Table of Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549**

** **

**FORM 10-Q**

 
| **x**      | ** ** | **Quarterly Report Pursuant to  Section 13 or 15(d) of the Securities Exchange Act of 1934** |
|------------|------------|--------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | **For the quarterly period ended  September 30, 2008.**                                           |

 

**or**

 
| **o**      | ** ** | **Transition Report Pursuant to  Section 13 or 15(d) of the Securities Exchange Act of 1934**                                                                                                                                                                                                                                                                                                         |
|------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | **For the transition period from                               to                               .** |

** **

**CommissionFile Number: 000-52857**

 

**STONE TAN CHINA ACQUISITION CORP.**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                     | ** ** | **20-8387484**      |
|----------------------------------|------------|---------------------|
| (State or Other  Jurisdiction of |       | (I.R.S. Employer    |
| Incorporation or  Organization)  |       | Identification No.) |

 

**Suite 1A, 11th Floor**

**Tower 1 China Hong Kong City**

**33 Canton Road Kowloon, Hong Kong**

(Address of Principal Executive Offices, Including Zip Code)

 

**852-27355493**

(Registrant’s Telephone Number, Including Area Code)

 

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Exchange Act during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes x   No o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company.  See the definitions of “large acceleratedfiler,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act:

 

| Large  Accelerated Filer o |   | Accelerated  Filer o |   | Non-Accelerated  Filer o  (Do not check if a smaller reporting company) |   | Smaller  Reporting Company x |
|----------------------------|--------|----------------------|--------|-------------------------------------------------------------------------|--------|------------------------------|

 

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

 

There were 41,212,875shares of the Registrant’s common stock issued and outstanding as of November 7,2008.

 

 

 

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**Tableof Contents**

 

**Stone TanChina Acquisition Corp.**

**Index to Form 10-Q**

 
| **Part I.**  | ** ** | **Financial Information**                                                                           |
|-------------------|------------|-----------------------------------------------------------------------------------------------------|
|              |       |                                                                                                |
|              |       | Item 1. Financial Statements                                                                        |
|              |       |                                                                                                |
|              |       | Balance  Sheets                                                                                     |
|              |       |                                                                                                |
|              |       | Statements  of Operations                                                                           |
|              |       |                                                                                                |
|              |       | Statement  of Stockholders’ Equity                                                             |
|              |       |                                                                                                |
|              |       | Statements  of Cash Flows                                                                           |
|              |       |                                                                                                |
|              |       | Notes to Financial Statements                                                                       |
|              |       |                                                                                                |
|              |       | Item 2. Management’s Discussion and Analysis of  Financial Condition and Results of Operations |
|              |       |                                                                                                |
|              |       | Item 3. Quantitative and Qualitative Disclosures About  Market Risk                                 |
|              |       |                                                                                                |
|              |       | Item 4T. Controls and Procedures                                                                    |
|              |       |                                                                                                |
| **Part II.** | ** ** | **Other Information**                                                                               |
|              |       |                                                                                                |
|              |       | Item  1. Legal Proceedings                                                                          |
|              |       |                                                                                                |
|              |       | Item 1A. Risk Factors                                                                               |
|              |       |                                                                                                |
|              |       | Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds                                |
|              |       |                                                                                                |
|              |       | Item 3. Defaults Upon Senior Securities                                                             |
|              |       |                                                                                                |
|              |       | Item 4. Submission of Matters to a Vote of Security  Holders                                        |
|              |       |                                                                                                |
|              |       | Item  5. Other Information                                                                          |
|              |       |                                                                                                |
|              |       | Item 6. Exhibits                                                                                    |
|              |       |                                                                                                |
| SIGNATURES        |

 

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Table of Contents

 

**PART I -FINANCIAL INFORMATION**

 

**ITEM 1 – FINANCIAL STATEMENTS (UNAUDITED)**

** **

****STONE TAN CHINA ACQUISITION CORP. AND SUBSIDIARY****

(a corporation in the development stage)

 

**CONDENSED CONSOLIDATED BALANCE SHEETS**

 
| ** **                                                                                                                                                                   | ** ** | **September 30,** | ** **  | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|-------------|-----------------------|------------|
| ** **                                                                                                                                                                   | ** ** | **2008**               | ** **  | **2007**              | ** ** |
| ** **                                                                                                                                                                   | ** ** | **(Unaudited)**        | ** **  | ** **            | ** ** |
|                                                                                                                                                                         |       |                   |        |                  |       |
| **ASSETS**                                                                                                                                                                   |       |                   |        |                  |       |
| Current assets:                                                                                                                                                              |       |                   |        |                  |       |
| Cash and cash equivalents                                                                                                                                                    |       | $                      | 1,719,212   |                  | $          | 1,214,280 |   |
| Money market funds - held in trust                                                                                                                                           |       | 262,662,137            |        | 260,800,695           |       |
| Prepaid expenses                                                                                                                                                             |       | 88,952                 |        | 203,186               |       |
| Total current assets                                                                                                                                                         |       | 264,470,301            |        | 262,218,161           |       |
| Total assets                                                                                                                                                                 |       | $                      | 264,470,301 |                  | $          | 262,218,161 |   |
|                                                                                                                                                                         |       |                   |        |                  |       |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                |       |                   |        |                  |       |
| Current liabilities:                                                                                                                                                         |       |                   |        |                  |       |
| Accounts payable and accrued expenses                                                                                                                                        |       | $                      | 102,775     |                  | $          | 109,459 |   |
| Deferred underwriting fees payable                                                                                                                                           |       | 9,231,684              |        | 9,231,684             |       |
| Deferred interest on funds held in trust                                                                                                                                     |       | 810,397                |        | —                |       |
| Income tax payable                                                                                                                                                           |       | 6,268                  |        | 881,000               |       |
| Total current liabilities                                                                                                                                                    |       | 10,151,124             |        | 10,222,143            |       |
|                                                                                                                                                                         |       |                   |        |                  |       |
| Common stock subject to possible redemption  - 9,891,089 shares at redemption value                                                                                          |       | 75,308,773             |        | 75,308,773            |       |
|                                                                                                                                                                         |       |                   |        |                  |       |
| Commitments and contingencies                                                                                                                                                |       |                   |        |                  |       |
|                                                                                                                                                                         |       |                   |        |                  |       |
| Stockholders’ equity:                                                                                                                                                   |       |                   |        |                  |       |
| Preferred stock, $0.0001 par value;  authorized - 1,000,000 shares; issued - none                                                                                            |       | —                 |        | —                |       |
| Common stock, $0.0001 par value; authorized  - 139,000,000 shares; issued and outstanding - 41,212,875 shares, inclusive  of 9,891,089 shares subject to possible redemption |       | 4,121                  |        | 4,121                 |       |
| Additional paid-in capital                                                                                                                                                   |       | 175,140,220            |        | 175,140,220           |       |
| Retained earnings                                                                                                                                                            |       | 3,866,063              |        | 1,542,904             |       |
| Total stockholders’ equity                                                                                                                                              |       | 179,010,404            |        | 176,687,245           |       |
| Total liabilities and stockholders’ equity                                                                                                                              |       | $                      | 264,470,301 |                  | $          | 262,218,161 |   |

 

**See accompanying notes to condensed consolidatedfinancial statements.**

 

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****STONE TAN CHINA ACQUISITION CORP. AND SUBSIDIARY****

(a corporation in the development stage)

 

**CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS (Unaudited)**

 
| ** **                                                                                    | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine  Months  Ended  September 30,** | ** ** | **Period from  January 24, 2007  (Inception) to  September 30,** | ** ** | **Period from  January 24, 2007  (Inception) to  September 30,  2008** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|---------------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|
| ** **                                                                                    | ** ** | **2008**                                             | ** ** | **2007**                                    | ** ** | **2008**                                                                                  | ** ** | **2007**                                                                                        | ** ** | **(Cumulative)** | ** ** |
|                                                                                          |       |                                                 |       |                                        |       |                                                                                      |       |                                                                                            |       |   |   |
| Revenues                                                                                      |       | $                                                    | —     |                                        | $          | —                                                                                    |       | $                                                                                               | —     |   | $ | — |   | $ | — |   |
| Operating expenses                                                                            |       | 187,947                                              |       | —                                      |       | 680,392                                                                                   |       | 15,019                                                                                          |       | 886,132 |   |
| Professional fees incurred relating to  potential acquisitions                                |       | 494,322                                              |       | —                                      |       | 533,928                                                                                   |       | —                                                                                          |       | 533,928 |   |
| Total operating expenses                                                                      |       | 682,269                                              |       | —                                      |       | 1,214,320                                                                                 |       | 15,019                                                                                          |       | 1,420,060 |   |
| Operating loss                                                                                |       | (682,269                                             | )          | —                                      |       | (1,214,320                                                                                | )          | (15,019                                                                                         | )          | (1,420,060 | ) |
| Interest income                                                                               |       | 1,751,594                                            |       | 1,468                                       |       | 6,346,876                                                                                 |       | 7,194                                                                                           |       | 8,989,506 |   |
| Interest expense – stockholder                                                           |       | —                                               |       | (5,041                                      | )          | —                                                                                    |       | (11,945                                                                                         | )          | (12,986 | ) |
| Income (loss) before provision for income  tax                                                |       | 1,069,325                                            |       | (3,573                                      | )          | 5,132,556                                                                                 |       | (19,770                                                                                         | )          | 7,556,460 |   |
| Provision for income tax                                                                      |       | 550,000                                              |       | —                                      |       | 1,999,000                                                                                 |       | —                                                                                          |       | 2,880,000 |   |
| Income (loss) before allocation of trust  account interest                                    |       | 519,325                                              |       | (3,573                                      | )          | 3,133,556                                                                                 |       | (19,770                                                                                         | )          | 4,676,460 |   |
| Allocation of trust account interest  relating to common stock subject to possible redemption |       | (354,024                                             | )          | —                                      |       | (810,397                                                                                  | )          | —                                                                                          |       | (810,397 | ) |
| Net income (loss) available to common  stockholders                                           |       | $                                                    | 165,301    |                                        | $          | (3,573                                                                                    | )          | $                                                                                               | 2,323,159  |   | $ | (19,770 | ) | $ | 3,866,063 |   |
|                                                                                          |       |                                                 |       |                                        |       |                                                                                      |       |                                                                                            |       |   |   |
| Net income (loss) per common  share —                                                    |       |                                                 |       |                                        |       |                                                                                      |       |                                                                                            |       |   |   |
| Basic                                                                                         |       | $                                                    | 0.00       |                                        | $          | (0.00                                                                                     | )          | $                                                                                               | 0.06       |   | $ | (0.00 | ) |   |   |
| Diluted                                                                                       |       | $                                                    | 0.00       |                                        | $          | (0.00                                                                                     | )          | $                                                                                               | 0.05       |   | $ | (0.00 | ) |   |   |
| Weighted average common shares outstanding  —                                            |       |                                                 |       |                                        |       |                                                                                      |       |                                                                                            |       |   |   |
| Basic                                                                                         |       | 41,212,875                                           |       | 8,625,000                                   |       | 41,212,875                                                                                |       | 8,625,000                                                                                       |       |   |   |
| Diluted                                                                                       |       | 51,309,403                                           |       | 8,625,000                                   |       | 51,072,066                                                                                |       | 8,625,000                                                                                       |       |   |   |

 

**See accompanying notes to condensed consolidatedfinancial statements.**

 

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****STONE TAN CHINA ACQUISITION CORP. AND SUBSIDIARY****

(a corporation in the development stage)

 

**CONDENSED CONSOLIDATED STATEMENT OFSTOCKHOLDERS’ EQUITY**

 

**FOR THE PERIOD FROM JANUARY 24, 2007(INCEPTION) TO SEPTEMBER 30, 2008**

 
| ** **                                                                                                                    | ** ** | **Common Stock** | ** ** | **Additional  Paid-in** | ** ** | **Retained** | ** ** | **Total  Stockholders’** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------------------|------------|--------------|------------|-------------------------------|------------|
| ** **                                                                                                                    | ** ** | **Shares**            | ** ** | **Amount**              | ** ** | **Capital**  | ** ** | **Earnings**                  | ** ** | **Equity** | ** ** |
|                                                                                                                          |       |                  |       |                    |       |         |       |                          |       |   |   |
| Balance, January 24, 2007 (inception)                                                                                    |       | —                |       | $                       | —     |         | $          | —                        |       | $ | — |   | $ | — |   |
| Sale of common shares to initial  stockholders at $0.003 per share                                                            |       | 8,625,000             |       | 863                     |       | 24,137       |       | —                        |       | 25,000 |   |
| Sale of shares and warrants in private  placement and public offering, net of offering costs of $19,534,385                   |       | 32,970,300            |       | 3,297                   |       | 250,424,717  |       | —                        |       | 250,428,014 |   |
| Sale of unit purchase option to  underwriters                                                                                 |       | —                |       | —                  |       | 100          |       | —                        |       | 100 |   |
| Shares reclassified to “Common stock  subject to possible redemption”                                               |       | —                |       | —                  |       | (75,308,773  | )          | —                        |       | (75,308,773 | ) |
| Shares surrendered and cancelled                                                                                              |       | (382,425              | )          | (39                     | )          | 39           |       | —                        |       | — |   |
| Net income available to common stockholders  for the period from January 24, 2007 (inception) to December 31,  2007 |       | —                |       | —                  |       | —       |       | 1,542,904                     |       | 1,542,904 |   |
| Balance, December 31, 2007                                                                                               |       | 41,212,875            |       | 4,121                   |       | 175,140,220  |       | 1,542,904                     |       | 176,687,245 |   |
| Net income available to common stockholders  for the nine months ended September 30, 2008 (unaudited)                    |       | —                |       | —                  |       | —       |       | 2,323,159                     |       | 2,323,159 |   |
| Balance, September 30, 2008  (unaudited)                                                                                 |       | 41,212,875            |       | $                       | 4,121      |         | $          | 175,140,220                   |       | $ | 3,866,063 |   | $ | 179,010,404 |   |

 

**See accompanying notes to condensed consolidatedfinancial statements**.

 

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****STONE TAN CHINA ACQUISITION CORP. AND SUBSIDIARY****

(a corporation in the development stage)

 

**CONDENSED CONSOLIDATED STATEMENTS OFCASH FLOWS (Unaudited)**

 
| ** **                                                                                          | ** ** | **Nine  Months  Ended  September 30,  2008** | ** ** | **Period from  January 24, 2007  (Inception) to  September 30,  2007** | ** ** | **Period from  January 24, 2007  (Inception) to  September 30, 2008  (Cumulative)** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|---------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|
|                                                                                                |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Cash flows from operating activities                                                                |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Net income (loss) available to common  stockholders                                                 |       | $                                                 | 2,323,159  |                                                                                            | $          | (19,770                                                                                                           | )          | $ | 3,866,063 |   |
| Adjustments to reconcile net income (loss)  to net cash provided by (used in) operating activities: |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Changes in operating assets and  liabilities:                                                       |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| (Increase) decrease in -                                                                            |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Prepaid expenses                                                                                    |       | 114,234                                           |       | (19,837                                                                                         | )          | (88,952                                                                                                           | )          |
| Increase (decrease) in -                                                                            |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Accounts payable and accrued expenses                                                               |       | (6,684                                            | )          | —                                                                                          |       | 102,775                                                                                                           |       |
| Income tax payable                                                                                  |       | (874,732                                          | )          | —                                                                                          |       | 6,268                                                                                                             |       |
| Accrued interest payable to stockholder                                                             |       | —                                            |       | 11,945                                                                                          |       | —                                                                                                            |       |
| Net cash provided by (used in) operating  activities                                                |       | 1,555,977                                         |       | (27,662                                                                                         | )          | 3,886,154                                                                                                         |       |
|                                                                                                |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Cash flows from investing activities                                                                |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Increase in trust account from interest  earned on funds held in trust                              |       | (5,475,992                                        | )          | —                                                                                          |       | (8,106,158                                                                                                        | )          |
| Funds placed in trust account from  offerings                                                       |       | —                                            |       | —                                                                                          |       | (259,745,716                                                                                                      | )          |
| Withdrawals from trust account                                                                      |       | 4,424,947                                         |       | —                                                                                          |       | 6,000,134                                                                                                         |       |
| Net cash used in investing activities                                                               |       | (1,051,045                                        | )          | —                                                                                          |       | (261,851,740                                                                                                      | )          |
|                                                                                                |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Cash flows from financing activities                                                                |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Proceeds from initial sale of common stock                                                          |       | —                                            |       | 25,000                                                                                          |       | 25,000                                                                                                            |       |
| Gross proceeds from private placement                                                               |       | —                                            |       | —                                                                                          |       | 6,200,000                                                                                                         |       |
| Gross proceeds from public offering                                                                 |       | —                                            |       | —                                                                                          |       | 263,762,399                                                                                                       |       |
| Payments of offering costs                                                                          |       | —                                            |       | (476,724                                                                                        | )          | (10,302,701                                                                                                       | )          |
| Proceeds from underwriter’s purchase option                                                    |       | —                                            |       | —                                                                                          |       | 100                                                                                                               |       |
| Proceeds from stockholder loans                                                                     |       | —                                            |       | 500,000                                                                                         |       | 500,000                                                                                                           |       |
| Repayment of stockholder loans                                                                      |       | —                                            |       | —                                                                                          |       | (500,000                                                                                                          | )          |
| Net cash provided by financing activities                                                           |       | —                                            |       | 48,276                                                                                          |       | 259,684,798                                                                                                       |       |
|                                                                                                |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Net increase in cash and cash equivalents                                                           |       | 504,932                                           |       | 20,614                                                                                          |       | 1,719,212                                                                                                         |       |
| Balance at beginning of period                                                                      |       | 1,214,280                                         |       | —                                                                                          |       | —                                                                                                            |       |
| Balance at end of period                                                                            |       | $                                                 | 1,719,212  |                                                                                            | $          | 20,614                                                                                                            |       | $ | 1,719,212 |   |
|                                                                                                |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Cash paid for:                                                                                      |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Interest                                                                                            |       | $                                                 | 165        |                                                                                            | $          | —                                                                                                            |       | $ | 12,986 |   |
| Income taxes                                                                                        |       | $                                                 | 2,873,732  |                                                                                            | $          | —                                                                                                            |       | $ | 2,873,732 |   |
|                                                                                                |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Supplemental schedule of non-cash investing  and financing activities:                              |       |                                              |       |                                                                                            |       |                                                                                                              |       |
| Increase in accrued offering costs and  placement fees, net                                         |       | $                                                 | —     |                                                                                            | $          | 133,079                                                                                                           |       | $ | 9,231,684 |   |
| Common stock subject to possible redemption                                                         |       | $                                                 | —     |                                                                                            | $          | —                                                                                                            |       | $ | 75,308,773 |   |
| Fair value of unit purchase option issued  to underwriters                                          |       | $                                                 | —     |                                                                                            | $          | —                                                                                                            |       | $ | 7,689,369 |   |

