UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2009.

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission File Number: 000-52857

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) (Zip Code)

852-27355493

(Registrant’s Telephone Number, Including Area Code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

Large Accelerated Filer o		Accelerated Filer x

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

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

There were 41,212,875 shares of the registrant’s common stock issued and outstanding as of May 5, 2009.

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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

	March 31,		December 31,
	2009		2008
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,097,350	$	1,473,753
Money market funds - held in trust	263,345,154		263,192,125
Prepaid expenses	21,294		55,815
Income tax refundable	211,732		161,732
Total current assets	264,675,530		264,883,425
Total assets	$	264,675,530	$	264,883,425

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	97,522	$	162,125
Deferred underwriting fees payable	9,231,684		9,231,684
Deferred interest on funds held in trust	1,002,508		982,477
Total current liabilities	10,331,714		10,376,286

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	3,890,702		4,054,025
Total stockholders’ equity	179,035,043		179,198,366
Total liabilities and stockholders’ equity	$	264,675,530	$	264,883,425

See accompanying notes to condensed consolidated financial statements.

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STONE TAN CHINA ACQUISITION CORP. AND SUBSIDIARY
(a corporation in the development stage)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

							Period from
							January 24,
							2007
							(Inception) to
	Three Months Ended						March 31,
	March 31,						2009
	2009			2008			(Cumulative)
Revenues	$	—		$	—		$	—
Operating expenses	349,073			211,261			1,459,581
Professional fees incurred relating to potential acquisitions abandoned	—			—			533,928
Total operating expenses	349,073			211,261			1,993,509
Operating loss	(349,073		)	(211,261		)	(1,993,509		)
Interest income	155,781			2,670,774			9,678,705
Interest expense — stockholder	—			—			(12,986		)
Income (loss) before provision for income tax	(193,292		)	2,459,513			7,672,210
Provision (benefit) for income tax, current	(50,000		)	896,000			2,779,000
Income (loss) before allocation of trust account interest	(143,292		)	1,563,513			4,893,210
Allocation of trust account interest relating to common stock subject to possible redemption	(20,031		)	(48,668		)	(1,002,508		)
Net income (loss) available to common stockholders	$	(163,323	)	$	1,514,845		$	3,890,702

Net income (loss) per common share —
Basic	$	(0.00	)	$	0.04
Diluted	$	(0.00	)	$	0.03
Weighted average common shares outstanding —
Basic	41,212,875			41,212,875
Diluted	41,212,875			50,830,822

See accompanying notes to condensed consolidated financial statements.

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STONE TAN CHINA ACQUISITION CORP. AND SUBSIDIARY
(a corporation in the development stage)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE PERIOD FROM JANUARY 24, 2007 (INCEPTION) TO MARCH 31, 2009

	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 year ended December 31, 2008	—		—			—			2,511,121			2,511,121
Balance, December 31, 2008	41,212,875		4,121			175,140,220			4,054,025			179,198,366
Net loss available to common stockholders for the three months ended March 31, 2009 (unaudited)	—		—			—			(163,323		)	(163,323		)
Balance, March 31, 2009 (unaudited)	41,212,875		$	4,121		$	175,140,220		$	3,890,702		$	179,035,043

See accompanying notes to condensed consolidated financial statements.

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STONE TAN CHINA ACQUISITION CORP. AND SUBSIDIARY
(a corporation in the development stage)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

							Period from
							January 24,
							2007
							(Inception) to
	Three Months Ended						March 31,
	March 31,						2009
	2009			2008			(Cumulative)
Cash flows from operating activities:
Net income (loss) available to common stockholders	$	(163,323	)	$	1,514,845		$	3,890,702
Adjustments to reconcile net income (loss) available to common stockholders to net cash provided by (used in) operating activities:
Changes in operating assets and liabilities:
(Increase) decrease in -
Prepaid expenses	34,521			38,602			(21,294		)
Income tax refundable	(50,000		)	—			(211,732		)
Increase (decrease) in -
Accounts payable and accrued expenses	(64,603		)	(37,019		)	97,522
Income tax payable	—			(4,000		)	—
Net cash provided by (used in) operating activities	(243,405		)	1,512,428			3,755,198

Cash flows from investing activities:
Increase in trust account from interest earned on funds held in trust	(132,998		)	(2,596,456		)	(8,597,064		)
Funds placed in trust account from offerings	—			—			(259,745,716		)
Withdrawals from trust account	—			2,885,822			6,000,134
Net cash provided by (used in) investing activities	(132,998		)	289,366			(262,342,646		)

