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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007.
|- | --------------------------------------------------------------------------------------------------------------------------------



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
 TO .
|- | -----------------------------------------------------------------------------------------------------------------------

Commission File Number 000-32860



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SHANGHAI CENTURY ACQUISITION CORPORATION

(Exact name of registrant as specified in its charter)



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|                                               |  |                                     
|---------------------------------------------- |  | ------------------------------------
|Cayman Islands                                 |  | N/A                                 
|(State or other jurisdiction of incorporation) |  | (I.R.S. Employer Identification No.)

23rdFloor, Shun Ho Tower

24 - 30 Ice
House Street

Central, Hong Kong SAR

China

(Address of principal executive offices)

(852) 2854-8989

(Registrants
telephone number, including area code)



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Indicate by check mark 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 (the Exchange Act) during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

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. (Check one):

Larger accelerated filer ̈Accelerated filer ̈Non-accelerated
filer  x

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

As of March 31, 2007, 17,500,000 shares of common stock, par value $0.0005 per share, were issued and outstanding.



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##### Table of Contents

|                              |  |                                                                                                                                                                                                          |  |         
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                              |  |                                                                                                                                                                                                          |  | Page No.
|Part I.
Financial Information |  |                                                                                                                                                                                                         
|                              |  |                                                                                                                                                                                                         
|Item 1                        |  | Financial Statements                                                                                                                                                                                     |  |         
|                              |  |                                                                                                                                                                                                         
|                              |  | Balance Sheets as at December 31, 2006 and March 31, 2007                                                                                                                                                |  | 3       
|                              |  |                                                                                                                                                                                                         
|                              |  | Statements of Operations for the three-month periods ended March 31, 2006 and 2007 and for the period from April 25, 2005 (date of inception) to March 31, 2007                                          |  | 4       
|                              |  |                                                                                                                                                                                                         
|                              |  | Statements of Shareholders Equity for the period from April 25, 2005 (date of inception) to December 31, 2005, for the year ended December 31, 2006 and for the three-month period ended March 31, 2007 |  | 5       
|                              |  |                                                                                                                                                                                                         
|                              |  | Statements of Cash Flows for the three-month periods ended March 31, 2006 and 2007 and for the period from April 25, 2005 (date of inception) to March 31, 2007                                          |  | 6       
|                              |  |                                                                                                                                                                                                         
|                              |  | Notes to Unaudited Financial Statements                                                                                                                                                                  |  | 7       
|                              |  |                                                                                                                                                                                                         
|Item 2                        |  | Managements Discussion and Analysis or Plan of Operations                                                                                                                                               |  | 16      
|                              |  |                                                                                                                                                                                                         
|Item 3                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                               |  | 17      
|                              |  |                                                                                                                                                                                                         
|Item 4T                       |  | Controls and Procedures                                                                                                                                                                                  |  | 18      
|                              | 
|Part II.
Other Information    |  |                                                                                                                                                                                                         
|                              |  |                                                                                                                                                                                                         
|Item 1A                       |  | Risk Factors                                                                                                                                                                                             |  | 18      
|                              |  |                                                                                                                                                                                                         
|Item 2                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                              |  | 18      
|                              |  |                                                                                                                                                                                                         
|Item 6                        |  | Exhibits                                                                                                                                                                                                 |  | 19      
|                              | 
|Signatures                    |  |                                                                                                                                                                                                         
|                              | 
|Exhibit Index                 |  |                                                                                                                                                                                                         



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

BALANCE SHEETS AS AT DECEMBER 31, 2006 AND MARCH 31, 2007

(Unaudited)

(Expressed in United States Dollars)



|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- |  | --------------------- | ----------- | - | ------------------ | - | ----------- | -
|                                                                                                                                                                                     |  | Note |  | December 31, 2006 US$ |             |   | March 31, 2007 US$ |  
|ASSETS                                                                                                                                                                               |  |      |  |                       |             |   |                    |   |             |  
|Current assets                                                                                                                                                                       |  |      |  |                       |             |   |                    |   |             |  
|Cash and cash equivalents                                                                                                                                                            |  |      |  |                       | 1,023,328   |   |                    |   | 249,857     |  
|Restricted cash equivalents held in Trust Account                                                                                                                                    |  | 2    |  |                       | 111,296,035 |   |                    |   | 111,714,212 |  
|Amount due from a related company                                                                                                                                                    |  | 5    |  |                       | 5,750       |   |                    |   | 5,750       |  
|Receivable from underwriters                                                                                                                                                         |  |      |  |                       | 100         |   |                    |   | 100         |  
|Prepayments, deposits and other receivables                                                                                                                                          |  |      |  |                       | 48,048      |   |                    |   | 1,091,427   |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|Total current assets                                                                                                                                                                 |  |      |  |                       | 112,373,261 |   |                    |   | 113,061,346 |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|Property, plant and equipment                                                                                                                                                        |  |      |  |                       |             |   |                    |   |             |  
|Leasehold improvements                                                                                                                                                               |  |      |  | $                     | 90,911      |   |                    | $ | 95,693      |  
|Computer and office equipment                                                                                                                                                        |  |      |  |                       | 32,143      |   |                    |   | 38,119      |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|                                                                                                                                                                                     |  |      |  |                       | 123,054     |   |                    |   | 133,812     |  
|Less : accumulated depreciation                                                                                                                                                      |  |      |  |                       | (12,362     | ) |                    |   | (28,385     | )
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|Total fixed assets                                                                                                                                                                   |  |      |  |                       | 110,692     |   |                    |   | 105,427     |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|Total assets                                                                                                                                                                         |  |      |  | $                     | 112,483,953 |   |                    | $ | 113,166,773 |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|LIABILITIES, ORDINARY SHARES SUBJECT TO REDEMPTION AND SHAREHOLDERS EQUITY                                                                                                          |  |      |  |                       |             |   |                    |   |             |  
|Current liabilities                                                                                                                                                                  |  |      |  |                       |             |   |                    |   |             |  
|Accrued expenses                                                                                                                                                                     |  |      |  | $                     | 199,582     |   |                    | $ | 591,549     |  
|Amounts due to founders                                                                                                                                                              |  | 4    |  |                       | 18,733      |   |                    |   | 31,074      |  
|Warrants liability                                                                                                                                                                   |  | 6    |  |                       | 22,856,250  |   |                    |   | 25,731,250  |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|Total current liabilities                                                                                                                                                            |  |      |  |                       | 23,074,565  |   |                    |   | 26,353,873  |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|Total liabilities                                                                                                                                                                    |  |      |  | $                     | 23,074,565  |   |                    | $ | 26,353,873  |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|Ordinary shares subject to possible redemption (2,873,563 ordinary shares at $7.60 per share, plus accrued interest of $359,887 at
December 31, 2006 and $494,092 at March 31, 2007) |  | 7    |  | $                     | 22,198,962  |   |                    | $ | 22,333,167  |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|                                                                                                                                                                                     |  |      | 
|Shareholders equity                                                                                                                                                                 |  |      |  |                       |             |   |                    |   |             |  
|Ordinary shares - $0.0005 par value; 50,000,000 shares authorized; 17,500,000 issued and outstanding at December 31, 2006 and
March 31, 2007                                         |  |      |  | $                     | 8,750       |   |                    | $ | 8,750       |  
|                                                                                                                                                                                     |  |      | 
|Preferred shares - $0.0005 par value; 5,000,000 shares authorized; none issued and outstanding at December 31, 2006 and March 31,
2007                                               |  | 9    |  |                       |            |   |                    |   |            |  
|Additional paid-in capital                                                                                                                                                           |  | 8    |  |                       | 73,153,546  |   |                    |   | 73,195,205  |  
|Unit purchase option                                                                                                                                                                 |  | 3    |  |                       | 2,572,400   |   |                    |   | 2,572,400   |  
|Deficit accumulated during the development stage                                                                                                                                     |  |      |  |                       | (8,524,270  | ) |                    |   | (11,296,622 | )
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|Total shareholders equity                                                                                                                                                           |  |      |  |                       | 67,210,426  |   |                    |   | 64,479,733  |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  
|Commitments and contingencies                                                                                                                                                        |  | 5    |  |                       |             |   |                    |   |             |  
|Total liabilities, ordinary shares subject to redemption and shareholders equity                                                                                                    |  |      |  | $                     | 112,483,953 |   |                    | $ | 113,166,773 |  
|                                                                                                                                                                                     |  |      |  |                       |             |   |                    |   |             |  