 

**See accompanying notes to condensed consolidated financial statements.**

 

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**STONE TAN CHINA ACQUISITION CORP. ANDSUBSIDIARY**

**(a corporation in the development stage)**

 

**NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS (Unaudited)**

 

Three Months Ended September 30, 2008 and 2007,

Nine Months Ended September 30, 2008, and

the Period from January 24, 2007 (Inception) through September 30,2007

 

**1.Basis of Presentation**

 

Thecondensed consolidated financial statements of Stone Tan China AcquisitionCorp. and its wholly owned subsidiary, Stone Tan China Acquisition (Hong Kong)Company Limited (the “Company”) at September 30, 2008, for the threemonths ended September 30, 2008 and 2007, for the nine months ended September 30,2008, for the period from January 24, 2007 (inception) to September 30,2007, and for the period from January 24, 2007 (inception) to September 30,2008 (cumulative), are unaudited. In the opinion of management, all adjustments(including normal recurring adjustments) have been made that are necessary topresent fairly the financial position of the Company as of September 30,2008, the results of its operations for the three months ended September 30,2008 and 2007, for the nine months ended September 30, 2008, for theperiod from January 24, 2007 (inception) to September 30, 2007, andfor the period from January 24, 2007 (inception) to September 30,2008 (cumulative), and its cash flows for the nine months ended September 30,2008, the period from January 24, 2007 (inception) to September 30,2007, and for the period from January 24, 2007 (inception) to September 30,2008 (cumulative). Operating results for the interim periods presented are notnecessarily indicative of the results to be expected for a full fiscal year.The condensed balance sheet at December 31, 2007 has been derived from theaudited financial statements.

 

Thestatements and related notes have been prepared pursuant to the rules andregulations of the Securities and Exchange Commission. Accordingly, certain informationand footnote disclosures normally included in financial statements prepared inaccordance with generally accepted accounting principles have been omittedpursuant to such rules and regulations. These financial statements shouldbe read in conjunction with the financial statements and other informationincluded in the Company’s Annual Report on Form 10-K for the fiscal yearended December 31, 2007, as filed with Securities and Exchange Commission.

 

**2.****Organization and ProposedBusiness Operations**

 

StoneTan Acquisition Corp. was incorporated in Delaware on January 24, 2007 asa blank check company formed for the purpose of acquiring, through a merger,stock exchange, asset acquisition or other similar business combination, orcontrol through contractual arrangements, an operating business having itsprimary operations in the People’s Republic of China.

 

OnAugust 22, 2008, the Company formed a new wholly-owned subsidiary, StoneTan China Acquisition (Hong Kong) Company Limited, organized under the laws ofHong Kong., in order to facilitate a transaction involving an operatingbusiness located in the People’s Republic of China.

 

AtSeptember 30, 2008, the Company had not yet commenced any businessoperations and is therefore considered a “corporation in the development stage.”  All activity through September 30, 2008is related to the Company’s formation, capital raising efforts (as describedbelow), and efforts to acquire a business. The Company is subject to the risksassociated with development stage companies. The Company has selected December 31as its fiscal year-end.

 

TheCompany’s ability to acquire an operating business was contingent uponobtaining adequate financial resources through a private placement inaccordance with Regulation D under the Securities Act of 1933, as amended (the “PrivatePlacement”), and an initial public offering (the “Public Offering”, andtogether with the Private Placement, the “Offerings”), which are discussed inNote 4. The Company’s management has broad discretion with respect to thespecific application of the net proceeds of the Offerings, althoughsubstantially all of the net proceeds of the Offerings are intended to begenerally applied toward consummating a business combination with an operatingcompany. As used herein, a “target business” shall include one or moreoperating businesses or assets with primary operations in the People’s Republicof China, and a “business combination” shall mean the acquisition by theCompany of such a target business. There can be no assurances that the Companywill be able to successfully effect a business combination.

 

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**3.Summary of Significant Accounting Policies**

 

***Principles of Consolidation***

 

Theaccompanying condensed consolidated financial statements include the financialstatements of the Company and its wholly owned subsidiary, Stone Tan ChinaAcquisition (Hong Kong) Company Limited. All intercompany balances andtransactions have been eliminated in consolidation.

*** ***

***Cash and Cash Equivalents***

 

TheCompany considers all highly liquid investments with an original maturity ofthree months or less when purchased to be cash equivalents. Such cash andequivalents, at times, may exceed federally insured limits. The Companymaintains its accounts with financial institutions with high credit ratings.

*** ***

***Income Taxes***

 

TheCompany accounts for income taxes pursuant to Statement of Financial AccountingStandards No. 109, “Accounting for Income Taxes” (“SFAS No. 109”),which establishes financial accounting and reporting standards for the effectsof income taxes that result from an enterprise’s activities during the currentand preceding years. SFAS No. 109 requires an asset and liability approachfor financial accounting and reporting for income taxes.

 

InJuly 2006, the Financial Accounting Standards Board (“FASB”) issued FASBInterpretation No. 48, “Accounting for Uncertainty in Income Taxes, aninterpretation of FASB Statement No. 109” (“FIN 48”), which providescriteria for the recognition, measurement, presentation and disclosure ofuncertain tax positions. A tax benefit from an uncertain position may berecognized only if it is “more likely than not” that the position issustainable based on its technical merits. The Company adopted the provisionsof FIN 48 on January 24, 2007 (inception).

 

***Earnings Per Common Share***

 

TheCompany computes earnings (loss) per common share (“EPS”) in accordance withStatement of Financial Accounting Standards No. 128, “Earnings per Share”(“SFAS No. 128”) and SEC Staff Accounting Bulletin No. 98 (“SAB 98”).  SFAS No. 128 requires companies withcomplex capital structures to present basic and diluted EPS.  Basic EPS is measured as the income (loss)available to common shareholders divided by the weighted average common sharesoutstanding for the period.  Diluted EPSis similar to basic EPS but presents the dilutive effect on a per share basisof potential common shares (e.g., convertible securities, options and warrants)as if they had been converted at the beginning of the periods presented, orissuance date, if later.  Potentialcommon shares that have an anti-dilutive effect (i.e., those that increaseincome per share or decrease loss per share) are excluded from the calculationof diluted EPS.

 

Thecalculation of net income (loss) per common share is summarized below. Thecalculation of diluted weighted average common shares outstanding for the threemonths and nine months ended September 30, 2008 is based on the average ofthe closing price of the Company’s common stock, as quoted on the OTC BulletinBoard for the applicable period.

 
| ** **                                              | ** ** | **Three Months Ended  September 30,** | ** ** | **Nine  Months  Ended  September 30,** | ** ** | **Period from  January 24, 2007  (Inception) to  September 30,** | ** ** |
|---------------------------------------------------------|------------|------------------------------------------------------|------------|---------------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|
| ** **                                              | ** ** | **2008**                                             | ** ** | **2007**                                    | ** ** | **2008**                                                                                  | ** ** | **2007** | ** ** |
| **Basic:**                                              |       |                                                 |       |                                        |       |                                                                                      |       |   |   |
| Net income (loss)                                       |       | $                                                    | 165,301    |                                        | $          | (3,573                                                                                    | )          | $ | 2,323,159 |   | $ | (19,770 | ) |
| Weighted average common shares outstanding              |       | 41,212,875                                           |       | 8,625,000                                   |       | 41,212,875                                                                                |       | 8,625,000 |   |
| Net income (loss) per common share —  basic   |       | $                                                    | 0.00       |                                        | $          | (0.00                                                                                     | )          | $ | 0.06 |   | $ | (0.00 | ) |
|                                                    |       |                                                 |       |                                        |       |                                                                                      |       |   |   |
| **Diluted:**                                            |       |                                                 |       |                                        |       |                                                                                      |       |   |   |
| Net income (loss)                                       |       | $                                                    | 165,301    |                                        | $          | (3,573                                                                                    | )          | $ | 2,323,159 |   | $ | (19,770 | ) |
| Weighted average common shares outstanding              |       | 41,212,875                                           |       | 8,625,000                                   |       | 41,212,875                                                                                |       | 8,625,000 |   |
| Effect of dilutive warrants                             |       | 10,096,528                                           |       | —                                      |       | 9,859,191                                                                                 |       | — |   |
| Diluted weighted average common shares  outstanding     |       | 51,309,403                                           |       | 8,625,000                                   |       | 51,072,066                                                                                |       | 8,625,000 |   |
| Net income (loss) per common share —  diluted |       | $                                                    | 0.00       |                                        | $          | (0.00                                                                                     | )          | $ | 0.05 |   | $ | (0.00 | ) |

 

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AtSeptember 30, 2008, potentially dilutive securities consisted ofoutstanding warrants and options to acquire an aggregate of 44,170,300 sharesof common stock, as follows, of which options to acquire 5,000,000 shares wereanti-dilutive at such date.

 
| Founders warrants                       |   | 6,200,000  |   |
|-----------------------------------------|--------|------------|--------|
| Public warrants                         |   | 32,970,300 |   |
| Underwriters’ unit purchase option |   | 5,000,000  |   |
| Total                                   |   | 44,170,300 |   |

 

***Use of Estimates***

 

Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities at the date of the financial statements and the reported amounts ofexpenses during the reporting period. Actual results could differ from thoseestimates.

