150,493
            
            
            $
            (14,844
            )Weighted
      average shares outstanding - Basic and diluted
            
            
            3,029,110
            
            
            
            1,250,000Net
      earnings/(loss) per share -    Basic and
      Diluted
            
            $
            0.05
            
            
            $
            (0.01
            )Balance
      sheet dataDecember
      31, 2007
            
            
            December
      31, 2006Cash
            
            $
            15,533
            
            
            $
            440Investments
      held in trust
            
            
            45,517,583
            
            
            
            -Other
      current assets
            
            
            87,871
            
            
            
            -Other
      assets
            
            
            57,610
            
            
            
            741,533Total
      assets
            
            $
            45,678,597
            
            
            $
            741,973Total
      liabilities
            
            
            2,621,063
            
            
            
            752,965Common
      stock, subject to possible redemption
            
            
            8,609,194
            
            
            
            -Total
      stockholders' equity
            
            
            34,448,340
            
            
            
            (10,992
            )Total
      liabilities and stockholders equity
            
            $
            45,678,597
            
            
            $
            741,973







24




Item
7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.




The
following Management’s Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with our financial
statements and the related notes and schedules thereto contained in this Annual
Report on Form 10-K and the Company’s audited financial statements and notes
thereto included in our Final Prospectus filed with the SEC on September 5,
2007, our Quarterly Reports on Form 10-Q on October 25, 2007 and November 19,
2007 and our filings on Form 8-K filed with the SEC on September 17, 2007 and
September 20, 2007.




We were
formed on May 10, 2005 for the purpose of effecting a merger, capital stock
exchange, asset acquisition or other similar business combination with an
operating business in the manufacturing or service sector domiciled anywhere in
the world that has a fair market value of at least 80% of our net assets (all of
our assets, including the funds held in the trust account, less our liabilities,
but excluding any funds (net of taxes payable) held in the trust account for the
benefit of the underwriters) at the time of the acquisition, provided that the
target business is not a start-up or development-stage company or an affiliate
of management. We can also satisfy the requirement that the business combination
have a fair market value at least equal to 80% of our net assets in an
acquisition transaction where we acquire less than a 100% interest in the target
business, provided that the fair market value of the interest in such business
or businesses is at least equal to 80% of our net assets at the time such
acquisition transaction is consummated. We intend to use cash derived from the
proceeds of our Offering and concurrent warrant sale, our capital stock, debt or
a combination of cash, capital stock and debt, to effect such business
combination.




Since our
Offering, we have been actively searching for a suitable business combination
candidate. We currently have not entered into any definitive agreement with any
potential target businesses. We have met with service professionals and other
intermediaries to discuss our company, the background of our management and our
combination preferences. In the course of these discussions, we have also spent
time explaining the capital structure of our initial public offering, the
combination approval process and the timeline within which we must either enter
into a letter of intent or definitive agreement for a business combination, or
return the proceeds of the initial public offering held in the Trust Account to
investors. Consistent with the disclosures in our prospectus, we have focused
our search on manufacturing and service-sector companies that have the potential
to expand their operating scope in Mexico/Latin America, but we may acquire a
business that would benefit from extending operations to other areas of the
world and we have no restrictions with respect to the geographic area in which
the target business operates. We cannot assure investors that we will find a
suitable business combination in the allotted time.




We are
currently in the process of evaluating and identifying targets for an initial
transaction. We are not presently engaged in, and will not engage in, any
substantive commercial business until we consummate an initial transaction. We
intend to utilize








25




cash
derived from the proceeds of our initial public offering, the warrant sale, our
capital stock, debt or a combination of cash, capital stock and debt, in
effecting an initial transaction. The issuance of additional shares of our
capital stock:




•
            may
      significantly reduce the equity interest of our current
      stockholders;




•
            may
      subordinate the rights of holders of common stock if preferred stock is
      issued with rights senior to those afforded to our common
      stock;




•
            will
      likely cause a change in control if a substantial number of our shares of
      common stock or preferred stock are issued, which may affect, among other
      things, our ability to use our net operating loss carry forwards, if any,
      and most likely also result in the resignation or removal of one or more
      of our present officers and directors;
and




•
            may
      adversely affect prevailing market prices for our
    securities.




Similarly,
      if we issued debt securities, it could result
  in:




•
            default
      and foreclosure on our assets, if our operating revenues after an initial
      transaction were insufficient to pay our debt
  obligations;




•
            acceleration
      of our obligations to repay the indebtedness, even if we have made all
      principal and interest payments when due, if the debt security contained
      covenants that required the maintenance of certain financial ratios or
      reserves and any such covenant were breached without a waiver or
      renegotiation of that covenant;




•
            our
      immediate payment of all principal and accrued interest, if any, if the
      debt security was payable on demand;
and




•
            our
      inability to obtain additional financing, if necessary, if the debt
      security contained covenants restricting our ability to obtain additional
      financing while such security was
outstanding.




We
      anticipate that we would only consummate such a financing simultaneously
      with the consummation of a business combination, although nothing would
      preclude us from raising more capital in anticipation of a possible
      business combination.




RESULTS
OF OPERATIONS




Through
December 31, 2007, our efforts have been primarily organizational activities,
activities relating to our Offering and active searching for a target company to
do a business combination. We have neither engaged in any operations nor
generated any operating revenues to date. We currently have no operating
business and have not entered into a definitive agreement with any potential
target businesses. Beginning September 10, 2007 (the date of the consummation of
our Offering) until our consummation of a business combination, we expect
interest earned on the Offering proceeds held in our Trust Account to be our
primary source of income.




Net
income for the twelve months ended December 31, 2007 was $150,493 which
consisted of $565,230 in interest income, partially offset by $100,078 in income
taxes and $314,659 in expenses consisting of $21,244 for D&O and other
insurance, $21,871 for legal fees, $35,722 for travel expenditures, $149,350 for
Delaware and California franchise taxes, $4,913 of interest expense on funds
borrowed from InterAmerican Advisors, LLC, an affiliate of our
management,  $36,333 paid to InterAmerican Advisors LLC for our office
space and other general and administrative services, $986 of other interest
expense, $11,152 for Trust Account administration, $13,403 for audit and
accounting support, $8,152 for printing, $10,000 for consulting services to
related to insurance and valuation matters and $1,534 for other expenses. Funds
from the Trust Account will be used to pay taxes including taxes due on interest
accrued on the funds held in the Trust Account. In 2007, $7,500 was withdrawn
from the Trust Account for payment of taxes and was being held by us in our
operating account at year-end in anticipation of payment to federal and state
governments and $200,000 was withdrawn to fund our working capital and pay
operating expenses of the business.




Net loss
for the period from May 10, 2005 (Inception) to December 31, 2006 was $(25,992)
which consisted of $0 in interest income offset by $25,992 in expenses which
consisted of $4,775 of organization costs, $11,231 of Franchise Tax, $7,765 of
interest expense on funds borrowed from InterAmerican Advisors, LLC, an
affiliate of our management and $2,221 of other expenses.




Net
income for the cumulative period from inception (May 10, 2005) to December 31,
2007 was $124,501 which consisted of $565,230 in interest income, partially
offset by $100,078 in income taxes and $340,651 in expenses consisting of
$21,244 for D&O and other insurance, $26,626 for legal fees, $37,099 for
travel expenditures, $160,418 for Delaware franchise taxes, $12,678 of interest
expense on funds borrowed from InterAmerican Advisors, LLC, an affiliate of our
management,  $36,333 paid to InterAmerican Advisors LLC for our office
space and other general and administrative services, $11,152 for Trust Account
administration, $13,403 for audit and accounting support, $8,152 for printing,
$10,000 for consulting services to related to insurance and valuation matters
and $3,528 for other expenses. Funds from the Trust Account will be used to pay
any taxes resulting from interest accrued on the funds held in the Trust
Account. $7,500 was withdrawn from the Trust Account from inception to December
31, 2007 and was being held by us at year-end in anticipation of payment of
federal and state taxes for 2007.






26






The net
proceeds to us from the sale of our Units, after deducting offering expenses of
$1,021,967 and underwriting discounts of $3,560,000 (including $2,070,000 placed
in the Trust Account representing a deferred underwriters’ discount) was
$41,418,033.  Additionally, we received $1,500,000 from the
contemporaneous sale of warrants to InterAmerican Capital Partners II, LLC and
affiliates and one of our special advisors.  Upon closing of the
initial public offering and warrant sale, including deferred underwriter’s
commissions of $2,070,000, $45,160,000 was placed in the Trust Account. The
remaining proceeds of $2,340,000 were used to pay expenses of the offering and
to provide for business, legal and accounting due diligence on prospective
transactions and continuing general and administrative expenses. To the extent
that our capital stock is used in whole or in part as consideration to effect an
initial transaction, the proceeds held in the Trust Account (excluding the
amount held in the Trust Account representing a portion of the underwriters’
discount) as well as any other net proceeds not expended will be used to finance
the operations of the target.




At
December 31, 2007, we had cash outside of the Trust Account of $15,533,
investments held in the Trust Account of $45,378,925 plus accrued interest
receivable on those investments of $138,657 , prepaid expenses of $87,871, other
assets of $57,610 and total liabilities of $2,621,063, excluding shares subject
to redemption. We believe that the funds available to us outside of the Trust
Account (including an additional $750,000 in after-tax interest that we are
permitted to draw from the Trust Account) are sufficient to allow us to operate
until September 5, 2009, assuming that an initial transaction is not consummated
during that time. The funds held outside of the Trust Account (excluding amounts
held for payment of taxes) plus the amount that we are permitted to draw from
the Trust Account totaled $757,033 as of December 31, 2007, we anticipate using
these funds to cover legal and accounting fees, other expenses attendant to the
due diligence investigations, structuring and negotiating of an initial
transaction, and administrative expenses incurred prior to completing an initial
transaction. We do not believe we will need to raise additional funds in order
to meet the expenditures required for operating our business. However, depending
upon the type, size and nature of any possible business combination, we may need
to do so. It is possible that the Company could use a portion of the funds that
can be drawn from the Trust Account to make a deposit, down payment or fund a
“no-shop” provision with respect to a particular proposed business combination.
In the event the Company were ultimately required to forfeit such funds (whether
as a result of our breach of the agreement relating to such payment or
otherwise), it may not have a sufficient amount of working capital available
outside of the Trust Account to pay expenses related to finding a suitable
business combination without securing additional financing. If it were unable to
secure additional financing, the company would most likely fail to consummate a
business combination in the allotted time and would be forced to liquidate the
Trust Account as part of any plan of dissolution and distribution approved by
the company’s stockholders.




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




We
currently pay InterAmerican Advisors, LLC an affiliate of our management, an
aggregate fee of $10,000 per month which includes the cost of the office space
and the cost of other general and administrative services provided to us by
InterAmerican Advisors, LLC.




CHANGES
IN FINANCIAL CONDITION




Liquidity
and Capital Resources




On
September 4, 2007 we sold 1,000,000 warrants in a private placement to
InterAmerican Capital Partners II, LLC and affiliates and one of our Special
Advisors. Each warrant entitles the holder to purchase from us one share of our
common stock at an exercise price of $5.00.The warrants were sold at a
price of $1.50 per warrant, generating net proceeds of $1,500,000.




On
September 10 and 11, 2007 we consummated our initial public offering of
5,750,000 Units. Each unit consists of one share of common stock and one
warrant. Each warrant entitles the holder to purchase from us one share of our
common stock at an exercise price of $5.00.




