##### Table of Contents

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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 SEPTEMBER 30, 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.)

23rd Floor, 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)



---

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 file ̈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 September 30, 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 September 30, 2007                                                                                                                                                |  | 3       
|                              |  |                                                                                                                                                                                                             
|                              |  | Statements of Operations for the three-month periods and nine-month periods ended September 30, 2006 and September 30, 2007 and for the period from April 25, 2005 (date of inception) to September 30, 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 nine-month period ended September 30, 2007  |  | 5       
|                              |  |                                                                                                                                                                                                             
|                              |  | Statements of Cash Flows for the three-month periods and nine-month periods ended September 30, 2006 and September 30, 2007 and for the period from April 25, 2005 (date of inception) to September 30, 2007 |  | 6       
|                              |  |                                                                                                                                                                                                             
|                              |  | Notes to Unaudited Financial Statements                                                                                                                                                                      |  | 7       
|                              |  |                                                                                                                                                                                                             
|Item 2                        |  | Managements Discussion and Analysis and Results of Operations                                                                                                                                               |  | 15      
|                              |  |                                                                                                                                                                                                             
|Item 3                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                   |  | 21      
|                              |  |                                                                                                                                                                                                             
|Item 4T                       |  | Controls and Procedures                                                                                                                                                                                      |  | 21      
|                              | 
|Part II. Other Information    |  |                                                                                                                                                                                                             
|                              |  |                                                                                                                                                                                                             
|Item 1A                       |  | Risk Factors                                                                                                                                                                                                 |  | 21      
|                              |  |                                                                                                                                                                                                             
|Item 2                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                  |  | 21      
|                              |  |                                                                                                                                                                                                             
|Item 5                        |  | Other Information                                                                                                                                                                                            |  | 22      
|                              |  |                                                                                                                                                                                                             
|Item 6                        |  | Exhibits                                                                                                                                                                                                     |  | 22      
|                              | 
|Signatures                    |  |                                                                                                                                                                                                             
|                              | 
|Exhibit Index                 |  |                                                                                                                                                                                                             



2



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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 SEPTEMBER 30, 2007

(Unaudited)

(Expressed in United States Dollars)



|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | ---------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                                                                         |  |       |  | December 31,2006 |             |   | September 30,2007 |  
|                                                                                                                                                                                         |  | Note  |  | US$              |             |   | US$               |  
|ASSETS                                                                                                                                                                                   |  |       |  |                  |             |   |                   |   |             |  
|                                                                                                                                                                                         |  |       | 
|Current assets                                                                                                                                                                           |  |       |  |                  |             |   |                   |   |             |  
|Cash and cash equivalents                                                                                                                                                                |  |       |  | $                | 1,023,328   |   |                   | $ | 68,395      |  
|Restricted cash equivalents held in Trust Account                                                                                                                                        |  | 2.2   |  |                  | 111,296,035 |   |                   |   | 113,068,006 |  
|Amount due from a related company                                                                                                                                                        |  | 5     |  |                  | 5,750       |   |                   |   | 5,750       |  
|Receivable from underwriters                                                                                                                                                             |  |       |  |                  | 100         |   |                   |   | 100         |  
|Prepayments, deposits and other receivables                                                                                                                                              |  |       |  |                  | 48,048      |   |                   |   | 681,673     |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|Total current assets                                                                                                                                                                     |  |       |  | $                | 112,373,261 |   |                   | $ | 113,823,924 |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|                                                                                                                                                                                         |  |       | 
|Property, plant and equipment                                                                                                                                                            |  |       |  |                  |             |   |                   |   |             |  
|Leasehold improvements                                                                                                                                                                   |  |       |  | $                | 90,911      |   |                   | $ | 95,693      |  
|Computer and office equipment                                                                                                                                                            |  |       |  |                  | 32,143      |   |                   |   | 42,707      |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|                                                                                                                                                                                         |  |       |  |                  | 123,054     |   |                   |   | 138,400     |  
|Less : accumulated depreciation                                                                                                                                                          |  |       |  |                  | (12,362     | ) |                   |   | (62,636     | )
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|Total fixed assets                                                                                                                                                                       |  |       |  | $                | 110,692     |   |                   | $ | 75,764      |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|Total assets                                                                                                                                                                             |  |       |  | $                | 112,483,953 |   |                   | $ | 113,899,688 |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|                                                                                                                                                                                         |  |       | 
|LIABILITIES, ORDINARY SHARES SUBJECT TO REDEMPTION AND SHAREHOLDERS EQUITY                                                                                                              |  |       |  |                  |             |   |                   |   |             |  
|                                                                                                                                                                                         |  |       | 
|Current liabilities                                                                                                                                                                      |  |       |  |                  |             |   |                   |   |             |  
|Accrued expenses                                                                                                                                                                         |  |       |  | $                | 199,582     |   |                   | $ | 669,328     |  
|Amounts due to founders                                                                                                                                                                  |  | 4     |  |                  | 18,733      |   |                   |   | 6,676       |  
|Warrants liability                                                                                                                                                                       |  | 6     |  |                  | 22,856,250  |   |                   |   | 30,187,500  |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|Total current liabilities                                                                                                                                                                |  |       |  | $                | 23,074,565  |   |                   | $ | 30,863,504  |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|Total liabilities                                                                                                                                                                        |  |       |  | $                | 23,074,565  |   |                   | $ | 30,863,504  |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|                                                                                                                                                                                         |  |       | 
|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 $765,361 at September 30, 2007) |  | 7     |  | $                | 22,198,962  |   |                   | $ | 22,604,436  |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|                                                                                                                                                                                         |  |       | 
|Shareholders equity                                                                                                                                                                     |  |       |  |                  |             |   |                   |   |             |  
|Ordinary shares$0.0005 par value; 50,000,000 shares authorized; 17,500,000 issued and outstanding at December 31, 2006 and
September 30, 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
September 30, 2007                                                 |  | 9     |  |                  |            |   |                   |   |            |  
|Additional paid-in capital                                                                                                                                                               |  | 8     |  |                  | 73,153,546  |   |                   |   | 73,302,509  |  
|Unit purchase option                                                                                                                                                                     |  | 3     |  |                  | 2,572,400   |   |                   |   | 2,572,400   |  
|Deficit accumulated during the development stage                                                                                                                                         |  |       |  |                  | (8,524,270  | ) |                   |   | (15,451,911 | )
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|Total shareholders equity                                                                                                                                                               |  |       |  | $                | 67,210,426  |   |                   | $ | 60,431,748  |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  
|Commitments and contingencies                                                                                                                                                            |  | 5, 12 |  |                  |             |   |                   |   |             |  
|                                                                                                                                                                                         |  |       | 
|Total liabilities, ordinary shares subject to redemption and shareholders equity                                                                                                        |  |       |  | $                | 112,483,953 |   |                   | $ | 113,899,688 |  
|                                                                                                                                                                                         |  |       |  |                  |             |   |                   |   |             |  

See accompanying notes to unaudited financial statements.



