UNITED
      STATESSECURITIES
      AND EXCHANGE COMMISSIONWashington,
      D.C. 20549


FORM
10-K


ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934


FOR
THE FISCAL YEAR ENDED MARCH 31, 2008


COMMISSION
FILE NUMBER 001-33343




MEDIA
      & ENTERTAINMENT HOLDINGS, INC.(Exact
      name of Registrant as specified in its charter)Delaware
            
            20-3178730(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)230
      Park Avenue
              Suite
      1000
              New
      York, New York
            
            10169
              (Zip
      code)(Address
      of principal executive offices)Registrant’s
      telephone number, including area code: (212) 551-1498


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




Name
      of Each Exchange on WhichTitle
      of Each Class
            
            
            
            the
      Securities are RegisteredUnits,
      each consisting of one share of Common Stock, $0.0001 par value, and one
      Warrant
              Common
      Stock included in the Units
              Warrants
      included in the Units
            
            American
      Stock Exchange
              American
      Stock Exchange
              American
      Stock Exchange


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


None.




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o  No x


Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. Yes o No x


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 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x  No o


Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405) is not contained herein, and will not be contained,
to the best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x


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):


Large
      accelerated filer o
            Accelerated
      filer x
            Non-accelerated
      filer o




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


Issuer’s
Revenues for the fiscal period ended March 31, 2008 were $0.


The
aggregate market value of the voting common stock held by non-affiliates of the
registrant computed by reference to the closing sales price for the registrant’s
common stock on June 11, 2008, as reported on the American Stock Exchange, was
approximately $95,871,960.


In
determining the market value of the voting stock held by any non-affiliates,
shares of common stock of the registrant beneficially owned by directors,
officers and holders of more than 10% of the outstanding shares of common stock
of the registrant have been excluded.  This determination of affiliate
status is not necessarily a conclusive determination for other
purposes.


Indicate
the number of shares outstanding of the issuer’s common stock, as of the latest
practicable date.




Number
      of Shares OutstandingTitle
      of Each Class
            
            
            at
      June 11, 2008Common
      Stock, $0.0001 par value
            15,120,000


Documents
Incorporated By Reference


None.





TABLE OF CONTENTS




PART I
            2ITEM 1.    Business
            2ITEM 1A. Risk Factors
            15ITEM 1B.  Unresolved Staff
      Comments
            29ITEM 2.    Properties
            30ITEM 3.    Legal
    Proceedings
            30ITEM 4.    Submission of Matters to a Vote
      of Security Holders
            30PART II
            30ITEM 5.    Market for Registrant’s Common
      Equity, Related Stockholder Matters and Issuer Purchases of Equity
      Securities
            30ITEM 6.    Selected Financial
      Data
            33ITEM 7.    Management’s Discussion and
      Analysis of Financial Condition and Results of
    Operations
            33ITEM 7A. Quantitative and Qualitative Disclosures
      about Market Risk
            38ITEM 8.    Financial Statements and
      Supplementary Data
            38ITEM 9.    Changes in and Disagreements With
      Accountants on Accounting and Financial Disclosure
            39ITEM 9A. Controls and Procedures
            39ITEM 9B.  Other Information
            41PART III
            41ITEM 10.  Directors, Executive Officers and
      Corporate Governance
            41ITEM 11.  Executive
    Compensation
            47ITEM 12.  Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters
            48ITEM 13.  Certain Relationships, Related
      Transactions and Director Independence
            50ITEM 14.  Principal Accounting Fees and
      Services
            51PART IV
            52ITEM 15.  Exhibits and Financial Statement
      Schedules
            52






i
 BACK


Forward-Looking
Statements




This
Annual Report on Form 10-K, and the information incorporated by reference in it,
include “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).  Our forward-looking
statements include, but are not limited to, statements regarding our
expectations, hopes, beliefs, intentions or strategies regarding the
future.  In addition, any statements that refer to protections,
forecasts or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking
statements.  The words “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “should,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking.  Forward-looking statements in this
report may include, for example, statements about our:




·
            Ability
      to complete a combination with one or more target
    businesses;


·
            Success
      in retaining or recruiting, or changes required in, our management or
      directors following a business
combination;


·
            Potential
      inability to obtain additional financing to complete a business
      combination;


·
            Limited
      pool of prospective target
businesses;


·
            Potential
      change in control if we acquire one of more target businesses for
      stock;


·
            Public
      securities’ limited liquidity and
trading;


·
            The
      delisting of our securities from the American Stock Exchange or an
      inability to have our securities listed on the American Stock Exchange
      following a business combination;


·
            Use
      of proceeds not in trust or available to us from interest income on the
      trust account balance; or


·
            Financial
      performance.




The
forward-looking statements contained or incorporated by reference in this Annual
Report on Form 10-K are based on our current expectation and beliefs concerning
future developments and their potential effects on us and speak only as of the
date of such statement.  There can be no assurance that future
developments affecting us will be those that we have
anticipated.  These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond our control) or other assumptions
that may cause actual results or performance to be materially different from
those expressed or implied by these forward-looking statements.  These
risks and uncertainties include, but are not limited to, those factors described
under the heading “Risk Factors.”  Should one or more of these risks
or uncertainties materialize, or should any of our assumptions prove incorrect,
actual results may vary in material respects from those projected in these
forward-looking statements.  We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under applicable
securities laws.




References
in this report as to “we,” “us” or “our Company” refer to Media &
Entertainment Holdings, Inc.  References to “public stockholders”
refer to holders of shares of common stock sold as part of the units in our
initial public offering, including any of our stockholders existing prior to the
initial public offering to the extent that they purchase or acquire such
shares.




BACK


PART I




ITEM 1.  Business




General




We are a
Delaware blank check company incorporated on July 8, 2005 in order to serve as a
vehicle for the acquisition of an operating business. We intend to focus on
companies solely in the entertainment, media and communications industries and
to seek out opportunities both domestically and internationally, particularly in
Europe and Asia, to take advantage of our management team’s experience in these
markets.




A
registration statement for our initial public offering was declared effective on
March 9, 2007.  On March 14, 2007, we completed our initial public
offering of 10,800,000 units at a price of $8.00 per unit.  Each unit
consists of one share of common stock and one warrant.  Each warrant
entitles the holder to purchase one share of common stock at a price of $5.00,
exercisable on the later of our completion of a business combination or March 9,
2008.  The warrants expire on March 9, 2011, or earlier upon
redemption.  Upon the closing of our initial public offering, on March
14, 2007, we sold and issued an option, for $100 to the representatives of the
underwriters, to purchase up to 540,000 units, at an exercise price of $10.00
per unit.




We
received total net proceeds of $81,420,447 from our initial public offering,
taking into account $4,979,533 of underwriting fees and other offering
expenses.  Simultaneously with the consummation of the initial public
offering, we privately sold an aggregate of 2,700,000 warrants to Messrs.
Granath, Seslowsky, Maggin and Clauser and The Hearst Corporation (together, the
“existing stockholders”) and one of their affiliates, Transmedia Corporation, at
a price of $1.00 per warrant, for an aggregate purchase price of $2,700,000, of
which $300,000 was used to pay off notes to our officers and the remaining
$2,400,000 was deposited in a trust account at JPMorganChase NY Bank, maintained
by Continental Stock Transfer & Trust Company.




On March
23, 2007, we completed the sale of an additional 1,620,000 units that were
granted to the underwriters as an over-allotment option at a price of $8.00 per
unit.  The initial public offering, including the exercise of the
over-allotment option, generated total gross proceeds of $99,360,000 to us,
excluding the proceeds from the offering of the 2,700,000 warrants on a private
basis to the existing stockholders.  The aggregate net proceeds of the
initial public offering, the exercise of the over-allotment option, and the sale
of warrants on a private basis to our existing stockholders of $96,618,800 were
placed in our trust account.  In addition, the underwriters of our
initial public offering agreed to defer payment of a portion of the underwriting
discount equal to 2.5% of the gross proceeds, or $2,484,000, and the full amount
of their non-accountable expense allowance, or $864,000.  These
deferred amounts will be held in trust and not released until the earlier to
occur of (i) the completion of our initial business combination or (ii) our
liquidation, in which case such proceeds will be distributed to the public
stockholders, together with all other funds held in the trust
account.  For a more complete discussion of our financial information,
please see the section in our Annual Report on Form 10-K entitled “Financial
Statements and Supplementary Data.”




Entertainment,
Media and Communications Industries




We are
focusing our efforts on identifying prospective target businesses in the
entertainment, media and communications industries.  The
entertainment, media and communications industries encompass those companies
which create, produce, deliver, own, distribute and/or market entertainment and
information content, products and services and include among
others:




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·
            broadcast
      television;




·
            cable,
      satellite and terrestrial television content
  delivery;




·
            film,
      television and video content production and
  distribution;




·
            newspaper,
      book, magazine, and specialty
publishing;




·
            motion
      picture exhibition and related
services;




·
            radio
      services via broadcast and
satellite;




·
            video
      game production and distribution;




·
            Internet
      media production and distribution;




·
            advertising
      agencies and other advertising services, including direct
      marketing;




·
            recorded
      music and other audio content production and distribution;
    and




·
            live
      event entertainment and venue
management.




Our
management team has extensive experience in the entertainment, media and
communications industries as senior executives, business consultants and/or
entrepreneurs. Herbert A. Granath, our Chairman of the Board and Chief Executive
Officer, currently serves as the Chairman Emeritus of ESPN, the 24-hour cable
sports network, and was previously employed as an executive of ABC for over 35
years. Harvey M. Seslowsky, our President and Chief Operating Officer, currently
serves as President of Transmedia Corporation, a private media consulting firm
he founded which provides consulting services to a variety of clients, including
Accenture Ltd., one of the world’s leading management consulting and technology
services organizations. Robert C. Clauser, Jr., our Executive Vice President,
Chief Financial Officer and Assistant Secretary most recently served as Lead
Strategy Partner of the Media & Entertainment Practice of Accenture Ltd.,
where he advised senior executive officers and the board of directors of
numerous media and entertainment companies on setting strategy, transforming
operations, and integrating technology to deliver growth, profitability and
value. Bruce Maggin, our Executive Vice President and Secretary, currently
serves as Vice President, Secretary and a Managing Member of The H.A.M. Media
Group, LLC, an international investment and advisory firm that specializes in
the entertainment and communications industries.




We intend
to leverage the industry experience of our executive officers by focusing our
efforts on identifying a prospective target business in the entertainment, media
and communications industries. We believe that companies involved in these
industries represent attractive acquisition targets for a number of reasons,
including a favorable economic environment for these industries, potentially
attractive valuations and the large number of middle market acquisition
candidates.




We
believe, based on our management’s collective business experience, that there
are numerous business opportunities in the entertainment, media and
communications industries. However, we cannot assure you that we will be able to
locate a target business in such industries or that we will be able to engage in
a business combination with a target business on favorable terms.




The
entertainment, media and communications industry represents a large and
expanding segment of the United States economy. According to
PricewaterhouseCoopers, LLP, global entertainment, media




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and
communications industry spending reached $1.3 trillion in 2004 and is expected
to increase to $1.8 trillion in 2009. The United States marketplace accounts for
$525 billion, or 42%, of the $1.3 trillion in spending. Certain segments of the
entertainment, media and communications industry, such as video games and
interactive multimedia software, are growing at rates above the industry average
domestically and are growing at even greater rates internationally.




Growth in
this industry has historically been driven by the introduction of new
technologies and the expansion of domestic and international markets. The latter
part of the 20th century witnessed the introduction and consumer acceptance of
cable television, home video, video games and compact discs. The 1990s witnessed
the emergence of additional products and improved delivery systems such as
interactive multimedia entertainment software, simulator and virtual reality
attractions and fiber optic cable. The emergence of the DVD and CD-ROM formats
has further increased this expansion.  The beginning of the 21st
century has witnessed even greater expansion as the emergence of next-generation
technologies has significantly strengthened growth opportunities for music,
video and television distribution through: direct broadcast satellite; digital
cable including VOD and mobile technologies; video games; and
broadband.




Effecting
a business combination




General




We are
not presently engaged in, and we will not engage in, any substantive commercial
business for an indefinite period of time. We intend to utilize the cash held in
trust, derived from the proceeds of our initial public offering and the private
placement of our warrants, our capital stock, debt or a combination of these in
effecting a business combination. While substantially all of the net proceeds of
our initial public offering are intended to be generally applied toward
effecting a business combination, the proceeds are not otherwise being
designated for any more specific purposes. Accordingly, there is no current
basis for shareholders to evaluate the specific merits or risks of any one or
more business combinations. A business combination may involve the acquisition
of, or merger with, a company which does not need substantial additional capital
but which desires to establish a public trading market for its shares, while
avoiding what it may deem to be adverse consequences of undertaking a public
offering itself. These include time delays, significant expense, loss of voting
control and compliance with various Federal and state securities laws. In the
alternative, we may seek to consummate a business combination with a company
that may be financially unstable, which would subject us to the numerous risks
inherent in such companies.




We are
currently in the process of identifying and evaluating targets for an initial
transaction.  We have not entered into any definitive business
combination agreement.




Prior to
the consummation of a business combination, we seek and will continue to seek to
have all vendors, prospective target businesses or other entities that we may
engage, which we refer to as potential contracted parties or a potential
contracted party, execute agreements with us waiving any right, title, interest
or claim of any kind in or to any monies held in the trust account for the
benefit of our public stockholders.  There is no assurance that we
will be able to get waivers from all of our vendors, and there is no assurance
that such waivers will be enforceable by operation of law or that creditors
would be prevented from bringing claims against the trust.  In the
event that a potential contracted party were to refuse to execute such a waiver,
then, as a board policy, our board of directors must approve our entering into
the contract.




Subject
to the limitation that a target business has a fair market value of at least 80%
of our net assets at the time of the acquisition and is within the
entertainment, media and communications industries,




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as
described below in more detail, we will have virtually unrestricted flexibility
in identifying and selecting a prospective acquisition candidate. Accordingly,
there is no basis for investors to evaluate the possible merits or risks of the
target business with which we may ultimately complete a business combination.
Although our management will endeavor to evaluate the risks inherent in a
particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.




Our
management believes that the net proceeds of our initial public offering,
particularly in light of the fact that our company could also utilize a
combination of cash and equity and/or debt securities as consideration in a
potential acquisition, would be sufficient to enable our company to pursue
either “spin-off” transactions with larger, well-established companies in the
target industries (in which our company would acquire a target subsidiary or
business division of a seasoned large or mid-cap company) or acquisitions of
small- or mid-cap companies in the target industries with attractive valuations
between approximately $80 million and $500 million that are in need of a new,
highly experienced management team. Management believes that companies that have
valuations greater than $500 million generally are acquisition candidates for
larger and more established operating companies that have developed marketing
and distribution capabilities and the ability to leverage existing products
and/or services to increase their market presence. Management further believes
that whether it solely applies, as acquisition consideration, the proceeds of
the trust, combines such proceeds with additional equity securities, or raises
additional acquisition consideration through the issuance and sale of debt
securities, it will be able to complete a business combination with a company
whose fair market value is equal to at least 80% of our company’s net
assets.




Sources
of target businesses




We
anticipate that our officers and directors as well as their affiliates will
bring to our attention target business candidates. While our officers and
directors make no commitment as to the amount of time they will spend trying to
identify or investigate potential target businesses, they believe that the
various relationships they have developed over their careers, together with
their direct inquiry, will generate a number of potential target businesses that
will warrant further investigation. As senior executives, business consultants
and entrepreneurs in the entertainment, media and communications industries,
members of our management team have been, and are likely to continue to be,
presented with proposals and offers of many varieties with respect to
prospective investments and transactions. They may also become aware of
potential transaction opportunities by attending entertainment, media and
communications conferences or conventions.




Target
business candidates may also be brought to our attention from various
unaffiliated sources, including investment bankers, venture capital funds,
leveraged buyout funds, hedge funds, management buyout funds and other members
of the financial community who are aware that we are seeking a business
combination partner via public relations and marketing efforts, direct contact
by management or other similar efforts and who may present solicited or
unsolicited proposals.  We may pay finders’ fees or compensation to
third parties for their efforts in introducing us to potential target businesses
which we would negotiate at the time. Such payments, which are typically based
on the dollar value of the transaction, could be paid to entities we engage for
this purpose or ones that approach us on an unsolicited basis. In no event,
however, will we pay any of our existing officers, directors or stockholders or
any entity with which they are affiliated any finder’s fee or other compensation
for services rendered to us prior to or in connection with the consummation of a
business combination. In addition, none of our officers, directors, or existing
stockholders will receive any finder’s fee, consulting fees or any similar fees
from any person or entity in connection with any business combination involving
us other than any compensation or fees that may be received for any services
provided following such business combination.




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Selection
of a target business and structuring of a business combination




Subject
to the requirement that our initial business combination must be with a target
business with a fair market value that is at least 80% of our net assets at the
time of such acquisition, our management will have virtually unrestricted
flexibility in identifying and selecting a prospective target business. If our
initial business combination involves a transaction in which we acquire less
than a 100% interest in the target company, the value of the interest we acquire
will similarly be equal to 80% of our net assets at the time of such
acquisition. In all instances, we would be the controlling shareholder of the
target company. The key factors that we will rely on in determining controlling
shareholder status would be our acquisition of at least 51% of the voting equity
interests of the target company and control of the majority of any governing
body of the target company. We will not consider any transaction that does not
meet such criteria.  In evaluating a prospective target business, our
management will consider, among other factors, the following:




·
            financial
      condition and results of operation;




·
            cash
      flow potential;




·
            growth
      potential;




·
            experience
      and skill of management and availability of additional
      personnel;




·
            capital
      requirements;




·
            competitive
      position;




·
            barriers
      to entry by competitors;




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




·
            security
      measures employed to protect technology, trademarks or trade
      secrets;




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




·
            proprietary
      features and degree of intellectual property or other protection of the
      products, processes or services;




·
            regulatory
      environment of the industry; and




·
            costs
      associated with effecting the business
  combination.




These
criteria are not intended to be exhaustive. Any evaluation relating to the
merits of a particular business combination will be based, to the extent
relevant, on the above factors as well as other considerations deemed relevant
by our management in effecting a business combination consistent with our
business objective. In evaluating a prospective target business, we will conduct
an extensive due diligence review which will encompass, among other things,
meetings with incumbent management and inspection of facilities, as well as
review of financial and other information which will be made available to us. As
needed, our management may hire a third party to assist us in performing the due
diligence and valuation of the target company.




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The time
and costs required to select and evaluate a target business and to structure and
complete the business combination cannot presently be ascertained with any
degree of certainty. Any costs incurred with respect to the identification and
evaluation of a prospective target business with which a business combination is
not ultimately completed will result in a loss to us and reduce the amount of
capital available to otherwise complete a business combination. However, we will
not pay any finder’s, consulting or similar fees to any of our existing
stockholders, or any of their respective affiliates, for services rendered to or
in connection with a business combination.




Fair
Market Value of Target Business




The
initial target business that we acquire must have a fair market value equal to
at least 80% of our net assets at the time of such acquisition. If our initial
business combination involves a transaction in which we acquire less than a 100%
interest in the target company, the value of the interest we acquire will
similarly be equal to 80% of our net assets at the time of such acquisition. In
all instances, we would be the controlling shareholder of the target company.
The key factors that we will rely on in determining controlling shareholder
status would be our acquisition of at least 51% of the voting equity interests
of the target company and control of the majority of any governing body of the
target company. We will not consider any transaction that does not meet such
criteria. The fair market value of such business will be determined by our board
of directors based upon standards generally accepted by the financial community,
such as actual and potential sales, the values of comparable businesses,
earnings and cash flow and book value. If our board is not able to independently
determine that the target business has a sufficient fair market value, we will
obtain an opinion from an unaffiliated, independent investment banking firm
which is a member of the National Association of Securities Dealers, Inc. with
respect to the satisfaction of such criteria. Since any opinion, if obtained,
would merely state that fair market value meets the 80% of net assets threshold,
it is not anticipated that copies of such opinion would be distributed to our
stockholders, although copies will be provided to stockholders who request it.
We will not be required to obtain an opinion from an investment banking firm as
to the fair market value if our board of directors independently determines that
the target business has sufficient fair market value.




Possible
lack of business diversification




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




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


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




Limited
ability to evaluate the target business’ management




Although
we intend to scrutinize the management of a prospective target business when
evaluating the desirability of effecting a business combination, we cannot
assure you that our assessment




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of the
target business’ management will prove to be correct. In addition, we cannot
assure you that the future management will have the necessary skills,
qualifications or abilities to manage a public company. Furthermore, although it
is our present intention to have our current officers and directors remain with
us following a business combination, the future role of our officers and
directors and their respective remuneration, if any, in the target business
following a business combination cannot presently be stated with any certainty.
Our current officers and directors would only be able to remain with the company
after the consummation of a business combination if they are able to negotiate
employment or consulting agreements in connection with the business combination.
Such negotiations would take place simultaneously with the negotiation of the
business combination and could provide for such individuals to receive
compensation in the form of cash payments and/or our securities for services
they would render to the company after the consummation of the business
combination. While the personal and financial interests of such individuals may
influence their motivation in identifying and selecting a target business, the
ability of such individuals to remain with the company after the consummation of
a business combination will not be the determining factor in our decision as to
whether or not we will proceed with any potential business combination, though
these considerations will be a factor in our decision, which poses potential
conflicts of interest.  Additionally, we cannot assure you that our
officers and directors will have significant experience or knowledge relating to
the operations of the particular target business.




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




Opportunity
for stockholder approval of business combination




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




In
connection with the vote required for any business combination, all of our
existing stockholders, including all of our officers and directors, have agreed
to vote their respective shares of common stock owned by them, including any
shares of common stock purchased in or following our initial public offering, in
accordance with the vote of the public stockholders owning a majority of the
shares of our common stock sold as part of units in our initial public offering.
We will proceed with the business combination only if a majority of the shares
of common stock voted by the public stockholders are voted in favor of the
business combination and public stockholders owning less than 20% of the shares
sold in our initial public offering exercise their conversion
rights.




Conversion
rights




At the
time we seek stockholder approval of any business combination, we will offer
each public stockholder (but not our existing stockholders) the right to have
such stockholder’s shares of common stock converted to cash if the stockholder
votes against the business combination and the business combination is approved
and completed. Our existing stockholders will not have such conversion rights
with respect to any shares of common stock owned by them, directly or
indirectly, whether acquired before, during or after our initial public
offering. The actual per-share conversion price will be equal to the amount in
the trust account, inclusive of any interest (calculated as of two business days
prior to the consummation of the proposed business combination), divided by the
number of shares sold in our initial




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public
offering. The per-share conversion price as of March 31, 2008 would be
approximately $7.86, or $0.14 less than the per-unit offering price of $8.00.
Because the per-share conversion price is approximately $7.86 per share upon
liquidation, plus any interest (excluding up to $1,800,000 of interest earned on
the monies in the trust account used by us as working capital), which is less
than the $8.00 per-unit offering price and may be less than the market price of
the common stock on the date of conversion, there may be a disincentive on the
part of public stockholders to exercise their conversion rights. An eligible
stockholder may request conversion at any time after the mailing to our
stockholders of the proxy statement and prior to the vote taken with respect to
a proposed business combination at a meeting held for that purpose, but the
request will not be granted unless the stockholder votes against the business
combination and the business combination is approved and completed. If a
stockholder votes against the business combination but fails to properly
exercise its conversion rights, such stockholder will not have its shares of
common stock converted to its pro rata distribution of the trust fund. Any
request for conversion, once made, may be withdrawn at any time up to the date
of the meeting. It is anticipated that the funds to be distributed to
stockholders entitled to convert their shares who elect conversion will be
distributed promptly after completion of a business combination. Public
stockholders who convert their stock into their share of the trust account still
have the right to exercise the warrants that they received as part of the units.
We will not complete any business combination if public stockholders, owning 20%
or more of the shares sold in our initial public offering, both exercise their
conversion rights and vote against the business combination. Accordingly, it is
our understanding and intention in every case to structure and consummate a
business combination in which approximately 19.99% of the public stockholders
may exercise their conversion rights and a business combination will still go
forward.