The net
proceeds to us from the sale of our Units, after deducting offering expenses of
$1,021,967 (some of which were not paid at closing) and underwriting discounts
of $3,560,000 (including $2,070,000 placed in the Trust Account representing a
deferred underwriters’ discount) was $41,418,033.  Additionally, we
received $1,500,000 from the contemporaneous sale of warrants to InterAmerican
Capital Partners II, LLC and affiliates and one of our special
advisors.  $45,160,000 plus after-tax interest income earned on that
amount (less up to $950,000 of such after-tax income which may be released to
the Company upon demand) is being held in a Trust Account at JP Morgan Chase
Bank, N.A. maintained by Continental Stock Transfer & Trust Company, as
trustee and the remaining funds (including up to $950,000 of after-tax income on
the funds held in the Trust Account that may be released to the Company) are
being held outside of the Trust Account. The funds outside the Trust Account are
available to be used by us to provide for business, legal and accounting due
diligence on prospective acquisitions and continuing general and administrative
expenses.  As of December 31, 2007, we had drawn $200,000 (of the
$950,000 permitted) from the interest earned net of taxes on the Trust Account;
we had a cash balance of $15,533; and $153,484 of the expenses incurred to
complete our initial public offering remained unpaid.  We do not
believe we will need to raise additional funds in order to meet the expenditures
required to consummate a business combination before September 4, 2009, however
there can be no assurance that the company will have sufficient funds to meet
the expenditures required to complete a business combination within the time
allowed. If it does not, it will be forced to liquidate.




It is
also possible that we would be compelled to use a portion of our working capital
to make a deposit, a down payment, a lock-up payment or fund a ‘‘no-shop’’
provision with respect to a particular proposed business combination, although
we do






27




not have
any current intention to do so. If we did, the amount that would be used as a
down payment or lock-up payment would be determined based on the terms of the
specific business combination and the amount of our available funds at the time.
In the event that we were ultimately required to forfeit such funds (whether as
a result of our breach of the agreement relating to such payment or otherwise),
we may not have a sufficient amount of working capital available outside of the
trust account to conduct due diligence and pay other expenses related to finding
another suitable business combination without securing additional
financing.




We cannot
assure you that such financing would be available on acceptable terms, if at
all. To the extent that additional financing proves to be unavailable if and
when needed to consummate a particular business combination, we would be
compelled to restructure the transaction or abandon that particular business
combination and seek an alternative target business candidate or liquidate. If
the company is forced to liquidate, it would result in a loss of a portion of
your investment. None of our officers, directors or stockholders is required to
provide any financing to us in connection with or after a business
combination.




Over the
time period from the effective date of our initial public offering (September 4,
2007) to September 5, 2009, we currently anticipate incurring expenses for the
following purposes:




•
            legal,
      accounting and other expenses attendant to due diligence investigations,
      structuring and negotiation of a Business
  Combination;




•
            due
      diligence of prospective target
businesses;




•
            legal
      and accounting fees relating to our SEC reporting obligations and general
      corporate matters;




•
            administrative
      fees (including $10,000/month for up to 12 months payable to InterAmerican
      Advisors, LLC, a company owned by our
  management);




•
            working
      capital, director and officer liability insurance premiums and reserves
      (including potential deposits, down payments or funding of a “no-shop”
      provision in connection with a particular Business Combination and
      dissolution obligations and reserves, if
any).




In
addition, prior to completion of our initial public offering, InterAmerican
Advisors, LLC, a company owned by our management, loaned us an aggregate of
$141,000 for payment of offering expenses on our behalf. These advances,
together with interest of approximately $12,678 were repaid on September 10,
2007 from the proceeds of the initial public offering that were allocated to pay
offering expenses.




We may
use all or substantially all of the proceeds held in trust other than the
deferred portion of the underwriter’s fee to acquire one or more target
businesses. We may not use all of the proceeds held in the Trust Account in
connection with a Business Combination, either because the consideration for the
Business Combination is less than the proceeds in trust or because we finance a
portion of the consideration with capital stock or debt securities that we can
issue. In that event, the proceeds held in the Trust Account as well as any
other net proceeds not expended will be used to finance the operations of the
target business or businesses. The operating businesses that we acquire in such
Business Combination must have, individually or collectively, a fair market
value equal to at least 80% of the balance in the Trust Account (excluding
deferred underwriter’s fee of $2,070,000) at the time of such acquisition. If we
consummate multiple Business Combinations that collectively have a fair market
value of 80% of our net assets, then we would require that such transactions are
consummated simultaneously.




If we are
unable to find a suitable target business by March 4, 2009, or September 4, 2009
if a letter of intent, agreement in principle or a definitive agreement has been
executed by March 4, 2009, we will be forced to liquidate.  If we are
forced to liquidate, the per share liquidation amount may be less than the
initial per unit price in our initial public offering because of the
underwriting commissions and expenses related thereto and because of the value
of the warrants in the per unit offering price. Additionally, if third parties
make claims against us, the funds held in the Trust Account could be subject to
those claims, resulting in a further reduction to the per share liquidation
price. Under Delaware law, our stockholders who have received distributions from
us may be held liable for claims by third parties to the extent such claims are
not been paid by us. Furthermore, our warrants will expire worthless if we
liquidate before the completion of a business combination.




Off-Balance
Sheet Arrangements




Options
and warrants issued in conjunction with our Offering are equity-linked
derivatives and accordingly represent off-balance sheet arrangements. The
options and warrants meet the scope exception in paragraph 11(a) of FAS 133 and
are accordingly not accounted for as derivatives for purposes of FAS 133, but
instead areaccounted for
as equity. For a more complete discussion of the treatment of the warrants, see
footnote 1 to the financial statements.




Other
than contractual obligations incurred in the normal course of business, we do
not have any off-balance sheet financing arrangements or liabilities, guarantee
contracts, retained or contingent interests in transferred assets or any
obligation arising out of a material variable interest in an unconsolidated
entity. The securities held in the Trust Account are in the name of
InterAmerican Acquisition Group, Inc.








28






Contractual
Obligations




In
connection with our Offering, Chardan Capital Markets (on behalf of the
underwriters) has agreed to defer payment of ($2,070,000) until completion of a
business combination. Until a business combination is complete, these funds will
remain in the Trust Account. If the Company does not complete a business
combination then the underwriters’ deferred fee will become part of the funds
returned to the Company’s Public Stockholders from the Trust Account upon its
liquidation as part of any plan of dissolution and distribution approved by the
Company’s stockholders.




Other
than contractual obligations incurred in the ordinary course of business and an
agreement with InterAmerican Advisors, LLC to provide office and administrative
services through September 4, 2009 for total consideration of up to
$120,000, we do not have any other long-term contractual
obligations.




Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.




Market
risk is the sensitivity of income to changes in interest rates, foreign
exchanges, commodity prices, equity prices, and other market-driven rates or
prices. We are not presently engaged in, and if a suitable business target is
not identified by us prior to the prescribed liquidation of the trust account we
may not engage in, any substantive commercial business. Accordingly, the risks
associated with foreign exchange rates, commodity prices, and equity prices are
not significant.




Item 8. Financial Statements and Supplementary Data.




The
following financial statements and the footnotes thereto are included in the
section beginning on Page F-1:




1. Report
of Independent Registered Public Account Firms.


2.
Balance Sheet as of December 31, 2007.


3.
Statement of Operations of the period May 10, 2005 (date of inception) to
December 31, 2007


4.
Statement of Stockholder’s Equity for the period May 10, 2005 (date of
inception) to December 31, 2007.


5.
Statement of Cash Flows for the period May 10, 2005 (date of inception) to
December 31, 2007.


6. Notes
to Financial Statements.




Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.




None.




Item
9A. Controls and Procedures.




Our
management carried out an evaluation, with the participation of William Morro,
our principal executive and Financial officer, of the effectiveness of our
disclosure controls and procedures as of December 31, 2007. Based upon that
evaluation, Mr. Morro 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 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 Rule 13a-15(d) under the Exchange Act
that occurred during the three months ended December 31, 2007 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.




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




Item
9B. Other Information.




Not
applicable.




29


PART
III




Item
10. Directors and Executive Officers and Special Advisors of the
Registrant.




Our
current directors and executive officers are as follows:




Name
            Age
            PositionWilliam
      C. Morro
            54
            Chairman,
      Chief Executive and Chief Financial OfficerRichard
      N. Sinkin, PhD
            64
            Chief
      Operating Officer, Secretary and DirectorJames
      Bazet
            60
            DirectorDr.
      Herminio A. Blanco Mendoza
            55
            DirectorRichard
      M. Wolfson
            40
            Director





William C.
Morro    has served as chairman of the board and
chief executive officer since our inception and as our chief financial officer
since December 5, 2005. Since November 2001, Mr. Morro has been a partner with
the InterAmerican Group, an advisory and investment firm focusing on
cross-border transactions. In October 1996, Mr. Morro founded the U.S. Merchant
Bank for the Bank of Montreal Group of Companies – BMO Nesbitt Burns Equity
Group (US), Inc. and was its president until October 2001. From 1991 to 1996,
Mr. Morro was employed by Heller Financial, Inc., and from June 1994 to
October 1996 served as president of its SBIC, Heller Investments, Inc. (HII).
Since 1991, Mr. Morro has accumulated experience with the acquisition and
management of middle-market companies, having participated as an investment
principal in 55 acquisition or divestiture transactions. Prior to joining HII,
Mr. Morro was a principal and shareholder of the general management consulting
firm, Cresap, McCormick and Paget (now owned by Towers, Perrin). Before joining
Cresap, Mr. Morro worked for two years as a Development Engineer for Union
Carbide Corporation and he earned a Masters degree from the Kellogg Graduate
School of Management at Northwestern University. His undergraduate degree is
from Dartmouth College, where he studied chemistry and engineering.




Dr. Richard N.
Sinkin    has served as chief operating officer and a
member of our board of directors since our inception and as our secretary since
December 5, 2005. From 2000 until the present, Dr. Sinkin has acted as the
managing partner of Strategies International d/b/a InterAmerican Holdings. In
2002, Dr. Sinkin officially became a partner in the InterAmerican Group,
providing advisory and consulting services and equity financing to middle market
companies interested in cross-border projects. In 1987 Dr. Sinkin founded
InterAmerican Holdings Co., an international consulting business and predecessor
to the InterAmerican Group. From June 1987 to October 2000, Dr. Sinkin was the
president of Strategies International. Strategies International d/b/a
InterAmerican Holdings was founded in 1987 and is the predecessor company to
InterAmerican Advisors. It provides international business consulting services
to companies and institutions seeking to establish a marketing or manufacturing
presence in Latin America. It also assists certain non-profit organizations,
such as the University of California San Diego, in the development of their
international educational programs. He is a specialist in setting up offshore
manufacturing operations, particularly in Mexico, where he has directed the
start-up of 27 factories. Prior to forming InterAmerican, Dr. Sinkin, who holds
his doctorate degree in Latin American history, was the vice president of the
Institute of the Americas in La Jolla, California, a center of private and
public sector collaboration on Latin American business issues. From 1982 to
1985, Dr. Sinkin was a director of Texas Bank in San Antonio, Texas. From 1981
to 1986, he was the executive director of the Latin American Studies
Association. In 1979, he was appointed Senior Policy Analyst at the U.S.
Department of State, Agency for International Development. From 1969 to 1986,
Dr. Sinkin was a professor of Latin American history at the University of Texas
at Austin. Dr. Sinkin is an elected member of the Council on Foreign
Relations in New York, the Pacific Council on International Policy in Los
Angeles, and the San Diego Dialogue in San Diego. He serves on the board of
directors of the Immigration Museum of New Americans in San Diego, and the
International Advisory Boards of two University of California San
Diego organizations: the Graduate School of International Relations and Pacific
Studies and the Center for US-Mexican Studies. He received a B.A., M.A., and
Ph.D. from the University of Michigan.




James
Bazet    has served as a member of our board of
directors since our inception. Mr. Bazet has been the president, chief executive
officer and a director of Cobra Electronics Corporation, a public company based
in Chicago with offices in Hong Kong and Ireland, since 1998. Cobra designs and
markets products primarily for consumer markets in North America and Europe.
Under Mr. Bazet’s leadership, Forbes Magazine named Cobra
one of theBest 200 Small
Companies in America in both 2000 and 2001. Since becoming president and
chief executive officer of Cobra in 1998, Mr. Bazet has overseen global sourcing
of the company’s products, particularly in Asia, as well as of distribution into
new markets for the company in Europe. Prior to assuming leadership of Cobra,
Mr. Bazet served as chief operating officer of Ryobi America from 1994 to 1998
and as chief executive officer of Code-A-Phone Corporation from 1991 to 1994.
Mr. Bazet received a B.S. degree in Finance from Nicholls State University in
Louisiana.