 

***Fair Value of Financial Instruments***

 

Thecarrying amounts of cash and cash equivalents, money market funds - held intrust, prepaid expenses, accounts payable and accrued expenses, deferredunderwriting fees payable, and income tax payable approximate their respectivefair values, due to the short-term nature of these items.

 

***Share-Based Payments***

 

TheCompany accounts for share-based payments pursuant to Statement of FinancialAccounting Standards No. 123R, “Share-Based Payment” (“SFAS No. 123R”).SFAS No. 123R requires all share-based payments, including grants ofemployee stock options to employees, to be recognized in the financialstatements based on their fair values. The Company adopted SFAS No. 123Ron January 24, 2007 (inception). The Company expects that SFAS No. 123Rcould have a material impact on the Company’s financial statements to the extentthat the Company grants stock-based compensation in future periods.

 

***Deferred Interest on Funds Held in Trust***

 

Deferredinterest on funds held in trust consists of the 30% less one share portion ofthe interest earned on the funds held in trust, reduced by certain permittedwithdrawals, including income taxes, by the Company, which is the maximumamount that the Company would be obligated to pay to stockholders who elect tohave their stock redeemed by the Company without resulting in a rejection of a businesscombination.

 

***Adoption of New Accounting Policies***

 

InSeptember 2006, the FASB issued Statement of Financial AccountingStandards No. 157, “Fair Value Measurements” (“SFAS No. 157”), whichestablishes a formal framework for measuring fair value under GenerallyAccepted Accounting Principles (“GAAP”). SFAS No. 157 defines and codifiesthe many definitions of fair value included among various other authoritativeliterature, clarifies and, in some instances, expands on the guidance forimplementing fair value measurements, and increases the level of disclosurerequired for fair value measurements. SFAS No. 157 applies to all other accounting pronouncementsrequiring or permitting fair value measurements, except for: SFAS No. 123R,share-based payment and related pronouncements, the practicability exceptionsto fair value determinations allowed by various other authoritativepronouncements, and AICPA Statements of Position 97-2 and 98-9 that deal withsoftware revenue recognition.  TheCompany adopted SFAS No. 157 on January 1, 2008.

 

InFebruary 2007, the FASB issued Statement of Financial Accounting StandardsNo. 159, “The Fair Value Option for Financial Assets and FinancialLiabilities” (“SFAS No. 159”), which provides companies with an option toreport selected financial assets and liabilities at fair value. SFAS No. 159’sobjective is to reduce both complexity in accounting for financial instrumentsand

 

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thevolatility in earnings caused by measuring related assets and liabilitiesdifferently. Generally accepted accounting principles have required differentmeasurement attributes for different assets and liabilities that can createartificial volatility in earnings. SFAS No. 159 helps to mitigate thistype of accounting-induced volatility by enabling companies to report relatedassets and liabilities at fair value, which would likely reduce the need forcompanies to comply with detailed rules for hedge accounting. SFAS No. 159also establishes presentation and disclosure requirements designed tofacilitate comparisons between companies that choose different measurementattributes for similar types of assets and liabilities. SFAS No. 159requires companies to provide additional information that will help investorsand other users of financial statements to more easily understand the effect ofthe Company’s choice to use fair value on its earnings. SFAS No. 159 alsorequires companies to display the fair value of those assets and liabilitiesfor which the Company has chosen to use fair value on the face of the balancesheet. SFAS No. 159 does not eliminate disclosure requirements included inother accounting standards, including requirements for disclosures about fairvalue measurements included in SFAS No. 157 and SFAS No. 107.  The Company adopted SFAS No. 159 on January 1,2008.

 

Theadoption of SFAS No. 157 and SFAS No. 159 on January 1, 2008 didnot have any effect on the Company’s consolidated financial statementpresentation or disclosures.

 

***Recent Accounting Pronouncements***

 

InDecember 2007, the FASB issued Statement of Financial Accounting StandardsNo. 141(R), “Business Combinations” (“SFAS No. 141(R)”), whichrequires an acquirer to recognize in its financial statements as of theacquisition date (i) the identifiable assets acquired, the liabilitiesassumed, and any noncontrolling interest in the acquiree, measured at theirfair values on the acquisition date, and (ii) goodwill as the excess ofthe consideration transferred plus the fair value of any noncontrollinginterest in the acquiree at the acquisition date over the fair values of theidentifiable net assets acquired. Acquisition-related costs, which are thecosts an acquirer incurs to effect a business combination, will be accountedfor as expenses in the periods in which the costs are incurred and the servicesare received, except that costs to issue debt or equity securities will berecognized in accordance with other applicable GAAP. SFAS No. 141(R) makessignificant amendments to other Statement of Financial Accounting Standards andother authoritative guidance to provide additional guidance or to conform theguidance in that literature to that provided in SFAS No. 141(R). SFAS No. 141(R) alsoprovides guidance as to what information is to be disclosed to enable users offinancial statements to evaluate the nature and financial effects of a businesscombination. SFAS No. 141(R) is effective for financial statementsissued for fiscal years beginning on or after December 15, 2008. Earlyadoption is prohibited. The adoption of SFAS No. 141(R) will affecthow the Company accounts for a business combination concluded after December 31,2008.

 

InDecember 2007, the FASB issued Statement of Financial Accounting StandardsNo. 160, “Noncontrolling Interests in Consolidated Financial Statements —an amendment of ARB No. 51” (“SFAS No. 160”), which requires thatownership interests in subsidiaries held by parties other than the parent, andthe amount of consolidated net income, be clearly identified, labeled andpresented in the consolidated financial statements.  SFAS No. 160 also requires that once asubsidiary is deconsolidated, any retained noncontrolling equity investment inthe former subsidiary be initially measured at fair value.  Sufficient disclosures are required toclearly identify and distinguish between the interests of the parent and theinterests of the noncontrolling owners. SFAS No. 160 amends FASB No. 128 to provide that thecalculation of earnings per share amounts in the consolidated financialstatements will continue to be based on the amounts attributable to the parent.SFAS No. 160 is effective for financial statements issued for fiscal years,and interim periods within those fiscal years, beginning on or after December 15,2008, and requires retroactive adoption of the presentation and disclosurerequirements for existing minority interests. All other requirements are applied prospectively.  Early adoption is prohibited.  The Company does not currently anticipatethat the adoption of SFAS No. 160 will have any impact on its consolidatedfinancial statement presentation or disclosures.

 

InMarch 2008, the FASB issued Statement of Financial Accounting Standards No. 161,“Disclosures about Derivative Instruments and Hedging Activities — an amendmentof FASB Statement No. 133” (“SFAS No. 161”).  SFAS No. 161 amends and expands thedisclosure requirements of SFAS No. 133, “Accounting for DerivativeInstruments and Hedging Activities” (“SFAS No. 133”). The objective ofSFAS No. 161 is to provide users of financial statements with an enhancedunderstanding of how and why an entity uses derivative instruments, howderivative instruments and related hedged items are accounted for under SFAS No. 133and its related interpretations, and how derivative instruments and relatedhedged items affect an entity’s financial position, financial performance, andcash flows.  SFAS No. 161 requiresqualitative disclosures about objectives and strategies for using derivatives,quantitative disclosures about fair value amounts of and gains and losses onderivative instruments, and disclosures about credit-risk-related contingentfeatures in derivative agreements.  SFAS No. 161applies to all derivative financial instruments, including bifurcatedderivative instruments (and nonderivative instruments that are designed andqualify as hedging instruments pursuant to paragraphs 37 and 42 of SFAS No. 133)and related hedged items accounted for under SFAS No. 133 and its relatedinterpretations.  SFAS No. 161 alsoamends certain provisions of SFAS No. 131. SFAS No. 161 is effectivefor financial statements issued for fiscal

 

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yearsand interim periods beginning after November 15, 2008, with earlyapplication encouraged.  SFAS No. 161encourages, but does not require, comparative disclosures for earlier periodsat initial adoption.  The Company doesnot currently anticipate that the adoption of SFAS No. 161 will have anyimpact on its consolidated financial statement presentation or disclosures.

*** ***

***Reclassification***

 

Certainreclassifications have been made to prior period balances to conform to thepresentation for the three months ended September 30, 2008. Suchreclassifications did not have any effect on results of operations.

** **

**4.Private Placement and Public Offering**

 

OnOctober 19, 2007, the Company completed its Public Offering of 30,000,000units at a price of $8.00 per unit. Each unit consisted of one share of theCompany’s common stock, $0.0001 par value, and one redeemable common stockpurchase warrant. Each warrant entitles the holder to purchase from the Companyone share of common stock at an exercise price of $5.50 per share commencingthe later of the completion of a business combination with a target business,or October 15, 2008, and expires on October 15, 2011. The warrantswill be redeemable at a price of $0.01 per warrant upon 30 days notice afterthe warrants become exercisable, only in the event that the last sale price ofthe common stock is at least $11.50 per share for any 20 trading days within a30 trading day period ending on the third day prior to date on which notice ofredemption is given.

