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<TITLE>FORM S-1</TITLE>
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<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>







<P align="center" style="font-size: 10pt">As filed with the
Securities and Exchange Commission on May 3, 2005



<DIV align="right" style="font-size: 10pt">Registration No.&nbsp;333-_________</DIV>


<P align="center" style="font-size: 14pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<P align="center" style="font-size: 18pt"><B>FORM S-1</B>


<DIV align="center" style="font-size: 12pt"><B>REGISTRATION STATEMENT<BR>
UNDER<BR>
THE SECURITIES ACT OF 1933</B></DIV>

<P align="center" style="font-size: 20pt"><B>STONE ARCADE ACQUISITION CORPORATION</B>


<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD align="center" valign="top">Delaware
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">6770
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">20-2699372</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of<BR>
incorporation or organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Primary Standard Industrial<BR>
Classification Code Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer Identification<BR>
Number)</TD>
</TR>
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</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">c/o Stone-Kaplan Investments, LLC<BR>
One Northfield Plaza, Suite&nbsp;480<BR>
Northfield, IL 60093<BR>
(847)&nbsp;441-0929<BR>
(847)&nbsp;441-8267 (facsimile)<BR>
(Address, including zip code, and telephone number, including area code, of registrant&#146;s principal executive offices)



<P align="center" style="font-size: 10pt">Roger W. Stone, Chairman of the Board<BR>
Stone Arcade Acquisition Corporation<BR>
c/o Stone-Kaplan Investments, LLC<BR>
One Northfield Plaza, Suite&nbsp;480<BR>
Northfield, IL 60093<BR>
(847)&nbsp;441-0929<BR>
(847)&nbsp;441-8267 (facsimile)<BR>
(Name, address, including zip code, and telephone number, including area code, of agent for service)



<P align="center" style="font-size: 10pt">Copies to:


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="60%">
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<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Fran Stoller, Esq.<br>
Wayne Datz, Esq.<br>
Loeb &#038; Loeb LLP<br>
345 Park Avenue<br>
New York, New York 10154<br>
(212)&nbsp;407-4000<br>
(212)&nbsp;407-4990 - Facsimile
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Alan I. Annex, Esq.<br>
Greenberg Traurig LLP<br>
MetLife Building<br>
200 Park Avenue<br>
New York, New York 10166<br>
(212)&nbsp;801-9323<br>
(212)&nbsp;801-6400 - Facsimile</TD>
</TR>
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</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Approximate date of commencement of proposed sale to the public: </B>As soon as practicable after
the effective date of this registration statement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule&nbsp;415 under the Securities Act of 1933 check the following box.
<FONT style="font-family: Wingdings">&#253;</FONT>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same
offering. <FONT style="font-family: Symbol">&#240;</FONT>



<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>









<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering. <FONT style="font-family: Symbol">&#240;</FONT>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering. <FONT style="font-family: Symbol">&#240;</FONT>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If delivery of the prospectus is expected to be made pursuant to Rule&nbsp;434, please check
the following box. <FONT style="font-family: Wingdings">&#253;</FONT>


<P align="center" style="font-size: 10pt"><B>CALCULATION OF REGISTRATION FEE</B>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Proposed</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Proposed</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Maximum</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Maximum</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Amount of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Title of each Class of Security</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Amount being</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Offering Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Registration</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>being registered</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Registered</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Per Security(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Offering Price(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Fee</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Units, each consisting of one share
of Common Stock, $.0001 par value,
and two Warrants(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Units</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">207,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,363.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares of Common Stock included as
part of the Units(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>(3)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants included as part of the
Units(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Warrants</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>(3)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares of Common Stock underlying the
Warrants included in the Units(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">345,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">40,606.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Underwriter&#146;s Unit Purchase Option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>(3)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Units underlying the Underwriter&#146;s
Unit Purchase Option (&#147;Underwriter&#146;s
Units&#148;)(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Units</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,324.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares of Common Stock included as
part of the Underwriter&#146;s Units(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>(3)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants included as part of the
Underwriter&#146;s Units(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Warrants</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>(3)</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares of Common Stock underlying the
Warrants included in the
Underwriter&#146;s Units(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,750,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,206.86</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">582,000,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,501.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="21" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<P align="left" style="font-size: 10pt">(1) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Estimated solely for the purpose of calculating the registration fee.


<P align="left" style="font-size: 10pt">(2) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Includes 4,500,000 Units and 4,500,000 shares of Common Stock and 9,000,000 Warrants underlying
such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover
over-allotments, if any.


<P align="left" style="font-size: 10pt">(3) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No fee pursuant to Rule&nbsp;457(g).


<P align="left" style="font-size: 10pt">(4) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pursuant to Rule&nbsp;416, there are also being registered such indeterminable additional securities
as may be issued as a result of the anti-dilution provisions contained in the Warrants.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The registrant hereby amends this registration statement on such date or dates as may be
necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become effective in
accordance with </B><B>Section 8(a)</B><B> of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said Section&nbsp;</B><B>8(a)</B><B>, may
determine</B>.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information in this prospectus is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and is not soliciting an offer
to buy these securities in any state where the offer or sale is not permitted.


<P align="center" style="font-size: 10pt"><B>PROSPECTUS</B>



<P align="center" style="font-size: 10pt"><B>Preliminary Prospectus<BR>
Subject to Completion, May 3, 2005</B>



<P align="center" style="font-size: 12pt"><B>$180,000,000</B><BR>



<B>STONE ARCADE ACQUISITION CORPORATION</B><BR>



<B>30,000,000 units</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stone Arcade Acquisition Corporation is a blank check company recently formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition or other similar business
combination with an unidentified operating business. We intend to focus on identifying a
prospective target business in the paper, packaging, forest products and related industries,
although our efforts will not be limited to any particular industry. We do not have any specific
merger, capital stock exchange, asset acquisition or other similar business combination under
consideration or contemplation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This is an initial public offering of our securities. Each unit consists of:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>one share of our common stock; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>two warrants.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each warrant entitles the holder to purchase one share of our common stock at a price of
$5.00. Each warrant will become exercisable on the later of our completion of a business
combination or &#95;&#95;&#95;, 2006 <B>&#091;one year from the date of this prospectus&#093;</B>, and will expire on
&#95;&#95;&#95;, 2009 <B>&#091;four years from the date of this prospectus&#093;</B>, or earlier upon redemption.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have granted the underwriters a 45-day option to purchase up to 4,500,000 additional units
solely to cover over-allotments, if any (over and above the 30,000,000 units referred to above).
The over-allotment will be used only to cover the net syndicate short position resulting from the
initial distribution. We have also agreed to sell to Morgan Joseph &#038; Co. Inc., the representative
of the underwriters, for $100, as additional compensation, an option to purchase up to a total of
1,500,000 units at $7.50 per unit. The units issuable upon exercise of this option are identical to
those offered by this prospectus except that the warrants included in the option have an exercise
price of $6.25 (125% of the exercise price of the warrants included in the units sold in the
offering). The purchase option and its underlying securities have been registered under the
registration statement of which this prospectus forms a part.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is presently no public market for our units, common stock or warrants. We anticipate
that the units will be quoted on the OTC Bulletin Board under the symbol &#95;&#95;&#95;on or promptly
after the date of this prospectus. Once the securities comprising the units begin separate trading,
the common stock and warrants will be traded on the OTC Bulletin Board under the symbols &#95;&#95;&#95;
and &#95;&#95;&#95;, respectively.


<P align="left" style="font-size: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investing in our securities involves a high degree of risk. See &#147;Risk Factors&#148; beginning on
page 6 of this prospectus for a discussion of information that should be considered in connection
with an investment in our securities.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underwriting</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Public offering</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>discount and</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Proceeds, before</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>commissions</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>expenses, to us</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Per unit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.58</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">180,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">167,400,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Of the net proceeds we receive from this offering, $164,279,000 ($5.48 per unit) will be
deposited into a trust account at JPMorgan Chase NY Bank maintained by Continental Stock Transfer &#038;
Trust Company acting as trustee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are offering the units for sale on a firm-commitment basis. Morgan Joseph &#038; Co. Inc.,
acting as representative of the underwriters, expects to deliver our securities to investors in the
offering on or about &#95;&#95;&#95;, 2005.


<P align="center" style="font-size: 14pt"><B>Morgan Joseph</B>



<P align="center" style="font-size: 12pt"><B>EarlyBirdCapital, Inc.</B>



<P align="center" style="font-size: 10pt">_______________ 2005



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>PROSPECTUS SUMMARY</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>This summary highlights certain information appearing elsewhere in this prospectus. For a more
complete understanding of this offering, you should read the entire prospectus carefully, including
the risk factors and the financial statements. Unless otherwise stated in this prospectus,
references to &#147;we,&#148; &#147;us,&#148; &#147;our&#148; or &#147;our company&#148; refer to Stone Arcade Acquisition Corporation.
Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will
not exercise their over-allotment option. You should rely only on the information contained or
incorporated by reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any jurisdiction where the
offer is not permitted.</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a blank check company organized under the laws of the State of Delaware on April&nbsp;15,
2005. We were formed to effect a merger, capital stock exchange, asset acquisition or other similar
business combination with an operating business. To date, our efforts have been limited to
organizational activities.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive officers, Roger Stone and Matthew Kaplan, our Chief Executive Officer and
President, respectively, each has over 25&nbsp;years of industry experience in the paper, packaging,
forest products and related industries. Mr.&nbsp;Stone had served as the Chief Executive Officer and Mr.
Kaplan as a Vice President of Smurfit Stone Container Corp., one of the nation&#146;s largest paper and
packaging companies, and were Chief Executive Officer and Senior Vice President, respectively, of
Stone Container Corp. prior to its acquisition by Jefferson Smurfit Corporation. Subsequently,
Messrs.&nbsp;Stone and Kaplan were the CEO and President,
respectively, of Box USA Holdings, Inc., a
company they acquired, ran and sold to a strategic acquirer. In the course of their careers, they
completed numerous strategic acquisitions in the paper, packaging, forest products and related
industries and have extensive contacts and relationships within these industries.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to leverage the industry experience of our executive officers by focusing our
efforts on identifying a prospective target business in the paper, packaging, forest products and
related industries. We believe that companies involved in these industries represent attractive
acquisition targets for a number of reasons, including potentially attractive valuations, the large
number of middle market acquisition candidates and a favorable economic environment for these
industries. However, we will not be limited to a particular industry and may seek to effect a
business combination with a company outside of our initial area of focus.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our initial business combination must be with a target business whose fair market value is at
least equal to 80% of our net assets at the time of such acquisition.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
has indicated that they plan on purchasing at least 500,000 units in
the offering. However, they are not obligated to do so and we do not
have any agreement or arrangement with them requiring them to purchase
such securities.

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive offices are located at c/o Stone-Kaplan Investments, LLC, One Northfield Plaza,
Suite&nbsp;480, Northfield, Illinois 60093 and our telephone number is (847)&nbsp;441-0929.


<P align="center" style="font-size: 10pt"><B>The Offering</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Securities offered</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">30,000,000 units, at $6.00 per unit, each unit consisting of:</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#149; &nbsp;&nbsp; one share of common stock; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#149; &nbsp;&nbsp; two warrants.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The units will begin trading on or promptly after the date of this
prospectus. Each of the common stock and warrants may trade
separately on the 90th day after the date of this prospectus unless
Morgan Joseph &#038; Co. determines that an earlier date is acceptable. In
no event will Morgan Joseph &#038; Co. allow separate trading of the
common stock and warrants until we file an audited balance sheet
reflecting our receipt of the gross proceeds of this offering. We
will file a Current Report on Form&nbsp;8-K, including an audited balance
sheet, upon the consummation of this offering, which is anticipated
to take place three business days from the date of this prospectus.
The audited balance sheet will include proceeds we receive from the
exercise of the over-allotment option if the over-allotment option is
exercised prior to the filing of the Form&nbsp;8-K.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">2
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Common stock:</B></DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:25px; text-indent:-15px"><B>Number
outstanding before this<br>offering</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">7,500,000 shares
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:25px; text-indent:-15px"><B>Number to be
outstanding after this
offering</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap valign="top">37,500,000 shares
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Warrants:</B></DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:25px; text-indent:-15px"><B>Number outstanding before this offering</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">0 warrants
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:25px; text-indent:-15px"><B>Number to be
outstanding after this
offering</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">60,000,000 warrants
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Exercisability</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Each warrant is exercisable for one share of common stock.
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Exercise price</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">$5.00</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Exercise period</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">The warrants will become exercisable on the later of:</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the completion of a business combination with a target business; or
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>

<TD valign="top">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#091;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#093;,
2006 <B>&#091;one year from the date of this prospectus&#093;</b>.
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">The warrants will expire at 5:00 p.m., New York City time, on &#091;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#093;, 2009 <B>&#091;four years from the date of this prospectus&#093; </B>or
earlier upon redemption.
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Redemption</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">We may redeem the outstanding warrants:
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in whole and not in part;
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;at a price of $.01 per warrant at any time after the warrants
become exercisable;
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;upon a minimum of 30&nbsp;days&#146; prior written notice of redemption; and
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if, and only if, the last sales price of our common stock equals or
exceeds $8.50 per share for any 20 trading days within a 30 trading
day period ending three business days before we send the notice of
redemption.
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Proposed OTC<br>
Bulletin Board symbols for our:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:25px; text-indent:-15px"><B>Units</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">&#091;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#093;
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:25px; text-indent:-15px"><B>Common stock</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">&#091;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#093;
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:25px; text-indent:-15px"><B>Warrants</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">&#091;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#093;
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Offering proceeds to be
held in trust:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">$164,279,000 of the proceeds of this offering ($5.48 per unit) will
be placed in a trust account at JPMorgan Chase NY Bank maintained by
Continental Stock Transfer &#038; Trust Company, pursuant to an agreement
to be signed on the date of this prospectus. These proceeds will not
be released until the earlier of the completion of a business
combination or our liquidation. Therefore, unless and until a
business combination is consummated, the proceeds held in the trust
account will not be available for our use for any expenses related to
this offering or expenses which we may incur related to the
investigation and selection of a target business and the negotiation
of an agreement to acquire a target business. These expenses may be
paid prior to a business combination only from the net proceeds of this offering not held in the trust account (initially, approximately $2,500,000 after payment of expenses related to this offering).
</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top">None of the warrants may be exercised until after the consummation of
a business combination and, thus, after the proceeds of the trust
account have been disbursed. Accordingly, the warrant exercise price
will be paid directly to us and not placed in the trust account.
</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">3
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Stockholders must approve<BR>
business combination</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">We will seek stockholder approval before we effect any business
combination, even if the nature of the acquisition would not
ordinarily require stockholder approval under applicable state law.
In connection with the vote required for any business combination,
all of our existing stockholders, including all of our officers and
directors, have agreed to vote the shares of common stock owned by
them in accordance with the majority
of the shares of common stock voted by the public stockholders. We
will proceed with a business combination only if a majority of the
shares of common stock voted by the public stockholders are voted in
favor of the business combination and public stockholders owning less
than 20% of the shares sold in this offering exercise their
conversion rights (described below).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Conversion rights for
stockholders voting to
reject a business
combination</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Public stockholders voting against a business combination will be
entitled to convert their stock into a pro rata share of the trust
account, including any interest earned on their portion of the trust
account, if the business combination is approved and completed.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Liquidation if no business<BR>
combination</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">We will dissolve and promptly distribute only to our public
stockholders (including any members of our management who participate
in this offering) the amount in our trust account plus any remaining
net assets if we do not effect a business combination within 18
months after consummation of this offering (or within 24&nbsp;months from
the consummation of this offering if a letter of intent, agreement in
principle or definitive agreement has been executed within 18&nbsp;months
after consummation of this offering and the business combination has
not yet been consummated within such 18-month period). All of our
officers and directors own stock in our company, but have waived
their right to receive distributions (other than with respect to
units they purchase in this offering or common stock they purchase in
the aftermarket) upon our liquidation prior to a business
combination.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Escrow of management shares</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">On the date of this prospectus, all of our existing stockholders,
including all of our officers and directors, will place the shares
they owned before this offering into an escrow account maintained by
Continental Stock Transfer &#038; Trust Company, acting as escrow agent.
Subject to certain limited exceptions, these shares will not be
transferable during the escrow period and will not be released from
escrow until 12&nbsp;months from the date of a business combination.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>Risks</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In making your decision on whether to invest in our securities, you should take into account
not only the backgrounds of our management team, but also the special risks we face as a blank
check company, as well as the fact that this offering is not being conducted in compliance with
Rule&nbsp;419 promulgated under the Securities Act of 1933, as amended, and, therefore, you will not be
entitled to protections normally afforded to investors in Rule&nbsp;419 blank check offerings. You
should carefully consider these and the other risks set forth in the section entitled &#147;Risk
Factors&#148; beginning on page 6 of this prospectus.



<P align="center" style="font-size: 10pt">4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>SUMMARY FINANCIAL DATA</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the relevant financial data for our business and should be read
with our financial statements, which are included in this prospectus. We have not had any
significant operations to date, so only balance sheet data is presented. The &#147;as adjusted&#148;
information gives effect to the sale of the units we are offering including the application of the
related gross proceeds and the payment of the estimated remaining costs from such sale.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>April 26, 2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Actual</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Adjusted</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance Sheet Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Working capital/(deficiency)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(11,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">166,803,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">225,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,803,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Maximum value of common stock which may be
converted to cash ($5.48 per share) in
connection with a business combination</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,839,372</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133,963,628</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Working capital excludes $35,000 of costs related to this offering which were paid prior to
April&nbsp;26, 2005. These deferred offering costs have been recorded as a long-term asset and are
reclassified against stockholders&#146; equity in the &#147;as adjusted&#148; column.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The working capital and total assets amounts include the $164,279,000 being held in the trust
account, which will be available to us only upon the consummation of a business combination within
the time period described in this prospectus. If a business combination is not so consummated, we
will be dissolved and the proceeds held in the trust account and any remaining assets will be
distributed solely to our public stockholders.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will not proceed with a business combination if public stockholders owning 20% or more of
the shares sold in this offering vote against the business combination and exercise their
conversion rights. Accordingly, we may effect a business combination if public stockholders owning
up to approximately 19.99% of the shares sold in this offering exercise their conversion rights. If
this occurred and the business combination was completed, we would be required to convert to cash
up to approximately 19.99% of the 30,000,000 shares sold in this offering, or 5,997,000 shares of
common stock, at an initial per-share conversion price of $5.48, without taking into account
interest earned on the trust account. The actual per-share conversion price will be equal to:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the amount in the trust account, including all accrued interest, as of two business
days prior to the proposed consummation of the business combination; divided by</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the number of shares of common stock sold in the offering.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt">5
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>RISK FACTORS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>An investment in our securities involves a high degree of risk. You should consider carefully
all of the material risks described below, together with the other information contained in this
prospectus before making a decision to invest in our securities. We have included risks associated
with the paper, packaging, forest products and related industries. However, you should bear in mind
that we will not be limited in our efforts to identifying prospective target companies in any
particular industry and may seek to effect a business combination with a company outside of the
paper, packaging, forest products and related industries.</I>


<P align="center" style="font-size: 10pt"><B>Risks Associated with our Business</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a recently incorporated development stage company with no operating results to date.
Therefore, our ability to begin operations is dependent upon obtaining financing through the public
offering of our securities. Since we do not have an operating history, you will have no basis upon
which to evaluate our ability to achieve our business objective, which is to acquire an operating
business. We have not conducted any discussions and we have no plans, arrangements or
understandings with any prospective acquisition candidates. We will not generate any operating
revenues until, at the earliest, after the consummation of a business combination. We cannot assure
you that a business combination will occur.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
we are unable to complete a business combination within the required
time frame and are forced to liquidate our assets,
the per-share liquidation distribution will be less than $6.00 because of the expenses of this
offering, our general and administrative expenses and the anticipated costs of seeking a business
combination. Furthermore, there will be no distribution with respect to our outstanding warrants
which will expire worthless if we liquidate before the completion of a business combination. For a
more complete discussion of the effects on our stockholders if we are unable to complete a business
combination, see the section appearing elsewhere in this prospectus entitled &#147;Effecting a business
combination&#151;Liquidation if no business combination.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>You will not be entitled to protections normally afforded to investors of blank check
companies.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the net proceeds of this offering are intended to be used to complete a business
combination with a target business that has not been identified, we may be deemed to be a &#147;blank
check&#148; company under the United States securities laws. However, since we will have net tangible
assets in excess of $5,000,000 upon the successful consummation of this offering and will file a
Current Report on Form 8-K with the SEC upon consummation of this offering including an audited
balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect
investors of blank check companies such as Rule&nbsp;419. Accordingly, investors will not be afforded
the benefits or protections of those rules. Because we are not subject to Rule&nbsp;419, our units will
be immediately tradable and we have a longer period of time to complete a business combination in
certain circumstances. For a more detailed comparison of our offering to offerings under Rule&nbsp;419,
see the section entitled &#147;Comparison to offerings of blank check companies&#148; appearing elsewhere in
this prospectus.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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 $5.48 per share.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our placing of funds in trust may not protect those funds from third party claims against us.
Although we will seek to have all vendors, prospective target businesses or other entities that we
engage execute agreements with us waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account for the benefit of our public stockholders, there is no
guarantee that they will execute such agreements. Nor is there any guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek recourse against the trust account
for any reason. If we liquidate before the completion of a business combination and distribute the
proceeds held in trust to our public stockholders, Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and
Rahman, our officers and directors, will be personally


<P align="center" style="font-size: 10pt">6
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">liable to pay debts and obligations to
vendors that are owed money by us for services rendered or products sold to us in excess of the net proceeds of this offering not held in the trust account at that time.
However, we cannot assure you that these individuals will be able to satisfy those obligations.
Further, they will not be personally liable to pay debts and obligations to prospective target
businesses if a business combination is not consummated with such prospective target businesses, or
for claims from any entity other than vendors. Accordingly, the proceeds held in trust could be
subject to claims which could take priority over the claims of our public stockholders and the
per-share liquidation price could be less than $5.48, plus interest, due to claims of such
creditors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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 industry or business
in which we may ultimately operate.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we intend to focus our efforts on the paper, packaging, forest products and related
industries, we may consummate a business combination with a company in any industry we choose and
are not limited to any particular industry or type of business. Accordingly, there is no current
basis for you to evaluate the possible merits or risks of the particular industry in which we may
ultimately operate or the target business which we may ultimately acquire. To the extent we
complete a business combination with a financially unstable company or an entity in its development
stage, we may be affected by numerous risks inherent in the business operations of those entities.
If we complete a business combination with an entity in an industry characterized by a high level
of risk, we may be affected by the currently unascertainable risks of that industry. Although our
management will endeavor to evaluate the risks inherent in a particular industry or target
business, we cannot assure you that we will properly ascertain or assess all of the significant
risk factors. We also cannot assure you that an investment in our units will not ultimately prove
to be less favorable to investors in this offering than a direct investment, if an opportunity were
available, in a target business. For a more complete discussion of our selection of a target
business, see the section appearing elsewhere in this prospectus entitled &#147;Effecting a business
combination&#151;We have not identified a target business.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our certificate of incorporation authorizes the issuance of up to 175,000,000 shares of common
stock, par value $.0001 per share, and 1,000,000 shares of preferred stock, par value $.0001 per
share. Immediately after this offering (assuming no exercise of the underwriters&#146; over-allotment
option), there will be 73,000,000 authorized but unissued shares of our common stock available for
issuance (after appropriate reservation for the issuance of shares upon full exercise of our
outstanding warrants and the purchase option granted to Morgan Joseph, the representative of the
underwriters) and all of the 1,000,000 shares of preferred stock available for issuance. Although
we have no commitments as of the date of this offering to issue our securities, we may issue a
substantial number of additional shares of our common stock or preferred stock, or a combination of
common and preferred stock, to complete a business combination. The issuance of additional shares
of our common stock or any number of shares of our preferred stock:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>may significantly reduce the equity interest of investors in this offering;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>could likely cause a change in control if a substantial number of our shares of
common stock are issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and may also result in the resignation or
removal of our present officers and directors; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>may adversely affect prevailing market prices for our common stock.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Similarly, if we issue debt securities, it could result in:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>default and foreclosure on our assets if our operating income and other resources
after a business combination were insufficient to pay our debt obligations;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>acceleration of our obligations to repay the indebtedness even if we have made all
principal and interest payments when due if the debt security contains covenants that
require the maintenance of certain financial ratios or reserves and any such covenant
is breached without a waiver or renegotiation of that covenant;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our immediate payment of all principal and accrued interest, if any, if the debt
security is payable on demand; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our inability to obtain additional financing, if necessary, if the debt security
contains covenants restricting our ability to obtain additional financing while such
security is outstanding.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">7
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a more complete discussion of the possible structure of a business combination, see the
section appearing elsewhere in this prospectus entitled &#147;Effecting a business combination&#151;Selection
of a target business and structuring of a business combination.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time we seek stockholder approval of any business combination, we will offer each
public stockholder the right to have such stockholder&#146;s shares of common stock converted to cash if
the stockholder votes against the business combination and the business combination is approved and
completed. Accordingly, if our business combination requires us to use substantially all of our
cash to pay the purchase price, because we will not know how many stockholders may exercise such
conversion rights, we may either need to reserve part of the trust fund for possible payment upon
such conversion, or we may need to arrange third party financing to help fund our business
combination in case a larger percentage of stockholders exercise their conversion rights than we
expected. Therefore, we may not be able to consummate a business combination that requires us to
use all of the funds held in the trust account as part of the purchase price, or we may end up
having a leverage ratio that is not optimal for our business combination. This may limit our
ability to effectuate the most attractive business combination available to us.


<P align="left" style="font-size: 10pt"><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our current officers and directors may resign upon consummation of a business combination.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon consummation of a business combination, the role of our key personnel in the target
business cannot presently be ascertained. Although it is presently contemplated that certain
members of our management team will remain associated in various capacities with the target
business following a business combination, it is possible that the management of the target
business at the time of the business combination will remain in place. Alternatively, we may
recruit new management team members to join the target business. Although we intend to closely
scrutinize the management of a prospective target business in connection with evaluating the
desirability of effecting a business combination, we cannot assure you that our assessment of
management will prove to be correct.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our officers are parties to non-competition agreements that will limit the types of companies
we can target for a business combination and may make us a less attractive buyer to certain target
companies.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Roger Stone, our Chairman and Chief Executive Officer, and Matthew Kaplan, our President, are
parties to non-competition agreements that were entered into in connection with the sale of their
most recent business, Box USA Holdings, Inc., to International Paper Company. These agreements, which
expire in July&nbsp;2007, prohibit our officers from participation in businesses engaged in the
manufacture of corrugated packaging, containers or containerboard. This prohibition may limit our
ability to consummate a business combination in certain sectors of the paper, packaging, forest
products and related industries. To the extent that an entity we identify as a potential target
manufactures corrugated packaging, containers or containerboard or has similar operations, such
potential target would need to dispose of such operations as part of a business combination with
us. If this occurred, it would make us a less attractive buyer for the entity and adversely impact
our position among competing acquirors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our officers and directors are not required to commit their full time to our affairs, which
may result in a conflict of interest in allocating their time between our operations and other
businesses. We do not intend to have any full time employees prior to the consummation of a
business combination. All of our executive officers are engaged in several other business endeavors
and are not obligated to contribute any specific number of hours to our affairs. If our executive
officers&#146; other business affairs require them to devote more substantial amounts of time to such
affairs, it could limit their ability to devote sufficient time to our affairs and could have a
negative impact on our ability to consummate a business combination. For a complete discussion of
the potential conflicts of interest that you should be aware of, see the section appearing
elsewhere in this prospectus entitled &#147;Management&#151;Conflicts of Interest.&#148; We cannot assure you that
these conflicts will be resolved in our favor.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of our officers and directors may in the future become affiliated with entities,
including other &#147;blank check&#148; companies, engaged in business activities similar to those intended
to be conducted by us. Additionally, after we complete a business combination, our officers and
directors may become aware of business opportunities which may be appropriate for presentation to
us as well as the other entities to which they have fiduciary obligations. Accordingly, they may
have conflicts of interest in determining to which entity a particular business opportunity should
be presented. For a complete discussion of our management&#146;s business affiliations and the potential
conflicts of interest that you should be aware of, see the sections appearing elsewhere in this
prospectus entitled &#147;Management&#151;Directors and Executive Officers&#148; and &#147;Management&#151;Conflicts of
Interest.&#148; We cannot assure you that these conflicts will be resolved in our favor.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our officers and directors own stock in our company, but have waived their right to
receive distributions (other than with respect to units they purchase in this offering or common
stock they purchase in the aftermarket) upon our liquidation prior to a business combination.
Additionally, Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and Rahman have agreed with the representative
of the underwriters that they and certain of their affiliates or designees will, subject to certain
conditions, purchase 4,000,000 warrants in the open market following this offering. The shares and
warrants owned by our officers and directors will be worthless if we do not consummate a business
combination. The personal and financial interests of our officers and directors may influence their
motivation in identifying and selecting a target business and completing a business combination
timely. Consequently, our officers&#146; and directors&#146; discretion in identifying and selecting a
suitable target business may result in a conflict of interest when determining whether the terms,
conditions and timing of a particular business combination are appropriate and in our stockholders&#146;
best interest.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and
management resources and may increase the time and costs of completing an acquisition.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our
system of internal controls beginning with our Annual Report on Form 10-K for the year ending
December&nbsp;31, 2006. If we fail to maintain the adequacy of our internal controls, we could be
subject to regulatory scrutiny, civil or criminal penalties or stockholder litigation. Any
inability to provide reliable financial reports could harm our business. Section&nbsp;404 of the
Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on
management&#146;s evaluation of our system of internal controls. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal
controls. The development of the internal controls of any such entity to achieve compliance with
the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Furthermore, any failure to implement required new or improved controls, or difficulties
encountered in the implementation of adequate controls over our financial processes and reporting
in the future, could harm our operating results or cause us to fail to meet our reporting
obligations. Inferior internal controls could also cause investors to lose confidence in our
reported financial information, which could have a negative effect on the trading price of our
stock.


<P align="center" style="font-size: 10pt"><B>Risks Associated with the Paper, Packaging, Forest Products and Related Industries</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The paper, packaging, forest products and related industries are highly cyclical. Fluctuations
in the prices of and the demand for a target company&#146;s products could result in smaller profit
margins and lower sales volumes.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, economic and market shifts, fluctuations in capacity and changes in foreign
currency exchange rates have created cyclical changes in prices, sales volume and margins for
products in the paper, packaging, forest products and related industries. The length and magnitude
of industry cycles have varied over time and by product, but generally reflect changes in
macroeconomic conditions and levels of industry capacity. Most paper products and many wood
products used in the packaging industry are commodities that are widely available from many
producers. Because commodity products have few distinguishing qualities from producer to producer,
competition for these products is based primarily on price, which is determined by supply relative
to demand. The overall levels of demand


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<P align="left" style="font-size: 10pt">for these commodity products reflect fluctuations in levels of end-user demand, which depend
in large part on general macroeconomic conditions in North America and regional economic conditions
in our markets, as well as foreign currency exchange rates. The foregoing factors could materially
and adversely impact sales and profitability of a target company with which we might seek a
business combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Difficulty obtaining timber at favorable prices, or at all, may negatively impact companies in
the packaging industry.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wood fiber is the principal raw material in many parts of the packaging industry. Wood fiber
is a commodity, and prices historically have been cyclical. Environmental litigation and regulatory
developments have caused, and may cause in the future, significant reductions in the amount of
timber available for commercial harvest in the United States. These reductions have caused the
closure of plywood and lumber operations in some of the geographic areas in which a target company
might operate. In addition, future domestic or foreign legislation and litigation concerning the
use of timberlands, the protection of endangered species, the promotion of forest health and the
response to and prevention of catastrophic wildfires could also affect timber supplies.
Availability of harvested timber may further be limited by fire, insect infestation, disease, ice
storms, wind storms, flooding and other natural and man made causes, thereby reducing supply and
increasing prices.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Industry supply of commodity paper and wood products is also subject to fluctuation, as
changing industry conditions can influence producers to idle or permanently close individual
machines or entire mills. In addition, to avoid substantial cash costs in connection with idling or
closing a mill, some producers will choose to continue to operate at a loss, sometimes even a cash
loss, which could prolong weak pricing environments due to oversupply. Oversupply in these markets
can also result from producers introducing new capacity in response to favorable short-term pricing
trends. Industry supply of commodity papers and wood products is also influenced by overseas
production capacity, which has grown in recent years and is expected to continue to grow. Wood
fiber pricing is subject to regional market influences, and the cost of wood fiber may increase in
particular regions due to market shifts in those regions. In addition, the ability to obtain wood
fiber from foreign countries may be impacted by legal and political conditions in that country as
well as transportation difficulties.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>An increase in the cost of purchased energy or chemicals would lead to higher manufacturing
costs, thereby reducing margins.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Energy is a significant raw material in the paper, packaging, forest products and related
industries. Energy prices, particularly for electricity, natural gas and fuel oil, have been
volatile in recent years and currently exceed historical averages. These fluctuations have
historically impacted manufacturing costs of companies in these industries, often contributing to
earnings volatility. Recent significant increases in energy prices can be expected to adversely
impact businesses in these industries. In addition, a target company could be materially adversely
impacted by supply disruptions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Paper, packaging and forest products companies face strong competition.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The paper, packaging, forest products and related industries are highly fragmented, and a
target company will face competition from numerous competitors, domestic as well as foreign. It is
likely that some of a target company&#146;s competitors will be large, vertically integrated companies
that have greater financial and other resources, greater manufacturing economies of scale, greater
energy self-sufficiency and/or lower operating costs than the target company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Certain paper and wood products are vulnerable to long-term declines in demand due to
competing technologies or materials.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Companies in the paper, packaging, forest products and related industries are subject to
possible declines in demand for their products as the use of alternative materials and
technologies grows and the prices of such alternatives become more competitive. Any substantial
shift in demand from wood and paper products to competing technologies or materials could result in
a material decrease in sales of a target company&#146;s products. While we would seek to have a target
company adapt its product offerings to changes in market demand, we cannot assure you that any
efforts will be successful or sufficient.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Packaging companies are subject to significant environmental regulation and environmental
compliance expenditures, as well as other potential environmental liabilities.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Companies in the packaging industry are subject to a wide range of general and
industry-specific environmental laws and regulations, particularly with respect to air emissions,
wastewater discharges, solid and hazardous waste management, site remediation, forestry operations
and endangered species habitats. A target company will in all likelihood incur substantial
expenditures to maintain compliance with applicable environmental laws and regulations. Failure to
comply with applicable environmental laws and regulations, could expose a target company to civil
or criminal fines or penalties or enforcement actions, including orders limiting operations or
requiring corrective measures, installation of pollution control equipment or other remedial
actions.