Dr. Herminio A.
Blanco Mendoza    has served as a member of our board
of directors since our inception. Dr. Blanco has been the chief executive
officer of Soluciones Estrategicas, an international consulting firm based in
Mexico City that specializes in advising multinational clients on international
trade and investment issues, since January 2002. Since April 2004, he has been a
member of the Board of Directors of Banco Latino Americano de Exportaciones
(listed on the NYSE as BLADEX), CYDSA (a Mexican chemical and textile
manufacturing group), and BANORTE. During 2001, prior to founding Soluciones
Estrategicas, Dr. Blanco advised governments and corporations on international
trade issues. He served as Secretary of Commerce and Industrial Development for
Mexico for the entire term of the Zedillo administration (1994 – 2000). Before
1994 he served under three presidential administrations in federal level Mexican
government positions including: Chief Negotiator of NAFTA, Undersecretary of
International Trade and Economic Advisor to the President. Dr. Blanco has
held academic teaching positions at Rice University, Instituto Tecnológico
Autónomo de México and El Colegio de México. He received his undergraduate
degree (B.A. in Economics) from Instituto Tecnológico de Estudios Superiores de
Monterrey and was awarded a Masters and Ph.D. in Economics from the University
of Chicago.






30






Richard M.
Wolfson    has served as a member of our board of
directors since our inception. From inception until December 5, 2005, Mr.
Wolfson also served as our chief financial officer and secretary. Mr. Wolfson
has been actively executing or guiding investment transactions for the bulk of
his professional career. Since January 31, 2006, Mr. Wolfson has served as vice
president, general counsel and secretary of Clarcor Inc., a public company
listed on the New York Stock Exchange. In July 2001, Mr. Wolfson joined
with Mr. Morro and Dr. Sinkin (former clients) to form the InterAmerican Group.
Prior to joining InterAmerican, from April 2000 to July 2001 Mr. Wolfson served
as EVP of Business Development for Education Networks of America, a provider of
internet services to K-12 public schools. From July 1991 to April 2000, Mr.
Wolfson was a partner with the Chicago office of Baker & McKenzie, where Mr.
Wolfson specialized in M&A and complex cross-border transactions for
numerous public and private company clients, with a focus on Latin America and
Europe. Mr. Wolfson received his undergraduate degree from Colgate
University and holds a JD with distinction from Northwestern University School
of Law.




We have
fixed the number of our board of directors at six. Five of the board positions
are filled by Messrs. Morro, Sinkin, Bazet, Blanco, and Wolfson and one position
is vacant. We had intended to fill the current vacancy in our board of directors
by December 31, 2007, but our board has elected to postpone doing so until a
business combination candidate has been identified and we can recruit an
individual with relevant experience to the position. Our board of directors is
divided into three classes with only one class of directors being elected in
each year and each class serving a three-year term. The term of office of the
first class of directors, consisting of Dr. Herminio A. Blanco Mendoza, will
expire at our first annual meeting of stockholders. The term of office of the
second class of directors, consisting of Mr. Bazet and Mr. Wolfson, will expire
at the second annual meeting. The term of office of the third class of
directors, consisting of Mr. Morro and Dr. Sinkin, will expire at the third
annual meeting.




Our board
is expected to participate in identifying and evaluating prospective business
combination candidates, selecting the target business, and guiding the
structuring, negotiating and consummating its acquisition. None of these
individuals has been a principal of or affiliated with a public company or blank
check company that executed a business plan similar to our business plan and
none of these individuals is currently affiliated with such an entity. However,
we believe that the skills and expertise of these individuals, their collective
access to acquisition opportunities and ideas, their contacts, and their
transaction expertise should enable them to identify and effect an acquisition
although we cannot assure you that they will, in fact, be able to do
so.




Special
advisors


As
described below, our special advisors are experienced with blank check companies
that have completed offerings similar to this offering. They have agreed to
treat our proprietary information confidentially and to be reasonably available
on request to advise our board of directors on matters related to the offering
and completing a subsequent business combination. Our special advisors purchased
shares of our common stock prior to the offering, and as described elsewhere in
this prospectus, have agreed to be treated similarly to members of management
and the board of directors with respect to the voting and disposition of those
shares. Our special advisors owe no fiduciary duties to us as officers or
directors or in their capacity as advisors.




Dr. Richard D.
Propper will serve as one of our special advisors. Dr. Propper is an
officer and director of several companies that have completed or are pursuing
offerings similar this offering, including Chardan China North Acquisition Corp,
Chardan China South Acquisition Corp. and Chardan China Acquisition Corp. In
August 2003, he formed: Chardan Capital, LLC, a venture capital management and
financial strategic consulting firm based in Southern California, and has been
one of its managers since its formation. During this time, Dr. Propper has been
focused principally on building business relationships between Chinese and U.S.
companies. In 1984, he founded Montgomery Medical Ventures Funds, an early stage
venture capital firm, and was the managing general partner until July 1993. He
then pursued private investment activities from July 1993 until he formed
Chardan Capital in August 2003. Dr. Propper received a B.S. from McGill
University and an M.D. from Stanford University. He also spent ten years on the
faculty of Harvard medical school as a research fellow and an assistant
professor in pediatrics. Dr. Propper is the father of Kerry Propper, the Chief
Executive Officer of Chardan Capital Markets, LLC, our lead
underwriter.




Steven M.
Oliveira will serve as one of our special advisors. Mr. Oliveira has been
the President of Oliveira Capital, LLC since its inception in 2002. Prior to
starting Oliveira Capital, Mr. Oliveira was a venture capitalist and investor in
the biotechnology industry. Mr. Oliveira’s career in biotechnology began in 1992
as a Vice President at D. Blech and Company, an investment bank that specialized
in financing emerging companies in the life sciences sector. In 1995, while a
Managing Partner at CSO Ventures, Mr. Oliveira co-founded Depomed, Inc. and Siga
Pharmaceuticals. Since starting Oliveira Capital, LLC in 2002, Mr. Oliveira has
focused on investments in the biotechnology industry and Special Purpose
Acquisition Companies (SPACs). Mr. Oliveira holds a Bachelor of Arts degree in
Economics from Manhattan College.




Section
16(a) Beneficial Ownership Reporting Compliance


Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our officers,
directors and persons who beneficially own more than ten percent of our common
stock to file reports of ownership and changes in ownership with the SEC. These
reporting persons are also required to furnish us with copies of all Section
16(a) forms they file. All of these reports were filed in a timely
manner.




Code
of Conduct and Ethics


We
currently do no have a formalized code of ethics.  Upon consummation
of a business combination we intend to adopt a code of ethics that would apply
to our principal executive officer, principal financial officer, principal
accounting officer or controller or any persons performing similar
functions.






31






Director
Independence


Our board
of directors has determined that Messrs. Bazet, Blanco and Wolfson are
“independent directors” within the meaning of  Rule IOA-3 promulgated
under the Securities and Exchange Act of 1934, as amended.




Board
Committees


Our
      board of directors has an audit committee and a compensation
      committee.




Audit
Committee




Our audit committee consists of James
Bazet and Richard Wolfson. Mr. Bazet serves as the chairman of our audit
committee. The independent directors we appointed to our audit committee are
each an independent member of our board of directors, as defined by the rules of
the SEC. Our board of directors has determined that Mr. Bazet qualifies as an
“audit committee financial expert,” as such term is defined by SEC
rules.




The audit
committee reviews the professional services and independence of our independent
registered public accounting firm and our accounts, procedures and internal
controls. The audit also approves the firm selected to be our independent
registered public accounting firm, reviews and approves the scope of the annual
audit, reviews and evaluates with the independent public accounting firm our
annual audit and annual consolidated financial statements, reviews with
management the status of internal accounting controls and reimbursement of
management’s out-of-pocket expenses, evaluates problem areas having a potential
financial impact on us that may be brought to the committee’s attention by
management, the independent registered public accounting firm or the board of
directors, and reviews all of our public financial reporting
documents.  In the event that our audit committee (which consists of
only two members) becomes deadlocked on any decision within the scope of its
responsibility, the matter is determined by vote of all independent
directors.




Audit
Committee Pre -Approval Policies and Procedures




In accordance with Section 1OA(i) of
the Securities Exchange Act of 1934 before the company engages its independent
accountant to render audit or permitted non-audit services, such engagement is
be approved by the board of directors or audit committee.




Compensation
Committee




We have
established a compensation committee of the board of directors, which consists
of Mr. Wolfson and Mr. Bazet, each of whom is an independent director as defined
by the rules of the SEC. Mr. Wolfson serves as Chairman of the compensation
committee. The compensation committee is responsible for overseeing any
compensation-related matters involving management.  It is also
responsible for reviewing and approving any compensation arrangements or
conflict-of-interest matters involving our management that may be negotiated or
arise in conjunction with a business combination.  In the event that
our compensation committee (which consists of only two members) becomes
deadlocked on any decision within the scope of its responsibility, the matter is
determined by vote of all independent directors.




Conflicts
of Interest




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


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




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




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




·
            Since
      our directors own shares of our common stock which will be released from
      escrow only if a business combination is successfully completed, and will
      own warrants which will expire worthless if a business combination is not
      consummated, our board may have a conflict of interest in determining
      whether a particular target business is appropriate to effect a business
      combination. The personal and financial interests of our directors and
      officers may influence their motivation in identifying and selecting
      a target business, completing a business combination timely and securing
      the release of their stock. Our directors and officers may purchase units
      in this offering or in the open market and common stock in the open market
      and will vote these shares in accordance with the majority of the shares
      of common stock voted by the public stockholders on a proposal to approve
      a business combination and exercise their redemption rights in connection
      therewith.








32




·
            The
      terms of any employment or consulting arrangements of our current
      management with the combined company post-business combination will
      be determined at the time management negotiates the terms of the
      business combination with the target business. Since our current
      management will be negotiating the terms of the business combination
      as well as the terms of their employment or consulting arrangements,
      our current management may have a conflict of interest in
      negotiating terms favorable to the company in the acquisition
      agreement and at the same time negotiating terms in their employment
      or consulting arrangements that are favorable to them. Although
      management intends to fully exercise its fiduciary duty to negotiate
      terms in the acquisition agreement that will be in the best interests
      of the combined-company and its public stockholders, members of
      management will be negotiating terms in their employment or
      consulting agreements that are favorable to
  them.




In
general, officers and directors of a corporation incorporated under the laws of
the State of Delaware are required to present business opportunities to a
corporation if:


·
            the
      corporation could financially undertake the
  opportunity;


·
            the
      opportunity is within the corporation’s line of business;
    and


·
            it
      would not be fair to the corporation and its stockholders for the
      opportunity not to be brought to the attention of the
      corporation.




Accordingly,
as a result of multiple business affiliations, our officers and directors may
have similar legal obligations relating to presenting business opportunities
meeting the above-listed criteria to multiple entities. In addition, conflicts
of interest may arise when our board evaluates a particular business opportunity
with respect to the above-listed criteria. We cannot assure you that any of the
above mentioned conflicts will be resolved in our favor.


In order
to minimize potential conflicts of interest which may arise from multiple
corporate affiliations, each of our officers and directors has agreed, until the
earliest of a business combination, our liquidation or such time as he ceases to
be an officer or director, to present to our company for our consideration,
prior to presentation to any other entity, any business opportunity which may
reasonably be required to be presented to us under Delaware law, subject
to any pre-existing fiduciary obligations he might have.


It is the
intention of each officer and non-independent director (Morro and Sinkin) to
present to us any business opportunities he is made aware of prior to presenting
such opportunity to another entity and such officers and non-independent
directors do not have any pre-existing fiduciary obligations to any entities
that would prohibit this or cause a conflict of interest to exist with us. Our
independent directors (Messrs. Bazet, Blanco and Wolfson) are subject to
pre-existing fiduciary obligations to the entities that they serve as officers
and/or directors and may present opportunities to such entities before
presenting them to us.


