1390332--3/20/2008--STONE_TAN_CHINA_ACQUISITION

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{interest, director, officer}

{regulation, change, law}

{operation, international, foreign}

{acquisition, growth, future}

{investment, property, distribution}

{stock, price, operating}

{stock, price, share}

{financial, litigation, operation}

The fact that we will proceed with the business combination if public stockholders holding less than 30% of the shares sold in our initial public offering exercise their redemption rights, rather than the 20% threshold of most other blank check companies, may hinder our ability to consummate a business combination in the most efficient manner or to optimize our capital structure. You will not be entitled to protections normally afforded to investors of blank check companies under the U.S. securities laws. 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 liquidation of the trust account. Since we are not limited to a particular industry or prospective target business with which to complete a business combination, investors may be unable to currently ascertain the merits or risks of the industry or target business in which we may ultimately operate. 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 issue shares of our capital stock or debt securities to complete a business combination, which would reduce the equity interest of our stockholders and may cause a change in control of our ownership. Our ability to successfully effect a business combination and to be successful afterwards will be dependent upon the efforts of our key personnel, some of whom may join us following a business combination and whom we would have only a limited ability to evaluate. Our executive officer 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, hampering our ability to consummate a business combination. Our executive officer and directors may be involved or in the future may become affiliated with other businesses, including other blank check companies, which could cause a conflict of interest as to which business they may present a viable acquisition opportunity. All of our existing executive officer and directors, or their respective affiliates, 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 initial 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. It is likely that we will only be able to complete one business combination with the proceeds of our initial public offering and the private placement, which will cause us to be solely dependent on a single business. 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. Because of our limited resources and the significant competition for business combination opportunities, we may not be able to consummate an attractive business combination. 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. We currently do not have an audit committee perform an independent review our financial statements. Our initial stockholders consisting of our executive officer and directors, control a substantial interest in us and thus may influence certain actions requiring stockholder vote. Risks associated with our acquisition of a target business in the PRC After a business combination, substantially all of our assets could be located in China and substantially all of our revenue will be derived from our operations in China. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal developments in China. Deterioration of China s political relations with the U.S., Europe, or other Asian nations could make Chinese businesses less attractive to Western investors. If relations between the United States and the PRC deteriorate, potential target businesses or their goods or services could become less attractive. If the PRC enacts regulations in more industry segments which forbid or restrict foreign investment, our ability to consummate a business combination could be severely impaired. 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. Contractual arrangements we enter into with potential future subsidiaries and affiliated entities or acquisitions of offshore entities that conduct PRC operations through affiliates in China may be subject to a high level of scrutiny by the PRC tax authorities. If the PRC imposes restrictions to reduce inflation, future economic growth in the PRC could be severely curtailed which could lead to a significant decrease in our profitability following a business combination. Because Chinese law will govern almost all of any target business material agreements, we may not be able to enforce our rights within the PRC or elsewhere, which could result in a significant loss of business, business opportunities or capital. As a result of merger and acquisition regulations implemented on September 8, 2006 relating to acquisitions of assets and equity interests of Chinese companies by foreign persons, it is expected that acquisitions will take longer and be subject to economic scrutiny by the PRC government authorities such that we may not be able to complete a transaction. Because the September 8, 2006 PRC merger and acquisition regulations permit the government agencies to have scrutiny over the economics of an acquisition transaction and require consideration in a transaction to be paid within stated time limits, we may not be able to negotiate a transaction that is acceptable to our stockholders or sufficiently protect their interests in a transaction. The PRC merger and acquisition regulations of September 8, 2006 have introduced industry protection and anti-trust aspects to the acquisition of Chinese companies and assets which may limit our ability to effect an acquisition. The Ministry of Information Industry (MII) issued regulations that regulate and limit ownership and investment in internet and other value-added telecommunications businesses in China which may limit the type of businesses we will be able to acquire. 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 reconciled to, U.S. generally accepted accounting principles, prospective target businesses may be limited. Any devaluation of currencies used in the PRC could negatively impact our target business results of operations and any appreciation thereof could cause the cost of a target business as measured in dollars to increase. Restrictions on currency exchange may limit our ability to utilize our cash flow effectively following a business combination. If any dividend is declared in the future and paid in a foreign currency, you may be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive. After we consummate a business combination, our operating company in China will be subject to restrictions on dividend payments. Recent regulations relating to offshore investment activities by PRC residents may increase the administrative burden we face and create regulatory uncertainties that may limit or adversely effect our ability to acquire PRC companies. We are required to deduct Chinese corporate withholding taxes from dividends we may pay to our stockholders following a business combination. The PRC government has enacted a new law on enterprise income tax, and as it implements this law the tax and fee benefits provided to foreign investors and companies to encourage development within the country may be lessened or removed with the consequence that expenses may rise impacting margins and net income. Recent regulations relating to offshore investment activities by PRC residents may increase the administrative burden we face and create regulatory uncertainties that may limit or adversely effect our ability to acquire PRC companies. If our management following a business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws which could lead to various regulatory issues.

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1390332--3/20/2008--STONE_TAN_CHINA_ACQUISITION_CORP.