3



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

STATEMENTS OF OPERATIONS

FOR THE
THREE-MONTH PERIODS AND NINE-MONTH PERIODS

ENDED SEPTEMBER 30, 2006 AND SEPTEMBER 30, 2007

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

SEPTEMBER 30, 2007

(Unaudited)

(Expressed in United States Dollars)



|                                                          |  |      |  |                          |           |   |                         |   |           |                                                                 |  |   |                   |   |  |     |            |   |  |   |             |  
|--------------------------------------------------------- |  | ---- |  | ------------------------ | --------- | - | ----------------------- | - | --------- | --------------------------------------------------------------- |  | - | ----------------- | - |  | --- | ---------- | - |  | - | ----------- | -
|                                                          |  |      |  | Three-month period ended |           |   | Nine-month period ended |   |           | Period fromApril 25, 2005(date ofinception)
toSeptember 30,2007 | 
|                                                          |  |      |  | September 30,2006        |           |   | September 30,2007       |   |           | September 30,2006                                               |  |   | September 30,2007 |   | 
|                                                          |  | Note |  | US$                      |           |   | US$                     |   |           | US$                                                             |  |   | US$               |   |  | US$ |           
|Revenues                                                  |  |      |  | $                        |          |   |                         | $ |          |                                                                 |  | $ |                  |   |  | $   |           |   |  | $ |            |  
|Operating expenses                                        |  |      |  |                          | (265,071  | ) |                         |   | (532,418  | )                                                               |  |   | (632,186          | ) |  |     | (3,259,701 | ) |  |   | (4,698,810  | )
|                                                          |  |      |  |                          |           |   |                         |   |           |                                                                 |  |   |                   |   |  |     |            |   |  |   |             |  
|Operating loss                                            |  |      |  |                          | (265,071  | ) |                         |   | (532,418  | )                                                               |  |   | (632,186          | ) |  |     | (3,259,701 | ) |  |   | (4,698,810  | )
|Interest income                                           |  |      |  |                          | 1,330,544 |   |                         |   | 1,348,172 |                                                                 |  |   | 2,263,263         |   |  |     | 4,068,784  |   |  |   | 7,691,306   |  
|Decrease / (increase) in fair value of warrants liability |  | 6    |  |                          | 4,100,890 |   |                         |   | 1,437,500 |                                                                 |  |   | 2,445,954         |   |  |     | (7,331,250 | ) |  |   | (17,679,046 | )
|                                                          |  |      |  |                          |           |   |                         |   |           |                                                                 |  |   |                   |   |  |     |            |   |  |   |             |  
|Net income/(loss) before income tax expense               |  |      |  | $                        | 5,166,363 |   |                         | $ | 2,253,254 |                                                                 |  | $ | 4,077,031         |   |  | $   | (6,522,167 | ) |  | $ | (14,686,550 | )
|Income tax expense                                        |  | 2.4  |  |                          |          |   |                         |   |          |                                                                 |  |   |                  |   |  |     |           |   |  |   |            |  
|                                                          |  |      |  |                          |           |   |                         |   |           |                                                                 |  |   |                   |   |  |     |            |   |  |   |             |  
|Net income/(loss)                                         |  |      |  | $                        | 5,166,363 |   |                         | $ | 2,253,254 |                                                                 |  | $ | 4,077,031         |   |  | $   | (6,522,167 | ) |  | $ | (14,686,550 | )
|                                                          |  |      |  |                          |           |   |                         |   |           |                                                                 |  |   |                   |   |  |     |            |   |  |   |             |  
|Basic net income/(loss) per share                         |  |      |  | $                        | 0.30      |   |                         | $ | 0.13      |                                                                 |  | $ | 0.36              |   |  | $   | (0.37      | ) |  |   |             |  
|                                                          |  |      |  |                          |           |   |                         |   |           |                                                                 |  |   |                   |   |  |     |            |   |  |   |             |  
|Diluted net income/(loss) per share                       |  |      |  | $                        | 0.26      |   |                         | $ | 0.11      |                                                                 |  | $ | 0.32              |   |  | $   | (0.37      | ) |  |   |             |  
|                                                          |  |      |  |                          |           |   |                         |   |           |                                                                 |  |   |                   |   |  |     |            |   |  |   |             |  

See accompanying notes to unaudited 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 NINE-MONTH PERIOD ENDED

SEPTEMBER 30, 2007

(Unaudited)

(Expressed in United States Dollars)



|                                                                                                                                     |  |                 |  |        |       |                           |   |             |                    |  |                                              |           |  |                     |             |   |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- |  | ------ | ----- | ------------------------- | - | ----------- | ------------------ |  | -------------------------------------------- | --------- |  | ------------------- | ----------- | - |  | - | ----------- | -
|                                                                                                                                     |  |                 |  |        |       | Additionalpaid-in capital |   |             | Unitpurchaseoption |  | Deficitaccumulatedduring thedevelopmentstage |           |  | Shareholdersequity |            
|                                                                                                                                     |  | Ordinary shares |  |        |       |                          
|                                                                                                                                     |  | Shares          |  | Amount |       |                           |   |            
|                                                                                                                                     |  |                 |  | 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 |  |                     |            |   |  |   |            |  
|Share based compensation (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  |  
|                                                                                                                                     |  |                 |  |        |       |                          
|Share based compensation (Note 10)                                                                                                   |  |                |  |        |      |                           |   | 148,963     |                    |  |                                              |          |  |                     |            |   |  |   | 148,963     |  
|Reclassification of accrued interest subject to redemption (Note 7)                                                                  |  |                |  |        |      |                           |   |            |                    |  |                                              |          |  |                     | (405,474    | ) |  |   | (405,474    | )
|Net loss                                                                                                                             |  |                |  |        |      |                           |   |            |                    |  |                                              |          |  |                     | (6,522,167  | ) |  |   | (6,522,167  | )
|                                                                                                                                     |  |                 |  |        |       |                           |   |             |                    |  |                                              |           |  |                     |             |   |  |   |             |  
|                                                                                                                                     |  |                 |  |        |       |                          
|Balance at September 30, 2007                                                                                                        |  | 17,500,000      |  | $      | 8,750 |                           | $ | 73,302,509  |                    |  | $                                            | 2,572,400 |  | $                   | (15,451,911 | ) |  | $ | 60,431,748  |  
|                                                                                                                                     |  |                 |  |        |       |                           |   |             |                    |  |                                              |           |  |                     |             |   |  |   |             |  