Messrs.
Morro and Sinkin are not currently involved in or a part of any private equity
firm or fund other than as limited partners or passive investors with no role in
identifying, selecting or disposing of investments. Instead, Messrs. Morro and
Sinkin, through InterAmerican Advisors LLC, provide advisory services to
U.S. and Canadian companies that are doing business in Latin America and
elsewhere and to Latin American companies that are doing business in the U.S.
and Canada. Their advisory services consist of evaluating third party
arrangements, conducting due diligence and assisting in the negotiation of
cross-border transactions. In providing these advisory services, Messrs. Morro
and Sinkin are not analyzing target businesses or seeking acquisitions for
InterAmerican Acquisition Group, Inc., instead they are providing advisory
services to the clients of InterAmerican Advisors and in such capacity are
precluded from activities that would conflict with their clients’ interests such
as using information gathered for their own purposes or to benefit us. While
Messrs. Morro and Sinkin have, in the past, invested personally (or through
affiliated entities they have formed for the purpose of holding their
investments) in private equity transactions, and are free to make such direct
investments in the future, they have agreed, as mentioned above, to present to
us prior to presenting such opportunity to another entity any investment or
acquisition opportunities that we are permitted to make or that would be
relevant to our business operations.


None of
Messrs. Bazet, Blanco or Wolfson (the independent directors) is currently
involved in or is a part of any private equity firm or fund. Unlike Messrs.
Morro and Sinkin, none of these independent directors will be actively involved
in seeking an acquisition target on our behalf. As directors of our company,
these independent directors are expected to become involved in evaluating a
potential acquisition target primarily after management has identified such a
potential opportunity and presented it for them to consider on our behalf. These
outside directors have duties as officers or directors of separate other
entities that, like the duties of Messrs. Morro and Sinkin to the clients of
InterAmerican Advisors LLC, preclude them from activities or sharing proprietary
information that would conflict with the interests of their employers. Although
none of their roles with their respective entities is focused on identifying and
evaluating acquisitions, if any of the outside directors becomes involved in
evaluating acquisitions or business combinations for these entities, they will
have to maintain the confidentiality of that activity and the information they
may learn would not be made available to us. The possibility exists that one or
more of the independent directors could become aware of a potential acquisition,
other than in connection with their duties as officers and directors of their
respective employers, and could pass that information on to members of our
management.


In
connection with the vote required for any business combination, all of our
existing stockholders, including all of our officers and directors, have agreed
to vote their respective shares of common stock which were owned prior to this
offering in accordance with the vote of the public stockholders owning a
majority of the shares of our common stock sold in this offering. Any common
stock acquired by existing stockholders in this offering or in the after market
will be considered part of the holdings of the public stockholders. These
existing stockholders will have the same rights as other public stockholders
with respect to such shares, including voting and redemption rights in
connection with a potential business combination. However, they will vote such
shares on a proposed business combination in accordance with the majority of the
shares of common stock voted by the public stockholders. In addition, they have
agreed to waive their respective rights to participate in any liquidation
including the liquidation of our trust account as part of our plan of
dissolution and distribution to our public stockholders, as well as to vote for
any plan of dissolution and distribution submitted to our stockholders, but only
with respect to those shares of common stock acquired by them prior to this
offering.


To
further minimize potential conflicts of interest, we have agreed not to
consummate a business combination with an entity which is affiliated with any of
our existing stockholders. However, after completing our initial business
combination and if we
   33
   deem it
to be in the best interest of our stockholders, we may enter into a business
combination with an affiliate in subsequent business combinations.


Item
11. Executive Compensation.


Executive
Compensation




No
executive officer has received any cash compensation for services rendered.
Commencing on the effective date of our initial public offering and for the 12
months thereafter, we have agreed to pay InterAmerican Advisors, LLC $10,00 per
month for use of office space, utilities, administrative, technology and
secretarial services. InterAmerican Advisors, LLC is owned by our management.
This arrangement is being agreed to by Value Investments, LLC for our benefit
and is not intended to provide compensation to our management in lieu of salary.
We believe, based on rents and fees for similar services in the San Diego area,
that the fee charged by InterAmerican Advisors, LLC is at least as favorable as
we could have obtained from an unaffiliated third party. Other than this $10,000
per month fee, no compensation of any kind, including finder’s and consulting
fees, has been or will be paid to any of our initial stockholders, including our
officers and directors or special advisors, or any of their respective
affiliates, for services rendered prior to or in connection with a business
combination. However, these individuals will be reimbursed for any out-of-pocket
expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable
business combinations. After a business combination, such individuals may be
paid consulting, management or other fees from target businesses, with any and
all amounts being fully disclosed to stockholders, to the extent known, in the
proxy solicitation materials furnished to the stockholders. There is no limit on
the amount of these out-of-pocket expenses, and there will be no review of the
reasonableness of the expenses by anyone other than our board of directors,
which includes persons who may seek reimbursement, or a court of competent
jurisdiction if such reimbursement is challenged. If none of our directors are
deemed “independent,” we will not have the benefit of independent directors
examining the propriety of expenses incurred on our behalf and subject to
reimbursement.




Compensation
Discussion and Analysis Summary Compensation Table


No
compensation was paid or accrued during the fiscal year ended December 31, 2007
to (1) our President and Chief Executive and Chief Financial Officer or (2) our
Chief Operating Officer and Secretary.  These two individuals are our
only officers and the company has no employees receiving compensation. In the
absence of any compensation, a summary compensation table is not
applicable.




2007
Grants of Plan-Based Awards


There
were no equity awards during the fiscal year ended December 31, 2007 to (1) our
President and Chief Executive and Chief Financial Officer or (2) our Chief
Operating Officer and Secretary.  These two individuals are our only
officers and the company has no employees and made no equity awards during
2007.




Employment
Agreement




The
Company is not a party to any formal employment agreements.




Fiscal
Year 2007 Stock Option Awards




The
Company did not award any stock options in 2007.




Compensation
Actions in 2007




The
Company did not make any bonus or salary awards for performance during 2007, nor
has it approved any stock option awards for 2007 performance.




Outstanding
Equity Awards at Fiscal 2007 Year-End




There
were no grants of stock options outstanding on December 31, 2007, the last day
of the fiscal year, held by each of (1) our President and Chief Executive and
Chief Financial Officer or (2) our Chief Operating Officer and
Secretary.  These two individuals are our only officers and the
company made no grants of stock options to any person during 2007.




2007
Option Exercises and Stock Vested




There
were no exercises of options to purchase our common stock by (1) our President
and Chief Executive and Chief Financial Officer or (2) our Chief Operating
Officer and Secretary.  These two individuals are our only officers
and no other person exercised options to purchase our common stock during
2007.  The company has not issued any stock to any person that is
subject to vesting.




Pension
Benefits




The
Company does not have any qualified or non-qualified defined benefit
plans.








34






Nonqualified
Deferred Compensation




The
Company does not have any non-qualified defined contribution plans or other
deferred compensation plans.




Potential
Payments Upon Termination or Change in Control




The
Company is not party to any agreements, employment or otherwise, the terms of
which obligate the Company to make payments and provide benefits to the
Company’s executive officers in the event of a termination of
employment.




2007
Director Compensation




No
compensation was earned or paid by or to our non-employee directors in
2007.




Director
Compensation Policy




The
Company does not currently pay any fees to our directors.




Performance
Graph




We have
not included the performance graph index as we became a reporting company on
September 4, 2007. We do not expect that our securities will trade at prices
much different than the amounts paid for such securities in our initial public
offering until such time that we complete a business combination, if we are able
to do so.




Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.




The
following table sets forth information regarding the beneficial ownership of our
common stock as of the date of this report by:




·
            each
      person known by us to be the beneficial owner of more than 5% of our
      outstanding shares of common stock;


·
            each
      of our officers and directors and special advisors;
  and


·
            all
      our officers and directors and special advisors as a
  group.




Unless
otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them.





Amount
      and Nature of Beneficial Ownership
            
            Approximate
      Percentage
              of
      Outstanding Common StockName
      and Address of Beneficial Owner (1)William
      C. Morro
            
            682,276
            (2)
            9.7%Richard
      N. Sinkin, Ph D.
            
            512,663
            (2)(3)
            7.3%Richard
      M. Wolfson (6)
            
            46,250
            
            0.7%James
      Bazet (7)
            
            23,125
            
            0.3%Dr.
      Herminio A. Blanco Mendoza (8)
            
            23,125
            
            0.3%Richard
      Propper (9)
            
            61,000
            
            0.9%Steven
      Oliveira (10)
            
            75,000
            
            1.1%All
      directors, executive officers and special
              advisors
      as a group (7 individuals)
            
            1,250,000
            (4)
            17.9%
            (5)




1.
            Unless
      otherwise indicated below in notes 6-10, the business address of each of
      the individuals is 2918 Fifth Avenue South, Suite 209, San Diego,
      California 92103




2.
            Includes
      173,438 shares of common stock held by InterAmerican Capital Partners II
      LLC, a holding company owned by William C. Morro and
      Dr. Richard N. Sinkin. Mr. Morro holds 60% of the
      membership interests of InterAmerican Capital Partners II LLC and Dr.
      Sinkin holds 40% of the membership interests of InterAmerican Capital
      Partners II LLC. However, Messrs. Morro and Sinkin equally share ultimate
      dispositive and voting control over the shares of common stock held
      by InterAmerican Capital Partners II LLC and for that reason the impact of
      full beneficial ownership of InterAmerican Capital Partners II LLC is
      reflected in the table for each of Mr. Morro and Dr. Sinkin. If the
      percentage ownership for Mr. Morro and Dr. Sinkin were to be
      calculated based on their actual percentage holdings of InterAmerican
      Capital Partners II LLC membership interests, 104,063 shares would be
      allocated to Mr. Morro and 69,375 shares would be allocated to Dr. Sinkin
      and the percentage ownership for each respectively would be approximately
      and 8.8% and 5.8%, respectively, after the
  offering.






35






3.
            Upon
      filling the vacancy in our board of directors, Dr. Sinkin will
      transfer up to 23,125 shares of common stock to our new
      director.




4.
            Since
      the 173,438 shares of common stock owned by InterAmerican Capital Partners
      II LLC are included in the beneficial ownership calculations of both Mr.
      Morro and Dr. Sinkin, such shares are only counted once for purposes of
      this total.




5.
            Since
      the 173,438 shares of common stock owned by InterAmerican Capital Partners
      II LLC are included in the beneficial ownership calculations of both Mr.
      Morro and Dr. Sinkin, such shares are only counted once for purposes of
      calculating the percentage of beneficial ownership of all officers,
      directors and special advisors as a
group.




6.
            The
      business address of Richard M. Wolfson is 840 Crescent Center Drive, Suite
      600, Franklin, TN 37067.




7.
            The
      business address of James Bazet is 6500 W. Cortland Street, Chicago,
      IL  60707.




8.
            The
      business address of Dr. Herminio A. Blanco Mendoza is Acordada #47, San
      Jose Insurgentes Benito Juarez, Mexico, D.F. 03900  (
      Mexico).




9.
            The
      business address of  Richard Propper is 625 Broadway, Suite
      1111, San Diego,
CA  92101.




10.
            The
      business address of Stephen Oliveira is 18 Fieldstone Court, New York,
      NY  10956.




Because
of this ownership block, these stockholders may be able to effectively influence
the outcome of all matters requiring approval by our stockholders, including the
election of directors and approval of significant corporate transactions other
than approval of a business combination.  All of the shares of common
stock outstanding prior to the date of our initial public offering were placed
in escrow with Continental Stock Transfer & Trust Company, as escrow agent,
until the earliest of:




·
            two
      years following the effective date of our initial public
      offering;


·
            our
      liquidation; and


·
            the
      consummation of a liquidation, merger, stock exchange or other similar
      transaction which results in all of our stockholders having the right to
      exchange their shares of common stock for cash, securities or other
      property subsequent to our consummating a business combination with a
      target business.