See accompanying notes to the financial statements.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

STATEMENTS OF OPERATIONS

FOR THE
THREE-MONTH PERIODS ENDED MARCH 31, 2006 and 2007

AND FOR THE PERIOD FROM APRIL 25, 2005 (DATE OF INCEPTION)

TO MARCH 31, 2007

(Unaudited)

(Expressed in United States Dollars)



|                                             |  |      |  |                                         |         |   |                                          |   |            |                                                                  |  |   |             |  
|-------------------------------------------- |  | ---- |  | --------------------------------------- | ------- | - | ---------------------------------------- | - | ---------- | ---------------------------------------------------------------- |  | - | ----------- | -
|                                             |  |      |  | Three-month period ended March 31, 2006 |         |   | Three- month period ended March 31, 2007 |   |            | Period from April 25, 2005 (date
of inception) to March 31, 2007 | 
|                                             |  | Note |  | US$                                     |         |   | US$                                      |   |            | US$                                                              | 
|Revenues                                     |  |      |  | $                                       |        |   |                                          | $ |           |                                                                  |  | $ |            |  
|Operating expenses                           |  |      |  |                                         | (40,327 | ) |                                          |   | (1,111,469 | )                                                                |  |   | (2,550,578  | )
|                                             |  |      |  |                                         |         |   |                                          |   |            |                                                                  |  |   |             |  
|Operating loss                               |  |      |  |                                         | (40,327 | ) |                                          |   | (1,111,469 | )                                                                |  |   | (2,550,578  | )
|Interest income                              |  |      |  |                                         |        |   |                                          |   | 1,348,322  |                                                                  |  |   | 4,970,844   |  
|Increase in fair value of warrants liability |  | 6    |  |                                         |        |   |                                          |   | (2,875,000 | )                                                                |  |   | (13,222,796 | )
|                                             |  |      |  |                                         |         |   |                                          |   |            |                                                                  |  |   |             |  
|Net loss before income tax expense           |  |      |  |                                         | (40,327 | ) |                                          |   | (2,638,147 | )                                                                |  |   | (10,802,530 | )
|Income tax expense                           |  | 2.4  |  |                                         |        |   |                                          |   |           |                                                                  |  |   |            |  
|                                             |  |      |  |                                         |         |   |                                          |   |            |                                                                  |  |   |             |  
|Net loss                                     |  |      |  | $                                       | (40,327 | ) |                                          | $ | (2,638,147 | )                                                                |  | $ | (10,802,530 | )
|                                             |  |      |  |                                         |         |   |                                          |   |            |                                                                  |  |   |             |  
|Basic and diluted net loss per share         |  | 2.7  |  | $                                       | (0.01   | ) |                                          | $ | (0.15      | )                                                                |  | $ | (1.13       | )
|                                             |  |      |  |                                         |         |   |                                          |   |            |                                                                  |  |   |             |  

See accompanying notes to the financial statements.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

STATEMENTS OF SHAREHOLDERS EQUITY

FOR THE PERIOD FROM APRIL 25, 2005

(DATE OF INCEPTION) TO DECEMBER 31, 2005,

FOR THE YEAR ENDED DECEMBER 31, 2006 AND

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2007

(Unaudited)

(Expressed in United States Dollars)