Liquidation
if no business combination




If a
letter of intent, agreement in principle or definitive agreement for a business
combination has not been executed prior to July 14, 2008 (16 months from March
14, 2007, the date of our initial public offering), which is two months before
the initial deadline for a business combination, our board will, prior to such
date, convene, adopt and recommend to our stockholders a plan of dissolution and
distribution and on such date file a proxy statement with the Securities and
Exchange Commission (the “SEC”) seeking stockholder approval for such plan, as
described below. If, however, a letter of intent, agreement in principle or
definitive agreement for a business combination has been executed prior to
September 14, 2008 (18 months from March 14, 2007, the date of our initial
public offering), we will abandon our plan of dissolution and distribution that
had been submitted to our stockholders and will instead seek the consummation of
that business combination. If, following the extent of such letter of intent,
agreement in principle or definitive agreement, a proxy statement seeking the
approval of our stockholders for that business combination has not been filed
prior to January 14, 2009 (22 months from March 14, 2007, the date of our
initial public offering), our board will, prior to such date, convene, adopt and
recommend to our stockholders a plan of dissolution and distribution, and on
such date file a proxy statement with the SEC seeking stockholder approval for
such plan. Upon dissolution, we will distribute to all of our public
stockholders, in proportion to their respective equity interests, an aggregate
sum equal to the amount in the trust account (including the amount representing
the $2,484,000 deferred portion of the underwriters’ fees and the $864,000
deferred representatives’ non-accountable expense allowance, plus any interest),
net of taxes payable. We anticipate notifying the trustee of the trust account
to begin liquidating such assets promptly after such date. Our existing
stockholders, including purchasers in our private placement offering, have
waived their rights to participate in any liquidation distribution, but only
with respect to those shares of common stock owned by them prior to our initial
public offering; they will participate in any liquidation distribution with
respect to any shares of common stock acquired in connection with or following
our initial public offering. There will be no distribution from the trust
account with respect to our existing stockholders’ warrants, which will expire
worthless. We will pay the costs of liquidation from our working capital of up
to $1,800,000 funded from interest on monies held in the trust account. If such
funds are insufficient, our officers will pay the funds necessary to complete
such liquidation. Our




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officers
have provided, through our counsel, our independent directors with summary
aggregate net worth information showing reasonably sufficient assets with which
they could meet their respective obligations to complete such liquidation, if it
should become necessary.




If we
were to expend all of the net proceeds of our initial public offering, other
than the proceeds deposited in the trust account, the per-share liquidation
price as of March 31, 2008 would be $7.86, or $0.14 less than the per-unit
offering price of $8.00. The proceeds deposited in the trust account could,
however, become subject to the claims of our creditors, based on fraudulent
inducement, breach of fiduciary responsibility or similar claims, which would
have higher priority than the claims of our public stockholders, in which case
our public stockholders would receive less than $7.86 per unit upon exercise of
their conversion rights. Although we will seek to have all vendors, prospective
target businesses or other entities we engage execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the
trust account for the benefit of our public stockholders, there is no guarantee
that they will execute such agreements or even if they execute such agreements
that they would be prevented from bringing claims against the trust account,
including but not limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims challenging the
enforceability of the waiver, in each case in order to gain an advantage with a
claim against our assets, including the funds held in the trust account. If any
third party refused to execute an agreement waiving such claims to the monies
held in the trust account, we would perform an analysis of the alternatives
available to us if we chose not to engage such third party and evaluate if such
engagement would be in the best interest of our stockholders if such third party
refused to waive such claims. In addition, it is board policy that our board of
directors must approve our entering into any contract with a third party who
refused to waive such claims.  Examples of possible instances where we
may engage a third party that refused to execute a waiver include the engagement
of a third party consultant whose particular expertise or skills are believed by
management to be significantly superior to those of other consultants that would
agree to execute a waiver or in cases where management is unable to find a
provider of required services willing to provide the waiver. In any event, our
management would perform an analysis of the alternatives available to it and
would only enter into an agreement with a third party that did not execute a
waiver if management believed that such third party’s engagement would be
significantly more beneficial to us than any alternative.




In
addition, there is no guarantee that such entities will agree to waive any
claims they may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek recourse against
the trust account for any reason. Messrs. Granath, Seslowsky, Clauser and Maggin
have each agreed, pursuant to a letter agreement with us and the
representatives, that if we liquidate prior to the consummation of a business
combination, they will be personally liable to pay debts and obligations to
target businesses or third parties that are owed money by us for services
rendered or contracted for or products sold to us in excess of the net proceeds
of our initial public offering not held in the trust account. Our officers have
provided, through our counsel, our independent directors with summary aggregate
net worth information showing reasonably sufficient assets with which they could
meet their respective obligations, if it should become necessary. In addition,
our board of directors, a majority of which are independent directors, would
have a fiduciary obligation to our stockholders to bring a claim against
Messers. Granath, Seslowsky, Clauser and Maggin to enforce their liability
obligation. None of these four individuals will be personally liable to pay any
of our debts and obligations except as provided above. Accordingly, the actual
per-share liquidation price could be less than $7.86 due to claims of
creditors.




Our
public stockholders will be entitled to receive funds from the trust account
only in the event of the expiration of our existence and our liquidation or if
they seek to convert their respective shares into cash upon a business
combination which the stockholder voted against and which is completed by us. In
no other circumstances will a stockholder have any right or interest of any kind
to or in the trust account.




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Under the
Delaware General Corporation Law, stockholders may be held liable for claims by
third parties against a corporation to the extent of distributions received by
them in dissolution. If the corporation complies with certain procedures set
forth in Section 280 of the Delaware General Corporation Law intended to ensure
that it makes reasonable provision for all claims against it, including a 60-day
notice period during which any third-party claims can be brought against the
corporation, a 90-day period during which the corporation may reject any claims
brought, and an additional 150-day waiting period before any liquidating
distributions are made to stockholders, any liability of stockholders with
respect to a liquidating distribution is limited to the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution. Because we will not be complying with
Section 280, we will seek stockholder approval to comply with Section 281(b) of
the Delaware General Corporation Law, requiring us to adopt a plan that will
provide for our payment, based on facts known to us at such time, of (i) all
existing claims, (ii) all pending claims and (iii) all claims that may be
potentially brought against us within the subsequent 10 years. However, because
we are a blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target businesses to
acquire, the only likely claims to arise would be from our vendors and service
providers (such as accountants, lawyers, investment bankers, etc.) and potential
target businesses. As described above, we will seek to have all vendors, service
providers and prospective target businesses execute agreements with us waiving
any right, title, interest or claim of any kind they may have in or to any
monies held in the trust account. As a result, the claims that could be made
against us will be significantly limited and the likelihood that any claim would
result in any liability extending to the trust is remote.




If we are
forced to file a bankruptcy case or an involuntary bankruptcy case is filed
against us that is not dismissed, the proceeds held in the trust account could
be subject to applicable bankruptcy law, and may be included in our bankruptcy
estate and subject to the claims of third parties with priority over the claims
of our stockholders. To the extent any bankruptcy claims deplete the trust
account, we cannot assure you we will be able to return to our public
stockholders at least $7.86 per share.




We
currently believe that any plan of dissolution and liquidation subsequent to the
expiration of the 16 and 22-month deadlines described above would proceed in
approximately the following manner:




·
            our
      board will, prior to such date, convene, adopt and recommend to our
      stockholders a plan of dissolution and distribution, and on such date file
      a proxy statement with the SEC seeking stockholder approval for such
      plan;




·
            upon
      such deadline, we would file our preliminary proxy statement with the
      SEC;




·
            if
      the SEC does not review the preliminary proxy statement, then, 10 days
      following the passing of such deadline, we will mail the proxy statements
      to our stockholders, and 30 days following the passing of such deadline,
      we will convene a meeting of our stockholders, at which they will either
      approve or reject our plan of dissolution and liquidation;
    and




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




In the
event we seek stockholder approval for a plan of dissolution and liquidation and
do not obtain such approval, we will nonetheless continue to pursue stockholder
approval for our dissolution. If




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no proxy
statement seeking the approval of our stockholders for a business combination
has been filed on or before January 14, 2009 (22 months from March 14, 2007, the
date of our initial public offering), our board will, prior to such date,
convene, adopt and recommend to our stockholders a plan of dissolution and
distribution, and on such date file a proxy statement with the SEC seeking
stockholder approval for such plan. The funds held in our trust account may not
be distributed except upon our dissolution and, unless and until such approval
is obtained from our stockholders, the funds held in our trust account will not
be released. Consequently, holders of a majority of our outstanding stock must
approve our dissolution in order to receive the funds held in our trust account
and the funds will not be available for any other corporate
purpose.




Competition




In
identifying, evaluating and selecting a target business, we may encounter
intense competition from other entities having a business objective similar to
ours. Many of these entities are well established and have extensive experience
identifying and effecting business combinations directly or through affiliates.
Many of these competitors possess greater technical, human and other resources
than us. Further:




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




·
            our
      obligation to convert into cash shares of common stock held by our public
      stockholders (but not our existing stockholders) in certain instances may
      reduce the resources available to us for a business combination;
      and




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




Any of
these factors may place us at a competitive disadvantage in successfully
negotiating a business combination. Our management believes, however, that to
the extent that our target business is a privately held entity, our status as a
well-financed public entity and the substantial industry expense of our officers
may give us a competitive advantage over entities having a similar business
objective as ours in acquiring a target business with significant growth
potential on favorable terms.




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




Conflicts
of Interest




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




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




·
            In
      the course of their other business activities, our officers and directors
      may become aware of investment and business opportunities which may be
      appropriate for presentation to us as well as the other entities with
      which they are affiliated. They may have conflicts of interest in
      determining to which entity a particular business opportunity should be
      presented.




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·
            Our
      officers and directors may in the future become affiliated with entities,
      including other blank check companies, engaged in business activities
      similar to those intended to be conducted by us. The members of our
      management are currently affiliated with the following entities. Herbert
      A. Granath is currently Chairman Emeritus of ESPN, a cable sports network,
      and Telnet, Belgium’s leading cable company. He is also the Vice Chairman
      of the board of directors of Central European Media Enterprises Ltd., a
      company which owns and operates leading commercial television stations in
      central and eastern Europe, and is Co-Chair of the board of directors of
      Crown Media Holdings, which owns and operates the Hallmark Channel. Harvey
      M. Seslowsky is currently affiliated with Transmedia Corporation, a
      private media consulting firm, and is a director of the International
      Academy of Television Arts & Sciences. Bruce Maggin currently serves
      as the Vice President, Secretary and Managing Member of The H.A.M. Media
      Group, LLC, an international investment and advisory firm specializing in
      the entertainment and communications industries. He sits on the board of
      advisors of JumpTV Inc., on the boards of directors of Phillips-Van Heusen
      Corporation and Central European Media Enterprises Ltd. Two of our
      directors, Mr. Reilly and Mr. Roskin, are also currently affiliated with
      other companies. For instance, Mr. Reilly currently serves as the
      President and Chief Executive Officer of the American Management
      Association, sits on the USO Worldwide Board of Governors and is a member
      of the Board of Directors of the New York Society of Association
      Executives. He is also the U.S. Chairman of the United States Chapter of
      the Royal Society of the Arts and serves on the Board of AARP Services,
      Inc. Mr. Roskin, a Senior Advisor to Viacom Inc., also presently serves on
      the board of directors of Ritz Interactive, Inc., a specialty online
      retailer and e-commerce provider, as well as on the board of ION Media
      Networks, an owner and operator of 60 broadcast television
      stations.




·
            Our
      officers and directors own shares of our common stock which will be
      released from escrow only if a business combination is successfully
      completed, and will own existing stockholders’ warrants that are subject
      to lock-up agreements restricting their sale until our initial business
      combination is completed (which will be worthless if a business
      combination is not consummated). Accordingly, our board may have a
      conflict of interest in determining whether a particular target business
      is appropriate to effect a business
combination.




·
            The
      personal and financial interests of our directors and officers may
      influence their motivation in identifying and selecting a target business,
      completing a business combination on a timely basis and securing the
      release of their stock.




·
            If
      we determined to enter into a business combination with an entity
      affiliated with any of our officers, directors or existing stockholders,
      they may benefit personally and financially from such transaction. As a
      result, such personal and financial interests may influence their
      motivation in identifying and selecting a target
  business.




·
            If
      management negotiates their retention as a condition to any potential
      business combination, management may look unfavorably upon or reject a
      business combination with a potential target business whose owners refuse
      to retain members of our management post-business
    combination.




·
            Our
      management may enter into consulting or employment agreements with the
      target company as part of a business combination pursuant to which they
      may be entitled to compensation for their services to be rendered to the
      company after the consummation of a business combination. We anticipate
      that management will base their negotiations for such employment
      agreements on terms agreed to by executives at similarly-situated
      companies for




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which
such information is publicly available. Similarly, such future payments to
themselves or to their affiliates may also then be included in the merger vote
and approval process.




With
respect to potential conflicts relating to potential business combinations, in
general, prior to availing themselves personally of a business opportunity,
officers and directors of a corporation incorporated under the laws of the State
of Delaware are required to present business opportunities to the subject
corporation if:




·
            the
      corporation could financially undertake the
  opportunity;




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




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




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




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




In
connection with the vote required for our initial business combination, all of
our existing stockholders, including all of our officers and directors, have
agreed to vote the shares of common stock owned by them, including any shares of
common stock purchased in or following our initial public offering, in
accordance with the majority of the shares of common stock voted by the public
stockholders (other than our existing stockholders). Our officers, directors and
existing stockholders will not have the right to convert any shares of common
stock owned by them, directly or indirectly, whether included in their initial
shares or any shares of common stock purchased in or following our initial
public offering, into a pro rata share of the trust account. In addition, they
have agreed to waive their respective rights to participate in any liquidating
distribution with respect to their initial shares (but not with respect to any
shares of common stock purchased in or following our initial public
offering).




To
further minimize potential conflicts of interest, we have agreed not to
consummate a business combination with an entity that is affiliated with any of
our existing stockholders unless we obtain an opinion from an independent
investment banking firm that the business combination is fair to our
stockholders from a financial point of view. We expect that any such opinion
will be included in our proxy solicitation materials, furnished to stockholders
in connection with their vote on such a business combination.




Employees




We
currently have four executive officers. These individuals are not obligated to
devote any minimum number of hours to our matters as the nature of identifying
and negotiating with a target business may require extensive time commitments at
certain stages and very little at others. However,




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these
individuals intend to devote as much time as they deem necessary to our affairs.
The amount of time they will devote in any time period will vary based on
whether a target business has been selected for a potential business combination
and the stage of a potential business combination. Accordingly, once management
locates a suitable target business to acquire, they will spend more time
investigating such target business and negotiating and processing the business
combination (and consequently devote more time to our affairs) than they would
prior to locating a suitable target business. We expect Messrs. Granath,
Seslowsky, Maggin and Clauser each to devote an average of approximately 10
hours per week to our business during the target identification stage, and close
to full time during due diligence and negotiation of a business combination. We
do not intend to have any full time employees prior to the consummation of a
business combination.




ITEM 1A.  Risk Factors




An
investment in our securities involves a high degree of risk. You should consider
carefully all of the material risks described below, together with the other
information contained in this Annual Report on Form 10-K  before
making a decision to invest in our securities.  If any of the
following events occur, our business, financial condition and operating results
may be materially adversely affected.  In that event, the trading
price of our securities could decline, and you could lose all or part of your
investment.




Risks
Associated with our Business




We
are a development stage company with no operating history and, accordingly, you
will not have any basis on which to evaluate our ability to achieve our business
objective.




We are a
development stage company with no operating results to date. Since we do not
have an operating history, you have no basis upon which to evaluate our ability
to achieve our business objective, which is to acquire an operating
business.  We are currently in the process of identifying and
evaluating prospective target businesses, however, we may be unable to complete
a business acquisition.  As described in this Annual Report on Form
10-K, we will not generate any operating revenues until, at the earliest, after
the consummation of a business combination. We cannot assure you that a business
combination will occur.  If we spend all of the proceeds from our
initial public offering not held in trust and interest income earned up to
$1,800,000 on the balance of the trust account that may be released to us to
fund our working capital requirements in seeking a business combination but fail
to complete such a combination, we will never generate any operating
revenues.  Through June 10, 2008, we spent $780,605 of the amount not
held in trust and $747,148 of interest income earned in the trust
account.




Because
of the significant competition for business combination opportunities, we may
not be able to consummate an attractive business combination within the required
time frame.




We expect
to encounter intense competition from entities other than blank check companies
having a business objective similar to ours, including leveraged buyout funds,
hedge funds and operating businesses competing for acquisitions. Many of these
entities are well established and have extensive experience in identifying and
effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and other resources than we do.
Further, the obligation we have to seek stockholder approval of a business
combination may delay the consummation of a transaction, and our obligation to
convert into cash the shares of common stock held by public stockholders in
certain instances may reduce the resources available for a business combination.
Additionally, our outstanding warrants, and the future dilution they potentially
represent, may not be viewed favorably by certain target businesses. Any of
these obligations may place us at a competitive disadvantage in successfully
negotiating a business combination.




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We will
be limited by the requirement that our initial business combination must be with
a business with a fair market value of at least 80% of our net assets at the
time of such acquisition. This requirement will prevent us from initially
targeting smaller companies, even if we believe they are attractive candidates
for acquisition. While it is likely that we will have the ability to initially
complete only a single business combination, this may entail the acquisition of
several operating businesses at the same time. If we determine to simultaneously
acquire several businesses and such businesses are owned by different sellers,
we would need each of the sellers to agree that our purchase of its business is
contingent on the simultaneous closings of the other acquisitions, which may be
difficult for us to accomplish and could delay the completion of the business
combination. With multiple acquisitions, we could also face additional risks,
including additional burdens and costs with respect to possible multiple
negotiations and due diligence investigations (if there are multiple sellers)
and the additional risks associated with the subsequent assimilation of the
operations and services or products of the acquired companies in a single
operating business.




If a
letter of intent, agreement in principle or definitive agreement for a business
combination has not been executed prior to July 14, 2008 (16 months from March
14, 2007, the date of our initial public offering), which is two months before
the initial deadline for a business combination, our board will, prior to such
date, convene, adopt and recommend to our stockholders a plan of dissolution and
distribution and on such date file a proxy statement with the SEC seeking
stockholder approval for such plan. If, however, a letter of intent, agreement
in principle or definitive agreement for a business combination has been
executed prior to September 14, 2008 (18 months from March 14, 2007, the date of
our initial public offering), we will abandon our plan of dissolution and
distribution that had been submitted to our stockholders and will instead seek
the consummation of that business combination. If, following the execution of
such letter of intent, agreement in principle or definitive agreement, a proxy
statement seeking the approval of our stockholders for that business combination
has not been filed prior to January 14, 2009 (22 months from March 14, 2007, the
date of our initial public offering), our board will, prior to such date,
convene, adopt and recommend to our stockholders a plan of dissolution and
distribution and on such date file a proxy statement with the SEC seeking
stockholder approval for such plan. We currently believe that any plan of
dissolution and liquidation subsequent to the expiration of the 16 and 22-month
deadlines would proceed in approximately the following manner:




·
            our
      board will, prior to such date, convene, adopt and recommend to our
      stockholders a plan of dissolution and distribution, and on such date file
      a proxy statement with the SEC seeking stockholder approval for such
      plan;




·
            upon
      such deadline, we would file our preliminary proxy statement with the
      SEC;




·
            if
      the SEC does not review the preliminary proxy statement, then, 10 days
      following the passing of such deadline, we will mail the proxy statements
      to our stockholders, and 30 days following the passing of such deadline we
      will convene a meeting of our stockholders, at which they will either
      approve or reject our plan of dissolution and liquidation;
    and




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




In the
event we seek stockholder approval for a plan of dissolution and liquidation and
do not obtain such approval, we will nonetheless continue to pursue stockholder
approval for our dissolution.




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The funds
held in our trust account may not be distributed except upon our dissolution
and, unless and until such approval is obtained from our stockholders, the funds
held in our trust account will not be released. Consequently, holders of a
majority of our outstanding stock must approve our dissolution in order to
receive the funds held in our trust account and the funds will not be available
for any other corporate purpose.




These
procedures, or a vote to reject any plan of dissolution and liquidation by our
stockholders, may result in substantial delays in the liquidation of our trust
account to our public stockholders as part of our plan of dissolution and
liquidation.




We
may be unable to obtain additional financing, if required, to complete a
business combination or to fund the operations and growth of the target
business, which could compel us to restructure the transaction or abandon a
particular business combination.




Although
we believe that the net proceeds of our initial public offering will be
sufficient to allow us to consummate a business combination, we cannot ascertain
the capital requirements for any particular transaction. If the net proceeds of
our initial public offering prove to be insufficient, either because of the size
of the business combination or because we become obligated to convert into cash
a significant number of shares from dissenting stockholders (other than our
existing stockholders), we will be required to seek additional financing. We
cannot assure you that such financing would be available on acceptable terms, if
at all. To the extent that additional financing proves to be unavailable when
needed to consummate a particular business combination, we would be compelled to
restructure the transaction or abandon that particular business combination and
seek an alternative target business candidate. In addition, if we consummate a
business combination, we may require additional financing to fund the operations
or growth of the target business. The failure to secure additional financing
could significantly curtail the continued development or growth of the target
business, thereby limiting its ability to effectively compete in the
marketplace. None of our officers, directors or stockholders is required to
provide any financing to us in connection with or after a business
combination.




If
we are forced to liquidate before a business combination and distribute the
trust account, our public stockholders will receive approximately $7.86 per
share, which is less than the $8.00 per unit offering price, upon distribution
of the trust account and our warrants will expire worthless.




If we are
unable to complete a business combination within the required time frame and are
forced to liquidate our assets, the per-share liquidation distribution will be
approximately $7.86, which is less than the $8.00 per unit offering price,
because of the expenses of our initial public offering, our general and
administrative expenses and the anticipated costs of seeking a business
combination. Furthermore, there will be no distribution with respect to our
outstanding warrants, which will expire worthless if we liquidate before the
completion of a business combination.




If
third parties bring claims against us, the proceeds held in trust could be
reduced and the per-share liquidation price received by stockholders could be
less than approximately $7.86 per share.




Our
placing of funds in trust may not protect those funds from third party claims
against us. Although we seek to have all vendors and service providers we engage
and prospective target businesses we negotiate with, execute agreements with us
waiving any right, title, interest or claim of any kind in or to any monies held
in the trust account for the benefit of our public stockholders, there is no
guarantee that they will execute such agreements. Nor is there any guarantee
that, even if such entities execute such agreements with us, they will not seek
recourse against the trust account. Accordingly, the proceeds held in trust may
be subject to claims which would take priority over those of our public
stockholders. If we liquidate before the completion of a business combination
and distribute the proceeds held in trust to our




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public
stockholders, Messrs. Granath, Seslowsky, Clauser and Maggin have each agreed,
pursuant to written agreements with us and the representatives of the
underwriters, that they will be personally liable to ensure that the proceeds in
the trust account are not reduced by the claims of third parties that are owed
money by us for services rendered or contracted for or products sold to us.
Messrs. Granath, Seslowsky, Clauser and Maggin are aware of their
indemnification obligation in the event of a claim on the trust account. They
have provided, through our counsel, our independent directors with summary
aggregate net worth information showing reasonably sufficient assets with which
they could meet their respective obligations to indemnify the trust, if it
should become necessary. In addition, our board of directors, a majority of
which are independent directors, would have a fiduciary obligation to our
stockholders to bring a claim against Messers. Granath, Seslowsky, Clauser and
Maggin to enforce their liability obligation. However, we cannot assure you that
the per-share distribution from the trust account will not be less than $7.86
due to such claims.




Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is
filed against us that is not dismissed, the funds held in our trust account will
be subject to applicable bankruptcy law, and may be included in our bankruptcy
estate and subject to claims of third parties with priority over the claims of
our public stockholders. To the extent bankruptcy claims deplete the trust
account, we cannot assure you we will be able to return to our public
stockholders at least $7.86 per share.




Our
stockholders may be held liable for claims by third parties against us to the
extent of distributions received by them.




If a
letter of intent, agreement in principle or definitive agreement for a business
combination has not been executed prior to September 14, 2008 (16 months from
March 14, 2007, the date of our initial public offering), which is two months
before the initial deadline for a business combination, our board will, prior to
such date, convene, adopt and recommend to our stockholders a plan of
dissolution and distribution and on such date file a proxy statement with the
SEC seeking stockholder approval for such plan. If, however, a letter of intent,
agreement in principle or definitive agreement for a business combination has
been executed prior to September 14, 2008 (18 months from March 14, 2007, the
date of our initial public offering), we will abandon our plan of dissolution
and distribution that had been submitted to our stockholders and will instead
seek the consummation of that business combination. If, following the execution
of such letter of intent, agreement in principle or definitive agreement, a
proxy statement seeking the approval of our stockholders for that business
combination has not been filed prior to March 14, 2009 (22 months from March 14,
2007, the date of our initial public offering), our board will, prior to such
date, convene, adopt and recommend to our stockholders a plan of dissolution and
distribution, and on such date file a proxy statement with the SEC seeking
stockholder approval for such plan. Under Sections 280 through 282 of the
Delaware General Corporation Law, stockholders may be held liable for claims by
third parties against a corporation to the extent of distributions received by
them in a dissolution. If the corporation complies with certain procedures
intended to ensure that it makes reasonable provision for all claims against it,
including a 60-day notice period during which any third-party claims can be
brought against the corporation, a 90-day period during which the corporation
may reject any claims brought, and an additional 150-day waiting period before
any liquidating distributions are made to stockholders, any liability of
stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution. However, it is our intention to make
liquidating distributions to our stockholders as soon as reasonably possible
after dissolution and, therefore, we do not intend to comply with those
procedures. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them in a dissolution and any
liability of our stockholders may extend beyond the third anniversary of such
dissolution. Accordingly, we cannot assure you that third parties will not seek
to recover from our stockholders amounts owed to them by us.