<P align="center" style="font-size: 10pt"><B>Risks Associated with this Offering</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to encounter intense competition from other entities having a business objective
similar to ours, including leveraged buyout funds, hedge funds and operating businesses competing
for acquisitions. Many of these entities are well established and have extensive experience in
identifying and effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and other resources than we do. Further, the
obligation we have to seek stockholder approval of a business combination may delay the
consummation of a transaction, and our obligation to convert into cash the shares of common stock
held by public stockholders in certain instances may reduce the resources available for a business
combination. Additionally, our outstanding warrants, and the future dilution they potentially
represent, may not be viewed favorably by certain target businesses. Any of these obligations may
place us at a competitive disadvantage in successfully negotiating a business combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be limited by the requirement that our initial business combination must be with a
business with a fair market value of at least 80% of our net assets at the time of such
acquisition. This requirement will prevent us from initially targeting smaller companies, even if
we believe they are attractive candidates for acquisition.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we believe that the net proceeds of this offering will be sufficient to allow us to
consummate a business combination, in as much as we have not yet identified any prospective target
business, we cannot ascertain the capital requirements for any particular transaction. If the net
proceeds of this offering prove to be insufficient, either because of the size of the business
combination or because we become obligated to convert into cash a significant number of shares from
dissenting stockholders, we will be required to seek additional financing. We cannot assure you
that such financing would be available on acceptable terms, if at all. To the extent that
additional financing proves to be unavailable when needed to consummate a particular business
combination, we would be compelled to restructure the transaction or abandon that particular
business combination and seek an alternative target business candidate. In addition, if we
consummate a business combination, we may require additional financing to fund the operations or
growth of the target business. The failure to secure additional financing could have a material
adverse effect on the continued development or growth of the target business. None of our officers,
directors or stockholders is required to provide any financing to us in connection with or after a
business combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our existing stockholders, including our officers and directors, control a substantial
interest in us and thus may influence certain actions requiring a stockholder vote.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon consummation of our offering, our existing stockholders (including all of our officers
and directors) will collectively own 20% of our issued and outstanding shares of common stock
(assuming they do not purchase units in this offering and assuming no exercise of the
underwriters&#146; over-allotment option). Our board of directors is divided into three classes, each of
which will generally serve for a term of two years with only one class of directors being elected
in each year. It is unlikely that there will be an annual meeting of stockholders to elect new
directors prior to the consummation of a business combination, in which case all of the current
directors will continue in office at least until the consummation of the business combination. If
there is an annual meeting, as a consequence of our &#147;staggered&#148; board of directors, only a minority
of the board of directors will be considered for election and our


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<P align="left" style="font-size: 10pt">existing stockholders, because of their ownership position, will have considerable influence
regarding the outcome. Accordingly, our existing stockholders will continue to exert control at
least until the consummation of a business combination. In addition, our existing stockholders and
their affiliates and relatives are not prohibited from purchasing units in this offering or shares
in the aftermarket. If they do, we cannot assure you that our existing stockholders will not have
considerable influence upon the vote in connection with a business combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our existing stockholders paid an aggregate of $25,000, or $0.003 per share, for their shares
and, accordingly, you will experience immediate and substantial dilution from the purchase of our
common stock.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The difference between the public offering price per share of our common stock and the pro
forma net tangible book value per share of our common stock after this offering constitutes the
dilution to you and the other investors in this offering. The fact that our existing stockholders
acquired their shares of common stock at a nominal price has significantly contributed to this
dilution. Assuming the offering is completed, you and the other new investors will incur an
immediate and substantial dilution of approximately 29% or $1.75 per share (the difference between
the pro forma net tangible book value per share of $4.25 and the initial offering price of $6.00
per unit).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our outstanding warrants may have an adverse effect on the market price of our common stock
and make it more difficult to effect a business combination.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with this offering, as part of the units, we will be issuing warrants to
purchase 60,000,000 shares of common stock (assuming no exercise of the underwriters&#146;
over-allotment option). We will also issue an option to purchase 1,500,000 units to the
representative of the underwriters which, if exercised, will result in the issuance of an
additional 1,500,000 shares of common stock and 3,000,000 warrants. To the extent we issue shares
of common stock to effect a business combination, the potential for the issuance of substantial
numbers of additional shares upon exercise of these warrants and option could make us a less
attractive acquisition vehicle in the eyes of a target business as such securities, when exercised,
will increase the number of issued and outstanding shares of our common stock and reduce the value
of the shares issued to complete the business combination. Accordingly, our warrants and option may
make it more difficult to effectuate a business combination or increase the cost of the target
business. Additionally, the sale, or even the possibility of sale, of the shares underlying the
warrants and option could have an adverse effect on the market price for our securities or on our
ability to obtain future public financing. If and to the extent these warrants and option are
exercised, you may experience dilution to your holdings.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>If our existing stockholders exercise their registration rights, it may have an adverse effect
on the market price of our common stock and the existence of these rights may make it more
difficult to effect a business combination.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our existing stockholders are entitled to demand that we register the resale of their shares
of common stock at any time after the date on which their shares are released from escrow. If our
existing stockholders exercise their registration rights with respect to all of their shares of
common stock, then there will be an additional 7,500,000 shares of common stock eligible for
trading in the public market. The presence of this additional number of shares of common stock
eligible for trading in the public market may have an adverse effect on the market price of our
common stock. In addition, the existence of these rights may make it more difficult to effectuate a
business combination or increase the cost of the target business, as the stockholders of the target
business may be discouraged from entering into a business combination with us or will request a
higher price for their securities as a result of these registration rights and the potential future
effect their exercise may have on the trading market for our common stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>If you are not an institutional investor, you may purchase our securities in this offering
only if you reside within certain states and may engage in resale transactions only in those states
and a limited number of other jurisdictions.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have applied to register our securities, or have obtained or will seek to obtain an
exemption from registration, in Colorado, Delaware, Florida, Hawaii, Illinois, Indiana, Maryland,
New York and Rhode Island. If you are not an &#147;institutional investor,&#148; you must be a resident of
these jurisdictions to purchase our securities in the offering. The definition of an &#147;institutional
investor&#148; varies from state to state but generally includes financial institutions, broker-dealers,
banks, insurance companies and other qualified entities. In order to prevent resale transactions in
violation of states&#146; securities laws, you may engage in resale transactions only in these states
and in other jurisdictions in which an applicable exemption is available or a Blue Sky application
has been filed and accepted. This restriction on resale may limit your ability to resell the
securities purchased in this offering and may impact the price of our securities. For a more
complete discussion of the Blue Sky state securities laws and


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<P align="left" style="font-size: 10pt">registrations affecting this offering, please see the section entitled &#147;State Blue Sky
Information&#148; appearing elsewhere in this prospectus.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We intend to have our securities 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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our securities will be traded in the over-the-counter market. It is anticipated that they will
be quoted on the OTC Bulletin Board, an NASD-sponsored and operated inter-dealer automated
quotation system for equity securities not included on The Nasdaq Stock Market. Quotation of our
securities on the OTC Bulletin Board 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>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.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are deemed to be an investment company under the Investment Company Act of 1940, the
nature of our investments and the issuance of our securities may be restricted, which may make it
difficult for us to complete a business combination. In addition, we may have imposed upon us
burdensome requirements, including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>registration as an investment company;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>adoption of a specific form of corporate structure; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not believe that our anticipated principal activities will subject us to the Investment
Company Act of 1940. To this end, the proceeds held in trust may only be invested by the trust
agent in &#147;government securities&#148; with specific maturity dates. By restricting the investment of the
proceeds to these instruments, we intend to meet the requirements for the exemption provided in
Rule&nbsp;3a-1 promulgated under the Investment Company Act of 1940. If we were deemed to be subject to
the Act, compliance with these additional regulatory burdens would require additional expense that
we have not allotted for.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Because we have no &#147;independent&#148; directors, actions taken and expenses incurred by our
officers and directors on our behalf will generally not be subject to &#147;independent&#148; review.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of our directors owns shares of our common stock and, although no compensation will be
paid to them for services rendered prior to or in connection with a business combination, they may
receive reimbursement for out-of-pocket expenses incurred by them in connection with activities on
our behalf such as identifying potential target businesses and performing due diligence on suitable
business combinations. There is no limit on the amount of these out-of-pocket expenses and there
will be no review of the reasonableness of the expenses by anyone other than our board of
directors, which includes persons who may seek reimbursement, or a court of competent jurisdiction
if such reimbursement is challenged. Because none of our directors will be deemed &#147;independent,&#148; we
will generally not have the benefit of independent directors examining the propriety of expenses
incurred on our behalf and subject to reimbursement. Although we believe that all actions taken by
our directors on our behalf will be in our best interests, we cannot assure you that this will be
the case. If actions are taken, or expenses are incurred that are not in our best interests, it
could have a material adverse effect on our business and operations and the price of our stock held
by the public stockholders.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Because our initial stockholders&#146; initial equity investment was only $25,000, our offering may
be disallowed by state administrators that follow the North American Securities Administrators
Association, Inc. Statement of Policy on development stage companies.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Statement of Policy Regarding Promoter&#146;s Equity Investment promulgated by The
North American Securities Administrators Association, Inc., an international organization devoted
to investor protection, any state administrator may disallow an offering of a development stage
company if the initial equity investment by a company&#146;s promoters does not equal a certain
percentage of the aggregate public offering price. Our promoters&#146; initial investment of $25,000 is
less than the required $4,610,000 minimum amount pursuant to this policy. Accordingly, a state
administrator would have the discretion to disallow our offering if it wanted to. We cannot assure
you that our offering would not be disallowed pursuant to this policy. Additionally, the initial
equity investment made by the initial stockholders may not adequately protect investors.


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<P align="center" style="font-size: 10pt"><B>USE OF PROCEEDS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to bear all fees, disbursements and expenses in connection with this offering.
We estimate that the net proceeds of this offering will be as set forth in the following table:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Without Over-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Over-Allotment</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Allotment Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Option Exercised</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><u>Gross proceeds</u></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">180,000,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">207,000,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><u>Offering expenses(1)</u></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Underwriting discount (7% of gross proceeds)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,600,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,490,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Legal fees and expenses (including blue sky
services and expenses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Miscellaneous expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,798.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,798.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Printing and engraving expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounting fees and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">SEC registration fee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,501.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,501.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">NASD registration fee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,700.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,700.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><u>Net proceeds</u></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Held in trust</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">164,279,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189,389,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Not held in trust</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,500,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,500,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total net proceeds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">166,779,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">191,889,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><u>Use of net proceeds not held in trust(2)</u></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Due diligence of prospective target businesses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">750,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30.0</TD>
    <TD nowrap>)%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Legal, accounting and other expenses attendant
to the due diligence investigations,
structuring and negotiation of a business
combination and the preparation and filing of
the related proxy statement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">700,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28.0</TD>
    <TD nowrap>)%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payment of administrative fee to Stone-Kaplan
Investments LLC ($7,500 per month for two
years)(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.2</TD>
    <TD nowrap>)%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Legal and accounting fees relating to SEC
reporting obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.0</TD>
    <TD nowrap>)%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Working capital to cover miscellaneous
expenses, D&#038;O insurance and reserves</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">820,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32.8</TD>
    <TD nowrap>)%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,500,000.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100.0</TD>
    <TD nowrap>)%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)&nbsp;&nbsp;</TD>
    <TD>A portion of the offering expenses have been paid from the funds loaned to us by members of
our management described below. These funds will be repaid from the gross proceeds of this
offering.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)&nbsp;&nbsp;</TD>
    <TD>These expenses are estimates only. Our actual expenditures for some or all of these items may
differ substantially from those set forth herein.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(3)&nbsp;&nbsp;</TD>
    <TD>A portion of this fee will be paid to Arcade Partners LLC.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$164,279,000, or $189,389,000 if the underwriters&#146; over-allotment option is exercised in full,
of net proceeds will be placed in a trust account at JPMorgan Chase NY Bank maintained by
Continental Stock Transfer &#038; Trust Company, New York, New York, as trustee. The proceeds will not
be released from the trust account until the earlier


<P align="center" style="font-size: 10pt">14
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">of the completion of a business combination or our liquidation. The proceeds held in the trust
account may be used as consideration to pay the sellers of a target business with which we complete
a business combination. Any amounts not paid as consideration to the sellers of the target business
may be used to finance operations of the target business.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The payment to Stone-Kaplan Investments, LLC, an affiliate of Roger Stone, our Chairman and
Chief Executive Officer and Matthew Kaplan, our President and a member of our board of directors,
of a monthly fee of $7,500 is for certain administrative, technology and secretarial services, as
well as the use of certain limited office space in Chicago, Illinois. Stone-Kaplan will pay a
portion of this fee to Arcade Partners LLC, an affiliate of Messrs.&nbsp;Chapman, Furer and Rahman,
members of our board of directors, to cover overhead expenses incurred on our behalf. This
arrangement is being agreed to by Stone-Kaplan Investments, LLC for our benefit and is not intended
to provide Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and Rahman compensation in lieu of a salary. We
believe, based on rents and fees for similar services in the Chicago metropolitan area, that the
fee charged by Stone-Kaplan Investments, LLC is at least as favorable as we could have obtained
from an unaffiliated person. Upon completion of a business combination or our liquidation, we will
no longer be required to pay this monthly fee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to use the excess working capital (approximately $820,000) for director and officer
liability insurance premiums (approximately $200,000), with the balance of $620,000 being held in
reserve in the event due diligence, legal, accounting and other expenses of structuring and
negotiating business combinations exceed our estimates, as well as for reimbursement of any
out-of-pocket expenses incurred by our existing stockholders in connection with activities on our
behalf as described below. We believe that the excess working capital will be sufficient to cover
the foregoing expenses and reimbursement costs.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 may be used to finance the operations of the target business.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and Rahman, our officers and directors, have advanced to
us a total of $200,000 which was used to pay a portion of the expenses of this offering referenced
in the line items above for SEC registration fee, NASD registration
fee and legal and accounting fees and
expenses. The loans will be payable without interest on the earlier of one year from the date of
issuance or the consummation of this offering. The loans will be repaid out of the proceeds of this
offering.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The net proceeds of this offering not held in the trust account and not immediately required
for the purposes set forth above will only be invested in United States &#147;government securities,&#148;
defined as any Treasury Bill issued by the United States having a maturity of 180&nbsp;days or less so
that we are not deemed to be an investment company under the Investment Company Act of 1940. The
interest income derived from investment of these net proceeds during this period may be used to
defray our general and administrative expenses, as well as costs relating to compliance with
securities laws and regulations, including associated professional fees, until a business
combination is completed.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that, upon consummation of this offering, we will have sufficient available funds
to operate for at least the next 24&nbsp;months, assuming that a business combination is not consummated
during that time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commencing on the effective date of this prospectus through the consummation of the
acquisition of the target business, we will pay Stone-Kaplan Investments, LLC the fee described
above, a portion of which will be paid to Arcade Partners LLC. Other than this $7,500 per month
administrative fee, no compensation of any kind (including finder&#146;s and consulting fees) will be
paid to any of our existing stockholders, our officers or directors, or any of their affiliates,
for services rendered to us prior to or in connection with the consummation of the business
combination. However, they will receive reimbursement for any out-of-pocket expenses incurred by
them in connection with activities on our behalf, such as identifying potential target businesses
and performing due diligence on suitable business combinations. Since the role of present
management after a business combination is uncertain, we have no ability to determine what
remuneration, if any, will be paid to those persons after a business combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A public stockholder will be entitled to receive funds from the trust account (including
interest earned on his, her or its portion of the trust account) only in the event of our
liquidation or if that public stockholder were to seek to convert such shares into cash in
connection with a business combination which the public stockholder voted against and which we
consummate. In no other circumstances will a public stockholder have any right or interest of any
kind to or in the trust account.


<P align="center" style="font-size: 10pt">15
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>DILUTION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The difference between the public offering price per share of common stock, assuming no value
is attributed to the warrants included in the units, and the pro forma net tangible book value per
share of our common stock after this offering constitutes the dilution to investors in this
offering. Net tangible book value per share is determined by dividing our net tangible book value,
which is our total tangible assets less total liabilities (including the value of common stock
which may be converted into cash), by the number of outstanding shares of our common stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At April&nbsp;26, 2005, our net tangible book value was a deficiency of approximately $11,000, or
approximately $.00 per share of common stock. After giving effect to the sale of 30,000,000 shares
of common stock included in the units, and the deduction of underwriting discounts and estimated
expenses of this offering, our pro forma net tangible book value at April&nbsp;26, 2005 would have been
$133,963,628 or $4.25 per share, representing an immediate increase in net tangible book value of
$4.25 per share to the existing stockholders and an immediate dilution of $1.75 per share or 29% to
new investors not exercising their conversion rights. For purposes of presentation, our pro forma
net tangible book value after this offering is $32,839,372 less than it otherwise would have been
because if we effect a business combination, the conversion rights to the public stockholders may
result in the conversion into cash of up to approximately 19.99% of the aggregate number of the
shares sold in this offering at a per-share conversion price equal to the amount in the trust
account as of the record date for the determination of stockholders entitled to vote on the
business combination, inclusive of any interest, divided by the number of shares sold in this
offering.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table illustrates the dilution to the new investors on a per-share basis,
assuming no value is attributed to the warrants included in the units:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Public offering price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net tangible book value before this offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase attributable to new investors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net tangible book value after this offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dilution to new investors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information with respect to our existing stockholders and the
new investors:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Shares Purchased</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Total Consideration</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price Per</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Share</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Existing stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.014</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.003</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">New investors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">80.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">180,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99.986</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">180,025,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma net tangible book value after the offering is calculated as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Numerator:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net tangible book value before this offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(11,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from this offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,779,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Offering costs paid in advance and excluded from net
tangible book value before this offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less: Proceeds held in trust subject to conversion to
cash ($164,279,000 x 19.99%)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,839,372</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">133,963,628</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Shares of common stock outstanding prior to this offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Shares of common stock included in the units offered</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less: Shares subject to conversion (30,000,000 x 19.99%)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,997,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,503,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">16
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="center" style="font-size: 10pt"><B>CAPITALIZATION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our capitalization at April&nbsp;26, 2005 and as adjusted to give
effect to the sale of our units and the application of the estimated net proceeds derived from the
sale of our units:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">April 26, 2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Actual</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">As Adjusted</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes payable to stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock, $.0001 par value, -0- and
5,997,000 shares which are subject to possible
conversion, shares at conversion value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,839,372</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred stock, $.0001 par value, 1,000,000
shares authorized; none issued or outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock, $.0001 par value, 175,000,000
shares authorized; 7,500,000 shares issued and
outstanding; 31,503,000 shares issued and
outstanding (excluding 5,997,000 shares subject
to possible conversion), as adjusted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133,961,478</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deficit accumulated during the development stage</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133,963,628</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total capitalization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">224,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">166,803,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we consummate a business combination, the conversion rights afforded to our public
stockholders may result in the conversion into cash of up to approximately 19.99% of the aggregate
number of shares sold in this offering at a per-share conversion price equal to the amount in the
trust account, inclusive of any interest thereon, as of two business days prior to the proposed
consummation of a business combination divided by the number of shares sold in this offering.


<P align="center" style="font-size: 10pt">17
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS<BR>
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were formed on April&nbsp;15, 2005, to serve as a vehicle to effect a merger, capital stock
exchange, asset acquisition or other similar business combination with an operating business. We
intend to utilize cash derived from the proceeds of this offering, our capital stock, debt or a
combination of cash, capital stock and debt, in effecting a business combination. The issuance of
additional shares of our capital stock:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>may significantly reduce the equity interest of our stockholders;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>will likely cause a change in control if a substantial number of our shares of
common stock are issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and may also result in the resignation or
removal of our present officers and directors; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>may adversely affect prevailing market prices for our common stock.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Similarly, if we issue debt securities, it could result in:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>default and foreclosure on our assets if our operating income and other resources
after a business combination were insufficient to pay our debt obligations;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>acceleration of our obligations to repay the indebtedness even if we have made all
principal and interest payments when due if the debt security contains covenants that
require the maintenance of certain financial ratios or reserves and any such covenant
is breached without a waiver or renegotiation of that covenant;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our immediate payment of all principal and accrued interest, if any, if the debt
security is payable on demand; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our inability to obtain additional financing, if necessary, if the debt security
contains covenants restricting our ability to obtain additional financing while such
security is outstanding.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have neither engaged in any operations nor generated any revenues to date. Our entire
activity since inception has been to prepare for our proposed fundraising through an offering of
our equity securities.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We estimate that the net proceeds from the sale of the units, after deducting offering
expenses of approximately $621,000 and underwriting discounts of approximately $12,600,000, will be
approximately $166,779,000, or $191,889,000 if the underwriters&#146; over-allotment option is exercised
in full. Of this amount, $164,279,000, or $189,389,000 if the underwriters&#146; over-allotment option
is exercised in full, will be held in trust and the remaining $2,500,000 in either event will not
be held in trust. We will use substantially all of the net proceeds of this offering not being held
in trust to identify and evaluate prospective acquisition candidates, select the target business,
and structure, negotiate and consummate the business combination. To the extent that our capital
stock or debt securities are 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
might be used to finance the operations of the target business. We believe that, upon consummation
of this offering, the funds available to us outside of the trust account will be sufficient to
allow us to operate for at least the next 24&nbsp;months, assuming that a business combination is not
consummated during that time. Over this time period, we anticipate approximately $750,000 of
expenses for the due diligence and investigation of a target business, $700,000 of expenses for
legal, accounting and other expenses attendant to the due diligence investigations, structuring and
negotiating of a business combination (including the costs of obtaining stockholder approval),
$180,000 for the administrative fee payable to Stone-Kaplan Investments ($7,500 per month for two
years), $50,000 of expenses in legal and accounting fees relating to our SEC reporting obligations
and $820,000 for general working capital that will be used for miscellaneous expenses and reserves,
including approximately $200,000 for director and officer liability insurance premiums. We do not
believe we will need to raise additional funds following this offering in order to meet the
expenditures required to operate our business. However, we may need to raise additional funds
through a private offering of debt or equity securities if such funds are required to consummate a
business combination that is presented to us. We would only consummate such a financing
simultaneously with the consummation of a business combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are obligated, commencing on the date of this prospectus, to pay to Stone-Kaplan
Investments, LLC, an affiliate of Roger Stone and Matthew Kaplan, a monthly fee of $7,500 for
certain administrative, technology and secretarial services, as well as the use of certain limited
office space in Chicago. A portion of this fee will be paid to Arcade Partners LLC, an affiliate
of Messrs.&nbsp;Chapman, Furer and Rahman, for overhead expenses incurred in connection with our
business. In addition, in April, 2005, Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and Rahman

advanced a total of $200,000 to us, on a non-interest bearing basis, for payment of offering
expenses on our behalf. The loans will be payable without interest on the earlier of one year from
the date of issuance or the consummation of this offering. The loans will be repaid out of the
proceeds of this offering not being placed in trust.


<P align="center" style="font-size: 10pt">18
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<P align="center" style="font-size: 10pt"><B>PROPOSED BUSINESS</B>



<P align="left" style="font-size: 10pt"><B>Introduction</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a recently organized Delaware corporation incorporated on April&nbsp;15, 2005 in order to
serve as a vehicle for the acquisition of an operating business. We intend to focus on companies in
paper, packaging, forest products and related industries, although our efforts will not be limited
to a particular industry.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Roger Stone and Matthew Kaplan, our Chief Executive Officer and President, respectively, each
has over 25&nbsp;years of industry experience in the paper, packaging and forest products industries.
Mr.&nbsp;Stone had served as the Chief Executive Officer and Mr.&nbsp;Kaplan as a Vice President of Smurfit
Stone Container Corp., one of the nation&#146;s largest paper and packaging companies and were Chief
Executive Officer and Senior Vice President with Stone Container Corp., respectively, prior to its
acquisition by Jefferson Smurfit Corporation. Subsequently, Messrs.&nbsp;Stone and Kaplan served as the
Chief Executive Officer and President, respectively, of Box USA Holdings Inc., one of the nation&#146;s
largest independent converters of corrugated packaging materials which they sold to International
Paper Company in July&nbsp;2004. In the course of their careers, they completed numerous strategic
acquisitions and have extensive contacts and relationships within these industries.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that companies involved in paper, packaging, forest products and related industries
represent attractive acquisition targets for a number of reasons, including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD><B><I>Potentially attractive valuations</I></B>. We believe that there are a number of
potential target businesses in a variety of sectors in paper, packaging, forest
products and related industries that may be available at valuations that are not
reflective of their full future potential. This may be in part the result of
consolidation among major competitors that has resulted in the desire on the part
of some companies to shed non-core assets as a way of generating free cash flow.
Also, financial buyers including several private equity firms have recently
purchased large portfolios of industry assets, and may be seeking liquidity by
selective divestitures of certain assets.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD><B><I>Numerous middle market acquisition candidates</I></B>. In addition to divisional
divestitures, standalone competitors in the size range being targeted by management
include many medium-sized family-owned businesses which may consider sale or
recapitalization transactions as a way to provide growth capital to the businesses
or due to their owners&#146; desires to transition for personal reasons.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD><B><I>Favorable economic environment</I></B>. The North American paper and forest products
industry is mature, and long-term demand and financial performance tend to
correlate with changes in U.S. gross domestic product. Over the last several years,
the industry has seen significant consolidation and disciplined capital management,
resulting in improving industry fundamentals such as operating rates and capacity
utilization.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The packaging industry includes paper as well as plastic products. According to the Freedonia
Group, in 2003, the total demand for paper and plastic packaging, excluding corrugated boxes, was
44.1&nbsp;billion pounds and is projected to grow to 57.3&nbsp;billion pounds by 2013. According to Standard
&#038; Poors, the paper and forest products industry is among the largest in the U.S. with annual
shipments of about $200&nbsp;billion. The paper and paperboard segment typically accounts for about 85%
of industry revenues, with wood products being the remainder. In 2003, total paper and paperboard
production amounted to 88.4&nbsp;million tons.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Roger Stone and Matthew Kaplan are parties to non-competition agreements expiring in July&nbsp;2007
that prohibit their participation in any business in the corrugated packaging and container
business. Accordingly, we will not be able to seek a business combination with a target company in
this business segment. We believe that the market size of the various industry segments within the
paper, packaging, forest products and related industries are sufficiently large such that the
excluded segment will have no material effect on our ability to find and complete such a
combination.


<P align="center" style="font-size: 10pt">19
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<P align="left" style="font-size: 10pt"><B>Effecting a business combination</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not presently engaged in, and we will not engage in, any substantive commercial
business for an indefinite period of time following this offering. We intend to utilize cash
derived from the proceeds of this offering, our capital stock, debt or a combination of these in
effecting a business combination. Although substantially all of the net proceeds of this offering
are intended to be generally applied toward effecting a business combination as described in this
prospectus, the proceeds are not otherwise being designated for any more specific purposes.
Accordingly, prospective investors in this offering will invest in us without an opportunity to
evaluate the specific merits or risks of any one or more business combinations. A business
combination may involve the acquisition of, or merger with, a company which does not need
substantial additional capital but which desires to establish a public trading market for its
shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering
itself. These include time delays, significant expense, loss of voting control and compliance with
various Federal and state securities laws. In the alternative, we may seek to consummate a business
combination with a company that may be financially unstable, which would subject us to the numerous
risks inherent in such companies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>We have not identified a target business</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To date, we have not selected any target business with which to seek a business combination.
Our officers, directors, promoters and other affiliates are not currently engaged in discussions on
our behalf with representatives of other companies regarding the possibility of a potential merger,
capital stock exchange, asset acquisition or other similar business combination with us. Subject
to the limitation that a target business has a fair market value of at least 80% of our net assets
at the time of the acquisition, as described below in more detail, we will have virtually
unrestricted flexibility in identifying and selecting a prospective acquisition candidate.
Accordingly, there is no basis for investors in this offering to evaluate the possible merits or
risks of the target business with which we may ultimately complete a business combination. Although
our management will endeavor to evaluate the risks inherent in a particular target business, we
cannot assure you that we will properly ascertain or assess all significant risk factors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sources of target businesses</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We anticipate that our officers and directors as well as their affiliates will bring to our
attention target business candidates. In no event, however, will we pay any of our existing
officers, directors or stockholders or any entity with which they are affiliated any finder&#146;s fee
or other compensation for services rendered to us prior to or in connection with the consummation
of a business combination. Target business candidates may also be brought to our attention from
various unaffiliated sources, including investment bankers, venture capital funds, leveraged buyout
funds, hedge funds, management buyout funds and other members of the financial community, who may
present solicited or unsolicited proposals.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Selection of a target business and structuring of a business combination</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the requirement that our initial business combination must be with a target
business with a fair market value that is at least 80% of our net assets at the time of such
acquisition, our management will have virtually unrestricted flexibility in identifying and
selecting a prospective target business. In evaluating a prospective target business, our
management will consider, among other factors, the following:


<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>financial condition and results of operation;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>cash flow potential;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>growth potential;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>experience and skill of management and availability of additional personnel;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>capital requirements;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>competitive position;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>barriers to entry by competitors;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>stage of development of the products, processes or services;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>security measures employed to protect technology, trademarks or trade secrets;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>degree of current or potential market acceptance of the products, processes or services;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>proprietary features and degree of intellectual property or other protection of the
products, processes or services;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>regulatory environment of the industry; and</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">20
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>costs associated with effecting the business combination.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a
particular business combination will be based, to the extent relevant, on the above factors as well
as other considerations deemed relevant by our management in effecting a business combination
consistent with our business objective. In evaluating a prospective target business, we will
conduct an extensive due diligence review which will encompass, among other things, meetings with
incumbent management and inspection of facilities, as well as review of financial and other
information which will be made available to us.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The time and costs required to select and evaluate a target business and to structure and
complete the business combination cannot presently be ascertained with any degree of certainty. Any
costs incurred with respect to the identification and evaluation of a prospective target business
with which a business combination is not ultimately completed will result in a loss to us and
reduce the amount of capital available to otherwise complete a business combination. However, we
will not pay any finder&#146;s or consulting fees to our existing stockholders, or any of their
respective affiliates, for services rendered to or in connection with a business combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fair Market Value of Target Business</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The initial target business that we acquire must have a fair market value equal to at least
80% of our net assets at the time of such acquisition. The fair market value of such business will
be determined by our board of directors based upon standards generally accepted by the financial
community, such as actual and potential sales, earnings and cash flow and book value. If our board
is not able to independently determine that the target business has a sufficient fair market value,
we will obtain an opinion from an unaffiliated, independent investment banking firm which is a
member of the National Association of Securities Dealers, Inc. with respect to the satisfaction of
such criteria. Since any opinion, if obtained, would merely state that fair market value meets the
80% of net assets threshold, it is not anticipated that copies of such opinion would be distributed
to our stockholders, although copies will be provided to stockholders who request it. We will not
be required to obtain an opinion from an investment banking firm as to the fair market value if our
board of directors independently determines that the target business has sufficient fair market
value.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Possible lack of business diversification</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While we may seek to effect business combinations with more than one target business, our
initial business combination must be with a target business which satisfies the minimum valuation
standard at the time of such acquisition, as discussed above. Consequently, it is likely that we
will have the ability to effect only one, or perhaps two, business combinations. Accordingly, the
prospects for our success may be entirely dependent upon the future performance of a single
business. Unlike other entities which may have the resources to complete several business
combinations of entities operating in multiple industries or multiple areas of a single industry,
it is probable that we will not have the resources to diversify our operations or benefit from the
possible spreading of risks or offsetting of losses. By consummating a business combination with
only a single entity, our lack of diversification may:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>subject us to numerous economic, competitive and regulatory developments, any or all
of which may have a substantial adverse impact upon the particular industry in which we
may operate subsequent to a business combination; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>result in our dependency upon the development or market acceptance of a single or
limited number of products, processes or services.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Limited ability to evaluate the target business&#146; management</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we intend to closely scrutinize the management of a prospective target business when
evaluating the desirability of effecting a business combination, we cannot assure you that our
assessment of the target business&#146; management will prove to be correct. In addition, we cannot
assure you that the future management will have the necessary skills, qualifications or abilities
to manage a public company. While it is our intention that our officers will devote their full
efforts to our affairs subsequent to a business combination and that one or more of our directors
will remain associated in some capacity with us following a business combination, the future role
of our officers and directors in the target business cannot presently be stated with any certainty.
Moreover, we cannot assure you that our officers and directors will have significant experience or
knowledge relating to the operations of the particular target business.