|                                                                                                                                     |  |                 |  |                    |       |         |               |             |                                            |  |       |               |  |        |             |   |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- |  | ------------------ | ----- | ------- | ------------- | ----------- | ------------------------------------------ |  | ----- | ------------- |  | ------ | ----------- | - |  | - | ----------- | -
|                                                                                                                                     |  | Ordinary shares |  | Additional Paid-in |       |         | Unit purchase |             | Deficit accumulated during the development |  |       | Shareholders | 
|                                                                                                                                     |  | Shares          |  | Amount             |       | Capital |               |             | option                                     |  | stage |               |  | Equity |            
|                                                                                                                                     |  |                 |  | US$                |       | US$     |               |             | US$                                        |  | US$   |               |  | US$    |            
|Ordinary shares issued :                                                                                                             |  |                 |  |                    |       |         |               |             |                                            |  |       |               |  |        |             |   |  |   |             |  
|April 25, 2005                                                                                                                       |  | 1,062,500       |  | $                  | 531   |         | $             | 10,094      |                                            |  | $     |              |  | $      |            |   |  | $ | 10,625      |  
|October 21, 2005                                                                                                                     |  | 2,062,500       |  |                    | 1,031 |         |               | 13,344      |                                            |  |       |              |  |        |            |   |  |   | 14,375      |  
|Net loss                                                                                                                             |  |                |  |                    |      |         |               |            |                                            |  |       |              |  |        | (14,156     | ) |  |   | (14,156     | )
|                                                                                                                                     |  |                 |  |                    |       |         |               |             |                                            |  |       |               |  |        |             |   |  |   |             |  
|Balance at December 31, 2005                                                                                                         |  | 3,125,000       |  |                    | 1,562 |         |               | 23,438      |                                            |  |       |              |  |        | (14,156     | ) |  |   | 10,844      |  
|                                                                                                                                     |  |                 |  |                    |       |        
|Sale of 14,375,000 units and underwriters unit purchase option, net of underwriters discount and offering expenses                 |  | 14,375,000      |  |                    | 7,188 |         |               | 109,984,326 |                                            |  |       |              |  |        |            |   |  |   | 109,991,514 |  
|Reclassification of warrants (Note 6)                                                                                                |  |                |  |                    |      |         |               | (12,508,454 | )                                          |  |       |              |  |        |            |   |  |   | (12,508,454 | )
|Reclassification of equity amount subject to redemption; 2,873,563 ordinary shares at $7.60 per share plus accrued interest
(Note 7) |  |                |  |                    |      |         |               | (21,839,075 | )                                          |  |       |              |  |        | (359,887    | ) |  |   | (22,198,962 | )
|Unit purchase option (Note 3)                                                                                                        |  |                |  |                    |      |         |               | (2,572,400  | )                                          |  |       | 2,572,400     |  |        |            |   |  |   |            |  
|Amortization of share options (Note 10)                                                                                              |  |                |  |                    |      |         |               | 65,711      |                                            |  |       |              |  |        |            |   |  |   | 65,711      |  
|Net loss                                                                                                                             |  |                |  |                    |      |         |               |            |                                            |  |       |              |  |        | (8,150,227  | ) |  |   | (8,150,227  | )
|                                                                                                                                     |  |                 |  |                    |       |         |               |             |                                            |  |       |               |  |        |             |   |  |   |             |  
|Balance at December 31, 2006                                                                                                         |  | 17,500,000      |  |                    | 8,750 |         |               | 73,153,546  |                                            |  |       | 2,572,400     |  |        | (8,524,270  | ) |  |   | 67,210,426  |  
|Amortization of share options (Note 10)                                                                                              |  |                |  |                    |      |         |               | 41,659      |                                            |  |       |              |  |        |            |   |  |   | 41,659      |  
|Reclassification of accrued interest subject to redemption (Note 7)                                                                  |  |                |  |                    |      |         |               |            |                                            |  |       |              |  |        | (134,205    | ) |  |   | (134,205    | )
|Net loss                                                                                                                             |  |                |  |                    |      |         |               |            |                                            |  |       |              |  |        | (2,638,147  | ) |  |   | (2,638,147  | )
|                                                                                                                                     |  |                 |  |                    |       |         |               |             |                                            |  |       |               |  |        |             |   |  |   |             |  
|Balance at March 31, 2007                                                                                                            |  | 17,500,000      |  | $                  | 8,750 |         | $             | 73,195,205  |                                            |  | $     | 2,572,400     |  | $      | (11,296,622 | ) |  | $ | 64,479,733  |  
|                                                                                                                                     |  |                 |  |                    |       |         |               |             |                                            |  |       |               |  |        |             |   |  |   |             |  

See accompanying notes to the financial statements.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

STATEMENTS OF CASH FLOWS

FOR THE
THREE-MONTH PERIODS ENDED MARCH 31, 2006 and 2007

AND FOR THE PERIOD FROM APRIL 25, 2005 (DATE OF INCEPTION)

TO MARCH 31, 2007

(Unaudited)

(Expressed in United States Dollars)



|                                                                                           |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|------------------------------------------------------------------------------------------ |  | ----------------------------------------- | ------- | - | ---------------------------------------- | - | ---------- | ------------------------------------------------------------ |  | - | ------------ | -
|                                                                                           |  | Three-monthperiod ended to March 31, 2006 |         |   | Three- month period ended March 31, 2007 |   |            | Period fromApril 25, 2005(date ofinception) toMarch 31, 2007 | 
|                                                                                           |  | US$                                       |         |   | US$                                      |   |            | US$                                                          | 
|Cash flows from operating activities                                                       |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Net loss                                                                                   |  | $                                         | (40,327 | ) |                                          | $ | (2,638,147 | )                                                            |  | $ | (10,802,530  | )
|Adjustments to reconcile net loss to net cash used in operating activities :               |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Depreciation                                                                               |  |                                           |        |   |                                          |   | 16,023     |                                                              |  |   | 28,385       |  
|Interest income                                                                            |  |                                           |        |   |                                          |   | (418,177   | )                                                            |  |   | (2,464,212   | )
|Amortization of share options                                                              |  |                                           |        |   |                                          |   | 41,659     |                                                              |  |   | 107,370      |  
|Revaluation of warrants liability                                                          |  |                                           |        |   |                                          |   | 2,875,000  |                                                              |  |   | 13,222,796   |  
|Increase in amount due from a related company                                              |  |                                           |        |   |                                          |   |           |                                                              |  |   | (5,750       | )
|Increase in accrued expenses                                                               |  |                                           | 2,309   |   |                                          |   | 387,800    |                                                              |  |   | 587,382      |  
|Increase in prepayments, deposits and other receivables                                    |  |                                           |        |   |                                          |   | (1,043,379 | )                                                            |  |   | (1,091,427   | )
|                                                                                           |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Net cash used in operating activities                                                      |  |                                           | (38,018 | ) |                                          |   | (779,221   | )                                                            |  |   | (417,986     | )
|                                                                                           |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Cash flows from investing activities                                                       |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Purchase of restricted cash equivalents in trust account                                   |  |                                           |        |   |                                          |   |           |                                                              |  |   | (109,250,000 | )
|Purchase of fixed assets                                                                   |  |                                           |        |   |                                          |   | (6,591     | )                                                            |  |   | (129,645     | )
|                                                                                           |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Net cash used in investing activities                                                      |  |                                           |        |   |                                          |   | (6,591     | )                                                            |  |   | (109,379,645 | )
|                                                                                           |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Cash flows from financing activities                                                       |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Proceeds from issuance of ordinary shares to founders                                      |  |                                           |        |   |                                          |   |           |                                                              |  |   | 25,000       |  
|Payment of offering costs                                                                  |  |                                           |        |   |                                          |   |           |                                                              |  |   | (68,129      | )
|Proceeds from amounts due to founders                                                      |  |                                           | 100,962 |   |                                          |   | 31,074     |                                                              |  |   | 272,985      |  
|Repayment of amounts due to founders                                                       |  |                                           |        |   |                                          |   | (18,733    | )                                                            |  |   | (241,911     | )
|Proceeds from initial public offering, net of underwriters discount and offering expenses |  |                                           |        |   |                                          |   |           |                                                              |  |   | 110,059,543  |  
|                                                                                           |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Net cash provided by financing activities                                                  |  |                                           | 100,962 |   |                                          |   | 12,341     |                                                              |  |   | 110,047,488  |  
|                                                                                           |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Net increase/(decrease) in cash and cash equivalents                                       |  |                                           | 62,944  |   |                                          |   | (773,471   | )                                                            |  |   | 249,857      |  
|Cash and cash equivalents at beginning of period                                           |  |                                           | 24,227  |   |                                          |   | 1,023,328  |                                                              |  |   |             |  
|                                                                                           |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  
|Cash and cash equivalents at end of period                                                 |  |                                           | 87,171  |   |                                          |   | 249,857    |                                                              |  |   | 249,857      |  
|                                                                                           |  |                                           |         |   |                                          |   |            |                                                              |  |   |              |  