See accompanying notes to unaudited 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 AND NINE-MONTH PERIODS

ENDED SEPTEMBER 30, 2006 AND SEPTEMBER 30, 2007

AND FOR THE PERIOD FROM APRIL 25, 2005 (DATE OF INCEPTION) TO SEPTEMBER 30, 2007

(Unaudited)

(Expressed in United States Dollars)



|                                                                                                    |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|--------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ----------------------- | - | ---------- | --------------------------------------------------------------- |  | - | ----------------- | - |  | --- | ---------- | - |  | - | ------------ | -
|                                                                                                    |  | Three-month period ended |            |   | Nine-month period ended |   |            | Period fromApril 25, 2005(date ofinception)
toSeptember 30,2007 | 
|                                                                                                    |  | September 30,2006        |            |   | September 30,2007       |   |            | September 30,2006                                               |  |   | September 30,2007 |   | 
|                                                                                                    |  | US$                      |            |   | US$                     |   |            | US$                                                             |  |   | US$               |   |  | US$ |           
|Cash flows from operating activities                                                                |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|                                                                                                    |  |                          |            |   |                        
|Net income/(loss)                                                                                   |  | $                        | 5,166,363  |   |                         | $ | 2,253,254  |                                                                 |  | $ | 4,077,031         |   |  | $   | (6,522,167 | ) |  | $ | (14,686,550  | )
|Adjustments to reconcile net income/(loss) to net cash (used in)/provided by operating activities : |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|Depreciation                                                                                        |  |                          | (806       | ) |                         |   | 17,251     |                                                                 |  |   | (806              | ) |  |     | 50,274     |   |  |   | 62,636       |  
|Interest income                                                                                     |  |                          | (646,237   | ) |                         |   | (691,677   | )                                                               |  |   | (1,146,037        | ) |  |     | (1,771,971 | ) |  |   | (3,818,006   | )
|Share based compensation                                                                            |  |                          | 29,133     |   |                         |   | 55,626     |                                                                 |  |   | 36,578            |   |  |     | 148,963    |   |  |   | 214,674      |  
|Revaluation of warrants liability                                                                   |  |                          | (4,100,890 | ) |                         |   | (1,437,500 | )                                                               |  |   | (2,445,954        | ) |  |     | 7,331,250  |   |  |   | 17,679,046   |  
|Increase in amount due from a related company                                                       |  |                          |           |   |                         |   |           |                                                                 |  |   | (5,750            | ) |  |     |           |   |  |   | (5,750       | )
|(Decrease)/increase in accrued expenses                                                             |  |                          | (76,037    | ) |                         |   | (264,441   | )                                                               |  |   | 3,351             |   |  |     | 469,746    |   |  |   | 669,328      |  
|(Increase)/decrease in prepayments, deposits and other receivables                                  |  |                          | (703,473   | ) |                         |   | 76,816     |                                                                 |  |   | (792,244          | ) |  |     | (633,625   | ) |  |   | (681,673     | )
|                                                                                                    |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|Net cash (used in)/provided by operating activities                                                 |  |                          | (331,947   | ) |                         |   | 9,329      |                                                                 |  |   | (273,831          | ) |  |     | (927,530   | ) |  |   | (566,295     | )
|                                                                                                    |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|                                                                                                    |  |                          |            |   |                        
|Cash flows from investing activities                                                                |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|                                                                                                    |  |                          |            |   |                        
|Purchase of restricted cash equivalents held in trust account                                       |  |                          |           |   |                         |   |           |                                                                 |  |   | (109,250,000      | ) |  |     |           |   |  |   | (109,250,000 | )
|Purchase of fixed assets                                                                            |  |                          | (4,079     | ) |                         |   | (1,295     | )                                                               |  |   | (6,125            | ) |  |     | (15,346    | ) |  |   | (138,400     | )
|                                                                                                    |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|Net cash used in investing activities                                                               |  |                          | (4,079     | ) |                         |   | (1,295     | )                                                               |  |   | (109,256,125      | ) |  |     | (15,346    | ) |  |   | (109,388,400 | )
|                                                                                                    |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|                                                                                                    |  |                          |            |   |                        
|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                                                               |  |                          |           |   |                         |   |           |                                                                 |  |   | 166,640           |   |  |     | 46,252     |   |  |   | 288,163      |  
|Repayment of amounts due to founders                                                                |  |                          | (42,920    | ) |                         |   | (15,179    | )                                                               |  |   | (203,241          | ) |  |     | (58,309    | ) |  |   | (281,487     | )
|Proceeds from initial public offering, net of underwriters discount and offering expenses          |  |                          |           |   |                         |   |           |                                                                 |  |   | 110,059,543       |   |  |     |           |   |  |   | 110,059,543  |  
|                                                                                                    |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|Net cash (used in)/provided by financing activities                                                 |  |                          | (42,920    | ) |                         |   | (15,179    | )                                                               |  |   | 110,022,942       |   |  |     | (12,057    | ) |  |   | 110,023,090  |  
|                                                                                                    |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|Net (decrease)/increase in cash and cash equivalents                                                |  |                          | (378,946   | ) |                         |   | (7,145     | )                                                               |  |   | 492,986           |   |  |     | (954,933   | ) |  |   | 68,395       |  
|Cash and cash equivalents at beginning of period                                                    |  |                          | 896,159    |   |                         |   | 75,540     |                                                                 |  |   | 24,227            |   |  |     | 1,023,328  |   |  |   |             |  
|                                                                                                    |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  
|Cash and cash equivalents at end of period                                                          |  | $                        | 517,213    |   |                         | $ | 68,395     |                                                                 |  | $ | 517,213           |   |  | $   | 68,395     |   |  | $ | 68,395       |  
|                                                                                                    |  |                          |            |   |                         |   |            |                                                                 |  |   |                   |   |  |     |            |   |  |   |              |  

See accompanying notes to unaudited financial statements.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 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 September 30, 2007, an amount of $113,068,006 (including interest) of the net proceeds plus investment income, 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 (see note 2.2). 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).