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Since
we have not yet selected a target business with which to complete a business
combination, we are unable to currently ascertain the particular merits or risks
of the business in which we may ultimately operate.




Although
we are focusing our efforts on the entertainment, media and communications
industries, there is no current basis for you to evaluate the possible merits or
risks of the particular target business which we may ultimately acquire. To the
extent we complete a business combination with a financially unstable company or
an entity in its development stage, we may be affected by numerous risks
inherent in the business operations of those entities. Although our management
will endeavor to evaluate the risks inherent in our industry or a particular
target business, we cannot assure you that we will properly ascertain or assess
all of the significant risk factors. We also cannot assure you that an
investment in our units will not ultimately prove to be less favorable to
investors in our initial public offering than a direct investment, if an
opportunity were available, in a target business.




Resources
could be wasted in researching acquisitions that are not
consummated.




It
is anticipated that the investigation of each specific target business and the
negotiation, drafting, and execution of relevant agreements, disclosure
documents, and other instruments will require substantial time and attention and
substantial costs for accountants, attorneys and others. In addition, we may opt
to make down payments or pay exclusivity or similar fees in connection with
structuring and negotiating a business combination. If a decision is made not to
complete a specific business combination, the costs incurred up to that point in
connection with the abandoned transaction, potentially including down payments
or exclusivity or similar fees, would not be recoverable. Furthermore, even if
an agreement is reached relating to a specific target business, we may fail to
consummate the transaction for any number of reasons, including those beyond our
control such as that more than approximately 19.99% of our public stockholders
vote against the transaction even though a majority of our public stockholders
approve the transaction. Any such event will result in a loss to us of the
related costs incurred, which could adversely affect subsequent attempts to
locate and acquire or merge with another business. Any such event will result in
a loss to us of the related costs incurred which could significantly limit our
ability to subsequently locate and acquire or merge with another
business.




We
are dependent on interest earned in the trust account to fund our search for a
target company and consummation of a business combination, and the amount of
this interest may not be sufficient for this purpose.




We
are dependent upon sufficient interest being earned on the proceeds held in the
trust account to provide us with the working capital we will need to search for
a target company and consummate a business combination. While we expect to
utilize up to a maximum of $1,800,000, for such purpose, if interest rates were
to decline substantially, we may not have sufficient funds available to complete
a business combination. If we do not have sufficient proceeds available to fund
our expenses, we may be forced to obtain additional financing, either from our
directors and officers or from third parties. We may not be able to obtain
additional financing, and our existing stockholders, directors and officers are
not obligated to provide any additional financing. If we do not have sufficient
proceeds and cannot find additional financing, we may be forced to liquidate
prior to consummating a business combination.




We
may issue additional shares of our capital stock, including through convertible
debt securities, to complete a business combination, which would reduce the
equity interest of our stockholders and likely cause a change in control of our
ownership.




Our
amended and restated certificate of incorporation authorizes the issuance of up
to 70,000,000 shares of common stock, par value $.0001 per share, and 1,000,000
shares of preferred stock, par value




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$.0001
per share.  Immediately after our initial public offering, including
the exercise of the underwriters’ over-allotment option, there were 38,680,000
authorized but unissued shares of our common stock available for issuance (after
appropriate reservation for the issuance of shares upon full exercise of our
outstanding warrants and the purchase option granted to the representatives of
the underwriters, and giving effect to the April 2006 and June 2006
contributions of common stock to us by certain of our stockholders and the stock
dividend in March 2007) and all of the 1,000,000 shares of preferred stock
available for issuance. Although we currently have no commitments to issue our
securities, we may issue a substantial number of additional shares of our common
stock, or preferred stock, or a combination of both, including through
convertible debt securities, to complete a business combination. The issuance of
additional shares of our common stock or any number of shares of our preferred
stock, including upon conversion of any debt securities:




·
            may
      significantly reduce the equity interest of our
    stockholders;




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




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




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




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




·
            default
      and foreclosure on our assets if our operating income and other resources
      after a business combination were insufficient to pay our debt
      obligations;




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




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




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




·
            our
      inability to pay dividends on our common
stock;




·
            using
      a substantial portion of our cash flow to pay principal and interest on
      our debt, which will reduce the funds available for dividends on our
      common stock, working capital, capital expenditures, acquisitions and
      other general corporate purposes;




·
            limitations
      on our flexibility in planning for and reacting to changes in our business
      and in the industry in which we
operate;




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·
            increased
      vulnerability to adverse changes in general economic, industry and
      competitive conditions and adverse changes in government
      regulation;




·
            limitations
      on our ability to borrow additional amounts for working capital, capital
      expenditures, acquisitions, debt service requirements, execution of our
      strategy or other purposes; and




·
            other
      disadvantages compared to our competitors who have less
    debt.




While
our current officers and directors intend to remain with us upon the
consummation of a business combination, we cannot ensure that they will remain
with us since some or all of them may resign upon the completion of the proposed
business combination.




Our
ability to effect a business combination successfully is totally dependent upon
the efforts of our key personnel. The future role of our key personnel following
a business combination, however, cannot presently be fully ascertained. Although
it is our present intention to have our current officers and directors remain
with us following a business combination, we may employ other personnel
following the business combination. Moreover, our current management will only
be able to remain with the combined company after the consummation of a business
combination if they are able to negotiate a position with the combined company
as part of any such combination. Such negotiations would take place
simultaneously with the negotiation of the business combination and could
provide for such individuals to receive compensation in the form of cash
payments and/or securities for services they would render to our company after
the consummation of the business combination. If we acquired a target business
in an all-cash transaction, it would be more likely that current members of
management would remain with us if they chose to do so. If a business
combination were structured as a merger whereby the stockholders of the target
company were to control the combined company, following a business combination,
it may be less likely that management would remain with the combined company
unless it was negotiated as part of the transaction through the acquisition
agreement, an employment agreement or other arrangement. In making the
determination as to whether current management should remain with us following
the business combination, management will analyze the experience and skill set
of the target business’ management and negotiate as part of the business
combination that certain members of current management remain if it is believed
that it is in the best interests of the combined company post-business
combination. While we intend to closely scrutinize any additional individuals we
engage after a business combination, we cannot assure you that our assessment of
these individuals will prove to be correct. These individuals may be unfamiliar
with the requirements of operating a public company as well as United States
securities laws which could cause us to have to expend time and resources
helping them become familiar with such laws. This could be expensive and
time-consuming and could lead to various regulatory issues which could divert
significant management attention from operating a prospective business and make
operating a prospective business more difficult.




There
may be potential conflicts of interest with our current officers and directors
and the management of the proposed target business regarding future employment
which may cause our officers and directors or the management of the target
business to look unfavorably upon or reject a business combination with a
potential target business.




When
determining the future management of a proposed target business, the current
intent of our officers and directors to remain with the business may conflict
with the desire of the current management to retain their positions. If our
management negotiates their retention as a condition to any potential business
combination, our management may look unfavorably upon or reject a business
combination whose owners refuse to retain members of our management
post-combination, thereby resulting in a conflict of interest. Similarly, the
current owners of our target business may have a vested interest in




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trying to
remain with the company following the business combination, thereby causing a
conflict of interest in completing any potential business combination.
Similarly, the personal and financial interests of our directors and officers
may influence their motivation in identifying and selecting a target business
and completing a business combination on a timely basis. While the personal and
financial interests of such individuals may influence their motivation in
identifying and selecting a target business, the ability of such individuals to
remain with the company after the consummation of a business combination will
not be the determining factor in our decision whether or not we will proceed
with any potential business combination, through we acknowledge that these
factors may be a factor in our decision, which poses potential conflicts of
interest.




The
ability of our public stockholders to exercise their conversion rights may not
allow us to effectuate the most desirable business combination or optimize our
capital structure.




At the
time we seek stockholder approval of any business combination, we will offer
each public stockholder (but not our existing stockholders) the right to have
such stockholder’s shares of common stock converted to cash if the stockholder
votes against the business combination and the business combination is approved
and completed. Because the per-share conversion price is approximately $7.86 per
share upon liquidation, which may be less than the $8.00 per-unit offering price
and may be less than the market price of the common stock on the date of
conversion, there may be a disincentive on the part of public stockholders to
exercise their conversion rights. A public stockholder must both vote against
such business combination and then exercise such holder’s conversion rights to
receive a pro rata portion of the trust fund. Accordingly, if our business
combination requires us to use substantially all of our cash to pay the purchase
price, because we will not know how many stockholders may exercise such
conversion rights, we may either need to reserve part of the trust fund for
possible payment upon such conversion, or we may need to arrange third party
financing to help fund our business combination in case a larger percentage of
stockholders exercise their conversion rights than we expected. Therefore, we
may not be able to consummate a business combination that requires us to use all
of the funds held in the trust account as part of the purchase price, or we may
end up having a leverage ratio that is not optimal for our business combination.
This may limit our ability to effectuate the most attractive business
combination available to us.




The
loss of key executives could adversely affect our ability to
operate.




Our
operations are dependent upon a relatively small group of key executives. We
believe that our success depends on the continued service of our key executive
management team. Although it is our present intention to have our current
officers and directors remain with us following a business combination, we
cannot assure you that such individuals will remain with us for the immediate or
foreseeable future. While the personal and financial interest of such
individuals may influence their motivation in identifying and selecting a target
business, the ability of such individuals to remain with the company after the
consummation of a business combination will not be the determining factor in our
decision as to whether or not we will proceed with any potential business
combination, though these considerations will be a factor in our decision, which
poses potential conflicts of interest. We do not have employment contracts with
any of our current executives. The unexpected loss of the services of one or
more of these executives could have a detrimental effect on our ability to
effectively operate our business and/or locate a prospective target business to
acquire.




If
we seek to effect a business combination with an entity that is directly or
indirectly affiliated with one or more of our existing stockholders or
directors, conflicts of interest could arise.




Our
initial stockholders and directors either currently have or may in the future
have affiliations with other companies. For instance, Herbert A. Granath is
currently Chairman Emeritus of ESPN, a cable




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sports
network, and Telnet, Belgium’s leading cable company. He is also the Vice
Chairman of the board of directors of Central European Media Enterprises Ltd., a
company which owns and operates leading commercial television stations in
central and eastern Europe, and is Co-Chair of the board of directors of Crown
Media Holdings, which owns and operates the Hallmark Channel. Harvey M.
Seslowsky is currently affiliated with Transmedia Corporation, a private media
consulting firm, and is a director of the International Academy of Television
Arts & Sciences. Bruce Maggin currently serves as the Vice President,
Secretary and Managing Member of The H.A.M. Media Group, LLC, an international
investment and advisory firm specializing in the entertainment and
communications industries. He sits on the board of advisors of JumpTV Inc., on
the boards of directors of Phillips-Van Heusen Corporation and Central European
Media Enterprises Ltd. Two of our directors, Mr. Reilly and Mr. Roskin, are also
currently affiliated with other companies. For instance, Mr. Reilly currently
serves as the President and Chief Executive Officer of the American Management
Association, sits on the USO Worldwide Board of Governors and is a member of the
Board of Directors of the New York Society of Association Executives. He is also
the U.S. Chairman of the United States Chapter of the Royal Society of the Arts
and serves on the Board of AARP Services, Inc. Mr. Roskin, a Senior Advisor to
Viacom Inc., also presently serves on the board of directors of Ritz
Interactive, Inc., a specialty online retailer and e-commerce provider, as well
as on the board of ION Media Networks, an owner and operator of 60 broadcast
television stations. If we were to seek a business combination with a target
company with which one or more of our existing stockholders or directors may be
affiliated, conflicts of interest could arise in connection with negotiating the
terms of and completing the business combination. Conflicts that may arise may
not be resolved in our favor.




We cannot
assure you that we will not in the future engage in discussions with or examine
any such business as a potential target. We will evaluate each potential
business combination opportunity as it comes to our attention, whether or not it
is with a business that may be affiliated with one of our officers. We believe
that it is most prudent to evaluate each potential opportunity as we hear of it,
whether or not it is with a business affiliated with one of our officers.
Moreover, we would evaluate any such affiliated business on the same basis as a
non-affiliated business, and negotiations with such potential business would be
conducted on an arms’ length basis and subject to the approval of our board,
which contains a majority of independent directors. In addition, we have agreed
not to consummate a business combination with an entity that is affiliated with
any of our existing stockholders unless we obtain an opinion from an independent
investment banking firm that the business combination is fair to our
stockholders from a financial point of view. We expect that any such opinion
will be included in our proxy solicitation materials, furnished to stockholders
in connection with their vote on such a business combination.




Our
officers and directors will allocate their time to other businesses thereby
causing conflicts of interest in their determination as to how much time to
devote to our affairs and thereby limit their ability to devote sufficient time
to our affairs, which could make it more difficult for us to complete a business
combination.




Our
officers and directors are not required to commit their full time to our
affairs, which may result in a conflict of interest in allocating their time
between our operations and other businesses. We do not intend to have any full
time employees prior to the consummation of a business combination. All of our
executive officers are engaged in several other business endeavors and are not
obligated to contribute any specific number of hours to our affairs. While it is
our executive officers’ intention to devote substantial business time to
identifying potential targets and consummating a business combination, the
amount of time devoted will vary depending on the stage of a potential business
combination (i.e., from approximately 10 hours per week during target
identification to substantially full time during negotiations), and their other
business affairs could in the future require them to devote more substantial
amounts of time to such affairs, limiting their ability to devote sufficient
time to our affairs. This could make it more difficult for




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us to
complete a business combination. We cannot assure you that these conflicts will
be resolved in our favor.




Our
officers, directors and their affiliates may in the future become affiliated
with entities engaged in business activities similar to those intended to be
conducted by us and accordingly, may have conflicts of interest in determining
to which entity a particular business opportunity should be
presented.




None of
our directors, officers or their affiliates has been or currently is a principal
of, or affiliated with, entities, including other “blank check” companies,
engaged in business activities similar to those intended to be conducted by us.
However, our officers and directors may in the future become affiliated with
entities, including other “blank check” companies, engaged in business
activities similar to those intended to be conducted by us. Additionally, our
officers and directors may become aware of business opportunities which may be
appropriate for presentation to us as well as the other entities to which they
owe fiduciary duties. Accordingly, they may have conflicts of interest in
determining to which entity a particular business opportunity should be
presented. We cannot assure you that these conflicts will be resolved in our
favor.




Our
existing stockholders will not receive reimbursement for any out-of-pocket
expenses incurred by them to the extent that such expenses exceed the amount not
in the trust fund and the portion of the interest on the amounts in the trust
fund being released to fund our working capital needs unless the business
combination is consummated and therefore they may have a conflict of interest in
determining whether a particular target business is appropriate for a business
combination and in the public stockholders’ best interest.




Our
existing stockholders, including all of our executive officers, will not receive
reimbursement for any out-of-pocket expenses incurred by them to the extent that
such expenses exceed the available proceeds not deposited in the trust fund and
the $1,800,000 aggregate amount of interest accrued on the amounts held in the
trust account (net of taxes, if any, payable by us with respect to such
interest) that will be released to us in monthly installments to fund a portion
of our working capital requirements, unless the business combination is
consummated. In such event, our existing stockholders may, as part of any such
combination, negotiate the repayment of some or all of any such expenses, with
or without interest or other compensation, which if not agreed to by the target
business’ owners, could cause our management to view such potential business
combination unfavorably, thereby resulting in a conflict of interest. The
financial interest of our officers and directors could influence their
motivation in selecting a target business and thus, there may be a conflict of
interest when determining whether a particular business combination is in the
stockholders’ best interest. We would note, however, that such expenses are
likely to be insignificant compared to the value of management’s
stake.




Risks
Associated with the Entertainment, Media and Communications
Industries




The
speculative nature of the entertainment, media and communications industry may
result in our inability to produce products or services that receive sufficient
market acceptance for us to be successful.




Certain
segments of the entertainment, media and communications industry are highly
speculative and historically have involved a substantial degree of risk. For
example, the success of a particular film, video game, program or recreational
attraction depends upon unpredictable and changing factors, including the
success of promotional efforts, the availability of alternative forms of
entertainment and leisure time activities, general economic conditions, public
acceptance and other tangible and intangible factors, many of which are beyond
our control. If we complete a business combination with a target




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business
in such a segment, we may be unable to produce products or services that receive
sufficient market acceptance for us to be successful.




Changes
in technology may reduce the demand for the products or services we may offer
following a business combination.




The
entertainment, media and communications industries are substantially affected by
rapid and significant changes in technology. These changes may reduce the demand
for certain existing services and technologies used in these industries or
render them obsolete. We cannot assure you that the technologies used by or
relied upon or produced by a target business with which we effect a business
combination will not be subject to such occurrence. While we may attempt to
adapt and apply the services provided by the target business to newer
technologies, we cannot assure you that we will have sufficient resources to
fund these changes or that these changes will ultimately prove
successful.




If
following a business combination, the products or services that we market or
sell are not accepted by the public, our profits may decline.




Certain
segments of the entertainment, media and communications industries are dependent
on developing and marketing new products and services that respond to
technological and competitive developments and changing customer needs and
tastes. We cannot assure you that the products and services of a target business
with which we effect a business combination will gain market acceptance. Any
significant delay or failure in developing new or enhanced technology, including
new product and service offerings, could result in a loss of actual or potential
market share and a decrease in revenues.




If
we are unable to protect our patents, trademarks, copyrights and other
intellectual property rights following a business combination, competitors may
be able to use our technology or intellectual property rights, which could
weaken our competitive position.




If we are
successful in acquiring a target business and the target business is the owner
of patents, trademarks, copyrights and other intellectual property, our success
will depend in part on our ability to obtain and enforce intellectual property
rights for those assets, both in the United States and in other countries. In
those circumstances, we may file applications for patents, copyrights and
trademarks as our management deems appropriate. We cannot assure you that these
applications, if filed, will be approved, or that we will have the financial and
other resources necessary to enforce our proprietary rights against infringement
by others. Additionally, we cannot assure you that any patent, trademark or
copyright obtained by us will not be challenged, invalidated or
circumvented.




If
we are alleged to have infringed on the intellectual property or other rights of
third parties it could subject us to significant liability for damages and
invalidation of our proprietary rights.




If,
following a business combination, third parties allege that we have infringed on
their intellectual property rights, privacy rights or publicity rights or have
defamed them, we could become a party to litigation. These claims and any
resulting lawsuits could subject us to significant liability for damages and
invalidation of our proprietary rights and/or restrict our ability to publish
and distribute the infringing or defaming content.




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Risks
Associated with our Common Stock




Our
outstanding warrants may cause the market price of our common stock to drop and
make it more difficult to effect a business combination.




In
connection with our initial public offering, as part of the units, we issued
warrants to purchase 12,420,000 shares of common stock.  In addition,
our existing stockholders and certain of their affiliates purchased an aggregate
of 2,700,000 warrants.  To the extent we issue shares of common stock
to effect a business combination, the potential for the issuance of substantial
numbers of additional shares upon exercise of these warrants and option could
make us a less attractive acquisition vehicle in the eyes of a target business
as such securities, when exercised, will increase the number of issued and
outstanding shares of our common stock and reduce the value of the shares issued
to complete the business combination. Accordingly, our warrants and option may
make it more difficult to effectuate a business combination or increase the cost
of the target business. Additionally, the sale, or even the possibility of sale,
of the shares underlying the warrants and option could cause the market price
for our securities to drop or limit our ability to obtain future public
financing. If and to the extent these warrants and option are exercised, you may
experience dilution to your holdings.




If
our existing stockholders exercise their registration rights, it may cause the
market price of our common stock and/or warrants to decline, and the existence
of these rights may make it more difficult to effect a business
combination.




Our
existing stockholders are entitled to demand that we register, at our expense,
the resale of their initial shares at any time after the date on which their
shares are released from escrow. Moreover, we are obligated to use our best
efforts to register the resale of 2,700,000 of existing stockholders’ warrants
and the shares of common stock underlying such warrants after the 90th day after
the consummation of our initial business combination. If all of the initial
shares, their existing stockholders’ warrants and the shares of common stock
underlying the existing stockholders’ warrants are registered, then there will
be an additional 5,400,000 shares of common stock eligible for trading in the
public market (assuming exercise of the existing stockholders’ warrants). The
presence of this additional number of shares of common stock eligible for
trading in the public market may cause the market price of our common stock to
drop. In addition, the existence of these rights may make it more difficult to
effectuate a business combination or increase the cost of the target business,
as the stockholders of the target business may be discouraged from entering into
a business combination with us or will request a higher price for their
securities as a result of these registration rights and the potential future
effect their exercise may have on the trading market for our common
stock.




If
we are deemed to be an investment company, we may be required to institute
burdensome compliance requirements and our activities may be restricted, which
may make it difficult for us to complete a business combination.




If we are
deemed to be an investment company under the Investment Company Act of 1940, the
nature of our investments and the issuance of our securities may be restricted,
which may make it difficult for us to complete a business combination. In
addition, we may have imposed upon us burdensome requirements,
including:




·
            registration
      as an investment company;




·
            adoption
      of a specific form of corporate structure;
and




·
            reporting,
      record keeping, voting, proxy and disclosure requirements and other rules
      and regulations.




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We do not
believe that our anticipated principal activities will subject us to the
Investment Company Act of 1940. To this end, the proceeds held in trust will
only be invested by the trust agent in “government securities” with specific
maturity dates or in money market funds meeting certain conditions under Rule
2a-7 promulgated under the Investment Company Act of 1940. By restricting the
investment of the proceeds to these instruments, we intend to meet the
requirements for the exemption provided in Rule 3a-1 promulgated under the
Investment Company Act of 1940. If we were deemed to be subject to the Act,
compliance with these additional regulatory burdens would require additional
expense that we have not allotted for.




An
effective registration statement may not be in place when an investor desires to
exercise warrants, thus precluding such investor from being able to exercise
his, her or its warrants, which could expire worthless.




No
warrants will be exercisable and we will not be obligated to issue shares of
common stock unless, at the time a holder seeks to exercise, a prospectus
relating to common stock issuable upon exercise of the warrants is current and
the common stock has been registered or qualified or deemed to be exempt under
the securities laws of the state of residence of the holder of the warrants.
Under the terms of the warrant agreement, we have agreed to use our best efforts
to meet these conditions and to maintain a current prospectus relating to common
stock issuable upon exercise of the warrants until the expiration of the
warrants. However, we cannot assure you that we will be able to do so. The
warrants may be deprived of any value, the market for the warrants may be
limited and the holders of warrants may not be able to exercise their warrants
if the prospectus relating to the common stock issuable upon the exercise of the
warrants is not current or if the common stock is not qualified or exempt from
qualification in the jurisdictions in which the holders of the warrants reside.
The warrants could therefore expire unexercised and unredeemed. In no event will
we be required to net cash settle the warrants.




Our
existing stockholders’ warrants have superior exercise rights to those warrants
received in our initial public offering.




If there
is no registration statement in effect covering the shares of common stock
issuable upon the exercise of the warrants or the prospectus relating to the
common stock issuable upon the exercise of the warrants is not current, the
warrants received in the public offering may be deprived of any value, the
market for such warrants may be limited and the holders of such warrants may not
be able to exercise their warrants. With respect to existing stockholders’
warrants, we would be permitted to issue unregistered shares of our common stock
pursuant to an exemption to the requirement that the securities underlying such
warrants be registered pursuant to an effective registration statement.
Therefore, the existing stockholders’ warrants may be exercised whether or not a
current registration statement is in place, and the existing stockholders may be
able to exercise their warrants at a time when warrant purchasers in the public
offering may not be able to exercise their warrants. We are only required to use
our best efforts to maintain a current registration statement; therefore, the
warrants issued in this public offering may expire worthless. In no event will
we be required to net cash settle the warrants.




We
may be obligated to return the funds raised in our private placement if that
transaction was not conducted in compliance with the registration requirements
of Section 5 of the Act.




The six
purchasers in our private placement of existing stockholder warrants included
one entity other than our officers and directors. Although such entity is an
accredited investor within the meaning of Rule 501 of Regulation D promulgated
under the Act, a court may take the position that such private placement was not
conducted in accordance with any exemption from the registration requirements of
Section 5 of the Act because, for example, the filing of a registration
statement in the context of a private placement constituted an improper “general
solicitation” of investors. A court could also conclude that




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our
decision to approach Astor Asset Management and The Hearst Corporation after
these entities expressed interest in participating in the public offering could
have violated Section 5 of the Act. If our private placement was not conducted
in compliance with the registration requirements of Section 5 of the Act, the
six purchasers in our private placement may have the right to rescind their
warrant purchases as a remedy to our failure to register these securities. These
rescission rights, if any, may require us to refund up to an aggregate of
$2,700,000, plus interest, to such persons, thereby reducing the amount in the
trust account available to us to consummate a business combination, or, in the
event we do not complete a business combination within the period prescribed by
our initial public offering, the amount available to our public stockholders
upon our liquidation. Although such persons have waived their respective
rescission rights, if any, such waivers may not be enforceable in light of
public policy considerations underlying federal and state securities laws. In
addition, we could be subject to an enforcement action from the SEC or a state
securities authority based on an alleged violation of securities
laws.