See accompanying notes to the financial statements.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2007

NOTE 1 ORGANIZATION, BUSINESS OPERATIONS AND BASIS OF PRESENTATION

Organization and Business Operations

Shanghai
Century Acquisition Corporation (the Company) was incorporated in the Cayman Islands on April 25, 2005 with an authorized share capital of 50,000,000 ordinary shares (par value $0.0005 per share) and 5,000,000 preferred shares (par
value $ 0.0005 per share). The Companys founders contributed $25,000 to the formation of the Company and were issued 3,125,000 ordinary shares. The Company was formed to acquire, through a stock exchange, asset acquisition or other
similar business combination, or control, through contractual arrangements, an operating business having its primary operations located in the Peoples Republic of China. The Company has neither engaged in any operations nor generated revenue
to date. 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 (as discussed in Note 3 below) (the Public Offering) was declared effective April 24, 2006. The Company completed the Public
Offering on April 28, 2006 and received net proceeds of approximately $109,991,514. The Company intends to use substantially all of the net proceeds of the Public Offering to acquire a target business (Business Combination),
including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating the Business Combination, and the payment of legal and accounting expenses and advisory and
investment banking fees payable in connection with the Business Combination. There is no assurance, however, that the Company will be able to successfully effect a Business Combination.

As at March 31, 2007, an amount of approximately $111,714,212 (including interest) of the net proceeds was held in a trust account (Trust
Account) and invested in short-term United States government securities. Under the agreement governing the Trust Account, the funds in the Trust Account may only be invested in United States government securities having a maturity of one
hundred and eighty days or less or in money market funds. The funds will continue to be kept in the Trust Account until the earlier of (i) the consummation of the Business Combination or (ii) distribution of the Trust Account as described
below.

The funds held in the Trust Account (excluding $3,300,000 to be paid to the underwriters upon consummation of a Business
Combination and a portion of the interest earned and other expenses in connection with the Business Combination) may be used as consideration to pay the sellers of a target business for which the Company ultimately completes a Business Combination.
Any amount not paid as consideration to the sellers of the target business may be used to finance operations of the target business or to effect other acquisitions, as determined by the Companys board of directors at that time.

In the event that the Company does not consummate a Business Combination within 18 months from the date of the completion of the Public Offering (or 24
months from the completion of the Public Offering if certain extension criteria have been satisfied), the Company will be dissolved and the proceeds held in the Trust Account (excluding one-half of the interest earned) will be distributed to the
Companys public shareholders. In the event of such distribution, the per share value of the residual assets remaining available for distribution (including the amount held in the Trust Account ) may be less than the public offering price of
$8.00 per unit (see Note 3).



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2007

Basis of
Presentation

The financial statements include the accounts of the Company. The Company has not commenced operations since its
inception on April 25, 2005. All activities and expenses incurred are related to the Companys formation and capital raising activities. The Company has selected December 31 as its fiscal year end.

The accompanying interim financial statements as of March 31, 2007 and for the three-month periods ended March 31, 2006 and 2007 and for the
period from April 25, 2005 (date of incorporation) to March 31, 2007, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. However,
the Company believes that the disclosures are adequate to make the information presented not misleading. The December 31, 2006 balance sheet was derived from audited financial statements included in the Companys Annual Report on Form 10-K
filed on April 19, 2007 (Form 10-K). The accompanying interim financial statements should be read in conjunction with the audited financial statements and the notes thereto, included in the Form 10-K.

In the opinion of management, all adjustments (which include normal recurring adjustments, except as disclosed herein) necessary to present a fair
statement of financial position as of March 31, 2007, the results of operations and cash flows for the three-month periods ended March 31, 2006 and 2007 and for the period from April 25, 2005 (date of incorporation) to March 31,
2007 as applicable, have been made. The results of operations for the three-month periods ended March 31, 2007 is not necessarily indicative of the operating results for the full fiscal year or any future periods.

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Cash
and cash equivalents:

Cash and cash equivalents comprise cash at bank and on hand and demand deposits with banks and other financial
institutions.

2.2 Restricted cash equivalents held in Trust Account:

The restricted cash equivalents held in the Trust Account as at March 31, 2007 consist of U.S. government treasury bills purchased with an original maturity of three months or less at date of acquisition. The
Company classifies this investment as held-to-maturity securities as the Company has the ability and intent to hold the securities until maturity. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion
of premiums, or discounts, if any. Interest income, including amortization of the premium and discount arising at acquisition is recorded on an accrual basis.

2.3 Use of estimates:

The preparation of financial statements in conformity with United States generally accepted
accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the fair value of warrants, the underwriters unit purchase option and consultants share options. Actual
results could differ from those estimates.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2007

2.4 Income
taxes:

Under current Cayman Islands laws, the Company is not subject to income tax, and accordingly, no income tax benefit or deferred
tax asset has been recognized in respect of the net losses incurred.

2.5 Property, plant & equipment

Fixed assets are stated at cost. Depreciation is calculated on straight-line basis over the estimated useful lives of the assets. The estimated useful
live of computer and office equipment is 2 years. Leasehold improvements are over the shorter of 2 years and unexpired term of the lease.