 

TheCompany paid the underwriters in the Public Offering an underwriting discountof 3.5% of the gross proceeds and upon the consummation of a businesscombination, the underwriters will receive an additional underwriting discountequal to 3.5% of the gross proceeds. The Company also issued a unit purchaseoption, for $100, upon consummation of the Public Offering, to Morgan Joseph &Co. Inc. (“Morgan”) , the representative of the underwriters, to purchase up toa total of 2,500,000 units at $10.00 per unit. The units issuable upon exerciseof this option are otherwise identical to those sold in the Public Offering,except that the exercise price of the warrants underlying the units is $7.00.This option is exercisable for cash, or on a cashless basis, commencing October 15,2007 and expiring October 15, 2012. Since the warrants underlying theoption are the same as the units sold in the Public Offering and expire October 15,2011, if the option is exercised after such date, the holders of the optionwill only receive the common stock component of the units. The estimated fairvalue of this unit purchase option on the grant date was determined to beapproximately $7,689,369 ($3.08 per unit) using a Black-Scholes option-pricingmodel with the following assumptions:  (1) expectedvolatility of 45.3%, (2) risk-free interest rate of 4.2%, (3) expectedlife of 5 years, and (4) dividend rate of zero. The Company accounted forthe fair value of the unit purchase option as a cost of the Public Offering,resulting in a charge directly to additional paid-in capital, offset by anequal amount credited directly to additional paid-in capital. As a result, thenet increase in shareholders’ equity from the issuance of the unit purchaseoption was the $100 cash payment received by the Company. The option andwarrants could expire worthless if there is no effective registrationstatement.

 

OnOctober 19, 2007, the closing date of the Offerings, $236,815,000 of theproceeds of the Offerings, including $8,400,000 of contingent underwritingcompensation which will be paid to Morgan if a business combination isconsummated, but which will be forfeited in part if the public stockholderselect to have their shares redeemed for cash and in full if a businesscombination is not consummated, was placed in a trust account (the “TrustAccount”) at Citi Smith Barney maintained by Continental Stock Transfer &Trust Company, and invested until the earlier of (i) the consummation ofthe Company’s first business combination or (ii) the liquidation of theCompany. However, up to $3,300,000 of the interest earned on the Trust Accountwill be released to the Company to fund working capital requirements as setforth in the Investment Management Trust Agreement. Therefore, unless and untila business combination is consummated, the proceeds held in the Trust Account(other than up to $3,300,000 of the interest earned and amounts necessary topay taxes) will not be available for the Company’s use for any expenses relatedto the Offerings or expenses which may be incurred related to the investigationand selection of a target business and the negotiation of an agreement toacquire a target business.

 

OnOctober 30, 2007, the underwriters of the Public Offering exercised theiroption to purchase an additional 2,970,300 units to cover over-allotments. Inconnection with the exercise of the over-allotment option, the underwritersreceived an underwriting discount of 3.5% of the gross proceeds and upon theconsummation of a business combination the underwriters will receive anadditional underwriting discount equal to 3.5% of the gross proceeds.Consequently, on October 30, 2007, the closing date of the overallotmentexercise, an additional $22,930,716 of the proceeds from the exercise,including $831,684 of contingent underwriting compensation which will be paidto Morgan if a business combination is consummated, but which will be forfeitedin part if the public stockholders elect to have their shares redeemed for cashand in full if a business combination is not consummated, was placed in theTrust Account.

 

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Thecommon stock and warrants included in the units began to trade separately on November 7,2007, and trading in the units ceased on that date.

 

OnOctober 19, 2007, prior to the consummation of the Public Offering, theCompany’s founding stockholders purchased from the Company an aggregate of6,200,000 warrants (the “Founder Warrants”) at $1.00 per warrant in a PrivatePlacement. All Founder Warrants issued in the Private Placement weresubstantially identical to the warrants in the units sold in the PublicOffering, except that:  (i) subjectto certain limited exceptions, none of the Founder Warrants were transferableor salable until after the Company completes a business combination; and (ii) theFounder Warrants are not subject to redemption and are not exercisable on acashless basis if held by the initial holders thereof. The $6,200,000 ofproceeds from the sale of the Founder Warrants were added to the portion of theproceeds from the Public Offering held in the Trust Account pending completionof the Company’s initial business combination. The Company determined, based ona review of the trading price of the public warrants of other blank checkcompanies similar to the Company, that the purchase price of $1.00 per FounderWarrant was not less than the approximate fair value of such warrants on thedate of issuance. Therefore, the Company did not record compensation expenseupon the sale of the Founder Warrants.

 

Afterthe Company signs a definitive agreement for the acquisition of a target business,it will submit such transaction for stockholder approval. In the event thatholders of the shares sold in the Public Offering (the “Public Stockholders”)owning 30% or more of the outstanding stock sold in the Public Offering voteagainst the business combination and elect to have the Company redeem theirshares for cash, the business combination will not be consummated. All of theCompany’s stockholders prior to the Offerings, including the officer anddirectors of the Company (the “Initial Stockholders”), have agreed to votetheir 8,625,000 founding shares of common stock in accordance with the vote ofthe majority of shares purchased in the Public Offering with respect to anybusiness combination and to vote any shares they acquire in the Public Offering,or in the aftermarket, in favor of the business combination. After consummationof the Company’s first business combination, all of these voting safeguardswill no longer be applicable.

 

Withrespect to the first business combination which is approved and consummated,any Public Stockholders who voted against the business combination may demandthat the Company redeem their shares for a pro rata share of the Trust Account(inclusive of a pro rata portion of the contingent underwriting compensation of$0.28 per share). Accordingly, Public Stockholders holding one share less than30% of the aggregate number of shares sold in the offerings may seek redemptionof their shares in the event of a business combination.

 

Ifno business combination occurs, the Company’s Amended and Restated Certificateof Incorporation provides for mandatory liquidation of the Company on October 15,2009, twenty-four months from the effective date of the Public Offering,without stockholder approval, unless the duration is extended or made permanentby an amendment to the Certificate of Incorporation authorized by the vote ofholders of a majority of all outstanding shares entitled to vote.

 

**5.Money Market Funds — Held In Trust**

 

Moneymarket funds held in trust at December 31, 2007, consisted of aninvestment in Citi Institutional Liquid Reserves Class A Funds with amarket value of $260,800,695 and annualized taxable yield of 4.94%.  The money market fund invested in highquality, short-term money market instruments denominated in United Statesdollars.

 

OnSeptember 29, 2008, the Company determined, in light of current marketuncertainties, to authorize the transfer of the funds being held in the TrustAccount into a money market fund invested solely in U.S. treasuries. The transferof the funds was effected at par. Accordingly, as of September 30, 2008,money market funds held in trust consisted of an investment in CitiInstitutional US Treasury Reserves Class A Funds with a market value of$262,662,137 and annualized taxable yield of 1.36%. Certain portions of thisinvestment fund may not be covered by insurance.

 

**6. NotePayable to Stockholder**

 

OnFebruary 27, 2007, the Company issued an unsecured promissory note of$500,000 to one of its Initial Stockholders. The note bore interest at the rateof 4% per annum and was due and payable at the earlier of:  (i) February 26, 2008; or (ii) thedate on which the Company consummated an initial public offering of itssecurities. The note, including related accrued interest of $12,821, was paidin full on October 19, 2007.

 

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**7.Common Stock**

** **

TheCompany was initially authorized to issue 39,000,000 shares of its common stockwith a par value $0.0001 per share. On October 15, 2007, the authorizedcommon shares were increased to 139,000,000 shares.

 

InFebruary 2007, the Company’s Initial Stockholders subscribed to 1,562,500shares of common stock for a total of $25,000. In April 2007, the Companyeffected a two-for-one stock split in the form of a stock distribution, whichresulted in the issuance of an additional 1,562,500 shares to its InitialStockholders. In May 2007, the Company effected a 1.15-for-one stock splitin the form of a stock distribution, which resulted in the issuance of anadditional 468,750 shares to its Initial Stockholders. In July 2007, theCompany effected a three-for-one stock split in the form of a stockdistribution, which resulted in the issuance of an additional 7,187,500 sharesto its Initial Stockholders. In October 2007, the Company effected atwo-for-three reverse stock split, which resulted in the reduction of 3,593,750shares held by its Initial Stockholders. Also in October 2007, the Companyeffected a 1.2-for-one stock split in the form of a stock distribution, whichresulted in the issuance of an additional 1,437,500 shares to its InitialStockholders. The Company’s financial statements give retroactive effect tosuch stock splits.

 

OnDecember 3, 2007, the Initial Stockholders surrendered for cancellation,for no consideration, 382,425 shares of common stock so as to ensure that thenumber of shares they held prior to the Public Offering, exclusive of sharesunderlying the Founder Warrants, equaled 20% of the outstanding shares ofcommon stock after the Public Offering and the exercise of the underwriters’over-allotment option.

 

Inthe event that holders of more than 20% of the shares of common stock sold inthe Public Offering elect to redeem their shares, the Company’s InitialStockholders have agreed to forfeit that number of shares (up to a maximum of937,500 shares) that will result in them owning collectively no more than23.81% of the Company’s outstanding common stock immediately prior to theconsummation of such business combination after giving effect to the redemption(without regard to any open market or co-investment unit purchases by theCompany’s Initial Stockholders as described in Note 10).