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 for the three-month periods ended September 30, 2006 and 2007, for the nine-month periods ended
September 30, 2006 and 2007 and for the period from April 25, 2005 (date of inception) to September 30, 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 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 September 30, 2007, the results of operations and cash flows for the three-month periods ended
September 30, 2006 and 2007, for the nine-month periods ended September 30, 2006 and 2007 and for the period from April 25, 2005 (date of inception) to September 30, 2007 as applicable, have been made. The results of operations
for the three-month period ended September 30, 2007 is not necessarily indicative of the operating results for the full fiscal year or any future periods.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007



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 September 30, 2007 consist primarily of money market funds purchased without maturity. The Company classifies these highly liquid investments to be cash equivalents. The
carrying value of cash equivalents approximates fair value. Interest income 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 and the underwriters unit
purchase option and consultants and employees share options. Actual results could differ from those estimates.



|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:
|--- | ----------------------------

Property,
plant and equipment 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 income /(loss) per share:
|--- | -----------------------------------------------

For the periods concerned, the number of shares used in the calculation of basic and diluted net income /(loss) per share is as follows:



|                                       |  |                                           |            |                                            |   |                                          |  |                                          |            |  |   |            |  
|-------------------------------------- |  | ----------------------------------------- | ---------- | ------------------------------------------ | - | ---------------------------------------- |  | ---------------------------------------- | ---------- |  | - | ---------- | -
|                                       |  | Three-monthperiod ended September 30,2006 |            | Three-month period ended September
30,2007 |   | Nine-monthperiod ended September 30,2006 |  | Nine-monthperiod ended September 30,2007 |           
|Net income/(loss)                      |  | $                                         | 5,166,363  |                                            | $ | 2,253,254                                |  | $                                        | 4,077,031  |  | $ | (6,522,167 | )
|                                       |  |                                           |            |                                           
|Denominator:                           |  |                                           |            |                                            |   |                                          |  |                                          |            |  |   |            |  
|Basic weighted average shares          |  |                                           | 17,500,000 |                                            |   | 17,500,000                               |  |                                          | 11,475,185 |  |   | 17,500,000 |  
|Effect of dilutive redeemable warrants |  |                                           | 2,240,102  |                                            |   | 3,521,417                                |  |                                          | 1,301,235  |  |   |           |  
|Effect of dilutive share options       |  |                                           | 97         |                                            |   | 20,369                                   |  |                                          | 56         |  |   |           |  
|                                       |  |                                           |            |                                            |   |                                          |  |                                          |            |  |   |            |  
|Diluted weighted average shares        |  |                                           | 19,740,199 |                                            |   | 21,041,786                               |  |                                          | 12,776,476 |  |   | 17,500,000 |  
|                                       |  |                                           |            |                                            |   |                                          |  |                                          |            |  |   |            |  
|Basic income /(loss) per share         |  | $                                         | 0.30       |                                            | $ | 0.13                                     |  | $                                        | 0.36       |  | $ | (0.37      | )
|                                       |  |                                           |            |                                            |   |                                          |  |                                          |            |  |   |            |  
|Diluted income /(loss) per share       |  | $                                         | 0.26       |                                            | $ | 0.11                                     |  | $                                        | 0.32       |  | $ | (0.37      | )
|                                       |  |                                           |            |                                            |   |                                          |  |                                          |            |  |   |            |  



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SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007



During the periods presented, the Companys dilutive potential common shares outstanding
consisted of 14,375,000 redeemable warrants, 2,000,000 ordinary shares issuable upon exercise of the unit purchase option, and 250,000 share options. The warrants, underwriters option and share options by applying the treasury stock method was
anti-dilutive.



|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 behaviors.
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%.



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.



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007



NOTE 4AMOUNTS 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 September 30,
2007, the Company drew $125,000 against the revolving credit line and obtained additional borrowings from the founders of $160,346 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 September 30, 2007, the amount due to the founders was $6,676.

NOTE 5AMOUNT DUE FROM A 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 September 30, 2007 for certain office and secretarial services according to the service agreement.

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). In consequence, a derivative within the above-mentioned parameters is recognized as an asset or liability where share settlement is not within the
companys control. Accordingly, in connection with the issuance of the units (see Note 3), the Company has recorded the fair value of the warrants as a liability with any changes in the fair value of such warrants at each reporting date being
recorded through the Companys statement of operations. The company will continue to adhere to the accounting policies set forth above until the warrant agreement is amended or there are developments which support a different accounting
treatment.

The Company has determined that the estimated fair value of the warrants on April 24, 2006, the date of issuance, and on
September 30, 2007 was approximately $0.87 and $2.10 per warrant, respectively, or an aggregate of $12,508,454 and $30,187,500, 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 September 30, 2007 was based on the 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



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##### Table of Contents

SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007



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.

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 $765,361 outside permanent equity as of
September 30, 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.

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.



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SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007



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.

On May 18, 2007, the Company further granted an option to consultant B to purchase 3,000 ordinary shares which vests six months after the consummation of a Business Combination, provided the consulting agreement
has not been terminated prior to the date which the option becomes vested. The options were granted for consulting services to be provided to the Company in connection with matters related to a Business Combination.

On the same date, the Company granted options to each of its two employees to purchase an aggregate of 10,000 ordinary shares which vests six months
after the consummation of a Business Combination, provided their employment agreements have not been terminated prior to the date which the options become vested. The options were granted for secretarial and administrative services to be provided to
the Company.

The exercise price of the three options granted on May 18, 2007 is $7.79, the closing market price of the ordinary
shares on the grant date. These options will expire upon the earlier of (i) the date the consulting or employment 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
termination of the services with the Company may be made by the Company in its sole discretion.

The Company determined that the estimated
fair value of the options granted on May 18, 2007 was approximately $1.0 per share or $13,000 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.

On May 22, 2007, the Company granted an option to another
independent consultant (consultant C) to purchase 2,000 ordinary shares which vests six months after the consummation of a Business Combination. The option was granted for services to be provided to the Company in connection with matters
related to a Business Combination.