2.6 Recently
issued accounting standards:

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

2.7 Basic and diluted net loss per share:



|                                       |  |                                        |           |   |                                         |   |             |                                                                  |  |   |             |  
|-------------------------------------- |  | -------------------------------------- | --------- | - | --------------------------------------- | - | ----------- | ---------------------------------------------------------------- |  | - | ----------- | -
|                                       |  | Three-month period endedMarch 31, 2006 |           |   | Three-month period ended March 31, 2007 |   |             | Period from April 25, 2005 (date of inception)
to March 31, 2007 | 
|Net loss                               |  | $                                      | (40,327   | ) |                                         | $ | (2, 638,147 | )                                                                |  | $ | (10,802,530 | )
|                                       |  |                                        |          
|Denominator:                           |  |                                        |           |   |                                         |   |             |                                                                  |  |   |             |  
|Basic weighted average shares          |  |                                        | 3,125,000 |   |                                         |   | 17,500,000  |                                                                  |  |   | 9,545,237   |  
|Effect of dilutive redeemable warrants |  |                                        |          |   |                                         |   |            |                                                                  |  |   |            |  
|Effect of dilutive share options       |  |                                        |          |   |                                         |   |            |                                                                  |  |   |            |  
|                                       |  |                                        |           |   |                                         |   |             |                                                                  |  |   |             |  
|Diluted weighted average shares        |  |                                        | 3,125,000 |   |                                         |   | 17,500,000  |                                                                  |  |   | 9,545,237   |  
|                                       |  |                                        |           |   |                                         |   |             |                                                                  |  |   |             |  
|Basic loss per share                   |  | $                                      | (0.01     | ) |                                         | $ | (0.15       | )                                                                |  | $ | (1.13       | )
|                                       |  |                                        |          
|Diluted loss per share                 |  | $                                      | (0.01     | ) |                                         | $ | (0.15       | )                                                                |  | $ | (1.13       | )

During the periods presented, the Companys dilutive potential ordinary shares outstanding
consist of 14,375,000 redeemable warrants, 2,000,000 ordinary shares issuable upon exercise of the unit purchase option, and 235,000 share options. The computation of diluted loss per share for the periods presented did not assume conversions of
redeemable warrants, the unit purchase option or the share options because, when applying the if-converted method, the effect of these conversions was anti-dilutive.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2007

2.8 Stock-Based
Compensation Expense:

The Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based
Payment, (SFAS 123(R)) which requires the measurement and recognition of compensation expense for all share-based payment awards based on estimated fair values.

SFAS 123(R) requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of
the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Companys statement of operations.

The Company used lattice-binomial option-pricing model (lattice-binomial model) as a method of valuation for share-based awards. For additional information, see Note 10. The Companys determination of
fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Companys stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include,
but are not limited to, the Companys expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behavior. Because the Companys stock options have certain characteristics that are
significantly different from traded options, and because changes in the subjective assumptions can materially affect the estimated value, in managements opinion, the existing valuation model may not provide an accurate measure of the fair
value of the Companys employee stock options.

NOTE 3 INITIAL PUBLIC OFFERING

On April 28, 2006, the Company completed the sale of 14,375,000 units in the Public Offering at a price of $8.00 per unit. Each unit consists of one
ordinary share of the Company, $0.0005 par value, and one warrant (see Note 6). Each warrant entitles the holder to purchase from the Company one ordinary share at an exercise price of $6.00 commencing on the later of (a) the completion of a
Business Combination with a target business, or (b) April 24, 2007. The warrants expire on April 23, 2010. The Company may redeem the warrants (including any warrants issued upon exercise of the unit purchase option described below)
at a price of $0.01 per warrant at any time after the warrants become exercisable to the extent the last sales price of the Companys ordinary shares equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period.

In addition, on April 28, 2006, the Company sold to the underwriters, for $100, an option to purchase up to a total of 1,000,000
units as compensation for their services (the unit purchase option). The units issuable upon exercise of the unit purchase option are identical to those offered in the Public Offering, except that the warrants have an exercise price of
$7.50.

The unit purchase option expires on April 23, 2011 and is exercisable at $10.00 per unit commencing on the later of
(a) the completion of a Business Combination, or (b) April 24, 2007. In lieu of the payment of the exercise price, the option may be converted into units on a net-share settlement or cashless exercise basis to the extent that the
market value of the units at the time of conversion exceeds the exercise price of the option. The option may only be exercised or converted by the option holder and cannot be redeemed for cash by the Company or the option holder.

The sale of the underwriters option was accounted for as an equity transaction in accordance with Emerging Issues Task Force No. 00-19,
Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Companys Own Stock, and was measured at its fair value on the date of the sale in accordance with Statements of Financial Accounting Standards
No. 123 (revised 2004), Share-based Payment. The Company has determined, based upon a lattice model, that the estimated fair value of the option on the date of sale was approximately $2.5724 per unit or an aggregate of $2,572,400, assuming an
expected life of 56 months, volatility of 33.7779% and a risk-free interest rate of 5.2390%.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2007

NOTE 3 INITIAL
PUBLIC OFFERING (continued)

The volatility calculation of 33.7779% is based on the latest five year average volatility of an index of
447 companies drawn from the Shanghai Stock Exchange Composite Index that had been trading for at least five years and that had market capitalizations of less than $400 million (Index). Since the Company did not have a trading history at
the time the option was issued, the Company estimated the potential volatility of its common stock price by referring to the latest five year average volatility of the Index because management believes that the average volatility of such index was a
reasonable benchmark to use in estimating the expected volatility of the Companys common stock after consummation of a business combination. Although an expected life of five years was taken into account for purposes of assigning a fair value
to this option, to the extent the Company does not consummate a Business Combination within the prescribed time period and liquidates, the underwriters option would become worthless.

Pursuant to Rule 2710(g)(1) of the NASD Conduct Rule, the option to purchase 1,000,000 units is deemed to be underwriting compensation and therefore upon
exercise, the underlying shares and warrants are subject to a 180-day lock-up. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date
of the Public Offering.

NOTE 4AMOUNT DUE TO FOUNDERS

The founders of the Company have entered into a revolving credit agreement with the Company in the amount of $125,000. Advances under the credit facility were interest-free and payable before October 22, 2006.

For the period from April 25, 2005 (inception) to March 31, 2007, the Company drew $125,000 against the revolving credit line
and obtained additional borrowings from the founders of $145,168 to pay a portion of the expenses of the Public Offering such as the Securities and Exchange Commission registration fee, National Association of Securities Dealers registration fee,
American Stock Exchange registration fee, and certain legal fees, administrative fees and other expenses.