Cash flows from financing activities:
Proceeds from initial sale of common stock	—			—			25,000
Gross proceeds from private placement	—			—			6,200,000
Gross proceeds from public offering	—			—			263,762,399
Payments of offering costs	—			—			(10,302,701		)
Proceeds from underwriter’s purchase option	—			—			100
Proceeds from stockholder loans	—			—			500,000
Repayment of stockholder loans	—			—			(500,000		)
Net cash provided by financing activities	—			—			259,684,798
				—
Net increase (decrease) in cash and cash equivalents	(376,403		)	1,801,794			1,097,350
Balance at beginning of period	1,473,753			1,214,280			—
Balance at end of period	$	1,097,350		$	3,016,074		$	1,097,350
				—
Cash paid for:				—
Interest	$	—		$	165		$	12,986
Income taxes	$	—		$	900,000		$	2,990,732

Supplemental schedule of non-cash investing and financing activities:
Increase in accrued offering costs and placement fees, net	$	—		$	—		$	9,231,684
Common stock subject to possible redemption	$	—		$	—		$	75,308,773
Fair value of unit purchase option issued to underwriters	$	—		$	—		$	7,689,369
Allocation of trust account interest relating to common stock subject to possible redemption	$	20,031		$	48,668		$	1,002,508

See accompanying notes to condensed consolidated financial statements.

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STONE TAN CHINA ACQUISITION CORP. AND SUBSIDIARY
(a corporation in the development stage)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Three Months Ended March 31, 2009 and 2008, and

Period from January 24, 2007 (Inception) to March 31, 2009 (Cumulative)

1. Basis of Presentation

The condensed consolidated financial statements of Stone Tan China Acquisition Corp., including its wholly-owned subsidiary, Stone Tan China Acquisition (Hong Kong) Company Limited (the “Company”), at March 31, 2009, for the three months ended March 31, 2009 and 2008, and for the period from January 24, 2007 (inception) to March 31, 2009 (cumulative), are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) have been made that are necessary to present fairly the financial position of the Company as of March 31, 2009, the results of its operations for the three months ended March 31, 2009 and 2008, and for the period from January 24, 2007 (inception) to March 31, 2009 (cumulative), and its cash flows for the three months ended March 31, 2009 and 2008, and for the period from January 24, 2007 (inception) to March 31, 2009 (cumulative). Operating results for the interim periods presented are not necessarily indicative of the results to be expected for a full fiscal year. The condensed balance sheet at December 31, 2008 has been derived from the audited financial statements.

These condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and other information included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as filed with Securities and Exchange Commission.

2. Organization and Proposed Business Operations

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

On August 22, 2008, the Company formed a new wholly-owned subsidiary, Stone Tan China Acquisition (Hong Kong) Company Limited, organized under the laws of Hong Kong, in order to facilitate a transaction involving an operating business located in the People’s Republic of China.

At March 31, 2009, the Company had not yet commenced any business operations and is therefore considered a “corporation in the development stage.” All activity through March 31, 2009 is related to the Company’s formation, capital raising efforts (as described below), and efforts to acquire a business. The Company is subject to the risks associated with development stage companies.

The Company’s ability to acquire an operating business was contingent upon obtaining adequate financial resources through a private placement in accordance with Regulation D under the Securities Act of 1933, as amended (the “Private Placement”), and an initial public offering (the “Public Offering”, and together with the Private Placement, the “Offerings”), which are discussed in Note 4. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Offerings, although substantially all of the net proceeds of the Offerings are intended to be generally applied toward consummating a business combination with an operating company. As used herein, a “target business” shall include one or more operating businesses or assets with primary operations in the People’s Republic of China, and a “business combination” shall mean the acquisition by the Company of such a target business. There can be no assurances that the Company will be able to successfully effect a business combination.

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s Amended and Restated Certificate of Incorporation provides that if the Company is not able to complete a business combination by October 15, 2009, its corporate existence will cease, except for the process of winding up and liquidating. The Company cannot assure its investors that it will be able to find a suitable business combination by October 15,

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2009. This condition raises substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

3. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements include the financial statements of Stone Tan Acquisition Corp. and its wholly-owned subsidiary, Stone Tan China Acquisition (Hong Kong) Company Limited. All intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased (including money market funds) to be cash equivalents. Such cash and equivalents, at times, may exceed federally insured limits. The Company maintains its accounts with financial institutions with high credit ratings.