The exercise price of the option granted on May 22, 2007 is $7.80, the closing market price of the
ordinary shares on the grant date. This option will expire upon the earlier of (i) 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 (ii) April 24, 2008 if a Business Combination is not consummated on or prior to such date, or (iii) August 31, 2007.

The Company determined that the estimated fair value of the option granted on May 22, 2007 was approximately $0.60 per share or $1,200 using the
lattice option pricing model. The risk-free rate for the expected term of the option is based on the US Treasury Yield with the same maturity of the option as at the grant date.

The assumptions used in determining the fair value of the options granted on each respective date are as follows:



|                        |  |                                |   |  |                                    |   |  |                                |   |  |                                |  
|----------------------- |  | ------------------------------ | - |  | ---------------------------------- | - |  | ------------------------------ | - |  | ------------------------------ | -
|                        |  | Options granted onJune 8, 2006 |   |  | Options granted onFebruary 1, 2007 |   |  | Options granted onMay 18, 2007 |   |  | Options granted onMay 22, 2007 |  
|Valuation assumptions   |  |                                |   |  |                                    |   |  |                                |   |  |                                |  
|Expected dividend yield |  | 0                              | % |  | 0                                  | % |  | 0                              | % |  | 0                              | %
|Expected volatility     |  | 20.00                          | % |  | 14.00                              | % |  | 13.26                          | % |  | 13.26                          | %
|Expected term(years)    |  | 3                              |   |  | 2                                  |   |  | 3                              |   |  | 1.28                           |  
|Risk-free interest rate |  | 4.97                           | % |  | 4.93                               | % |  | 4.71                           | % |  | 4.86                           | %



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SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007



Stock option activity during the periods indicated is 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
|Granted on May 18, 2007                                           |  | 13,000          |  |                                         | 1.000
|Granted on May 22, 2007                                           |  | 2,000           |  |                                         | 0.600
|                                                                  |  |                 |  |                                         |      
|Balance at September 30, 2007                                     |  | 250,000         |  | $                                       | 1.565
|                                                                  |  |                 |  |                                         |      
|Exercisable at September 30, 2007                                 |  |                |  | $                                       |     
|                                                                  |  |                 |  |                                         |      

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



|                                                                  |  |                 |  |                                        |      
|----------------------------------------------------------------- |  | --------------- |  | -------------------------------------- | -----
|Nonvested shares                                                  |  | Numberof shares |  | Weightedaverage 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
|Granted on May 18, 2007                                           |  | 13,000          |  |                                        | 1.000
|Granted on May 22, 2007                                           |  | 2,000           |  |                                        | 0.600
|                                                                  |  |                 |  |                                        |      
|Balance at September 30, 2007                                     |  | 250,000         |  | $                                      | 1.565
|                                                                  |  |                 |  |                                        |      

The Company has accounted for these share options under SFAS 123 (R) and EITF No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, by recording compensation based on the fair value at grant date or, where applicable, their then-current fair
values at each interim reporting date of such awards and amortizing the compensation amount over the expected term of the respective consulting or employment agreements which approximates the expected life of the respective options. The amount of
compensation recognized for these options for the nine-month period ended September 30, 2007 was $148,963. At September 30, 2007, there was $201,526 of total unrecognized compensation cost related to nonvested share options. The cost is
expected to be recognized over a weighted average period of 0.89 years.

NOTE 11ACQUISITION

On May 28, 2007, the Company entered into a definitive share purchase agreement (Purchase Agreement) to acquire 100 percent of the shares
of privately-owned Sichuan Kelun Pharmaceutical Co., Ltd. (Kelun), a pharmaceutical company based in China, for a total consideration of approximately $235.4 million comprising of cash and ordinary shares over a specified period of time
subject to the achievement of performance milestones. Kelun started its business in 1996. Since that time Kelun and its subsidiaries have been principally engaged in the development and production of IV solution products and their sale and
distribution in China.

In connection with the acquisition, management determined that Kelun will be treated as the accounting acquirer for
the following reasons: (i) immediately after the transaction, Kelun shareholders will hold approximately 53.3% of the voting rights in the combined company; (ii) under the Purchase Agreement, Kelun shareholders will have controlling rights
over the election of directors of the combined company; and (iii) the Company is a non-operating company while Kelun and its subsidiaries are operating entities and Keluns management will continue to operate the combined company. Since
the Company is not an operating company, the acquisition is treated as the issuance of shares of Kelun for the Companys net assets, and the carrying value of the Companys assets approximates their fair values. Therefore, no purchase
accounting fair value adjustments will be required and no goodwill will be recorded as a result of the acquisition.

The proposed
acquisition has been unanimously approved by the board of directors of the Company and Kelun. It is subject to the approval by a majority of the shareholders of the Company in person or by proxy at a meeting to be held for that purpose as well



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SHANGHAI CENTURY ACQUISITION CORPORATION

(a development stage enterprise)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007



as certain closing conditions, including obtaining approval from the Chinese government. In addition, the Company will not complete the acquisition if its
shareholders holding 20% or more of the ordinary shares issued in its initial public offering both vote against the acquisition and elect to convert their ordinary shares into a pro rata share of the funds in the Companys trust account.
Following the closing of the business combination, the Company will be renamed China Kelun Pharmaceutical Corporation (China Kelun).

On August 16, 2007, the Company filed a preliminary proxy statement with the SEC seeking approval from its shareholders for the announced acquisition of all of the issued and outstanding shares of Kelun. The proxy statement is still
being reviewed by the SEC.

NOTE 12COMMITMENTS AND CONTINGENCIES

On May 25 2007, the Company agreed to grant an option to an external advisor to purchase 100,000 ordinary shares of the Company. This option will be granted if he is elected to the Companys board, which
will occur if the acquisition of Kelun is completed and such election is approved by the shareholders. The exercise price of this option is $7.95, the closing market price of the ordinary shares on May 24, 2007.

Subsequent to September 30, 2007, the Company agreed to pay the Companys legal counsel approximately $447,500 of professional fees if a
Business Combination is consummated.