In addition, $2,817 of the costs
incurred prior to the formation of Company was to be reimbursed to one of the founders.

As of March 31, 2007, the amount due to the
founders was $31,074.

NOTE 5AMOUNT DUE FROM RELATED COMPANY

The Company has agreed to pay FDC Consultants Limited, a company owned and managed by Mr. Franklin D. Chu, the Companys co-chief executive officer, $7,500 per month for office space and general and
administrative services including secretarial support commencing on April 24, 2006 and continuing until (i) the consummation of a Business Combination, (ii) 18 months from commencement of the Public Offering if the Company does not
effect a Business Combination, or (iii) 24 months from the consummation of the Public Offering if a letter of intent, agreement in principle or definitive agreement has been executed within 18 months of commencement of the Public Offering and
the Company has not effected a Business Combination.

In addition, the Company prepaid $5,750 as at March 31, 2007 for certain office
and secretarial services according to the service agreement.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2007

NOTE
6WARRANTS LIABILITY

Under the terms of the warrant agreement, no warrants will be exercised unless at the time of exercise a
prospectus relating to ordinary shares issuable upon exercise of the warrants is current and the ordinary shares have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the
warrants. The Company has agreed to meet these conditions and use their best efforts to maintain a current prospectus relating to ordinary shares issuable upon exercise of the redeemable warrants until the expiration of the warrants. The warrant
agreement does not specify the consequences or penalty imposed against the Company in the event the Company is unable to file and complete an effective registration statement to deliver registered shares.

Under EITF No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock, if
(a) a derivative contract requires physical or net-share settlement by delivery of registered shares and does not specify any circumstances under which net-cash settlement would be permitted or required and (b) the contract does not
specify how the contract would be settled in the event that the company is unable to deliver registered shares, then net-cash settlement is assumed if the company is unable to deliver registered shares (because it is unlikely that nonperformance
would be an acceptable alternative). As a consequence of EITF No. 00-19, a derivative within the parameters must be classified as an asset or a liability because share settlement is not within the companys control. Accordingly, in connection
with the issuance of the units (see Note 3), the Company was required to record the fair value of the warrants as a liability with any changes in the fair value of the warrants at each reporting date being recorded through the Companys
statement of operations. The warrants will continue to be reported as a liability until such time as the warrants are exercised, expire, or the Company is otherwise able to revise the warrant agreement to specify (a) whether net-cash settlement
would be permitted or required or (b) how the contract would be settled in the event that the company is unable to deliver registered shares.

The Company has determined that the estimated fair value of the warrants on April 24, 2006, the date of issuance, and on March 31, 2007 was approximately $0.87 and $1.79 per warrant, respectively, or an aggregate of $12,508,454
and $25,731,250, respectively. Since the warrants were not traded or quoted on a market exchange at the time of issuance, the fair value of the warrants as of April 24, 2006 was estimated based on a lattice-binomial model using an expected life
of 48 months, a volatility of 33.7779%, a risk-free interest rate of 5.204% and taking into consideration the liquidity risk and the forfeiture risk that the warrants could become worthless if the Company does not consummate a Business Combination
within the prescribed period and liquidates. The fair value of the warrants as of March 31, 2007 was based on a quoted market price.

NOTE 7 
AMOUNT OF EQUITY SUBJECT TO POSSIBLE REDEMPTION

The Company is required to obtain shareholder approval for any business combination of
a target business. In the event that public shareholders owning 20% or more of the ordinary shares sold in the Public Offering vote against a business combination, the Company will not proceed with a business combination if the public shareholders
exercise their redemption rights. That is, the Company can still effect a business combination if the public shareholders owning up to approximately 19.99% of the ordinary shares sold in the Public Offering exercise their redemption rights.

This redemption obligation with respect to up to 19.99% of the ordinary shares sold in the Public Offering will exist regardless of how a
business combination is structured. That is, the Company would be required to redeem up to an amount equal to the product of approximately 19.99% of the 14,375,000 ordinary shares sold in the Public Offering (or 2,873,563 ordinary shares) multiplied
by an initial cash per-share redemption price of $7.60. The actual per-share redemption price will be equal to the quotient of the amount in the Trust Account plus all accrued interest not previously released to the Company, as of two business days
prior to the proposed consummation of the business combination, divided by 14,375,000 ordinary shares.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2007

NOTE 7 
AMOUNT OF EQUITY SUBJECT TO POSSIBLE REDEMPTION (continued)

Accordingly, under the provision of EITF D-98, Classification and
Measurement of Redeemable Securities, the Company has classified 19.99% of the net proceeds from the Public Offering, or $21,839,075, and the related accrued interest of approximately $494,092 outside permanent equity as of March 31, 2007.

NOTE 8PROCEEDS FROM PUBLIC OFFERING

The
following is the classification of the net proceeds from the Public Offering:



|                                                                  |  |   |            
|----------------------------------------------------------------- |  | - | -----------
|Classified as liability:                                          |  |   |            
|Warrants liability (note 6)                                       |  | $ | 12,508,454 
|                                                                  | 
|Classified outside of permanent equity:                           |  |   |            
|Amount subject to possible redemption at $7.60 per share (note 7) |  | $ | 21,839,075 
|                                                                  | 
|Classified as permanent equity:                                   |  |   |            
|Additional paid-in capital                                        |  | $ | 73,064,397 
|Par value of 14,375,000 ordinary shares at $0.0005 per par value  |  |   | 7,188      
|Unit purchase option (note 3)                                     |  |   | 2,572,400  
|                                                                  |  |   |            
|                                                                  |  | $ | 75,643,985 
|                                                                  |  |   |            
|Net proceeds from the Public Offering                             |  | $ | 109,991,514
|                                                                  |  |   |            

NOTE 9PREFERRED SHARES

The Company is authorized to issue 5,000,000 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. No preferred
shares have been issued during the periods presented.

NOTE 10SHARE OPTIONS

On June 8, 2006, the Company engaged an independent consultant (consultant A) to assist the Company in matters related to a Business
Combination. The term of the contract is three years expiring on June 8, 2009 unless terminated earlier. As part of the compensation for services provided to the Company, the Company granted to consultant A (i) an option to purchase 50,000
ordinary shares which vests six months after the consummation of a Business Combination and (ii) an option to purchase 75,000 ordinary shares which vests on April 24, 2009, provided the consulting agreement has not been terminated prior to
the date on which either option becomes vested. The exercise price of both options is $7.10, the closing market price of the ordinary shares on the first day that ordinary shares of the Company were traded. Both options will expire upon the earlier
of (i) the date the consulting agreement is terminated, or (ii) October 24, 2007 if a Business Combination is not consummated on or prior to such date and the Company has not entered into a letter of intent, agreement in principle or
definitive agreement on or prior to such date, or (iii) April 24, 2008 if a Business Combination is not consummated on or prior to such date.