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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following a business combination, we may seek to recruit additional managers to supplement the
incumbent management of the target business. We cannot assure you that we will have the ability to
recruit additional managers, or that the managers we hire will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Opportunity for stockholder approval of business combination</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the completion of a business combination, we will submit the transaction to our
stockholders for approval, even if the nature of the acquisition is such as would not ordinarily
require stockholder approval under applicable state law. In connection with seeking stockholder
approval of a business combination, we will furnish our stockholders with proxy solicitation
materials prepared in accordance with the Securities Exchange Act of 1934, which, among other
matters, will include a description of the operations of the target business and audited historical
financial statements of the business.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the vote required for any business combination, all of our existing
stockholders, including all of our officers and directors, have agreed to vote their respective
shares of common stock owned by them immediately prior to this offering in accordance with the
majority of the shares of common stock voted by the public stockholders. This voting arrangement
shall not apply to shares included in units purchased in this offering or purchased following this
offering in the open market by any of our existing stockholders, officers and directors. We will
proceed with the business combination only if a majority of the shares of common stock voted by the
public stockholders are voted in favor of the business combination and public stockholders owning
less than 20% of the shares sold in this offering exercise their conversion rights.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conversion rights</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time we seek stockholder approval of any business combination, we will offer each
public stockholder the right to have such stockholder&#146;s shares of common stock converted to cash if
the stockholder votes against the business combination and the business combination is approved and
completed. The actual per-share conversion price will be equal to the amount in the trust account,
inclusive of any interest (calculated as of two business days prior to the consummation of the
proposed business combination), divided by the number of shares sold in this offering. Without
taking into any account interest earned on the trust account, the initial per-share conversion
price would be $5.48, or $0.52 less than the per-unit offering price of $6.00. An eligible
stockholder may request conversion at any time after the mailing to our stockholders of the proxy
statement and prior to the vote taken with respect to a proposed business combination at a meeting
held for that purpose, but the request will not be granted unless the stockholder votes against the
business combination and the business combination is approved and completed. Any request for
conversion, once made, may be withdrawn at any time up to the date of the meeting. It is
anticipated that the funds to be distributed to stockholders entitled to convert their shares who
elect conversion will be distributed promptly after completion of a business combination. Public
stockholders who convert their stock into their share of the trust account still have the right to
exercise the warrants that they received as part of the units. We will not complete any business
combination if public stockholders owning 20% or more of the shares sold in this offering exercise
their conversion rights.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Liquidation if no business combination</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we do not complete a business combination within 18&nbsp;months after the consummation of this
offering, or within 24&nbsp;months if the extension criteria described below have been satisfied, we
will be dissolved and distribute to all of our public stockholders, in proportion to their
respective equity interests, an aggregate sum equal to the amount in the trust account, inclusive
of any interest, plus any remaining net assets. Our existing stockholders have waived their rights
to participate in any liquidation distribution with respect to shares of common stock owned by them
immediately prior to this offering. There will be no distribution from the trust account with
respect to our warrants, which will expire worthless.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we were to expend all of the net proceeds of this offering, other than the proceeds
deposited in the trust account, and without taking into account interest, if any, earned on the
trust account, the initial per-share liquidation price would be $5.48, or $0.52 less than the
per-unit offering price of $6.00. The proceeds deposited in the trust account could, however,
become subject to the claims of our creditors which could be prior to the claims of our public
stockholders. Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and Rahman have agreed pursuant to agreements
with us and Morgan Joseph &#038; Co. that, if we liquidate prior to the consummation of a business
combination, they will be personally liable to pay debts and obligations to vendors that are owed
money by us for services rendered or products sold to us in excess of the net proceeds of this
offering not held in the trust account at that time. We cannot assure
you, however, that they would be able to satisfy those obligations.

<P align="center" style="font-size: 10pt">22
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">Further, they will not be
personally liable to pay debts and obligations to prospective target businesses if a business
combination is not consummated with such prospective target businesses, or for claims from any
other entity other than vendors. Accordingly, we cannot assure you that the actual per-share
liquidation price will not be less than $5.48, plus interest, due to claims of creditors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we enter into either a letter of intent, an agreement in principle or a definitive
agreement to complete a business combination prior to the expiration of 18&nbsp;months after the
consummation of this offering, but are unable to complete the business combination within the
18-month period, then we will have an additional six months in which to complete the business
combination contemplated by the letter of intent, agreement in principle or definitive agreement.
If we are unable to do so within 24&nbsp;months following the consummation of this offering, we will
then liquidate. Upon notice from us, the trustee of the trust account will commence liquidating the
investments constituting the trust account and will turn over the proceeds to our transfer agent
for distribution to our public stockholders. We anticipate that our instruction to the trustee
would be given promptly after the expiration of the applicable 18-month or 24-month period.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our public stockholders will be entitled to receive funds from the trust account only in the
event of our liquidation or if the stockholders seek to convert their respective shares into cash
upon a business combination which the stockholder voted against and which is completed by us. In no
other circumstances will a stockholder have any right or interest of any kind to or in the trust
account.


<P align="left" style="font-size: 10pt"><B>Competition</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In identifying, evaluating and selecting a target business, we may encounter intense
competition from other entities having a business objective similar to ours. Many of these entities
are well established and have extensive experience identifying and effecting business combinations
directly or through affiliates. Many of these competitors possess greater technical, human and
other resources than us. Further:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our obligation to seek stockholder approval of a business combination may delay or
threaten the completion of a transaction;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our obligation to convert into cash shares of common stock held by our public
stockholders in certain instances may reduce the resources available to us for a
business combination; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our outstanding warrants and option, and the future dilution they potentially
represent, may not be viewed favorably by certain target businesses.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any of these factors may place us at a competitive disadvantage in successfully negotiating a
business combination. Our management believes, however, that to the extent that our target business
is a privately held entity, our status as a well-financed public entity and the substantial
industry expense of any officers may give us a competitive advantage over entities having a similar
business objective as ours in acquiring a target business with significant growth potential on
favorable terms.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we succeed in effecting a business combination, there will be, in all likelihood, intense
competition from competitors of the target business. We cannot assure you that, subsequent to a
business combination, we will have the resources or ability to compete effectively.


<P align="left" style="font-size: 10pt"><B>Facilities</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain our executive offices at c/o Stone-Kaplan Investments, LLC, One Northfield Plaza,
Suite&nbsp;480, Northfield, IL 60093. Stone-Kaplan Investments has agreed to provide us with certain
administrative, technology and secretarial services, as well as the use of certain limited office
space at this location at a cost of $7,500 per month pursuant to a letter agreement between us and
Stone-Kaplan Investments. Stone-Kaplan Investments will use a portion of the $7,500&nbsp;monthly fee to
pay Arcade Partners for overhead expenditures incurred on our behalf. We believe, based on rents
and fees for similar services in the Chicago metropolitan area, that the $7,500 fee is at least as
favorable as we could have obtained from an unaffiliated person. We consider our current office
space adequate for our current operations.


<P align="left" style="font-size: 10pt"><B>Employees</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have two executive officers. These individuals are not obligated to devote any specific
number of hours to our matters and intend to devote only as much time as they deem necessary to our
affairs. The amount of time they
will devote in any time period will vary based on the availability of suitable target
businesses to investigate, although we expect Messrs.&nbsp;Stone and Kaplan to devote an average of
approximately ten hours per week to our business. We do not intend to have any full time employees
prior to the consummation of a business combination.

<P align="center" style="font-size: 10pt">23
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt"><B>Periodic Reporting and Audited Financial Statements</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have registered our units, common stock and warrants under the Securities Exchange Act of
1934, as amended, and have reporting obligations, including the requirement that we file annual and
quarterly reports with the SEC. In accordance with the requirements of the Securities Exchange Act
of 1934, as amended, our annual reports will contain financial statements audited and reported on
by our independent accountants.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will not acquire a target business if audited financial statements based on United States
generally accepted accounting principles cannot be obtained for the target business. Additionally,
our management will provide stockholders with audited financial statements, prepared in accordance
with generally accepted accounting principles, of the prospective target business as part of the
proxy solicitation materials sent to stockholders to assist them in assessing the target business.
Our management believes that the requirement of having available audited financial statements for
the target business will not materially limit the pool of potential target businesses available for
acquisition.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act
for the fiscal year ending December&nbsp;31, 2006. A target company may not be in compliance with the
provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may
increase the time and costs necessary to complete any such acquisition.


<P align="left" style="font-size: 10pt"><B>Comparison to offerings of blank check companies</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table compares and contrasts the terms of our offering and the terms of an
offering of blank check companies under Rule&nbsp;419 promulgated by the SEC assuming that the gross
proceeds, underwriting discounts and underwriting expenses for the Rule&nbsp;419 offering are the same
as this offering and that the underwriters will not exercise their over-allotment option. None of
the terms of a Rule&nbsp;419 offering will apply to this offering.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Terms of Our Offering</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Terms Under a Rule 419 Offering</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Escrow of offering proceeds</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$164,279,000 of the
net offering
proceeds will be
deposited into a
trust account at
JPMorgan Chase NY
Bank maintained by
Continental Stock
Transfer &#038; Trust
Company.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$150,660,000 of the offering
proceeds would be required to
be deposited into either an
escrow account with an insured
depositary institution or in a
separate bank account
established by a broker-dealer
in which the broker-dealer
acts as trustee for persons
having the beneficial
interests in the account.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Investment of net proceeds</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The $164,279,000 of
net offering
proceeds held in
trust will only be
invested in U.S.
&#147;government
securities,&#148; defined
as any Treasury Bill
issued by the United
States having a
maturity of one
hundred and eighty
days or less.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Proceeds could be invested
only in specified securities
such as a money market fund
meeting conditions of the
Investment Company Act of 1940
or in securities that are
direct obligations of, or
obligations guaranteed as to
principal or interest by, the
United States.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Limitation on Fair Value or
Net Assets of Target
Business</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The initial target
business that we
acquire must have a
fair market value
equal to at least
80% of our net
assets at the time
of such acquisition.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">We would be restricted from
acquiring a target business
unless the fair value of such
business or net assets to be
acquired represented at least
80% of the maximum offering
proceeds.</TD>
</TR>
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</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">24
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Terms of Our Offering</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Terms Under a Rule 419 Offering</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Trading of securities issued</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The units may
commence trading on
or promptly after
the date of this
prospectus. The
common stock and
warrants comprising
the units will begin
to trade separately
on the 90th day
after the date of
this prospectus
unless Morgan Joseph
&#038; Co. informs us of
its decision to
allow earlier
separate trading,
provided we have
filed with the SEC a
Current Report on
Form&nbsp;8-K, which
includes an audited
balance sheet
reflecting our
receipt of the
proceeds of this
offering, including
any proceeds we
receive from the
exercise of the
over-allotment
option, if such
option is exercised
prior to the filing
of the Form&nbsp;8-K.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">No trading of the units or the
underlying common stock and
warrants would be permitted
until the completion of a
business combination. During
this period, the securities
would be held in the escrow or
trust account.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Exercise of the warrants</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The warrants cannot
be exercised until
the later of the
completion of a
business combination
and one year from
the date of this
prospectus and,
accordingly, will be
exercised only after
the trust account
has been terminated
and distributed.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The warrants could be
exercised prior to the
completion of a business
combination, but securities
received and cash paid in
connection with the exercise
would be deposited in the
escrow or trust account.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Election to remain an
investor</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">We will give our
stockholders the
opportunity to vote
on the business
combination. In
connection with
seeking stockholder
approval, we will
send each
stockholder a proxy
statement containing
information required
by the SEC. A
stockholder
following the
procedures described
in this prospectus
is given the right
to convert his or
her shares into his
or her pro rata
share of the trust
account. However, a
stockholder who does
not follow these
procedures or a
stockholder who does
not take any action
would not be
entitled to the
return of any funds.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A prospectus containing
information required by the
SEC would be sent to each
investor. Each investor would
be given the opportunity to
notify the company, in
writing, within a period of no
less than 20 business days and
no more than 45 business days
from the effective date of the
post-effective amendment, to
decide whether he or she
elects to remain a stockholder
of the company or require the
return of his or her
investment. If the company has
not received the notification
by the end of the 45th
business day, funds and
interest or dividends, if any,
held in the trust or escrow
account would automatically be
returned to the stockholder.
Unless a sufficient number of
investors elect to remain
investors, all of the
deposited funds in the escrow
account must be returned to
all investors and none of the
securities will be issued.</TD>
</TR>
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</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">25
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Terms of Our Offering</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Terms Under a Rule 419 Offering</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Business combination<BR>
deadline</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A business
combination must
occur within 18
months after the
consummation of this
offering or within
24&nbsp;months after the
consummation of this
offering if a letter
of intent, agreement
in principle or
definitive agreement
relating to a
prospective business
combination was
entered into prior
to the end of the
18-month period.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If an acquisition has not been
consummated within 18&nbsp;months
after the effective date of
the initial registration
statement, funds held in the
trust or escrow account would
be returned to investors.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Release of funds</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The proceeds held in
the trust account
will not be released
until the earlier of
the completion of a
business combination
and our liquidation
upon failure to
effect a business
combination within
the allotted time.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The proceeds held in the
escrow account would not be
released until the earlier of
the completion of a business
combination or the failure to
effect a business combination
within the allotted time.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">26
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="center" style="font-size: 10pt"><B>MANAGEMENT</B>



<P align="left" style="font-size: 10pt"><B>Directors and Executive Officers</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our current directors and executive officers are as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Roger W. Stone</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board and Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Matthew Kaplan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President, Secretary and Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">John M. Chapman</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jonathan R. Furer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Muhit U. Rahman</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Roger W. Stone </I></B>has been our Chairman of the Board since our inception. Mr.&nbsp;Stone has been
Manager of Stone-Kaplan Investments, LLC, a private investment company, since July&nbsp;2004. He was
Chairman and Chief Executive Officer of Box USA Holdings, Inc., a corrugated box manufacturer, from
July&nbsp;2000 until the sale of that company in July&nbsp;2004. Mr.&nbsp;Stone was Chairman, President and Chief
Executive Officer of Stone Container Corporation, a multinational paper company primarily producing
and selling pulp, paper and packaging products, from March&nbsp;1987 to November&nbsp;1998 when Stone
Container Corporation merged with Jefferson Smurfit Corporation, at which time he became President
and Chief Executive Officer of Smurfit-Stone Container Corporation
until March 1999. Mr.&nbsp;Stone serves on the boards
of directors of McDonald&#146;s Corporation and Autoliv Inc. Mr.&nbsp;Stone received a B.S. in Economics
from the Wharton School at the University of Pennsylvania. Mr.&nbsp;Stone is the father-in-law of
Matthew Kaplan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Matthew Kaplan </I></B>has been our President and a member of our board of directors since our
inception. Mr.&nbsp;Kaplan has been Manager of Stone-Kaplan Investments, LLC, a private investment
company, since July&nbsp;2004. He was President, Chief Operating Officer and a director of Box USA
Holdings, Inc., a corrugated box manufacturer, from July&nbsp;2000 until the sale of the company in July
2004. Mr.&nbsp;Kaplan began his career at Stone Container Corporation in 1979 and was serving as its
Senior Vice President and General Manager of North American Operations when Stone Container
Corporation merged with Jefferson Smurfit Corporation in November&nbsp;1998. He was Vice
President/General Manager Container Division with Smurfit-Stone Container Corporation until March
1999. Mr.&nbsp;Kaplan received a B.A. in Economics from the University of Pennsylvania and an M.B.A.
from the University of Chicago. Mr.&nbsp;Kaplan is the son-in-law of Roger W. Stone.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>John M. Chapman </I></B>has been a member of our board of directors since our inception. Mr.&nbsp;Chapman
is a co-founder and managing member of Arcade Partners LLC, a private equity firm. Since January
2004, he has been a Managing Director of Washington &#038; Congress Managers, a private equity firm.
From March&nbsp;1990 through December&nbsp;2003, he was employed by Triumph Capital Group, Inc, a private
equity firm, last serving as a Managing Director. Mr.&nbsp;Chapman received a B.A. from Bates College
and an M.B.A. from the Tuck School of Business at Dartmouth University.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Jonathan R. Furer </I></B>has been a member of our board of directors since our inception. Mr.&nbsp;Furer
is a co-founder and managing member of Arcade Partners LLC. Since January&nbsp;2004, he has been a
Managing Director of Washington &#038; Congress Managers, LLC. From March&nbsp;2000 through December&nbsp;2003, he
was a Managing Director of Triumph Capital Group, Inc. From December&nbsp;1998 until February&nbsp;2000, he
was a Managing Director of MG Group, LLC, a private equity firm he co-founded. Mr.&nbsp;Furer received a
B.B.A. from George Washington University.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Muhit U. Rahman </I></B>has been a member of our board of directors since our inception. Mr.&nbsp;Rahman is
a co-founder and managing member of Arcade Partners LLC. Since January&nbsp;2004, he has been a Managing
Director of Washington &#038; Congress Managers. From November&nbsp;1993 through December&nbsp;2003, he was a
Managing Director of Triumph Capital Group. Mr.&nbsp;Rahman received a B.S. from Yale University and an
M.B.A. from the Anderson School of Management at UCLA.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2003, Triumph Capital Group, Inc. and its general counsel were found guilty of fraud
arising from a scheme involving the former Connecticut State Treasurer&#146;s investment of state
pension fund money with private equity firms, including Triumph. Triumph&#146;s chairman pleaded guilty
to criminal charges for his role in this matter.


<P align="center" style="font-size: 10pt">27
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">Triumph and its chairman subsequently entered into
a consent decree in a related action brought by the SEC. Messrs. Chapman, Rahman and Furer were not executive officers, directors or shareholders of Triumph
Capital during the period that the conduct was alleged to have occurred and were not named or
targeted in any of these actions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors is divided into three classes with only one class of directors being
elected in each year and each class serving a three-year term. The term of office of the first
class of directors, consisting of Muhit Rahman, will expire at our first annual meeting of
stockholders. The term of office of the second class of directors, consisting of Matthew Kaplan and
John Chapman, will expire at the second annual meeting. The term of office of the third class of
directors, consisting of Roger Stone and Jonathan Furer, will expire at the third annual meeting.
These individuals will play a key role in identifying and evaluating prospective acquisition
candidates, selecting the target business, and structuring, negotiating and consummating its
acquisition.


<P align="left" style="font-size: 10pt"><B>Executive Compensation</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No executive officer has received any cash compensation for services rendered. Commencing on
the effective date of this prospectus through the acquisition of a target business, we will pay
Stone-Kaplan Investments LLC, an affiliate of Roger Stone and Matthew Kaplan, a fee of $7,500 per
month for providing us with certain administrative, technology and secretarial services, as well as
the use of certain limited office space in Chicago. A portion of this
fee will be paid to Arcade Partners LLC, an affiliate of John Chapman, Jonathan Furer and Muhit Rahman, for overhead
costs incurred on our behalf. However, this arrangement is solely for our benefit and is not
intended to provide these individuals compensation in lieu of a salary. No other executive officer
or director has a relationship with or interest in Stone-Kaplan Investments, LLC or Arcade Partners
LLC. Other than this $7,500 per-month fee, no compensation of any kind, including finder&#146;s and
consulting fees, will be paid to any of our existing stockholders, our officers or directors, or
any of their respective affiliates, for services rendered prior to or in connection with a business
combination. However, our existing stockholders will be reimbursed for any out-of-pocket expenses
incurred in connection with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable business combinations. There is no limit on the
amount of these out-of-pocket expenses and there will be no review of the reasonableness of the
expenses by anyone other than our board of directors, which includes persons who may seek
reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Because
none of our directors will be deemed &#147;independent,&#148; we will generally not have the benefit of
independent directors examining the propriety of expenses incurred on our behalf and subject to
reimbursement.


<P align="left" style="font-size: 10pt"><B>Conflicts of Interest</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Potential investors should be aware of the following potential conflicts of interest:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>None of our officers and directors are required to commit their full time to our
affairs and, accordingly, they may have conflicts of interest in allocating management
time among various business activities.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>In the course of their other business activities, our officers and directors may
become aware of investment and business opportunities which may be appropriate for
presentation to us as well as the other entities with which they are affiliated. They
may have conflicts of interest in determining to which entity a particular business
opportunity should be presented. For a complete description of our management&#146;s other
affiliations, see the section entitled &#147;Directors and Executive Officers.&#148;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Our officers and directors may in the future become affiliated with entities,
including other blank check companies, engaged in business activities similar to those
intended to be conducted by us.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Since our directors own shares of our common stock, and may own warrants, which will
be worthless if a business combination is not consummated, our board may have a
conflict of interest in determining whether a particular target business is appropriate
to effect a business combination. The personal and financial interests of our directors
and officers may influence their motivation in identifying and selecting a target
business, completing a business combination on a timely basis and securing the release
of their stock.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, officers and directors of a corporation incorporated under the laws of the State
of Delaware are required to present business opportunities to a corporation if:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the corporation could financially undertake the opportunity;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the opportunity is within the corporation&#146;s line of business; and</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">28
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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>it would not be fair to the corporation and its stockholders for the opportunity not
to be brought to the attention of the corporation.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accordingly, as a result of multiple business affiliations, our officers and directors may
have similar legal obligations relating to presenting business opportunities meeting the
above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our
board evaluates a particular business opportunity with respect to the above-listed criteria. We
cannot assure you that any of the above mentioned conflicts will be resolved in our favor.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to minimize potential conflicts of interest which may arise from multiple corporate
affiliations, each of our officers has agreed, until the earlier of a business combination, our
liquidation or such time as he ceases to be an officer, to present to us for our consideration,
prior to presentation to any other entity, any business opportunity which may reasonably be
required to be presented to us under Delaware law, subject to any pre-existing fiduciary
obligations he might have. However, our directors are not under any such obligation. Accordingly,
they may face conflicts of interest in determining to which entity a particular business
opportunity should be presented. We cannot assure you that these conflicts will be resolved in our
favor.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the vote required for any business combination, all of our existing
stockholders, including all of our officers and directors, have agreed to vote their respective
shares of common stock which were owned prior to this offering in accordance with the vote of the
public stockholders owning a majority of the shares of our common stock sold in this offering. In
addition, they have agreed to waive their respective rights to participate in any liquidation
distribution but only with respect to those shares of common stock acquired by them prior to this
offering.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To further minimize potential conflicts of interest, we have agreed not to consummate a
business combination with an entity which is affiliated with any of our existing stockholders
unless we obtain an opinion from an independent investment banking firm that the business
combination is fair to our stockholders from a financial point of view.


<P align="center" style="font-size: 10pt">29
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>PRINCIPAL STOCKHOLDERS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information regarding the beneficial ownership of our common
stock as of April&nbsp;30, 2005, and as adjusted to reflect the sale of our common stock included in the
units offered by this prospectus (assuming the persons listed below do not purchase units in this
offering), by:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>each person known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>each of our officers and directors; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>all our officers and directors as a group.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise indicated, we believe that all persons named in the table have sole voting
and investment power with respect to all shares of common stock beneficially owned by them.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amount and</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Nature of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Approximate Percentage of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Beneficial</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Outstanding Common Stock</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and Address of Beneficial Owner</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Ownership</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Before Offering</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>After Offering</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Roger W. Stone (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,062,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">27.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Matthew Kaplan (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,062,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">27.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">John M. Chapman (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,125,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jonathan R. Furer (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,125,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Muhit U. Rahman (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,125,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All directors and executive
officers as a group (5 individuals)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<HR size="1" width="18%" align="left" noshade color="#000000">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">The business address of each of such individuals is c/o Stone-Kaplan Investments, LLC,
One Northfield Plaza, Suite&nbsp;480, Northfield, IL 60093.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">The business address of such individual is c/o Arcade Partners LLC, 62 La Salle Road, Suite
220, West Hartford, CT 06107.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">(3)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">The business address of such individual is 45 Park St., Tenafly, NJ 07670.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">(4)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">The business address of such individual is 8550 Willow Run Court Cincinnati, OH 45243.</TD>
</TR>

</TABLE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and Rahman, representing all of our existing
stockholders, officers and directors, have indicated that they plan on purchasing at least 500,000
units in the offering. However, they are not obligated to do so and we do not have any agreements
or arrangements with these individuals requiring them to purchase such securities. Assuming these
securities are not purchased, immediately after this offering, these individuals, collectively,
will beneficially own 20% of the then issued and outstanding shares of our common stock. Because of
this ownership block, these stockholders may be able to effectively exercise control over all
matters requiring approval by our stockholders, including the election of directors and approval of
significant corporate transactions other than approval of a business combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of the shares of our common stock outstanding prior to the date of this prospectus will be
placed in escrow with Continental Stock Transfer &#038; Trust Company, as escrow agent, until the
earliest of:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>12&nbsp;months following the date of the consummation of a liquidation, merger, stock
exchange or other similar transaction which results in all of our stockholders having
the right to exchange their shares of common stock for cash, securities or other
property subsequent to our consummating a business combination with a target business;
and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our liquidation.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the escrow period, the holders of these shares will not be able to sell or transfer
their securities except to their spouses and children or trusts established for their benefit or to
affiliated companies, but will retain all other


<P align="center" style="font-size: 10pt">30
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">rights as our stockholders, including, without
limitation, the right to vote their shares of common stock and the right
to receive cash dividends, if declared. If dividends are declared and payable in shares of
common stock, such dividends will also be placed in escrow. If we are unable to effect a business
combination and liquidate, none of our existing stockholders will receive any portion of the
liquidation proceeds with respect to common stock owned by them prior to the date of this
prospectus.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and Rahman have agreed with Morgan Joseph &#038; Co. that
after this offering is completed and within the first 40 trading days after separate trading of the
warrants has commenced, they or certain of their affiliates or designees will collectively purchase
up to 4,000,000 warrants in the public marketplace at prices not to exceed $0.70 per warrant. They
have further agreed that any warrants purchased by them or their affiliates or designees will not
be sold or transferred until after we have completed a business combination. The warrants may trade
separately on the 90th day after the date of this prospectus unless Morgan Joseph &#038; Co. determines
that an earlier date is acceptable. In no event will Morgan Joseph &#038; Co. allow separate trading of
the common stock and warrants until we file a Current Report on Form 8-K which includes an audited
balance sheet reflecting our receipt of the proceeds of this offering including any proceeds we
receive from the exercise of the over-allotment option if such option is exercised prior to our
filing of the Form 8-K. Purchases of warrants demonstrate confidence in our ultimate ability to
effect a business combination because the warrants will expire worthless if we are unable to
consummate a business combination and are ultimately forced to liquidate.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and Rahman may be deemed to be our &#147;parents&#148; and
&#147;promoters,&#148; as these terms are defined under the Federal securities laws.


<P align="center" style="font-size: 10pt">31
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>CERTAIN TRANSACTIONS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;16, 2005, we issued 7,500,000 shares of our common stock to the individuals set forth
below for $25,000 in cash, at an average purchase price of $0.003 per share, as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Relationship to Us</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Roger W. Stone</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,062,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board and Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Matthew Kaplan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,062,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">John M. Chapman</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,125,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jonathan R. Furer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,125,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Muhit U. Rahman</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,125,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The holders of the majority of these shares will be entitled to make up to two demands that we
register these shares pursuant to an agreement to be signed prior to or on the date of this
prospectus. The holders of the majority of these shares may elect to exercise these registration
rights at any time after the date on which these shares of common stock are released from escrow.
In addition, these stockholders have certain &#147;piggy-back&#148; registration rights on registration
statements filed subsequent to the date on which these shares of common stock are released from
escrow. We will bear the expenses incurred in connection with the filing of any such registration
statements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stone-Kaplan Investments, LLC, an affiliate of Roger Stone and Matthew Kaplan, has agreed
that, commencing on the effective date of this prospectus through the acquisition of a target
business, it will make available to us certain administrative, technology and secretarial services,
as well as the use of certain limited office space in Chicago, Illinois, as we may require from
time to time. We have agreed to pay Stone-Kaplan Investments, LLC $7,500 per month for these
services, a portion of which will be paid to Arcade Partners LLC, an affiliate of John Chapman,
Jonathan Furer and Muhit Rahman. These individuals are each managing members of their respective
entities- and, as a result, will benefit from the transaction to the extent of their interest this
entity. However, this arrangement is solely for our benefit and is not intended to provide these
individuals compensation in lieu of a salary. We believe, based on rents and fees for similar
services in the Chicago metropolitan area, that the fee charged by Stone-Kaplan Investments, LLC is
at least as favorable as we could have obtained from an unaffiliated person. However, as our
directors may not be deemed &#147;independent,&#148; we did not have the benefit of disinterested directors
approving this transaction.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2005, Messrs.&nbsp;Stone, Kaplan, Chapman, Furer and Rahman advanced a total of $200,000
to us to cover expenses related to this offering. The loans will be payable without interest on the
earlier of one year from the date of issuance or the consummation of this offering. We intend to
repay these loans from the proceeds of this offering not being placed in trust.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will reimburse our officers and directors for any reasonable out-of-pocket business
expenses incurred by them in connection with certain activities on our behalf such as identifying
and investigating possible target businesses and business combinations. There is no limit on the
amount of accountable out-of-pocket expenses reimbursable by us, which will be reviewed only by our
board or a court of competent jurisdiction if such reimbursement is challenged.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than the $7,500 per-month administrative fee and reimbursable out-of-pocket expenses
payable to our officers and directors, no compensation or fees of any kind, including finder&#146;s and
consulting fees, will be paid to any of our existing stockholders, officers or directors who owned
our common stock prior to this offering, or to any of their respective affiliates for services
rendered to us prior to or with respect to the business combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All ongoing and future transactions between us and any of our officers and directors or their
respective affiliates, including loans by our officers and directors, will be on terms believed by
us to be no less favorable than are available from unaffiliated third parties and such transactions
or loans, including any forgiveness of loans, will require prior approval in each instance by a
majority of our uninterested &#147;independent&#148; directors (to the extent we have any) or the members of
our board who do not have an interest in the transaction, in either case, who had access, at our
expense, to our attorneys or independent legal counsel.


<P align="center" style="font-size: 10pt">32
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>DESCRIPTION OF SECURITIES</B>



<P align="left" style="font-size: 10pt"><B>General</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are authorized to issue 175,000,000 shares of common stock, par value $.0001 per share, and
1,000,000 shares of preferred stock, par value $.0001 per share. As of the date of this prospectus,
7,500,000 shares of common stock are outstanding, held by five record holders. No shares of
preferred stock are currently outstanding.


<P align="left" style="font-size: 10pt"><B>Units</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each unit consists of one share of common stock and two warrants. Each warrant entitles the
holder to purchase one share of common stock. The common stock and warrants will begin to trade
separately on the 90th day after the date of this prospectus unless Morgan Joseph &#038; Co. informs us
of its decision to allow earlier separate trading, provided that, in no event may the common stock
and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K
which includes an audited balance sheet reflecting our receipt of the gross proceeds of this
offering. We will file a Current Report on Form 8-K which includes this audited balance sheet upon
the consummation of this offering. The audited balance sheet will reflect proceeds we receive from
the exercise of the over-allotment option, if the over-allotment option is exercised prior to the
filing of the Form 8-K.


<P align="left" style="font-size: 10pt"><B>Common stock</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our stockholders are entitled to one vote for each share held of record on all matters to be
voted on by stockholders. In connection with the vote required for any business combination, all of
our existing stockholders, including all of our officers and directors, have agreed to vote their
respective shares of common stock owned by them immediately prior to this offering in accordance
with the majority of the shares of common stock voted by the public stockholders. This voting
arrangement shall not apply to shares included in units purchased in this offering or purchased
following this offering in the open market by any of our existing stockholders, officers and
directors. Additionally, our existing stockholders, officers and directors will vote all of their
shares in any manner they determine, in their sole discretion, with respect to any other items that
come before a vote of our stockholders.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will proceed with the business combination only if a majority of the shares of common stock
voted by the public stockholders are voted in favor of the business combination and public
stockholders owning less than 20% of the shares sold in this offering exercise their conversion
rights.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors is divided into three classes, each of which will generally serve for a
term of three years with only one class of directors being elected in each year. There is no
cumulative voting with respect to the election of directors, with the result that the holders of
more than 50% of the shares voted for the election of directors can elect all of the directors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are forced to liquidate prior to a business combination, our public stockholders are
entitled to share ratably in the trust account, inclusive of any interest, and any net assets
remaining available for distribution to them after payment of liabilities. Our existing
stockholders have agreed to waive their rights to share in any distribution with respect to common
stock owned by them prior to the offering if we are forced to liquidate prior to a business
combination.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our stockholders have no conversion, preemptive or other subscription rights and there are no
sinking fund or redemption provisions applicable to the common stock, except that public
stockholders have the right to have their shares of common stock converted to cash equal to their
pro rata share of the trust account if they vote against the business combination and the business
combination is approved and completed. Public stockholders who convert their stock into their share
of the trust account still have the right to exercise the warrants that they received as part of
the units.


<P align="left" style="font-size: 10pt"><B>Preferred stock</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our certificate of incorporation, as amended, authorizes the issuance of 1,000,000 shares of
blank check preferred stock with such designation, rights and preferences as may be determined from
time to time by our board of directors. Accordingly, our board of directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or
other rights which could adversely affect the voting power or other


<P align="center" style="font-size: 10pt">33
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">rights of the holders of common
stock, although the underwriting agreement prohibits us, prior to a business
combination, from issuing preferred stock which participates in any manner in the proceeds of
the trust account, or which votes as a class with the common stock on a business combination. We
may issue some or all of the preferred stock to effect a business combination. In addition, the
preferred stock could be utilized as a method of discouraging, delaying or preventing a change in
control of us. Although we do not currently intend to issue any shares of preferred stock, we
cannot assure you that we will not do so in the future. No shares of preferred stock are being
issued or registered in this offering.


<P align="left" style="font-size: 10pt"><B>Warrants</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No warrants are currently outstanding. Each warrant entitles the registered holder to purchase
one share of our common stock at a price of $5.00 per share, subject to adjustment as discussed
below, at any time commencing on the later of:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the completion of a business combination; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>one year from the date of this prospectus.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The warrants will expire four years from the date of this prospectus at 5:00 p.m., New York City time.
We may call the warrants for redemption:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>in whole and not in part;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>at a price of $.01 per warrant at any time after the warrants become exercisable;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>upon not less than 30&nbsp;days&#146; prior written notice of redemption to each warrant holder; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>if, and only if, the reported last sale price of the common stock equals or exceeds
$8.50 per share for any 20 trading days within a 30 trading day period ending on the
third business day prior to the notice of redemption to warrant holders.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The warrants will be issued in registered form under a warrant agreement between Continental
Stock Transfer &#038; Trust Company, as warrant agent, and us. You should review a copy of the warrant
agreement, which has been filed as an exhibit to the registration statement of which this
prospectus is a part, for a complete description of the terms and conditions applicable to the
warrants.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exercise price and number of shares of common stock issuable on exercise of the warrants
may be adjusted in certain circumstances including in the event of a stock dividend, or our
recapitalization, reorganization, merger or consolidation. However, the warrants will not be
adjusted for issuances of common stock at a price below their respective exercise prices.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The warrants may be exercised upon surrender of the warrant certificate on or prior to the
expiration date at the offices of the warrant agent, with the exercise form on the reverse side of
the warrant certificate completed and executed as indicated, accompanied by full payment of the
exercise price, by certified check payable to us, for the number of warrants being exercised. The
warrant holders do not have the rights or privileges of holders of common stock and any voting
rights until they exercise their warrants and receive shares of common stock. After the issuance of
shares of common stock upon exercise of the warrants, each holder will be entitled to one vote for
each share held of record on all matters to be voted on by stockholders.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No warrants will be exercisable unless at the time of exercise a prospectus relating to common
stock issuable upon exercise of the warrants is current and the common stock has been registered or
qualified or deemed to be exempt under the securities laws of the state of residence of the holder
of the warrants. Under the terms of the warrant agreement, we have agreed to meet these conditions
and use our best efforts to maintain a current prospectus relating to common stock issuable upon
exercise of the warrants until the expiration of the warrants. However, we cannot assure you that
we will be able to do so. The warrants may be deprived of any value and the market for the warrants
may be limited if the prospectus relating to the common stock issuable upon the exercise of the
warrants is not current or if the common stock is not qualified or exempt from qualification in the
jurisdictions in which the holders of the warrants reside.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the
warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon
exercise, round up or down to the nearest whole number the number of shares of common stock to be
issued to the warrant holder.