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|Item 2. | Managements Discussion and Analysis and Results of Operations
|------- | --------------------------------------------------------------

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 including the proposed business combination discussed below under the heading
Entry into Definitive Share Purchase Agreement, the ownership of our securities being concentrated and those other risks and uncertainties detailed in the Companys filings with the Securities and Exchange Commission, including our
registration statement on Form F-1 originally filed December 12, 2005 and the definitive prospectus thereunder, our annual report on Form 10-K for the year ended December 31, 2006, our current reports on Form 8-K filed on May 29,
2007, June 5, 2007, August 16, 2007 and September 19, 2007, respectively, and our preliminary proxy statement on Schedule 14A filed with the Securities and Exchange Commission on August 16, 2007 and the uncertainties
set forth from time to time in the Companys filings and other public statements.

Critical Accounting Policies

Share-Based Compensation

We adopted Statement
of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, or SFAS 123R, on January 1, 2006. Under SFAS 123R, we are required to measure the cost of all share-based payment transactions based on their grant- date fair
value and recognize the cost as an expense in our financial statements over the requisite service period, which is generally the period from the date of grant to the date when the share compensation is no longer contingent upon additional service
from the option holder, or the vesting period. We also follow EITF No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, for share options issued
to independent consultants by recording compensation cost based on the their then-current fair values at each interim reporting date over the expected term of the respective consulting agreements which approximates the expected life of the
respective options.

We determine the fair value of these share options using the lattice-option pricing model. Under this model, we make a
number of assumptions regarding the fair value of the options, including:



| |  |  | the expected volatility of our future ordinary share price;
| | - |  | -----------------------------------------------------------



| |  |  | the expected dividend rate; and
| | - |  | -------------------------------



| |  |  | the expected life of the options.
| | - |  | ---------------------------------

To determine the estimated fair value of our share options, we believe that the expected volatility is the most subjective assumption due to the lack of trading history of our ordinary shares. Changes in the volatility assumption could
significantly impact the estimated fair values of the options calculated by the lattice option pricing model. For share options granted prior to our initial public offering, expected volatility was estimated based upon the average volatility of an
index of certain guideline companies for a period that is commensurate with the life of those options. Guideline companies were used because we did not have a trading history at the time the options were issued and prior to having sufficient share
price history to calculate our own volatility, we believed the average volatility of the guideline companies was a reasonable benchmark to use in estimating the expected volatility of our ordinary shares. For share options granted after our initial
public offering, expected volatility was estimated based upon historical stock price movements over the most recent period that is commensurate with the expected life of those options.



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Changes in our estimates and assumptions regarding the expected volatility could significantly impact the
estimated fair values of our share options determined under the binomial valuation model and, as a result, our net loss.

Warrants Liability

On April 28, 2006, we completed the sale of 14,375,000 units in our initial 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. Each warrant entitles the holder to purchase from us one ordinary share at an exercise price of $6.00 commencing on the completion, if it occurs, of the acquisition
(Acquisition) by the Company of all of the issued and outstanding shares of Sichuan Kelun Pharmaceutical Co., Ltd. (Kelun), a joint stock limited company incorporated and existing under the laws of the Peoples Republic
of China (the PRC or China). The warrants expire on April 23, 2010.

In addition, on April 28, 2006, we
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 our initial 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 completion of the Acquisition.

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. We have agreed to meet these
conditions and use our best efforts to maintain a current prospectus relating to ordinary shares issuable upon exercise of the warrants until the expiration of the warrants. The warrant agreement does not specify the consequences or penalty imposed
against us in the event we are 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(EITF No. 00-19), 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 we are unable to
deliver registered shares, then net-cash settlement is assumed if we are unable to deliver registered shares (because it is unlikely that nonperformance would be an acceptable alternative). In consequence, a derivative within the
abovementioned parameters is recognized as an asset or a liability where share settlement is not within the Companys control. Accordingly, in connection with the issuance of the units upon the initial public offering, we have recorded
the fair value of the warrants as a liability with any changes in the fair value of such warrants at each reporting date being recorded through our statement of operations. We will continue to adhere to the accounting policies set forth above until
the warrant agreement is amended or there are developments which support a different accounting treatment.

We have determined that the
estimated fair value of the warrants on April 24, 2006, the date of issuance, and on September 30, 2007 was approximately $0.87 and $2.10 per warrant, respectively, or an aggregate of $12,508,454 and $30,187,500, 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 we do not consummate a business combination within the prescribed period and liquidates. The
fair value of the warrants as of September 30, 2007 was based on a quoted market price.



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The volatility calculation of 33.7779% was based on the latest five year average volatility of an index
of 447 companies drawn from the Shanghai Stock Exchange Composite Index, or the Shanghai Index, that have been trading for at least five years and that have market capitalizations of less than $400 million. Since we did not have a trading history at
the time the option was issued, we estimated the potential volatility of our ordinary share price by referring to the latest five year average volatility of the Shanghai Index because our board of directors believes that the average volatility of
this index is a reasonable benchmark to use in estimating the expected volatility of our ordinary shares 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 the option, to the extent we do not consummate a business combination within the prescribed time period and liquidate the underwriters option would become worthless.

Amount of Equity Subject to Possible Redemption

We are required to obtain shareholder
approval for any business combination of a target business, which includes the proposed Acquisition of Kelun. In the event that our public shareholders owning 20% or more of the ordinary shares sold in our initial public offering vote against a
business combination, we will not proceed with a business combination if the public shareholders exercise their redemption rights. That is, we can still effect a business combination if the public shareholders owning up to approximately 19.99% of
the ordinary shares sold in our initial public offering exercise their redemption rights.

This redemption obligation with respect to up to
19.99% of the ordinary shares sold in our initial public offering will exist regardless of how a business combination is structured. That is, we 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 our trust
account plus all accrued interest not previously released to us, as of two business days prior to the proposed consummation of the business combination, divided by 14,375,000 ordinary shares.

Accordingly, under the provision of EITF D-98, Classification and Measurement of Redeemable Securities,we have classified 19.99% of the net
proceeds from the initial public offering, or $21,839,075, and the related accrued interest of approximately $765,361 outside permanent equity as of September 30, 2007.

Entry into Definitive Share Purchase Agreement

On May 28, 2007, we entered into a definitive
share purchase agreement (Purchase Agreement) with Kelun, a joint stock limited company incorporated and existing under the laws of the PRC, and all the existing shareholders of Kelun (the Kelun Shareholders), pursuant to
which we will acquire all of the issued and outstanding share capital of Kelun from the Kelun Shareholders (the Acquisition). The Acquisition constitutes a business combination as defined in our amended and restated articles of
association. Kelun is principally engaged in the development and production of intravenous solution products and sales and distribution of these products to hospitals, clinics and other healthcare facilities in the PRC.