Income Taxes

The Company accounts for income taxes pursuant to Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS No. 109”), which establishes financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities during the current and preceding years. SFAS No. 109 requires an asset and liability approach for financial accounting and reporting for income taxes.

The Company has adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income Taxes” (“FIN 48”). FIN 48 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The adoption of the provisions of FIN 48 did not have a material effect on the Company’s consolidated financial statements. As of March 31, 2009, no liability for unrecognized tax benefits was required to be recorded.

The Company files income tax returns in the U.S. federal jurisdiction and is subject to income tax examinations by federal tax authorities for the year 2007 and thereafter. The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of March 31, 2009, the Company has no accrued interest or penalties related to uncertain tax positions.

Earnings Per Common Share

The Company computes earnings (loss) per common share (“EPS”) in accordance with Statement 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 with complex 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 shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

The calculation of net income (loss) per common share is summarized below. The calculation of diluted weighted average common shares outstanding for the three months ended March 31, 2009 and 2008 is based on the average of the closing price of the Company’s common stock, as quoted on the OTC Bulletin Board for the applicable period.

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	Three Months Ended March 31,
	2009			2008
Basic:
Net income (loss) available to common stockholders	$	(163,323	)	$	1,514,845
Weighted average common shares outstanding	41,212,875			41,212,875
Net income (loss) per common share — basic	$	(0.00	)	$	0.04

Diluted:
Net income (loss) available to common stockholders	$	(163,323	)	$	1,514,845
Weighted average common shares outstanding	41,212,875			41,212,875
Effect of dilutive warrants	—			9,617,947
Diluted weighted average common shares outstanding	41,212,875			50,830,822
Net income (loss) per common share — diluted	$	(0.00	)	$	0.03

At March 31, 2009 and 2008, potentially dilutive securities consisted of outstanding warrants and options to acquire an aggregate of 44,170,300 shares of common stock, all of which were anti-dilutive at March 31, 2009, and 5,000,000 of which were anti-dilutive at March 31, 2008.

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

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, money market funds - held in trust, prepaid expenses, income tax refundable, accounts payable and accrued expenses, and deferred underwriting fees payable approximate their respective fair values, due to the short-term nature of these items.

Share-Based Payments

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

Deferred Interest on Funds Held in Trust

Deferred interest on funds held in trust consists of the 30% less one share portion of the interest earned on the funds held in trust, reduced by certain permitted withdrawals, including income taxes, by the Company, which is the maximum amount that the Company would be obligated to pay to stockholders who elect to have their stock redeemed by the Company without resulting in a rejection of a business combination.

Recent Accounting Pronouncements

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disclosures about fair value measurements. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, except for the measurement of share-based payments. The Company adopted SFAS No. 157 on January 1, 2008. However, since the issuance of SFAS No. 157, the FASB has issued several FASB Staff Positions (FSPs) to clarify the application of SFAS No. 157. In February 2008, the FASB released FSP No. 157-2, “Effective Date of FASB Statement No. 157”, which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). In October 2008, the FASB issued FSP No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active”, which clarifies the application of SFAS No. 157 in a market that is not active and provides guidance in key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSPs apply to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with SFAS No. 157. In April 2009, the FASB issued FSP No. 157-4, “Determining the Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, which provides additional guidance for estimating fair value in accordance with SFAS No. 157, when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 also provides guidance on identifying circumstances that indicate a transaction is not orderly. FSP No. 157-4 is effective for interim and periods ending after June 15, 2009, and shall be applied prospectively. Additional disclosures required as a result of the Company’s implementation of SFAS No. 157 are presented at Note 6.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”), which provides companies with an option to report selected financial assets and liabilities at fair value. SFAS No. 159’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. Generally accepted accounting principles have required different measurement attributes for different assets and liabilities that can create artificial volatility in earnings. SFAS No. 159 helps to mitigate this type of accounting-induced volatility by enabling companies to report related assets and liabilities at fair value, which would likely reduce the need for companies to comply with detailed rules for hedge accounting. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 requires companies to provide additional information that will help investors and other users of financial statements to more easily understand the effect of the Company’s choice to use fair value on its earnings. SFAS No. 159 also requires companies to display the fair value of those assets and liabilities for which the Company has chosen to use fair value on the face of the balance sheet. SFAS No. 159 does not eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in SFAS No. 157 and SFAS No. 107. The Company adopted SFAS No. 159 on January 1, 2008. The adoption of SFAS No. 159 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (“SFAS No. 141(R)”), which requires an acquirer to recognize in its financial statements as of the acquisition date (i) the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, measured at their fair values on the acquisition date, and (ii) goodwill as the excess of the consideration transferred plus the fair value of any noncontrolling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired. Acquisition-related costs, which are the costs an acquirer incurs to effect a business combination, will be accounted for as expenses in the periods in which the costs are incurred and the services are received, except that costs to issue debt or equity securities will be recognized in accordance with other applicable GAAP. SFAS No. 141(R) makes significant amendments to other Statement of Financial Accounting Standards and other authoritative guidance to provide additional guidance or to conform the guidance in that literature to that provided in SFAS No. 141(R). SFAS No. 141(R) also provides guidance as to what information is to be disclosed to enable users of financial statements to evaluate the nature and financial effects of a business combination. SFAS No. 141(R) is effective for financial statements issued for fiscal years beginning on or after December 15, 2008. The Company adopted SFAS No. 141(R) on January 1, 2009. The adoption of SFAS No. 141(R) will affect how the Company accounts for a business combination in 2009 and beyond.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS No. 160”), which requires that ownership interests in subsidiaries held by parties other than the parent, and the amount of consolidated net income, be clearly identified, labeled and presented in the consolidated financial statements. SFAS No. 160 also requires that once a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value. Sufficient disclosures are required to clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 amends FASB No. 128 to provide that the calculation of earnings per share amounts in the consolidated financial statements 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