 

**8.Preferred Stock**

** **

TheCompany is authorized to issue 1,000,000 shares of preferred stock with a parvalue $0.0001 per share, with such designations, voting and other rights andpreferences, as may be determined from time to time by the Company’s board ofdirectors.

 

**9.Income Taxes**

** **

Theprovision for income tax consists of U.S. federal income tax currently payable.The Company has its executive office in Hong Kong and accordingly is notsubject to state income tax.

 

Deferredincome taxes reflect the net tax effects of temporary differences between thecarrying amounts of assets and liabilities for financial reporting purposes andthe amounts used for income tax purposes. The Company’s deferred tax assets asof September 30, 2008 and December 31, 2007 consist of start-up andorganization costs.  Start-up costs mustbe deferred until the Company actively commences business operations, at whichtime they may be written off over a 180-month period.  Organization costs must be deferred andwritten off over a 180-month period starting with the date that the Company isformed.  Because of the uncertaintyassociated with the realization of the Company’s deferred tax assets, a 100%valuation allowance has been recorded.

 

**10.Commitments and Contingencies**

** **

TheCompany will not proceed with a business combination if Public Stockholdersowning 30% or more of the shares sold in the Public Offering vote against thebusiness combination and exercise their redemption rights. Accordingly, theCompany may effect a business combination if Public Stockholders owning up toone share less than 30% of the aggregate shares sold in the Public Offeringexercise their redemption rights. If this occurred, the Company would berequired to redeem for cash up to one share less than 30% of the 32,970,300shares of common stock included in the units, or 9,891,089 shares of commonstock, at an expected initial per share redemption price of $7.88. However, theability of stockholders to receive $7.88 per unit is subject to any validclaims by the Company’s creditors which are not covered by amounts held in theTrust Account or the indemnities provided by the Company’s officers anddirectors. The expected redemption price per share is greater than eachstockholder’s initial pro rata share of the Trust Account of approximately$7.60 per share. Of the excess redemption price, approximately $0.28 per sharerepresents a portion of the underwriters’ contingent fee, which they haveagreed to forego for each share that is redeemed. Accordingly, the totaldeferred

 

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underwritingcompensation payable to the underwriters in the event of a business combinationwill be reduced by approximately $0.28 for each share that is redeemed. Thebalance will be paid from proceeds held in the Trust Account, which are payableto the Company upon consummation of a business combination. Even if less than30% of the stockholders exercise their redemption rights, the Company may beunable to consummate a business combination if such redemption leaves theCompany with funds insufficient to acquire or merge with a business with a fairmarket value greater than 80% of the Company’s net assets at the time of suchacquisition, which would be in violation of a condition to the consummation ofthe Company’s initial business combination, and as a consequence, the Companymay be forced to find additional financing to consummate such a businesscombination, consummate a different business combination or liquidate.

 

TheCompany’s Initial Stockholders will enter into an agreement with Morganpursuant to which they will place limit orders to purchase up to an aggregateof $10,000,000 of the Company’s common stock in the open market commencing 10business days after the Company files its Current Report on Form 8-Kannouncing the execution of a definitive agreement for a business combinationand ending on the business day immediately preceding the date of the meeting ofstockholders at which a business combination is to be approved. Such openmarket purchases will be made in accordance with Rules 10b-18 and 10b5-1under the Securities Exchange Act of 1934, as amended, at a price per share ofnot more than the per share amount held in the Trust Account (less taxespayable) as reported in such Form 8-K and will be made by a broker-dealermutually agreed upon by the Company’s Initial Stockholders and Morgan in suchamounts and at such times as such broker-dealer may determine, in its solediscretion, so long as the purchase price does not exceed the above-referencedper share purchase price. The Company’s Initial Stockholders have agreed tovote any such shares of common stock purchased in the open market in favor ofthe Company’s initial business combination, representing a possible maximumaggregate of 4.2% of the public shares entitled to vote on the businesscombination. They have agreed not to sell such shares unless a businesscombination is approved by the Company’s stockholders; however, they will beentitled to participate in any liquidating distributions with respect to theshares purchased in the open market if the business combination is notcompleted and the Company dissolves.

 

Inthe event purchases of $10,000,000 of the Company’s common stock cannot becompleted through the open market purchases described above, the Company’sInitial Stockholders have agreed to purchase from the Company, in a privateplacement, units identical to the units offered hereby at a purchase price of$8.00 per unit until they have spent an aggregate of $10,000,000 in the openmarket purchases described above and this private purchase. The purchase ofco-investment units will occur immediately prior to the Company’s consummationof a business combination, which will not occur until after the signing of adefinitive business combination agreement and the approval of that businesscombination by a majority of the Company’s public stockholders. The warrantsincluded in the co-investment units will be exercisable on a cashless basis.

 

TheCompany has agreed to pay Pacific Millennium Investment Corporation, anaffiliate of the Company’s Chief Executive Officer, $7,500 per month for 24months, for office space and reimbursement of general and administrativeexpenses pursuant to a letter agreement, commencing on the date of the PublicOffering and terminating upon the date the Company consummates a businesscombination or liquidates.

 

**11.Registration Rights**

** **

Theholders of 8,242,575 shares of common stock issued prior to the completion ofthe Public Offering, the holders of the warrants to purchase 6,200,000 sharesof common stock underlying the Founder Warrants sold in the Private Placement,and the holders of co-investment units are entitled to registration rightscovering the resale of their shares and the resale of their warrants and sharesacquired upon exercise of their warrants. The holders of the majority of theseshares are entitled to make up to two demands that the Company register theirshares, warrants and shares that they are entitled to acquire upon the exerciseof warrants. The holders of the majority of these shares can elect to exercisethese registration rights at any time after one year from the date of theconsummation of the Company’s initial business combination, subject to thetransfer restrictions imposed by the lock-up agreements. The holders of theFounder Warrants are also entitled to require the Company to register forresale the shares underlying the Founder Warrants when such warrants becomeexercisable by their terms. In addition, these stockholders have certain “piggy-back”registration rights on registration statements filed subsequent to the date onwhich these securities are released from the restrictions imposed by thelock-up agreements. The Company will bear the expenses incurred in connection withthe filing of any such registration statements.

 

Inthe event that a registration statement is not effective at the time ofexercise, the holder of such warrant shall not be entitled to exercise suchwarrant and in no event will the Company be required to net cash settle thewarrant exercise. Consequently, the warrants may expire unexercised.

 

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Theunit purchase option and its underlying securities have been registered in theregistration statement for the Public Offering; however, the option also grantsholders demand and “piggy back” registration rights for periods of five andseven years, respectively, from the date of the Public Offering. These rightsapply to all of the securities directly and indirectly issuable upon exerciseof the option. The Company will bear all fees and expenses attendant toregistering the securities issuable on exercise of the option, other thanunderwriting commissions incurred and payable by the holders.

 

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**ITEM 2. MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

** **

**ForwardLooking Statements**

** **

ThisQuarterly Report on Form 10-Q includes forward-looking statements withinthe meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended. We have based theseforward-looking statements on our current expectations and projections aboutfuture events. These forward-looking statements are subject to known andunknown risks, uncertainties and assumptions about us that may cause our actualresults, levels of activity, performance or achievements to be materiallydifferent from any future results, levels of activity, performance orachievements expressed or implied by such forward-looking statements. In somecases, you can identify forward-looking statements by terminology such as “may,”“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”“continue,” or the negative of such terms or other similar expressions. Factorsthat might cause or contribute to such a discrepancy include, but are notlimited to, those described in our other Securities and Exchange Commissionfilings. The following discussion should be read in conjunction with ourFinancial Statements and related Notes thereto included elsewhere in thisreport.

 

**Overview**

** **

We were formed on January 24, 2007 to serve as a vehicle to effecta merger, asset acquisition, stock exchange or other similar businesscombination, or control through contractual arrangements, an operating businesshaving its primary operations in the People’s Republic of China. Our initialbusiness combination must be with a target business or businesses whose fairmarket value is at least equal to 80% of our net assets at the time of suchacquisition. Since our offering, we have been actively searching for a suitablebusiness combination candidate. We currently have not entered into anydefinitive agreement with any potential target businesses. We are not presentlyengaged in, and will not engage in, any substantive commercial business untilwe consummate an initial transaction. We intend to utilize cash derived fromthe proceeds of our recently completed private placement and initial publicoffering, our capital stock, debt or a combination of cash, capital stock anddebt, in effecting a business combination.

 

We cannot assure investors that we will find a suitable businesscombination in the allotted time.

 

**CriticalAccounting Policies**

** **

Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities at the date of the financial statements and the reported amounts ofexpenses during the reporting period. Actual results could differ from thoseestimates.

 

*Share-Based Payments*

* *

Weaccount for share-based payments pursuant to Statement of Financial AccountingStandards (“SFAS”) No. 123R, “Share-Based Payment” (“SFAS No. 123R”).SFAS No. 123R requires all share-based payments, including grants of stockoptions to employees, to be recognized in the financial statements based ontheir fair values. We adopted SFAS No. 123R on January 24, 2007(inception) and expect that it could have a material impact on our financialstatements to the extent we grant stock-based compensation in future periods.