<P align="center" style="font-size: 10pt">34
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Purchase Option</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to sell to the representative of the underwriters an option to purchase up to a
total of 1,500,000 units at a per unit price of $7.50, which may be exercised on a cashless basis. The
units issuable upon exercise of this option are identical to those offered by this prospectus,
except that the exercise price of the warrants underlying the underwriters&#146; purchase option is
$6.25 (125% of the exercise price of the warrants included in the units sold in the offering). For
a more complete description of the purchase option, see the section below entitled
&#147;Underwriting&#151;Purchase Option.&#148;


<P align="left" style="font-size: 10pt"><B>Dividends</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not paid any dividends on our common stock to date and do not intend to pay dividends
prior to the completion of a business combination. The payment of dividends in the future will be
contingent upon our revenues and earnings, if any, capital requirements and general financial
condition subsequent to completion of a business combination. The payment of any dividends
subsequent to a business combination will be within the discretion of our then current board of
directors. It is the present intention of our board of directors to retain all earnings, if any,
for use in our business operations and, accordingly, our board does not anticipate declaring any
dividends in the foreseeable future.


<P align="left" style="font-size: 10pt"><B>Our Transfer Agent and Warrant Agent</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The transfer agent for our securities and warrant agent for our warrants is Continental Stock
Transfer &#038; Trust Company, 17 Battery Place, New York, New York 10004.


<P align="left" style="font-size: 10pt"><B>Shares Eligible for Future Sale</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Immediately after this offering, we will have 37,500,000 shares of common stock outstanding,
or 42,000,000 shares if the underwriters&#146; over-allotment option is exercised in full. Of these
shares, the 30,000,000 shares sold in this offering, or 34,500,000 shares if the over-allotment
option is exercised, will be freely tradable without restriction or further registration under the
Securities Act, except for any shares purchased by one of our affiliates within the meaning of Rule
144 under the Securities Act. All of the remaining 7,500,000 shares are restricted securities under
Rule&nbsp;144, in that they were issued in private transactions not involving a public offering. None of
those will be eligible for sale under Rule&nbsp;144 prior to April&nbsp;15, 2006. Notwithstanding this rule,
all of those shares have been placed in escrow and will not be transferable for a period 12&nbsp;months
from the date of a business combination and will only be released prior to that date subject to
certain limited exceptions.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rule&nbsp;144</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, under Rule&nbsp;144 as currently in effect, a person who has beneficially owned
restricted shares of our common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of either of the following:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>1% of the number of shares of common stock then outstanding, which will equal
375,000 shares immediately after this offering (or 420,000 if the underwriters exercise
their over-allotment option); and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the average weekly trading volume of the common stock during the four calendar weeks
preceding the filing of a notice on Form&nbsp;144 with respect to the sale.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales under Rule&nbsp;144 are also limited by manner of sale provisions and notice requirements and
to the availability of current public information about us.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rule&nbsp;144(k)</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Rule&nbsp;144(k), a person who is not deemed to have been one of our affiliates at the time
of or at any time during the three months preceding a sale, and who has beneficially owned the
restricted shares proposed to be sold for at least two years, including the holding period of any
prior owner other than an affiliate, is entitled to sell their shares without complying with the
manner of sale, public information, volume limitation or notice provisions of Rule&nbsp;144.


<P align="center" style="font-size: 10pt">35
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>SEC Position on Rule&nbsp;144 Sales</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Securities and Exchange Commission has taken the position that promoters or affiliates of
a blank check company and their transferees, both before and after a business combination, would
act as an &#147;underwriter&#148; under the Securities Act when reselling the securities of a blank check
company. Accordingly, Rule&nbsp;144 may not be available for the resale of those securities despite
technical compliance with the requirements of Rule&nbsp;144, in which event the resale transactions
would need to be made through a registered offering.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Registration Rights</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The holders of our 7,500,000 issued and outstanding shares of common stock on the date of this
prospectus will be entitled to registration rights pursuant to an agreement to be signed prior to
or on the effective date of this offering. The holders of the majority of these shares are entitled
to make up to two demands that we register these shares. The holders of the majority of these
shares can elect to exercise these registration rights at any time after the date on which these
shares of common stock are released from escrow. In addition, these stockholders have certain
&#147;piggy-back&#148; registration rights on registration statements filed subsequent to the date on which
these shares of common stock are released from escrow. We will bear the expenses incurred in
connection with the filing of any such registration statements.


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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>UNDERWRITING</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the terms and conditions contained in the underwriting agreement, we have
agreed to sell to each of the underwriters named below, and each of the underwriters, for which
Morgan Joseph &#038; Co. is acting as representative, have severally, and not jointly, agreed to
purchase on a firm commitment basis the number of units offered in this offering set forth opposite
their respective names below:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Underwriters</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Number of Units</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Morgan Joseph &#038; Co. Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EarlyBirdCapital, Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A copy of the underwriting agreement has been filed as an exhibit to the registration
statement of which this prospectus forms a part.


<P align="left" style="font-size: 10pt"><B>State Blue Sky Information</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will offer and sell the units to retail customers only in Colorado, Delaware, Florida,
Hawaii, Illinois, Indiana, Maryland, New York and Rhode Island. In New York and Hawaii, we have
relied on exemptions from the state registration requirements for transactions between an issuer
and an underwriter involving a firm commitment underwritten offering. In the other states, we have
applied to have the units registered for sale and will not sell the units in these states until
such registration is effective (including in Colorado, pursuant to 11-51-302(6) of the Colorado
Revised Statutes).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are not an institutional investor, you may purchase our securities in this offering
only in the jurisdictions described directly above. Institutional investors in every state except
Idaho and South Dakota may purchase the units in this offering pursuant to exemptions provided to
such entities under the Blue Sky laws of various states. The definition of an &#147;institutional
investor&#148; varies from state to state but generally includes financial institutions, broker-dealers,
banks, insurance companies and other qualified entities.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the National Securities Markets Improvement Act of 1996, the resale of the units, from
and after the effective date, and the common stock and warrants comprising the units, once they
become separately transferable, are exempt from state registration requirements because we will
file periodic and annual reports under the Securities Exchange Act of 1934. However, states are
permitted to require notice filings and collect fees with regard to these transactions and a state
may suspend the offer and sale of securities within such state if any such required filing is not
made or fee is not paid. The following states do not presently require any notice filings or fee
payments and permit the resale of the units, and the common stock and warrants comprising the
units, once they become separately transferable:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Hawaii, Indiana,
Louisiana, Maine, Missouri, Nevada, New York, North Carolina, Ohio, Pennsylvania, Utah,
Virginia, Washington, and Wisconsin.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally, the following states permit the resale of the units, and the common stock and
warrants comprising the units, once they become separately transferable, if the proper notice
filings have been made and fees paid:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Delaware, Kansas, Maryland, Michigan, New Hampshire, Rhode Island, South Carolina,
Texas and Vermont.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the date of this prospectus, we have not determined in which, if any, of these states we
will submit the required filings or pay the required fee. If any of these states that has not yet
adopted a statute relating to the National Securities Markets Improvement Act adopts such a statute
in the future requiring a filing or fee or if any state amends its existing statutes with respect
to its requirements, we would need to comply with those new requirements in order for the
securities to continue to be eligible for resale in those jurisdictions.


<P align="center" style="font-size: 10pt">37
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Despite the exemption from state registration provided by the National Securities Markets
Improvement Act described above, the following states, regardless of whether they require a filing
to be made or fee to be paid, have
advised us that they do not recognize this act as a basis for exempting the registration of
resales in their states of securities issued in blank check offerings:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>Alaska, Arkansas, California, Illinois, Iowa, Kentucky, Massachusetts, Minnesota,
Mississippi, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon,
Puerto Rico, Tennessee, West Virginia and Wyoming.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not intend to register the resale of the securities sold in this offering in these states.
However, we believe that the units, from and after the effective date, and the common stock and
warrants comprising the units, once they become separately transferable, will be eligible for sale
on a secondary market basis in each of the following states, without any notice filings or fee
payments, based upon the availability of another applicable exemption from the state&#146;s registration
requirements:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>immediately in Delaware, Illinois, Kentucky, Maryland and Rhode Island;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>commencing 90&nbsp;days after the date of this prospectus in Iowa and New Mexico; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>commencing 180&nbsp;days from the date of this prospectus in Massachusetts.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Idaho and South Dakota have informed us that they do not permit the resale in their states of
securities issued in blank check offerings, without exception. We will amend this prospectus for
the purpose of disclosing additional states, if any, which advise us that our securities will be
eligible for secondary trading without registration.


<P align="left" style="font-size: 10pt"><B>Pricing of Securities</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been advised by the representative that the underwriters propose to offer the units to
the public at the initial offering price set forth on the cover page of this prospectus. They may
allow some dealers concessions not in excess of
$<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>&nbsp;per unit and the dealers may reallow a
concession not in excess of
$<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>&nbsp;per unit to other dealers.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to this offering there has been no public market for any of our securities. The public
offering price of the units and the terms of the warrants were negotiated between us and the
representative. Factors considered in determining the prices and terms of the units, including the
common stock and warrants underlying the units, include:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>the history and prospects of companies whose principal business is the acquisition
of other companies;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>prior offerings of those companies;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our prospects for acquiring an operating business at attractive values;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>our capital structure;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>an assessment of our management and their experience in identifying operating companies;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>general conditions of the securities markets at the time of the offering; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD>other factors as were deemed relevant.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, although these factors were considered, the determination of our offering price is more
arbitrary than the pricing of securities for an operating company in a particular industry since
the underwriters are unable to compare our financial results and prospects with those of public
companies operating in the same industry.



<P align="left" style="font-size: 10pt"><B>Over-Allotment Option</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have also granted to the underwriters an option, exercisable during the 45-day period
commencing on the date of this prospectus, to purchase from us at the offering price, less
underwriting discounts, up to an aggregate of 4,500,000 additional units for the sole purpose of
covering over-allotments, if any. The over-allotment option will only be used to cover the net
syndicate short position resulting from the initial distribution. The underwriters may exercise
that option if the underwriters sell more units than the total number set forth in the table above.
If any units underlying the option are purchased, the underwriters will severally purchase shares
in approximately the same proportion as set forth in the table above.


<P align="center" style="font-size: 10pt">38
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Commissions and Discounts</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the public offering price, underwriting discount to be paid by us to
the underwriters and the proceeds, before expenses, to us. This information assumes either no
exercise or full exercise by the underwriters of their over-allotment option.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Per unit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Without option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>With option</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Public offering price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">180,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">207,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Discount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,490,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds before expenses (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">167,400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">192,510,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<HR size="1" width="18%" align="left" noshade color="#000000">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">The offering expenses are estimated at $621,000.</TD>
</TR>

</TABLE>



<P align="left" style="font-size: 10pt"><B>Purchase Option</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to sell to the representative of the underwriters, for $100, an option to
purchase up to a total of 1,500,000 units. The units issuable upon exercise of this option are
identical to those offered by this prospectus except that the warrants underlying this option are
exercisable at $6.25 per share (125% of the exercise price of the warrants included in the units
sold in the offering). This option is exercisable at $7.50 per unit commencing on the later of the
consummation of a business combination or one year from the date of this prospectus and expiring
five years from the date of this prospectus and may be exercised on a cashless basis. The option
may not be sold, transferred, assigned, pledged or hypothecated for a one-year period following the
date of this prospectus. However, the option may be transferred to any underwriter and selected
dealer participating in the offering and their bona fide officers or partners. Although the
purchase option and its underlying securities have been registered under the registration statement
of which this prospectus forms a part, the option grants to holders
demand and &#147;piggy-back&#148;
rights for periods of five and seven years, respectively, from the date of this prospectus with
respect to the registration under the Securities Act of the securities directly and indirectly
issuable upon exercise of the option. The exercise price and number of units issuable upon exercise
of the option may be adjusted in certain circumstances including in the event of a stock dividend,
or our recapitalization, reorganization, merger or consolidation. However, the option will not be
adjusted for issuances of common stock at a price below its exercise price.


<P align="left" style="font-size: 10pt"><B>Regulatory Restrictions on Purchase of Securities</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rules of the SEC may limit the ability of the underwriters to bid for or purchase our
securities before the distribution of the securities is completed. However, the underwriters may
engage in the following activities in accordance with the rules:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD><I>Stabilizing Transactions</I>. The underwriters may make bids or purchases for the
purpose of pegging, fixing or maintaining the price of our securities, so long as
stabilizing bids do not exceed a specified maximum.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD><I>Over-Allotments and Syndicate Coverage Transactions</I>. The underwriters may create a
short position in our securities by selling more of our securities than are set forth
on the cover page of this prospectus. If the underwriters create a short position
during the offering, the representative may engage in syndicate covering transactions
by purchasing our securities in the open market. The representative may also elect to
reduce any short position by exercising all or part of the over-allotment option.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&#149;&nbsp;&nbsp;</TD>
    <TD><I>Penalty Bids</I>. The representative may reclaim a selling concession from a syndicate
member when the common stock originally sold by the syndicate member is purchased in a
stabilizing or syndicate covering transaction to cover syndicate short positions.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stabilization and syndicate covering transactions may cause the price of the securities to be
higher than they would be in the absence of these transactions. The imposition of a penalty bid
might also have an effect on the prices of the securities if it discourages resales of the
securities.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither we nor the underwriters makes any representation or prediction as to the effect that
the transactions described above may have on the prices of the securities. These transactions may
occur on the OTC Bulletin Board, in the over-the-counter market or on any trading market. If any of
these transactions are commenced, they may be discontinued without notice at any time.


<P align="center" style="font-size: 10pt">39
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Other Terms</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have granted Morgan Joseph, as representative of the underwriters, the right to have its
designee present at all meetings of our board of directors until we consummate a business
combination. The designee will be entitled to the same notices and communications sent by us to our
directors and to attend directors&#146; meetings, but will not have voting rights. The representative
has not named a designee as of the date of this prospectus.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we are not under any contractual obligation to engage any of the underwriters to
provide services for us after this offering, any of the underwriters may, among other things,
introduce us to potential target businesses or assist us in raising additional capital, as needs
may arise in the future. If any of the underwriters provides services to us after the offering we
may pay such underwriter fair and reasonable fees that would be determined in an arms length
negotiation.


<P align="left" style="font-size: 10pt"><B>Indemnification</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to indemnify the underwriters against some liabilities, including civil
liabilities under the Securities Act, or to contribute to payments the underwriters may be required
to make in this respect.


<P align="center" style="font-size: 10pt"><B>LEGAL MATTERS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The validity of the securities offered in this prospectus are being passed upon for us by Loeb
&#038; Loeb LLP, New York, New York. Greenberg Traurig LLP, New York, New York, is acting as counsel for
the underwriters in this offering.


<P align="center" style="font-size: 10pt"><B>EXPERTS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements of Stone Arcade Acquisition Corporation at April&nbsp;26, 2005 and for the
period from April&nbsp;15, 2005 (date of inception) through April&nbsp;26, 2005 appearing in this prospectus
and in the registration statement have been included herein in reliance upon the report, which
contains an explanatory paragraph relating to substantial doubt existing about the ability of Stone
Arcade Acquisition Corporation to continue as a going concern, of Eisner LLP, independent
registered public accounting firm given on the authority of such firm as experts in accounting and
auditing.


<P align="center" style="font-size: 10pt"><B>WHERE YOU CAN FIND ADDITIONAL INFORMATION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have filed with the SEC a registration statement on Form S-1, which includes exhibits,
schedules and amendments, under the Securities Act, with respect to this offering of our
securities. Although this prospectus, which forms a part of the registration statement, contains
all material information included in the registration statement, parts of the registration
statement have been omitted as permitted by rules and regulations of the SEC. We refer you to the
registration statement and its exhibits for further information about us, our securities and this
offering. The registration statement and its exhibits, as well as our other reports filed with the
SEC, can be inspected and copied at the SEC&#146;s public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549-1004. The public may obtain information about the operation of the public
reference room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site at
http://www.sec.gov which contains the Form S-1 and other reports, proxy and information statements
and information regarding issuers that file electronically with the SEC.



<P align="center" style="font-size: 10pt">40
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>STONE ARCADE ACQUISITION CORPORATION<BR>
(a development stage company)</B>



<P align="center" style="font-size: 10pt"><B>Index to Financial Statements</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Financial Statements</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Report of independent registered public accounting firm</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance sheet as of April&nbsp;26, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Statement of operations for the period from April&nbsp;15, 2005 (date of inception) through April&nbsp;26, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Statement of stockholders&#146; equity for the period from April&nbsp;15, 2005 (date of inception) through April&nbsp;26, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Statement of cash flows for the period from April&nbsp;15, 2005 (date of inception) through April&nbsp;26, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes to financial statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-7 &#150; F-9</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-1
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>



<P align="left" style="font-size: 10pt">Board of Directors and Stockholders

<P align="left" style="font-size: 10pt">We have audited the accompanying balance sheet of Stone Arcade Acquisition Corporation (a
development stage company) (the &#147;Company&#148;) as of April&nbsp;26, 2005 and the related statements of
operations, stockholders&#146; equity and cash flows for the period from April&nbsp;15, 2005 (date of
inception) through April&nbsp;26, 2005. These financial statements are the responsibility of the
Company&#146;s management. Our responsibility is to express an opinion on these financial statements
based on our audit.


<P align="left" style="font-size: 10pt">We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.


<P align="left" style="font-size: 10pt">In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Stone Arcade Acquisition Corporation as of April&nbsp;26, 2005 and
the results of its operations and its cash flows for the period from April&nbsp;15, 2005 (date of
inception) through April&nbsp;26, 2005 in conformity with U.S. generally accepted accounting principles.


<P align="left" style="font-size: 10pt">The accompanying financial statements have been prepared assuming the Company will continue as a
going concern. As discussed in Note A to the financial statements, the Company has generated no
revenue, its business plan is dependent on completion of a financing and the Company has a negative
working capital position of $11,000 as of April&nbsp;26, 2005. These conditions raise substantial doubt
about the Company&#146;s ability to continue as a going concern. Management&#146;s plans regarding these
matters are also described in Note A. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.



<P align="left" style="font-size: 10pt">Eisner LLP


<P align="left" style="font-size: 10pt">New York, New York<BR>
April&nbsp;27, 2005


<P align="center" style="font-size: 10pt">F-2
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>Stone Arcade Acquisition Corporation</B><BR>
(a development stage company)



<P align="center" style="font-size: 10pt"><B>Balance Sheet</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>April 26,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="center"><DIV style="margin-left:75px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">190,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred offering costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">225,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:45px; text-indent:-15px"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Notes payable to stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">201,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and Contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="LEFT"><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock&#151;$.0001 par value, 175,000,000 shares authorized; 7,500,000 issued and
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred stock &#151; $.0001 par value; 1,000,000 shares authorized; 0 issued and outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deficit accumulated during the development stage</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities and stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">225,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">See notes to financial statements


<P align="center" style="font-size: 10pt">F-3
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>Stone Arcade Acquisition Corporation</B><BR>
(a development stage company)



<P align="center" style="font-size: 10pt"><B>Statement of Operations</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>April 15, 2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Date of Inception)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>April 26, 2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Costs and expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Organization costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss for the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss per share &#150;basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.00</TD>
    <TD nowrap>)</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number of shares outstanding &#151; basic and diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">See notes to financial statements


<P align="center" style="font-size: 10pt">F-4
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>Stone Arcade Acquisition Corporation</B><BR>
(a development stage company)



<P align="center" style="font-size: 10pt"><B>Statement of Stockholders&#146; Equity</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deficit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD  nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>


    <TD nowrap align="center" colspan="2"><B>Accumulated<BR>During the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Paid-In</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Development</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Stage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance &#151; April&nbsp;15,
2005 (date of
inception)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Initial capital
from founding
stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance
&#151; April &nbsp;26,
2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,500,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>750</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>24,250</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>$</B></TD>
    <TD align="right"><B>(1,000</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>24,000</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">See notes to financial statements


<P align="center" style="font-size: 10pt">F-5
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>Stone Arcade Acquisition Corporation</B><BR>
(a development stage company)



<P align="center" style="font-size: 10pt"><B>Statement of Cash Flows</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>April 15, 2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Date of Inception)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>April 26, 2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from operating activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net loss to net cash provided by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Changes in:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">
Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from financing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from notes payable to stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payments of deferred offering costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net Increase in cash</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash &#151; beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash &#151; end of period</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>190,000</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">See notes to financial statements


<P align="center" style="font-size: 10pt">F-6
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>Stone Arcade Acquisition Corporation</B><BR>
(a development stage company)



<P align="center" style="font-size: 10pt"><B>Notes to Financial Statements<BR>
April&nbsp;26, 2005</B>



<P align="left" style="font-size: 10pt"><B>NOTE A &#151; ORGANIZATION AND BUSINESS OPERATIONS; GOING CONCERN CONSIDERATION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stone Arcade Acquisition Corporation (the &#147;Company&#148;) was incorporated in Delaware on April&nbsp;15,
2005. The Company was formed to serve as a vehicle for the acquisition through a merger, capital
stock exchange, asset acquisition, or other similar business combination (&#147;Business Combination&#148;)
of an operating business in the paper, packaging, forest products and related
industries, although the Company is not limited to any particular industry. The Company has neither
engaged in any operations nor generated revenue. The Company is considered to be in the
development stage and is subject to the risks associated with activities of development stage
companies. As such, the Company&#146;s operating results relate to organizational activities through
April&nbsp;26, 2005, and its ability to begin planned operations is dependent upon the completion of a
financing.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s management has broad discretion with respect to the specific application of the
net proceeds of the proposed initial public offering of its Units (as described in Note C)
(&#147;Proposed Offering&#148;), although substantially all of the net proceeds of the Proposed Offering are
intended to be generally applied toward a Business Combination. Furthermore, there is no
assurance that the Company will be able to successfully effect a Business Combination. Upon the
closing of the Proposed Offering, at least ninety percent (90%) of the net proceeds, after payment
of certain amounts to the underwriter, will be held in a trust account (&#147;Trust Fund&#148;) and invested
in government securities until the earlier of (i)&nbsp;the consummation of its first Business
Combination or (ii)&nbsp;the distribution of the Trust Fund as described below. The remaining proceeds
may be used to pay for business, legal and accounting due diligence on prospective acquisitions and
continuing general and administrative expenses. The Company, after signing a definitive agreement
for the acquisition of a Business Combination, will submit such transaction for stockholder
approval. In the event that holders of 20% or more of the shares issued in the Proposed Offering
vote against the Business Combination, the Business Combination will not be consummated. However,
the persons who were stockholders prior to the Proposed Offering (the &#147;Founding Stockholders&#148;) will
participate in any liquidation distribution only with respect to any shares of the common stock
acquired in connection with or following the Proposed Offering.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that the Company does not consummate a Business Combination within 18&nbsp;months from
the date of the consummation of the Proposed Offering, or 24&nbsp;months from the consummation of the
Proposed Offering if certain extension criteria have been satisfied (the &#147;Acquisition Period&#148;), the
proceeds held in the Trust Fund will be distributed to the Company&#146;s public stockholders, excluding
the Founding Stockholders to the extent of their initial stock holdings. In the event of such
distribution, it is likely that the per share value of the residual assets remaining available for
distribution (including Trust Fund assets) will be less than the initial public offering price per
share in the Proposed Offering (assuming no value is attributed to the Warrants contained in the
Units to be offered in the Proposed Offering discussed in Note C).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Going concern consideration &#151; As indicated in the accompanying financial statements, at April
26, 2005, the Company had $190,000 in cash and a working capital deficiency of $11,000. Further,
the Company has incurred and expects to continue to incur significant costs in pursuit of its
financing and acquisition plans. Management&#146;s plans to address this uncertainty through a Proposed
Offering are discussed in Note C. There is no assurance that the Company&#146;s plans to raise capital
or to consummate a Business Combination will be successful or successful within the target business
acquisition period. These factors, among others, raise substantial doubt about the Company&#146;s
ability to continue operations as a going concern.


<P align="center" style="font-size: 10pt">F-7
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>Stone Arcade Acquisition Corporation</B><BR>
(a development stage company)



<P align="center" style="font-size: 10pt"><B>Notes to Financial Statements &#151; (Continued)</B>



<P align="left" style="font-size: 10pt"><B>NOTE B &#151;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B>



<P align="left" style="font-size: 10pt"><B>&#091;1&#093;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Loss per common share:</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss per share is computed by dividing net loss applicable to common stockholders by the
weighted average number of common shares outstanding for the period.



<P align="left" style="font-size: 10pt"><B>&#091;2&#093;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Use of estimates:</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those estimates.



<P align="left" style="font-size: 10pt"><B>&#091;3&#093;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Income taxes:</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes are provided for the differences between the bases of assets and
liabilities for financial reporting and income tax purposes. A valuation allowance is established
when necessary to reduce deferred tax assets to the amount expected to be realized.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company recorded a deferred income tax asset for the tax effect of start-up costs and
temporary differences, aggregating approximately $340. In recognition of the uncertainty regarding
the ultimate amount of income tax benefits to be derived, the Company has recorded a full valuation
allowance at April&nbsp;26, 2005.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effective tax rate differs from the statutory rate of 34% due to the increase in the valuation allowance.



<P align="left" style="font-size: 10pt"><B>&#091;4&#093;</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Deferred offering costs:</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred offering costs consist principally of legal and other fees incurred through the
balance sheet date that are related to the Proposed Offering and that will be charged to capital
upon the receipt of the capital or charged to expense if not completed.



<P align="left" style="font-size: 10pt"><B>NOTE C &#151; PROPOSED OFFERING</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Proposed Offering calls for the Company to offer for public sale up to 30,000,000 units
(&#147;Units&#148;). Each Unit consists of one share of the Company&#146;s common stock, $.0001 par value, and two
warrants (&#147;Warrants&#148;). Each Warrant entitles the holder to purchase from the Company one share
of common stock at an exercise price of $5.00. Each Warrant will
become exercisable on the later of (a) the completion of a Business
Combination with a target business or (b) one year from the date of
the prospectus and will expire four years
from the date of the prospectus. The Warrants will be redeemable at a price of $.01 per Warrant
upon 30&nbsp;days notice after the Warrants become exercisable, only in the event that the last sale
price of the common stock is at least $8.50 per share for any 20 trading days within a 30 trading
day period ending on the third day prior to the date on which notice of redemption is given.



<P align="left" style="font-size: 10pt"><B>NOTE D &#151; NOTES PAYABLE TO STOCKHOLDERS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company issued unsecured promissory notes to the Founding Stockholders of the Company
totaling $200,000 on April&nbsp;16 and April&nbsp;25, 2005. The Notes are non-interest bearing and are
payable on the earlier of one year from the date of issuance or the consummation of the Proposed
Offering. Due to the related party nature of the notes, the estimated fair value of the notes is
not reasonably determinable.



<P align="center" style="font-size: 10pt">F-8
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt"><B>NOTE E &#151;RELATED PARTY TRANSACTION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has agreed to pay Stone Kaplan Investments, LLC, a company where certain of the
Founding Stockholders serve in executive capacities, an administrative fee of $7,500 per month for
office space and general and administrative services from the effective date of the Proposed
Offering through the acquisition date of a target business. Stone Kaplan Investments, LLC has
agreed to pay a portion of the aforementioned administrative fee to Arcade Partners LLC, a company
where certain of the Founding Stockholders serve in executive capacities, to cover overhead
incurred on the Company&#146;s behalf.



<P align="left" style="font-size: 10pt"><B>NOTE F&#151;COMMITMENTS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has a commitment to pay an underwriting discount of 7.0% of the public offering
price to Morgan Joseph &#038; Co. Inc., representative of the underwriters, at the closing of the
Proposed Offering.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will also issue an option to the representative of the underwriters to purchase up
to a total of 1,500,000 units at a price of $7.50. The units issuable upon the exercise of this
option are identical to those offered in the prospectus, except that the exercise price of the
warrants underlying the underwriters&#146; purchase option is $6.25.



<P align="left" style="font-size: 10pt"><B>NOTE G&#151;FOUNDING
STOCKHOLDERS (UNAUDITED)</B>





<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Founding Stockholders will have agreed with Morgan Joseph &#038; Co. Inc., the representative of the
underwriters, that after the Proposed Offering is completed and within the first forty trading days
after the separate trading of the warrants has commenced, they or certain of their affiliates or
designees will collectively purchase up to 4,000,000 warrants in the public marketplace at prices
not to exceed $0.70 per warrant. They will have further agreed that any warrants purchased by them or
their affiliates or designees will not be sold or transferred until the completion of a Business
Combination.



<P align="center" style="font-size: 10pt">F-9
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until &#95;&#95;&#95;, 2005, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a prospectus. This is in
addition to the dealers&#146; obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No dealer, salesperson or any other person is authorized to give any information or make any
representations in connection with this offering other than those contained in this prospectus and,
if given or made, the information or representations must not be relied upon as having been
authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any security other than the securities offered by this prospectus, or an offer to sell
or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the
offer or solicitation is not authorized or is unlawful.



<P align="center" style="font-size: 10pt"><B>TABLE OF CONTENTS</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prospectus Summary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;2</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Summary Financial Data</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;5</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk Factors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;6</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Use of Proceeds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>14</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dilution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>16</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capitalization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>17</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>18</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proposed Business</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>19</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>27</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Principal Stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>30</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Certain Transactions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>32</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Description of Securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>33</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Underwriting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>37</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Legal Matters</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>40</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Experts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>40</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Where You Can Find Additional Information</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>40</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Index to Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>F-1</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>STONE ARCADE ACQUISITION CORPORATION</B>



<P align="center" style="font-size: 10pt">30,000,000 Units



<P align="center" style="font-size: 10pt"><BR><BR><BR>
<BR><BR>
<BR><BR>
<BR><BR>
<BR><BR>
<BR><BR>
<BR><BR>
<BR>



<P align="center" style="font-size: 10pt">PROSPECTUS



<P align="center" style="font-size: 10pt"><BR><BR>
<BR><BR>
<BR><BR>
<BR>



<P align="center" style="font-size: 10pt"><B>MORGAN JOSEPH</B>



<P align="center" style="font-size: 10pt"><B>EARLYBIRDCAPITAL, INC.</B>



<P align="center" style="font-size: 10pt"><B>______________________ , 2005</B>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>PART II</B>



<P align="center" style="font-size: 10pt"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B>



<P align="left" style="font-size: 10pt"><B>Item&nbsp;13. Other Expenses of Issuance and Distribution.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The estimated expenses payable by us in connection with the offering described in this
registration statement (other than the underwriting discount and commissions) will be as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Initial Trustees&#146; fee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">1,000.00</TD>
    <TD nowrap>(1)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">SEC Registration Fee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,501.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NASD filing fee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,700.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounting fees and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Printing and engraving expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Director &#038; Officer liability insurance premiums</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">200,000.00</TD>
    <TD nowrap>(2)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Legal fees and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Blue sky services and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Miscellaneous</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">42,798.60</TD>
    <TD nowrap>(3)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">821,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<HR size="1" width="18%" align="left" noshade color="#000000">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">In addition to the initial acceptance fee that is charged by Continental Stock Transfer &#038;
Trust Company, as trustee, the registrant will be required to pay to Continental Stock
Transfer &#038; Trust Company annual fees of $3,000 for acting as trustee, $4,800 for acting as
transfer agent of the registrant&#146;s common stock, $2,400 for acting as warrant agent for the
registrant&#146;s warrants and $1,800 for acting as escrow agent.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">This amount represents the approximate amount of director and officer liability insurance
premiums the registrant anticipates paying following the consummation of its initial public
offering and until it consummates a business combination.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="left">(3)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">This amount represents additional expenses that may be incurred by the Company in connection
with the offering over and above those specifically listed above, including distribution and
mailing costs.</TD>
</TR>

</TABLE>



<P align="left" style="font-size: 10pt"><B>Item&nbsp;14. Indemnification of Directors and Officers.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our certificate of incorporation provides that all directors, officers, employees and agents
of the registrant shall be entitled to be indemnified by us to the fullest extent permitted by
Section&nbsp;145 of the Delaware General Corporation Law.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;145 of the Delaware General Corporation Law concerning indemnification of officers,
directors, employees and agents is set forth below.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Section&nbsp;145. Indemnification of officers, directors, employees and agents; insurance.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporation shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action by or in the right
of the corporation) by reason of the fact that the person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys&#146; fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with such action, suit or
proceeding if the person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the person&#146;s conduct was


<P align="center" style="font-size: 10pt">II-1
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea
of nolo contendere or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person&#146;s conduct was unlawful.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporation shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the fact that the person
is or was a director, officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses (including attorneys&#146; fees)
actually and reasonably incurred by the person in connection with the defense or settlement of such
action or suit if the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery
or the court in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that a present or former director or officer of a corporation has been
successful on the merits or otherwise in defense of any action, suit or proceeding referred to in
subsections (a)&nbsp;and (b)&nbsp;of this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys&#146; fees) actually and reasonably
incurred by such person in connection therewith.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any indemnification under subsections (a)&nbsp;and (b)&nbsp;of this section (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the present or former director, officer, employee or agent is
proper in the circumstances because the person has met the applicable standard of conduct set forth
in subsections (a)&nbsp;and (b)&nbsp;of this section. Such determination shall be made, with respect to a
person who is a director or officer at the time of such determination, (1)&nbsp;by a majority vote of
the directors who are not parties to such action, suit or proceeding, even though less than a
quorum, or (2)&nbsp;by a committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3)&nbsp;if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (4)&nbsp;by the stockholders.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses (including attorneys&#146; fees) incurred by an officer or director in defending any
civil, criminal, administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys&#146; fees) incurred by former directors
and officers or other employees and agents may be so paid upon such terms and conditions, if any,
as the corporation deems appropriate.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indemnification and advancement of expenses provided by, or granted pursuant to, the
other subsections of this section shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in such person&#146;s
official capacity and as to action in another capacity while holding such office.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporation shall have power to purchase and maintain insurance on behalf of any person
who is or was director, officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such person&#146;s status as
such, whether or not the corporation would have the power to indemnify such person against such
liability under this section.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this section, references to &#147;the corporation&#148; shall include, in addition
to the resulting corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers, and employees or agents,
so that any person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation


<P align="center" style="font-size: 10pt">II-2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise,
shall stand in the same position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent corporation if its separate
existence had continued.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this section, references to &#147;other enterprises&#148; shall include employee
benefit plans; references to &#147;fines&#148; shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to &#147;serving at the request of the corporation&#148;
shall include any service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner such person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a manner &#147;not opposed to
the best interests of the corporation&#148; as referred to in this section.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indemnification and advancement of expenses provided by, or granted pursuant to, this
section shall, unless otherwise provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine
all actions for advancement of expenses or indemnification brought under this section or under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation&#146;s obligation to advance expenses (including
attorneys&#146; fees).&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to our directors, officers, and controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment of expenses
incurred or paid by a director, officer or controlling person in a successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paragraph&nbsp;B of Article&nbsp;Eighth of our certificate of incorporation provides:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;The Corporation, to the full extent permitted by Section&nbsp;145 of the GCL, as amended from time
to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses (including
attorneys&#146; fees) incurred by an officer or director in defending any civil, criminal,
administrative, or investigative action, suit or proceeding for which such officer or director may
be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized hereby.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Underwriting Agreement filed as Exhibit&nbsp;1.1 to this Registration Statement, we
have agreed to indemnify the Underwriter and the Underwriter has agreed to indemnify us against
certain civil liabilities that may be incurred in connection with this offering, including certain
liabilities under the Securities Act.