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presentation and disclosure requirements for existing minority interests. All other requirements are applied prospectively. The Company adopted SFAS No. 160 on January 1, 2009. The adoption of SFAS No. 160 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”). The objective of SFAS No. 161 is to provide users of financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS No. 161 applies to all derivative financial instruments, including bifurcated derivative instruments (and nonderivative instruments that are designed and qualify 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 related interpretations. SFAS No. 161 also amends certain provisions of SFAS No. 133. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. SFAS No. 161 encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company adopted SFAS No. 161 on January 1, 2009. The adoption of SFAS No. 161 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. SFAS No. 162 became effective on November 15, 2008. The adoption of SFAS No. 162 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In June 2008, the FASB ratified Emerging Issues Task Force (“EITF”) Issue No. 07-05, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” (“EITF 07-05”). EITF 07-05 mandates a two-step process for evaluating whether an equity-linked financial instrument or embedded feature is indexed to the entity’s own stock. Warrants that a company issues that contain a strike price adjustment feature, upon the adoption of EITF 07-05, results in the instruments no longer being considered indexed to the company’s own stock. Accordingly, adoption of EITF 07-05 will change the current classification (from equity to liability) and the related accounting for such warrants outstanding at that date. EITF 07-05 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company adopted EITF 07-05 on January 1, 2009. The adoption of EITF 07-05 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In April 2009, the FASB issued FSP 107-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP 107-1”), which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FSP 107-1 also amends APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in summarized financial information at interim reporting. FSP 107-1 is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company is currently evaluating the potential impact of FSP 107-1 on its consolidated financial statement presentation and disclosures.

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

4. Private Placement and Public Offering

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

The Company paid the underwriters in the Public Offering an underwriting discount of 3.5% of the gross proceeds and upon the consummation of a business combination, the underwriters will receive an additional underwriting discount equal to 3.5% of the gross proceeds. The Company also issued a unit purchase option, for $100, upon consummation of the Public Offering, to Morgan Joseph & Co. Inc. (“Morgan”) , the representative of the underwriters, to purchase up to a total of 2,500,000 units at $10.00 per unit. The units issuable upon exercise of this option are otherwise identical to those sold in the Public Offering, except that the exercise

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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 the option 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 option will only receive the common stock component of the units. The estimated fair value of this unit purchase option on the grant date was determined to be approximately $7,689,369 ($3.08 per unit) using a Black-Scholes option-pricing model with the following assumptions: (1) expected volatility of 45.3%, (2) risk-free interest rate of 4.2%, (3) expected life of 5 years, and (4) dividend rate of zero. The Company accounted for the 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 an equal amount credited directly to additional paid-in capital. As a result, the net increase in shareholders’ equity from the issuance of the unit purchase option was the $100 cash payment received by the Company. The option and warrants could expire worthless if there is no effective registration statement.