 

*Deferred Interest on Funds Held in Trust*

* *

Deferredinterest on funds held in the trust account consists of the 30% less one shareportion of the interest earned on the funds held in trust reduced by certainpermitted withdrawals, including income taxes, by us, which is the maximumamount that we would be obligated to pay to stockholders who elect to havetheir stock redeemed by us without resulting in a rejection of a businesscombination.

 

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*Income Taxes*

 

Weaccount for income taxes pursuant to SFAS No. 109, “Accounting for IncomeTaxes” (“SFAS 109”), which establishes financial accounting and reportingstandards for the effects of income taxes that result from an enterprise’sactivities during the current and preceding years. SFAS No. 109 requiresan asset and liability approach for financial accounting and reporting forincome taxes.

 

InJuly 2006, the Financial Accounting Standards Board (“FASB”) issued FASBInterpretation No. 48, “Accounting for Uncertainty in Income Taxes, aninterpretation of FASB Statement No. 109” (“FIN 48”), which providescriteria for the recognition, management, presentation and disclosure ofuncertain tax positions. A tax benefit from an uncertain position may berecognized only if it is “more likely than not” that the position issustainable based on its technical merits. We adopted the provisions of FIN 48on January 24, 2007 (inception).

 

**RecentAccounting Pronouncements**

** **

InDecember 2007, the FASB issued SFAS No. 141(R), “BusinessCombinations” (“SFAS No. 141(R)”), which requires an acquirer to recognizein its financial statements as of the acquisition date (i) theidentifiable assets acquired, the liabilities assumed, and any noncontrollinginterest in the acquiree, measured at their fair values on the acquisitiondate, and (ii) goodwill as the excess of the consideration transferredplus the fair value of any noncontrolling interest in the acquiree at theacquisition date over the fair values of the identifiable net assets acquired.Acquisition-related costs, which are the costs an acquirer incurs to effect abusiness combination, will be accounted for as expenses in the periods in whichthe costs are incurred and the services are received, except that costs toissue debt or equity securities will be recognized in accordance with otherapplicable GAAP. SFAS No. 141(R) makes significant amendments toother Statements and other authoritative guidance to provide additionalguidance or to conform the guidance in that literature to that provided in SFASNo. 141(R). SFAS No. 141(R) also provides guidance as to whatinformation is to be disclosed to enable users of financial statements toevaluate the nature and financial effects of a business combination. SFAS No. 141(R) iseffective for financial statements issued for fiscal years beginning on orafter December 15, 2008. Early adoption is prohibited. The adoption ofSFAS No. 141(R) will affect how the Company accounts for a businesscombination concluded after December 31, 2008.

 

InDecember 2007, the FASB issued SFAS No. 160, “NoncontrollingInterests in Consolidated Financial Statements — an amendment of ARB No. 51”(“SFAS No. 160”), which requires that ownership interests in subsidiariesheld by parties other than the parent, and the amount of consolidated netincome, be clearly identified, labeled and presented in the consolidatedfinancial statements.  SFAS No. 160also requires that once a subsidiary is deconsolidated, any retainednoncontrolling equity investment in the former subsidiary be initially measuredat fair value.  Sufficient disclosuresare required to clearly identify and distinguish between the interests of theparent and the interests of the noncontrolling owners.  SFAS No. 160 amends FASB No. 128 toprovide that the calculation of earnings per share amounts in the consolidatedfinancial statements will continue to be based on the amounts attributable tothe parent. SFAS No. 160 is effective for financial statements issued forfiscal years, and interim periods within those fiscal years, beginning on orafter December 15, 2008, and requires retroactive adoption of thepresentation and disclosure requirements for existing minority interests.  All other requirements are appliedprospectively.  Early adoption isprohibited.  The Company does notcurrently anticipate that the adoption of SFAS No. 160 will have an impacton its financial statement presentation or disclosures.

 

InMarch 2008, the FASB issued SFAS No. 161, “Disclosures aboutDerivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”(“SFAS No. 161”).  SFAS No. 161amends and expands the disclosure requirements of SFAS No. 133, “Accountingfor Derivative Instruments and Hedging Activities” (“SFAS No. 133”). Theobjective of SFAS No. 161 is to provide users of financial statements withan enhanced understanding of how and why an entity uses derivative instruments,how derivative instruments and related hedged items are accounted for underSFAS No. 133 and its related interpretations, and how derivativeinstruments and related hedged items affect an entity’s financial position,financial performance, and cash flows. SFAS No. 161 requires qualitative disclosures about objectives andstrategies for using derivatives, quantitative disclosures about fair valueamounts of and gains and losses on derivative instruments, and disclosuresabout credit-risk-related contingent features in derivative agreements.  SFAS No. 161 applies to all derivativefinancial instruments, including bifurcated derivative instruments (andnonderivative instruments that are designed and qualify as hedging instrumentspursuant to paragraphs 37 and 42 of SFAS No. 133) and related hedged itemsaccounted for under SFAS No. 133 and its related interpretations.  SFAS No. 161 also amends certainprovisions of SFAS No. 131. SFAS No. 161 is effective for financialstatements issued for fiscal years and interim periods beginning after November 15,2008, with early application encouraged. SFAS No. 161 encourages, but does not require, comparativedisclosures for earlier periods at initial adoption.  The Company does not currently anticipatethat the adoption of SFAS No. 161 will have any impact on its financialstatement presentation or disclosures.

 

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**Results of Operations for the Three Months Ended September 30,2008 and 2007**

** **

For the three months ended September 30, 2008, wehad net income of approximately $165,000, comprised of interest income ofapproximately $1,751,000, less operating expenses of approximately $682,000,income tax expense of approximately $550,000, and interest allocable to commonshares subject to possible redemption of approximately $354,000. Operatingexpenses of approximately $682,000 consisted of approximately $494,000 forprofessional fees incurred relating to potential acquisitions, $29,000 forother professional fees, $39,000 for travel expenses, $33,000 for insurance,$46,000 for other operating costs, and $41,000 for capital based taxes.

 

For the three months ended September 30, 2007, wehad a net loss of approximately $4,000, comprised of interest income ofapproximately $1,000, less interest expense with respect to a note payable toone of our initial stockholders of approximately $5,000.

 

**Results of Operations for the Nine Months Ended September 30,2008 and the Period from January 24, 2007 (inception) to September 30,2007**

** **

For the nine months ended September 30, 2008, wehad net income of approximately $2,323,000, comprised of interest income ofapproximately $6,347,000, less operating expenses of approximately $1,214,000,income tax expense of approximately $1,999,000, and interest allocable tocommon shares subject to possible redemption of approximately $811,000.Operating expenses of approximately $1,214,000 consisted of approximately$534,000 for professional fees incurred relating to potential acquisitions,$159,000 for other professional fees, $152,000 for travel expenses, $99,000 forinsurance, $150,000 for other operating costs, and $120,000 for capital basedtaxes.

 

For the period from January 24, 2007 (inception)to September 30, 2007, we had a net loss of approximately $20,000,comprised of interest income of approximately $7,000, less operating expensesof approximately $15,000 and interest expense with respect to a note payable toone of our initial stockholders of $12,000.

 

Commencing on October 15, 2007 and ending uponthe acquisition of a target business, we began incurring a fee of $7,500 per monthfor office space and certain other additional services from Pacific Millennium,an affiliate of Mr. Tan, our Chief Executive Officer. In addition, on February 27,2007, we issued an unsecured promissory note of $500,000 to one of our initialstockholders. The note, which bore interest at the rate of 4% per annum, waspaid on October 19, 2007.

 

**Liquidity and Capital Resources**

** **

On October 19, 2007, we consummated our initialpublic offering of 30,000,000 units. Each unit consists of one share of commonstock and one redeemable common stock purchase warrant. Immediately prior tothe consummation of our initial public offering, we sold 6,200,000 warrants tothe Company’s founding stockholders for $1.00 per warrant. Each warrantentitles the holder to purchase from us one share of our common stock at anexercise price of $5.50. On October 30, 2007, the underwriters exercisedtheir over-allotment option and purchased an additional 2,970,300 Units. Ourcommon stock and warrants started trading separately as of November 7,2007.

 

The net proceeds from the sale of our units (includingthe underwriters’ over-allotment option) and the insider warrants, afterdeducting certain offering expenses of approximately $9,592,000, includingunderwriting discounts of approximately $9,232,000, and the repayment of thenote payable to a stockholder of approximately $513,000, including accruedinterest, were approximately $259,875,000. Of this amount, approximately$259,746,000 is being held in the trust account and the remaining proceeds arebeing held outside of the trust account. The remaining proceeds, along with upto $3,300,000 in interest earned on the funds in the trust account, areavailable to be used by us to provide for business, legal and accounting duediligence on prospective acquisitions and continuing general and administrativeexpenses. We will use substantially all of the net proceeds of the offering toacquire a target business, including identifying and evaluating prospectiveacquisition candidates, selecting the target business, and structuring,negotiating and consummating a business combination. To the extent that ourcapital stock is used in whole or in part as consideration to effect a businesscombination, the proceeds held in the trust account, as well as any other netproceeds not expended, will be used to finance the operations of the targetbusiness. Including the $3,300,000 in interest available to us, we believe wewill have sufficient available funds outside of the trust account to operatethrough October 15, 2009, assuming that a business combination is notconsummated during that time.