The aggregate purchase price payable by us to the Kelun Shareholders includes Shanghai Centurys ordinary shares and cash payments as described
below, which will be paid in the following manner:



| |  |  | At the closing of the Acquisition, we will issue an aggregate of 20,000,000 ordinary shares to the Kelun Shareholders, provided that, if the combined net profit of
Kelun for 2006 (subject to carveouts of certain accounting items as set forth in the share purchase agreement) equals or is less than RMB101.7 million, then the number of ordinary shares payable to the Kelun Shareholders will be subject to
renegotiation by us, Kelun and the Kelun Shareholders. For purposes of the foregoing calculation, such net profit of Kelun for 2006 will be based on the combined financial accounts of Kelun, as well as certain subsidiaries it acquired as part of a
restructuring to facilitate the Acquisition, for the financial year ended December 31, 2006 prepared by the management of Kelun in accordance with US GAAP based on the audited financial accounts of each such company after adjustments for
inter-company transactions and unrealized profits relating thereto and for the 20% minority interest in two subsidiaries;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Following the closing of the Acquisition, if the post-combination entity achieves or exceeds RMB180 million, RMB260 million and RMB370 million in net profit
(excluding the effects of certain accounting items) in 2007, 2008 and 2009, respectively, we will issue to the Kelun Shareholders an aggregate of 5,000,000 additional ordinary shares after the end of 2007, 2,000,000 additional ordinary shares after
the end of 2008 and 2,000,000 additional ordinary shares after the end of 2009; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Following the closing of the Acquisition, we will pay an aggregate of $11,500,000 to the Kelun Shareholders within 60 days after the earlier of (a) the date
when we send the notice of redemption to the holders of our outstanding redeemable warrants after the last sales price of our ordinary shares equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending three
business days before we send the notice of redemption and (b) the date when the agent for our warrants notifies us that at least 70% of the outstanding warrants have been exercised.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The parties intend that the current management of Kelun will operate the post-Acquisition business following the closing of the Acquisition. These
management members include Mr. Gexin Liu, the current chairman of Keluns board of directors, Mr. Zhipeng Cheng, an executive director and the general manager of Kelun, Ms. Hui Pan, an executive director and the vice president of
Kelun for procurement, Mr. Long Liang, an executive director and the head of the research and development division of Kelun, Mr. Suihua Liu, the current vice president of Kelun in charge of financial matters, human resources and general
administration, Mr. Deguang Chen, the current deputy general manager of Kelun in charge of sales and marketing, and Mr. Yangyu Wan, the current vice president of Kelun in charge of production.

Following the closing of the Acquisition, we will be renamed as China Kelun Pharmaceutical Corporation.

Consummation of the Acquisition is subject to PRC regulatory approvals, the approval of our shareholders and certain other conditions. In the event that
20% or more of our outstanding ordinary shares (excluding, for this purpose, those ordinary shares issued prior to our initial public offering) vote against the proposed Acquisition of Kelun and exercise their conversion rights, the Acquisition will
not be consummated. In light of such conditions, and the fact that we must complete a business combination by no later than April 28, 2008, we cannot assure you that we will be able to complete the Acquisition of Kelun.

For a more complete discussion of the proposed Acquisition, see our current reports on Form 8-K filed with the Securities and Exchange Commission on
May 29, 2007, June 5, 2007, August 16, 2007 and September 19, 2007, respectively, and our preliminary proxy statement on Schedule 14A filed with the Securities and Exchange Commission on August 16, 2007. Upon being
approved by the Securities and Exchange Commission, a definitive proxy statement will be sent to our shareholders seeking their approval of the Acquisition and related matters. Our shareholders and other interested persons are advised to read our
preliminary proxy statement and, when available, our definitive proxy statement in connection with our solicitation of proxies for approval of the Acquisition and related matters at a general meeting of our shareholders.

Results of Operations

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-month and
nine-month periods ended September 30, 2007.

For the three-month and nine-month periods ended September 30, 2007, we earned
interest income of approximately $1.3 million and $4.1 million, respectively, and incurred operating expenses of approximately $0.5 million and $3.3 million, respectively. Our expenses consist primarily of legal and accounting fees (including
principally fees associated with the negotiation and execution of the Purchase Agreement with Kelun and the Kelun Shareholders, as described above), 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 approximately $1.4 million and ($7.3) million in the three-month and nine-month periods ended September 30, 2007, respectively, which represents
a change in fair value of warrants liability during the respective periods.

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



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$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 our advisory and investment banking fees payable in connection with the business combination. Funds held in the trust account would only be used to pay these expenses and fees upon the consummation of a business combination, but would not
otherwise be available for these 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 and cash payments made to the Kelun Shareholders and to Shanghai Century Capital Corporation (SHCC), a company in
formation controlled by our Co-Chief Executive Officers, as a consideration for its management consulting services to be rendered to our company following the Acquisition, if they become payable under the Purchase Agreement) 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 our board of directors determines at that time. We and Keluns management currently have no commitments for the use of the
funds in the trust account following the completion of the Acquisition, although a portion may be used to pay the cash consideration to the Kelun Shareholders and to pay the consulting fees to SHCC if they become payable. We previously believed 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, would 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. However, we have incurred approximately $1.4 million in operating expenses in 2006 and approximately $3.3 million in operating expenses during the first nine months of 2007,
which consist primarily of legal and accounting fees, overhead fees, insurance, travel expenses in connection with the search of a target company, the structuring, negotiation and documentation of the Acquisition, the preparation of our preliminary
proxy statement on Schedule 14A filed with the Securities and Exchange Commission on August 16, 2007 as well as certain other expenses associated with being a public company. We do not believe we will need to raise additional funds in order to
meet the expenditures required for operating our business or to consummate the Acquisition, but we may need to use a portion of funds held in the trust account to settle any unpaid amounts of these operating expenses upon the consummation of the
Acquisition.

On April 28, 2006, in connection with our initial public offering, we 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 units issuable upon exercise of the option are identical to those offered in our initial public offering, except that the warrants have an exercise price of $7.50. The
option expires on April 23, 2011 and is exercisable at $10.00 per unit commencing on the completion of a business combination. 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 us or
the option holder.