We
may redeem the warrants included in the units sold in our initial public
offering for $0.01 under certain circumstances, even if such warrants are not
then exercisable because there is no current prospectus relating to the common
stock issuable upon such exercise.




After the
later of consummation of a business combination and March 9, 2008, we will be
entitled to redeem the warrants if the last sales price of our common stock
equals or exceeds $11.50 for any 20 trading days within a 30 day trading period
ending three days before we send the notice of redemption. The redemption price
is $0.01 per warrant. Under the provisions of the warrant agreement, we would be
entitled to redeem the warrants even though the prospectus relating to the
exercise of the warrants is not current and the warrants are therefore not
exercisable. Accordingly, your warrants may be redeemed for $0.01 at a time when
you have no practical ability to exercise the warrants, even though at such time
the warrants could be “in the money” at the time of such redemption. In this
event, you would effectively forfeit the full value of your warrants, which may
be substantial, and you would have no claim against us for all or any portion of
any such value.




The
American Stock Exchange may delist our securities which could limit investors’
ability to make transactions in our securities and subject us to additional
trading restrictions.




Our
securities are listed on the American Stock Exchange.  We cannot
assure you that our securities will continue to be listed on the American Stock
Exchange as we may not meet continued listing standards such as income from
continuing operations.  Additionally, in connection with our business
combination, it is likely that the American Stock Exchange may require us to
file a new initial listing application and meet its initial listing requirements
as opposed to its more lenient continued listing requirements.  We
cannot assure you that we will be able to meet those initial listing
requirements at that time.




If the
American Stock Exchange delists our securities from trading, we could face
significant consequences including:




·
            a
      limited availability for market quotations for our
    securities;




·
            reduced
      liquidity with respect to our
securities;




·
            a
      determination that our common stock is a “penny stock” which will require
      brokers trading in our common stock to adhere to more stringent rules and
      possible result in a reduced level of trading activity in the secondary
      trading market for our common
stock;




·
            limited
      amount of news and analyst coverage for our company;
  and




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·
            a
      decreased ability to issue additional securities or obtain additional
      financing in the future.




Risks
Associated with Effecting a Business Combination Internationally




A
prospective foreign target business’ compliance with the Sarbanes-Oxley Act of
2002 may increase the time and costs of completing an acquisition.




If we do
find a prospective target internationally, this business may not be in
compliance with the provisions of the Sarbanes-Oxley Act of 2002 regarding
adequacy of its internal controls. The development of the necessary internal
controls of such entity to achieve compliance with the Sarbanes-Oxley Act may
increase the time and costs needed to complete any such
acquisition.




Foreign
currency fluctuations could adversely affect our ability to achieve our business
objective.




If we do
find a prospective target with its primary operations abroad (most likely in
Europe or Asia), changes in the U.S. dollar exchange rate against that foreign
country’s currency may affect our ability to achieve our business objectives. If
the U.S. dollar declines in value against the foreign currency in which our
prospective target operates, then any business combination will be more
expensive and, therefore, potentially more difficult to complete. Furthermore,
we may incur costs with currency conversions which may make it more expensive to
consummate a business combination.




If
political relations between the U.S. and the home country of our prospective
target business weaken, it could make a target business’ operations less
attractive.




Relations
between the United States and any foreign country where our potential business
target may reside may deteriorate over time. Changes in political conditions are
difficult to predict and could adversely affect our future operations or cause
potential target business to become less attractive, which could decrease our
profitability. Any weakening in the relations between the U.S. and the home
country of our potential business target could have a material adverse effect on
our operations after the successful completion of a business
combination.




The
home country of a prospective target may have different disclosure, governance
and regulatory requirements than those in the United States which may make it
more difficult or complex to consummate a business combination.




Foreign
companies are subject to accounting, auditing, regulatory and financial
standards and requirements that differ, in some cases significantly, from those
applicable to public companies in the United States, which may make it more
difficult or complex to consummate a business combination. In particular, the
assets and profits appearing on the financial statements of a foreign company
may not reflect its financial position or results of operations in the way that
they would be reflected had such financial statements been prepared in
accordance with U.S. Generally Accepted Accounting Principles, or US GAAP, which
could make it more difficult for us to determine the fair market value of the
target. There may be substantially less publicly available information about a
foreign company than there is about U.S. companies. Moreover, some companies in
foreign jurisdictions are not subject to the same degree of regulation as are
U.S. companies.




ITEM 1B.  Unresolved Staff Comments




Not
applicable.




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ITEM 2.  Properties




We
currently maintain our virtual executive offices at 230 Park Avenue, Suite 1000,
New York, New York 10169.  The cost for the office services is $300
per month.  We consider our current virtual office space adequate for
our current operations.




ITEM 3.  Legal Proceedings




None.




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




Not
applicable.




PART II




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




Our
equity securities trade on the American Stock Exchange.  Each of our
units consists of one share of common stock and one warrant and trades on the
American Stock Exchange under the symbol “TVH.U.”  On April 2, 2007,
the common stock and warrants included in the units began to trade separately.
Those units not separated will continue to trade on the American Stock Exchange
under the symbol “TVH.U,” and each of the common stock and warrants trade on the
American Stock Exchange under the symbols “TVH” and “TVH.WS,”
respectively.




Each
warrant entitles the holder to purchase one share of our common stock at a price
of $5.00.  Each warrant will become exercisable on the later of our
completion of a business combination or March 9, 2008 and will expire on March
9, 2011, or earlier upon redemption.




The
following table sets forth, for the periods indicated, the high and low closing
sales prices of our units and common stock as reported on the American Stock
Exchange.  Prior to March 9, 2007, there was no established trading
market for our securities.




Quarter
      Ended
              
              Units
              
              Common
      StockHigh
              Low
              
              High
              LowFourth
      Quarter of Year ended March 31, 2007 (from March 9, 2007)1
              
              $       8.47
              $        8.18
              
              $              -
              $              -First
      Quarter of Year ended March 31, 20082
              
              $       8.52
              $        8.00
              
              $        7.50
              $        7.21Second
      Quarter of Year ended March 31, 2008
              
              $       8.60
              $        7.95
              
              $        7.60
              $        7.33Third
      Quarter of Year ended March 31, 2008
              
              $       8.45
              $        8.03
              
              $        7.52
              $        7.36Fourth
      Quarter of Year ended March 31, 2008
              
              $       8.15
              $        7.65
              
              $        7.50
              $        7.37
 1 The
common stock did not begin trading separately from the warrants until April 2,
2007.


2The
figures for our common stock are for the period April 2, 2007 through March 31,
2008.





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Set forth
below is a graph comparing the cumulative total stockholder return on the
Company’s common stock from April 2, 2007 (the date on which the common stock
began trading separately from the warrants) through March 31, 2008 with the
total return on the Russell 2000 Index and the AMEX Media (Communications)
Index.  The comparison assumes $100 was invested in the Company’s
common stock on April 2, 2007 and in each of the foregoing indices, including
reinvestment of dividends.  The closing price of Media &
Entertainment Holdings, Inc.’s common stock on April 2, 2007 was
$7.23.





Relative
Stock Performance







Use
of Proceeds from our Initial Public Offering





On March
14, 2007, we consummated our initial public offering of 10,800,000 units, and on
March 23, 2007, we consummated the sale of an additional 1,620,000 units
pursuant to the exercise of the underwriters’ over-allotment
option.  Each unit consists of one share of common stock and one
warrant.  Each warrant entitles the holder to purchase from us one
share of our common stock at an exercise price of $5.00.  Each warrant
will become exercisable on the later of our completion of a business combination
or March 9, 2008 and will expire on March 9, 2011, or earlier upon
redemption.  The securities sold in this offering were registered
under the Securities Act on a registration statement on Form S-1 (File No.
333-128218) that was declared effective by the SEC on March 9,
2007.  Our underwriters were Lazard Capital Markets LLC and Ladenburg
Thalmann & Co. Inc., as joint bookrunners, and Jesup & Lamont Securities
Corporation participated as co-manager.





In
connection with our offering and the exercise of the over-allotment option, we
incurred a total of $4,471,200 in underwriting discounts and $1,091,533 for
costs and expenses related to the offering.  The underwriters have
agreed to defer $2,484,000 of the underwriting discount (equal to 2.5% of the
gross proceeds of the offering).  In addition, the full amount of the
non-accountable expense allowance payable to the representatives of the
underwriters equal to 1% of the gross offering proceeds (excluding the
over-allotment option), or $864,000, is also deferred.  These proceeds
are held in the trust account and will not be released until the earlier to
occur of the completion of our initial business combination or our
liquidation.  In addition, the trust account holds the deferred
portion of the underwriting discount and


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non-accountable
expense allowance and the proceeds from the sale of the warrants on a private
placement basis.  In total, we deposited $96,618,800 in the trust
account.




On March 14, 2007, we consummated the
sale to the representatives of the underwriters, for $100, of an option to
purchase up to a total of an aggregate of 540,000 units.  This option
is exercisable at $10.00 per unit.  The purchase option, as well as
the units issuable upon exercise of the purchase option, the shares of common
stock and warrants underlying the units, and the shares of common stock issuable
upon exercise of the warrants included in the units were registered under the
Securities Act on the same registration statement on Form S-1 (File No.
333-128218).





Holders
of Common Equity





On June
10, 2008, there were approximately one (1) holder of record of our units,
approximately eight (8) holders of record of our warrants and approximately
eight (8) holders of record of our common stock.  Such numbers do not
include beneficial owners holding shares, warrants or units through nominee
names.




Dividends




On March
6, 2007, the Company declared a one share for each five shares outstanding stock
dividend payable to all stockholders of record on November 30,
2006.   Except for this dividend, we have not paid any dividends
on our common stock to date, and we do not intend to pay cash dividends prior to
the consummation of a business combination.  After we complete a
business combination, the payment of dividends will depend on our revenues and
earnings, if any, capital requirements and general financial
condition.  The payments of dividends after a business combination
will be within the discretion of our then-board of directors.  Our
board of directors currently intends to retain any earnings for use in our
business operations, and, accordingly, we do not anticipate the board declaring
any dividends in the foreseeable future.




Securities
Authorized for Issuance Under Equity Compensation Plans




On August
25, 2005, we issued stock options to purchase 100,000 shares of our common stock
at an exercise price of $6.00 per share to Mr. Weden for services rendered to us
as an independent director in connection with the formation and organization of
our company and our efforts in connection with our initial public offering,
including the preparation of the registration statement. The option was
subsequently amended on April 25, 2006 to increase the exercise price thereof to
$8.00 per share, and to modify the vesting schedule of the option to provide
that one third of such options vest upon consummation of our initial business
combination, and the remaining two thirds vest on the first and second
anniversaries of such date, provided that such individual remains a director of
our company at such time.




On April
25, 2006, Edward T. Reilly and William A. Roskin, two of our independent
directors, were each granted an option to acquire 100,000 shares of our common
stock at an exercise price of $8.00 per share, with one third vesting upon the
consummation of our initial business combination, and the remaining two thirds
vesting on the first and second anniversaries of such date, provided that such
individual remains a director of our company at such time. Such options were
issued to Messrs. Reilly and Roskin for services rendered to us as independent
directors in connection with our initial public offering, including the
preparation of the registration statement.




The
following table provides information as of March 31, 2008, with respect to the
shares of common stock that may be issued pursuant to outstanding stock
options:




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Equity
      Compensation Plan InformationNumber
      of Shares of Common Stock to be issued upon exercise of outstanding
      options, warrants and rights
            
            Weighted-average
      exercise price of outstanding options, warrants and rights
            Number
      of securities remaining for future issuance under equity compensation
      plans (excluding securities reflected in the second
  column)Plan
      CategoryEquity
      compensation plans approved
              by
      security holders
            0
            
            0
            0Equity
      compensation plans not approved
              by
      security holders
            300,000
            
            $8.00
            0Total
            300,000
            
            $8.00
            0





ITEM 6.  Selected Financial Data




The
following table summarizes the relevant financial data for our business and
should be read with our financial statements which are included in this
report.









Income
      Statement Data:
            For
      the year ended
              March
      31, 2008
            For
      the year ended
              March
      31, 2007
            For
      the Period from July 8, 2005 (Inception) Through March 31,
      2006
            For
      the Period from July 8, 2005 (Inception) Through March 31,
      2008Operating
      loss
            $(803,517)
            $(200,210)
            $(56,249)
            $
      (1,059,976)Interest
      income
            $3,865,426
            $   183,799
            $             0
            $    4,049,225Net
      income (loss)
            $1,973,560
            $(  26,249)
            $
      (56,249)
            $    1,891,062Basic
      and diluted net income (loss) per share
            $           .14
            $        (.01)
            $          .01Weighted
      average shares outstanding – Basic and diluted
            12,636,001
            3,509,408
            4,500,000







Balance
      Sheet Data:
            
            As
      of
              March
      31, 2008Working
      capital
            
            $  1,028,548Total
      assets
            
            $99,833,551Total
      liabilities
            
            $  1,204,753Value
      of common stock which may be redeemed for cash ($7.86 per
      share)
            
            $19,520,042Stockholders’
      Equity
            
            $79,108,756


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




Overview




We were
formed under the laws of the State of Delaware on July 8, 2005 to serve as a
vehicle to effect a merger, capital stock exchange, asset acquisition or other
similar business combination with an




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operating
business in the entertainment, media and communications industries.  We
intend to utilize cash derived from the proceeds of our initial public offering,
our capital stock, debt or a combination of cash, capital stock and debt, in
effecting a business combination.




On March
14, 2007, we completed our initial public offering of 10,800,000 units at $8.00
per unit. Simultaneously with the consummation of the initial public
offering we sold an aggregate of 2,700,000 warrants to certain existing
shareholders (Messrs. Granath, Seslowsky, Maggin and Clauser and The Hearst
Corporation) and one of their affiliates, Transmedia Corporation, at a price of
$1.00 per warrant, for an aggregate price of $2,700,000. On March 23, 2007, we
sold an additional aggregate 1,620,000 units pursuant to the underwriters’
over-allotment option of the initial public offering.  The total gross
proceeds from the initial public offering, excluding the warrants sold on a
private placement basis but including the over-allotment, amounted to
$99,360,000.  After the payment of offering expenses, the net proceeds to
us amounted to $93,797,247. Each unit consists of one share of the
Company’s common stock, $.0001 par value, and one redeemable common stock
purchase warrant.  Each warrant entitles the holder to purchase from
us one share of common stock at an exercise price of $5.00 commencing the later
of the completion of an initial business combination or one year from the
effective date of the initial public offering (March 9, 2008) and expiring four
years from the effective date of the initial public offering (March 9,
2011).  The warrants will be redeemable by us, at a price of $.01 per
warrant upon 30 days’ notice after the warrants become exercisable, only in the
event that the last sale price of the common stock is at least $11.50 per share
for any 20 trading days within a 30 trading day period ending on the third day
prior to the date on which notice of redemption is given.





In
connection with our initial public offering, we issued an option, for $100, to
the representatives of the underwriters in our initial public offering, to
purchase 540,000 units. The units issuable upon exercise of this option are
identical to those offered in our initial public offering, except that each of
the warrants underlying this option entitles the holder to purchase one share of
common stock at a price of $7.50. This option is exercisable at $10.00 per unit
commencing on the later of the consummation of a business combination and March
9, 2008 which is one year from the date of the prospectus and expiring on March
9, 2012 which is five years from the date of the prospectus. The option may only
be exercised or converted by the option holder. In no event will we be required
to net cash settle this option or the underlying warrants. We have accounted for
the fair value of the option, inclusive of the receipt of the $100 cash payment,
as an expense of the public offering resulting in a charge directly to
stockholders’ equity.  We estimate that the fair value of this option
is approximately $1,869,815 ($3.46 per unit) using a Black-Scholes
option-pricing model.  The fair value of the option granted to the
representatives is estimated as of the date of grant using the following
assumptions:  (1) expected volatility of 50.3%, (2) risk-free interest
rate of 5.00% and (3) expected life of five years and a dividend rate of
zero.  The option may be exercised for cash or on a “cashless” basis
at the holder’s option, such that the holder may use the appreciated value of
the option (the difference between the exercise prices of the option and the
underlying warrants and the market price of the units and underlying securities)
to exercise the option without the payment of any cash.





The
volatility calculation of 50.3% is based on the five-year average volatility of
a representative sample of five (5) companies that our management believes are
representative of the media and entertainment industry (the “sample companies”).
Because we do not have a trading history, we needed to estimate the potential
volatility of its common stock price, which will depend on a number of factors
which cannot be ascertained at this time. We referred to the five-year average
volatility of the sample companies because management believes that the average
volatility of such companies is a reasonable benchmark to use in estimating the
expected volatility of our common stock post-business combination. Although an
expected life of five years was taken into account for purposes of assigning a
fair value to the option, if the Company does not consummate a business
combination within the prescribed time period and liquidates, the option would
become worthless.


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Results
of Operations




We have
neither engaged in any operations nor generated any revenues to date, other than
in connection with our initial public offering.  Our entire activity
since inception has been to prepare for and consummate our initial public
offering and to identify and investigate targets for a potential business
combination.  We will not generate any operating revenues until
consummation of a business combination.  We will generate
non-operating income in the form of interest income on cash and cash equivalents
from the funds held in our trust account which we invested mainly in U.S.
Treasury Bills.




For the
period from July 8, 2005 (inception) to March 31, 2006, we had a net loss of
$56,249 consisting of $56,249 of general, selling and administrative
expense.  The main components of the $56,249 of general, selling and
administrative expenses included approximately $32,000 of stock compensation
expense relating to the stock options granted to our independent directors,
approximately $16,000 of travel expense, approximately $5,000 of accounting
fees, and approximately $2,000 of printing and reproduction
expense.




For the
year ended March 31, 2007, we had a net loss of $26,249 consisting of
approximately $184,000 of interest income on the trust fund offset by
approximately $200,000 of general, selling and administrative expense.  The
main components of the $200,000 of general, selling and administrative expenses
included approximately $100,000 of stock compensation expense relating to the
stock options granted to our independent directors, approximately $85,000 for
professional fees, approximately $11,000 of travel expenses, and
approximately $3,000 of directors and officers’ liability
insurance.




For the
year ended March 31, 2008, we had net income (loss) of $1,973,560 consisting of
approximately $3,865,426 of interest income on the trust fund offset by
approximately $803,517 of general, selling and administrative expense.  The
main components of the $803,517 of general, selling and administrative expenses
included approximately $83,000 of stock compensation expense relating to the
stock options granted to our independent directors, approximately $400,000 for
professional fees, approximately $50,000 of travel expenses, and
approximately $50,000 of directors and officers’ liability
insurance.




Interest
income in fiscal 2007 was earned on the net proceeds from our initial public
offering which was placed in a trust account.




Interest
income in fiscal 2008 was earned on the net proceeds from our initial public
offering which was placed in a trust account.




General,
selling and administrative expense incurred in fiscal 2007 was approximately
$143,000 higher than general, selling and administrative expenses during fiscal
2006.  This increase was partially attributable to a full 12 month period
of operations during 2007, as compared to approximately only 9 months during
2006. The Company incurred stock compensation expense relating to the stock
options granted to our independent directors of approximately $67,000 more in
fiscal 2007 as well as approximately $80,000 more in professional fees
associated with the various SEC filings necessary due to our initial public
offering.




General,
selling and administrative expense incurred in fiscal 2008 was approximately
$600,000 higher than general, selling and administrative expenses during fiscal
2007.  This increase was partially




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attributable
to large increases in travel, insurance, professional fees, and Delaware
franchise tax.  The Company incurred stock compensation expense
relating to the stock options granted to our independent directors of
approximately $16,000 less in fiscal 2008 as well as approximately $310,000 more
in professional fees associated with the various SEC filings necessary following
our initial public offering.




Off-Balance
Sheet Arrangements




We have not entered into any
off-balance sheet financing arrangements and have never established any special
purpose entities.  We have not guaranteed any debt or commitments of
other entities or entered into any options on non-financial assets.




Contractual
Obligations




We do not have any long-term debt,
capital lease obligations, operating lease obligations, purchase obligations or
other long-term liabilities.




Liquidity
and Capital Resources




$96,618,800
of the net proceeds of our initial public offering, over-allotment exercise,
private sale of warrants, and a portion of the underwriters’ discounts and
expense allowance were deposited in trust, with the remaining net proceeds being
placed in our operating account. We plan to use the interest income earned on
the trust proceeds (up to a maximum of $1,800,000) to identify, evaluate and
negotiate with prospective acquisition candidates as well as cover our ongoing
operating expenses until a transaction is approved by our shareholders or the
trust funds are returned to them.




We intend
to utilize our cash, including the funds held in the trust fund, capital stock,
debt or a combination of the foregoing to effect a business combination. 
To the extent that our capital stock or debt securities are used in whole or in
part as consideration to effect a business combination, the proceeds held in the
trust fund as well as any other available cash will be used to finance the
operations of the target business.  At March 31, 2008, we had cash outside
of the trust fund of $1,107,519 and other current assets of $1,125,782 and total
liabilities of $1,204,753.  Our working capital amounted to
$1,028,548.




Our
certificate of incorporation requires that we take all actions necessary to
liquidate in the event that we do not consummate a business combination within
18 months from the date of the consummation of our initial public offering
(September 14, 2008), or
24 months from the consummation of our initial public offering (March 14, 2009) if certain criteria
have been satisfied.  In the event of a liquidation, it is likely that the
per share value of the residual assets remaining available for distribution
(including assets deposited in the trust fund) will be less than the offering
price per unit in our initial public offering due to costs related to the
initial public offering and since no value would be attributed to the warrants
contained in the units sold.




Recently
Issued Accounting Pronouncements and Their Effect on the Company’s Financial
Statements




In September 2006, the Financial
Accounting Standards Board (‘‘FASB’’) issued SFAS No. 157 (‘‘SFAS 157’’), ‘‘Fair
Value Measurements.’’ Among other requirements, SFAS 157 defines fair value and
establishes a framework for measuring fair value and also expands disclosure
about the use of fair value to measure asset and liabilities. SFAS 157 is
effective beginning the first fiscal year that
begins


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after
November 15, 2007. The Company is currently evaluating the potential
effect that the adoption of SFAS 157 will have on its financial
statements.




In
December 2007, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement
No. 157,” that would permit a one-year deferral in applying the
measurement provisions of Statement No. 157 to non-financial assets and
non-financial liabilities (non-financial items) that are not recognized or
disclosed at fair value in an entity’s financial statements on a recurring basis
(at least annually). Therefore, if the change in fair value of a non-financial
item is not required to be recognized or disclosed in the financial statements
on an annual basis or more frequently, the effective date of application of
Statement 157 to that item is deferred until fiscal years beginning after
November 15, 2008 and interim periods within those fiscal years. The
Company is currently evaluating the potential effect that the adoption of FSP
157-2 will have on its financial statements.





In February 2007, the FASB issued
SFAS No. 159 (“SFAS 159”) ‘‘The Fair Value Opinion for Financial Assets and
Financial Liabilities – Including an amendment of FASB Statement No. 115’’ which
permits entities to choose to measure many financial instruments and certain
other items at fair value. The fair value option established by this Statement
permits all entities to choose to measure eligible items at fair value at
specified election dates. A business entity shall report unrealized gains and
losses on items for which the fair value option has been elected in earnings at
each subsequent reporting date. Adoption is required for fiscal years beginning
after November 15, 2007. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007,
provided the entity also elects to apply the provisions of SFAS 159. The Company
is currently evaluating the potential effect that the adoption of SFAS 159 will
have on its financial statements.





In December 2007, the Financial
Accounting Standards Board (‘‘FASB’’) issued Statement of Financial Accounting
Standards No. 141 (revised 2007),Business
Combinations(‘‘SFAS
141(R)’’). SFAS 141(R) changesaccounting for acquisitions that close
beginning in 2009 in a number of areas including the treatment of contingent
consideration, contingencies, acquisition costs, IPR&D and restructuring
costs. More transactions and events will qualify as business combinations
and will be accounted for at fair value under the new standard. SFAS 141(R)
promotes greater use of fair values in financial reporting. In addition,
under SFAS 141(R), changes in deferred tax asset valuation allowances and
acquired income tax uncertainties in a business combination after the
measurement period will impact income tax expense. Some of the changes will
introduce more volatility into earnings. SFAS 141(R) is effective for
fiscal years beginning on or after December 15, 2008.  SFAS 141(R)
will have an impact on accounting for any business acquired after the effective
date of this pronouncement.





In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 160, Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB
No. 51 (‘‘SFAS 160’’). SFAS 160 will change the accounting and
reporting for minority interests, which will be recharacterized as
noncontrolling interests (NCI) and classified as a component of equity.
This new consolidation method will significantly change the accounting for
transactions with minority interest holders. SFAS 160 is effective for fiscal
years beginning after December 15, 2008. The Company is currently
evaluating the potential effect that the adoption of SFAS 160 will have on its
financial statements.