On October 19, 2007, the closing date of the Offerings, $236,815,000 of the proceeds of the Offerings, including $8,400,000 of contingent underwriting compensation which will be paid to Morgan if a business combination is consummated, but which will be forfeited in part if the public stockholders elect to have their shares redeemed for cash and in full if a business combination is not consummated, was placed in a trust account (the “Trust Account”) at Citi Smith Barney maintained by Continental Stock Transfer & Trust Company, and invested until the earlier of (i) the consummation of the Company’s first business combination or (ii) the liquidation of the Company. However, up to $3,300,000 of the interest earned on the Trust Account is permitted to be released to the Company to fund working capital requirements as set forth in the Investment Management Trust Agreement. Therefore, unless and until a 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 to pay taxes) will not be available for the Company’s use for any expenses related to the Offerings or expenses which may be incurred related to the investigation and selection of a target business and the negotiation of an agreement to acquire a target business.

On October 30, 2007, the underwriters of the Public Offering exercised their option to purchase an additional 2,970,300 units to cover over-allotments. In connection with the exercise of the over-allotment option, the underwriters received an underwriting discount of 3.5% of the gross proceeds and upon the consummation of a business combination the underwriters will receive an additional underwriting discount equal to 3.5% of the gross proceeds. Consequently, on October 30, 2007, the closing date of the overallotment exercise, an additional $22,930,716 of the proceeds from the exercise, including $831,684 of contingent underwriting compensation which will be paid to Morgan if a business combination is consummated, but which will be forfeited in part if the public stockholders elect to have their shares redeemed for cash and in full if a business combination is not consummated, was placed in the Trust Account. The common stock and warrants included in the units began to trade separately on November 7, 2007, and trading in the units ceased on that date.

On October 19, 2007, prior to the consummation of the Public Offering, the Company’s founding stockholders purchased from the Company an aggregate of 6,200,000 warrants (the “Founder Warrants”) at $1.00 per warrant in a Private Placement. All Founder Warrants issued in the Private Placement were substantially identical to the warrants in the units sold in the Public Offering, except that: (i) subject to certain limited exceptions, none of the Founder Warrants were transferable or salable until after the Company completes a business combination; and (ii) the Founder Warrants are not subject to redemption and are not exercisable on a cashless basis if held by the initial holders thereof. The $6,200,000 of proceeds from the sale of the Founder Warrants were added to the portion of the proceeds from the Public Offering held in the Trust Account pending completion of the Company’s initial business combination. The Company determined, based on a review of the trading price of the public warrants of other blank check companies similar to the Company, that the purchase price of $1.00 per Founder Warrant was not less than the approximate fair value of such warrants on the date of issuance. Therefore, the Company did not record compensation expense upon the sale of the Founder Warrants.

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

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With respect to the first business combination which is approved and consummated, any Public Stockholders who vote against the business combination may demand that 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 than 30% of the aggregate number of shares sold in the offerings may seek redemption of their shares in the event of a business combination.

If no business combination occurs, the Company’s Amended and Restated Certificate of 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 permanent by an amendment to the Certificate of Incorporation authorized by the vote of holders of a majority of all outstanding shares entitled to vote.

5. Money Market Funds — Held In Trust

Money market funds held in trust at March 31, 2009 and December 31, 2008 consist of an investment in Citi Institutional US Treasury Reserves Class A Funds with a market value of $263,345,154 and $263,192,125, respectively, and annualized taxable yields of 0.21% and 0.56%, respectively. The money market fund invests solely in U.S. treasuries.

6. Money Market Funds — Fair Value

The Company adopted SFAS No. 157 on January 1, 2008, delaying, as permitted, application for non-financial assets and non-financial liabilities. SFAS No. 157 establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, and requires that assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1: quoted prices (unadjusted) in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives.

Level 2: inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange based derivatives, mutual funds, and fair-value hedges.

Level 3: unobservable inputs for the asset or liability are only used when there is little, if any, market activity for the asset or liability at the measurement date. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models.

In accordance with SFAS No. 157, the Company determines the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities that are subject to SFAS No. 157 at each reporting period end.

Money market funds are the only financial instrument that is measured and recorded at fair value on the Company’s balance sheet on a recurring basis. The following tables present money market funds at their level within the fair value hierarchy at December 31, 2008 and March 31, 2009, respectively.