In June 2006, we engaged Consultant A to assist us 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 his compensation for services provided to us, we granted to Consultant A (a) an option to purchase 50,000 ordinary shares which vests six months after
the consummation of a business combination and (b) 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 become
vested. The exercise price of both options is $7.10, the closing market price of our ordinary shares on the first day that they were traded on the American Stock Exchange. Both options will expire upon the earlier of (i) the date the consulting
agreement is terminated, or (ii) April 24, 2008 if a business combination is not consummated on or prior to that date. We have determined that the estimated fair value of these options on the date of grant was approximately $2.064 per
share, or an aggregate of $258,000, using the lattice option pricing model.

In February 2007, we granted an option to Consultant A to
purchase 100,000 ordinary shares which vests six months after the consummation of the Acquisition, and an option to Consultant B to purchase 10,000 ordinary shares which vests six months after the consummation of the Acquisition. Both options were
granted for consulting services to be provided to us in connection with matters related to the Acquisition. The exercise price of the two options granted on February 1, 2007 is $7.38, the closing market



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price of the ordinary shares on the grant date. These options will expire upon the earlier of (i) the date the consulting agreement is terminated, or
(ii) April 24, 2008 if a business combination is not consummated on or prior to that date. We determined that the estimated fair value of the options granted on February 1, 2007 was approximately $1.082 per share, or an aggregate of
$119,000, using the lattice option pricing model.

In May 2007, we granted (a) to Consultant B an option to purchase 3,000 ordinary
shares and (b) to Consultant C an option to purchase 2,000 ordinary shares. Each of these options vests six months after the consummation of the Acquisition. The exercise price of the option granted to Consultant B is $7.79, the closing market
price of our ordinary shares on the grant date. The exercise price of the option granted to Consultant C is $7.80, the closing market price of our ordinary shares on the grant date. These options will expire upon the earlier of (i) the date the
consulting agreement is terminated, or (ii) April 24, 2008 if a business combination is not consummated on or prior to that date.

In May 2007, we granted options to two of our employees to purchase an aggregate of 10,000 ordinary shares which vests six months after the consummation of the Acquisition. The exercise price of these two options is $7.79, the closing
market price of the ordinary shares on the grant date. These options will expire upon the earlier of (i) the date the employment agreement is terminated, or (ii) April 24, 2008 if a business combination is not consummated on or prior
to that date.

We determined that the estimated fair value of these options granted to Consultant B and two of our employees in May 2007
was approximately $1.0 per share, or an aggregate of $13,000 using the lattice option pricing model. We determined that the estimated fair value of the option granted to Consultant C in May 2007 was approximately $0.60 per share, or an aggregate of
$1,200, using the lattice option pricing model.

We have accounted for these share options under the fair value method of Statement of
Financial Accounting Standards No.123 (revised 2004) and EITF No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, by recording compensation based
on the fair value at grant date or, where applicable, their then-current fair values at each interim reporting date for these awards and amortizing the compensation amount over the expected term of the respective consulting or employment contracts
which approximates the expected life of the respective options. The amount of compensation recognized for these share options was $148,963 for the period ended September 30, 2007.

Also in May 2007, we agreed to grant an option to our advisor, Dr. Raymond Kuo Fung Chien, to purchase 100,000 ordinary shares. This option
will be granted if he is elected to our board, which will occur if the Acquisition is completed and such election is approved by our shareholders. The exercise price of this option is $7.95, the closing market price of the ordinary shares on
May 24, 2007.

Off-Balance Sheet Commitments and Arrangements

We have agreed to pay our legal counsel approximately $447,500 of professional fee if a business combination is consummated.

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any unconsolidated third parties. In addition, we have not entered into any derivative contracts that are
indexed to our shares and classified as shareholders equity, or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves
as credit, liquidity or market risk support to that entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or
research and development services with us.

Contractual Obligations

We have agreed to pay FDC Consultants Limited, a company owned and managed by Mr. Franklin D. Chu, our Co-Chief Executive Officer, $7,500 per month for office space and general and administrative services
including secretarial support until (i) the consummation of a business combination, (ii) 18 months after our initial public offering if we do not effect a business combination or (iii) 24 months after our initial public offering if a
letter of intent, agreement in principle or definitive agreement has been executed within 18 months of our initial public offering and we have not effected a business combination. Other than this agreement, as of December 31, 2006 and
September 30, 2007, we had no contractual obligations or commitments.



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|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices. We are not presently engaged in any substantive commercial business.
Accordingly, we are not and, until that time as it consummates a business combination, it will not be, exposed to risks associated with foreign exchange rates, commodity prices, equity prices or other market-driven rates or prices.

The net proceeds of our initial public offering held in the trust account have been invested only 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 the
Acquisition, 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.



|Item 4T. | Controls and Procedures
|-------- | -----------------------

Evaluation of
disclosure controls and procedures.An evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 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 Securities and Exchange Commissions rules and forms, and that information
required to be disclosed by us in the reports that it files or submits under the Exchange Act is accumulated and communicated to our 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 annual report on Form 10-K for the fiscal year ended December 31, 2006 and in the quarterly report on Form 10-Q for the quarterly period ended June 30, 2007 filed with the Securities and
Exchange Commission on April 19, 2007 and August 14, 2007, respectively.

In addition, there are substantial risks and
uncertainties relating to the proposed Acquisition of Kelun by us and the combined company following the Acquisition. We filed a preliminary proxy statement with the Securities and Exchange Commission on August 16, 2007 relating to the
Acquisition which includes a discussion of these risks. Upon being approved by the Securities and Exchange Commission, a definitive proxy statement will be sent to our shareholders seeking their approval of the Acquisition and related matters.
Shareholders of Shanghai Century and other interested persons are advised to read the preliminary proxy statement and, when available, the definitive proxy statement because they contain important information, including risk factors.



|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 $0.0005 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 Securities and Exchange Commission 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 Securities and Exchange
Commission.



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.



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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.



|Item 5. | Other Information
|------- | -----------------

For a summary of certain
material U.S. federal income tax consequences of the acquisition, ownership and disposition of our ordinary shares and warrants, please see Item 5Other InformationMaterial United States Federal Income Tax Considerations of
the quarterly report on Form 10-Q for the quarterly period ended June 30, 2007 filed with the Securities and Exchange Commission on August 14, 2007.



|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: November 16, 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.



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