<P align="center" style="font-size: 10pt">II-3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>Item&nbsp;15. Recent Sales of Unregistered Securities.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the past three years, we sold the following shares of common stock without
registration under the Securities Act:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Roger W. Stone</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,062,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Matthew Kaplan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,062,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">John M. Chapman</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,125,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jonathan R. Furer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,125,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Muhit U. Rahman</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,125,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Such shares were issued on April&nbsp;16, 2005 in connection with our organization pursuant to
the exemption from registration contained in Section&nbsp;4(2) of the Securities Act as they were sold
to sophisticated, wealthy individuals. The shares issued to the individuals and entities above were
sold for an aggregate offering price of $25,000 at an average purchase price of $0.003 per share.
No underwriting discounts or commissions were paid with respect to such sales.


<P align="left" style="font-size: 10pt"><B>Item&nbsp;16. Exhibits and Financial Statement Schedules.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The following exhibits are filed as part of this Registration Statement:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Underwriting Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Selected Dealers Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3.1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Incorporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3.2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By-laws.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4.1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen Unit Certificate.*</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4.2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen Common Stock Certificate.*</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4.3</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen Warrant Certificate.*</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4.4</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Unit Purchase Option to be granted to Representative.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4.5</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Warrant Agreement between Continental Stock Transfer &#038; Trust Company and the Registrant.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">5.1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Opinion of Loeb &#038; Loeb LLP.*</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">10.1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Letter Agreement among the Registrant, Morgan Joseph &#038; Co. Inc. and each of the Initial Stockholders.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">10.2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Promissory Note issued to each of Roger Stone, Matthew Kaplan, John Chapman, Jonathan Furer and Muhit Rahman.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">10.3</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Investment Management Trust Agreement between Continental Stock Transfer &#038; Trust Company and the Registrant.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">II-4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="top">
    <TD><DIV style="margin-left:15px; text-indent:-15px">10.4</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Stock Escrow Agreement between the Registrant, Continental Stock Transfer &#038; Trust Company and the Initial Stockholders.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">10.5</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Letter Agreement between Stone-Kaplan Investments LLC and Registrant regarding administrative support.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">10.6</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Registration Rights Agreement among the Registrant and the Initial Stockholders.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">10.7</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Warrant Purchase Agreements among each of the Initial Stockholders and Morgan Joseph &#038; Co. Inc.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">23.1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Eisner LLP.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">23.2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Loeb &#038; Loeb LLP (included in Exhibit 5.1). *</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">24</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Power of Attorney (included on signature page of this Registration Statement).</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<HR size="1" width="18%" align="left" noshade color="#000000">

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="1%" nowrap align="left">*</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">To be filed by amendment.</TD>
</TR>

</TABLE>



<P align="left" style="font-size: 10pt"><B>Item&nbsp;17. Undertakings.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned registrant hereby undertakes:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To include any prospectus required by Section&nbsp;10(a)(3) of the Securities Act of 1933;



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20&nbsp;percent change in the maximum aggregate
offering price set forth in the &#147;Calculation of Registration Fee&#148; table in the effective
registration statement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such information in
the registration statement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;That, for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby undertakes to provide to the underwriter at the closing specified
in the underwriting agreements, certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each purchaser.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred or paid by a


<P align="center" style="font-size: 10pt">II-5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned registrant hereby undertakes that:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of this registration statement in
reliance upon Rule&nbsp;430A and contained in a form of prospectus filed by the registrant pursuant to
Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the purpose of determining any liability under the Securities Act of 1933, each
post-effective amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.



<P align="center" style="font-size: 10pt">II-6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>SIGNATURES</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused
this registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 2nd day of May, 2005.


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>STONE ARCADE ACQUISITION CORPORATION</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Roger W. Stone
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Roger W. Stone&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chairman of the Board and Chief Executive
Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt"><B>POWER OF ATTORNEY</B>




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Roger Stone and John Chapman his true and lawful attorney-in-fact, with full power of
substitution and resubstitution for him and in his name, place and stead, in any and all capacities
to sign any and all amendments including post-effective amendments to this registration statement,
and to file the same, with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact or his substitute, each acting alone, may lawfully do or cause to be done by
virtue thereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates indicated.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD align="center" nowrap valign="top">/s/ Roger W. Stone
<HR size="1" noshade color="#000000">
Roger W. Stone</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
Chairman of the Board and Chief
Executive Officer (Principal
Executive Officer and Principal
Accounting and Financial Officer)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May 2, 2005</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em"><!-- Blank Space -->
    <TD align="right">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD align="center" nowrap valign="top">/s/ Matthew Kaplan
<HR size="1" noshade color="#000000">
Matthew Kaplan</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
President, Secretary and Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May 2, 2005</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em"><!-- Blank Space -->
    <TD align="right">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD align="center" nowrap valign="top">/s/ John M. Chapman
<HR size="1" noshade color="#000000">
John M. Chapman</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May 2, 2005</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em"><!-- Blank Space -->
    <TD align="right">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD align="center" nowrap valign="top">/s/ Jonathan R. Furer
<HR size="1" noshade color="#000000">
Jonathan R. Furer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May 2, 2005</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em"><!-- Blank Space -->
    <TD align="right">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD align="center" nowrap valign="top">/s/ Muhit U. Rahman
<HR size="1" noshade color="#000000">
Muhit U. Rahman</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May 2, 2005</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">II-7
</DIV>