In
December 2007, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 110 (“SAB 110”). SAB 110 amends and replaces Question 6 of
Section D.2 of Topic 14, Share-Based Payment of the Staff Accounting Bulletin
series. Question 6 of Section D.2 of Topic 14 expresses the views of the staff
regarding the use of the “simplified” method in developing an estimate of the
expected term of “plain vanilla” share options and allows usage of that method
for option grants prior to December 31, 2007. SAB 110 allows public
companies which do not have sufficient historical experience


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to
provide a reasonable estimate to continue the use of this method for estimating
the expected term of “plain vanilla” share option grants after December 31,
2007. The adoption of this pronouncement by the Company in fiscal 2008 has not
had an effect on its financial statements.




In
February 2008, the FASB issued Staff Position No. FAS 140-3, “Accounting for
Transfers of Financial Assets and Repurchase Financing Transactions,” which
provides guidance on accounting for a transfer of a financial asset and a
repurchase financing. This accounting guidance presumes that an initial transfer
of a financial asset and a repurchase financing are considered part of the same
arrangement (linked transaction) under SFAS No. 140. However, if certain
criteria are met, the initial transfer and repurchase financing shall be
evaluated separately under SFAS No. 140. Staff Position No. FAS 140-3 will be
effective for financial statements issued for fiscal years beginning after
November 15, 2008, and for interim periods within those fiscal years. Early
adoption is prohibited. The Company is currently evaluating the potential effect
that the adoption of FAS 140-3 will have on its financial
statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133,” (“SFAS 161”) as amended and interpreted, which requires enhanced
disclosures about an entity’s derivative and hedging activities and thereby
improves the transparency of financial reporting. Disclosing the fair values of
derivative instruments and their gains and losses in a tabular format provides a
more complete picture of the location in an entity’s financial statements of
both the derivative positions existing at period end and the effect of using
derivatives during the reporting period. Entities are required to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS No. 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008. Early adoption is permitted, but not expected.  The
company is currently evaluating the potential effect that the adoption of SFAS
161 will have on its financial statements.





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





ITEM 7A.  Quantitative and Qualitative Disclosures about
Market Risk




Market
risk is a broad term for the risk of economic loss due to adverse changes in the
fair value of a financial instrument.  These changes may be the result
of various factors, including interest rates, foreign exchange rates, commodity
prices and/or equity prices.  Our exposure to market risk is limited
to interest income sensitivity with respect to the funds placed in the trust
account.  Since the funds held in our trust account have been invested
in only U.S. “government securities” defined as any Treasury Bill issued by the
United States having a maturity of one hundred and eighty days or less or in
money market funds meeting certain conditions under Rule 2a-7 under the
Investment Company Act of 1940, so we are not deemed to be an investment company
under the Investment Company Act, we are subject to market risk primarily
through the effect of changes in interest rates on government
securities.  The effect of other changes, such as foreign exchange
rates, commodity prices and/or equity prices, does not pose significant market
risk to us.




ITEM 8.  Financial Statements and Supplementary
Data




The financial statements are included
in this annual report on Form 10-K as pages F-1 through F-24.





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ITEM 9.  Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure




None.




ITEM 9A.  Controls and Procedures




A control
system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the control system’s objectives will be
met.  The design of a control system must reflect the fact that there
are resource constraints, and the benefits of controls must be considered
relative to their costs.  Further, because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance
that misstatements due to error or fraud will not occur or that all control
issues and instances of fraud, if any, within the company have been
detected.  These inherent limitations include the realities that
judgments in decision-making can be faulty and that breakdowns can occur because
of simple error or mistake.  Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the controls.  The design of any system of
controls is based in part on certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions.  Projections
of any evaluation of controls effectiveness to future periods are subject to
risks.  Over time, controls may become inadequate because of changes
in conditions or deterioration in the degree of compliance with policies or
procedures.





The
Company carried out, under the supervision and with the participation of the
Company’s management, including its Chief Executive Officer and Chief Financial
Officer, an evaluation of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Securities Exchange Act of 1934) as of the end of the annual period covered
by this report.  Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, as of March 31, 2008, the
design and operation of these disclosure controls and procedures were
effective.  During the annual period covered by this report, there
have been no changes in the Company’s internal control over financial reporting
that have materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting.


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Management
Report on Internal Control Over Financial Reporting




Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, and for performing an assessment of the effectiveness of
internal control over financial reporting as of March 31,
2008.  Internal control over financial reporting is defined in Rule
13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as
a process designed by, or under the supervision of, the Company’s principal
executive and principal financial officers and effected by the Company’s board
of directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with U.S. generally
accepted accounting principles.  Internal control over financial
reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the financial
statements.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.




Management
performed an assessment of the effectiveness of the Company’s internal control
over financial reporting as of March 31, 2008 based upon criteria in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”).  Based on this assessment,
management believes that the Company’s internal control over financial reporting
was effective as of March 31, 2008 based on those criteria issued by
COSO.




The
Company’s independent registered public accounting firm, Marcum & Kliegman
LLP, has issued an audit report on management’s assessment of the effectiveness
of the Company’s internal control over financial reporting as of March 31,
2008.  Their report appears below.





Report
of Independent Registered Public Accounting Firm on Internal Control over
Financial Reporting





To the
Audit Committee of the


Board of
Directors and Shareholders


of Media
& Entertainment Holdings, Inc.





We have
audited Media & Entertainment Holdings, Inc. (the "Company") internal
control over financial reporting as of March 31, 2008, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Company's
management is responsible for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying "Management
Report on Internal Control over Financial Reporting". Our responsibility is to
express an opinion on the Company's internal control over financial reporting
based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all
material


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respects.
Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.





A
company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial
statements.





Because
of the inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that degree of compliance with
the policies or procedures may deteriorate.





In our
opinion, Media & Entertainment Holdings, Inc. maintained, in all material
aspects, effective internal control over financial reporting as of March 31,
2008, based on criteria established in Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).





We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the balance sheets as of March 31, 2008 and
2007 and the related statements of operations, changes in stockholders’ equity,
and cash flows for the years then ended and for the periods from July 8, 2005
(inception) to March 31, 2006 and from July 8, 2005 (inception) to March 31,
2008 of the Company and our report dated June 16, 2008 includes and explanatory
paragraph as to Media & Entertainment Holdings, Inc. ability to continue as
a going concern on those financial statements.





/s/ Marcum & Kliegmanllp


Marcum
& Kliegman llp


Melville,
New York


June 16,
2008




ITEM 9B.  Other Information




Not
applicable.




PART III




ITEM 10.  Directors, Executive Officers and Corporate
Governance




Directors
and Executive Officers




Our
current directors and executive officers are as follows:




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Name
            Age
            PositionHerbert
      A. Granath
            78
            Chairman
      of the Board and Chief Executive OfficerHarvey
      M. Seslowsky
            66
            President,
      Chief Operating Officer and DirectorRobert
      C. Clauser, Jr
            41
            Executive
      Vice President, Chief Financial Officer and Assistant
      SecretaryBruce
      Maggin
            65
            Executive
      Vice President, Secretary and TreasurerRichard
      Weden
            67
            DirectorEdward
      T. Reilly
            60
            DirectorWilliam
      A. Roskin
            66
            Director




Herbert A.
Granathhas been our Chairman of the Board and Chief Executive Officer
since August 2005. Since February 2001, Mr. Granath has served as Chairman
Emeritus of ESPN, a cable sports network, and Telenet, Belgium’s leading cable
television company. Since 1999, he has served as a Director (and, since 2006, as
Vice Chairman) of Central European Media Enterprises Ltd, a company engaged in
the ownership and operation of leading commercial television stations in Central
and Eastern Europe, and of Crown Media Holdings (Co-Chairman since 2006), which
owns and operates the Hallmark Channel. Mr. Granath is the Chairman of the
National Academy of Television Arts and Sciences, which presents the EMMY
awards. Mr. Granath is also a director of the International Academy of
Television Arts and Sciences (“IATAS”), a non-profit industry organization
promoting international television. Mr. Granath was employed by ABC for over 35
years, where he was Senior Vice President from 1998 to February 2001, and was
Chairman of Disney/ABC International, an international broadcasting company,
from 1996 to January 1998. He served as Chairman of the Board of ESPN for 16
years, from January 1984 to February 2001, as well as Board Chairman of A&E,
from March 1980 to February 2001, The History Channel, from May 1992 to February
2001, The Biography Channel, from March 1994 to February 2001, and Lifetime
Television, from March 1980 to December 1996, and was a Founding Partner and
Director of Eurosport, the largest cable network in Europe, from April 1985 to
April 1995. He also served on the boards of Telefunf, from June 1984 to March
1987, RTL2, from May 1987 to December 1995, and TM3 networks in Germany, from
June 1989 to December 1995, SBS Broadcasting SA, from March 1985 to November
1995, and TVA, the Brazilian pay-TV company, from January 1990 to June 1998. Mr.
Granath also served as Senior Content Advisor to Cable Partners Europe, a cable
communications operator, from February 2001 to February 2006, and on the Board
of Advisors of Veronis, Suhler & Associates Fund III, a billion dollar fund
investing in worldwide media, from 1999 to October 2005. Among the awards Mr.
Granath has received are two TONY Awards, an International EMMY (Lifetime
Achievement in International TV), as well as a U.S. EMMY (Lifetime Achievement
in Sports TV). Most recently, he was honored by the National Association of
Broadcasters as a Broadcast Pioneer and received the European Lifetime
Achievement Award at the Rose d’Or Festival in Lucerne,
Switzerland.




Harvey M.
Seslowskyhas been our President and Chief Operating Officer and a
Director of our company since August 2005. Since August 2003, Mr. Seslowsky has
been the President of Transmedia Corporation, a private media consulting firm he
founded which provides consulting services to a wide variety of clients,
including Accenture Ltd., one of the world’s leading management consulting and
technology services organizations. From October 2002 to August 2003, Mr.
Seslowsky served as a consultant to Accenture Ltd. From October 2000 to
September 2002, Mr. Seslowsky served as Executive Vice President of Worldwide
Sales & Distribution for Blockbuster International Distribution, a division
of Blockbuster Inc., a leading global provider of in-home rental and retail
movie and game entertainment, and from February 1995 to October 2000, as Senior
Vice President, National Sales, Partnership




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Marketing
& Licensing of Blockbuster, Inc. Mr. Seslowsky has been active as a
Consultant/New Business Development since 1990, and served as President and a
Director of Scat Hovercraft, Inc., a company engaged in the Hovercraft industry,
from 1990 to 1991, as President and a Director of Media Merchandising
Corporation, the publisher of The Video Source Book and maintainer of the
world’s largest and most comprehensive data base on the home video business,
from 1988 to 1990, and as President of Broadcast Information Bureau Inc., a
trade book and magazine publisher, where he served as a consultant to over 50
television stations. Prior to that time, he served as an Account Executive of
ABC Television Network. Mr. Seslowsky is also a director of the International
Academy of Television Arts & Sciences (IATAS).




Robert C.
Clauser, Jr.has been our Executive Vice President and Chief Financial
Officer of our company since August 2005, our Assistant Secretary since June
2007, and served as a director of our company from August 2005 to April 2006.
Mr. Clauser recently completed the David Rockefeller Fellowship, awarded to him
in 2005 for his civic and corporate achievements. Mr. Clauser left Accenture
Ltd. in November 2005 where he had served as Lead Strategy Partner of the Media
& Entertainment Practices for the Americas, having joined the company in
October 1997. At Accenture, Mr. Clauser advised senior executive officers and
boards of directors of numerous media and entertainment companies on setting
strategy, transforming operations, and integrating technology to deliver growth,
profitability and value. From August 1993 to September 1997, Mr. Clauser served
as Manager of the Consumer Products and Retail Practice of Braxton Associates, a
strategy consulting firm and division of Deloitte & Touche Consulting Group,
where he was responsible for the development and implementation of strategic
initiatives aimed to innovate and develop new products and new markets, and grow
revenue and profitability. From 1988 to 1991, Mr. Clauser served as Assistant
Treasurer of the Oil, Gas & Extractive Industries Division of Irving
Trust/The Bank of New York. Mr. Clauser also serves as:  a Trustee of
the Alliance for the Arts, an arts advocacy and research organization, since
June 2004; a board member and mentor of icouldbe.org,
an internet youth mentoring organization, since April 2000; and a member of the
Metropolitan Museum of Art’s Trustees Committee on Education, by invitation,
since March 2007.  He has also previously served as Chief Executive
Officer and Producer of Montage Entertainment, an independent non profit film
production company, from April 1998 to September 2002 and as an adviser to Box
of Bees Media, a music production and distribution company from January 2004 to
November 2006.




Bruce Magginhas been our Executive Vice President and Secretary of our company since
August 2005, our Treasurer since June 2007, and served as a director of our
company from August 2005 to April 2006. Mr. Maggin currently serves as the Vice
President, Secretary and a Managing Member of The H.A.M. Media Group, LLC, an
international investment and advisory firm specializing in the entertainment and
communications industries, which he co-founded in 1997. From February 1999 to
November 2002, Mr. Maggin was also Chief Executive Officer of “at TV Media,” a
joint venture of NBC, Gemstar International, and Thomson Multimedia. Mr. Maggin
has served on the Boards of Directors of the following publicly-traded
companies:  Phillips-Van Heusen Corporation, since June 1987 (where he
has also served as the Audit Committee Chairman since June 1997); Central
European Media Enterprises Ltd., since September 2002 (where he has also served
as the Compensation Committee Chairman since February 2003); and on the Board of
Advisors of JumpTV Inc., since March 2006. He also served on the Board of
Directors of In-Store Advertising, Inc. from December 1989 to December 1993, of
Newstar Media (formerly Dove Entertainment) from 1997 to December 2000, and of
Avalon Digital Marketing Systems (formerly Mindarrow Systems) from August 2001
to April 2003, each of which is a publicly-traded company. Prior to forming the
H.A.M. Media Group, Mr. Maggin served in a variety of positions at Capital
Cities/ABC. From 1993 to 1996, he was responsible for directing the company’s
activities in the digital world including the production of content for video
games, the internet, and video on demand. From 1986 to 1993, Mr. Maggin served
as Executive Vice President of the Development/Operations division of Capital
Cities/ABC Video Enterprises, where he oversaw all of the company’s start-up and
venture business activities. Prior to such time, Mr. Maggin served as a merger
and




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acquisition
consultant for CFC, a unit of The Irving Trust Company, and as Vice President of
Ziff Corporation, the parent company of Ziff-Davis Publishing and Broadcasting.
Mr. Maggin also served on the Boards of Directors of the Lifetime Television
Network from 1983 to 1995 and of ESPN from 1984 to 1996.




Richard Wedenhas been a Director of our company since August 2005. Mr. Weden was
employed by American Express for over 35 years and most recently, from April
1995 to July 2004, served as Vice President and Director General of American
Express International Services in Moscow, Russia, where he was responsible for
the launch of American Express Business Travel and Card Business in Russia and
other former Soviet Union countries. Prior to that time, Mr. Weden served in
various executive capacities at American Express, including as Senior Vice
President, Travel Management Services, Latin America from 1994 to 1995, as
President and Senior Vice President, Travel Related Services, Mexico from 1989
to 1994, and as Senior Vice President & General Manager, Travel Related
Services, Asia, North Pacific and China from 1983 to 1989, after having served
in various other capacities at American Express since 1968. Mr. Weden has also
been actively involved in a number of international professional organizations,
including serving as the Chairman of the Board of the American Chamber of
Commerce in Russia from January 2002 to January 2004 and as a member of its
Executive Committee from January 1996 to January 2004, and as a board member of
the Anglo-American School of Moscow from September 2000 to May 2004, the Russian
National Orchestra from April 1995 to July 2004, and the United Way from January
1996 to June 2004. He also served on the Executive Board of the American Chamber
of Mexico from approximately January 1990 to December
1993.  Currently, Mr. Weden sits on the board of the Morningside Civic
Association, a neighborhood board in Florida.




Edward T. Reillyhas been a Director of our company since April 2006. Since 2001, Mr.
Reilly has been the President and Chief Executive Officer of the American
Management Association, International, the world’s leading not-for-­profit,
membership-based management development, research and publishing organization.
Prior to that time, Mr. Reilly served as President and Chief Executive Officer
of Big Flower Holdings, Inc. (now Vertis, Inc.), a leading provider of
integrated marketing and advertising services. Prior to joining Big Flower
Holdings, Mr. Reilly spent over 25 years with the broadcast and book publishing
groups of The McGraw-Hill Companies, a publishing and communications company,
and served in numerous capacities, including: Editor-in-Chief of the Accounting,
Computing and Data Processing Department of Gregg Community College Division;
Chief Financial Officer of the California Test Bureau; General Manager of the
Instructo Corporation; Group Vice President for Europe, Africa and the Middle
East; Group Vice President for McGraw-Hill Training Systems; and Executive Vice
President in charge of McGraw-Hill International Book Company. In 1987, Mr.
Reilly became the President of The McGraw-Hill Broadcasting Company, and during
that time served on the boards of the Television Bureau of Advertising, the
National Association of Broadcasters, and as Chairman of the Association for
Maximum Service Television. He also served as a past Chairman of The Advertising
Counsel, the world leader in public service advertising. Presently, Mr. Reilly
serves on the following boards:   the USO Worldwide Board of
Governors; the New York Society of Association Executives;  as
Chairman of the United States chapter of the Royal Society of the Arts; AARP
Services, Inc., a for-profit operating arm of The American Association of
Retired Persons; as Fellow of the International Academy of Management; and as a
member of the North American Advisory Board of the UCD Michael Smurfit School of
Business in Dublin, Ireland.  Mr. Reilly was also a member of the
Board of Directors of iVillage Inc., a leading Internet portal specializing in
women’s issues, and was a member of its the Audit Committee and was Chairman of
its Compensation Committee,




William A. Roskinhas been a Director of our company since April 2006. Since September
2005, Mr. Roskin has served as a Senior Advisor to Viacom Inc., a diversified
worldwide entertainment company. From November 2004 until September 2005, Mr.
Roskin served as Executive Vice President, Human Resources and Administration of
Viacom. Mr. Roskin joined Viacom in 1988 as Vice President of




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Human
Resources and Administration and was promoted to Senior Vice President in 1992,
a position he held until his November 2004 promotion. Before joining Viacom, Mr.
Roskin was the Senior Vice President of Human Resources at Coleco Industries,
Inc., a manufacturer and distributor of children’s toys, from 1986 to 1988.
Prior to that, Mr. Roskin spent ten years with Warner Communications Inc. (now
known as Time Warner Inc.), a media and entertainment company, where he held
several executive positions in labor relations, including Vice President of
Industrial and Labor Relations. Since January 2005, Mr. Roskin has served on the
board of directors of Ritz Interactive, Inc., an award winning, specialty online
retailer and e-commerce provider that operates a network of websites offering
high quality, branded lifestyle products. Since June 2006, Mr. Roskin has served
on the board of directors of ION Media Networks, Inc., an owner and operator of
60 broadcast television stations.




Board
Committees




Committees
of the Board of Directors




Our board
of directors has three committees, an audit committee, a compensation committee
and a nominating committee, that comply with the requirements of the American
Stock Exchange.




Audit Committee.Our audit committee is comprised of Edward T. Reilly, Richard Weden and
William A. Roskin, each of whom our board has determined is an independent
director who is financially literate in accordance with the American Stock
Exchange listing standards. Our board of directors has also determined that Mr.
Reilly qualifies as an “audit committee financial expert” as that term is
defined in rules promulgated by the SEC, and Mr. Reilly acts as the chair of our
audit committee.




The audit
committee will assist the board in overseeing and reviewing: (a) the integrity
of our financial reports and financial information provided to the public and to
governmental and regulatory agencies; (b) the adequacy of our internal
accounting systems and financial controls; and (c) the annual independent audit
of our financial statements, including the independent auditor’s qualifications
and independence. The audit committee’s duties, which are specified in our Audit
Committee Charter, include, but are not limited to:




·
            reviewing
      and discussing with management and the independent auditor the annual
      audited financial statements, and recommend to the board that the audited
      financial statements be included in our Form
  10-K;




·
            discussing
      with management and the independent auditor significant financial
      reporting issues and judgments made in connection with the preparation of
      our financial statements;




·
            discussing
      with management and the independent auditor the effect on our financial
      statements of (i) regulatory and accounting initiatives and (ii)
      off-balance sheet structures;




·
            discussing
      with management major financial risk exposures and the steps management
      has taken to monitor and control such exposures, including our risk
      assessment and risk management
policies;




·
            reviewing
      disclosures made to the audit committee by our chief executive officer and
      chief financial officer during their certification process for our Form
      10-K and Form 10-Q about any significant deficiencies in the design or
      operation of internal controls or material weaknesses therein and any
      fraud involving management or other employees who have a significant role
      in our internal controls;




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·
            verifying
      the rotation of the lead (or coordinating) audit partner having primary
      responsibility for the audit and the audit partner responsible for
      reviewing the audit as required by
law;




·
            reviewing
      and approving all related-party transactions including analyzing the
      stockholder base of each target business so as to determine whether we
      plan to consummate a business combination with an entity that is
      affiliated with our management. If a contemplated business combination is
      with an entity that is affiliated with our management, then prior to
      approving such transaction, the audit committee will ensure that we obtain
      an opinion from all independent investment banking firm that the business
      combination is fair to our stockholders from a financial point of
      view;




·
            inquiring
      and discussing with management our compliance with applicable laws and
      regulations;




·
            pre-approving
      all audit services and permitted non-audit services to be performed by our
      independent auditor, including the fees and terms of the services to be
      performed;




·
            appointing
      or replacing the independent
auditor;




·
            reviewing
      proxy disclosure to ensure that it is in compliance with SEC rules and
      regulations;




·
            determining
      the compensation and oversight of the work of the independent auditor
      (including resolution of disagreements between management and the
      independent auditor regarding financial reporting) for the purpose of
      preparing or issuing an audit report or related work;
  and




·
            establishing
      procedures for the receipt, retention and treatment of complaints received
      by us regarding accounting, internal accounting controls or reports which
      raise material issues regarding our financial statements or accounting
      policies.




Compensation
Committee.Our board of directors has established a compensation
committee comprised of Richard Weden, Edward T. Reilly and William A. Roskin,
each of whom our board has determined is an independent director in accordance
with the American Stock Exchange listing standards. Mr. Roskin acts as the chair
of our Compensation Committee. The compensation committee’s duties, which are
specified in our Compensation Committee Charter, include, but are not limited
to:





·
            evaluating
      the performance of our named executive officers and approve their
      compensation;




·
            preparing
      an annual report on executive compensation for inclusion in our proxy
      statement;




·
            reviewing
      and approving compensation plans, policies and programs, considering their
      design and competitiveness;




·
            administering
      and reviewing changes to our equity incentive plans pursuant to the terms
      of the plans; and




·
            reviewing
      our non-employee independent director compensation levels and practices
      and recommending changes as
appropriate.




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The
compensation committee will review and approve corporate goals and objectives
relevant to our Chief Executive Officer’s compensation, evaluate our Chief
Executive Officer’s performance in light of those goals and objectives, and
recommend to the board our Chief Executive Officer’s compensation levels based
on its evaluation.




Nominating
Committee.Our board of directors established a nominating committee
comprised of Richard Weden, Edward T. Reilly and William A. Roskin, each of whom
our board has determined is an independent director in accordance with the
American Stock Exchange listing standards. Mr. Weden acts as the chair of our
Nominating Committee. The nominating committee is responsible for overseeing the
selection of persons to be nominated to serve on our board of directors. The
nominating committee considers persons identified by its members, management,
shareholders, investment bankers and others.




The
guidelines for selecting nominees, which are specified in the Nominating
Committee Charter, generally provide that persons to be nominated should be
actively engaged in business endeavors, have an understanding of financial
statements, corporate budgeting and capital structure, be familiar with the
requirements of a publicly traded company, be familiar with industries relevant
to our business endeavors, be willing to devote significant time to the
oversight duties of the board of directors of a public company, and be able to
promote a diversity of views based on the person’s education, experience and
professional employment. The nominating committee evaluates each individual in
the context of the board as a whole, with the objective of recommending a group
of persons that can best implement our business plan, perpetuate our business
and represent shareholder interests. The nominating committee may require
certain skills or attributes, such as financial or accounting experience, to
meet specific board needs that arise from time to time. The nominating committee
does not distinguish among nominees recommended by shareholders and other
persons.




Code
of Ethics and Committee Charters




We have
adopted a code of ethics that applies to all of our executive officers,
directors and employees. The code of ethics codifies the business and ethical
principles that govern all aspects of our business.  We have filed
copies of our code of ethics and our board committee charters as exhibits to the
registration statement in connection with our initial public
offering.  You may review these documents by accessing our public
filings on the SEC’s web site at www.sec.gov.  In addition, a copy of
the code of ethics will be provided without charge upon request to us in writing
at 230 Park Avenue, Suite 1000, New York, New York 10169 or by telephone at
(212) 551-1498.  We intend to disclose any amendments to or waivers of
certain provisions of our code of ethics in a Current Report on Form
8-K.