During
the escrow period, the holders of these shares will not be able to sell or
transfer their securities except to their spouses and children or trusts
established for their benefit, but will retain all other rights as our
stockholders, including, without limitation, the right to vote their shares of
common stock and the right to receive cash dividends, if declared. If dividends
are declared and payable in shares of common stock, such dividends will also be
placed in escrow. If we are unable to effect a business combination and
liquidate, none of our existing stockholders will receive any portion of the
liquidation proceeds with respect to common stock owned by them prior to the
date of this prospectus.




Item
13. Certain Relationships and Related Transactions.




In May
2005, we issued 1,250,000 shares of our common stock for $15,000 in cash, at a
purchase price of $0.012 per share (giving retroactive effect to a 2-for-5
reverse stock split we effected in December 2005, a reallocation of shares among
our officers and directors, a 1.25-for-1 stock split we effected in April 2006,
a 1.44-for-1 stock split we effected in May 2006, a 1-for-2.16 reverse stock
split effected in June 2007, a transfer of 325,000 shares from our existing
stockholders to our special advisors in June 2007 and a transfer of an aggregate
of 189,000 shares from our special advisor, Richard Propper, to our two
executive officers in August 2007). The shares are now owned by the following
stockholders:





Name
            
            Number
      of Shares
            
            Relationship
      to UsWilliam
      C. Morro
            
            508,837
            
            Chief
      Executive Officer, Chief Financial Officer and Chairman of the Board of
      DirectorsDr.
      Richard N. Sinkin
            
            339,225
            
            Chief
      Operating Officer, Secretary and DirectorRichard
      M. Wolfson
            
            46,250
            
            DirectorInterAmerican
      Capital Partners II LLC
            
            173,438
            
            StockholderJames
      Bazet
            
            23,125
            
            DirectorDr.
      Herminio A. Blanco Mendoza
            
            23,125
            
            DirectorRichard
      Propper
            
            61,000
            
            Special
      AdvisorSteven
      Oliveira
            
            75,000
            
            Special
      Advisor1,250,000




Concurrently
with the closing of the initial public offering, InterAmerican Capital Partners
II, LLC and affiliates and one of our Special Advisors collectively purchased a
combined total of 1,000,000 of our warrants from us at a price of $1.50 per
warrant. These warrants, which we collectively refer to as the founders’
warrants, will not be sold or transferred by the








36




purchasers
who initially purchased these warrants from us until the completion of our
initial business combination. The $1,500,000 purchase price of the founders’
warrants was added to the proceeds of the initial public offering to be held in
the trust account pending our completion of one or more business combinations.
If we do not complete one or more business combinations that meet the criteria
described herein, then the $1,500,000 purchase price of the founders’ warrants
will become part of the liquidation amount distributed to our public
stockholders from our trust account as part of any plan of dissolution and
distribution and the founders’ warrants will expire worthless.




The
holders of the majority of the 1,250,000 shares are entitled to require us, on
up to two occasions, to register these shares and the and the holders of a
majority of the founders’ warrants are entitled to make up to one demand that we
register such warrants pursuant to an agreement signed on the date of our
initial public offering. The holders of the majority of the 1,250,000 shares can
elect to exercise the registration rights at any time commencing three months
prior to the date on which these shares of common stock are to be released from
escrow. In addition, these securityholders have certain ‘‘piggy-back’’
registration rights with respect to registration statements filed subsequent to
the date on which these shares of common stock are released from escrow. We will
bear the expenses incurred in connection with the filing of any such
registration statements.




The
holders of the majority of these shares may elect to exercise these registration
rights at any time after the date on which these shares of common stock are
released from escrow, which, except in limited circumstances, is not before
three years from the date of our initial public offering. In addition, these
stockholders and the holders of the founding director warrants have certain
“piggy-back” registration rights on registration statements filed subsequent to
the date on which these shares of common stock are released from escrow or the
founding director warrants become exercisable, as the case may be. We will bear
the expenses incurred in connection with the filing of any such registration
statements.




We have
agreed to pay InterAmerican Advisors, LLC $10,000 per month for use of office
space, utilities, administrative, technology and secretarial services for up to
12 months. InterAmerican Advisors, LLC is owned by our management. Messrs. Morro
and an affiliate of Dr. Sinkin own 3% and 97% of InterAmerican Advisors, LLC,
respectively. The name of the affiliate of Dr. Sinkin is Sintrim Capital Corp.,
a Delaware corporation that is wholly controlled by Dr. Sinkin. Sintrim
Capital Corp. is a holding company used by Dr. Sinkin to hold certain business
assets.  Accordingly, each will benefit from the transaction to the
extent of his respective interest in InterAmerican Advisors, LLC. However, this
arrangement is solely for our benefit and is not intended to provide Messrs.
Morro and Sinkin compensation in lieu of a salary. We believe, based on rents
and fees for similar services in the metropolitan area of San Diego, that the
fee charged by InterAmerican Advisors, LLC is at least as favorable as we could
have obtained from an unaffiliated person.




Each of
Messrs. Morro and Sinkin is deemed to be our “parent” and “promoter,” as these
terms are defined under the Federal securities laws.




If we
liquidate before the completion of a business combination and distribute the
proceeds held in trust to our public stockholders, William C. Morro, our chief
executive officer, chief financial officer and chairman of our board of
directors and Dr. Richard N. Sinkin, our chief operating officer, secretary and
a member of our board of directors, have severally (but not jointly) agreed,
pursuant to agreements with us and Chardan Capital Markets, LLC, that they will
be personally liable, severally (but not jointly), which means they will be
personally liable only for 60% and 40%, respectively (as an example, if there is
a valid third party claim of $1,000,000, Mr. Morro will be responsible for
$600,000 of such claim and Dr. Sinkin will be responsible for $400,000 of
such claim), to pay claims of third parties that are owed money for services
rendered to us or products sold to us (which includes, for example, accountants,
lawyers, investment bankers, consultants and analysts) that would reduce the
amount of the trust, provided that such third party has not executed a valid and
enforceable waiver to rights or claims against the trust account and only to the
extent necessary to ensure that such claims do not reduce the amount in the
trust account. The indemnification provided by Messrs. Morro and Sinkin would
not cover tort claims brought against us for some unforseen event, claims
against us brought by a target business for breach of contract or breach of a
confidentiality agreement with a potential target. We will bring an action
against either of our executive officers in the event that such individual
asserts that he is not able to cover any of the expenses that would deplete the
trust proceeds or that either is not liable pursuant to their indemnification
obligations as described above. Based on the information provided to us in the
director and officer questionnaires provided to us in connection with this
offering as well as the representations as to their accredited investor status
(as such term is defined in Regulation D), we currently believe that such
persons are of substantial means and capable of funding their indemnity
obligations. However, because the amount of any such indemnification obligations
cannot be estimated, we have not asked Messrs. Morro or Sinkin to reserve for
such an eventuality and there can be no assurance that they will satisfy their
indemnification obligations if and when they arise. Further, they will not be
personally liable to pay debts and obligations to prospective target businesses,
if a business combination is not consummated with such prospective target
businesses, or for claims from any entity other than as described
above.




If we are
required to liquidate, we expect that all costs associated with the
implementation and completion of our plan of dissolution and distribution, which
we currently estimate to be approximately $50,000 to $75,000, will be funded by
any funds not held in our trust account, although we cannot assure you that
there will be sufficient funds for such purpose. To the extent such funds are
not available, the principals of InterAmerican Capital Partners II LLC have
agreed to advance us the necessary funds and haveagreed not to
seek repayment for such expenses. However, there can be no assurance that they
will be able to meet their obligations under this agreement. InterAmerican
Capital Partners II LLC, a holding company owned by William C. Morro (60%) and
Dr. Richard N. Sinkin (40%), owns 173,438 of our outstanding shares of common
stock.




We will
reimburse our officers and directors and special advisors for any reasonable
out-of-pocket business expenses incurred by them in connection with certain
activities on our behalf such as identifying and investigating possible target
businesses and business combinations. There is no limit on the amount of
accountable out-of-pocket expenses reimbursable by us, which will be reviewed
only by our board or a court of competent jurisdiction if such reimbursement is
challenged. Accountable out-of-






37






pocket
expenses incurred by our officers and directors and special advisors will not be
repaid out of proceeds held in trust until these proceeds are released to us
upon the completion of a business combination, provided there are sufficient
funds available for reimbursement after such consummation.




Other
than the reimbursable out-of-pocket expenses payable to our officers and
directors and special advisors, no compensation or fees of any kind, including
finders and consulting fees, will be paid to any of our initial stockholders,
officers or directors who owned our common stock prior to the initial public
offering, or to any of their respective affiliates for services rendered to us
prior to or with respect to the business combination.




Our
initial stockholders will not receive reimbursement for any out-of-pocket
expenses incurred by them to the extent that such expenses exceed the amount
held outside of the trust account unless the business combination is consummated
and there are sufficient funds available for reimbursement after such
consummation. The financial interest of such persons could influence their
motivation in selecting a target business and thus, there may be a conflict of
interest when determining whether a particular business combination is in the
stockholders’ best interest.




After the
consummation of a business combination, if any, to the extent our management
remains as officers of the resulting business, some of our officers and
directors may enter into employment agreements, the terms of which shall be
negotiated and which we expect to be comparable to employment agreements with
other similarly-situated companies in the media, entertainment and
telecommunications industries. Further, after the consummation of a business
combination, if any, to the extent our directors remain as directors of the
resulting business, we anticipate that they will receive compensation comparable
to directors at other similarly-situated companies in the applicable
industry.




All
ongoing and future transactions between us and any of our officers and directors
or their respective affiliates, will be on terms believed by us at that time,
based upon other similar arrangements know to us, to be no less favorable than
are available from unaffiliated third parties and any transactions or loans,
including any forgiveness of loans, will require prior approval in each instance
by a majority of our uninterested “independent” directors (to the extent we have
any) or the members of our board who do not have an interest in the transaction,
in either case who had access, at our expense, to our attorneys or independent
legal counsel. We will not enter into any such transaction unless our
disinterested “independent” directors (or, if there are no “independent”
directors, our disinterested directors) determine that the terms of such
transaction are no less favorable to us than those that would be available to us
with respect to such a transaction from unaffiliated third parties.




In
connection with our initial public offering, Chardan Capital Markets, LLC acting
for the underwriters, has agreed to defer payment of $2,070,000 of underwriting
fees until completion of a business combination, Until a business combination is
complete, these funds will remain in the Trust Account. If the Company does not
complete a business combination then the deferred fees will become part of the
funds returned to the Company’s Public Stockholders from the Trust Account upon
its liquidation as part of any plan of dissolution and distribution approved by
the Company’s stockholders.




Item
14. Principal Accounting Fees and Services




Description
of Professional Services




As
previously disclosed in our January 2008 8-K filing, a majority of the partners
of Goldstein Golub Kessler LLP ("GGK") became partners of McGladrey &
Pullen, LLP ("M&P"). As a result, GGK resigned as auditors of the company
effective January 28, 2008 and M&P was appointed as our independent
registered public accounting firm in connection with our annual financial
statements for the fiscal year ended December 31, 2007.




Audit
Fees




The
aggregate fees paid to GGK in 2007 which includes fees relating to the initial
public offering and for the review of financial statements included in our
quarterly reports on Form 10-QSB were approximately $44,500. The aggregate fees
for professional services rendered by GGK in 2006, which includes fees related
to the December 31, 2006 audit and fees relating to the initial public offering
were approximately $33,000.  In addition, we expect to be billed
approximately $25,000 by M&P in connection with our December 31, 2007
year-end audit.




Audit-Related
Fees




Audit
related fees are for assurance and related services including, among others,
consultation concerning financial accounting and reporting standards. There were
no aggregate fees billed for audit related services rendered by GGK or
M&P.




Tax Fees




There
were no fees paid to GGK or M&P in 2007 for tax compliance.