</BODY>
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{"company-data": {"conformed-name": "Stone Arcade Acquisition CORP", "cik": "0001325281", "irs-number": "202699372", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-124601", "film-number": "05796065"}, "business-address": {"street1": "C/O STONE-KAPLAN INVESTMENTS, LLC,", "street2": "ONE NORTHFIELD PLAZA, SUITE 480", "city": "NORTHFIELD", "state": "IL", "zip": "60093", "phone": "847-441-0929"}, "mail-address": {"street1": "C/O STONE-KAPLAN INVESTMENTS, LLC,", "street2": "ONE NORTHFIELD PLAZA, SUITE 480", "city": "NORTHFIELD", "state": "IL", "zip": "60093"}}
FORM S-1
As filed with the
Securities and Exchange Commission on May 3, 2005
Registration No. 333-_________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
STONE ARCADE ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
6770
20-2699372
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer Identification
Number)
c/o Stone-Kaplan Investments, LLC
One Northfield Plaza, Suite 480
Northfield, IL 60093
(847) 441-0929
(847) 441-8267 (facsimile)
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Roger W. Stone, Chairman of the Board
Stone Arcade Acquisition Corporation
c/o Stone-Kaplan Investments, LLC
One Northfield Plaza, Suite 480
Northfield, IL 60093
(847) 441-0929
(847) 441-8267 (facsimile)
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Fran Stoller, Esq.
Wayne Datz, Esq.
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
(212) 407-4000
(212) 407-4990 - Facsimile
Alan I. Annex, Esq.
Greenberg Traurig LLP
MetLife Building
200 Park Avenue
New York, New York 10166
(212) 801-9323
(212) 801-6400 - Facsimile
Approximate date of commencement of proposed sale to the public:
As soon as practicable after
the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.
ý
If this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same
offering.
ð
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
ð
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
ð
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check
the following box.
ý
CALCULATION OF REGISTRATION FEE
Proposed
Proposed
Maximum
Maximum
Amount of
Title of each Class of Security
Amount being
Offering Price
Aggregate
Registration
being registered
Registered
Per Security(1)
Offering Price(1)
Fee
Units, each consisting of one share
of Common Stock, $.0001 par value,
and two Warrants(2)
34,500,000
Units
$
6.00
$
207,000,000
$
24,363.90
Shares of Common Stock included as
part of the Units(2)
34,500,000
Shares
—
—
—
(3)
Warrants included as part of the
Units(2)
69,000,000
Warrants
—
—
—
(3)
Shares of Common Stock underlying the
Warrants included in the Units(4)
69,000,000
Shares
$
5.00
$
345,000,000
$
40,606.50
Underwriter's Unit Purchase Option
1
$
100
$
100
—
(3)
Units underlying the Underwriter's
Unit Purchase Option ("Underwriter's
Units")(4)
1,500,000
Units
$
7.50
$
11,250,000
$
1,324.13
Shares of Common Stock included as
part of the Underwriter's Units(4)
1,500,000
Shares
—
—
—
(3)
Warrants included as part of the
Underwriter's Units(4)
3,000,000
Warrants
—
—
—
(3)
Shares of Common Stock underlying the
Warrants included in the
Underwriter's Units(4)
3,000,000
Shares
$
6.25
$
18,750,000
$
2,206.86
Total
$
582,000,100
$
68,501.39
(1)       Estimated solely for the purpose of calculating the registration fee.
(2)       Includes 4,500,000 Units and 4,500,000 shares of Common Stock and 9,000,000 Warrants underlying
such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover
over-allotments, if any.
(3)       No fee pursuant to Rule 457(g).
(4)       Pursuant to Rule 416, there are also being registered such indeterminable additional securities
as may be issued as a result of the anti-dilution provisions contained in the Warrants.
The registrant hereby amends this registration statement on such date or dates as may be
necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become effective in
accordance with
Section 8(a)
of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said Section
8(a)
, may
determine
.
The information in this prospectus is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and is not soliciting an offer
to buy these securities in any state where the offer or sale is not permitted.
PROSPECTUS
Preliminary Prospectus
Subject to Completion, May 3, 2005
$180,000,000
STONE ARCADE ACQUISITION CORPORATION
30,000,000 units
Stone Arcade Acquisition Corporation is a blank check company recently formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition or other similar business
combination with an unidentified operating business. We intend to focus on identifying a
prospective target business in the paper, packaging, forest products and related industries,
although our efforts will not be limited to any particular industry. We do not have any specific
merger, capital stock exchange, asset acquisition or other similar business combination under
consideration or contemplation.
This is an initial public offering of our securities. Each unit consists of:
•
one share of our common stock; and
•
two warrants.
Each warrant entitles the holder to purchase one share of our common stock at a price of
$5.00. Each warrant will become exercisable on the later of our completion of a business
combination or ___, 2006
[one year from the date of this prospectus]
, and will expire on
___, 2009
[four years from the date of this prospectus]
, or earlier upon redemption.
We have granted the underwriters a 45-day option to purchase up to 4,500,000 additional units
solely to cover over-allotments, if any (over and above the 30,000,000 units referred to above).
The over-allotment will be used only to cover the net syndicate short position resulting from the
initial distribution. We have also agreed to sell to Morgan Joseph & Co. Inc., the representative
of the underwriters, for $100, as additional compensation, an option to purchase up to a total of
1,500,000 units at $7.50 per unit. The units issuable upon exercise of this option are identical to
those offered by this prospectus except that the warrants included in the option have an exercise
price of $6.25 (125% of the exercise price of the warrants included in the units sold in the
offering). The purchase option and its underlying securities have been registered under the
registration statement of which this prospectus forms a part.
There is presently no public market for our units, common stock or warrants. We anticipate
that the units will be quoted on the OTC Bulletin Board under the symbol ___on or promptly
after the date of this prospectus. Once the securities comprising the units begin separate trading,
the common stock and warrants will be traded on the OTC Bulletin Board under the symbols ___
and ___, respectively.
Investing in our securities involves a high degree of risk. See "Risk Factors" beginning on
page 6 of this prospectus for a discussion of information that should be considered in connection
with an investment in our securities.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
Underwriting
Public offering
discount and
Proceeds, before
price
commissions
expenses, to us
Per unit
$
6.00
$
0.42
$
5.58
Total
$
180,000,000
$
12,600,000
$
167,400,000
Of the net proceeds we receive from this offering, $164,279,000 ($5.48 per unit) will be
deposited into a trust account at JPMorgan Chase NY Bank maintained by Continental Stock Transfer &
Trust Company acting as trustee.
We are offering the units for sale on a firm-commitment basis. Morgan Joseph & Co. Inc.,
acting as representative of the underwriters, expects to deliver our securities to investors in the
offering on or about ___, 2005.
Morgan Joseph
EarlyBirdCapital, Inc.
_______________ 2005
PROSPECTUS SUMMARY
This summary highlights certain information appearing elsewhere in this prospectus. For a more
complete understanding of this offering, you should read the entire prospectus carefully, including
the risk factors and the financial statements. Unless otherwise stated in this prospectus,
references to "we," "us," "our" or "our company" refer to Stone Arcade Acquisition Corporation.
Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will
not exercise their over-allotment option. You should rely only on the information contained or
incorporated by reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any jurisdiction where the
offer is not permitted.
We are a blank check company organized under the laws of the State of Delaware on April 15,
2005. We were formed to effect a merger, capital stock exchange, asset acquisition or other similar
business combination with an operating business. To date, our efforts have been limited to
organizational activities.
Our executive officers, Roger Stone and Matthew Kaplan, our Chief Executive Officer and
President, respectively, each has over 25 years of industry experience in the paper, packaging,
forest products and related industries. Mr. Stone had served as the Chief Executive Officer and Mr.
Kaplan as a Vice President of Smurfit Stone Container Corp., one of the nation's largest paper and
packaging companies, and were Chief Executive Officer and Senior Vice President, respectively, of
Stone Container Corp. prior to its acquisition by Jefferson Smurfit Corporation. Subsequently,
Messrs. Stone and Kaplan were the CEO and President,
respectively, of Box USA Holdings, Inc., a
company they acquired, ran and sold to a strategic acquirer. In the course of their careers, they
completed numerous strategic acquisitions in the paper, packaging, forest products and related
industries and have extensive contacts and relationships within these industries.
We intend to leverage the industry experience of our executive officers by focusing our
efforts on identifying a prospective target business in the paper, packaging, forest products and
related industries. We believe that companies involved in these industries represent attractive
acquisition targets for a number of reasons, including potentially attractive valuations, the large
number of middle market acquisition candidates and a favorable economic environment for these
industries. However, we will not be limited to a particular industry and may seek to effect a
business combination with a company outside of our initial area of focus.
Our initial business combination must be with a target business whose fair market value is at
least equal to 80% of our net assets at the time of such acquisition.
Management
has indicated that they plan on purchasing at least 500,000 units in
the offering. However, they are not obligated to do so and we do not
have any agreement or arrangement with them requiring them to purchase
such securities.
Our executive offices are located at c/o Stone-Kaplan Investments, LLC, One Northfield Plaza,
Suite 480, Northfield, Illinois 60093 and our telephone number is (847) 441-0929.
The Offering
Securities offered
30,000,000 units, at $6.00 per unit, each unit consisting of:
•    one share of common stock; and
•    two warrants.
The units will begin trading on or promptly after the date of this
prospectus. Each of the common stock and warrants may trade
separately on the 90th day after the date of this prospectus unless
Morgan Joseph & Co. determines that an earlier date is acceptable. In
no event will Morgan Joseph & Co. allow separate trading of the
common stock and warrants until we file an audited balance sheet
reflecting our receipt of the gross proceeds of this offering. We
will file a Current Report on Form 8-K, including an audited balance
sheet, upon the consummation of this offering, which is anticipated
to take place three business days from the date of this prospectus.
The audited balance sheet will include proceeds we receive from the
exercise of the over-allotment option if the over-allotment option is
exercised prior to the filing of the Form 8-K.
2
Common stock:
Number
outstanding before this
offering
7,500,000 shares
Number to be
outstanding after this
offering
37,500,000 shares
Warrants:
Number outstanding before this offering
0 warrants
Number to be
outstanding after this
offering
60,000,000 warrants
Exercisability
Each warrant is exercisable for one share of common stock.
Exercise price
$5.00
Exercise period
The warrants will become exercisable on the later of:
•     the completion of a business combination with a target business; or
•     [     ],
2006
[one year from the date of this prospectus]
.
The warrants will expire at 5:00 p.m., New York City time, on [     ], 2009
[four years from the date of this prospectus]
or
earlier upon redemption.
Redemption
We may redeem the outstanding warrants:
•     in whole and not in part;
•     at a price of $.01 per warrant at any time after the warrants
become exercisable;
•     upon a minimum of 30 days' prior written notice of redemption; and
•     if, and only if, the last sales price of our common stock equals or
exceeds $8.50 per share for any 20 trading days within a 30 trading
day period ending three business days before we send the notice of
redemption.
Proposed OTC
Bulletin Board symbols for our:
Units
[     ]
Common stock
[     ]
Warrants
[     ]
Offering proceeds to be
held in trust:
$164,279,000 of the proceeds of this offering ($5.48 per unit) will
be placed in a trust account at JPMorgan Chase NY Bank maintained by
Continental Stock Transfer & Trust Company, pursuant to an agreement
to be signed on the date of this prospectus. These proceeds will not
be released until the earlier of the completion of a business
combination or our liquidation. Therefore, unless and until a
business combination is consummated, the proceeds held in the trust
account will not be available for our use for any expenses related to
this offering or expenses which we may incur related to the
investigation and selection of a target business and the negotiation
of an agreement to acquire a target business. These expenses may be
paid prior to a business combination only from the net proceeds of this offering not held in the trust account (initially, approximately $2,500,000 after payment of expenses related to this offering).
None of the warrants may be exercised until after the consummation of
a business combination and, thus, after the proceeds of the trust
account have been disbursed. Accordingly, the warrant exercise price
will be paid directly to us and not placed in the trust account.
3
Stockholders must approve
business combination
We will seek stockholder approval before we effect any business
combination, even if the nature of the acquisition would not
ordinarily require stockholder approval under applicable state law.
In connection with the vote required for any business combination,
all of our existing stockholders, including all of our officers and
directors, have agreed to vote the shares of common stock owned by
them in accordance with the majority
of the shares of common stock voted by the public stockholders. We
will proceed with a business combination only if a majority of the
shares of common stock voted by the public stockholders are voted in
favor of the business combination and public stockholders owning less
than 20% of the shares sold in this offering exercise their
conversion rights (described below).
Conversion rights for
stockholders voting to
reject a business
combination
Public stockholders voting against a business combination will be
entitled to convert their stock into a pro rata share of the trust
account, including any interest earned on their portion of the trust
account, if the business combination is approved and completed.
Liquidation if no business
combination
We will dissolve and promptly distribute only to our public
stockholders (including any members of our management who participate
in this offering) the amount in our trust account plus any remaining
net assets if we do not effect a business combination within 18
months after consummation of this offering (or within 24 months from
the consummation of this offering if a letter of intent, agreement in
principle or definitive agreement has been executed within 18 months
after consummation of this offering and the business combination has
not yet been consummated within such 18-month period). All of our
officers and directors own stock in our company, but have waived
their right to receive distributions (other than with respect to
units they purchase in this offering or common stock they purchase in
the aftermarket) upon our liquidation prior to a business
combination.
Escrow of management shares
On the date of this prospectus, all of our existing stockholders,
including all of our officers and directors, will place the shares
they owned before this offering into an escrow account maintained by
Continental Stock Transfer & Trust Company, acting as escrow agent.
Subject to certain limited exceptions, these shares will not be
transferable during the escrow period and will not be released from
escrow until 12 months from the date of a business combination.
Risks
In making your decision on whether to invest in our securities, you should take into account
not only the backgrounds of our management team, but also the special risks we face as a blank
check company, as well as the fact that this offering is not being conducted in compliance with
Rule 419 promulgated under the Securities Act of 1933, as amended, and, therefore, you will not be
entitled to protections normally afforded to investors in Rule 419 blank check offerings. You
should carefully consider these and the other risks set forth in the section entitled "Risk
Factors" beginning on page 6 of this prospectus.
4
SUMMARY FINANCIAL DATA
The following table summarizes the relevant financial data for our business and should be read
with our financial statements, which are included in this prospectus. We have not had any
significant operations to date, so only balance sheet data is presented. The "as adjusted"
information gives effect to the sale of the units we are offering including the application of the
related gross proceeds and the payment of the estimated remaining costs from such sale.
April 26, 2005
Actual
As Adjusted
Balance Sheet Data:
Working capital/(deficiency)
$
(11,000
)
$
166,803,000
Total assets
225,000
166,803,000
Total liabilities
201,000
Maximum value of common stock which may be
converted to cash ($5.48 per share) in
connection with a business combination
—
32,839,372
Stockholders' equity
24,000
133,963,628
Working capital excludes $35,000 of costs related to this offering which were paid prior to
April 26, 2005. These deferred offering costs have been recorded as a long-term asset and are
reclassified against stockholders' equity in the "as adjusted" column.
The working capital and total assets amounts include the $164,279,000 being held in the trust
account, which will be available to us only upon the consummation of a business combination within
the time period described in this prospectus. If a business combination is not so consummated, we
will be dissolved and the proceeds held in the trust account and any remaining assets will be
distributed solely to our public stockholders.
We will not proceed with a business combination if public stockholders owning 20% or more of
the shares sold in this offering vote against the business combination and exercise their
conversion rights. Accordingly, we may effect a business combination if public stockholders owning
up to approximately 19.99% of the shares sold in this offering exercise their conversion rights. If
this occurred and the business combination was completed, we would be required to convert to cash
up to approximately 19.99% of the 30,000,000 shares sold in this offering, or 5,997,000 shares of
common stock, at an initial per-share conversion price of $5.48, without taking into account
interest earned on the trust account. The actual per-share conversion price will be equal to:
•
the amount in the trust account, including all accrued interest, as of two business
days prior to the proposed consummation of the business combination; divided by
•
the number of shares of common stock sold in the offering.
5
RISK FACTORS
An investment in our securities involves a high degree of risk. You should consider carefully
all of the material risks described below, together with the other information contained in this
prospectus before making a decision to invest in our securities. We have included risks associated
with the paper, packaging, forest products and related industries. However, you should bear in mind
that we will not be limited in our efforts to identifying prospective target companies in any
particular industry and may seek to effect a business combination with a company outside of the
paper, packaging, forest products and related industries.
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.
We are a recently incorporated development stage company with no operating results to date.
Therefore, our ability to begin operations is dependent upon obtaining financing through the public
offering of our securities. Since we do not have an operating history, you will have no basis upon
which to evaluate our ability to achieve our business objective, which is to acquire an operating
business. We have not conducted any discussions and we have no plans, arrangements or
understandings with any prospective acquisition candidates. We will not generate any operating
revenues until, at the earliest, after the consummation of a business combination. We cannot assure
you that a business combination will occur.
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
we are unable to complete a business combination within the required
time frame and are forced to liquidate our assets,
the per-share liquidation distribution will be less than $6.00 because of the expenses of this
offering, our general and administrative expenses and the anticipated costs of seeking a business
combination. Furthermore, there will be no distribution with respect to our outstanding warrants
which will expire worthless if we liquidate before the completion of a business combination. For a
more complete discussion of the effects on our stockholders if we are unable to complete a business
combination, see the section appearing elsewhere in this prospectus entitled "Effecting a business
combination—Liquidation if no business combination."
You will not be entitled to protections normally afforded to investors of blank check
companies.
Since the net proceeds of this offering are intended to be used to complete a business
combination with a target business that has not been identified, we may be deemed to be a "blank
check" company under the United States securities laws. However, since we will have net tangible
assets in excess of $5,000,000 upon the successful consummation of this offering and will file a
Current Report on Form 8-K with the SEC upon consummation of this offering including an audited
balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect
investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded
the benefits or protections of those rules. Because we are not subject to Rule 419, our units will
be immediately tradable and we have a longer period of time to complete a business combination in
certain circumstances. For a more detailed comparison of our offering to offerings under Rule 419,
see the section entitled "Comparison to offerings of blank check companies" appearing elsewhere in
this prospectus.
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 $5.48 per share.
Our placing of funds in trust may not protect those funds from third party claims against us.
Although we will seek to have all vendors, prospective target businesses or other entities that we
engage execute agreements with us waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account for the benefit of our public stockholders, there is no
guarantee that they will execute such agreements. Nor is there any guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek recourse against the trust account
for any reason. If we liquidate before the completion of a business combination and distribute the
proceeds held in trust to our public stockholders, Messrs. Stone, Kaplan, Chapman, Furer and
Rahman, our officers and directors, will be personally
6
liable to pay debts and obligations to
vendors that are owed money by us for services rendered or products sold to us in excess of the net proceeds of this offering not held in the trust account at that time.
However, we cannot assure you that these individuals will be able to satisfy those obligations.
Further, they will not be personally liable to pay debts and obligations to prospective target
businesses if a business combination is not consummated with such prospective target businesses, or
for claims from any entity other than vendors. Accordingly, the proceeds held in trust could be
subject to claims which could take priority over the claims of our public stockholders and the
per-share liquidation price could be less than $5.48, plus interest, due to claims of such
creditors.
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 industry or business
in which we may ultimately operate.
Although we intend to focus our efforts on the paper, packaging, forest products and related
industries, we may consummate a business combination with a company in any industry we choose and
are not limited to any particular industry or type of business. Accordingly, there is no current
basis for you to evaluate the possible merits or risks of the particular industry in which we may
ultimately operate or the target business which we may ultimately acquire. To the extent we
complete a business combination with a financially unstable company or an entity in its development
stage, we may be affected by numerous risks inherent in the business operations of those entities.
If we complete a business combination with an entity in an industry characterized by a high level
of risk, we may be affected by the currently unascertainable risks of that industry. Although our
management will endeavor to evaluate the risks inherent in a particular industry or target
business, we cannot assure you that we will properly ascertain or assess all of the significant
risk factors. We also cannot assure you that an investment in our units will not ultimately prove
to be less favorable to investors in this offering than a direct investment, if an opportunity were
available, in a target business. For a more complete discussion of our selection of a target
business, see the section appearing elsewhere in this prospectus entitled "Effecting a business
combination—We have not identified a target business."
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.
Our certificate of incorporation authorizes the issuance of up to 175,000,000 shares of common
stock, par value $.0001 per share, and 1,000,000 shares of preferred stock, par value $.0001 per
share. Immediately after this offering (assuming no exercise of the underwriters' over-allotment
option), there will be 73,000,000 authorized but unissued shares of our common stock available for
issuance (after appropriate reservation for the issuance of shares upon full exercise of our
outstanding warrants and the purchase option granted to Morgan Joseph, the representative of the
underwriters) and all of the 1,000,000 shares of preferred stock available for issuance. Although
we have no commitments as of the date of this offering to issue our securities, we may issue a
substantial number of additional shares of our common stock or preferred stock, or a combination of
common and preferred stock, to complete a business combination. The issuance of additional shares
of our common stock or any number of shares of our preferred stock:
•
may significantly reduce the equity interest of investors in this offering;
•
could likely cause a change in control if a substantial number of our shares of
common stock are issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and may also result in the resignation or
removal of our present officers and directors; and
•
may adversely affect prevailing market prices for our common stock.
Similarly, if we issue debt securities, it could result in:
•
default and foreclosure on our assets if our operating income and other resources
after a business combination were insufficient to pay our debt obligations;
•
acceleration of our obligations to repay the indebtedness even if we have made all
principal and interest payments when due if the debt security contains covenants that
require the maintenance of certain financial ratios or reserves and any such covenant
is breached without a waiver or renegotiation of that covenant;
•
our immediate payment of all principal and accrued interest, if any, if the debt
security is payable on demand; and
•
our inability to obtain additional financing, if necessary, if the debt security
contains covenants restricting our ability to obtain additional financing while such
security is outstanding.
7
For a more complete discussion of the possible structure of a business combination, see the
section appearing elsewhere in this prospectus entitled "Effecting a business combination—Selection
of a target business and structuring of a business combination."
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.
At the time we seek stockholder approval of any business combination, we will offer each
public stockholder the right to have such stockholder's shares of common stock converted to cash if
the stockholder votes against the business combination and the business combination is approved and
completed. Accordingly, if our business combination requires us to use substantially all of our
cash to pay the purchase price, because we will not know how many stockholders may exercise such
conversion rights, we may either need to reserve part of the trust fund for possible payment upon
such conversion, or we may need to arrange third party financing to help fund our business
combination in case a larger percentage of stockholders exercise their conversion rights than we
expected. Therefore, we may not be able to consummate a business combination that requires us to
use all of the funds held in the trust account as part of the purchase price, or we may end up
having a leverage ratio that is not optimal for our business combination. This may limit our
ability to effectuate the most attractive business combination available to us.
Our current officers and directors may resign upon consummation of a business combination.
Upon consummation of a business combination, the role of our key personnel in the target
business cannot presently be ascertained. Although it is presently contemplated that certain
members of our management team will remain associated in various capacities with the target
business following a business combination, it is possible that the management of the target
business at the time of the business combination will remain in place. Alternatively, we may
recruit new management team members to join the target business. Although we intend to closely
scrutinize the management of a prospective target business in connection with evaluating the
desirability of effecting a business combination, we cannot assure you that our assessment of
management will prove to be correct.
Our officers are parties to non-competition agreements that will limit the types of companies
we can target for a business combination and may make us a less attractive buyer to certain target
companies.
Roger Stone, our Chairman and Chief Executive Officer, and Matthew Kaplan, our President, are
parties to non-competition agreements that were entered into in connection with the sale of their
most recent business, Box USA Holdings, Inc., to International Paper Company. These agreements, which
expire in July 2007, prohibit our officers from participation in businesses engaged in the
manufacture of corrugated packaging, containers or containerboard. This prohibition may limit our
ability to consummate a business combination in certain sectors of the paper, packaging, forest
products and related industries. To the extent that an entity we identify as a potential target
manufactures corrugated packaging, containers or containerboard or has similar operations, such
potential target would need to dispose of such operations as part of a business combination with
us. If this occurred, it would make us a less attractive buyer for the entity and adversely impact
our position among competing acquirors.
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.
Our officers and directors are not required to commit their full time to our affairs, which
may result in a conflict of interest in allocating their time between our operations and other
businesses. We do not intend to have any full time employees prior to the consummation of a
business combination. All of our executive officers are engaged in several other business endeavors
and are not obligated to contribute any specific number of hours to our affairs. If our executive
officers' other business affairs require them to devote more substantial amounts of time to such
affairs, it could limit their ability to devote sufficient time to our affairs and could have a
negative impact on our ability to consummate a business combination. For a complete discussion of
the potential conflicts of interest that you should be aware of, see the section appearing
elsewhere in this prospectus entitled "Management—Conflicts of Interest." We cannot assure you that
these conflicts will be resolved in our favor.
8
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.
Some of our officers and directors may in the future become affiliated with entities,
including other "blank check" companies, engaged in business activities similar to those intended
to be conducted by us. Additionally, after we complete a business combination, our officers and
directors may become aware of business opportunities which may be appropriate for presentation to
us as well as the other entities to which they have fiduciary obligations. Accordingly, they may
have conflicts of interest in determining to which entity a particular business opportunity should
be presented. For a complete discussion of our management's business affiliations and the potential
conflicts of interest that you should be aware of, see the sections appearing elsewhere in this
prospectus entitled "Management—Directors and Executive Officers" and "Management—Conflicts of
Interest." We cannot assure you that these conflicts will be resolved in our favor.
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.
All of our officers and directors own stock in our company, but have waived their right to
receive distributions (other than with respect to units they purchase in this offering or common
stock they purchase in the aftermarket) upon our liquidation prior to a business combination.
Additionally, Messrs. Stone, Kaplan, Chapman, Furer and Rahman have agreed with the representative
of the underwriters that they and certain of their affiliates or designees will, subject to certain
conditions, purchase 4,000,000 warrants in the open market following this offering. The shares and
warrants owned by our officers and directors will be worthless if we do not consummate a business
combination. The personal and financial interests of our officers and directors may influence their
motivation in identifying and selecting a target business and completing a business combination
timely. Consequently, our officers' and directors' discretion in identifying and selecting a
suitable target business may result in a conflict of interest when determining whether the terms,
conditions and timing of a particular business combination are appropriate and in our stockholders'
best interest.
Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and
management resources and may increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our
system of internal controls beginning with our Annual Report on Form 10-K for the year ending
December 31, 2006. If we fail to maintain the adequacy of our internal controls, we could be
subject to regulatory scrutiny, civil or criminal penalties or stockholder litigation. Any
inability to provide reliable financial reports could harm our business. Section 404 of the
Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on
management's evaluation of our system of internal controls. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal
controls. The development of the internal controls of any such entity to achieve compliance with
the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Furthermore, any failure to implement required new or improved controls, or difficulties
encountered in the implementation of adequate controls over our financial processes and reporting
in the future, could harm our operating results or cause us to fail to meet our reporting
obligations. Inferior internal controls could also cause investors to lose confidence in our
reported financial information, which could have a negative effect on the trading price of our
stock.
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.
Historically, economic and market shifts, fluctuations in capacity and changes in foreign
currency exchange rates have created cyclical changes in prices, sales volume and margins for
products in the paper, packaging, forest products and related industries. The length and magnitude
of industry cycles have varied over time and by product, but generally reflect changes in
macroeconomic conditions and levels of industry capacity. Most paper products and many wood
products used in the packaging industry are commodities that are widely available from many
producers. Because commodity products have few distinguishing qualities from producer to producer,
competition for these products is based primarily on price, which is determined by supply relative
to demand. The overall levels of demand
9
for these commodity products reflect fluctuations in levels of end-user demand, which depend
in large part on general macroeconomic conditions in North America and regional economic conditions
in our markets, as well as foreign currency exchange rates. The foregoing factors could materially
and adversely impact sales and profitability of a target company with which we might seek a
business combination.
Difficulty obtaining timber at favorable prices, or at all, may negatively impact companies in
the packaging industry.
Wood fiber is the principal raw material in many parts of the packaging industry. Wood fiber
is a commodity, and prices historically have been cyclical. Environmental litigation and regulatory
developments have caused, and may cause in the future, significant reductions in the amount of
timber available for commercial harvest in the United States. These reductions have caused the
closure of plywood and lumber operations in some of the geographic areas in which a target company
might operate. In addition, future domestic or foreign legislation and litigation concerning the
use of timberlands, the protection of endangered species, the promotion of forest health and the
response to and prevention of catastrophic wildfires could also affect timber supplies.
Availability of harvested timber may further be limited by fire, insect infestation, disease, ice
storms, wind storms, flooding and other natural and man made causes, thereby reducing supply and
increasing prices.
Industry supply of commodity paper and wood products is also subject to fluctuation, as
changing industry conditions can influence producers to idle or permanently close individual
machines or entire mills. In addition, to avoid substantial cash costs in connection with idling or
closing a mill, some producers will choose to continue to operate at a loss, sometimes even a cash
loss, which could prolong weak pricing environments due to oversupply. Oversupply in these markets
can also result from producers introducing new capacity in response to favorable short-term pricing
trends. Industry supply of commodity papers and wood products is also influenced by overseas
production capacity, which has grown in recent years and is expected to continue to grow. Wood
fiber pricing is subject to regional market influences, and the cost of wood fiber may increase in
particular regions due to market shifts in those regions. In addition, the ability to obtain wood
fiber from foreign countries may be impacted by legal and political conditions in that country as
well as transportation difficulties.
An increase in the cost of purchased energy or chemicals would lead to higher manufacturing
costs, thereby reducing margins.
Energy is a significant raw material in the paper, packaging, forest products and related
industries. Energy prices, particularly for electricity, natural gas and fuel oil, have been
volatile in recent years and currently exceed historical averages. These fluctuations have
historically impacted manufacturing costs of companies in these industries, often contributing to
earnings volatility. Recent significant increases in energy prices can be expected to adversely
impact businesses in these industries. In addition, a target company could be materially adversely
impacted by supply disruptions.
Paper, packaging and forest products companies face strong competition.
The paper, packaging, forest products and related industries are highly fragmented, and a
target company will face competition from numerous competitors, domestic as well as foreign. It is
likely that some of a target company's competitors will be large, vertically integrated companies
that have greater financial and other resources, greater manufacturing economies of scale, greater
energy self-sufficiency and/or lower operating costs than the target company.
Certain paper and wood products are vulnerable to long-term declines in demand due to
competing technologies or materials.
Companies in the paper, packaging, forest products and related industries are subject to
possible declines in demand for their products as the use of alternative materials and
technologies grows and the prices of such alternatives become more competitive. Any substantial
shift in demand from wood and paper products to competing technologies or materials could result in
a material decrease in sales of a target company's products. While we would seek to have a target
company adapt its product offerings to changes in market demand, we cannot assure you that any
efforts will be successful or sufficient.
10
Packaging companies are subject to significant environmental regulation and environmental
compliance expenditures, as well as other potential environmental liabilities.
Companies in the packaging industry are subject to a wide range of general and
industry-specific environmental laws and regulations, particularly with respect to air emissions,
wastewater discharges, solid and hazardous waste management, site remediation, forestry operations
and endangered species habitats. A target company will in all likelihood incur substantial
expenditures to maintain compliance with applicable environmental laws and regulations. Failure to
comply with applicable environmental laws and regulations, could expose a target company to civil
or criminal fines or penalties or enforcement actions, including orders limiting operations or
requiring corrective measures, installation of pollution control equipment or other remedial
actions.
Risks Associated with this Offering
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 expect to encounter intense competition from other entities having a business objective
similar to ours, including leveraged buyout funds, hedge funds and operating businesses competing
for acquisitions. Many of these entities are well established and have extensive experience in
identifying and effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and other resources than we do. Further, the
obligation we have to seek stockholder approval of a business combination may delay the
consummation of a transaction, and our obligation to convert into cash the shares of common stock
held by public stockholders in certain instances may reduce the resources available for a business
combination. Additionally, our outstanding warrants, and the future dilution they potentially
represent, may not be viewed favorably by certain target businesses. Any of these obligations may
place us at a competitive disadvantage in successfully negotiating a business combination.
We will be limited by the requirement that our initial business combination must be with a
business with a fair market value of at least 80% of our net assets at the time of such
acquisition. This requirement will prevent us from initially targeting smaller companies, even if
we believe they are attractive candidates for acquisition.
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.
Although we believe that the net proceeds of this offering will be sufficient to allow us to
consummate a business combination, in as much as we have not yet identified any prospective target
business, we cannot ascertain the capital requirements for any particular transaction. If the net
proceeds of this offering prove to be insufficient, either because of the size of the business
combination or because we become obligated to convert into cash a significant number of shares from
dissenting stockholders, we will be required to seek additional financing. We cannot assure you
that such financing would be available on acceptable terms, if at all. To the extent that
additional financing proves to be unavailable when needed to consummate a particular business
combination, we would be compelled to restructure the transaction or abandon that particular
business combination and seek an alternative target business candidate. In addition, if we
consummate a business combination, we may require additional financing to fund the operations or
growth of the target business. The failure to secure additional financing could have a material
adverse effect on the continued development or growth of the target business. None of our officers,
directors or stockholders is required to provide any financing to us in connection with or after a
business combination.
Our existing stockholders, including our officers and directors, control a substantial
interest in us and thus may influence certain actions requiring a stockholder vote.
Upon consummation of our offering, our existing stockholders (including all of our officers
and directors) will collectively own 20% of our issued and outstanding shares of common stock
(assuming they do not purchase units in this offering and assuming no exercise of the
underwriters' over-allotment option). Our board of directors is divided into three classes, each of
which will generally serve for a term of two years with only one class of directors being elected
in each year. It is unlikely that there will be an annual meeting of stockholders to elect new
directors prior to the consummation of a business combination, in which case all of the current
directors will continue in office at least until the consummation of the business combination. If
there is an annual meeting, as a consequence of our "staggered" board of directors, only a minority
of the board of directors will be considered for election and our
11
existing stockholders, because of their ownership position, will have considerable influence
regarding the outcome. Accordingly, our existing stockholders will continue to exert control at
least until the consummation of a business combination. In addition, our existing stockholders and
their affiliates and relatives are not prohibited from purchasing units in this offering or shares
in the aftermarket. If they do, we cannot assure you that our existing stockholders will not have
considerable influence upon the vote in connection with a business combination.
Our existing stockholders paid an aggregate of $25,000, or $0.003 per share, for their shares
and, accordingly, you will experience immediate and substantial dilution from the purchase of our
common stock.
The difference between the public offering price per share of our common stock and the pro
forma net tangible book value per share of our common stock after this offering constitutes the
dilution to you and the other investors in this offering. The fact that our existing stockholders
acquired their shares of common stock at a nominal price has significantly contributed to this
dilution. Assuming the offering is completed, you and the other new investors will incur an
immediate and substantial dilution of approximately 29% or $1.75 per share (the difference between
the pro forma net tangible book value per share of $4.25 and the initial offering price of $6.00
per unit).
Our outstanding warrants may have an adverse effect on the market price of our common stock
and make it more difficult to effect a business combination.
In connection with this offering, as part of the units, we will be issuing warrants to
purchase 60,000,000 shares of common stock (assuming no exercise of the underwriters'
over-allotment option). We will also issue an option to purchase 1,500,000 units to the
representative of the underwriters which, if exercised, will result in the issuance of an
additional 1,500,000 shares of common stock and 3,000,000 warrants. To the extent we issue shares
of common stock to effect a business combination, the potential for the issuance of substantial
numbers of additional shares upon exercise of these warrants and option could make us a less
attractive acquisition vehicle in the eyes of a target business as such securities, when exercised,
will increase the number of issued and outstanding shares of our common stock and reduce the value
of the shares issued to complete the business combination. Accordingly, our warrants and option may
make it more difficult to effectuate a business combination or increase the cost of the target
business. Additionally, the sale, or even the possibility of sale, of the shares underlying the
warrants and option could have an adverse effect on the market price for our securities or on our
ability to obtain future public financing. If and to the extent these warrants and option are
exercised, you may experience dilution to your holdings.
If our existing stockholders exercise their registration rights, it may have an adverse effect
on the market price of our common stock and the existence of these rights may make it more
difficult to effect a business combination.
Our existing stockholders are entitled to demand that we register the resale of their shares
of common stock at any time after the date on which their shares are released from escrow. If our
existing stockholders exercise their registration rights with respect to all of their shares of
common stock, then there will be an additional 7,500,000 shares of common stock eligible for
trading in the public market. The presence of this additional number of shares of common stock
eligible for trading in the public market may have an adverse effect on the market price of our
common stock. In addition, the existence of these rights may make it more difficult to effectuate a
business combination or increase the cost of the target business, as the stockholders of the target
business may be discouraged from entering into a business combination with us or will request a
higher price for their securities as a result of these registration rights and the potential future
effect their exercise may have on the trading market for our common stock.
If you are not an institutional investor, you may purchase our securities in this offering
only if you reside within certain states and may engage in resale transactions only in those states
and a limited number of other jurisdictions.
We have applied to register our securities, or have obtained or will seek to obtain an
exemption from registration, in Colorado, Delaware, Florida, Hawaii, Illinois, Indiana, Maryland,
New York and Rhode Island. If you are not an "institutional investor," you must be a resident of
these jurisdictions to purchase our securities in the offering. The definition of an "institutional
investor" varies from state to state but generally includes financial institutions, broker-dealers,
banks, insurance companies and other qualified entities. In order to prevent resale transactions in
violation of states' securities laws, you may engage in resale transactions only in these states
and in other jurisdictions in which an applicable exemption is available or a Blue Sky application
has been filed and accepted. This restriction on resale may limit your ability to resell the
securities purchased in this offering and may impact the price of our securities. For a more
complete discussion of the Blue Sky state securities laws and
12
registrations affecting this offering, please see the section entitled "State Blue Sky
Information" appearing elsewhere in this prospectus.
We intend to have our securities 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.
Our securities will be traded in the over-the-counter market. It is anticipated that they will
be quoted on the OTC Bulletin Board, an NASD-sponsored and operated inter-dealer automated
quotation system for equity securities not included on The Nasdaq Stock Market. Quotation of our
securities on the OTC Bulletin Board 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.
If we are deemed to be an investment company under the Investment Company Act of 1940, the
nature of our investments and the issuance of our securities may be restricted, which may make it
difficult for us to complete a business combination. In addition, we may have imposed upon us
burdensome requirements, including:
•
registration as an investment company;
•
adoption of a specific form of corporate structure; and
•
reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
We do not believe that our anticipated principal activities will subject us to the Investment
Company Act of 1940. To this end, the proceeds held in trust may only be invested by the trust
agent in "government securities" with specific maturity dates. By restricting the investment of the
proceeds to these instruments, we intend to meet the requirements for the exemption provided in
Rule 3a-1 promulgated under the Investment Company Act of 1940. If we were deemed to be subject to
the Act, compliance with these additional regulatory burdens would require additional expense that
we have not allotted for.
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.
Each of our directors owns shares of our common stock and, although no compensation will be
paid to them for services rendered prior to or in connection with a business combination, they may
receive reimbursement for out-of-pocket expenses incurred by them in connection with activities on
our behalf such as identifying potential target businesses and performing due diligence on suitable
business combinations. There is no limit on the amount of these out-of-pocket expenses and there
will be no review of the reasonableness of the expenses by anyone other than our board of
directors, which includes persons who may seek reimbursement, or a court of competent jurisdiction
if such reimbursement is challenged. Because none of our directors will be deemed "independent," we
will generally not have the benefit of independent directors examining the propriety of expenses
incurred on our behalf and subject to reimbursement. Although we believe that all actions taken by
our directors on our behalf will be in our best interests, we cannot assure you that this will be
the case. If actions are taken, or expenses are incurred that are not in our best interests, it
could have a material adverse effect on our business and operations and the price of our stock held
by the public stockholders.
Because our initial stockholders' initial equity investment was only $25,000, our offering may
be disallowed by state administrators that follow the North American Securities Administrators
Association, Inc. Statement of Policy on development stage companies.
Pursuant to the Statement of Policy Regarding Promoter's Equity Investment promulgated by The
North American Securities Administrators Association, Inc., an international organization devoted
to investor protection, any state administrator may disallow an offering of a development stage
company if the initial equity investment by a company's promoters does not equal a certain
percentage of the aggregate public offering price. Our promoters' initial investment of $25,000 is
less than the required $4,610,000 minimum amount pursuant to this policy. Accordingly, a state
administrator would have the discretion to disallow our offering if it wanted to. We cannot assure
you that our offering would not be disallowed pursuant to this policy. Additionally, the initial
equity investment made by the initial stockholders may not adequately protect investors.
13
USE OF PROCEEDS
We have agreed to bear all fees, disbursements and expenses in connection with this offering.
We estimate that the net proceeds of this offering will be as set forth in the following table:
Without Over-
Over-Allotment
Allotment Option
Option Exercised
Gross proceeds
$
180,000,000.00
$
207,000,000.00
Offering expenses(1)
Underwriting discount (7% of gross proceeds)
12,600,000.00
14,490,000.00
Legal fees and expenses (including blue sky
services and expenses)
350,000.00
350,000.00
Miscellaneous expenses
43,798.60
43,798.60
Printing and engraving expenses
75,000.00
75,000.00
Accounting fees and expenses
25,000.00
25,000.00
SEC registration fee
68,501.39
68,501.39
NASD registration fee
58,700.01
58,700.01
Net proceeds
Held in trust
164,279,000.00
189,389,000.00
Not held in trust
2,500,000.00
2,500,000.00
Total net proceeds
$
166,779,000.00
$
191,889,000.00
Use of net proceeds not held in trust(2)
Due diligence of prospective target businesses
$
750,000.00
(30.0
)%
Legal, accounting and other expenses attendant
to the due diligence investigations,
structuring and negotiation of a business
combination and the preparation and filing of
the related proxy statement
700,000.00
(28.0
)%
Payment of administrative fee to Stone-Kaplan
Investments LLC ($7,500 per month for two
years)(3)
180,000.00
(7.2
)%
Legal and accounting fees relating to SEC
reporting obligations
50,000.00
(2.0
)%
Working capital to cover miscellaneous
expenses, D&O insurance and reserves
820,000.00
(32.8
)%
Total
$
2,500,000.00
(100.0
)%
(1)
A portion of the offering expenses have been paid from the funds loaned to us by members of
our management described below. These funds will be repaid from the gross proceeds of this
offering.
(2)
These expenses are estimates only. Our actual expenditures for some or all of these items may
differ substantially from those set forth herein.
(3)
A portion of this fee will be paid to Arcade Partners LLC.
$164,279,000, or $189,389,000 if the underwriters' over-allotment option is exercised in full,
of net proceeds will be placed in a trust account at JPMorgan Chase NY Bank maintained by
Continental Stock Transfer & Trust Company, New York, New York, as trustee. The proceeds will not
be released from the trust account until the earlier
14
of the completion of a business combination or our liquidation. The proceeds held in the trust
account may be used as consideration to pay the sellers of a target business with which we complete
a business combination. Any amounts not paid as consideration to the sellers of the target business
may be used to finance operations of the target business.
The payment to Stone-Kaplan Investments, LLC, an affiliate of Roger Stone, our Chairman and
Chief Executive Officer and Matthew Kaplan, our President and a member of our board of directors,
of a monthly fee of $7,500 is for certain administrative, technology and secretarial services, as
well as the use of certain limited office space in Chicago, Illinois. Stone-Kaplan will pay a
portion of this fee to Arcade Partners LLC, an affiliate of Messrs. Chapman, Furer and Rahman,
members of our board of directors, to cover overhead expenses incurred on our behalf. This
arrangement is being agreed to by Stone-Kaplan Investments, LLC for our benefit and is not intended
to provide Messrs. Stone, Kaplan, Chapman, Furer and Rahman compensation in lieu of a salary. We
believe, based on rents and fees for similar services in the Chicago metropolitan area, that the
fee charged by Stone-Kaplan Investments, LLC is at least as favorable as we could have obtained
from an unaffiliated person. Upon completion of a business combination or our liquidation, we will
no longer be required to pay this monthly fee.
We intend to use the excess working capital (approximately $820,000) for director and officer
liability insurance premiums (approximately $200,000), with the balance of $620,000 being held in
reserve in the event due diligence, legal, accounting and other expenses of structuring and
negotiating business combinations exceed our estimates, as well as for reimbursement of any
out-of-pocket expenses incurred by our existing stockholders in connection with activities on our
behalf as described below. We believe that the excess working capital will be sufficient to cover
the foregoing expenses and reimbursement costs.
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 may be used to finance the operations of the target business.
Messrs. Stone, Kaplan, Chapman, Furer and Rahman, our officers and directors, have advanced to
us a total of $200,000 which was used to pay a portion of the expenses of this offering referenced
in the line items above for SEC registration fee, NASD registration
fee and legal and accounting fees and
expenses. The loans will be payable without interest on the earlier of one year from the date of
issuance or the consummation of this offering. The loans will be repaid out of the proceeds of this
offering.
The net proceeds of this offering not held in the trust account and not immediately required
for the purposes set forth above will only be invested in United States "government securities,"
defined as any Treasury Bill issued by the United States having a maturity of 180 days or less so
that we are not deemed to be an investment company under the Investment Company Act of 1940. The
interest income derived from investment of these net proceeds during this period may be used to
defray our general and administrative expenses, as well as costs relating to compliance with
securities laws and regulations, including associated professional fees, until a business
combination is completed.
We believe that, upon consummation of this offering, we will have sufficient available funds
to operate for at least the next 24 months, assuming that a business combination is not consummated
during that time.
Commencing on the effective date of this prospectus through the consummation of the
acquisition of the target business, we will pay Stone-Kaplan Investments, LLC the fee described
above, a portion of which will be paid to Arcade Partners LLC. Other than this $7,500 per month
administrative fee, no compensation of any kind (including finder's and consulting fees) will be
paid to any of our existing stockholders, our officers or directors, or any of their affiliates,
for services rendered to us prior to or in connection with the consummation of the business
combination. However, they will receive reimbursement for any out-of-pocket expenses incurred by
them in connection with activities on our behalf, such as identifying potential target businesses
and performing due diligence on suitable business combinations. Since the role of present
management after a business combination is uncertain, we have no ability to determine what
remuneration, if any, will be paid to those persons after a business combination.
A public stockholder will be entitled to receive funds from the trust account (including
interest earned on his, her or its portion of the trust account) only in the event of our
liquidation or if that public stockholder were to seek to convert such shares into cash in
connection with a business combination which the public stockholder voted against and which we
consummate. In no other circumstances will a public stockholder have any right or interest of any
kind to or in the trust account.
15
DILUTION
The difference between the public offering price per share of common stock, assuming no value
is attributed to the warrants included in the units, and the pro forma net tangible book value per
share of our common stock after this offering constitutes the dilution to investors in this
offering. Net tangible book value per share is determined by dividing our net tangible book value,
which is our total tangible assets less total liabilities (including the value of common stock
which may be converted into cash), by the number of outstanding shares of our common stock.
At April 26, 2005, our net tangible book value was a deficiency of approximately $11,000, or
approximately $.00 per share of common stock. After giving effect to the sale of 30,000,000 shares
of common stock included in the units, and the deduction of underwriting discounts and estimated
expenses of this offering, our pro forma net tangible book value at April 26, 2005 would have been
$133,963,628 or $4.25 per share, representing an immediate increase in net tangible book value of
$4.25 per share to the existing stockholders and an immediate dilution of $1.75 per share or 29% to
new investors not exercising their conversion rights. For purposes of presentation, our pro forma
net tangible book value after this offering is $32,839,372 less than it otherwise would have been
because if we effect a business combination, the conversion rights to the public stockholders may
result in the conversion into cash of up to approximately 19.99% of the aggregate number of the
shares sold in this offering at a per-share conversion price equal to the amount in the trust
account as of the record date for the determination of stockholders entitled to vote on the
business combination, inclusive of any interest, divided by the number of shares sold in this
offering.
The following table illustrates the dilution to the new investors on a per-share basis,
assuming no value is attributed to the warrants included in the units:
Public offering price
$
6.00
Net tangible book value before this offering
$
0.00
Increase attributable to new investors
4.25
Pro forma net tangible book value after this offering
4.25
Dilution to new investors
$
1.75
The following table sets forth information with respect to our existing stockholders and the
new investors:
Average
Shares Purchased
Total Consideration
Price Per
Number
Percentage
Amount
Percentage
Share
Existing stockholders
7,500,000
20.0
%
$
25,000
0.014
%
$
0.003
New investors
30,000,000
80.0
%
$
180,000,000
99.986
%
$
6.00
37,500,000
100.0
%
$
180,025,000
100.0
%
The pro forma net tangible book value after the offering is calculated as follows:
Numerator:
Net tangible book value before this offering
$
(11,000
)
Proceeds from this offering
166,779,000
Offering costs paid in advance and excluded from net
tangible book value before this offering
35,000
Less: Proceeds held in trust subject to conversion to
cash ($164,279,000 x 19.99%)
(32,839,372
)
$
133,963,628
Denominator:
Shares of common stock outstanding prior to this offering
7,500,000
Shares of common stock included in the units offered
30,000,000
Less: Shares subject to conversion (30,000,000 x 19.99%)
(5,997,000
)
31,503,000
16
CAPITALIZATION
The following table sets forth our capitalization at April 26, 2005 and as adjusted to give
effect to the sale of our units and the application of the estimated net proceeds derived from the
sale of our units:
April 26, 2005
Actual
As Adjusted
Notes payable to stockholders
$
200,000
$
—
Total debt
200,000
—
Common stock, $.0001 par value, -0- and
5,997,000 shares which are subject to possible
conversion, shares at conversion value
32,839,372
Stockholders' equity:
Preferred stock, $.0001 par value, 1,000,000
shares authorized; none issued or outstanding
—
—
Common stock, $.0001 par value, 175,000,000
shares authorized; 7,500,000 shares issued and
outstanding; 31,503,000 shares issued and
outstanding (excluding 5,997,000 shares subject
to possible conversion), as adjusted
750
3,150
Additional paid-in capital
24,250
133,961,478
Deficit accumulated during the development stage
(1,000
)
(1,000
)
Total stockholders' equity
24,000
133,963,628
Total capitalization
$
224,000
$
166,803,000
If we consummate a business combination, the conversion rights afforded to our public
stockholders may result in the conversion into cash of up to approximately 19.99% of the aggregate
number of shares sold in this offering at a per-share conversion price equal to the amount in the
trust account, inclusive of any interest thereon, as of two business days prior to the proposed
consummation of a business combination divided by the number of shares sold in this offering.
17
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We were formed on April 15, 2005, to serve as a vehicle to effect a merger, capital stock
exchange, asset acquisition or other similar business combination with an operating business. We
intend to utilize cash derived from the proceeds of this offering, our capital stock, debt or a
combination of cash, capital stock and debt, in effecting a business combination. The issuance of
additional shares of our capital stock:
•
may significantly reduce the equity interest of our stockholders;
•
will likely cause a change in control if a substantial number of our shares of
common stock are issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and may also result in the resignation or
removal of our present officers and directors; and
•
may adversely affect prevailing market prices for our common stock.
Similarly, if we issue debt securities, it could result in:
•
default and foreclosure on our assets if our operating income and other resources
after a business combination were insufficient to pay our debt obligations;
•
acceleration of our obligations to repay the indebtedness even if we have made all
principal and interest payments when due if the debt security contains covenants that
require the maintenance of certain financial ratios or reserves and any such covenant
is breached without a waiver or renegotiation of that covenant;
•
our immediate payment of all principal and accrued interest, if any, if the debt
security is payable on demand; and
•
our inability to obtain additional financing, if necessary, if the debt security
contains covenants restricting our ability to obtain additional financing while such
security is outstanding.
We have neither engaged in any operations nor generated any revenues to date. Our entire
activity since inception has been to prepare for our proposed fundraising through an offering of
our equity securities.
We estimate that the net proceeds from the sale of the units, after deducting offering
expenses of approximately $621,000 and underwriting discounts of approximately $12,600,000, will be
approximately $166,779,000, or $191,889,000 if the underwriters' over-allotment option is exercised
in full. Of this amount, $164,279,000, or $189,389,000 if the underwriters' over-allotment option
is exercised in full, will be held in trust and the remaining $2,500,000 in either event will not
be held in trust. We will use substantially all of the net proceeds of this offering not being held
in trust to identify and evaluate prospective acquisition candidates, select the target business,
and structure, negotiate and consummate the business combination. To the extent that our capital
stock or debt securities are 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
might be used to finance the operations of the target business. We believe that, upon consummation
of this offering, the funds available to us outside of the trust account will be sufficient to
allow us to operate for at least the next 24 months, assuming that a business combination is not
consummated during that time. Over this time period, we anticipate approximately $750,000 of
expenses for the due diligence and investigation of a target business, $700,000 of expenses for
legal, accounting and other expenses attendant to the due diligence investigations, structuring and
negotiating of a business combination (including the costs of obtaining stockholder approval),
$180,000 for the administrative fee payable to Stone-Kaplan Investments ($7,500 per month for two
years), $50,000 of expenses in legal and accounting fees relating to our SEC reporting obligations
and $820,000 for general working capital that will be used for miscellaneous expenses and reserves,
including approximately $200,000 for director and officer liability insurance premiums. We do not
believe we will need to raise additional funds following this offering in order to meet the
expenditures required to operate our business. However, we may need to raise additional funds
through a private offering of debt or equity securities if such funds are required to consummate a
business combination that is presented to us. We would only consummate such a financing
simultaneously with the consummation of a business combination.
We are obligated, commencing on the date of this prospectus, to pay to Stone-Kaplan
Investments, LLC, an affiliate of Roger Stone and Matthew Kaplan, a monthly fee of $7,500 for
certain administrative, technology and secretarial services, as well as the use of certain limited
office space in Chicago. A portion of this fee will be paid to Arcade Partners LLC, an affiliate
of Messrs. Chapman, Furer and Rahman, for overhead expenses incurred in connection with our
business. In addition, in April, 2005, Messrs. Stone, Kaplan, Chapman, Furer and Rahman