	Total		Level 1		Level 2		Level 3

December 31, 2008:
Money Market Funds — presented as cash and cash equivalents	$	1,473,753	$	1,473,753	$	—	$	—
Money Market Funds — Held in Trust	$	263,192,125	$	263,192,125	$	—	$	—

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	Total		Level 1		Level 2		Level 3

March 31, 2009:
Money Market Funds — presented as cash and cash equivalents	$	1,097,350	$	1,097,350	$	—	$	—
Money Market Funds — Held in Trust	$	263,345,154	$	263,345,154	$	—	$	—

7. Related Party Transactions

Note Payable to Stockholder

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

Management Fees and Other Costs

The Company has agreed to pay Pacific Millennium Investment Corporation (“Pacific Millennium”), an affiliate of the Company’s Chief Executive Officer, $7,500 per month for 24 months, for office space and reimbursement of general and administrative expenses pursuant to a letter agreement, commencing on the date of the Public Offering and terminating upon the date the Company consummates a business combination or liquidates. During the three months ended March 31, 2009 and 2008, and for the period from January 24, 2007 (inception) to March 31, 2009, the Company incurred $22,500, $22,500 and $127,500 of costs, respectively, under this agreement.

From time to time, Pacific Millennium makes payments on the Company’s behalf to third parties for expenses incurred in the pursuit of a potential business combination for which it is reimbursed by the Company. Such reimbursements amounted to $45,352, $26,438 and $432,749 during the three months ended March 31, 2009 and 2008, and the period from January 24, 2007 (inception) to March 31, 2009, respectively. Pacific Millennium does not receive any benefit from these transactions.

8. Common Stock

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

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

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

In the event that holders of more than 20% of the shares of common stock sold in the Public Offering elect to redeem their shares, the Company’s Initial Stockholders have agreed to forfeit that number of shares (up to a maximum of 937,500 shares) that will result in them owning collectively no more than 23.81% of the Company’s outstanding common stock immediately prior to the consummation of such business combination after giving effect to the redemption.

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9. Preferred Stock

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

10. Income Taxes

The provision for income tax for the three months ended March 31, 2008 consists of U.S. federal income tax currently payable. The Company had a tax benefit for the three months ended March 31, 2009. The Company has its executive office in Hong Kong and accordingly is not subject to state income tax.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred tax assets as of March 31, 2009 and December 31, 2008 consist of start-up and organization costs. Start-up costs must be deferred until the Company actively commences business operations, at which time they may be written off over a 180-month period. Organization costs must be deferred and written off over a 180-month period starting with the date that the Company is formed. Because of the uncertainty associated with the realization of the Company’s deferred tax assets, a 100% valuation allowance has been recorded.

11. Commitments and Contingencies

The Company will not proceed with a business combination if Public Stockholders owning 30% or more of the shares sold in the Public Offering vote against the business combination and exercise their redemption rights. Accordingly, the Company may effect a business combination if Public Stockholders owning up to one share less than 30% of the aggregate shares sold in the Public Offering exercise their redemption rights. If this occurred, the Company would be required to redeem for cash up to one share less than 30% of the 32,970,300 shares of common stock included in the units, or 9,891,089 shares of common stock, at an expected initial per share redemption price of $7.88. However, the ability of stockholders to receive $7.88 per unit is subject to any valid claims by the Company’s creditors which are not covered by amounts held in the Trust Account or the indemnities provided by the Company’s officers and directors. The expected redemption price per share is greater than each stockholder’s initial pro rata share of the Trust Account of approximately $7.60 per share. Of the excess redemption price, approximately $0.28 per share represents a portion of the underwriters’ contingent fee, which they have agreed to forego for each share that is redeemed. Accordingly, the total deferred underwriting compensation payable to the underwriters in the event of a business combination will be reduced by approximately $0.28 for each share that is redeemed. The balance will be paid from proceeds held in the Trust Account, which are payable to the Company upon consummation of a business combination. Even if less than 30% of the stockholders exercise their redemption rights, the Company may be unable to consummate a business combination if such redemption leaves the Company with funds insufficient to acquire or merge with a business with a fair market value greater than 80% of the Company’s net assets at the time of such acquisition, which would be in violation of a condition to the consummation of the Company’s initial business combination, and as a consequence, the Company may be forced to find additional financing to consummate such a business combination, consummate a different business combination or liquidate.

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

In the event purchases of $10,000,000 of the Company’s common stock cannot be completed through the open market purchases described above, the Company’s Initial Stockholders have agreed to purchase from the Company, in a private placement, 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

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, 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. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission filings. The following discussion should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this report.