The Company has determined that the estimated fair value of these options on the date of grant was approximately $2.064 per share or $258,000 using the lattice option pricing model. The risk-free rate for the expected
term of the option is based on the 3 year US Treasury Yield as at the issue date.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2007

NOTE
10SHARE OPTIONS (continued)

On February 1, 2007, the Company further granted an option to consultant A to purchase 100,000
ordinary shares which vests six months after the consummation of a Business Combination, and an option to another independent consultant (consultant B) to purchase 10,000 ordinary shares which vests six months after the consummation of a
Business Combination. Both options were granted for consulting services to be provided to the Company in connection with matters related to a Business Combination.

The exercise price of the two options granted on February 1, 2007 is $7.38, the closing market price of the ordinary share on the grant date. These options will expire upon the earlier of (i) the date the
consulting agreement is terminated, or (ii) October 24, 2007 if a Business Combination is not consummated on or prior to such date and the Company has not entered into a letter of intent, agreement in principle or definitive agreement on
or prior to such date, or (iii) April 24, 2008 if a Business Combination is not consummated on or prior to such date.

The
Company determined that the estimated fair value of the options granted on February 1, 2007 was approximately $1.082 per share or $119,000 using the lattice option pricing model. The risk-free rate for the expected term of the option is based
on the 3 year US Treasury Yield as at the issue date.

The assumptions used in determining the fair value of the options granted on
June 8, 2006 and February 1, 2007 are as follows:



|                        |  |                                |   |  |                                     |  
|----------------------- |  | ------------------------------ | - |  | ----------------------------------- | -
|                        |  | Options grantedon June 8, 2006 |   |  | Options granted on February 1, 2007 |  
|Valuation assumptions   |  |                                |   |  |                                     |  
|Expected dividend yield |  | 0                              | % |  | 0                                   | %
|Expected volatility     |  | 20                             | % |  | 14                                  | %
|Expected term(years)    |  | 3                              |   |  | 2                                   |  
|Risk-free interest rate |  | 4.97                           | % |  | 4.93                                | %

Stock option activity during the periods indicated is as follows:



|                                                                  |  |                  |  |                                |      |                                           |     |                          |        
|----------------------------------------------------------------- |  | ---------------- |  | ------------------------------ | ---- | ----------------------------------------- | --- | ------------------------ | -------
|                                                                  |  | Number of shares |  | Weightedaverage exercise price |      | Weightedaverageremaining contractual term |     | Aggregateintrinsic value
|Balance at April 25, 2005 (date of inception) and January 1, 2006 |  |                 |  | $                              |     |                                           |     |                          |        
|Granted on June 8, 2006                                           |  | 125,000          |  | $                              | 7.10 |                                           |     |                          |        
|Granted on February 1, 2007                                       |  | 110,000          |  | $                              | 7.38 |                                           |     |                          |        
|                                                                  |  |                  |  |                                |      |                                           |     |                          |        
|Balance at March 31, 2007                                         |  | 235,000          |  | $                              | 7.23 |                                           | 2.2 |                          | 107,850
|                                                                  |  |                  |  |                                |      |                                           |     |                          |        
|Exercisable at March 31, 2007                                     |  |                 |  |                                |     |                                           |    |                          |       
|                                                                  |  |                  |  |                                |      |                                           |     |                          |        



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2007

NOTE
10SHARE OPTIONS (continued)

The weighted average grant date fair values of the options granted during the periods were as
follows:



|                                                                  |  |                 |  |                                          |      
|----------------------------------------------------------------- |  | --------------- |  | ---------------------------------------- | -----
|Nonvested shares                                                  |  | Numberof shares |  | Weighted average grant - date
fair value
|Balance at April 25, 2005 (date of inception) and January 1, 2006 |  |                |  | $                                        |     
|Granted on June 8, 2006                                           |  | 125,000         |  | $                                        | 2.064
|Granted on February 1, 2007                                       |  | 110,000         |  | $                                        | 1.082
|                                                                  |  |                 |  |                                          |      
|Balance at March 31, 2007                                         |  | 235,000         |  | $                                        | 1.604
|                                                                  |  |                 |  |                                          |      

The Company has accounted for these share options under the fair value method of SFAS 123
(R) by recording compensation based on the fair value at grant date for such awards and amortizing the compensation amount over the expected term of the consulting contract which approximates the expected life of the option. The amount of
compensation recognized for these share options for the three month ended March 31, 2007 was $41,659. At March 31, 2007, there was $269,630 of total unrecognized compensation cost related to nonvested share options. The cost is expected to
be recognized over a weighted average period of 1.4 years.



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##### Table of Contents

Item 2. Managements Discussion and Analysis or Plan of Operation

The following discussion should be
read in conjunction with the financial statements and footnotes thereto incorporated by reference in this report.

Forward Looking Statements

Certain statements contained in this interim report that are not historical facts, including, but not limited to, statements that can
be identified by the use of forward-looking terminology such as may, expect, anticipate, predict, believe, plan, estimate or continue or the negative
thereof or other variations thereon or comparable terminology, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties. The actual results of the
future events described in such forward-looking statements in this interim report could differ materially from those stated in such forward-looking statements due to various factors, including but not limited to, our being a development stage
company with no operating history, our dependence on key personnel some of whom may join us following a business combination, our personnel allocating their time to other businesses and potentially having conflicts of interest with our business, our
potentially being unable to obtain additional financing to complete a business combination, the ownership of our securities being concentrated and those other risks and uncertainties detailed in the Companys filings with the SEC, including our
registration statement on Form F-1 originally filed December 12, 2005 and the definitive prospectus thereunder and our annual report on Form 10-K for the year ended December 31, 2006, and the uncertainties set forth from time to time in
the Companys filings and other public statements.

Plan of Operation

We were formed on April 25, 2005, to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business
combination with an operating business which we believe has significant growth potential. Our initial business combination must be with a target business whose fair market value is at least equal to 80% of our net assets. We consummated our initial
public offering on April 28, 2006. Our activities to date have been comprised solely of organizational activities, preparing for and consummating our initial public offering, and efforts associated with identifying a target for a business
combination. We have neither engaged in any operations nor generated any revenues for the three-months ended March 31, 2007.

