1325281--3/23/2006--Stone_Arcade_Acquisition

related topics

{interest, director, officer}

{product, market, service}

{cost, regulation, environmental}

{cost, operation, labor}

{acquisition, growth, future}

{stock, price, share}

{control, financial, internal}

{stock, price, operating}

Risks associated with our business We are a development stage company with limited operating history and, accordingly, our stockholders do not have any basis on which to evaluate our ability to achieve our business objective. If we are forced to liquidate before a business combination and distribute the trust account, our public stockholders will receive less than $6.00 per share upon distribution of the trust account and our warrants will expire worthless. If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders would be less than $5.54 per share. Since we have not yet selected a target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of the business in which we may ultimately operate. We may issue shares of our capital stock or debt securities to complete a business combination which would reduce the equity interest of our stockholders and could likely cause a change in control of our ownership. The ability of our stockholders to exercise their conversion rights may not allow us to effectuate the most desirable business combination or optimize our capital structure. Because of the significant competition for business combination opportunities, we may not be able to consummate an attractive business combination within the required time frame. We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure the transaction or abandon a particular business combination. Our officers and directors control a substantial interest in us and thus may influence certain actions requiring a stockholder vote. Our current officers and directors may resign upon consummation of a business combination. Our officers are parties to non-competition agreements that limits the types of companies we can target for a business combination and may make us a less attractive buyer to certain target companies. Our officers and directors may allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This could have a negative impact on our ability to consummate a business combination. Some of our officers and directors may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. Because we have no independent directors, actions taken and expenses incurred by our officers and directors on our behalf will generally not be subject to independent review. All of our officers and directors own shares of our common stock which will not participate in liquidation distributions and therefore they may have a conflict of interest in determining whether a particular target business is appropriate for a business combination. Our officers and directors will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount not in the trust fund unless the business combination is consummated and therefore they may have a conflict of interest in determining whether a particular target business is appropriate for a business combination and in the public stockholders best interest. Risks associated with the paper, packaging, forest products and related industries The paper, packaging, forest products and related industries are highly cyclical. Fluctuations in the prices of and the demand for a target company s products could result in smaller profit margins and lower sales volumes. Difficulty obtaining timber at favorable prices, or at all, may negatively impact companies in the packaging industry. An increase in the cost of purchased energy or chemicals would lead to higher manufacturing costs, thereby reducing margins. Paper, packaging and forest products companies face strong competition. Certain paper and wood products are vulnerable to long-term declines in demand due to competing technologies or materials. Packaging companies are subject to significant environmental regulation and environmental compliance expenditures, as well as other potential environmental liabilities.

Full 10-K form ▸

1325281--3/23/2006--Stone_Arcade_Acquisition_CORP