Overview

We were formed on January 24, 2007 to serve as a vehicle to effect a merger, asset acquisition, stock exchange or other similar business combination, or control through contractual arrangements, an operating business having its primary operations in the People’s Republic of China. Our initial business combination must be with a target business or businesses whose fair market value is at least equal to 80% of our net assets at the time of such acquisition. Since our initial public offering in October 2007, we have been actively searching for a suitable business combination candidate. We currently have not entered into any definitive agreement with any potential target businesses. We are not presently engaged in, and will not engage in, any substantive commercial business until we consummate an initial transaction. We intend to utilize cash derived from the proceeds of our private placement and initial public offering, our capital stock, debt or a combination of cash, capital stock and debt, in effecting a business combination.

Going Concern

Our financial statements have been prepared assuming that we will continue as a going concern. Our amended and restated certificate of incorporation provides that if we are not able to complete a business combination by October 15, 2009, our corporate existence will cease, except for the process of winding up and liquidating. We cannot assure our investors that we will be able to find a suitable business combination by October 15, 2009. Our independent registered public accounting firm, in their report on our 2008 consolidated financial statements, have raised substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements as of and for the three months ended March 31, 2009 do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies

Share-Based Payments

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

Deferred Interest on Funds Held in Trust

Deferred interest on funds held in the trust account consists of the 30% less one share portion of the interest earned on the funds held in trust reduced by certain permitted withdrawals, including income taxes, by us, which is the maximum amount that we

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would be obligated to pay to stockholders who elect to have their stock redeemed by us without resulting in a rejection of a business combination.

Income Taxes

We account for income taxes pursuant to SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”), which establishes financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities during the current and preceding years. SFAS No. 109 requires an asset and liability approach for financial accounting and reporting for income taxes.

Effective January 24, 2007 (inception), we adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109,” which provides criteria for the recognition, management, presentation and disclosure of uncertain tax positions. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS No. 157”), which establishes a framework for measuring fair value in accordance with generally accepted accounting principles, clarifies the definition of fair value within that framework and expands disclosures about fair value measurements. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, except for the measurement of share-based payments. The Company adopted SFAS No. 157 on January 1, 2008. However, since the issuance of SFAS No. 157, the FASB has issued several FASB Staff Positions (FSPs) to clarify the application of SFAS No. 157. In February 2008, the FASB released FSP No. 157-2, “Effective Date of FASB Statement No. 157”, which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). In October 2008, the FASB issued FSP No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active”, which clarifies the application of SFAS No. 157 in a market that is not active and provides guidance in key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSPs apply to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with SFAS No. 157. In April 2009, the FASB issued FSP No. 157-4, “Determining the Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, which provides additional guidance for estimating fair value in accordance with SFAS No. 157, when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 also provides guidance on identifying circumstances that indicate a transaction is not orderly. FSP No. 157-4 is effective for interim and periods ending after June 15, 2009, and shall be applied prospectively.

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acquirer incurs to effect a business combination, will be accounted for as expenses in the periods in which the costs are incurred and the services are received, except that costs to issue debt or equity securities will be recognized in accordance with other applicable GAAP. SFAS No. 141(R) makes significant amendments to other Statement of Financial Accounting Standards and other authoritative guidance to provide additional guidance or to conform the guidance in that literature to that provided in SFAS No. 141(R). SFAS No. 141(R) also provides guidance as to what information is to be disclosed to enable users of financial statements to evaluate the nature and financial effects of a business combination. SFAS No. 141(R) is effective for financial statements issued for fiscal years beginning on or after December 15, 2008. The Company adopted SFAS No. 141(R) on January 1, 2009. The adoption of SFAS No. 141(R) will affect how the Company accounts for a business combination in 2009 and beyond.

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Results of Operations -Three Months Ended March 31, 2009 and 2008

For the three months ended March 31, 2009, we had a net loss of approximately $163,300, comprised of interest income of approximately $155,800, less operating expenses of approximately $349,100, interest allocable to common shares subject to possible redemption of approximately $20,000, and an income tax benefit of $50,000. Operating expenses consisted of approximately $200,500 for professional fees, $19,400 for travel expenses, $33,100 for insurance, $54,800 for other operating costs, and $41,300 for capital based taxes.