We
intend to utilize cash derived from the proceeds of our initial public offering, our ordinary shares, debt or a combination of cash, ordinary shares and debt, in effecting a business combination. The issuance of additional ordinary shares:



| |  |  | may significantly reduce the equity interest of our shareholders;
| | - |  | -----------------------------------------------------------------



| |  |  | will likely cause a change in control if a substantial number of our ordinary shares are issued and may 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 a business combination 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.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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For the three-months ended March 31, 2007, we earned interest income of approximately $1,348,322,
and incurred operating expenses of approximately $1,111,469. Our expenses consist primarily of legal and accounting fees, overhead fees, insurance, travel expenses in connection with our search for a target company, and certain other expenses
associated with being a public company. We have also recorded an expense of $2,875,000 in the period representing the increase in fair value of warrants liability during the period from January 1, 2007 to March 31, 2007.

The net proceeds to us from the sale of our units, after deducting offering expenses of approximately $8,308,586 including underwriting discounts of
approximately $4,600,000, and an additional $3,300,000 to be paid to the underwriters if a business combination is consummated (less $0.24 for each share converted to cash in connection with our business combination), was $106,691,414. Of this
amount, $105,950,000 was placed in a trust account and the remaining $741,414 became available to be used in connection with acquiring a target business, including identifying and evaluating prospective acquisition candidates, selecting the target
business, and structuring, negotiating and consummating the business combination, including the payment of legal and accounting expenses and advisory and investment banking fees payable in connection with the business combination. Funds held in the
trust account would only be used to pay such expenses and fees upon the consummation of a business combination, but would not otherwise be available for such uses. To the extent that our securities are used in whole or in part as consideration to
effect a business combination, the proceeds held in the trust account (excluding $3,300,000 to be paid to the underwriters upon consummation of a business combination, amounts payable to any shareholders who exercise their redemption rights,
one-half of the interest income which may be released to us each calendar quarter to fund our working capital and general corporate purposes, and expenses associated with the business combination that are in excess of the amounts not held in trust)
as well as any other net proceeds not expended may be used to finance the operations of the target business or to effect other acquisitions, as determined by our board of directors at that time. It is impossible at this time to determine
specifically how we would, following a business combination, use any proceeds held in the trust account which are not used to consummate such business combination. We believe that the funds available to us outside of the trust account, including
one-half of the interest income to be distributed to us each calendar quarter, will be sufficient to allow us to operate for a 24 month period following our initial public offering, assuming that a business combination is not consummated during that
time. We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, we may need to raise additional funds through a private offering of debt or equity securities if such
funds are required to consummate a business combination that is presented to us. We would only consummate such a fund raising simultaneously with the consummation of a business combination.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is a broad term for the
risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. $105,950,000 of
the net offering proceeds has been placed into a trust account at JP Morgan Chase NY Bank maintained by Continental Stock Transfer & Trust Company, acting as trustee. Additionally, $3,300,000 of the proceeds attributable to the
underwriters discount has also been deposited into the trust account. The proceeds held in trust will only be invested in United States government securities, defined as any Treasury Bill issued by the United States having a
maturity of 180 days or less. Thus, we are subject to market risk primarily through the effect of changes in interest rates on government securities. In addition, following a business combination, it is possible that some or all of our revenues and
expenses may be denominated in non-United States currencies, primarily Renminbi, which could subject us to increased risks relating to foreign exchange rate fluctuations that could have a material adverse effect on our business, financial condition
and operating results.



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Item 4T. Controls and Procedures

Evaluation of disclosure controls and procedures. An evaluation
of the effectiveness of our disclosure controls and procedures as of March 31, 2007 was made under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer.
Based on that evaluation, they concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that information required to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Companys management, including its executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal controls over financial reporting.During the most recently completed fiscal quarter, there have been no
changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in the
registration statement on Form F-1 (File No. 333-130260) filed in connection with our initial public offering, which the SEC declared effective on April 24, 2006.

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

(a) Unregistered Sales of Equity
Securities by Issuer

None.

(b) Use of Proceeds

On April 28, 2006, we closed our initial public offering of 14,375,000 units (including 1,875,000 units
subject to the underwriters over allotment option, which was exercised in full). Each unit consists of one ordinary share, par value $.0005 and one warrant. The units were sold at an offering price of $8.00, generating gross proceeds to the
Company of $115,000,000. I-Bankers Securities Incorporated, WR Hambrecht + Co and Ladenburg Thalmann & Co. Inc. acted as the co-managing underwriters for the initial public offering. The securities sold in the offering were registered under
the Securities Act of 1933 pursuant to a registration statement on Form F-1 (No. 333-130260). The SEC declared the registration statement effective on April 24, 2006. The Companys units began trading on the American Stock Exchange on
Tuesday, April 25, 2006 shortly after the Companys registration statement was declared effective by the SEC.

We paid a total of
$4,600,000 in underwriting discounts and commissions, and incurred fees of approximately $408,586 for other costs and expenses related to the offering. An additional $3,300,000 was deposited in the trust account and will be paid to the underwriters
if a business combination is consummated.

After deducting the underwriting discounts and commissions and the offering expenses, the total
net proceeds to us from the offering were approximately $106,691,414, excluding an additional $3,300,000 to be paid to the underwriter, of which $105,950,000 was deposited into a trust account and the remaining proceeds are available to be used to
provide for business, legal and accounting due diligence and advisory fees in connection with prospective business combinations, compliance with securities laws and regulations, and continuing general and administrative expenses.



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Item 6. Exhibits

The following exhibits are filed with this report:



|     |  |                                                                                                        
|---- |  | -------------------------------------------------------------------------------------------------------
|31.1 |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a).                                            
|     | 
|31.2 |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a).                                            
|     | 
|32.1 |  | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|     | 
|32.2 |  | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 14, 2007



SHANGHAI CENTURY ACQUISITION CORPORATION/s/ Franklin D. ChuFranklin D. ChuCo-Chief Executive Officer(principal executive officer)/s/ Anthony Kai Yiu LoAnthony Kai Yiu LoCo-Chief Executive Officer(principal financial officer)




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EXHIBIT INDEX



|       |  |                                                                                                        
|------ |  | -------------------------------------------------------------------------------------------------------
|Number |  | Description                                                                                            
|31.1   |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a).                                            
|       | 
|31.2   |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a).                                            
|       | 
|32.1   |  | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|       | 
|32.2   |  | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.