Audit
Committee Approval




The Audit
Committee is responsible for appointing, setting compensation, and overseeing
the work of the independent auditor. The Audit Committee has established a
policy regarding pre-approval of all audit and permissible non-audit services
provided by the independent auditor. A centralized service request function is
used to provide an initial assessment of requests for








38




services
by the independent auditor. The request must be specific as to the particular
services to be provided. Requests approved during the initial assessment are
aggregated and submitted to the Audit committee for final approval. The
independent auditor may not perform services, whether associated with audit or
non-audit functions, unless the services have been approved prior to their
performance by the Company’s Audit Committee. Each fiscal year, the Audit
Committee negotiates and pre-approves the fee for the annual audit of the
Company’s Consolidated Financial Statements. Each fiscal year, the Audit
Committee may also specifically pre-approve certain audit services,
audit-related services, tax services and other services. At the present time,
the Audit Committee has not delegated any authority for approval of any
services. All audit and permissible non-audit services provided by the
independent auditor have been approved by the Audit Committee.




PART
IV




Item
15. Exhibits and Financial Statement Schedules




Financial
Statements




The
financial statements filed as part of this report are listed in “Item 8
Financial Statements and Supplementary Data.”




Contents




Reports
of Independent Registered Public Accounting Firms       F-1--F-2


Audited Financial
Statements




Balance
Sheet                 F-3


Statement
of Operations               F-4


Statement
of Stockholders’ Equity              F-5


Statement
of Cash Flows              F-6


Notes to
Financial StatementsF-7




Exhibits




We hereby
file as part of this Annual Report on Form 10-K the Exhibits listed in this
Exhibit Index.  Exhibits which are incorporated herein by reference
can be inspected and copied at the public reference facilities maintained by the
SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549.  Copies of
such material can also be obtained from the Public Reference Section of the SEC,
100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates or on
the SEC website at w.w.w.sec.gov.




3.1(a)        
Second Amended and Restated Certificate of Incorporation*


3.1(b)        Certificate
of Amendment to Second Amended and Restated Certificate of
Incorporation*


3.2            
Bylaws*


4.1            
Specimen of Unit Certificate*


4.2            
Specimen Common Stock Certificate*


4.3            
Specimen Warrant Certificate*


4.4            
Form of Warrant
Agreement between Continental Stock Transfer & Trust Company and the
Registrant.*


4.5            
Form of Warrant
Certificate
(issued in
private placement).*


10.1           Form of Letter Agreement
among the Registrant, Chardan Capital Markets, LLC and William C.
Morro.*


10.2           Form of Letter Agreement
among the Registrant, Chardan Capital Markets, LLC and Dr. Richard N.
Sinkin*


10.3           Form of Letter Agreement
among the Registrant, Chardan Capital Markets, LLC and Richard M.
Wolfson*


10.4           Form of Letter Agreement
among the Registrant, Chardan Capital Markets, LLC and
James Bazet.*


10.5           Form of Letter Agreement
among the Registrant, Chardan Capital Markets, LLC and Dr. Herminio A.
Blanco Mendoza.*


10.6           Form of Letter Agreement
among the Registrant, Chardan Capital Markets, LLC and InterAmerican Capital
Partners II LLC.*


10.7           Form of Letter Agreement
among the Registrant, Chardan Capital Markets, LLC and Richard
Propper.*


10.8           Form of Letter Agreement
among the Registrant, Chardan Capital Markets, LLC and Steven
Oliveira.*


10.9           Form of Underwriting
Agreement.*


10.10         Form of Investment Management
Trust Agreement between Continental Stock Transfer & Trust Company and the
Registrant.*


10.11
            Form of Stock
      Escrow Agreement between the Registrant, Continental Stock Transfer &
      Trust Company and the Initial
  Stockholders.*




10.12         Form of Letter Agreement
between InterAmerican Advisors, LLC and the Registrant regarding administrative
support.*


10.13         Promissory Note, dated May
28, 2005, issued to InterAmerican Advisors, LLC.*


10.14       
 Allonge to May
28, 2005 Promissory Note issued to InterAmerican Advisors, LLC dated
May 15, 2007.*


10.15         Promissory Note, dated July
6, 2006, issued to InterAmerican Advisors, LLC.*


10.16         Allonge to July 6, 2006
Promissory Note issued to InterAmerican Advisors, LLC dated May 15,
2007.*


10.17         Promissory Note, dated
November 6, 2006, issued to InterAmerican Advisors, LLC.*


10.18         Allonge to November 6, 2006
Promissory Note issued to InterAmerican Advisors, LLC dated May 15,
2007.*


10.19         Promissory Note, dated March
1, 2007, issued to InterAmerican Advisors, LLC.*








39






10.20        Allonge to March 1, 2007
Promissory Note issued to InterAmerican Advisors, LLC dated May 15,
2007.*


10.21        Promissory Note, dated June
25, 2007, issued to InterAmerican Advisors, LLC.*


10.22        Form of Registration Rights
Agreement among the Registrant and the Initial Stockholders.*


10.23
            Form of Fourth
      Amended and Restated Warrant Purchase Agreement dated June 27, 2007
      between the Registrant, one of its special advisors and InterAmerican
      Capital Partners II LLC*.




16
            Letter
      fromGoldstein
      Golub Kessler LLP to the Securities and Exchange Commission, dated January
      16, 2008.**


31
            Certification
      of Chief Executive and Chief Financial Officer pursuant to Rule 13a-14(a)
      of the Securities Exchange Act of 1934, as amended, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of
2002.








32
              Certification of Chief Executive Officer and Chief 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
to our Registration Statement on Form S-1, as amended (File No.333-125558).




** Incorporated by reference to our Current Report on Form 8-K,
filed January 16, 2008.









40





SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) 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.




INTERAMERICAN
ACQUISITION GROUP, INC.




By: /s/William C.
Morro


Name: William C.
Morro


Title:   
Chairman, Chief Executive Officer and Chief Financial Officer


(principal executive
officer)




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

















REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors and Stockholders




InterAmerican
Acquisition Group Inc.




We have
audited the balance sheet of InterAmerican Acquisition Group Inc. (a corporation
in the development stage) as of December 31, 2007, and the related statements of
operations, stockholders' equity, and cash flows for the year then ended and the
amounts included in the cumulative columns in the statements of operations and
cash flows for the year ended December 31, 2007.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.




We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audit provides a reasonable basis for our opinion.




In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of InterAmerican Acquisition Group
Inc. as of December 31, 2007 and the results of its operations and its cash
flows for the year then ended in conformity with U.S. generally accepted
accounting principles.




/s/McGLADREY & PULLEN,
LLP




McGLADREY
& PULLEN, LLP


New York,
New York




April 02,
2008


F-1





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the
Board of Directors and Stockholders


InterAmerican
Acquisition Group Inc.


We have
audited the accompanying balance sheet of InterAmerican Acquisition Group Inc.
(a corporation in the development stage) (the “Company”) as of December 31,
2006, and the related statements of operations, stockholders’ equity
(deficiency) and cash flows for the year then ended, and the amounts included in
the statements of stockholders’ equity (deficiency) and the cumulative columns
in the statements of operations and cash flows for the period from May 10, 2005
(inception) to December 31, 2006.  These financial statements are the
responsibility of the Company’s management.  Our responsibility is to
express an opinion on these financial statements based on our
audit.


We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audit provides a reasonable basis
for our opinion.


In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of InterAmerican Acquisition Group
Inc. as of December 31, 2006, and the results of its operations and its cash
flows for the year then ended and the cumulative period from May 10, 2005
(inception) to December 31, 2006, in conformity with United States generally
accepted accounting principles.


/s/
GOLDSTEIN GOLUB KESSLER LLP


GOLDSTEIN
GOLUB KESSLER LLP


New York,
New York


September
14, 2007


F-2




FINANCIAL
STATEMENTS







InterAmerican
      Acquisition Group Inc.(a
      corporation in the development stage)Balance
      SheetDecember 31, 2007
            
            
            December 31, 2006ASSETSCurrent
      Assets:Cash
            
            $
            15,533
            
            
            $
            440Investment
      and Accrued Interest - Trust Account
            
            
            45,517,583
            
            
            
            -Prepaid
      Expense
            
            
            87,871
            
            
            
            -Total
      Current Assets
            
            
            45,620,987
            
            
            
            440Deferred
      Tax Asset
            
            
            57,610
            
            
            
            -Deferred
      Offering Costs
            
            
            -
            
            
            
            741,533Total
      Assets
            
            $
            45,678,597
            
            
            $
            741,973LIABILITIES
      AND STOCKHOLDERS' DEFICIENCYCurrent
      LiabilitiesAccounts
      Payable and Accrued Expenses
            
            $
            203,533
            
            
            $
            588,855Amounts
      due to officers and directors for offering-related
expenses
            
            
            -
            
            
            
            59,110Note
      Payable
            
            
            46,734
            
            
            
            105,000Income
      and capital taxes payable
            
            
            300,796
            
            
            
            -Deferred
      Underwriting Fees
            
            
            2,070,000
            
            
            
            -Total
      Current Liabilities
            
            
            2,621,063
            
            
            
            752,965COMMON
      STOCK SUBJECT TO POSSIBLE REDEMPTION(1,149,425
      shares at redemption value) (Note 1)
            
            
            8,609,194
            
            
            
            -Stockholders'
      Equity/(Deficiency)Preferred
      stock, $0.0001 par valueAuthorized
      1,000,000 shares; none issuedCommon
      stock, $0.0001 par valueAuthorized
      90,000,000 sharesIssued
      and outstanding 7,000,000 shares at December 31, 2007 (which includes
      1,149,425
              shares
      subject to possible redemption) and 1,250,000 shares at December 31,
      2006
            
            
            700
            
            
            
            125Additional
      paid-in capital
            
            
            34,323,139
            
            
            
            14,875Income/(Deficit)
      accumulated during the development stage
            
            
            124,501
            
            
            
            (25,992
            )Total
      Stockholders' Equity/(Deficiency)
            
            
            34,448,340
            
            
            
            (10,992
            )Total
      Liabilities and Stockholders Equity/(Deficiency)
            
            $
            45,678,597
            
            
            $
            741,973See
      notes to Financial Statements











F-3







InterAmerican
      Acquisition Group Inc.(a
      corporation in the development stage)Statement
      of OperationsFor
      the Year Ended
            
            
            For
      the period fromDecember
      31, 2007
            
            
            December
      31, 2006
            
            
            May
      10, 2005 (Inception) - December 31, 2007Interest
      income
            
            $
            565,230
            
            
            $
            -
            
            
            $
            565,230ExpensesFormation
      costs
            
            
            -
            
            
            
            -
            
            
            
            4,775General
      and administrative expenses
            
            
            308,760
            
            
            
            9,767
            
            
            
            322,212Interest
      expense
            
            
            5,899
            
            
            
            5,077
            
            
            
            13,664Total
      Expenses
            
            
            314,659
            
            
            
            14,844
            
            
            
            340,651Net
      profit/(loss) before income tax provision
            
            
            250,571
            
            
            
            (14,844
            )
            
            
            224,579Provision
      for income taxes
            
            
            100,078
            
            
            
            -
            
            
            
            100,078Net
      Income/(Loss)
            
            $
            150,493
            
            
            $
            (14,844
            )
            
            $
            124,501Weighted
      average shares outstanding - Basic and diluted
            
            
            3,029,110
            
            
            
            1,250,000
            
            
            
            1,922,231Net
      earnings/(loss) per share -    Basic and
      Diluted
            
            $
            0.05
            
            
            $
            (0.01
            )
            
            $
            0.06See
      notes to Financial Statements









F-4





InterAmerican
      Acquisition Group Inc.(a
      corporation in the development stage)Statement
      of Stockholders, Equity/(Deficiency)For
      the period from May 10, 2005 (Inception) through December 31,
      2007Income/(Deficit)AccumulatedCommon
      Stock
            
            
            Additional
            
            
            During
      the
            
            
            Stockholders'Shares
            
            
            Amount
            
            
            paid-in
      capital
            
            
            Development
      Stage
            
            
            Equity/(Deficiency)Common
      shares issued May 26, 2005 at $0.01 per share
            
            
            1,250,000
            
            
            $
            125
            
            
            $
            14,875
            
            
            $
            -
            
            
            $
            15,000Net
      Loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (11,148
            )
            