Section
16(a) Beneficial Ownership Reporting Compliance




Section
16(a) of the Securities Exchange Act of 1934 requires our officers, directors
and persons who own more than ten percent of a registered class of our equity
securities to file reports of ownership and changes in ownership with the
SEC.  Officers, directors and ten percent stockholders are required by
regulation to furnish us with copies of all Section 16(a) forms they
file.  Based solely on copies of such forms received, we believe that,
during the fiscal year ended March 31, 2008, all filing requirements applicable
to our officers, directors and greater than ten percent beneficial owners were
complied with.




ITEM 11.  Executive Compensation




Compensation
Discussion and Analysis




None of
our executive officers or directors has received any cash compensation for
services rendered.  No compensation of any kind, including finders and
consulting fees, will be paid to our




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officers,
directors or any of their respective affiliates for services rendered prior to
or in connection with a business combination.  However, these
individuals will be reimbursed for any out-of-pocket expenses incurred in
connection with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable business
combinations.  After a business combination, any of our officers and
directors who remain with us may be paid consulting, management or other fees
from the combined company with any and all amounts full disclosed to
stockholders, to the extent then known, in the proxy solicitation materials
furnished to our stockholders.  It is unlikely the amount of such
compensation will be known at the time of a stockholder meeting held to consider
a business combination to determine executive and director
compensation.




Other
than the securities described above and in the section appearing below in this
Annual Report on Form 10-K entitled “Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters,” neither our officers nor
our directors has received any of our equity securities.




Compensation
Committee Interlocks and Insider Participation




None.




Compensation
Committee Report




The Compensation Committee of the board
of directors has reviewed and discussed with our management the Compensation
Discussion and Analysis.  Based on this review and these discussions
with management, the Compensation Committee recommended to the board of
directors that the Compensation Discussion and Analysis be included in this
Annual Report on Form 10-K.




Compensation
of Directors




None.




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




For
information on our securities authorized for issuance under equity compensation
plans, please see “Item 5.  Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity”
above.  Unless otherwise indicated, we believe that all persons named
in the table below have sole voting and investment power with respect to all
shares of common stock beneficially owned by them.  The following
table does not reflect record or beneficial ownership of the existing
stockholders’ warrants, as these warrants and options are not exercisable within
60 days of the date hereof.





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Name
      of Beneficial Owner
            
            Amount
      and
              Nature
      of
              Beneficial
              Ownership
            Approximate
      Percentage
              of
      Outstanding Common StockHerbert
      A. Granath(1)
            
            594,000
            
            3.9%Harvey
      M. Seslowsky(1)
            
            594,000
            
            3.9%Robert
      C. Clauser, Jr.(1)
            
            594,000
            
            3.9%Bruce
      Maggin(1)
            
            594,000
            
            3.9%Edward
      T. Reilly(2)
            
            -0-(3)
            
            *Richard
      Weden(4)
            
            -0-(3)
            
            *William
      A. Roskin(5)
            
            12,000(3)
            
            *Azimuth
      Opportunity, Ltd.(6)
            
            856,500
            
            5.0%Deutsche
      Bank AG(7)
            
            991,209
            
            6.55%The
      Hearst Corporation(8)
            
            1,286,500
            
            8.5%Fir
      Tree, Inc.(9)
            
            1,336,500
            
            8.8%HBK
      Investments L.P.(10)
            
            1,495,375
            
            9.9%All
      directors and executive officers as a group (7
individuals)
            
            2,388,000
            
            17.60%




____________________


*  Less
than 1%.


1  The
business address of each of such individuals is c/o Media & Entertainment
Holdings, Inc., 230 Park Avenue, Suite 1000, New York, New York
10169.


2  The
address of Mr. Reilly is 1601 Broadway, New York, New York 10019.


3  Does
not include options to acquire an aggregate of 300,000 shares of our common
stock (100,000 for each of Messrs. Reilly, Weden and Roskin) at an exercise
price of $8.00 per share, with one third vesting upon the consummation of our
initial business combination, and the remaining two thirds vesting on the first
and second anniversaries of that date, provided that such individual remains a
director of our company at such time.


4  The
address of Mr. Weden is 5600 NE 6th Avenue, Miami, Florida 33137.


5  The
address of Mr. Roskin is 150 East 69th Street, Apt. 20K, New York, New York
10021.


6Based
on a Schedule 13G filed on August 16, 2007 with the SEC on behalf of Azimuth
Opportunity, LTD.  The address of Azimuth Opportunity, LTD is c/o
Ogier, Qwomar Complex, 4th Floor,
P.O. Box 3170, Road Town, Tortola, British Virgin Islands.


7Based
on a Schedule 13G filed on February 6, 2008 with the SEC on behalf of Deutsche
Bank AG.  The address of Deutsch Bank AG is Theodor-Heuss-Allee 70,
60468 Frankfurt am Main, Federal Republic of Germany.


8The
address of The Hearst Corporation is 300 West 57th Street,
New York, New York 10019; Attn:  Victor F. Ganzi, President and Chief
Executive Officer.  The control person for The Hearst Corporation is
The Hearst Family Trust, its sole shareholder. The Hearst Family Trust, a trust
established under the will of William Randolph Hearst, is overseen by a
13-member board of testamentary trustees, five of whom are Hearst family members
and eight of whom are current or retired Hearst Corporation executives. Based on
publicly available information, the 13 trustees are: Anissa Boudjakdji Balson,
Frank A. Bennack, Jr., John G. Conomikes, Richard E. Deems, Victor F. Ganzi,
George R. Hearst, Jr., John R. Hearst, Jr., William R. Hearst III, Harvey L.
Lipton, Gilbert C. Mauer, Mark F. Miller, Raymond J. Petersen and Virginia
Hearst Randt.


9  Based
on a Schedule 13G filed on February 14, 2008 with the SEC jointly on behalf of
Sapling, LLC, Fir Tree Capital Opportunity Master Fund, L.P. and Fir Tree,
Inc.  The Schedule 13G indicates that Fir Tree, Inc. is the investment
manager for each of Sapling, LLC and Fir Tree Capital Opportunity Master Fund,
L.P. and has been granted investment discretion over portfolio investments,
including the shares of the Company’s common stock owned by them.  The
address of Fir Tree, Inc. and Sapling LLC is 505 Fifth Avenue, 23rd Floor,
New York, New York 10017.  The address of Fir Tree Capital Opportunity
Master Fund, L.P. is c/o Admiral Administration Ltd., Admiral Financial Center,
5th
Floor, 90 Fort Street, Box 32021 SMB, Grand Cayman, Cayman Islands.


10Based
on a Schedule 13G filed on February 7, 2008 with the SEC on behalf of HBK
Investments L.P., HBK Services LLC, HBK Partners II L.P., HBK Management LLC,
HBK Master Fund L.P.  The address of HBK Investments L.P., HBK
Services LLC, HBK Partners II L.P., and HBK Management LLC is 300 Crescent
Court, Suite 700, Dallas, Texas 75021.  The address of HBK Master Fund
L.P. is c/o HBK Services LLC, 300 Crescent Court, Suite 700, Dallas, Texas
75021.





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In
connection with the vote required for our initial business combination, all of
our existing stockholders, including each of our executive officers, has agreed
to vote the shares of common stock acquired by them before the initial public
offering in accordance with the majority of the shares of common stock voted by
the public stockholders (other than the existing stockholders).




ITEM 13.  Certain Relationships, Related Transactions and
Director Independence




On August
25, 2005, we issued 4,500,000 shares of our common stock to the individuals set
forth below for $25,000 in cash, at a purchase price of approximately $0.0056
per share, as follows:




Name
            Number
              of
      Shares
            Relationship
      to UsHerbert
      A. Granath
            1,125,000
            Chairman
      of the Board and Chief Executive OfficerHarvey
      M. Seslowsky
            1,125,000
            President,
      Chief Operating Officer and DirectorRobert
      C. Clauser, Jr.
            1,125,000
            Executive
      Vice President, Chief Financial Officer and Assistant
      SecretaryBruce
      Maggin
            1,125,000
            Executive
      Vice President, Secretary and
Treasurer







We will
reimburse our officers and directors for any reasonable out-of-pocket business
expenses incurred by them in connection with activities on our behalf in
identifying and investigating possible target businesses and business
combinations. There is no limit on the amount of these out-of-pocket expenses,
and there will be no review of the reasonableness of the expenses by anyone
other than our board of directors, which includes persons who may seek
reimbursement, or a court of competent jurisdiction if such reimbursement is
challenged. Because of the foregoing, we will generally not have the benefit of
independent directors examining the propriety of expenses incurred on our behalf
and subject to reimbursement.




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




Our
policies and procedures for the review, approval or ratification of certain
related party transactions are as follows. All ongoing and future transactions
between us and any of our officers and directors or their respective affiliates,
including loans by our officers and directors or their affiliates, will be on
terms believed by us to be no less favorable than are available from
unaffiliated third parties. Such transactions or loans, including any
forgiveness of loans, will require prior approval in each instance by a majority
of our uninterested “independent” directors or the members of our board who do
not have an interest in the transaction, in either case who had access, at our
expense, to our attorneys or independent legal counsel. We will not enter into
any such transaction unless our disinterested “independent” directors determine
that the terms of such transaction are no less favorable to us than those that
would be available to us with respect to such a transaction from unaffiliated
third parties.




Messrs.
Granath, Seslowsky, Clauser and Maggin are our “promoters,” as that term is
defined under the Federal securities laws. Capitalink, L.C. and James S. Cassel
may also be considered “promoters,” as that term is defined under the Federal
securities laws.




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Director
Independence




Our board
of directors has determined that each of Mr. Weden, Mr. Reilly and Mr. Roskin
are “independent directors” as such term is defined in Rule 10A-3 of the
Exchange Act and the rules of the American Stock Exchange.




ITEM 14.  Principal Accounting Fees and
Services




The firm
of Marcum & Kliegman LLP (“M&K”) acts as our independent registered
public accounting firm.  The following is a summary of fees paid to
M&K for services rendered:




Audit
Fees




The
aggregate fees billed or expected to be billed for professional services
rendered by M&K for the year ended March 31, 2007 for (a) the annual audit
of our financial statements and (b) the audit of our financial statements dated
as of March 31, 2006 and for the period July 8, 2005 (inception) to March 31,
2006 and filed with our registration statement on Form S-1 or our current
reports on Form 8-K and (c) reviews of SEC filings amounted to approximately
$217,650.




The
aggregate fees billed or expected to be billed for professional services
rendered by M&K for the year ended March 31, 2008 for (a) the annual audit
of our financial statements and (b) reviews of SEC filings amounted to
approximately $101,000.




Audit-Related
Fees




We did not receive audit-related
services that are not reported as Audit Fees for the fiscal year ended March 31,
2008 or 2007.




Tax
Fees




During the fiscal year ended March 31,
2008 and March 31, 2007, M&K billed us $10,200 and $0, respectively, for tax
compliance and advice.





All
Other Fees




The Company did not receive products
and services from M&K, other than those discussed above, for the fiscal year
ended March 31, 2008 or 2007.





Pre-Approval
Policy




Since our audit committee was not
formed until June 2006, the audit committee did not pre-approve all of the
foregoing services, although any services rendered prior to the formulation of
our audit committee were approved by our board of directors.  Since
the formation of our audit committee, and on a going-forward basis, the audit
committee has and will continue to pre-approve all auditing services and
permitted non-audit services to be performed for us by M&K, including the
fees and terms thereof (subject to the de minimis exceptions for non-audit
service described in the Exchange Act which are approved by the audit committee
prior to the completion of the audit).  The audit committee may form
and delegate authority to grant pre-approvals of audit and permitted non-audit
services, provided that decisions of such subcommittee to grant pre-approvals
shall be presented to the full audit committee at its next scheduled
meeting.


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PART IV




ITEM 15.  Exhibits and Financial Statement
Schedules




(a) 
The following documents are filed as a part of this Report:




1. 
Financial Statements




Report of
Independent Registered Public Accounting Firm


Balance
Sheets


Statements
of Operations


Statements
of Changes in Stockholders’ Equity


Statements
of Cash Flows


Notes to
Financial Statements





2. 
Financial Statement Schedules




All
schedules are omitted for the reason that the information is included in the
financial statements or the notes thereto or that they are not required or are
not applicable.




(b) 
Exhibits:




We hereby
file as part of this Annual Report on Form 10-K the Exhibits listed in the
attached Exhibit Index.




(c) 
Financial Statement Schedules




All
schedules are omitted for the reason that the information is included in the
financial statements or the notes thereto or that they are not required or are
not applicable.




Exhibit Number
            Description3.1
            Amended
      and Restated Certificate of Incorporation.(1)3.2
            Amended
      and Restated By-laws.4.4
            Form
      of Unit Purchase Option to be granted to the Co-Representatives.(2)4.5
            Form
      of Warrant Agreement between Continental Stock Transfer & Trust
      Company and the Registrant.(2)10.1
            Letter
      Agreement, dated April 25, 2006, among the Registrant, the
      Co-Representatives, and Herbert A. Granath.(3)10.2
            Letter
      Agreement, dated April 25, 2006, among the Registrant, the
      Co-Representatives, and Harvey M. Seslowsky.(3)10.3
            Letter
      Agreement, dated April 25, 2006, among the Registrant, the
      Co-Representatives, and Robert C. Clauser, Jr.(3)10.4
            Letter
      Agreement, dated April 25, 2006, among the Registrant, the
      Co-Representatives, and Bruce Maggin.(3)10.9
            Form
      of Investment Management Trust Agreement between Continental Stock
      Transfer & Trust Company and the Registrant.(2)10.10
            Form
      of Stock Escrow Agreement between the Registrant, Continental Stock
      Transfer & Trust Company and the Initial Stockholders.(3)


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10.12
            Form
      of Registration Rights Agreement among the Registrant and the Initial
      Stockholders.(4)10.13
            Stock
      Option Agreement, dated August 25, 2005, between Richard Weden and the
      Registrant.(1)10.22
            Amendment
      to Stock Option Agreement, dated April 25, 2006, between Richard Weden and
      the Registrant.(5)10.23
            Stock
      Option Agreement, dated April 25, 2006, between Edward T. Reilly and the
      Registrant.(5)10.24
            Stock
      Option Agreement, dated April 25, 2006, between William A. Roskin and the
      Registrant.(5)10.25
            Letter
      Agreement, dated as of August 3, 2006, among the Registrant, the
      Co-Representatives, and The Hearst Corporation.(6)10.32
            Letter
      Agreement, dated as of August 3, 2006, among the Registrant and Herbert A.
      Granath, Harvey M. Seslowsky, Robert C. Clauser, Jr., Bruce Maggin,
      Richard M. Weden, Edward T. Reilly, William A. Roskin, Transmedia
      Corporation, The Hearst Corporation, Lazard Capital Markets LLC and
      Ladenburg Thalmann & Co. Inc.(6)10.33
            Letter
      Agreement, dated as of August 3, 2006, among the Registrant and Herbert A.
      Granath, Harvey M. Seslowsky, Robert C. Clauser, Jr., Bruce Maggin,
      Transmedia Corporation, The Hearst Corporation, Lazard Capital Markets LLC
      and Ladenburg Thalmann & Co. Inc.(6)14.1
            Code
      of Ethics.(5)31.1
            Certification
      by Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
            Certification
      by Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
            Certification
      by Principal Executive Officer and Principal Financial Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.99.1
            Audit
      Committee Charter.(7)99.2
            Compensation
      Committee Charter.(4)99.3
            Nominating
      Committee Charter.(4)





(1)  Incorporated
by reference to the corresponding exhibit filed with the Registration Statement
on Form S-1 (File No. 333-128218) with the SEC on September 9,
2005.


(2)  Incorporated
by reference to the corresponding exhibit filed with Amendment No. 8 to the
Registration Statement on Form S-1 (File No. 333-128218) filed with the SEC on
March 8, 2007.


(3)  Incorporated
by reference to the corresponding exhibit filed with Amendment No. 6 to the
Registration Statement on Form S-1 (File No. 333-128218) filed with the SEC on
December 26, 2006.


(4)  Incorporated
by reference to the corresponding exhibit filed with Amendment No. 3 to the
Registration Statement on Form S-1 (File No. 333-128218) filed with the SEC on
August 25, 2006.


(5)  Incorporated
by reference to the corresponding exhibit filed with Amendment No. 2 to the
Registration Statement on Form S-1 (File No. 333-128218) filed with the SEC on
May 11, 2006.


(6)  Incorporated
by reference to the corresponding exhibit filed with Amendment No. 5 to the
Registration Statement on Form S-1 (File No. 333-128218) filed with the SEC on
November 9, 2006.


(7)  Incorporated
by reference to the corresponding exhibit filed with Amendment No. 7 to the
Registration Statement on Form S-1 (File No. 333-128218) filed with the SEC on
February 2, 2007.


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MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





CONTENTS





REPORT OF INDEPENDENT REGISTERED PUBLIC
                ACCOUNTING FIRM
              F-2Balance Sheets
              F-3Statements of Operations
              F-4Statements of Changes in Stockholders’
      Equity
              F-5Statements of Cash Flows
              F-6NOTES TO FINANCIAL STATEMENTS
              F-7
      – F-24




F-1
 BACK







REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM










To the
Audit Committee of the


Board of
Directors and Shareholders


of Media
& Entertainment Holdings, Inc.







We have
audited the accompanying balance sheets of Media & Entertainment Holdings,
Inc. (a development stage enterprise) (the “Company”) as of March 31, 2008 and
2007, and the related statements of operations, changes in stockholders’ equity
and cash flows for the years then ended and for the periods from July 8, 2005
(inception) through March 31, 2006 and from July 8, 2005 (inception) through
March 31, 2008.  These financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.  An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 2 to the
financial statements, the Company’s certificate of incorporation provides for
mandatory liquidation of the Company in the event that the Company does not
consummate a business combination (as defined) prior to September 14, 2008 or
March 14, 2009 if certain criteria have been satisfied.  These
conditions raise substantial doubt about its ability to continue as a going
concern.  Management’s plans regarding those matters are described in
Note 2.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.




In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial
position of Media & Entertainment Holdings, Inc. (a development stage
enterprise), as of March 31, 2008 and 2007, and the results of its operations
and its cash flows for the years then ended and for the periods from July 8,
2005 (inception) through March 31, 2006 and from July 8, 2005 (inception)
through March 31, 2008 in conformity with United States generally accepted
accounting principles.




We have also audited, in accordance with
the standards of the Public Company Accounting Oversight Board (United States),
the Company internal control over financial reporting as of March 31, 2008,
based on the criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated, June 16, 2008, expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial
reporting.




/s/ Marcum & Kliegmanllp


Marcum
& Kliegman llp


Melville,
New York


June 16,
2008


F-2
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





BALANCE SHEETS





ASSETS


March
      31,
              2008
            
            
            March
      31, 2007CURRENT
      ASSETSCash
            
            $
            1,107,519
            
            
            $
            13,693Cash
      held in trust account, interest available for workingcapital
      and taxes
            
            
            1,103,685
            
            
            
            183,799Prepaid
      expenses
            
            
            22,097
            
            
            
            49,652TOTAL
      CURRENT ASSETS
            
            
            2,233,301
            
            
            
            247,144OTHER ASSETSCash
      held in trust account, restricted
            
            
            97,300,150
            
            
            
            96,618,800Tax
      refunds due to trust account
            
            
            300,100
            
            
            
            --TOTAL
      OTHER ASSETS
            
            
            97,600,250
            
            
            
            96,618,800TOTAL
      ASSETS
            
            $
            99,833,551
            
            
            $
            96,865,944





LIABILITIES AND
STOCKHOLDERS’ EQUITY





CURRENT
      LIABILITIESAccrued
      expenses
            
            $
            128,690
            
            
            $
            334,245Income
      taxes payable
            
            
            1,076,063
            
            
            
            9,838TOTAL
      CURRENT LIABILITIES
            
            
            1,204,753
            
            
            
            344,083Common stock - subject
      to possible conversion,
              2,483,999
      shares at conversion value
            
            
            19,520,042
            
            
            
            19,323,752COMMITMENTSSTOCKHOLDERS’
      EQUITYPreferred
      stock, $.0001 par value; authorized 1,000,000
              shares;
      none issuedCommon
      stock, $.0001 par value, authorized 70,000,000
              shares;
      16,920,000 (less 2,483,999 subject to possible
              conversion)
      issued and outstanding
            
            
            1,444
            
            
            
            1,444Additional
      paid-in capital
            
            
            77,216,430
            
            
            
            77,279,343Income
      (deficit) accumulated during the development
              stage
            
            
            1,891,062
            
            
            
            (82,498
            )79,108,936
            
            
            
            77,198,289Less:
      Shares of common stock held in treasury,
              1,800,000
      shares
            
            
            (180
            )
            
            
            (180
            )TOTAL
      STOCKHOLDERS’ EQUITY
            
            
            79,108,756
            
            
            
            77,198,109TOTAL
      LIABILITIES AND STOCKHOLDERS’
              EQUITY
            
            $
            99,833,551
            
            
            $
            96,865,944





The
accompanying notes are an integral part of these financial
statements.


F-3
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





STATEMENTS OF OPERATIONS








For
      the year
              ended
              March
      31, 2008
            
            
            For
      the yearended
              March
      31,2007
            
            
            For
      the
              period
              July
      8, 2005 (inception) through
              March
      31, 2006
            
            
            For
      the
              period
              July
      8, 2005 (inception) through
              March
      31, 2008Revenue
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --Formation
      and operating costs
            
            
            803,517
            
            
            
            200,210
            
            
            
            56,249
            
            
            
            1,059,976Loss
      from operations
            
            
            (803,517
            )
            
            
            (200,210
            )
            
            
            (56,249
            )
            
            
            (1,059,976
            )Interest
      income
            
            
            3,865,426
            
            
            
            183,799
            
            
            
            --
            
            
            
            4,049,225Net
      income (loss) before
              Provision
      for income taxes
            
            
            3,061,909
            
            
            
            (16,411
            )
            
            
            (56,249
            )
            
            
            2,989,249Provision
      for income taxes
            
            
            1,088,349
            
            
            
            9,838
            
            
            
            --
            
            
            
            1,098,187Net
      income (loss)
            
            
            1,973,560
            
            
            
            (26,249
            )
            
            
            (56,249
            )
            
            
            1,891,062Accretion
      of trust account relating to common stock subject to possible
      conversion
            
            
            (196,290
            )
            
            
            --
            
            
            
            --
            
            
            
            (196,290
            )Net
      income (loss) attributable to other common stockholders
            
            $
            1,777,270
            
            
            $
            (26,249
            )
            
            $
            (56,249
            )
            
            $
            1,694,772Weighted
      average shares
              outstanding
            
            
            12,636,001
            
            
            
            3,509,408
            
            
            
            4,500,000Basic
      and diluted net income
              (loss)
      per share
            
            $
            .14
            
            
            $
            (.01
            )
            
            $
            (.01
            )











The
accompanying notes are an integral part of these financial
statements.








