1332741--4/16/2007--Shine_Media_Acquisition

related topics

{interest, director, officer}

{regulation, change, law}

{stock, price, share}

{operation, international, foreign}

{acquisition, growth, future}

{investment, property, distribution}

{financial, litigation, operation}

{product, market, service}

{control, financial, internal}

Risks Associated With Our Business We are a development stage company with no operating history, and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective. If we are not able to consummate a business combination within the required time frame, we will be forced to liquidate, and, upon distribution of the trust account, our public stockholders will receive less than $6.00 per share, and our warrants will expire with no value. You will not be entitled to protections normally afforded to investors of blank check companies under federal securities laws. If third parties bring claims against us, the proceeds held in trust could be reduced, and the per-share liquidation amount received by stockholders could be less than $5.65 per unit. The procedures we must follow under Delaware law and our third amended and restated certificate of incorporation if we dissolve and liquidate may result in substantial delays in the liquidation of our trust account to our public stockholders as part of our plan of dissolution and distribution. Our stockholders may be held liable for claims of third parties against us to the extent of distributions received by them in connection with the dissolution of the trust account. Since we have not selected any target businesses with which to complete a business combination, investors would not be able to ascertain the merits or risks of any particular target business operations before deciding to invest. We will be dependent upon interest earned on the trust account to fund our search for a target company and consummation of a business combination. A significant portion of the net offering proceeds not held in the trust account could be expended in pursuing business combinations that are not consummated, requiring us to find additional sources of working capital to continue to identify target businesses. Because there are numerous companies with a business plan similar to ours seeking to effectuate a business combination, it may be more difficult for us to do so. We may choose to redeem our outstanding warrants at a time that is disadvantageous to our warrant holders. We may issue additional shares of our capital stock, including through convertible debt securities, to complete a business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership. Some or all of our current officers and directors may resign upon consummation of a business combination, and we will have only limited ability to evaluate management of the target business. Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This could have a negative impact on our ability to consummate a business combination. Our officers and directors are now, and 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. All of our Pre-IPO Stockholders, which includes all our officers and directors, own shares of our common stock which will not participate in the liquidation of the trust account and have agreed to purchase warrants which will expire worthless if we do not consummate a business combination, and therefore, they may have a conflict of interest in determining whether a particular target business is appropriate for a business combination. Our Pre-IPO Stockholders interests in obtaining reimbursement for any out-of-pocket expenses incurred by them may lead to a conflict of interest in determining whether a particular target business is appropriate for a business combination and in the public stockholders best interest. Our initial business combination may be with a single target business, which may cause us to be solely dependent on a single business and a limited number of services. 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. Any exercise by our Pre-IPO Stockholders of their registration rights may substantially reduce the market price of our common stock, and the may make it more difficult to effect a business combination. Our securities are quoted on the OTC Bulletin Board, which will limit the liquidity and price of our securities more than if our securities were quoted or listed on the Nasdaq Stock Market or a national exchange. If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination. Because we may be deemed to 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. Risks Relating to Regulation of the Corporate Structures We May Use in Connection With an Acquisition We may not be able to locate and acquire a foreign advertising company with the requisite experience which would allow us to directly invest in the Chinese advertising industry, and even if we are successful, we may not be able to coordinate the concurrent purchase of one or more Chinese advertising companies. Instead of acquiring one or more Chinese media and advertising companies through a foreign entity, we may attempt to obtain control of Chinese companies in the media and advertising industry through contractual arrangements, and the Chinese government may find that the resulting corporate structure does not comply with Chinese governmental restrictions on foreign investment in media or advertising, and we may be required to forfeit all economic benefits of such contracts and be subject to severe penalties. If we acquire a target business through contractual arrangements with one or more operating businesses in China, such contracts may not be as effective in providing operational control as direct ownership of such businesses and may be difficult to enforce. If existing laws and regulations in China or the way they are interpreted change, we may not be able to acquire an advertising business in China by concurrently acquiring a foreign entity with the requisite advertising experience, or by entering into contractual arrangements to obtain control of one or more Chinese companies in the media and advertising industry, and we may not be able to consummate a business combination within the required time frame, in which case we would be forced to liquidate. Any contractual arrangements we may enter into with a Chinese media or advertising company in which we do not have a direct ownership interest would subject us to an additional layer of taxation, and may be subject to scrutiny by the Chinese tax authorities. Risks Associated With Our Industry and With Doing Business in China Media and advertising spending in China is particularly sensitive to changes in economic conditions and advertising trends making it harder to assess whether any company we acquire will be profitable. After a business combination, we may be subject to, and may expend significant resources defending against, government actions and civil suits in China based on the content and services we provide. The approval of the Chinese Securities Regulatory Commission may be required in connection with any business combination we enter into under a recently adopted regulation, which could result in it taking a longer amount of time or more money for us to consummate a business combination, or, in the event that we are not able to obtain approval, could result in our being forced to liquidate and dissolve. Our business operations may be affected by legislative or regulatory changes in China. Our operations after a successful business combination in China may not develop in the same way or at the same rate as might be expected if the Chinese economy were similar to the market-oriented economies of member countries of the Organization for Economic Cooperation and Development ( OECD ). Because most of our directors and officers reside outside of the United States, and, after the consummation of a business combination, substantially all of our assets may be located outside of the United States, it may be difficult for investors to enforce their legal rights against such individuals or such assets. Because any target business with which we attempt to complete a business combination will be required to provide our stockholders with financial statements prepared in accordance with, or which can be reconciled to, and audited in accordance with, United States Generally Accepted Accounting Principles ( GAAP ), prospective target businesses may be limited. Exchange controls that exist in China may limit our ability to use our cash flow effectively following a business combination. After we consummate a business combination, our operating company in China will be subject to restrictions on dividend payments and other distributions to us. A recently issued SAFE Circular relating to offshore investment activities by residents or companies in China may increase the administrative burden we face and create regulatory uncertainties that could restrict our overseas and cross-border investment activities, and a failure by our stockholders who are residents of China to make any required applications and filings pursuant to such Circular may prevent us from being able to distribute profits and could expose us and our China resident stockholders to liabilities under Chinese law.

Full 10-K form ▸

1332741--4/16/2007--Shine_Media_Acquisition_Corp.