            
            (11,148
            )Balance
      at December 31, 2005
            
            
            1,250,000
            
            
            
            125
            
            
            
            14,875
            
            
            
            (11,148
            )
            
            
            3,852Net
      Loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (14,844
            )
            
            
            (14,844
            )Balance
      at December 31, 2006
            
            
            1,250,000
            
            
            
            125
            
            
            
            14,875
            
            
            
            (25,992
            )
            
            
            (10,992
            )Proceeds
      of private placement September 10, 2007
            
            
            
            
            
            
            
            
            
            
            1,500,000
            
            
            
            
            
            
            
            1,500,000Units
      issued Sept. 10, 2007 @$8.00 per unit
            
            
            5,375,000
            
            
            
            538
            
            
            
            42,999,462
            
            
            
            
            
            
            
            43,000,000Units
      issued Sept. 11, 2007 @$8.00 per unit
            
            
            375,000
            
            
            
            37
            
            
            
            2,999,963
            
            
            
            
            
            
            
            3,000,000Expenses
      of the Offering
            
            
            
            
            
            
            
            
            
            
            (4,581,967
            )
            
            
            
            
            
            
            (4,581,967
            )Less
      shares subject to possible redemption
            
            
            
            
            
            
            
            
            
            
            (8,609,194
            )
            
            
            
            
            
            
            (8,609,194
            )Net
      Income for the period
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            150,493
            
            
            
            150,493Balance
      at December 31, 2007
            
            
            7,000,000
            
            
            $
            700
            
            
            $
            34,323,139
            
            
            $
            124,501
            
            
            $
            34,448,340See
      notes to Financial Statements












F-5





InterAmerican
      Acquisition Group Inc.(a
      corporation in the development stage)Statement
      of Cash FlowsYear
      EndedDecember 31,
      2007
            
            December
      31, 2006
            
            
            May
      10, 2005 (Inception) - December 31, 2007Cash
      flow from operating activitiesNet
      income/(loss)
            
            $
            150,493
            
            
            
            (14,844
            )
            
            $
            124,501Adjustments
      to reconcile income/(loss) to net cash used in operating
      activities:Net
      interest income
            
            $
            (565,230
            )
            
            
            -
            
            
            
            (565,230
            )(Increase)
      in prepaid expenses
            
            
            (87,871
            )
            
            
            -
            
            
            
            (87,871
            )(Increase)
      in deferred income tax asset
            
            
            (57,610
            )
            
            
            -
            
            
            
            (57,610
            )Increase
      in taxes payable
            
            
            300,796
            
            
            
            -
            
            
            
            300,796Increase/(decrease)
      in accounts payable and accrued expenses
            
            
            30,959
            
            
            
            9,500
            
            
            
            50,049Net
      cash used in operating activities
            
            
            (228,463
            )
            
            
            (5,344
            )
            
            
            (235,365
            )Cash
      flows from investment activitiesPayment
      to trust account
            
            
            (45,160,000
            )
            
            
            -
            
            
            
            (45,160,000
            )Interest
      drawn from trust account
            
            
            207,647
            
            
            
            -
            
            
            
            207,647Net
      cash used in investing activities
            
            
            (44,952,353
            )
            
            
            -
            
            
            
            (44,952,353
            )Cash
      flows from financing activitiesProceeds from notes and advances payable, InterAmerican Advisors,
      LLC
            
            
            36,000
            
            
            
            30,000
            
            
            
            141,000Payments of notes and advances payable, InterAmerican Advisors,
    LLC
            
            
            (141,000
            )
            
            
            
            
            
            
            (141,000
            )Proceeds
      from note payable
            
            
            46,734
            
            
            
            
            
            
            
            46,734Payment
      of costs of public offering
            
            
            (2,245,825
            )
            
            
            (33,432
            )
            
            
            (2,358,483
            )Proceeds
      from private placement warrant sale
            
            
            1,500,000
            
            
            
            -
            
            
            
            1,500,000Proceeds
      from sale of shares of common stock
            
            
            -
            
            
            
            -
            
            
            
            15,000Proceeds
      from initial public offering
            
            
            46,000,000
            
            
            
            -
            
            
            
            46,000,000Net
      cash provided by (used in) financing activities
            
            
            45,195,909
            
            
            
            (3,432
            )
            
            
            45,203,251Net
      Increase/(decrease) in cash
            
            
            15,093
            
            
            
            (8,776
            )
            
            
            (15,533
            )Cash
      at beginning of period
            
            
            440
            
            
            
            9,216
            
            
            
            -Cash
      at end of period
            
            $
            15,533
            
            
            $
            440
            
            
            $
            15,533Supplemental
      schedule of non-cash financing activities:Accrual
      of deferred offering costs
            
            $
            153,484
            
            
            $
            285,346
            
            
            $
            153,484Accrual
      of deferred underwriting fees
            
            $
            2,070,000
            
            
            $
            -
            
            
            $
            2,070,000Cash
      paid for interest
            
            $
            12,678
            
            
            $
            -
            
            
            $
            12,678See
      notes to Financial Statements











F-6




InterAmerican Acquisition Group
Inc.


(a
corporation in the development stage)




Notes
to Financial Statements


December
31, 2007




1.  Organization,
Business Operations and Significant Accounting Policies




The
Company was incorporated in Delaware on May 10, 2005 as a blank check
company whose objective is to acquire an operating business. At December 31,
2007, the Company had not generated any revenue to date.  All activity
through December 31, 2007 relates to the Company’s formation, the public
offering and its efforts to identify and consummate a business combination as
described below.  The Company is considered to be in the development
stage and is subject to the risks associated with activities of development
stage companies.




The
registration statement for the Company’s initial public offering (the
“Offering”) was declared effective  September 4, 2007. The Company
completed the Offering, including the exercise of the underwriter’s
overallotment option, on September 10, 2007 and September 11, 2007, and received
net proceeds of approximately $41.4 million, which is net of $2,070,000 of
deferred underwriting discounts (as described in Note 4). The Company’s
executive officers and directors have broad discretion with respect to the
specific application of the net proceeds of the Offering of units, consisting of
one share of the Company’s common stock and one redeemable common stock purchase
warrant (the“Units”) and the private placement of 1,000,000 warrants that
occurred immediately prior to completion of the Offering (the “Private
Placement”), although substantially all of the net proceeds of the Offering and
Private Placement are intended to be generally applied toward consummating an
initial merger, acquisition, asset purchase or other such transaction (a
“Business Combination”) with (or acquisition of) one or more operating
businesses. Furthermore, there is no assurance that the Company will be able to
successfully consummate an initial Business Combination. An amount of
$45,160,000, which includes $1,500,000 relating to the sale of warrants in the
Private Placement and $2,070,000 deferred payment to the underwriters in the
Offering, of the net proceeds was deposited in a trust account (the
“Trust Account”), as further described in Note 2, until the earlier of
(i) the consummation of its initial Business Combination or (ii) the
distribution of the Trust Account as described below. 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 third parties
the Company engages for services rendered to it or products sold to it (which
includes, for example, lawyers, investment bankers, consultants and analysts),
prospective target businesses or other entities it engages, execute agreements
with the Company waiving any right, title, interest or claim of any kind in or
to any monies held in the Trust Account, there is no guarantee that they will
execute such agreements. The Company’s two executive officers, William Morro and
Dr. Richard Sinkin have severally (but not jointly) agreed that they will be
personally liable, severally (but not jointly), which means they will be
personally liable only for 60% and 40% respectively (as an example, if there is
a valid third party claim of $1,000,000, Mr. Morro will be responsible for
$600,000 of such claim and Dr. Sinkin will be responsible for $400,000 of such
claim), to pay claims of third parties that are owed money for services rendered
to the Company or products sold to the Company (which includes, for example,
accountants, lawyers, investment bankers, consultants and analysts) that would
reduce the amount of the Trust Account, provided that such third party has not
executed a valid and enforceable waiver to rights or claims against the Trust
Account and only to the extent necessary to ensure that such claims do
not reduce the amount in the Trust Account. The indemnification provided by
Messrs. Morro and Sinkin would not cover tort claims brought against the Company
for some unforeseen event, claims against the Company brought by a target
business for breach of contract, or breach of a confidentiality agreement with a
potential target. The Company will bring an action against either of its
executive officers in the event that such individual asserts that he is not able
to cover any of the expenses that would deplete the trust proceeds or that
either is not liable pursuant to their indemnification obligations as described
above. Based on the information provided to the Company in the director and
officer questionnaires provided to the Company in connection with the Offering
as well as the representations as to their accredited investor status (as such
term is defined in Regulation D), the Company currently believes that such
persons are of substantial means and capable of funding their indemnity
obligations. However, because the amount of any such indemnification obligations
cannot be estimated, the Company has not asked Messrs. Morro or
Sinkin to reserve for such an eventuality and there can be no assurance that
they will satisfy their indemnification obligations if and when they arise.
Accordingly, the proceeds held in trust could be subject to claims which could
take priority over the claims of the Company’s public stockholders and the
per-share liquidation price could be less than approximately $7.85, plus
interest (net of taxes payable and net of interest earned on the trust account
up to a maximum amount of $950,000 that will be released to the Company to fund
its working capital), due to claims of such creditors. The remaining net
proceeds (not held in the Trust Account) and interest income earned on the funds
in the Trust Account of up to $950,000, after tax, may be released to the
Company upon demand and 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, is required to submit such transaction for
stockholder approval. In the event that stockholders owning 20% or more of the
shares sold in the Offering vote against the Business Combination and exercise
their redemption rights described below, the Business Combination will not be
consummated. All of the Company’s stockholders prior to the Offering, including
all of the officers, directors and special advisors of the Company (‘‘Initial
Stockholders’’), have agreed to vote their 1,250,000 founding shares of common
stock (as well as any shares included in units purchased in the Offering or in
the aftermarket) 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.










F-7






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 redeem his or her shares.  The per share redemption price will
equal the amount in the Trust Account (inclusive of the funds held in the trust
account for the benefit of the underwriters and the proceeds from management’s
warrant purchase but net of taxes payable and net of interest earned up to a
maximum amount of $950,000 that may be released from the trust account to meet
working capital needs), calculated as of two business days prior to the
consummation of the proposed Business Combination, divided by the number of
shares of common stock sold in our initial public offering. Accordingly, Public
Stockholders holding 19.99% of the aggregate number of shares owned by all
Public Stockholders may seek redemption of their shares in the event of a
Business Combination.  Therefore, a portion of the net proceeds from
the Offering (19.99% of the amount placed in the Trust Account) has been
classified as common stock subject to possible redemption.




The
Company’s amended and restated certificate of incorporation provides for the
liquidation of the Trust Account as part of any plan of dissolution and
distribution 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, or 24 months from the consummation of the Offering if certain
extension criteria have been satisfied. These liquidation provisions, which are
also contained in the agreement governing the Trust Account, cannot be amended
without the affirmative vote of 100% of the Public Stockholders, nor can the
certificate of incorporation be amended without the affirmative vote of 95% of
the shares sold in the Offering. 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 initial public offering
price per share in the Offering (assuming no value is attributed to the
Warrants, as defined below, contained in the Units issued in the Offering
discussed in Note 2).




Income
Taxes


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




Net
Income (loss) Per Common Share


Loss per
share is computed by dividing net loss by the weighted-average number of shares
of common stock outstanding during the period after giving effect to stock
splits and reverse stock splits.  The effect of the 5,750,000
outstanding warrants issued in connection with the Offering and the 1,000,000
outstanding warrants issued in connection with the Private Placement has not
been considered in diluted loss per share calculations for the periods
ended December 31, 2007 since such warrants are contingently
exercisable.




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 at the date of the financial statements and the reported amounts of
expenses during the reporting period. Actual results could differ from those
estimates.




Cash
and Cash Equivalents


The
Company maintains cash in bank deposit accounts which, at times, exceed
federally insured (FDIC) limits. The Company has not experienced any losses
on these accounts.  For financial statement purposes, the Company
considers all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.