F-4
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


Common
      Stock
            
            
            
            
            
            
            
            
            Treasury
      StockShares
            
            
            Amount
            
            
            Additional
              paid-in
              capital
            
            
            Income
              (deficit)
              accumulated
              during
              development
              stage
            
            
            Shares
            
            
            Amount
            
            
            Total
              stockholders’
              equityBALANCE - July
      8, 2005
              (inception)
            
            
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            
            --
            
            
            $
            --
            
            
            $
            --Issuance
      of stock to initial
              stockholders
            
            
            4,500,000
            
            
            
            450
            
            
            
            24,550
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            25,000Amortization
      of stock    basedcompensation
            
            
            --
            
            
            
            --
            
            
            
            32,062
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            32,062Net
      loss from July 8, 2005
              (inception) to March 31,    2006
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            (56,249
            )
            
            
            --
            
            
            
            --
            
            
            
            (56,249
            )BALANCE - March
      31, 2006
            
            
            4,500,000
            
            
            
            450
            
            
            
            56,612
            
            
            
            (56,249
            )
            
            
            --
            
            
            
            --
            
            
            
            813Treasury
      stock
            
            
            --
            
            
            
            --
            
            
            
            180
            
            
            
            --
            
            
            
            1,800,000
            
            
            
            (180
            )
            
            
            --Amortization
      of stock    basedcompensation
            
            
            --
            
            
            
            --
            
            
            
            99,950
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            99,950Sale
      of 10,800,000 units, net    ofunderwriters’
      discount    and offeringexpenses
      of    $4,979,533 (includes
              2,159,999
      shares subject to
              possible
      conversion)
            
            
            10,800,000
            
            
            
            1,080
            
            
            
            81,369,367
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            81,370,447Sale
      of 1,620,000 units net of
              underwriting
      discount and    offeringexpenses
      of    $583,200 (includes
              324,000
      shares subject to    possibleconversion)
            
            
            1,620,000
            
            
            
            162
            
            
            
            12,376,638
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            12,376,800Proceeds
      subject to possible
              conversion
      of 2,483,999   shares
            
            
            --
            
            
            
            (248
            )
            
            
            (19,323,504
            )
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            (19,323,752
            )Proceeds
      from issuance of   options
            
            
            --
            
            
            
            --
            
            
            
            100
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            100Proceeds
      from sale of   warrants
            
            
            --
            
            
            
            --
            
            
            
            2,700,000
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            2,700,000Net
      loss for the year ended
              March
      31, 2007
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            (26,249
            )
            
            
            --
            
            
            
            --
            
            
            
            (26,249
            )BALANCE - March
      31, 2007
            
            
            16,920,000
            
            
            
            1,444
            
            
            
            77,279,343
            
            
            
            (82,498
            )
            
            
            1,800,000
            
            
            
            (180
            )
            
            
            77,198,109Amortization
      of stock based
              compensation
            
            
            --
            
            
            
            --
            
            
            
            83,377
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            83,377Reduction
      of Accrued    Offering Costs
            
            
            --
            
            
            
            --
            
            
            
            50,000
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            50,000Accretion
      of trust account    relatingto
      common stock    subject topossible
         conversion
            
            
            --
            
            
            
            --
            
            
            
            (196,290
            )
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            (196,290
            )Net
      income for the year    endedMarch
      31, 2008
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            1,973,560
            
            
            
            --
            
            
            
            --
            
            
            
            1,973,560BALANCE - March
      31, 2008
            
            
            16,920,000
            
            
            $
            1,444
            
            
            $
            77,216,430
            
            
            $
            1,891,062
            
            
            
            1,800,000
            
            
            $
            (180
            )
            
            $
            79,108,756




The
accompanying notes are an integral part of these financial
statements.


F-5
 BACK





MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





STATEMENTS OF CASH FLOWS


For
      the year
              ended
              March
      31, 2008
            
            
            For
      the year
              ended
              March
      31, 2007
            
            
            For
      the period
              July
      8, 2005
              (inception)
      through
              March
      31, 2006
            
            
            For
      the period
              July
      8, 2005
              (inception)
      through
              March
      31, 2008Cash Flows From
      Operating ActivitiesNet  income
      (loss)
            
            $
            1,973,560
            
            
            $
            (26,249
            )
            
            $
            (
      56,249
            )
            
            $
            1,891,062Adjustments
      to reconcile net loss to net
              cash
      provided by (used in) operating
              activities:Stock
      based compensation
            
            
            83,377
            
            
            
            99,950
            
            
            
            32,062
            
            
            
            215,389Changes
      in operating assets and liabilities:Decrease
      (increase) in prepaid expenses
            
            
            27,555
            
            
            
            (49,652
            )
            
            
            --
            
            
            
            (22,097
            )Increase
      in accrued expenses
            
            
            8,060
            
            
            
            36,077
            
            
            
            --
            
            
            
            44,137(Increase)
      in prepaid taxes
            
            
            (300,100
            )
            
            
            --
            
            
            
            --
            
            
            
            (300,100
            )Increase
      in income taxes payable
            
            
            1,066,225
            
            
            
            9,838
            
            
            
            --
            
            
            
            1,076,063Net
      Cash Provided By (Used In) Operating Activities
            
            
            2,858,677
            
            
            
            69,964
            
            
            
            (24,187
            )
            
            
            2,904,454Cash Flows From Investing
      ActivitiesCash
      held in trust account- restricted
            
            
            (681,350
            )
            
            
            (96,618,800
            )
            
            
            --
            
            
            
            (97,300,150
            )Cash
      held in trust account- interest
              available
      for working capital
            
            
            (919,886
            )
            
            
            (183,799
            )
            
            
            --
            
            
            
            (1,103,685
            )Net
      Cash Used In Investing
              Activities
            
            
            (1,601,236
            )
            
            
            (96,802,599
            )
            
            
            --
            
            
            
            (98,403,835
            )Cash Flows From
      Financing ActivitiesProceeds
      from notes payable –
              stockholders
            
            
            --
            
            
            
            135,000
            
            
            
            165,000
            
            
            
            300,000Proceeds
      from sale of warrants
            
            
            --
            
            
            
            2,700,000
            
            
            
            --
            
            
            
            2,700,000Repayment
      of notes payable- stockholders
            
            
            --
            
            
            
            (300,000
            )
            
            
            --
            
            
            
            (300,000
            )Proceeds
      form sale of option
            
            
            --
            
            
            
            100
            
            
            
            --
            
            
            
            100Proceeds
      from issuance of stock to initial
              stockholders
            
            
            --
            
            
            
            --
            
            
            
            25,000
            
            
            
            25,000Gross
      proceeds from initial public offering
            
            
            --
            
            
            
            86,400,000
            
            
            
            --
            
            
            
            86,400,000Payment
      of offering costs from initial
              Public
      offering
            
            
            (163,615
            )
            
            
            (4,589,283
            )
            
            
            (142,102
            )
            
            
            (4,895,000
            )Gross
      proceeds from over- allotment
            
            
            --
            
            
            
            12,960,000
            
            
            
            --
            
            
            
            12,960,000Payment
      of offering costs from over-
              Allotment
            
            
            --
            
            
            
            (583,200
            )
            
            
            --
            
            
            
            (583,200
            )Net
      Cash (Used) Provided By
              Financing
      Activities
            
            
            (163,615
            )
            
            
            96,722,617
            
            
            
            47,898
            
            
            
            96,606,900Net
      Increase (Decrease)
              In
      Cash
            
            
            1,093,826
            
            
            
            (10,018
            )
            
            
            23,711
            
            
            
            1,107,519Cash -
      Beginning
            
            
            13,693
            
            
            
            23,711
            
            
            
            --
            
            
            
            --Cash –
      Ending
            
            $
            1,107,519
            
            
            $
            13,693
            
            
            $
            23,711
            
            
            $
            1,107,519Supplemental
      Disclosures Of Non-Cash Transactions:Accrual
      of offering costs:Offering
      costs
            
            
            (50,000
            )
            
            
            298,168
            
            
            
            --
            
            
            
            84,553Accrued
      expenses payable
            
            
            50,000
            
            
            
            (298,168
            )
            
            
            --
            
            
            
            (84,553
            )Transfer
      of shares from directors to Hearst
              Corporation
      for purchase commitment:Deferred
      offering costs
            
            
            --
            
            
            
            2,264,987
            
            
            
            --
            
            
            
            --Additional
      paid-in-capital
            
            
            --
            
            
            
            (2,264,987
            )
            
            
            --
            
            
            
            --Supplemental
      Disclosure of Cash Flow Information:Cash
      paid during the year for:Income
      taxes
            
            $
            322,224
            
            
            $
            --
            
            
            $
            --
            
            
            $
            322,224








The
accompanying notes are an integral part of these financial
statements.


F-6
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL STATEMENTS





NOTE 1 –
Organization and
Business Operations





Media
& Entertainment Holdings, Inc. (the “Company”) was incorporated in Delaware
on July 8, 2005 as a blank check company whose objective is to acquire an
operating business in the entertainment, media and communications
industries.





All
activity from July 8, 2005 through March 14, 2007 relates to the Company’s
formation and the initial public offering described below.  Since
March 15, 2007, the Company has been searching for a target company to acquire.
The Company has selected March 31 as its fiscal year-end.





The
registration statement for the Company’s initial public offering (“Offering”)
was declared effective March 9, 2007.  The Company consummated the
offering on March 14, 2007 and received net proceeds of $81,420,447 from the
Offering (Note 3).  Simultaneous with the closing, the Company sold
2,700,000 warrants in a private sale to its Initial Stockholders for $2,700,000
of which $300,000 was used to pay off notes due to the stockholders and the
remaining $2,400,000 was deposited in the Trust Account.  An amount of
$84,242,000 from the net proceeds of the offering and the warrants is being held
in an interest-bearing trust account (“Trust Account”), until the earlier of (i)
the consummation of a Business Combination or (ii) liquidation of the
Company.  Under the agreement governing the Trust Account, funds will
only be invested in United States “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940 having a maturity of 180
days or less, or in money market funds meeting certain conditions under Rule
2a-7 promulgated under the Investment Company Act of 1940.  The
remaining net proceeds (not held in the Trust Account) may be used to pay for
business, legal and accounting due diligence on prospective acquisitions and
continuing general and administrative expenses.





On March
23, 2007, the Company completed the sale of an additional 1,620,000 units that
were granted to the underwriters as an over-allotment option at a price of $8.00
per unit and received net proceeds of $12,376,800.





The
Offering, including the exercise of the over-allotment option, generated total
gross proceeds of $99,360,000, excluding the proceeds from the Offering of the
2,700,000 warrants sold on a private basis to the existing
stockholders.  The aggregate net proceeds of the Offering, the
exercise of the over-allotment option, and the sale of warrants on a private
basis to the existing stockholders of $96,618,800 were placed in the Trust
Account.  In addition, the underwriters of the Offering agreed to
defer payment of a portion of the underwriting discount equal to 2.5% of the
gross proceeds, or $2,484,000, and the full amount of their non-accountable
expense allowance, or $864,000.  These deferred amounts will be held
in the trust and not released until the earlier to occur of (i) the completion
of the Company’s initial business combination (“Business Combination”) or (ii)
the Company’s liquidation, in which case such proceeds will be distributed to
the public stockholders (“Public Stockholders”), together with all other funds
held in the Trust Account.





If there is no registration statement in
effect covering the shares of common stock issuable upon the exercise of the
warrants or the prospectus relating to the common stock issuable upon the
exercise of the warrants is not current, the warrants received in the Offering
may


F-7
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)


NOTES TO FINANCIAL
STATEMENTS


NOTE 1 –
Organization and
Business Operations, continued





be deprived of any value, the market for
such warrants may be limited and the holders of such warrants may not be able to
exercise their warrants. With respect to existing stockholders’
warrants, the Company would be permitted to issue unregistered shares
of its common stock pursuant to an exemption to the requirement that the
securities underlying such warrants be registered pursuant to an effective
registration statement. Therefore, the existing stockholders’ warrants may be
exercised whether or not a current registration statement is in place, and the
existing stockholders may be able to exercise their warrants at a time when
warrant purchasers in the Offering may not be able to exercise their
warrants. The Company is only required to use its best efforts to
maintain a current registration statement; therefore, the warrants issued in the
Offering may expire worthless. In no event will the Company be required to net
cash settle the warrants.





The
Company’s management has broad discretion with respect to the specific
application of the net proceeds of this Offering, although substantially all of
the net proceeds of this Offering are intended to be generally applied toward
consummating a business combination with an operating business (“Business
Combination”).  Furthermore, there is no assurance that the Company
will be able to successfully effect a Business Combination. Up to an aggregate
of $1,800,000 of the interest accrued on the amounts held in the Trust Account
(net of taxes, if any, payable by the Company with respect to such interest) was
to be released to the Company in monthly installments to fund a portion of its
working capital requirements. As of March 31, 2008, the $1,800,000 had been
released. The Company, after signing a definitive agreement for the acquisition
of a target business, will submit such transaction for stockholder
approval.  In the event that stockholders (but not the Initial
Stockholders) owning 20% or more of the shares sold in the Offering vote against
the Business Combination and exercise their conversion rights, the Business
Combination will not be consummated.





All of
the Company’s stockholders prior to the Offering, including all of the officers
and directors of the Company (“Initial Stockholders”), have agreed to vote all
of their shares of common stock, whether acquired prior to, in or following the
Offering, in accordance with the vote of the majority in interest of all other
stockholders of the Company (“Public Stockholders”) with respect to any Business
Combination.  After consummation of a Business Combination, these
voting safeguards will no longer be applicable.  The Company, after
signing a definitive agreement for the acquisition of a target business, will
submit such transaction for stockholder approval.  In the event that
stockholders (but not the Initial Stockholders) owning 20% or more of the shares
sold in the Offering vote against the Business Combination and exercise their
conversion rights, the Business Combination will not be
consummated.





If the
Company does not execute a letter of intent, agreement in principle or
definitive agreement for a business combination prior to 18 months from the date
of the Offering (September 14, 2008), the Company’s board will, prior to such
date, convene, adopt and recommend to their stockholders a plan of dissolution
and distribution and on such date file a proxy statement with the SEC seeking
stockholder approval for such plan.  If, however, a letter of intent,
agreement in principle or definitive agreement for a business combination has
been executed prior to 18 months from the date of the Offering (September 14,
2008),


F-8
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 1 –
Organization and
Business Operations, continued





the
Company will abandon its plan of dissolution and distribution that had been
submitted to its stockholders and will instead seek the consummation of that
business combination.  If, following the execution of such letter of
intent, agreement in principle or definitive agreement, a proxy statement
seeking the approval of the Company’s stockholders for that business combination
has not been filed prior to 24 months from the date of the Offering, the
Company’s board will, prior to such date, convene, adopt and recommend to their
stockholders a plan of dissolution and distribution and on such date file a
proxy statement with the SEC seeking stockholder approval for such
plan.  In the event there is no Business Combination within the 18 and
24 month deadlines, the Company will dissolve and distribute to its Public
Stockholders, in proportion to their respective equity interests, the amount
held in the Trust Account, and any remaining net assets, after the distribution
of the Trust Account.  In the event of liquidation, it is likely that
the per share value of the residual assets remaining available for distribution
(including Trust Account assets) will be less than the initial public offering
price per share.





The
Company’s existing stockholders, including purchasers in the private placement
offering, have waived their rights to participate in any liquidation
distribution, but only with respect to those shares of common stock owned by
them prior to the initial public offering; they will participate in any
liquidation distribution with respect to any shares of common stock acquired in
connection with or following our initial public offering.  There will
be no distribution from the Trust Account with respect to the Company’s existing
stockholders’ warrants, which will expire worthless.





With
respect to a Business Combination which is approved and consummated, any Public
Stockholder who voted against the Business Combination may demand that the
Company convert his shares.  The per share conversion price will equal
the amount in the Trust Account, calculated as of two business days prior to the
consummation of the proposed Business Combination, divided by the number of
shares of common stock held by Public Stockholders at the consummation of the
Offering. Accordingly, Public Stockholders holding 20% (less one share) of the
aggregate number of shares owned by all Public Stockholders may seek conversion
of their shares in the event of a Business Combination.  Such Public
Stockholders are entitled to receive their per share interest in the Trust
Account computed without regard to the shares held by Initial Stockholders.
Accordingly, a portion of the net proceeds from the offering (20%, less the
value of one share, of the amount held in the Trust Account) plus the accretion
of the income related thereto, has been classified as common stock subject to
possible conversion in the accompanying March 31, 2008 and 2007 balance
sheets.


F-9
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 2 –
Summary of Significant
Accounting Policies




Going  Concern and Management's Plan and
Intentions – As of March 31, 2008, excluding Cash held in the
Trust Account – restricted of $97,300,150, the Company had working capital of
$1,028,548. The Company’s only source of income to enable it to continue to fund
its search for an acquisition candidate is the interest it earns on its money
not held in the Trust Account. These funds may not be sufficient to maintain the
Company until a business combination is consummated. In addition, there can be
no assurance that the Company will enter into a Business Combination prior to
September 14, 2008. Pursuant to its Certificate of Incorporation, the
Company would have to liquidate pursuant to a dissolution plan and return the
funds held in the Trust Account to the holders of shares issued in the Offering
as previously described.




These factors raise substantial
doubt about the Company’s ability to continue as a going
concern.




Cash and Cash
Equivalents – The Company considers all highly liquid money market
instruments with maturities of three months or less at date of purchase to be
cash equivalents.





Investments Held in Trust
Account – The Company maintains its cash, held in the Trust Account, in
treasury bills and are recorded at cost which approximates fair
value.





Cash held in Trust
Account-restricted – The Company considers the restricted portion of the
funds held in the Trust Account as being a non-current asset.  A
current asset is one that is reasonably expected to be used to pay current
liabilities, such as accounts payable or short-term debt or to pay current
operating expenses, or will be used to acquire other current
assets.  Since the acquisition of a business is principally considered
to be a long-term purpose, with long-term assets such as property and
intangibles, typically being a major part of the acquired assets, the Company
has reported the funds anticipated to be used in the acquisition as a
non-current asset.





Concentrations of Credit
Risk – SFAS No. 107, “Disclosure of Information about Financial
Instruments with Off-Balance Sheet Risk and Financial Instruments with
Concentration of Credit Risk”, requires disclosure of significant concentrations
of credit risk regardless of the degree of risk.  At March 31, 2008,
financial instruments that potentially expose the Company to credit risk consist
of cash and cash equivalents held in trust.  The Company maintains its
cash balances in two different financial institutions.  The Federal
Deposit Insurance Corporation insures balances in bank accounts up to $100,000
and the Securities Investor Protection Corporation insures balances up to
$500,000 in brokerage accounts.  At March 31, 2008, the uninsured
balances in the bank brokerage accounts amounted to


F-10
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 2 –
Summary of Significant
Accounting Policies, continued





$98,911,354.  Management
believes the risk of loss to be minimal since it invests in or through major
financial institutions.





Fair Value of Financial
Instruments – The carrying value of cash, investments held in the Trust
Account, accounts payable and accrued expenses are reasonable estimates of the
fair values due to their short-term maturity.





Income Taxes –
Deferred income taxes are provided for the differences between the basis of
assets and liabilities for financial reporting and income tax purposes. A
valuation allowance is established when necessary to reduce deferred tax assets
to the amount expected to be realized.  The provision for federal,
state and local taxes, which are included
in the accompanying statement of operations amounted to $1,088,349 and $9,838
for the years ended March 31, 2008 and 2007, respectively, $0 for the period
July 8, 2005 (inception) to March 31, 2006, and $1,098,187 for the period July
8, 2005 (inception) to March 31, 2008.  The Company has recorded a
$300,100 tax refund receivable which is due to the Trust Account.




Income
(Loss) Per Share– The Company follows the provisions of
Statement of Financial Accounting Standards (“SFAS 128”), ‘‘Earnings Per
Share’’. In accordance with SFAS No. 128, earnings per common share amounts
(‘‘Basic EPS’’) is computed by dividing earnings by the weighted average number
of common shares outstanding for the period. Common shares subject to possible
conversion of 2,483,999 have been excluded from the calculation of basic
earnings per share since such shares, if redeemed, only participate in their pro
rata shares of the trust earnings. Earnings per common share amounts, assuming
dilution (‘‘Diluted EPS’’), gives effect to dilutive options, warrants, and
other potential common stock outstanding during the period. SFAS No. 128
requires the presentation of both Basic EPS and Diluted EPS on the face of the
statements of operations.The effect of the 16,500,000, 16,500,000
and 100,000 outstanding Options and Warrants issued in connection with the
Public Offering and the Private Placement for the years ended
March 31, 2008 and 2007 and for the period July 8, 2005 (inception)
through March 31, 2006, respectively, describedin Note 3 has not been considered in the
diluted earnings per share calculation since the conversion of the outstanding
Options and Warrants are contingent upon the occurrence of future events, and
therefore, is not includable in the calculation of diluted earnings per share in
accordance with SFAS No. 128.




Estimates– The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the




F-11
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 2 –
Summary of Significant
Accounting Policies, continued





reported amounts of expenses during the
reporting period. Actual results could differ from those
estimates.





Recently
Issued Accounting Pronouncements:


In September 2006, the Financial
Accounting Standards Board (‘‘FASB’’) issued SFAS No. 157 (‘‘SFAS 157’’), ‘‘Fair
Value Measurements.’’ Among other requirements, SFAS 157 defines fair value and
establishes a framework for measuring fair value and also expands disclosure
about the use of fair value to measure asset and liabilities. SFAS 157 is
effective beginning the first fiscal year that begins after
November 15, 2007. The Company is currently evaluating the potential
effect that the adoption of SFAS 157 will have on its financial
statements.





In
December 2007, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement
No. 157,” that would permit a one-year deferral in applying the
measurement provisions of Statement No. 157 to non-financial assets and
non-financial liabilities (non-financial items) that are not recognized or
disclosed at fair value in an entity’s financial statements on a recurring basis
(at least annually). Therefore, if the change in fair value of a non-financial
item is not required to be recognized or disclosed in the financial statements
on an annual basis or more frequently, the effective date of application of
Statement 157 to that item is deferred until fiscal years beginning after
November 15, 2008 and interim periods within those fiscal years. The
Company is currently evaluating the potential effect that the adoption of FSP
157-2 will have on its financial statements.





In February 2007, the FASB issued
SFAS No. 159 (“SFAS 159”) ‘‘The Fair Value Opinion for Financial Assets and
Financial Liabilities – Including an amendment of FASB Statement No. 115’’ which
permits entities to choose to measure many financial instruments and certain
other items at fair value. The fair value option established by this Statement
permits all entities to choose to measure eligible items at fair value at
specified election dates. A business entity shall report unrealized gains and
losses on items for which the fair value option has been elected in earnings at
each subsequent reporting date. Adoption is required for fiscal years beginning
after November 15, 2007. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007,
provided the entity also elects to apply the provisions of SFAS 159. The Company
is currently evaluating the potential effect that the adoption of SFAS 159 will
have on its financial statements.





In December 2007, the Financial
Accounting Standards Board (‘‘FASB’’) issued Statement of Financial Accounting
Standards No. 141 (revised 2007),Business
Combinations(‘‘SFAS
141(R)’’). SFAS 141(R) changesaccounting for acquisitions that close
beginning in 2009 in a number of areas including the treatment of contingent
consideration, contingencies, acquisition costs, IPR&D and restructuring
costs. More transactions and events will qualify as business combinations
and will be accounted for at fair value under the new standard. SFAS 141(R)
promotes greater use of fair values in financial reporting. In addition,
under SFAS 141(R), changes in deferred tax asset valuation allowances and
acquired income tax uncertainties in a business combination after the
measurement period will impact income tax expense. Some of the changes will
introduce more volatility into earnings. SFAS 141(R) is effective for
fiscal years beginning on


F-12
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 2 –
Summary of Significant
Accounting Policies, continued





or after December 15, 2008.
 SFAS 141(R) will have an impact on accounting for any business acquired
after the effective date of this pronouncement.





In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 160, Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB
No. 51 (‘‘SFAS 160’’). SFAS 160 will change the accounting and
reporting for minority interests, which will be recharacterized as
noncontrolling interests (NCI) and classified as a component of equity.
This new consolidation method will significantly change the accounting for
transactions with minority interest holders. SFAS 160 is effective for fiscal
years beginning after December 15, 2008. The Company is currently
evaluating the potential effect that the adoption of SFAS 160 will have on its
financial statements.




In
December 2007, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 110 (“SAB 110”). SAB 110 amends and replaces Question 6 of
Section D.2 of Topic 14, Share-Based Payment of the Staff Accounting Bulletin
series. Question 6 of Section D.2 of Topic 14 expresses the views of the staff
regarding the use of the “simplified” method in developing an estimate of the
expected term of “plain vanilla” share options and allows usage of that method
for option grants prior to December 31, 2007. SAB 110 allows public
companies which do not have sufficient historical experience to provide a
reasonable estimate to continue the use of this method for estimating the
expected term of “plain vanilla” share option grants after December 31,
2007. The adoption of this pronouncement by the Company in fiscal 2008 has not
had an effect on its financial statements.





In
February 2008, the FASB issued Staff Position No. FAS 140-3, “Accounting for
Transfers of Financial Assets and Repurchase Financing Transactions,” which
provides guidance on accounting for a transfer of a financial asset and a
repurchase financing. This accounting guidance presumes that an initial transfer
of a financial asset and a repurchase financing are considered part of the same
arrangement (linked transaction) under SFAS No. 140. However, if certain
criteria are met, the initial transfer and repurchase financing shall be
evaluated separately under SFAS No. 140. Staff Position No. FAS 140-3 will be
effective for financial statements issued for fiscal years beginning after
November 15, 2008, and for interim periods within those fiscal years. Early
adoption is prohibited. The Company is currently evaluating the potential effect
that the adoption of FAS 140-3 will have on its financial
statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133,” (“SFAS 161”) as amended and interpreted, which requires enhanced
disclosures about an entity’s derivative and hedging activities and thereby
improves the transparency of financial reporting. Disclosing the fair values of
derivative instruments and their gains and losses in a tabular format provides a
more complete picture of the location in an entity’s financial statements of
both the derivative positions existing at period end and the effect of using
derivatives during the reporting period. Entities are required to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an


F-13
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 2 –
Summary of Significant
Accounting Policies, continued





entity’s
financial position, financial performance, and cash flows. SFAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. Early adoption is permitted, but not
expected.  The company is currently evaluating the potential effect
that the adoption of SFAS 161 will have on its financial
statements.