advanced a total of $200,000 to us, on a non-interest bearing basis, for payment of offering
expenses on our behalf. The loans will be payable without interest on the earlier of one year from
the date of issuance or the consummation of this offering. The loans will be repaid out of the
proceeds of this offering not being placed in trust.
18
PROPOSED BUSINESS
Introduction
We are a recently organized Delaware corporation incorporated on April 15, 2005 in order to
serve as a vehicle for the acquisition of an operating business. We intend to focus on companies in
paper, packaging, forest products and related industries, although our efforts will not be limited
to a particular industry.
Roger Stone and Matthew Kaplan, our Chief Executive Officer and President, respectively, each
has over 25 years of industry experience in the paper, packaging and forest products industries.
Mr. Stone had served as the Chief Executive Officer and Mr. Kaplan as a Vice President of Smurfit
Stone Container Corp., one of the nation's largest paper and packaging companies and were Chief
Executive Officer and Senior Vice President with Stone Container Corp., respectively, prior to its
acquisition by Jefferson Smurfit Corporation. Subsequently, Messrs. Stone and Kaplan served as the
Chief Executive Officer and President, respectively, of Box USA Holdings Inc., one of the nation's
largest independent converters of corrugated packaging materials which they sold to International
Paper Company in July 2004. In the course of their careers, they completed numerous strategic
acquisitions and have extensive contacts and relationships within these industries.
We believe that companies involved in paper, packaging, forest products and related industries
represent attractive acquisition targets for a number of reasons, including:
•
Potentially attractive valuations
. We believe that there are a number of
potential target businesses in a variety of sectors in paper, packaging, forest
products and related industries that may be available at valuations that are not
reflective of their full future potential. This may be in part the result of
consolidation among major competitors that has resulted in the desire on the part
of some companies to shed non-core assets as a way of generating free cash flow.
Also, financial buyers including several private equity firms have recently
purchased large portfolios of industry assets, and may be seeking liquidity by
selective divestitures of certain assets.
•
Numerous middle market acquisition candidates
. In addition to divisional
divestitures, standalone competitors in the size range being targeted by management
include many medium-sized family-owned businesses which may consider sale or
recapitalization transactions as a way to provide growth capital to the businesses
or due to their owners' desires to transition for personal reasons.
•
Favorable economic environment
. The North American paper and forest products
industry is mature, and long-term demand and financial performance tend to
correlate with changes in U.S. gross domestic product. Over the last several years,
the industry has seen significant consolidation and disciplined capital management,
resulting in improving industry fundamentals such as operating rates and capacity
utilization.
The packaging industry includes paper as well as plastic products. According to the Freedonia
Group, in 2003, the total demand for paper and plastic packaging, excluding corrugated boxes, was
44.1 billion pounds and is projected to grow to 57.3 billion pounds by 2013. According to Standard
& Poors, the paper and forest products industry is among the largest in the U.S. with annual
shipments of about $200 billion. The paper and paperboard segment typically accounts for about 85%
of industry revenues, with wood products being the remainder. In 2003, total paper and paperboard
production amounted to 88.4 million tons.
Roger Stone and Matthew Kaplan are parties to non-competition agreements expiring in July 2007
that prohibit their participation in any business in the corrugated packaging and container
business. Accordingly, we will not be able to seek a business combination with a target company in
this business segment. We believe that the market size of the various industry segments within the
paper, packaging, forest products and related industries are sufficiently large such that the
excluded segment will have no material effect on our ability to find and complete such a
combination.
19
Effecting a business combination
General
We are not presently engaged in, and we will not engage in, any substantive commercial
business for an indefinite period of time following this offering. We intend to utilize cash
derived from the proceeds of this offering, our capital stock, debt or a combination of these in
effecting a business combination. Although substantially all of the net proceeds of this offering
are intended to be generally applied toward effecting a business combination as described in this
prospectus, the proceeds are not otherwise being designated for any more specific purposes.
Accordingly, prospective investors in this offering will invest in us without an opportunity to
evaluate the specific merits or risks of any one or more business combinations. A business
combination may involve the acquisition of, or merger with, a company which does not need
substantial additional capital but which desires to establish a public trading market for its
shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering
itself. These include time delays, significant expense, loss of voting control and compliance with
various Federal and state securities laws. In the alternative, we may seek to consummate a business
combination with a company that may be financially unstable, which would subject us to the numerous
risks inherent in such companies.
We have not identified a target business
To date, we have not selected any target business with which to seek a business combination.
Our officers, directors, promoters and other affiliates are not currently engaged in discussions on
our behalf with representatives of other companies regarding the possibility of a potential merger,
capital stock exchange, asset acquisition or other similar business combination with us. Subject
to the limitation that a target business has a fair market value of at least 80% of our net assets
at the time of the acquisition, as described below in more detail, we will have virtually
unrestricted flexibility in identifying and selecting a prospective acquisition candidate.
Accordingly, there is no basis for investors in this offering to evaluate the possible merits or
risks of the target business with which we may ultimately complete a business combination. Although
our management will endeavor to evaluate the risks inherent in a particular target business, we
cannot assure you that we will properly ascertain or assess all significant risk factors.
Sources of target businesses
We anticipate that our officers and directors as well as their affiliates will bring to our
attention target business candidates. In no event, however, will we pay any of our existing
officers, directors or stockholders or any entity with which they are affiliated any finder's fee
or other compensation for services rendered to us prior to or in connection with the consummation
of a business combination. Target business candidates may also be brought to our attention from
various unaffiliated sources, including investment bankers, venture capital funds, leveraged buyout
funds, hedge funds, management buyout funds and other members of the financial community, who may
present solicited or unsolicited proposals.
Selection of a target business and structuring of a business combination
Subject to the requirement that our initial business combination must be with a target
business with a fair market value that is at least 80% of our net assets at the time of such
acquisition, our management will have virtually unrestricted flexibility in identifying and
selecting a prospective target business. In evaluating a prospective target business, our
management will consider, among other factors, the following:
•
financial condition and results of operation;
•
cash flow potential;
•
growth potential;
•
experience and skill of management and availability of additional personnel;
•
capital requirements;
•
competitive position;
•
barriers to entry by competitors;
•
stage of development of the products, processes or services;
•
security measures employed to protect technology, trademarks or trade secrets;
•
degree of current or potential market acceptance of the products, processes or services;
•
proprietary features and degree of intellectual property or other protection of the
products, processes or services;
•
regulatory environment of the industry; and
20
•
costs associated with effecting the business combination.
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a
particular business combination will be based, to the extent relevant, on the above factors as well
as other considerations deemed relevant by our management in effecting a business combination
consistent with our business objective. In evaluating a prospective target business, we will
conduct an extensive due diligence review which will encompass, among other things, meetings with
incumbent management and inspection of facilities, as well as review of financial and other
information which will be made available to us.
The time and costs required to select and evaluate a target business and to structure and
complete the business combination cannot presently be ascertained with any degree of certainty. Any
costs incurred with respect to the identification and evaluation of a prospective target business
with which a business combination is not ultimately completed will result in a loss to us and
reduce the amount of capital available to otherwise complete a business combination. However, we
will not pay any finder's or consulting fees to our existing stockholders, or any of their
respective affiliates, for services rendered to or in connection with a business combination.
Fair Market Value of Target Business
The initial target business that we acquire must have a fair market value equal to at least
80% of our net assets at the time of such acquisition. The fair market value of such business will
be determined by our board of directors based upon standards generally accepted by the financial
community, such as actual and potential sales, earnings and cash flow and book value. If our board
is not able to independently determine that the target business has a sufficient fair market value,
we will obtain an opinion from an unaffiliated, independent investment banking firm which is a
member of the National Association of Securities Dealers, Inc. with respect to the satisfaction of
such criteria. Since any opinion, if obtained, would merely state that fair market value meets the
80% of net assets threshold, it is not anticipated that copies of such opinion would be distributed
to our stockholders, although copies will be provided to stockholders who request it. We will not
be required to obtain an opinion from an investment banking firm as to the fair market value if our
board of directors independently determines that the target business has sufficient fair market
value.
Possible lack of business diversification
While we may seek to effect business combinations with more than one target business, our
initial business combination must be with a target business which satisfies the minimum valuation
standard at the time of such acquisition, as discussed above. Consequently, it is likely that we
will have the ability to effect only one, or perhaps two, business combinations. Accordingly, the
prospects for our success may be entirely dependent upon the future performance of a single
business. Unlike other entities which may have the resources to complete several business
combinations of entities operating in multiple industries or multiple areas of a single industry,
it is probable that we will not have the resources to diversify our operations or benefit from the
possible spreading of risks or offsetting of losses. By consummating a business combination with
only a single entity, our lack of diversification may:
•
subject us to numerous economic, competitive and regulatory developments, any or all
of which may have a substantial adverse impact upon the particular industry in which we
may operate subsequent to a business combination; and
•
result in our dependency upon the development or market acceptance of a single or
limited number of products, processes or services.
Limited ability to evaluate the target business' management
Although we intend to closely scrutinize the management of a prospective target business when
evaluating the desirability of effecting a business combination, we cannot assure you that our
assessment of the target business' management will prove to be correct. In addition, we cannot
assure you that the future management will have the necessary skills, qualifications or abilities
to manage a public company. While it is our intention that our officers will devote their full
efforts to our affairs subsequent to a business combination and that one or more of our directors
will remain associated in some capacity with us following a business combination, the future role
of our officers and directors in the target business cannot presently be stated with any certainty.
Moreover, we cannot assure you that our officers and directors will have significant experience or
knowledge relating to the operations of the particular target business.
21
Following a business combination, we may seek to recruit additional managers to supplement the
incumbent management of the target business. We cannot assure you that we will have the ability to
recruit additional managers, or that the managers we hire will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Opportunity for stockholder approval of business combination
Prior to the completion of a business combination, we will submit the transaction to our
stockholders for approval, even if the nature of the acquisition is such as would not ordinarily
require stockholder approval under applicable state law. In connection with seeking stockholder
approval of a business combination, we will furnish our stockholders with proxy solicitation
materials prepared in accordance with the Securities Exchange Act of 1934, which, among other
matters, will include a description of the operations of the target business and audited historical
financial statements of the business.
In connection with the vote required for any business combination, all of our existing
stockholders, including all of our officers and directors, have agreed to vote their respective
shares of common stock owned by them immediately prior to this offering in accordance with the
majority of the shares of common stock voted by the public stockholders. This voting arrangement
shall not apply to shares included in units purchased in this offering or purchased following this
offering in the open market by any of our existing stockholders, officers and directors. We will
proceed with the business combination only if a majority of the shares of common stock voted by the
public stockholders are voted in favor of the business combination and public stockholders owning
less than 20% of the shares sold in this offering exercise their conversion rights.
Conversion rights
At the time we seek stockholder approval of any business combination, we will offer each
public stockholder the right to have such stockholder's shares of common stock converted to cash if
the stockholder votes against the business combination and the business combination is approved and
completed. The actual per-share conversion price will be equal to the amount in the trust account,
inclusive of any interest (calculated as of two business days prior to the consummation of the
proposed business combination), divided by the number of shares sold in this offering. Without
taking into any account interest earned on the trust account, the initial per-share conversion
price would be $5.48, or $0.52 less than the per-unit offering price of $6.00. An eligible
stockholder may request conversion at any time after the mailing to our stockholders of the proxy
statement and prior to the vote taken with respect to a proposed business combination at a meeting
held for that purpose, but the request will not be granted unless the stockholder votes against the
business combination and the business combination is approved and completed. Any request for
conversion, once made, may be withdrawn at any time up to the date of the meeting. It is
anticipated that the funds to be distributed to stockholders entitled to convert their shares who
elect conversion will be distributed promptly after completion of a business combination. Public
stockholders who convert their stock into their share of the trust account still have the right to
exercise the warrants that they received as part of the units. We will not complete any business
combination if public stockholders owning 20% or more of the shares sold in this offering exercise
their conversion rights.
Liquidation if no business combination
If we do not complete a business combination within 18 months after the consummation of this
offering, or within 24 months if the extension criteria described below have been satisfied, we
will be dissolved and distribute to all of our public stockholders, in proportion to their
respective equity interests, an aggregate sum equal to the amount in the trust account, inclusive
of any interest, plus any remaining net assets. Our existing stockholders have waived their rights
to participate in any liquidation distribution with respect to shares of common stock owned by them
immediately prior to this offering. There will be no distribution from the trust account with
respect to our warrants, which will expire worthless.
If we were to expend all of the net proceeds of this offering, other than the proceeds
deposited in the trust account, and without taking into account interest, if any, earned on the
trust account, the initial per-share liquidation price would be $5.48, or $0.52 less than the
per-unit offering price of $6.00. The proceeds deposited in the trust account could, however,
become subject to the claims of our creditors which could be prior to the claims of our public
stockholders. Messrs. Stone, Kaplan, Chapman, Furer and Rahman have agreed pursuant to agreements
with us and Morgan Joseph & Co. that, if we liquidate prior to the consummation of a business
combination, they will be personally liable to pay debts and obligations to vendors that are owed
money by us for services rendered or products sold to us in excess of the net proceeds of this
offering not held in the trust account at that time. We cannot assure
you, however, that they would be able to satisfy those obligations.
22
Further, they will not be
personally liable to pay debts and obligations to prospective target businesses if a business
combination is not consummated with such prospective target businesses, or for claims from any
other entity other than vendors. Accordingly, we cannot assure you that the actual per-share
liquidation price will not be less than $5.48, plus interest, due to claims of creditors.
If we enter into either a letter of intent, an agreement in principle or a definitive
agreement to complete a business combination prior to the expiration of 18 months after the
consummation of this offering, but are unable to complete the business combination within the
18-month period, then we will have an additional six months in which to complete the business
combination contemplated by the letter of intent, agreement in principle or definitive agreement.
If we are unable to do so within 24 months following the consummation of this offering, we will
then liquidate. Upon notice from us, the trustee of the trust account will commence liquidating the
investments constituting the trust account and will turn over the proceeds to our transfer agent
for distribution to our public stockholders. We anticipate that our instruction to the trustee
would be given promptly after the expiration of the applicable 18-month or 24-month period.
Our public stockholders will be entitled to receive funds from the trust account only in the
event of our liquidation or if the stockholders seek to convert their respective shares into cash
upon a business combination which the stockholder voted against and which is completed by us. In no
other circumstances will a stockholder have any right or interest of any kind to or in the trust
account.
Competition
In identifying, evaluating and selecting a target business, we may encounter intense
competition from other entities having a business objective similar to ours. Many of these entities
are well established and have extensive experience identifying and effecting business combinations
directly or through affiliates. Many of these competitors possess greater technical, human and
other resources than us. Further:
•
our obligation to seek stockholder approval of a business combination may delay or
threaten the completion of a transaction;
•
our obligation to convert into cash shares of common stock held by our public
stockholders in certain instances may reduce the resources available to us for a
business combination; and
•
our outstanding warrants and option, and the future dilution they potentially
represent, may not be viewed favorably by certain target businesses.
Any of these factors may place us at a competitive disadvantage in successfully negotiating a
business combination. Our management believes, however, that to the extent that our target business
is a privately held entity, our status as a well-financed public entity and the substantial
industry expense of any officers may give us a competitive advantage over entities having a similar
business objective as ours in acquiring a target business with significant growth potential on
favorable terms.
If we succeed in effecting a business combination, there will be, in all likelihood, intense
competition from competitors of the target business. We cannot assure you that, subsequent to a
business combination, we will have the resources or ability to compete effectively.
Facilities
We maintain our executive offices at c/o Stone-Kaplan Investments, LLC, One Northfield Plaza,
Suite 480, Northfield, IL 60093. Stone-Kaplan Investments has agreed to provide us with certain
administrative, technology and secretarial services, as well as the use of certain limited office
space at this location at a cost of $7,500 per month pursuant to a letter agreement between us and
Stone-Kaplan Investments. Stone-Kaplan Investments will use a portion of the $7,500 monthly fee to
pay Arcade Partners for overhead expenditures incurred on our behalf. We believe, based on rents
and fees for similar services in the Chicago metropolitan area, that the $7,500 fee is at least as
favorable as we could have obtained from an unaffiliated person. We consider our current office
space adequate for our current operations.
Employees
We have two executive officers. These individuals are not obligated to devote any specific
number of hours to our matters and intend to devote only as much time as they deem necessary to our
affairs. The amount of time they
will devote in any time period will vary based on the availability of suitable target
businesses to investigate, although we expect Messrs. Stone and Kaplan to devote an average of
approximately ten hours per week to our business. We do not intend to have any full time employees
prior to the consummation of a business combination.
23
Periodic Reporting and Audited Financial Statements
We have registered our units, common stock and warrants under the Securities Exchange Act of
1934, as amended, and have reporting obligations, including the requirement that we file annual and
quarterly reports with the SEC. In accordance with the requirements of the Securities Exchange Act
of 1934, as amended, our annual reports will contain financial statements audited and reported on
by our independent accountants.
We will not acquire a target business if audited financial statements based on United States
generally accepted accounting principles cannot be obtained for the target business. Additionally,
our management will provide stockholders with audited financial statements, prepared in accordance
with generally accepted accounting principles, of the prospective target business as part of the
proxy solicitation materials sent to stockholders to assist them in assessing the target business.
Our management believes that the requirement of having available audited financial statements for
the target business will not materially limit the pool of potential target businesses available for
acquisition.
We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act
for the fiscal year ending December 31, 2006. A target company may not be in compliance with the
provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may
increase the time and costs necessary to complete any such acquisition.
Comparison to offerings of blank check companies
The following table compares and contrasts the terms of our offering and the terms of an
offering of blank check companies under Rule 419 promulgated by the SEC assuming that the gross
proceeds, underwriting discounts and underwriting expenses for the Rule 419 offering are the same
as this offering and that the underwriters will not exercise their over-allotment option. None of
the terms of a Rule 419 offering will apply to this offering.
Terms of Our Offering
Terms Under a Rule 419 Offering
Escrow of offering proceeds
$164,279,000 of the
net offering
proceeds will be
deposited into a
trust account at
JPMorgan Chase NY
Bank maintained by
Continental Stock
Transfer & Trust
Company.
$150,660,000 of the offering
proceeds would be required to
be deposited into either an
escrow account with an insured
depositary institution or in a
separate bank account
established by a broker-dealer
in which the broker-dealer
acts as trustee for persons
having the beneficial
interests in the account.
Investment of net proceeds
The $164,279,000 of
net offering
proceeds held in
trust will only be
invested in U.S.
"government
securities," defined
as any Treasury Bill
issued by the United
States having a
maturity of one
hundred and eighty
days or less.
Proceeds could be invested
only in specified securities
such as a money market fund
meeting conditions of the
Investment Company Act of 1940
or in securities that are
direct obligations of, or
obligations guaranteed as to
principal or interest by, the
United States.
Limitation on Fair Value or
Net Assets of Target
Business
The initial target
business that we
acquire must have a
fair market value
equal to at least
80% of our net
assets at the time
of such acquisition.
We would be restricted from
acquiring a target business
unless the fair value of such
business or net assets to be
acquired represented at least
80% of the maximum offering
proceeds.
24
Terms of Our Offering
Terms Under a Rule 419 Offering
Trading of securities issued
The units may
commence trading on
or promptly after
the date of this
prospectus. The
common stock and
warrants comprising
the units will begin
to trade separately
on the 90th day
after the date of
this prospectus
unless Morgan Joseph
& Co. informs us of
its decision to
allow earlier
separate trading,
provided we have
filed with the SEC a
Current Report on
Form 8-K, which
includes an audited
balance sheet
reflecting our
receipt of the
proceeds of this
offering, including
any proceeds we
receive from the
exercise of the
over-allotment
option, if such
option is exercised
prior to the filing
of the Form 8-K.
No trading of the units or the
underlying common stock and
warrants would be permitted
until the completion of a
business combination. During
this period, the securities
would be held in the escrow or
trust account.
Exercise of the warrants
The warrants cannot
be exercised until
the later of the
completion of a
business combination
and one year from
the date of this
prospectus and,
accordingly, will be
exercised only after
the trust account
has been terminated
and distributed.
The warrants could be
exercised prior to the
completion of a business
combination, but securities
received and cash paid in
connection with the exercise
would be deposited in the
escrow or trust account.
Election to remain an
investor
We will give our
stockholders the
opportunity to vote
on the business
combination. In
connection with
seeking stockholder
approval, we will
send each
stockholder a proxy
statement containing
information required
by the SEC. A
stockholder
following the
procedures described
in this prospectus
is given the right
to convert his or
her shares into his
or her pro rata
share of the trust
account. However, a
stockholder who does
not follow these
procedures or a
stockholder who does
not take any action
would not be
entitled to the
return of any funds.
A prospectus containing
information required by the
SEC would be sent to each
investor. Each investor would
be given the opportunity to
notify the company, in
writing, within a period of no
less than 20 business days and
no more than 45 business days
from the effective date of the
post-effective amendment, to
decide whether he or she
elects to remain a stockholder
of the company or require the
return of his or her
investment. If the company has
not received the notification
by the end of the 45th
business day, funds and
interest or dividends, if any,
held in the trust or escrow
account would automatically be
returned to the stockholder.
Unless a sufficient number of
investors elect to remain
investors, all of the
deposited funds in the escrow
account must be returned to
all investors and none of the
securities will be issued.
25
Terms of Our Offering
Terms Under a Rule 419 Offering
Business combination
deadline
A business
combination must
occur within 18
months after the
consummation of this
offering or within
24 months after the
consummation of this
offering if a letter
of intent, agreement
in principle or
definitive agreement
relating to a
prospective business
combination was
entered into prior
to the end of the
18-month period.
If an acquisition has not been
consummated within 18 months
after the effective date of
the initial registration
statement, funds held in the
trust or escrow account would
be returned to investors.
Release of funds
The proceeds held in
the trust account
will not be released
until the earlier of
the completion of a
business combination
and our liquidation
upon failure to
effect a business
combination within
the allotted time.
The proceeds held in the
escrow account would not be
released until the earlier of
the completion of a business
combination or the failure to
effect a business combination
within the allotted time.
26
MANAGEMENT
Directors and Executive Officers
Our current directors and executive officers are as follows:
Name
Age
Position
Roger W. Stone
70
Chairman of the Board and Chief Executive Officer
Matthew Kaplan
48
President, Secretary and Director
John M. Chapman
45
Director
Jonathan R. Furer
48
Director
Muhit U. Rahman
49
Director
Roger W. Stone
has been our Chairman of the Board since our inception. Mr. Stone has been
Manager of Stone-Kaplan Investments, LLC, a private investment company, since July 2004. He was
Chairman and Chief Executive Officer of Box USA Holdings, Inc., a corrugated box manufacturer, from
July 2000 until the sale of that company in July 2004. Mr. Stone was Chairman, President and Chief
Executive Officer of Stone Container Corporation, a multinational paper company primarily producing
and selling pulp, paper and packaging products, from March 1987 to November 1998 when Stone
Container Corporation merged with Jefferson Smurfit Corporation, at which time he became President
and Chief Executive Officer of Smurfit-Stone Container Corporation
until March 1999. Mr. Stone serves on the boards
of directors of McDonald's Corporation and Autoliv Inc. Mr. Stone received a B.S. in Economics
from the Wharton School at the University of Pennsylvania. Mr. Stone is the father-in-law of
Matthew Kaplan.
Matthew Kaplan
has been our President and a member of our board of directors since our
inception. Mr. Kaplan has been Manager of Stone-Kaplan Investments, LLC, a private investment
company, since July 2004. He was President, Chief Operating Officer and a director of Box USA
Holdings, Inc., a corrugated box manufacturer, from July 2000 until the sale of the company in July
2004. Mr. Kaplan began his career at Stone Container Corporation in 1979 and was serving as its
Senior Vice President and General Manager of North American Operations when Stone Container
Corporation merged with Jefferson Smurfit Corporation in November 1998. He was Vice
President/General Manager Container Division with Smurfit-Stone Container Corporation until March
1999. Mr. Kaplan received a B.A. in Economics from the University of Pennsylvania and an M.B.A.
from the University of Chicago. Mr. Kaplan is the son-in-law of Roger W. Stone.
John M. Chapman
has been a member of our board of directors since our inception. Mr. Chapman
is a co-founder and managing member of Arcade Partners LLC, a private equity firm. Since January
2004, he has been a Managing Director of Washington & Congress Managers, a private equity firm.
From March 1990 through December 2003, he was employed by Triumph Capital Group, Inc, a private
equity firm, last serving as a Managing Director. Mr. Chapman received a B.A. from Bates College
and an M.B.A. from the Tuck School of Business at Dartmouth University.
Jonathan R. Furer
has been a member of our board of directors since our inception. Mr. Furer
is a co-founder and managing member of Arcade Partners LLC. Since January 2004, he has been a
Managing Director of Washington & Congress Managers, LLC. From March 2000 through December 2003, he
was a Managing Director of Triumph Capital Group, Inc. From December 1998 until February 2000, he
was a Managing Director of MG Group, LLC, a private equity firm he co-founded. Mr. Furer received a
B.B.A. from George Washington University.
Muhit U. Rahman
has been a member of our board of directors since our inception. Mr. Rahman is
a co-founder and managing member of Arcade Partners LLC. Since January 2004, he has been a Managing
Director of Washington & Congress Managers. From November 1993 through December 2003, he was a
Managing Director of Triumph Capital Group. Mr. Rahman received a B.S. from Yale University and an
M.B.A. from the Anderson School of Management at UCLA.
In July 2003, Triumph Capital Group, Inc. and its general counsel were found guilty of fraud
arising from a scheme involving the former Connecticut State Treasurer's investment of state
pension fund money with private equity firms, including Triumph. Triumph's chairman pleaded guilty
to criminal charges for his role in this matter.
27
Triumph and its chairman subsequently entered into
a consent decree in a related action brought by the SEC. Messrs. Chapman, Rahman and Furer were not executive officers, directors or shareholders of Triumph
Capital during the period that the conduct was alleged to have occurred and were not named or
targeted in any of these actions.
Our board of directors is divided into three classes with only one class of directors being
elected in each year and each class serving a three-year term. The term of office of the first
class of directors, consisting of Muhit Rahman, will expire at our first annual meeting of
stockholders. The term of office of the second class of directors, consisting of Matthew Kaplan and
John Chapman, will expire at the second annual meeting. The term of office of the third class of
directors, consisting of Roger Stone and Jonathan Furer, will expire at the third annual meeting.
These individuals will play a key role in identifying and evaluating prospective acquisition
candidates, selecting the target business, and structuring, negotiating and consummating its
acquisition.
Executive Compensation
No executive officer has received any cash compensation for services rendered. Commencing on
the effective date of this prospectus through the acquisition of a target business, we will pay
Stone-Kaplan Investments LLC, an affiliate of Roger Stone and Matthew Kaplan, a fee of $7,500 per
month for providing us with certain administrative, technology and secretarial services, as well as
the use of certain limited office space in Chicago. A portion of this
fee will be paid to Arcade Partners LLC, an affiliate of John Chapman, Jonathan Furer and Muhit Rahman, for overhead
costs incurred on our behalf. However, this arrangement is solely for our benefit and is not
intended to provide these individuals compensation in lieu of a salary. No other executive officer
or director has a relationship with or interest in Stone-Kaplan Investments, LLC or Arcade Partners
LLC. Other than this $7,500 per-month fee, no compensation of any kind, including finder's and
consulting fees, will be paid to any of our existing stockholders, our officers or directors, or
any of their respective affiliates, for services rendered prior to or in connection with a business
combination. However, our existing stockholders will be reimbursed for any out-of-pocket expenses
incurred in connection with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable business combinations. There is no limit on the
amount of these out-of-pocket expenses and there will be no review of the reasonableness of the
expenses by anyone other than our board of directors, which includes persons who may seek
reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Because
none of our directors will be deemed "independent," we will generally not have the benefit of
independent directors examining the propriety of expenses incurred on our behalf and subject to
reimbursement.
Conflicts of Interest
Potential investors should be aware of the following potential conflicts of interest:
•
None of our officers and directors are required to commit their full time to our
affairs and, accordingly, they may have conflicts of interest in allocating management
time among various business activities.
•
In the course of their other business activities, our officers and directors may
become aware of investment and business opportunities which may be appropriate for
presentation to us as well as the other entities with which they are affiliated. They
may have conflicts of interest in determining to which entity a particular business
opportunity should be presented. For a complete description of our management's other
affiliations, see the section entitled "Directors and Executive Officers."
•
Our officers and directors may in the future become affiliated with entities,
including other blank check companies, engaged in business activities similar to those
intended to be conducted by us.
•
Since our directors own shares of our common stock, and may own warrants, which will
be worthless if a business combination is not consummated, our board may have a
conflict of interest in determining whether a particular target business is appropriate
to effect a business combination. The personal and financial interests of our directors
and officers may influence their motivation in identifying and selecting a target
business, completing a business combination on a timely basis and securing the release
of their stock.
In general, officers and directors of a corporation incorporated under the laws of the State
of Delaware are required to present business opportunities to a corporation if:
•
the corporation could financially undertake the opportunity;
•
the opportunity is within the corporation's line of business; and
28
•
it would not be fair to the corporation and its stockholders for the opportunity not
to be brought to the attention of the corporation.
Accordingly, as a result of multiple business affiliations, our officers and directors may
have similar legal obligations relating to presenting business opportunities meeting the
above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our
board evaluates a particular business opportunity with respect to the above-listed criteria. We
cannot assure you that any of the above mentioned conflicts will be resolved in our favor.
In order to minimize potential conflicts of interest which may arise from multiple corporate
affiliations, each of our officers has agreed, until the earlier of a business combination, our
liquidation or such time as he ceases to be an officer, to present to us for our consideration,
prior to presentation to any other entity, any business opportunity which may reasonably be
required to be presented to us under Delaware law, subject to any pre-existing fiduciary
obligations he might have. However, our directors are not under any such obligation. Accordingly,
they may face conflicts of interest in determining to which entity a particular business
opportunity should be presented. We cannot assure you that these conflicts will be resolved in our
favor.
In connection with the vote required for any business combination, all of our existing
stockholders, including all of our officers and directors, have agreed to vote their respective
shares of common stock which were owned prior to this offering in accordance with the vote of the
public stockholders owning a majority of the shares of our common stock sold in this offering. In
addition, they have agreed to waive their respective rights to participate in any liquidation
distribution but only with respect to those shares of common stock acquired by them prior to this
offering.
To further minimize potential conflicts of interest, we have agreed not to consummate a
business combination with an entity which is affiliated with any of our existing stockholders
unless we obtain an opinion from an independent investment banking firm that the business
combination is fair to our stockholders from a financial point of view.
29
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership of our common
stock as of April 30, 2005, and as adjusted to reflect the sale of our common stock included in the
units offered by this prospectus (assuming the persons listed below do not purchase units in this
offering), by:
•
each person known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock;
•
each of our officers and directors; and
•
all our officers and directors as a group.
Unless otherwise indicated, we believe that all persons named in the table have sole voting
and investment power with respect to all shares of common stock beneficially owned by them.
Amount and
Nature of
Approximate Percentage of
Beneficial
Outstanding Common Stock
Name and Address of Beneficial Owner
Ownership
Before Offering
After Offering
Roger W. Stone (1)
2,062,500
27.5
%
5.5
%
Matthew Kaplan (1)
2,062,500
27.5
%
5.5
%
John M. Chapman (2)
1,125,000
15.0
%
3.0
%
Jonathan R. Furer (3)
1,125,000
15.0
%
3.0
%
Muhit U. Rahman (4)
1,125,000
15.0
%
3.0
%
All directors and executive
officers as a group (5 individuals)
7,500,000
100.0
%
20.0
%
(1)
The business address of each of such individuals is c/o Stone-Kaplan Investments, LLC,
One Northfield Plaza, Suite 480, Northfield, IL 60093.
(2)
The business address of such individual is c/o Arcade Partners LLC, 62 La Salle Road, Suite
220, West Hartford, CT 06107.
(3)
The business address of such individual is 45 Park St., Tenafly, NJ 07670.
(4)
The business address of such individual is 8550 Willow Run Court Cincinnati, OH 45243.
Messrs. Stone, Kaplan, Chapman, Furer and Rahman, representing all of our existing
stockholders, officers and directors, have indicated that they plan on purchasing at least 500,000
units in the offering. However, they are not obligated to do so and we do not have any agreements
or arrangements with these individuals requiring them to purchase such securities. Assuming these
securities are not purchased, immediately after this offering, these individuals, collectively,
will beneficially own 20% of the then issued and outstanding shares of our common stock. Because of
this ownership block, these stockholders may be able to effectively exercise control over all
matters requiring approval by our stockholders, including the election of directors and approval of
significant corporate transactions other than approval of a business combination.
All of the shares of our common stock outstanding prior to the date of this prospectus will be
placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, until the
earliest of:
•
12 months following the date of the consummation of a liquidation, merger, stock
exchange or other similar transaction which results in all of our stockholders having
the right to exchange their shares of common stock for cash, securities or other
property subsequent to our consummating a business combination with a target business;
and
•
our liquidation.
During the escrow period, the holders of these shares will not be able to sell or transfer
their securities except to their spouses and children or trusts established for their benefit or to
affiliated companies, but will retain all other
30
rights as our stockholders, including, without
limitation, the right to vote their shares of common stock and the right
to receive cash dividends, if declared. If dividends are declared and payable in shares of
common stock, such dividends will also be placed in escrow. If we are unable to effect a business
combination and liquidate, none of our existing stockholders will receive any portion of the
liquidation proceeds with respect to common stock owned by them prior to the date of this
prospectus.
Messrs. Stone, Kaplan, Chapman, Furer and Rahman have agreed with Morgan Joseph & Co. that
after this offering is completed and within the first 40 trading days after separate trading of the
warrants has commenced, they or certain of their affiliates or designees will collectively purchase
up to 4,000,000 warrants in the public marketplace at prices not to exceed $0.70 per warrant. They
have further agreed that any warrants purchased by them or their affiliates or designees will not
be sold or transferred until after we have completed a business combination. The warrants may trade
separately on the 90th day after the date of this prospectus unless Morgan Joseph & Co. determines
that an earlier date is acceptable. In no event will Morgan Joseph & Co. allow separate trading of
the common stock and warrants until we file a Current Report on Form 8-K which includes an audited
balance sheet reflecting our receipt of the proceeds of this offering including any proceeds we
receive from the exercise of the over-allotment option if such option is exercised prior to our
filing of the Form 8-K. Purchases of warrants demonstrate confidence in our ultimate ability to
effect a business combination because the warrants will expire worthless if we are unable to
consummate a business combination and are ultimately forced to liquidate.
Messrs. Stone, Kaplan, Chapman, Furer and Rahman may be deemed to be our "parents" and
"promoters," as these terms are defined under the Federal securities laws.
31
CERTAIN TRANSACTIONS
On April 16, 2005, we issued 7,500,000 shares of our common stock to the individuals set forth
below for $25,000 in cash, at an average purchase price of $0.003 per share, as follows:
Name
Number of Shares
Relationship to Us
Roger W. Stone
2,062,500
Chairman of the Board and Chief Executive Officer
Matthew Kaplan
2,062,500
President and Director
John M. Chapman
1,125,000
Director
Jonathan R. Furer
1,125,000
Director
Muhit U. Rahman
1,125,000
Director
The holders of the majority of these shares will be entitled to make up to two demands that we
register these shares pursuant to an agreement to be signed prior to or on the date of this
prospectus. The holders of the majority of these shares may elect to exercise these registration
rights at any time after the date on which these shares of common stock are released from escrow.
In addition, these stockholders have certain "piggy-back" registration rights on registration
statements filed subsequent to the date on which these shares of common stock are released from
escrow. We will bear the expenses incurred in connection with the filing of any such registration
statements.
Stone-Kaplan Investments, LLC, an affiliate of Roger Stone and Matthew Kaplan, has agreed
that, commencing on the effective date of this prospectus through the acquisition of a target
business, it will make available to us certain administrative, technology and secretarial services,
as well as the use of certain limited office space in Chicago, Illinois, as we may require from
time to time. We have agreed to pay Stone-Kaplan Investments, LLC $7,500 per month for these
services, a portion of which will be paid to Arcade Partners LLC, an affiliate of John Chapman,
Jonathan Furer and Muhit Rahman. These individuals are each managing members of their respective
entities- and, as a result, will benefit from the transaction to the extent of their interest this
entity. However, this arrangement is solely for our benefit and is not intended to provide these
individuals compensation in lieu of a salary. We believe, based on rents and fees for similar
services in the Chicago metropolitan area, that the fee charged by Stone-Kaplan Investments, LLC is
at least as favorable as we could have obtained from an unaffiliated person. However, as our
directors may not be deemed "independent," we did not have the benefit of disinterested directors
approving this transaction.
In April 2005, Messrs. Stone, Kaplan, Chapman, Furer and Rahman advanced a total of $200,000
to us to cover expenses related to this offering. The loans will be payable without interest on the
earlier of one year from the date of issuance or the consummation of this offering. We intend to
repay these loans from the proceeds of this offering not being placed in trust.
We will reimburse our officers and directors for any reasonable out-of-pocket business
expenses incurred by them in connection with certain activities on our behalf such as identifying
and investigating possible target businesses and business combinations. There is no limit on the
amount of accountable out-of-pocket expenses reimbursable by us, which will be reviewed only by our
board or a court of competent jurisdiction if such reimbursement is challenged.
Other than the $7,500 per-month administrative fee and reimbursable out-of-pocket expenses
payable to our officers and directors, no compensation or fees of any kind, including finder's and
consulting fees, will be paid to any of our existing stockholders, officers or directors who owned
our common stock prior to this offering, or to any of their respective affiliates for services
rendered to us prior to or with respect to the business combination.
All ongoing and future transactions between us and any of our officers and directors or their
respective affiliates, including loans by our officers and directors, will be on terms believed by
us to be no less favorable than are available from unaffiliated third parties and such transactions
or loans, including any forgiveness of loans, will require prior approval in each instance by a