Recent
Accounting Pronouncements


In July
2006, the FASB issued FASB Interpretation No. 48, ‘‘Accounting for Uncertainty
in Income Taxes,’’ an interpretation of FASB Statement No. 109 (‘‘FIN 48’’),
which provides criteria for the recognition, measurement, presentation and
disclosure of uncertain tax positions. A tax benefit from an uncertain position
may be recognized only if it is ‘‘more likely than not’’ that the position is
sustainable based on its technical merits. The Company adopted FIN 48 effective
January 1, 2007. The adoption  of FIN 48 did not have a material
effect on our financial condition or results of operations.  There
have been no audits of the Company’s tax returns since inception and all years
remain open to tax examination.




In
December 2007, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 141R, “Business Combinations” (“SFAS 141R”)
that is effective for business combinations for which the acquisition date is on
or after the beginning of the first annual reporting period beginning on or
after December 15, 2008.  The pronouncement resulted from a joint
project between the FASB and the International Accounting Standards Board and
continues the movement toward the greater use of fair values in financial
reporting.  SFAS 141R is expected to significantly change how future
business acquisitions are accounted for and will impact financial statements
both on the acquisition date and in subsequent periods.








F-8






In
December 2007, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”) that is effective for annual
periods beginning on or after December 15, 2008.  The pronouncement
resulted from a joint project between the FASB and the International Accounting
Standards Board and continues the movement toward the greater use of fair values
in financial reporting.  Upon adoption of  SFAS 160, the
Company will reclassify any non-controlling interests as a component of
equity.




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.




2.  Initial
Public Offering




The
Company sold 5,750,000 Units at an offering price of $8.00 per Unit (750,000 of
which Units were sold in connection with the underwriters’ exercise of their
over-allotment option).  Each “Unit” consists of one share of the
Company’s common stock and one Redeemable Common Stock Purchase Warrant
(“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 and one year from the
effective date of the Offering and expiring four years from the effective date
of the Offering.  The Company may redeem the Warrants 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 a t least
$10.00 per share for any 20 trading days within a 30-day period ending on the
third day prior to the date on which notice of redemption is
given.  The Company agreed to pay the underwriters in the Offering an
underwriting discount of 6% of the gross proceeds of the offering and a
non-accountable expense allowance of 2% of the gross proceeds  of the
Offering (excluding any over-allotment option proceeds).  However, the
underwriters have agreed that, of this amount, 4.5% of the gross proceeds of the
Offering will not be paid unless and until the Company completes an initial
Business Combination and has waived its rights to receive such payment upon the
Company’s liquidation if the Company is unable to complete an initial Business
Combination.




The
Company will use its best efforts to cause a registration statement to become
effective on or prior to the commencement of the Warrant exercise period and to
maintain the effectiveness of such registration statement until the expiration
of the Warrants.  If the Company is unable to maintain the
effectiveness of such registration statement until the expiration of the
Warrants, and therefore is unable to deliver registered shares, the Company will
not be required to net cash settle the Warrants and the Warrants may become
worthless.




3.  Trust
Account




Investments held in trust at December
31, 2007 are invested in a money market fund meeting conditions of the
Investment Company Act of 1940.  Continental Stock Transfer and Trust
Company is the trustee and the trust account is maintained by the trustee at JP
Morgan Chase New York Bank. The Company is permitted to draw up to $950,000 of
after-tax interest to meet its needs for operating expenses and working
capital.  Of this amount the Company had drawn $200,000 as of December
31, 2007.   The Company is also permitted to draw from interest
earned on the Trust Account without restriction to pay taxes.  As of
December 31, 2007, it had drawn $7,500 for that purpose and was holding such
funds in its bank account in anticipation of making income tax
payments.  The reconciliation of investments held in trust as
of December 31, 2007 is as follows:





Contribution
      to trust
            
            $
            45,160,000Interest
      income received
            
            
            426,573Accrued
      interest income
            
            
            138,657Withdrawl
      to pay taxes
            
            
            (7,500
            )Withdrawl
      to fund operations
            
            
            (200,000
            )Disputed
      withdrawl fee
            
            
            (147
            )Investments
      and accrued interest held in trust at December 31, 2007
            
            $
            45,517,583




4.  Deferred
Offering Costs




Deferred
offering costs consist of legal, underwriting, accounting and other fees
incurred through the balance sheet dates that are directly related to the
Offering and were charged to stockholders’ equity (deficiency) upon the
consummation of the Offering.










F-9






5.  Accounts
Payable and Accrued Expenses




Accounts
payable and accrued expenses consist of the following components as of December
31, 2007 and 2006:




December
      31, 2007
            
            
            December
      31, 2006Other
      amounts due or accrued for offering-related expenses
            
            $
            153,484
            
            
            $
            569,765Other
            
            
            50,049
            
            
            
            19,090Total
            
            $
            203,533
            
            
            $
            588,855




6.  Notes
Payable




The
Company issued a $75,000 unsecured promissory note to InterAmerican Advisors,
LLC (‘‘InterAmerican’’), an affiliate of certain of its Initial Stockholders, on
May 27, 2005, issued a $15,000 unsecured promissory note to InterAmerican on
July 6, 2006, issued an additional $15,000 unsecured promissory note to
InterAmerican on November 6, 2006, issued an additional $6,500 unsecured
promissory note to InterAmerican on March 1, 2007 and issued an additional
$29,000 unsecured promissory note to InterAmerican on June 25, 2007. In
accordance with their terms, the notes were repaid in full on September 10, 2007
together with interest at the rate of 6% per annum for the amount of $12,678
from the date of issue.




Effective
September 9, 2007 the Company entered into an unsecured financing agreement for
its insurance premiums with an unaffiliated finance company in the amount of
$69,650.  The annualized interest rate is 7.07%.  The first
principal payment of $29,850 was paid in November 2007 and the second and
principal payment was due and paid in February 2008.  The final
payment is due on May 6, 2008.




7.
Commitments and Related Party Transactions




The
Company presently occupies office space provided by an affiliate of several of
the Initial Stockholders. Such affiliate has agreed that, until the Company
consummates a Business Combination, it will make such office space, as well as
certain office and secretarial services, available to the Company, as may be
required by the Company from time to time. The Company has agreed to pay such
affiliate $10,000 per month for such services for up to 12 months commencing on
the effective date of the Offering.  The statement of Operations for
the period ended December 31, 2007 include $36,333 related to this
agreement.




Pursuant
to letter agreements dated June 27, 2007 with the Company and the representative
for the underwriters, the Initial Stockholders have waived their right to
receive distributions with respect to their founding shares upon the Company’s
liquidation.




Immediately
prior to the consummation of the Offering on September 10, 2007, Sintrim Capital
Corporation, an affiliate of InterAmerican Capital Partners II LLC, an entity
wholly-owned by certain of the Company’s executive officers, together with one
of the Company’s special advisors, purchased $1,500,000 of warrants from the
Company at a purchase price of $1.50 per warrant, each to purchase one share of
the Company’s common stock. Sintrim Capital Corp and one of the Company’s
special advisors have further agreed that the warrants purchased by them
pursuant to this agreement will not be sold or transferred, except to one or
more affiliates, until after the Company has completed a business combination.
The proceeds from the sale of the warrants was deposited into the Trust Account
and is part of the amount payable to the Public Stockholders in the event of the
liquidation of the Trust Account as part of the Company’s plan of dissolution
and distribution. Similarly, the purchase price will become part of any
redemption amount paid to redeeming stockholders. The warrant purchase agreement
also grants certain registration rights to Sintrim Capital Corp., InterAmerican
Capital Partners II LLC and one of the Company’s special advisors with respect
to the warrants purchased and the shares of our common stock issuable upon
exercise of the warrants.




The
Initial Stockholders are entitled to registration rights with respect to their
founding shares pursuant to an agreement to be signed prior to or on the
effective date of the Offering. The holders of the majority of
these shares are entitled to make up to two demands that the Company register
these shares at any time commencing three months prior to the third anniversary
of the effective date of the Offering. In addition, the Initial Stockholders
have certain ‘‘piggy-back’’ registration rights on registration statements filed
subsequent to the third anniversary of the effective date of the
Offering.








F-10






8.             Stockholders’
Equity




Common
Stock




On
December 7, 2005, the Company effected a 2-for-5 reverse stock split of its
shares of common stock. On April 26, 2006, the Company effected a 1.25-for-1
stock split of its shares of common stock. On May 26, 2006, the Company effected
a 1.44-for-1 stock split of its shares of common stock. On June 27, 2007, the
Company effected a 1-for-2.16 reverse stock split of its shares of common stock.
All references in the accompanying financial statements to the number of shares
of common stock and income (loss) per share have been retroactively restated to
reflect these transactions.




Preferred
Stock




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




9.  Income
Taxes




The
provision for income taxes consists of the following:


Year
      ended December 31, 2007Current:Federal
              
              $
              122,155State
              
              
              35,533Deferred:Federal
              
              
              (57,610
              )State
              
              
              -Total
              
              $
              100,078




The total
provision for income taxes differs from that amount which would be computed by
applying the U.S. Federal tax rate to income before provision for income taxes
as follows:


Year
      ended December 31, 2007
            
            Year
      ended December 31, 2006Statutory
      federal income tax rate
            
            
            34.0
            %
            
            
            (34.0
            )%State
      and local income tax rate
            
            
            5.9
            %
            
            
            (5.9
            )%Increase
      in valuation allowance
            
            
            0.0
            %
            
            
            39.9
            %Effective
      income tax rate
            
            
            39.9
            %
            
            
            0.0
            %Note: Calculation
      of State rate is 9% California rate x (1-federal rate)




The
effect of the temporary differences that make up the deferred tax assets are as
follows:


December
      31, 2007
              
              
              December
      31, 2006Effect
      of expenses deferred for purposes of calculating income
tax
              
              $
              57,610
              
              
              $
              10,381Valuation
      allowance
              
              
              -
              
              
              $
              (10,381
              )Total
              
              $
              57,610
              
              
              $
              -




In
recognition of the uncertainty regarding the ultimate amount of income tax
benefits to be derived, the Company recorded a full valuation allowance at
December 31, 2006.








F-11






10.  Selected
Quarterly Financial Data (Unaudited)




The  following
is a summary of the quarterly results of operations of the Company for the years
ended December 31, 2007 and December 31, 2006.




2007First
      Quarter
            
            
            Second
      Quarter
            
            
            Third
      Quarter
            
            
            Fourth
      Quarter
            
            
            TotalInterest
      Income
            
            
            -
            
            
            
            -
            
            
            
            105,360
            
            
            
            459,870
            
            
            
            565,230Operating
      Expenses
            
            
            17
            
            
            
            10
            
            
            
            44,337
            
            
            
            270,295
            
            
            
            314,659Income/(loss)
      before income taxes
            
            
            (17
            )
            
            
            (10
            )
            
            
            61,023
            
            
            
            189,575
            
            
            
            250,571Net
      Income/loss
            
            
            (17
            )
            
            
            (10
            )
            
            
            53,830
            
            
            
            96,690
            
            
            
            150,493Net
      Income/loss per share - basic and diluted
            
            
            (0.00
            )
            
            
            (0.00
            )
            
            
            0.02
            
            
            
            0.01
            
            
            
            0.052006First
      Quarter
            
            
            Second
      Quarter
            
            
            Third
      Quarter
            
            
            Fourth
      Quarter
            
            
            TotalInterest
      Income
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Operating
      Expenses
            
            
            1,126
            
            
            
            3,693
            
            
            
            1,938
            
            
            
            8,087
            
            
            
            14,844Income/(loss)
      before income taxes
            
            
            (1,126
            )
            
            
            (3,693
            )
            
            
            (1,938
            )
            
            
            (8,087
            )
            
            
            (14,844
            )Net
      Income/loss
            
            
            (1,126
            )
            
            
            (3,693
            )
            
            
            (1,938
            )
            
            
            (8,087
            )
            
            
            (14,844
            )Net
      Income/loss per share - basic and diluted
            
            
            (0.00
            )
            
            
            (0.00
            )
            
            
            (0.00
            )
            
            
            (0.01
            )
            
            
            (0.01
            )