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





NOTE 3 -
Initial Public
Offering





On March
9, 2007, the Company sold 10,800,000 units (“Unit”) in the Offering at $8.00 per
Unit. The Company received gross proceeds of $86,400,000 and incurred offering
costs of $4,979,533
(netting $81,420,447) in connection with the Offering. Each Unit consists of one
share of the Company’s common stock, $.0001 par value, and one Redeemable Common
Stock Purchase Warrant (“Warrant”).  Each Warrant entitles the holder
to purchase from the Company one share of common stock at an exercise price of
$5.00 commencing the later of the completion of a Business Combination or one
year from the effective date of the Initial Public Offering and expiring four
years from the effective date of the Initial Public Offering.  The
Warrants will be redeemable by the Company, at a price of $.01 per Warrant upon
30 days’ notice after the Warrants become exercisable, only in the event that
the last sale price of the common stock is at least $11.50 per share for any 20
trading days within a 30 trading day period ending on the third day prior to the
date on which notice of redemption is given.  In connection with this
Offering, the Company issued an option, for $100, to the representatives of the
underwriters in the Offering (“Representative”), to purchase 540,000 Units. The
Units issuable upon exercise of this option are identical to those offered in
this Offering, except that each of the warrants underlying this option entitles
the holder to purchase one share of Common Stock at a price of $7.50. This
option is exercisable at $10.00 per unit commencing on the later of the
consummation of a business combination and one year from the date of the
prospectus and expiring five years from the date of the prospectus. The option
may only be exercised or converted by the option holder. In no event will the
Company be required to net cash settle this option or the underlying warrants.
The Company has accounted for the fair value of the option, inclusive of the
receipt of the $100 cash payment, as an expense of the public offering resulting
in a charge directly to stockholders’ equity.  The Company estimates
that the fair value of this option was approximately $1,869,815 ($3.46 per Unit)
using a Black-


F-14
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 3 -
Initial Public
Offering, continued





Scholes
option-pricing model.  The fair value of the option granted to the
Representative is estimated as of the date of grant using the following
assumptions:  (1) expected volatility of 50.3%, (2) risk-free interest
rate of 5.00% and (3) expected life of five years and a dividend rate of
zero.  The option may be exercised for cash or on a “cashless” basis
at the holder’s option, such that the holder may use the appreciated value of
the option (the difference between the exercise prices of the option and the
underlying Warrants and the market price of the Units and underlying securities)
to exercise the option without the payment of any cash.





The
volatility calculation of 50.3% is based on the five-year average volatility of
a representative sample of five (5) companies that management believes are
representative of the Media and Entertainment Industry (the "Sample Companies").
Because the Company does not have a trading history, the Company needed to
estimate the potential volatility of its common stock price, which will depend
on a number of factors which cannot be ascertained at this time. The Company
referred to the five-year average volatility of the Sample Companies because
management believes that the average volatility of such companies is a
reasonable benchmark to use in estimating the expected volatility of the
Company's common stock post-business combination. Although an expected life of
five years was taken into account for purposes of assigning a fair value to the
option, if the Company does not consummate a business combination within the
prescribed time period and liquidates, the option would become
worthless.





The
Company has met all of the criteria in paragraphs 12 through 32 of EITF 00-19
"Accounting for Derivative Financial Instruments Indexed to and Potentially
Settled in, a Company's Own Stock" ("EITF 00-19") in connection with the unit
purchase option and underlying warrants and has determined that these
instruments will be recorded as equity at issuance since there is no possibility
of net cash settlement and thereby excluded from the scope of SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133").





The
Company’s Initial Stockholders had committed to purchase an aggregate of
2,400,000 Warrants.  On March 7, 2007 the existing stockholders
committed to purchase an additional 300,000 warrants for a total of 2,700,000
warrants, at a price of $1.00 per Warrant, for an aggregate
purchase price of $2,700,000, of which $300,000 was paid by means of a repayment
of loans made to the Company by its officers.  These purchases
occurred on a private placement basis simultaneously with the consummation of
the Initial Public Offering.  The proceeds of $2,400,000 that the
Company received from these purchases were placed in the Trust
Account.  The Warrants are identical to the Warrants offered as part
of the units in the Initial Public Offering in many respects, however they may
be


F-15
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 3 -
Initial Public
Offering, continued





exercisable
on a cashless basis, so long as such Warrants are held by the Initial
Stockholders or their affiliates, and the Warrants are not redeemable by the
Company.  Furthermore, the purchasers of such Warrants, including all
of the Company’s officers and directors, have agreed not to sell or transfer
their Warrants (or any of the underlying shares of Common Stock) until 90 days
after the consummation of the Company’s initial business combination. The
Warrants purchased by the Hearst Corporation and Transmedia Corporation are
subject to the same terms and conditions as those purchased by the Company’s
officers and directors.





On March 23, 2007, the Company
completed the sale of an additional 1,620,000 units that were granted to the
underwriters as an over-allotment option at a price of $8.00 per unit. An additional amount of $12,376,800 (net of
a portion of the underwriters’ discount of $583,200) was placed in the Company’s
Trust Account.





The Company entered into an agreement
with the underwriters of the Offering (the ‘‘Underwriting Agreement’’). Under
the terms of the underwriting agreement, the Company paid an underwriting
discount of 4.5% ($3,888,000) of the gross proceeds in connection with the
consummation of the Offering and has placed 2.5% ($2,160,000) of the gross
proceeds in the Trust Account which will be paid to the underwriters only upon
consummation of a Business Combination. Additionally, the Company has placed
$864,000 in the Trust Account which will be paid to the underwriters for expense
reimbursement associated with the initial public offering only upon consummation
of a Business Combination. The Company did not pay any discount related to the
Warrants sold in the private placement. The Underwriters have waived their
rights to receive payments from the Trust Account of $2,160,000 of underwriting
discounts and $864,000 of expense reimbursements, which are due under the
Underwriting Agreement if the Company is unable to consummate a Business
Combination.





NOTE 4 -
Notes Payable,
Stockholders





On August
25, 2005, four officers (the “Initial Stockholders”) advanced a total of
$100,000 to the Company, on a non-interest bearing basis, for payment of
Offering expenses.  The Company issued an aggregate of $100,000 of
unsecured promissory notes which matured August 25, 2006 to the Initial
Stockholders. On August 17, 2006, the notes were amended to extend their
maturity date to January 25, 2007. On March 6, 2007, the notes were amended to
extend their maturity date to July 25, 2007. On September 3, 2005, Transmedia
Corporation, an affiliate of one of the Initial Stockholders, advanced $20,000
to the Company as additional working capital to cover additional offering
expenses.  The note is non-interest bearing and matured on September
3, 2006.  On October 16, 2006, effective to


F-16
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 4 -
Notes Payable,
Stockholders, continued





September
3, 2005, the note evidencing this loan was amended to extend its maturity date
to March 3, 2007. On September 26, 2005, Herbert Granath, Robert Clauser and
Bruce Maggin, each of whom is a Founding Stockholder, advanced a total of
$30,000 to the Company as additional working capital to cover additional
expenses associated with the Offering.  The notes are non-interest
bearing and matured on September 26, 2006.  On October 16, 2006,
effective to September 26, 2005, the notes were amended to extend their maturity
date to March 26, 2007. On March 28, 2006, Mr. Clauser advanced to the Company a
total of $15,000 to cover additional expenses associated with the Offering. On
April 3, 2006, Messrs. Granath and Maggin, and Transmedia Corporation advanced
to the Company a total of $35,000 to cover additional expenses associated with
the Offering. On November 17, 2006, Messrs. Granath, Seslowsky, Clauser and
Maggin advanced to the Company a total of $50,000 to cover additional expenses
related to the offering. On February 16, 2007, Messrs. Granath, Seslowsky,
Clauser, and Maggin advanced
to the Company a total of $50,000 to cover additional roadshow and other
offering expenses. The aggregate of $300,000 of these notes were satisfied in
full at the closing
on March 14, 2007 when they were applied against the proceeds due upon the sale
of 2,700,000 Warrants to the Initial Stockholders.





NOTE 5 -
Commitments





On March
22, 2007, the Company signed an agreement to utilize certain administrative,
technological and secretarial services, as well as certain limited office space
located in New York City for the period from April 1, 2007 through March 31,
2008. The Company has renewed this agreement through March 31, 2009. The Company
has agreed to pay $300 per month for such services.





On March
4, 2008, the Company entered into a one year agreement for financial advisory
services in connection with acquisition of a target. If the Company consummates
a transaction during the term the fee will be equal to .5% of the consideration
paid in connection with the acquisition.





NOTE 6 –
Capital
Transactions





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





On March
6, 2007 the Company declared a one share for each five shares outstanding stock
dividend payable to all shareholders of record on November 30, 2006. All
references in the





F-17
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)


NOTES TO FINANCIAL STATEMENTS




NOTE
      6 – Capital
      Transactions, continued




accompanying
financial statements to the number of common shares and per-share amounts have
been retroactively restated to reflect the stock dividend. The Company is
obligated to use their best efforts to register the resale of 2,700,000 of
existing stockholders’ warrants and the shares of common stock underlying such
warrants after the 90th day
after the consummation of our initial business combination.





In
connection with the Company’s decision to revise the structure of the Offering,
effective April 25, 2006, each of Messrs. Granath, Seslowsky, Clauser and Maggin
contributed to the Company, at no cost, 281,250 shares of common stock
(collectively a total of 1,125,000 shares), effectively increasing the average
purchase price to approximately $0.0075 per share. The purpose of this
contribution was to maintain the equity ownership interest of the Initial
Stockholders at 20% of the total outstanding shares of common stock after
downsizing the original Offering.





On behalf
of the Company, effective August 3, 2006, several of the directors transferred
324,000 shares, in the aggregate, of their own stock to The Hearst Corporation
in consideration for Hearst’s commitment to purchase existing stockholders’
warrants simultaneously with the consummation of the Company’s offering. The
value of the  transfer was recorded at $6.99 per share calculated as
follows: the offering price of one unit ($8) less the value ($1) attributed to
the Warrant attached thereto and the reimbursement of the price originally paid
for the shares by the directors of $.0093. The Company estimates that the fair
value of this private transfer is approximately $2,264,987 and was recorded as
an expense of the offering resulting in a charge directly to stockholders
equity.





In March
2007, the Company and the underwriters increased the size of the Offering to
10,800,000 units (20% increase) (12,420,000 if the underwriters exercise their
45-day over-allotment option). In addition, in order for the Company’s existing
stockholders to retain their ownership percentage of the number of shares to be
sold in the offering, on March 6, 2007 the Company effectuated a stock dividend
of 1 share for each 5 shares then outstanding. These financial statements have
been retroactively restated for this dividend. Similarly, the existing
shareholders also agreed to a proportionate increase of their Warrant purchase
simultaneous with the offering on a private placement basis which has increased
in the aggregate by $300,000 to $2,700,000 (See Note 3).





NOTE 7 -
Stock
Options and Stock Based Compensation





Effective March 31, 2006, the
Company adopted (“SFAS No. 123(R)”), ‘‘Share-Based Payment,’’ which
requires the measurement and recognition of compensation cost at the fair value
for all share-based payments, including stock options and stock purchased at a
discount through a stock purchase plan.


F-18
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS








NOTE 7 -
Stock
Options and Stock Based Compensation,continued





On August
25, 2005, the Company granted one member of the Company's Board of Directors an
option to purchase up to a total of 100,000 shares of common stock at a price of
$6.00 per share. This option expires on August 25, 2010.





The
Company accounted for the fair value of this option as an expense of operations
resulting in a charge directly to formation and operating costs. The Company
estimates that t he fair
value of this option is approximately $250,131 ($2.50 per share underlying such
option) using a Black-Scholes option-pricing model. The fair value of the option
granted to our
independent director is estimated as of the date of grant using the following
assumptions: (1) expected volatility of 59.7%, (2) risk-free interest rate of
4.08%, (3) expected life of five years and (4) dividend rate is
zero.





The
volatility calculation of 59.7% is based on the five-year average volatility of
the five Sample Companies. Because the Company does not have a trading history,
the Company needed to estimate the potential volatility of its common stock
price, which will depend on a number of factors which cannot be ascertained at
this time. The Company referred to the five-year average volatility of the
Sample Companies because Management believes that the average volatility of such
companies is a reasonable benchmark to use in estimating the expected volatility
of the Company's common stock post-business combination. Although an expected
life of five years was taken into account for purposes of assigning a fair value
to the option, if the Company does not consummate a business combination within
the prescribed time period and liquidates, the option would become
worthless.





On April
25, 2006, the Company modified the options to provide that the exercise price
would be $8.00 per share, and to amend the vesting schedule of the option to
provide that one third of such options vest upon the consummation of the
Company's initial business combination, and the remaining two thirds vest on the
first and second anniversaries of that date, provided that such individual
remains a director of the Company at such time. This modification resulted in no
additional compensation expense since the fair value of the original award at
the modification date exceeded the fair value of the modified award. The value
of the original award immediately before the modification is calculated to be
$352,499 ($3.525 per share) based on a share price of $7, an exercise price of
$6, a term of 4.42 years, a volatility of 48.6% and a risk free discount rate of
4.9%. The Company estimates that the modified fair value of the August 25, 2005
option is approximately $328,134 ($3.28 per share underlying such option) using
a Black-Scholes option-pricing model. The fair value of the option granted to
our independent director is estimated as of the date of modification using the
following assumptions: (1) expected volatility of 51.9%, (2) risk-free discount
rate of 4.90%, (3) expected life of five years and (4) dividend rate is
zero.





F-19
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 7 -
Stock
Options and Stock Based Compensation,continued





In
accordance with FAS 123(R) the Company will continue to amortize the cost of the
stock compensation represented by the options through the original vesting
period, August 2008, since the vesting conditions changed from probable to
improbable (Type II modification
per FAS 123(R) ) and management believes that the modified vesting terms is not
probable of achievement; but continues to believe that the original vesting
schedule is probable. The
amortization of the stock compensation was, which is reflected in formation and
operating costs, $83,377, $99,950, $32,062,  and $215,389 for the
years ended March 31, 2008 and 2007, and the period from
July 8, 2005 (inception) through March 31, 2006, and the
period July 8, 2005 (inception) through March 31, 2008,
respectively.





On April
25, 2006, the Company granted two additional members of the Company's Board of
Directors options to acquire 100,000 shares each of the Company's common stock
at an exercise price of $8.00 per share, with one third vesting upon the
consummation of the Company's initial business combination, and the remaining
two thirds vesting on the first and second anniversaries of that date, provided
that such individual remains a director of the Company at such time. The Company
intends to account for the fair value of these options as an expense of
operations beginning upon the first vesting period upon consummation of the
Company's initial business combination resulting in a charge directly to
formation and operating costs. The Company estimates that the fair value of
these options is approximately $656,268 ($3.28 per share underlying such option)
using a Black-Scholes option-pricing model. The fair value of the option granted
to our independent director is estimated as of the date of grant using the
following assumptions: (1) expected volatility of 51.9%, (2) risk-free discount
rate of 4.9%, (3) expected life of five years and (4) dividend rate is
zero.





Since the strike price of the
outstanding options and warrants was greater than the market price of the stock,
there is no intrinsic value to the options or warrants.





The
volatility calculation of 51.9% is based on the five-year average volatility of
the five Sample Companies. Because the Company does not have a trading history,
the Company needed to estimate the potential volatility of its common stock
price, which will depend on a number of factors which cannot be ascertained at
this time. The Company referred to the five-year average volatility of the
Sample Companies because Management believes that the average volatility of such
companies is a reasonable benchmark to use in estimating the expected volatility
of the Company's common stock post-business combination. Although an expected
life of five years was taken into account for purposes of assigning a fair value
to the option, if the Company does not consummate a business combination within
the prescribed time period and liquidates, the option would become
worthless.


F-20
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS





NOTE 7 -
Stock
Options and Stock Based Compensation,continued





There were no stock options granted
during the years ended March 31, 2008 and 2007.




NOTE 8 –
Income
Taxes




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





Effective April 1, 2007, the
Company adopted the provisions of the Financial Accounting Standards Board
(‘‘FASB’’) Interpretation No. 48, ‘‘Accounting for Uncertainty in Income Taxes – an interpretation of FASB
Statement No. 109’’ (‘‘FIN 48’’). There were no unrecognized tax benefits
as of April 1, 2007 and as of March 31, 2008. FIN 48
prescribes a recognition threshold and a measurement attribute for the financial
statement recognition and measurement of tax positions taken or expected to be
taken in a tax return. For those benefits to be recognized, a tax
position must be more-likely-than-not to be sustained upon examination by taxing
authorities.





The Company has identified its federal
tax return and its New York State and City tax returns as ‘‘major’’ tax
jurisdictions, as defined in FIN 48. The Company’s evaluations were performed
for fiscal tax years ended 2006, 2007, and 2008, the only periods subject to
examination. The Company believes that its income tax positions and deductions
would be sustained on audit and does not anticipate any adjustments that would
result in a material change to its financial position. There were no
unrecognized tax benefits as of March 31, 2008. The Company recognizes accrued
interest and penalties related to unrecognized tax benefits as income tax
expense. No amounts were accrued for the payment of interest and penalties at
April 1, 2007. There was no change to this balance at
March 31, 2008. The Company does not expect its unrecognized tax
benefit position to change during the next twelve months. Management is
currently unaware of any issues under review that could result in significant
payments, accruals or material deviations from its
position.





At March 31, 2008 and 2007,
the Company has a deferred tax asset of approximately $85,000 and $45,000,
respectively, which consists primarily of a temporary difference relating to
stock based compensation. Based on the contingent nature of the exercise of the
options and the uncertainty of the resulting tax benefit, a valuation allowance
for all of the deferred tax asset was recorded in each period, respectively.
Deferred income taxes reflect the net tax effects of operating losses and other
temporary differences between carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The





F-21
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)




NOTES TO FINANCIAL STATEMENTS




NOTE 8 –
Income Taxes,
continued




ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which temporary differences representing net future deductible
amounts become deductible. SFAS No. 109 requires that a valuation allowance be
established when it is ‘‘more likely than not’’ that all or a portion of
deferred tax assets will not be realized. A review of all available positive and
negative evidence needs to be considered, including a company’s performance, the
market environment in which the company operates, the length of
carryback and carryforward periods, and expectations of future
profits.





The
      provision for income tax consists of the
  following:








For
      the year ended
              March
      31, 2008
            
            
            For
      the year ended
              March
      31, 2007
            
            
            For
      the period from
              July
      8, 2005
              (inception)
      through
              March
      31, 2006
            
            
            For
      the period from
              July
      8, 2005
              (inception)
      through
              March
      31, 2008Current:Federal
            
            $
            1,087,949
            
            
            $
            9,838
            
            
            
            --
            
            
            $
            1,097,787State and Local
            
            
            400
            
            
            
            --
            
            
            
            --
            
            
            
            400DeferredFederal
            
            
            (40,058
            )
            
            
            (26,000
            )
            
            
            (19,000
            )
            
            
            (85,058
            )State and Local
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --Adjustments
      to valuation allowance related to net deferred tax assets
            
            
            40,058
            
            
            
            26,000
            
            
            
            19,000
            
            
            
            85,058Total provision
for
              income
      taxes
            
            $
            1,088,349
            
            
            $
            9,838
            
            
            $
            --
            
            
            $
            1,098,187








F-22
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS







NOTE 8 –
Income Taxes,
continued




A reconciliation between the effective
rate for income taxes and the amount computed by applying the statutory Federal
income tax rate to income (loss) from continuing operations before provision for
income taxes is as follows:




For the
      year
                ended
                March
      31,
                2008
              
              
              For the
      year
                ended
                March
      31,
                2007
              
              
              For the
      period
                from
                July 8,
      2005
                (inception)
                through
                March
      31,
                2006
              
              
              For the
      period
                from
                July 8,
      2005
                (inception)
                through
                March
      31,
                2008Tax provision at
      statutory
                rate
              
              
              34%
              
              
              
              (34%
              )
              
              
              (34%
              )
              
              
              34%State
      and local taxes
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Permanent
      difference for the effect of graduated tax rates
              
              
              --
              
              
              
              (63%
              )
              
              
              --
              
              
              
              --Change in
      valuation
                allowance for
      net
                deferred tax
      assets
              
              
              1%
              
              
              
              157%
              
              
              
              34%
              
              
              
              3%35%
              
              
              
              60%
              
              
              
              --%
              
              
              
              37%





Due to the uncertainty of the Company’s
ability to realize the benefit of the deferred tax assets, the deferred tax
assets are fully offset by a valuation allowance at March 31, 2008 and
2007.





F-23
 BACK


MEDIA
& ENTERTAINMENT HOLDINGS, INC.


(A
DEVELOPMENT STAGE ENTERPRISE)





NOTES TO FINANCIAL
STATEMENTS








NOTE 9 –
Summarized Quarterly
Data (unaudited)





Following
is a summary of the quarterly results of operations for the year ended March 31,
2008:


Quarter
              ended
              June
      30,
              2007
            
            
            Quarter
              ended
              September
      30 2007
            
            
            Quarter
              ended
              December
      31, 2007
            
            
            Quarter
              ended
              March
      31,
              2008Revenue
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --Loss
      from operations
            
            
            (148,998
            )
            
            
            (222,049
            )
            
            
            (155,356
            )
            
            
            (277,114
            )Dividend
      and interest income
            
            
            1,163,963
            
            
            
            993,755
            
            
            
            952,081
            
            
            
            755,627Income
      before provision for
              income
      taxes
            
            
            1,014,965
            
            
            
            771,706
            
            
            
            796,725
            
            
            
            478,513Provision
      (benefit) for
              Income
      taxes
            
            
            474,409
            
            
            
            380,339
            
            
            
            369,901
            
            
            
            (136,300
            )Net
      Income
            
            
            540,556
            
            
            
            391,367
            
            
            
            426,824
            
            
            
            614,813Accretion
      of income
            
            
            --
            
            
            
            (104,835
            )
            
            
            54,876
            
            
            
            (146,331
            )Net
      income  attributable to
              common
      stockholders
            
            $
            540,556
            
            
            $
            286,532
            
            
            $
            481,700
            
            
            $
            468,482Weighted
      average shares
              outstanding
      basic and
              diluted
            
            
            15,120,000
            
            
            
            12,636,001
            
            
            
            12,636,001
            
            
            
            12,636,001Basic
      and diluted net income
              per
      share
            
            $
            .04
            
            
            $
            .02
            
            
            $
            .04
            
            
            $
            .04




Following
is a summary of the quarterly results of operations for the year ended March 31,
2007:




Quarter
              ended
              June
      30,
              2006
            
            
            Quarter
              ended
              September
      30 2006
            
            
            Quarter
              ended
              December
      31, 2006
            
            
            Quarter
              ended
              March
      31,
              2007Revenue
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --Loss
      from operations
            
            
            (70,000
            )
            
            
            (40,367
            )
            
            
            (27,687
            )
            
            
            (62,156
            )Dividend
      and interest income
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            183,799Income
      (loss)before provision
              for
      income taxes
            
            
            (70,000
            )
            
            
            (40,367
            )
            
            
            (27,687
            )
            
            
            121,643Provision
      for income taxes
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            9,838Net
      Income (loss)
            
            
            (70,000
            )
            
            
            (40,367
            )
            
            
            (27,687
            )
            
            
            111,805Accretion
      of income
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --Net
      income (loss) attributable
              to
      common stockholders
            
            $
            (70,000
            )
            
            $
            (40,367
            )
            
            $
            (27,687
            )
            
            $
            111,805Weighted
      average shares
              outstanding
      basic and
              diluted
            
            
            3,634,615
            
            
            
            2,700,000
            
            
            
            2,700,000
            
            
            
            3,509,408Basic
      and diluted net income
              (loss)
      per share
            
            $
            (.02
            )
            
            $
            (.01
            )
            
            $
            (.01
            )
            
            $
            .03


F-24
 BACK


SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




MEDIA & ENTERTAINMENT
      HOLDINGS, INC./s/
      Herbert A. GranathBy:
            Herbert
      A. GranathTitle:
            Chairman
      of the Board and Chief Executive OfficerDate:
            June
      16, 2008





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




Signature
            Title
            Date/s/ Herbert A.
      Granath
              Herbert
      A. Granath
            Chairman
      of the Board and Chief Executive Officer
              (Principal
      Executive Officer)
            June
      16, 2008/s/ Robert C.
      Clauser
              Robert
      C. Clauser, Jr.
            Executive
      Vice President, Chief Financial Officer and Assistant
      Secretary
              (Principal
      Financial and Accounting Officer)
            June
      16, 2008/s/ Harvey M.
      Seslowsky
              Harvey
      M. Seslowsky
            President,
      Chief Operating Officer and Director
            June
      16, 2008/s/ Bruce
      Maggin
              Bruce
      Maggin
            Executive
      Vice President, Secretary and Treasurer
            June
      16, 2008/s/ Richard
      Weden
              Richard
      Weden
            Director
            June
      16, 2008/s/ Edward T.
      Reilly
              Edward
      T. Reilly
            Director
            June
      16, 2008/s/ William A.
      Roskin
              William
      A. Roskin
            Director
            June
      16, 2008