For the three months ended March 31, 2008, we had net income available to common stockholders of approximately $1,514,800, comprised of interest income of approximately $2,670,800, less operating expenses of approximately $211,300, income tax expense of approximately $896,000, and interest allocable to common shares subject to possible redemption of approximately $48,700. Operating expenses consisted of approximately $86,900 for professional fees, $13,100 for travel expenses, $33,100 for insurance, $40,900 for other operating costs, and $37,300 for capital based taxes.

Commencing on October 15, 2007 and ending upon the acquisition of a target business, we began incurring a fee of $7,500 per month for office space and certain other additional services from Pacific Millennium, an affiliate of Mr. Tan, our Chief Executive Officer. During each of the three months ended March 31, 2009 and 2008, we incurred $22,500 of costs under this agreement.

From time to time Pacific Millennium makes payments on our behalf to third parties for expenses incurred by us in the pursuit of a potential business combination for which we reimburse Pacific Millennium. Such reimbursements amounted to $45,352 and $26,438 during the three months ended March 31, 2009 and 2008, respectively. Pacific Millennium does not receive any benefit from these transactions.

Liquidity and Capital Resources

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

The net proceeds from the sale of our units (including the underwriters’ over-allotment option) and the insider warrants, after deducting certain offering expenses of approximately $9,592,000, including underwriting discounts of approximately $9,232,000, and the repayment of the note payable to a stockholder of approximately $513,000, including accrued interest, were approximately $259,875,000, of which approximately $259,746,000 was deposited into the trust account. The remaining proceeds were deposited into the Company’s operating account, which along with up to $3,300,000 in interest earned on the funds in the trust account, are available to be used by us to provide for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. We expect to use substantially all of the net proceeds of the offering to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating a business combination. To the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the proceeds held in the trust account, as well as any other net proceeds not expended, is expected to be used to finance the operations of the target business.

On February 27, 2007, we issued an unsecured promissory note of $500,000 to one of our initial stockholders. The note, which bore interest at the rate of 4% per annum, was paid in full on October 19, 2007.

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

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

· due diligence of prospective target businesses;

· legal and accounting fees relating to our Securities and Exchange Commission reporting obligations and general corporate matters;

· administrative fees ($7,500 per month); and

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

As of March 31, 2009, we had $1,097,350 available to us outside of the trust account to fund our working capital requirements and are entitled to withdraw up to an additional $256,634 of the interest earned on the trust account, net of taxes, to fund our business. However, we may not have sufficient funds available to complete a business combination. In such event, we would need to borrow funds from our insiders or others or seek favorable payment terms with our professionals and we may not be successful in these efforts.

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

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

Off Balance-Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the sensitivity of income to changes in interest rates (with respect to both interest income on the trust funds and interest expense on any future debt obligations), foreign exchange rates, commodity prices, equity prices, and other market-driven rates or prices.

Table of Contents

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors the Company is exposed to from those risk factors which were previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as filed with Securities and Exchange Commission.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

We did not engage in the sale of any unregistered securities during the three months ended March 31, 2009.

Use of Proceeds

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

The underwriters of the offering were Morgan Joseph & Co. Inc., Southwest Securities, Inc., Maxim Group LLC, Brean Murray, Carret & Co., LLC, GunnAllen Financial, Inc., Legend Merchant Group. Each of our units commenced trading its component share of common stock and warrant separately on November 7, 2007.

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

No expenses of the offering were paid to our officer and directors or any of their respective affiliates. We did, however, repay an affiliate of our officer for a loan 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%.

On September 29, 2008, all the funds held in the trust account were transferred into a money market fund that is invested solely in U.S. treasuries.

Repurchases of Equity Securities

None.

Part I.	Financial Information

	Item 1. Condensed Consolidated Financial Statements

	Balance Sheets

	Statements of Operations

	Statement of Stockholders’ Equity

	Statements of Cash Flows

	Notes to Condensed Consolidated 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 4. 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

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.

	STONE TAN CHINA ACQUISITION CORP.


May 7, 2009	By:	/s/ Richard Tan

		Richard Tan
		Chief Executive Officer, President and Director
		(Principal Executive, Accounting and Financial
		Officer)

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.

	/s/ Richard Tan
	Name:	Richard Tan
	Title:	Chief Executive Officer, President and Director
		(Principal Executive and Principal Financial Officer)

May 7, 2009	/s/ Richard Tan
		Name: Richard Tan
		Title: Chief Executive Officer, President and Director (Principal Executive and Principal Financial Officer)