 

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From now until the earlier of October 15, 2009 orthe date when we complete a business combination, we currently anticipateincurring expenses for the following purposes:

 

·                  legal,accounting and other expenses attendant to due diligence investigations,structuring and negotiation of a business combination;

 

·                  duediligence of prospective target businesses;

 

·                  legaland accounting fees relating to our Securities and Exchange Commissionreporting obligations and general corporate matters;

 

·                  administrativefees ($7,500 per month); and

 

·                  workingcapital, director and officer liability insurance premiums and reserves(including potential deposits, down payments or funding of a “no-shop”provision in connection with a particular business combination and dissolutionobligations and reserves, if any).

 

We may use all or substantially all of the proceedsheld in trust other than the deferred portion of the underwriter’s fee to acquireone or more target businesses. We may not use all of the proceeds held in thetrust account in connection with a business combination, either because theconsideration for the business combination is less than the proceeds in trustor because we finance a portion of the consideration with capital stock or debtsecurities that we can issue. In that event, the proceeds held in the trustaccount as well as any other net proceeds not expended will be used to financethe operations of the target business or businesses. The operating businessesthat we acquire in such business combination must have, individually orcollectively, a fair market value equal to at least 80% of our net assets atthe time of such acquisition. If we consummate multiple business combinationsthat collectively have a fair market value of 80% of our net assets, then wewould require that such transactions are consummated simultaneously.

 

If we are unable to find a suitable target business byOctober 15, 2009, we will be forced to liquidate. If we are forced toliquidate, the per share liquidation amount may be less than the initial perunit offering price because of the underwriting commissions and expensesrelated to our offering and because of the value of the warrants in the perunit offering price. Additionally, if third parties make claims against us, theoffering proceeds held in the trust account could be subject to those claims,resulting in a further reduction to the per share liquidation price. UnderDelaware law, our stockholders who have received distributions from us may beheld liable for claims by third parties to the extent such claims are not beenpaid by us. Furthermore, our warrants will expire worthless if we liquidatebefore the completion of a business combination.

 

**Off-Balance Sheet Arrangements**

 

We do not have any off-balance sheet arrangements.

 

**Contractual Obligations**

 

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

 

**ITEM 3. QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

** **

Marketrisk is the sensitivity of income to changes in interest rates (with respect toboth interest income on the trust funds and interest expense on any future debtobligations), foreign exchange rates, commodity prices, equity prices, andother market-driven rates or prices.

 

Weare not presently engaged in and, if a suitable business target is notidentified by us prior to the prescribed liquidation date of the trust fund, wemay not engage in, any substantive commercial business.  We do not currently have any interest-bearingdebt.  Accordingly, we are not and, untilsuch time as we consummate a business combination that involves a debtcomponent, we will not be, exposed to risks associated with interest rates ondebt obligations, foreign exchange rates, commodity prices, equity prices, orother market-driven rates or prices.

 

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Thenet proceeds of our initial public offering held in the trust fund have beeninvested only in money market funds meeting certain conditions under Rule 2a-7promulgated under the Investment Company Act of 1940. Although we believe thatour risk is limited with respect to our exposure to money market funds,reductions in interest rates could decrease the amount of interest earned onthe trust funds and thus negatively impact future earnings.  Fluctuations in interest rates could beexacerbated in future periods as a result of the current worldwide instabilityin the banking and credit markets.

 

 

**ITEM 4T. CONTROLS ANDPROCEDURES**

** **

Anevaluation of the effectiveness of our disclosure controls and procedures as ofSeptember 30, 2008 was made under the supervision and with theparticipation of our management, including our chief executive and principalfinancial officer. Based on that evaluation, they concluded that our disclosurecontrols and procedures are effective as of the end of the period covered bythis report to ensure that information required to be disclosed by us inreports that we file or submit under the Securities Exchange Act of 1934 isrecorded, processed, summarized and reported within the time periods specifiedin Securities and Exchange Commission’s rules and forms, and to ensurethat such information is accumulated, and communicated to our management,including our chief executive and principal financial officer, to allow timelydecisions regarding required disclosure. During the most recently completedfiscal quarter, there has been no significant change in our internal controlover financial reporting that has materially affected, or is reasonably likelyto materially affect, our internal control over financial reporting.

 

Pursuantto Section 404 of the Sarbanes-Oxley Act of 2002 (the Act), beginning withour Annual Report on Form 10-K for the fiscal year ending December 31,2008, we will be required to furnish a report by our management on our internalcontrol over financial reporting. This report will contain, among othermatters, an assessment of the effectiveness of our internal control overfinancial reporting as of the end of our fiscal year, including a statement asto whether or not our internal control over financial reporting is effective.This assessment must include disclosure of any material weaknesses in ourinternal control over financial reporting identified by management. If weidentify one or more material weaknesses in our internal control over financialreporting, we will be unable to assert our internal control over financialreporting is effective.

 

Managementacknowledges its responsibility for internal controls over financial reportingand seeks to continually improve those controls. In order to achieve compliancewith Section 404 of the Act within the prescribed period, we are currentlyperforming the system and process documentation and evaluation needed to complywith Section 404, which is both costly and challenging. We believe ourprocess, which began in 2007 and continues in 2008 for documenting, evaluatingand monitoring our internal control over financial reporting is consistent withthe objectives of Section 404 of the Act.

 

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**PART II -OTHER INFORMATION**

** **

**ITEM 1. LEGAL PROCEEDINGS**

** **

None.

 

**ITEM 1A. RISK FACTORS**

** **

We are not required to respond to this item because weare a smaller reporting company.

 

**ITEM 2. UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

** **

**RecentSales of Unregistered Securities**

 

Wedid not engage in the sale of any unregistered securities during the threemonths ended September 30, 2008.

 

**Use ofProceeds**

 

OnOctober 19, 2007, we consummated our initial public offering of 30,000,000units. Each unit consisted of one share of common stock, $.0001 par value pershare, and one warrant to purchase one share of common stock. On October 30,2007, the underwriters of our initial public offering exercised theirover-allotment option to sell an additional 2,970,300 units. We receivedaggregate gross proceeds of $240,000,000 from the sale of the units. Theoffering was registered under the Securities Act of 1933, as amended, pursuantto a registration statement on Form S-1 (File No. 333-142729), whichwas declared effective by the Securities and Exchange Commission on October 15,2007.

 

Theunderwriters of the offering were Morgan Joseph & Co. Inc., SouthwestSecurities, Inc., Maxim Group LLC, Brean Murray, Carret & Co.,LLC, GunnAllen Financial, Inc., Legend Merchant Group. Each of our unitscommenced trading its component share of common stock and warrant separately onNovember 7, 2007.

 

Immediatelyprior to the consummation of our initial public offering, we sold 6,200,000warrants to the Company’s founding stockholders for $1.00 per warrant foraggregate gross proceeds of $6,200,000.

 

Thenet proceeds from the sale of our units (including the underwriters’over-allotment option) and the insider warrants, after deducting certainoffering expenses of approximately $9,592,000, including underwriting discountsof approximately $9,232,000, and the repayment of the note payable to astockholder of approximately $513,000, including accrued interest, wereapproximately $259,875,000. Of this amount, approximately $259,746,000 is beingheld in the trust account and the remaining proceeds are being held outside ofthe trust account. The remaining proceeds, along with up to $3,300,000 in interestearned on the funds in the trust account, are available to be used by us toprovide for business, legal and accounting due diligence on prospectiveacquisitions and continuing general and administrative expenses.

 

Noexpenses of the offering were paid to our officer and directors or any of theirrespective affiliates. We did, however, repay an affiliate of our officer for aloan in the principal amount of $500,000 made to us prior to the consummation of the initial public offering,together with interest at the rate of 4%.

 

OnSeptember 29, 2008, all the funds held in the trust account weretransferred into a money market fund that is invested solely in U.S.treasuries.

 

**Repurchasesof Equity Securities**

 

None

 

**ITEM 3. DEFAULTS UPONSENIOR SECURITIES**

** **

None.

 

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**ITEM 4. SUBMISSION OFMATTERS TO A VOTE OF SECURITY HOLDERS**

** **

None.

 

**ITEM 5. OTHER INFORMATION**

** **

None.

 

**ITEM 6. EXHIBITS**

 
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                   |
|----------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |       |                                                                                                                                                                              |
| 31.1                 |       | Certification of the Principal Executive and  Principal Financial Officer pursuant to Rule 13a-14(a) of the  Securities Exchange Act of 1934, as amended.               |
| 32.1                 |       | Certification of the Principal Executive and Principal  Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002. |

 

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**SIGNATURES**

** **

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

 

 
|                  | STONE TAN CHINA ACQUISITION CORP. |
|-----------------------|-----------------------------------|
|                  |                              |   |
|                  |                              |   |
| November 7, 2008 | By:                               | /s/ Richard Tan |
|                  |                              |   |
|                  |                              | Richard Tan |
|                  |                              | Chief Executive Officer, President and Director   (Principal Executive, Accounting and Financial   Officer) |

 

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**Exhibit Index**

** **
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                   |
|----------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |       |                                                                                                                                                                              |
| 31.1                 |       | Certification of the Principal Executive and  Principal Financial Officer pursuant to Rule 13a-14(a) of the  Securities Exchange Act of 1934, as amended.               |
| 32.1                 |       | Certification of the Principal Executive and  Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002. |

 

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