majority of our uninterested "independent" directors (to the extent we have any) or the members of
our board who do not have an interest in the transaction, in either case, who had access, at our
expense, to our attorneys or independent legal counsel.
32
DESCRIPTION OF SECURITIES
General
We are authorized to issue 175,000,000 shares of common stock, par value $.0001 per share, and
1,000,000 shares of preferred stock, par value $.0001 per share. As of the date of this prospectus,
7,500,000 shares of common stock are outstanding, held by five record holders. No shares of
preferred stock are currently outstanding.
Units
Each unit consists of one share of common stock and two warrants. Each warrant entitles the
holder to purchase one share of common stock. The common stock and warrants will begin to trade
separately on the 90th day after the date of this prospectus unless Morgan Joseph & Co. informs us
of its decision to allow earlier separate trading, provided that, in no event may the common stock
and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K
which includes an audited balance sheet reflecting our receipt of the gross proceeds of this
offering. We will file a Current Report on Form 8-K which includes this audited balance sheet upon
the consummation of this offering. The audited balance sheet will reflect proceeds we receive from
the exercise of the over-allotment option, if the over-allotment option is exercised prior to the
filing of the Form 8-K.
Common stock
Our stockholders are entitled to one vote for each share held of record on all matters to be
voted on by stockholders. In connection with the vote required for any business combination, all of
our existing stockholders, including all of our officers and directors, have agreed to vote their
respective shares of common stock owned by them immediately prior to this offering in accordance
with the majority of the shares of common stock voted by the public stockholders. This voting
arrangement shall not apply to shares included in units purchased in this offering or purchased
following this offering in the open market by any of our existing stockholders, officers and
directors. Additionally, our existing stockholders, officers and directors will vote all of their
shares in any manner they determine, in their sole discretion, with respect to any other items that
come before a vote of our stockholders.
We will proceed with the business combination only if a majority of the shares of common stock
voted by the public stockholders are voted in favor of the business combination and public
stockholders owning less than 20% of the shares sold in this offering exercise their conversion
rights.
Our board of directors is divided into three classes, each of which will generally serve for a
term of three years with only one class of directors being elected in each year. There is no
cumulative voting with respect to the election of directors, with the result that the holders of
more than 50% of the shares voted for the election of directors can elect all of the directors.
If we are forced to liquidate prior to a business combination, our public stockholders are
entitled to share ratably in the trust account, inclusive of any interest, and any net assets
remaining available for distribution to them after payment of liabilities. Our existing
stockholders have agreed to waive their rights to share in any distribution with respect to common
stock owned by them prior to the offering if we are forced to liquidate prior to a business
combination.
Our stockholders have no conversion, preemptive or other subscription rights and there are no
sinking fund or redemption provisions applicable to the common stock, except that public
stockholders have the right to have their shares of common stock converted to cash equal to their
pro rata share of the trust account if they vote against the business combination and the business
combination is approved and completed. Public stockholders who convert their stock into their share
of the trust account still have the right to exercise the warrants that they received as part of
the units.
Preferred stock
Our certificate of incorporation, as amended, authorizes the issuance of 1,000,000 shares of
blank check preferred stock with such designation, rights and preferences as may be determined from
time to time by our board of directors. Accordingly, our board of directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or
other rights which could adversely affect the voting power or other
33
rights of the holders of common
stock, although the underwriting agreement prohibits us, prior to a business
combination, from issuing preferred stock which participates in any manner in the proceeds of
the trust account, or which votes as a class with the common stock on a business combination. We
may issue some or all of the preferred stock to effect a business combination. In addition, the
preferred stock could be utilized as a method of discouraging, delaying or preventing a change in
control of us. Although we do not currently intend to issue any shares of preferred stock, we
cannot assure you that we will not do so in the future. No shares of preferred stock are being
issued or registered in this offering.
Warrants
No warrants are currently outstanding. Each warrant entitles the registered holder to purchase
one share of our common stock at a price of $5.00 per share, subject to adjustment as discussed
below, at any time commencing on the later of:
•
the completion of a business combination; and
•
one year from the date of this prospectus.
The warrants will expire four years from the date of this prospectus at 5:00 p.m., New York City time.
We may call the warrants for redemption:
•
in whole and not in part;
•
at a price of $.01 per warrant at any time after the warrants become exercisable;
•
upon not less than 30 days' prior written notice of redemption to each warrant holder; and
•
if, and only if, the reported last sale price of the common stock equals or exceeds
$8.50 per share for any 20 trading days within a 30 trading day period ending on the
third business day prior to the notice of redemption to warrant holders.
The warrants will be issued in registered form under a warrant agreement between Continental
Stock Transfer & Trust Company, as warrant agent, and us. You should review a copy of the warrant
agreement, which has been filed as an exhibit to the registration statement of which this
prospectus is a part, for a complete description of the terms and conditions applicable to the
warrants.
The exercise price and number of shares of common stock issuable on exercise of the warrants
may be adjusted in certain circumstances including in the event of a stock dividend, or our
recapitalization, reorganization, merger or consolidation. However, the warrants will not be
adjusted for issuances of common stock at a price below their respective exercise prices.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the
expiration date at the offices of the warrant agent, with the exercise form on the reverse side of
the warrant certificate completed and executed as indicated, accompanied by full payment of the
exercise price, by certified check payable to us, for the number of warrants being exercised. The
warrant holders do not have the rights or privileges of holders of common stock and any voting
rights until they exercise their warrants and receive shares of common stock. After the issuance of
shares of common stock upon exercise of the warrants, each holder will be entitled to one vote for
each share held of record on all matters to be voted on by stockholders.
No warrants will be exercisable unless at the time of exercise a prospectus relating to common
stock issuable upon exercise of the warrants is current and the common stock has been registered or
qualified or deemed to be exempt under the securities laws of the state of residence of the holder
of the warrants. Under the terms of the warrant agreement, we have agreed to meet these conditions
and use our best efforts to maintain a current prospectus relating to common stock issuable upon
exercise of the warrants until the expiration of the warrants. However, we cannot assure you that
we will be able to do so. The warrants may be deprived of any value and the market for the warrants
may be limited if the prospectus relating to the common stock issuable upon the exercise of the
warrants is not current or if the common stock is not qualified or exempt from qualification in the
jurisdictions in which the holders of the warrants reside.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the
warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon
exercise, round up or down to the nearest whole number the number of shares of common stock to be
issued to the warrant holder.
34
Purchase Option
We have agreed to sell to the representative of the underwriters an option to purchase up to a
total of 1,500,000 units at a per unit price of $7.50, which may be exercised on a cashless basis. The
units issuable upon exercise of this option are identical to those offered by this prospectus,
except that the exercise price of the warrants underlying the underwriters' purchase option is
$6.25 (125% of the exercise price of the warrants included in the units sold in the offering). For
a more complete description of the purchase option, see the section below entitled
"Underwriting—Purchase Option."
Dividends
We have not paid any dividends on our common stock to date and do not intend to pay dividends
prior to the completion of a business combination. The payment of dividends in the future will be
contingent upon our revenues and earnings, if any, capital requirements and general financial
condition subsequent to completion of a business combination. The payment of any dividends
subsequent to a business combination will be within the discretion of our then current board of
directors. It is the present intention of our board of directors to retain all earnings, if any,
for use in our business operations and, accordingly, our board does not anticipate declaring any
dividends in the foreseeable future.
Our Transfer Agent and Warrant Agent
The transfer agent for our securities and warrant agent for our warrants is Continental Stock
Transfer & Trust Company, 17 Battery Place, New York, New York 10004.
Shares Eligible for Future Sale
Immediately after this offering, we will have 37,500,000 shares of common stock outstanding,
or 42,000,000 shares if the underwriters' over-allotment option is exercised in full. Of these
shares, the 30,000,000 shares sold in this offering, or 34,500,000 shares if the over-allotment
option is exercised, will be freely tradable without restriction or further registration under the
Securities Act, except for any shares purchased by one of our affiliates within the meaning of Rule
144 under the Securities Act. All of the remaining 7,500,000 shares are restricted securities under
Rule 144, in that they were issued in private transactions not involving a public offering. None of
those will be eligible for sale under Rule 144 prior to April 15, 2006. Notwithstanding this rule,
all of those shares have been placed in escrow and will not be transferable for a period 12 months
from the date of a business combination and will only be released prior to that date subject to
certain limited exceptions.
Rule 144
In general, under Rule 144 as currently in effect, a person who has beneficially owned
restricted shares of our common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of either of the following:
•
1% of the number of shares of common stock then outstanding, which will equal
375,000 shares immediately after this offering (or 420,000 if the underwriters exercise
their over-allotment option); and
•
the average weekly trading volume of the common stock during the four calendar weeks
preceding the filing of a notice on Form 144 with respect to the sale.
Sales under Rule 144 are also limited by manner of sale provisions and notice requirements and
to the availability of current public information about us.
Rule 144(k)
Under Rule 144(k), a person who is not deemed to have been one of our affiliates at the time
of or at any time during the three months preceding a sale, and who has beneficially owned the
restricted shares proposed to be sold for at least two years, including the holding period of any
prior owner other than an affiliate, is entitled to sell their shares without complying with the
manner of sale, public information, volume limitation or notice provisions of Rule 144.
35
SEC Position on Rule 144 Sales
The Securities and Exchange Commission has taken the position that promoters or affiliates of
a blank check company and their transferees, both before and after a business combination, would
act as an "underwriter" under the Securities Act when reselling the securities of a blank check
company. Accordingly, Rule 144 may not be available for the resale of those securities despite
technical compliance with the requirements of Rule 144, in which event the resale transactions
would need to be made through a registered offering.
Registration Rights
The holders of our 7,500,000 issued and outstanding shares of common stock on the date of this
prospectus will be entitled to registration rights pursuant to an agreement to be signed prior to
or on the effective date of this offering. The holders of the majority of these shares are entitled
to make up to two demands that we register these shares. The holders of the majority of these
shares can elect to exercise these registration rights at any time after the date on which these
shares of common stock are released from escrow. In addition, these stockholders have certain
"piggy-back" registration rights on registration statements filed subsequent to the date on which
these shares of common stock are released from escrow. We will bear the expenses incurred in
connection with the filing of any such registration statements.
36
UNDERWRITING
In accordance with the terms and conditions contained in the underwriting agreement, we have
agreed to sell to each of the underwriters named below, and each of the underwriters, for which
Morgan Joseph & Co. is acting as representative, have severally, and not jointly, agreed to
purchase on a firm commitment basis the number of units offered in this offering set forth opposite
their respective names below:
Underwriters
Number of Units
Morgan Joseph & Co. Inc.
EarlyBirdCapital, Inc.
Total
A copy of the underwriting agreement has been filed as an exhibit to the registration
statement of which this prospectus forms a part.
State Blue Sky Information
We will offer and sell the units to retail customers only in Colorado, Delaware, Florida,
Hawaii, Illinois, Indiana, Maryland, New York and Rhode Island. In New York and Hawaii, we have
relied on exemptions from the state registration requirements for transactions between an issuer
and an underwriter involving a firm commitment underwritten offering. In the other states, we have
applied to have the units registered for sale and will not sell the units in these states until
such registration is effective (including in Colorado, pursuant to 11-51-302(6) of the Colorado
Revised Statutes).
If you are not an institutional investor, you may purchase our securities in this offering
only in the jurisdictions described directly above. Institutional investors in every state except
Idaho and South Dakota may purchase the units in this offering pursuant to exemptions provided to
such entities under the Blue Sky laws of various states. The definition of an "institutional
investor" varies from state to state but generally includes financial institutions, broker-dealers,
banks, insurance companies and other qualified entities.
Under the National Securities Markets Improvement Act of 1996, the resale of the units, from
and after the effective date, and the common stock and warrants comprising the units, once they
become separately transferable, are exempt from state registration requirements because we will
file periodic and annual reports under the Securities Exchange Act of 1934. However, states are
permitted to require notice filings and collect fees with regard to these transactions and a state
may suspend the offer and sale of securities within such state if any such required filing is not
made or fee is not paid. The following states do not presently require any notice filings or fee
payments and permit the resale of the units, and the common stock and warrants comprising the
units, once they become separately transferable:
•
Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Hawaii, Indiana,
Louisiana, Maine, Missouri, Nevada, New York, North Carolina, Ohio, Pennsylvania, Utah,
Virginia, Washington, and Wisconsin.
Additionally, the following states permit the resale of the units, and the common stock and
warrants comprising the units, once they become separately transferable, if the proper notice
filings have been made and fees paid:
•
Delaware, Kansas, Maryland, Michigan, New Hampshire, Rhode Island, South Carolina,
Texas and Vermont.
As of the date of this prospectus, we have not determined in which, if any, of these states we
will submit the required filings or pay the required fee. If any of these states that has not yet
adopted a statute relating to the National Securities Markets Improvement Act adopts such a statute
in the future requiring a filing or fee or if any state amends its existing statutes with respect
to its requirements, we would need to comply with those new requirements in order for the
securities to continue to be eligible for resale in those jurisdictions.
37
Despite the exemption from state registration provided by the National Securities Markets
Improvement Act described above, the following states, regardless of whether they require a filing
to be made or fee to be paid, have
advised us that they do not recognize this act as a basis for exempting the registration of
resales in their states of securities issued in blank check offerings:
•
Alaska, Arkansas, California, Illinois, Iowa, Kentucky, Massachusetts, Minnesota,
Mississippi, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon,
Puerto Rico, Tennessee, West Virginia and Wyoming.
We do not intend to register the resale of the securities sold in this offering in these states.
However, we believe that the units, from and after the effective date, and the common stock and
warrants comprising the units, once they become separately transferable, will be eligible for sale
on a secondary market basis in each of the following states, without any notice filings or fee
payments, based upon the availability of another applicable exemption from the state's registration
requirements:
•
immediately in Delaware, Illinois, Kentucky, Maryland and Rhode Island;
•
commencing 90 days after the date of this prospectus in Iowa and New Mexico; and
•
commencing 180 days from the date of this prospectus in Massachusetts.
Idaho and South Dakota have informed us that they do not permit the resale in their states of
securities issued in blank check offerings, without exception. We will amend this prospectus for
the purpose of disclosing additional states, if any, which advise us that our securities will be
eligible for secondary trading without registration.
Pricing of Securities
We have been advised by the representative that the underwriters propose to offer the units to
the public at the initial offering price set forth on the cover page of this prospectus. They may
allow some dealers concessions not in excess of
$
per unit and the dealers may reallow a
concession not in excess of
$
per unit to other dealers.
Prior to this offering there has been no public market for any of our securities. The public
offering price of the units and the terms of the warrants were negotiated between us and the
representative. Factors considered in determining the prices and terms of the units, including the
common stock and warrants underlying the units, include:
•
the history and prospects of companies whose principal business is the acquisition
of other companies;
•
prior offerings of those companies;
•
our prospects for acquiring an operating business at attractive values;
•
our capital structure;
•
an assessment of our management and their experience in identifying operating companies;
•
general conditions of the securities markets at the time of the offering; and
•
other factors as were deemed relevant.
However, although these factors were considered, the determination of our offering price is more
arbitrary than the pricing of securities for an operating company in a particular industry since
the underwriters are unable to compare our financial results and prospects with those of public
companies operating in the same industry.
Over-Allotment Option
We have also granted to the underwriters an option, exercisable during the 45-day period
commencing on the date of this prospectus, to purchase from us at the offering price, less
underwriting discounts, up to an aggregate of 4,500,000 additional units for the sole purpose of
covering over-allotments, if any. The over-allotment option will only be used to cover the net
syndicate short position resulting from the initial distribution. The underwriters may exercise
that option if the underwriters sell more units than the total number set forth in the table above.
If any units underlying the option are purchased, the underwriters will severally purchase shares
in approximately the same proportion as set forth in the table above.
38
Commissions and Discounts
The following table shows the public offering price, underwriting discount to be paid by us to
the underwriters and the proceeds, before expenses, to us. This information assumes either no
exercise or full exercise by the underwriters of their over-allotment option.
Per unit
Without option
With option
Public offering price
$
6.00
$
180,000,000
$
207,000,000
Discount
$
0.42
$
12,600,000
$
14,490,000
Proceeds before expenses (1)
$
5.58
$
167,400,000
$
192,510,000
(1)
The offering expenses are estimated at $621,000.
Purchase Option
We have agreed to sell to the representative of the underwriters, for $100, an option to
purchase up to a total of 1,500,000 units. The units issuable upon exercise of this option are
identical to those offered by this prospectus except that the warrants underlying this option are
exercisable at $6.25 per share (125% of the exercise price of the warrants included in the units
sold in the offering). This option is exercisable at $7.50 per unit commencing on the later of the
consummation of a business combination or one year from the date of this prospectus and expiring
five years from the date of this prospectus and may be exercised on a cashless basis. The option
may not be sold, transferred, assigned, pledged or hypothecated for a one-year period following the
date of this prospectus. However, the option may be transferred to any underwriter and selected
dealer participating in the offering and their bona fide officers or partners. Although the
purchase option and its underlying securities have been registered under the registration statement
of which this prospectus forms a part, the option grants to holders
demand and "piggy-back"
rights for periods of five and seven years, respectively, from the date of this prospectus with
respect to the registration under the Securities Act of the securities directly and indirectly
issuable upon exercise of the option. The exercise price and number of units issuable upon exercise
of the option may be adjusted in certain circumstances including in the event of a stock dividend,
or our recapitalization, reorganization, merger or consolidation. However, the option will not be
adjusted for issuances of common stock at a price below its exercise price.
Regulatory Restrictions on Purchase of Securities
Rules of the SEC may limit the ability of the underwriters to bid for or purchase our
securities before the distribution of the securities is completed. However, the underwriters may
engage in the following activities in accordance with the rules:
•
Stabilizing Transactions
. The underwriters may make bids or purchases for the
purpose of pegging, fixing or maintaining the price of our securities, so long as
stabilizing bids do not exceed a specified maximum.
•
Over-Allotments and Syndicate Coverage Transactions
. The underwriters may create a
short position in our securities by selling more of our securities than are set forth
on the cover page of this prospectus. If the underwriters create a short position
during the offering, the representative may engage in syndicate covering transactions
by purchasing our securities in the open market. The representative may also elect to
reduce any short position by exercising all or part of the over-allotment option.
•
Penalty Bids
. The representative may reclaim a selling concession from a syndicate
member when the common stock originally sold by the syndicate member is purchased in a
stabilizing or syndicate covering transaction to cover syndicate short positions.
Stabilization and syndicate covering transactions may cause the price of the securities to be
higher than they would be in the absence of these transactions. The imposition of a penalty bid
might also have an effect on the prices of the securities if it discourages resales of the
securities.
Neither we nor the underwriters makes any representation or prediction as to the effect that
the transactions described above may have on the prices of the securities. These transactions may
occur on the OTC Bulletin Board, in the over-the-counter market or on any trading market. If any of
these transactions are commenced, they may be discontinued without notice at any time.
39
Other Terms
We have granted Morgan Joseph, as representative of the underwriters, the right to have its
designee present at all meetings of our board of directors until we consummate a business
combination. The designee will be entitled to the same notices and communications sent by us to our
directors and to attend directors' meetings, but will not have voting rights. The representative
has not named a designee as of the date of this prospectus.
Although we are not under any contractual obligation to engage any of the underwriters to
provide services for us after this offering, any of the underwriters may, among other things,
introduce us to potential target businesses or assist us in raising additional capital, as needs
may arise in the future. If any of the underwriters provides services to us after the offering we
may pay such underwriter fair and reasonable fees that would be determined in an arms length
negotiation.
Indemnification
We have agreed to indemnify the underwriters against some liabilities, including civil
liabilities under the Securities Act, or to contribute to payments the underwriters may be required
to make in this respect.
LEGAL MATTERS
The validity of the securities offered in this prospectus are being passed upon for us by Loeb
& Loeb LLP, New York, New York. Greenberg Traurig LLP, New York, New York, is acting as counsel for
the underwriters in this offering.
EXPERTS
The financial statements of Stone Arcade Acquisition Corporation at April 26, 2005 and for the
period from April 15, 2005 (date of inception) through April 26, 2005 appearing in this prospectus
and in the registration statement have been included herein in reliance upon the report, which
contains an explanatory paragraph relating to substantial doubt existing about the ability of Stone
Arcade Acquisition Corporation to continue as a going concern, of Eisner LLP, independent
registered public accounting firm given on the authority of such firm as experts in accounting and
auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1, which includes exhibits,
schedules and amendments, under the Securities Act, with respect to this offering of our
securities. Although this prospectus, which forms a part of the registration statement, contains
all material information included in the registration statement, parts of the registration
statement have been omitted as permitted by rules and regulations of the SEC. We refer you to the
registration statement and its exhibits for further information about us, our securities and this
offering. The registration statement and its exhibits, as well as our other reports filed with the
SEC, can be inspected and copied at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549-1004. The public may obtain information about the operation of the public
reference room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site at
http://www.sec.gov which contains the Form S-1 and other reports, proxy and information statements
and information regarding issuers that file electronically with the SEC.
40
STONE ARCADE ACQUISITION CORPORATION
(a development stage company)
Index to Financial Statements
Financial Statements
Report of independent registered public accounting firm
F-2
Balance sheet as of April 26, 2005
F-3
Statement of operations for the period from April 15, 2005 (date of inception) through April 26, 2005
F-4
Statement of stockholders' equity for the period from April 15, 2005 (date of inception) through April 26, 2005
F-5
Statement of cash flows for the period from April 15, 2005 (date of inception) through April 26, 2005
F-6
Notes to financial statements
F-7 – F-9
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
We have audited the accompanying balance sheet of Stone Arcade Acquisition Corporation (a
development stage company) (the "Company") as of April 26, 2005 and the related statements of
operations, stockholders' equity and cash flows for the period from April 15, 2005 (date of
inception) through April 26, 2005. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Stone Arcade Acquisition Corporation as of April 26, 2005 and
the results of its operations and its cash flows for the period from April 15, 2005 (date of
inception) through April 26, 2005 in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company will continue as a
going concern. As discussed in Note A to the financial statements, the Company has generated no
revenue, its business plan is dependent on completion of a financing and the Company has a negative
working capital position of $11,000 as of April 26, 2005. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans regarding these
matters are also described in Note A. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Eisner LLP
New York, New York
April 27, 2005
F-2
Stone Arcade Acquisition Corporation
(a development stage company)
Balance Sheet
April 26,
2005
ASSETS
Current assets:
Cash
$
190,000
Deferred offering costs
35,000
Total assets
$
225,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses
$
1,000
Notes payable to stockholders
200,000
Total current liabilities
$
201,000
Commitments and Contingencies
Stockholders' equity:
Common stock—$.0001 par value, 175,000,000 shares authorized; 7,500,000 issued and
outstanding
$
750
Preferred stock — $.0001 par value; 1,000,000 shares authorized; 0 issued and outstanding
0
Additional paid-in capital
24,250
Deficit accumulated during the development stage
(1,000
)
Total stockholders' equity
24,000
Total liabilities and stockholders' equity
$
225,000
See notes to financial statements
F-3
Stone Arcade Acquisition Corporation
(a development stage company)
Statement of Operations
April 15, 2005
(Date of Inception)
through
April 26, 2005
Costs and expenses:
Organization costs
$
1,000
Net loss for the period
$
(1,000
)
Net loss per share –basic and diluted
$
(0.00
)
Weighted average number of shares outstanding — basic and diluted
7,500,000
See notes to financial statements
F-4
Stone Arcade Acquisition Corporation
(a development stage company)
Statement of Stockholders' Equity
Deficit
Additional
Accumulated
During the
Common Stock
Paid-In
Development
Shares
Amount
Capital
Stage
Total
Balance — April 15,
2005 (date of
inception)
Initial capital
from founding
stockholders
7,500,000
$
750
$
24,250
$
25,000
Net loss
$
(1,000
)
(1,000
)
Balance
— April  26,
2005
7,500,000
$
750
$
24,250
$
(1,000
)
$
24,000
See notes to financial statements
F-5
Stone Arcade Acquisition Corporation
(a development stage company)
Statement of Cash Flows
April 15, 2005
(Date of Inception)
through
April 26, 2005
Cash flows from operating activities:
Net loss
$
(1,000
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Changes in:
Accrued expenses
1,000
Net cash provided by operating activities
0
Cash flows from financing activities:
Proceeds from notes payable to stockholders
200,000
Proceeds from sale of common stock
25,000
Payments of deferred offering costs
(35,000
)
Net cash provided by financing activities
190,000
Net Increase in cash
190,000
Cash — beginning of period
0
Cash — end of period
$
190,000
See notes to financial statements
F-6
Stone Arcade Acquisition Corporation
(a development stage company)
Notes to Financial Statements
April 26, 2005
NOTE A — ORGANIZATION AND BUSINESS OPERATIONS; GOING CONCERN CONSIDERATION
Stone Arcade Acquisition Corporation (the "Company") was incorporated in Delaware on April 15,
2005. The Company was formed to serve as a vehicle for the acquisition through a merger, capital
stock exchange, asset acquisition, or other similar business combination ("Business Combination")
of an operating business in the paper, packaging, forest products and related
industries, although the Company is not limited to any particular industry. The Company has neither
engaged in any operations nor generated revenue. The Company is considered to be in the
development stage and is subject to the risks associated with activities of development stage
companies. As such, the Company's operating results relate to organizational activities through
April 26, 2005, and its ability to begin planned operations is dependent upon the completion of a
financing.
The Company's management has broad discretion with respect to the specific application of the
net proceeds of the proposed initial public offering of its Units (as described in Note C)
("Proposed Offering"), although substantially all of the net proceeds of the Proposed Offering are
intended to be generally applied toward a Business Combination. Furthermore, there is no
assurance that the Company will be able to successfully effect a Business Combination. Upon the
closing of the Proposed Offering, at least ninety percent (90%) of the net proceeds, after payment
of certain amounts to the underwriter, will be held in a trust account ("Trust Fund") and invested
in government securities until the earlier of (i) the consummation of its first Business
Combination or (ii) the distribution of the Trust Fund as described below. The remaining proceeds
may be used to pay for business, legal and accounting due diligence on prospective acquisitions and
continuing general and administrative expenses. The Company, after signing a definitive agreement
for the acquisition of a Business Combination, will submit such transaction for stockholder
approval. In the event that holders of 20% or more of the shares issued in the Proposed Offering
vote against the Business Combination, the Business Combination will not be consummated. However,
the persons who were stockholders prior to the Proposed Offering (the "Founding Stockholders") will
participate in any liquidation distribution only with respect to any shares of the common stock
acquired in connection with or following the Proposed Offering.
In the event that the Company does not consummate a Business Combination within 18 months from
the date of the consummation of the Proposed Offering, or 24 months from the consummation of the
Proposed Offering if certain extension criteria have been satisfied (the "Acquisition Period"), the
proceeds held in the Trust Fund will be distributed to the Company's public stockholders, excluding
the Founding Stockholders to the extent of their initial stock holdings. In the event of such
distribution, it is likely that the per share value of the residual assets remaining available for
distribution (including Trust Fund assets) will be less than the initial public offering price per
share in the Proposed Offering (assuming no value is attributed to the Warrants contained in the
Units to be offered in the Proposed Offering discussed in Note C).
Going concern consideration — As indicated in the accompanying financial statements, at April
26, 2005, the Company had $190,000 in cash and a working capital deficiency of $11,000. Further,
the Company has incurred and expects to continue to incur significant costs in pursuit of its
financing and acquisition plans. Management's plans to address this uncertainty through a Proposed
Offering are discussed in Note C. There is no assurance that the Company's plans to raise capital
or to consummate a Business Combination will be successful or successful within the target business
acquisition period. These factors, among others, raise substantial doubt about the Company's
ability to continue operations as a going concern.
F-7
Stone Arcade Acquisition Corporation
(a development stage company)
Notes to Financial Statements — (Continued)
NOTE B —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1]
Loss per common share:
Loss per share is computed by dividing net loss applicable to common stockholders by the
weighted average number of common shares outstanding for the period.
[2]
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 and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those estimates.
[3]
Income taxes:
Deferred income taxes are provided for the differences between the bases of assets and
liabilities for financial reporting and income tax purposes. A valuation allowance is established
when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company recorded a deferred income tax asset for the tax effect of start-up costs and
temporary differences, aggregating approximately $340. In recognition of the uncertainty regarding
the ultimate amount of income tax benefits to be derived, the Company has recorded a full valuation
allowance at April 26, 2005.
The effective tax rate differs from the statutory rate of 34% due to the increase in the valuation allowance.
[4]
Deferred offering costs:
Deferred offering costs consist principally of legal and other fees incurred through the
balance sheet date that are related to the Proposed Offering and that will be charged to capital
upon the receipt of the capital or charged to expense if not completed.
NOTE C — PROPOSED OFFERING
The Proposed Offering calls for the Company to offer for public sale up to 30,000,000 units
("Units"). Each Unit consists of one share of the Company's common stock, $.0001 par value, and two
warrants ("Warrants"). Each Warrant entitles the holder to purchase from the Company one share
of common stock at an exercise price of $5.00. Each Warrant will
become exercisable on the later of (a) the completion of a Business
Combination with a target business or (b) one year from the date of
the prospectus and will expire four years
from the date of the prospectus. The Warrants will be redeemable at a price of $.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 $8.50 per share for any 20 trading days within a 30 trading
day period ending on the third day prior to the date on which notice of redemption is given.
NOTE D — NOTES PAYABLE TO STOCKHOLDERS
The Company issued unsecured promissory notes to the Founding Stockholders of the Company
totaling $200,000 on April 16 and April 25, 2005. The Notes are non-interest bearing and are
payable on the earlier of one year from the date of issuance or the consummation of the Proposed
Offering. Due to the related party nature of the notes, the estimated fair value of the notes is
not reasonably determinable.
F-8
NOTE E —RELATED PARTY TRANSACTION
The Company has agreed to pay Stone Kaplan Investments, LLC, a company where certain of the
Founding Stockholders serve in executive capacities, an administrative fee of $7,500 per month for
office space and general and administrative services from the effective date of the Proposed
Offering through the acquisition date of a target business. Stone Kaplan Investments, LLC has
agreed to pay a portion of the aforementioned administrative fee to Arcade Partners LLC, a company
where certain of the Founding Stockholders serve in executive capacities, to cover overhead
incurred on the Company's behalf.
NOTE F—COMMITMENTS
The
Company has a commitment to pay an underwriting discount of 7.0% of the public offering
price to Morgan Joseph & Co. Inc., representative of the underwriters, at the closing of the
Proposed Offering.
The Company will also issue an option to the representative of the underwriters to purchase up
to a total of 1,500,000 units at a price of $7.50. The units issuable upon the exercise of this
option are identical to those offered in the prospectus, except that the exercise price of the
warrants underlying the underwriters' purchase option is $6.25.
NOTE G—FOUNDING
STOCKHOLDERS (UNAUDITED)
The
Founding Stockholders will have agreed with Morgan Joseph & Co. Inc., the representative of the
underwriters, that after the Proposed Offering is completed and within the first forty trading days
after the separate trading of the warrants has commenced, they or certain of their affiliates or
designees will collectively purchase up to 4,000,000 warrants in the public marketplace at prices
not to exceed $0.70 per warrant. They will have further agreed that any warrants purchased by them or
their affiliates or designees will not be sold or transferred until the completion of a Business
Combination.
F-9
Until ___, 2005, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a prospectus. This is in
addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
No dealer, salesperson or any other person is authorized to give any information or make any
representations in connection with this offering other than those contained in this prospectus and,
if given or made, the information or representations must not be relied upon as having been
authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any security other than the securities offered by this prospectus, or an offer to sell
or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the
offer or solicitation is not authorized or is unlawful.
TABLE OF CONTENTS
Page
Prospectus Summary
2
Summary Financial Data
5
Risk Factors
6
Use of Proceeds
14
Dilution
16
Capitalization
17
Management's Discussion and Analysis of Financial Condition and Results of Operations
18
Proposed Business
19
Management
27
Principal Stockholders
30
Certain Transactions
32
Description of Securities
33
Underwriting
37
Legal Matters
40
Experts
40
Where You Can Find Additional Information
40
Index to Financial Statements
F-1
STONE ARCADE ACQUISITION CORPORATION
30,000,000 Units
PROSPECTUS
MORGAN JOSEPH
EARLYBIRDCAPITAL, INC.
______________________ , 2005
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The estimated expenses payable by us in connection with the offering described in this
registration statement (other than the underwriting discount and commissions) will be as follows:
Initial Trustees' fee
$
1,000.00
(1)
SEC Registration Fee
68,501.39
NASD filing fee
58,700.01
Accounting fees and expenses
25,000.00
Printing and engraving expenses
75,000.00
Director & Officer liability insurance premiums
200,000.00
(2)
Legal fees and expenses
300,000.00
Blue sky services and expenses
50,000.00
Miscellaneous
42,798.60
(3)
Total
$
821,000.00
(1)
In addition to the initial acceptance fee that is charged by Continental Stock Transfer &
Trust Company, as trustee, the registrant will be required to pay to Continental Stock
Transfer & Trust Company annual fees of $3,000 for acting as trustee, $4,800 for acting as
transfer agent of the registrant's common stock, $2,400 for acting as warrant agent for the
registrant's warrants and $1,800 for acting as escrow agent.
(2)
This amount represents the approximate amount of director and officer liability insurance
premiums the registrant anticipates paying following the consummation of its initial public
offering and until it consummates a business combination.
(3)
This amount represents additional expenses that may be incurred by the Company in connection
with the offering over and above those specifically listed above, including distribution and
mailing costs.
Item 14. Indemnification of Directors and Officers.
Our certificate of incorporation provides that all directors, officers, employees and agents
of the registrant shall be entitled to be indemnified by us to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law.
Section 145 of the Delaware General Corporation Law concerning indemnification of officers,
directors, employees and agents is set forth below.
"Section 145. Indemnification of officers, directors, employees and agents; insurance.
(a)     A corporation shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action by or in the right
of the corporation) by reason of the fact that the person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with such action, suit or
proceeding if the person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the person's conduct was
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unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea
of nolo contendere or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's conduct was unlawful.
(b)     A corporation shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the fact that the person
is or was a director, officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by the person in connection with the defense or settlement of such
action or suit if the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery
or the court in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
(c)     To the extent that a present or former director or officer of a corporation has been
successful on the merits or otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.
(d)     Any indemnification under subsections (a) and (b) of this section (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the present or former director, officer, employee or agent is
proper in the circumstances because the person has met the applicable standard of conduct set forth
in subsections (a) and (b) of this section. Such determination shall be made, with respect to a
person who is a director or officer at the time of such determination, (1) by a majority vote of
the directors who are not parties to such action, suit or proceeding, even though less than a
quorum, or (2) by a committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (4) by the stockholders.
(e)     Expenses (including attorneys' fees) incurred by an officer or director in defending any
civil, criminal, administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred by former directors
and officers or other employees and agents may be so paid upon such terms and conditions, if any,
as the corporation deems appropriate.
(f)     The indemnification and advancement of expenses provided by, or granted pursuant to, the
other subsections of this section shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such office.
(g)     A corporation shall have power to purchase and maintain insurance on behalf of any person
who is or was director, officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such person's status as
such, whether or not the corporation would have the power to indemnify such person against such
liability under this section.
(h)     For purposes of this section, references to "the corporation" shall include, in addition
to the resulting corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers, and employees or agents,
so that any person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
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as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise,
shall stand in the same position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent corporation if its separate
existence had continued.
(i)     For purposes of this section, references to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner such person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" as referred to in this section.
(j)     The indemnification and advancement of expenses provided by, or granted pursuant to, this
section shall, unless otherwise provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k)     The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine
all actions for advancement of expenses or indemnification brought under this section or under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance expenses (including
attorneys' fees)."
Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to our directors, officers, and controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment of expenses
incurred or paid by a director, officer or controlling person in a successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
Paragraph B of Article Eighth of our certificate of incorporation provides:
"The Corporation, to the full extent permitted by Section 145 of the GCL, as amended from time
to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses (including
attorneys' fees) incurred by an officer or director in defending any civil, criminal,
administrative, or investigative action, suit or proceeding for which such officer or director may
be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized hereby."
Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this Registration Statement, we
have agreed to indemnify the Underwriter and the Underwriter has agreed to indemnify us against
certain civil liabilities that may be incurred in connection with this offering, including certain
liabilities under the Securities Act.
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Item 15. Recent Sales of Unregistered Securities.
(a)     During the past three years, we sold the following shares of common stock without
registration under the Securities Act:
Name
Number of Shares
Roger W. Stone
2,062,500
Matthew Kaplan
2,062,500
John M. Chapman
1,125,000
Jonathan R. Furer
1,125,000
Muhit U. Rahman
1,125,000
Such shares were issued on April 16, 2005 in connection with our organization pursuant to
the exemption from registration contained in Section 4(2) of the Securities Act as they were sold
to sophisticated, wealthy individuals. The shares issued to the individuals and entities above were
sold for an aggregate offering price of $25,000 at an average purchase price of $0.003 per share.
No underwriting discounts or commissions were paid with respect to such sales.
Item 16. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed as part of this Registration Statement:
Exhibit No.
Description
1.1
Form of Underwriting Agreement.
1.2
Form of Selected Dealers Agreement.
3.1
Certificate of Incorporation.
3.2
By-laws.
4.1
Specimen Unit Certificate.*
4.2
Specimen Common Stock Certificate.*
4.3
Specimen Warrant Certificate.*
4.4
Form of Unit Purchase Option to be granted to Representative.
4.5
Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant.
5.1
Opinion of Loeb & Loeb LLP.*
10.1
Form of Letter Agreement among the Registrant, Morgan Joseph & Co. Inc. and each of the Initial Stockholders.
10.2
Form of Promissory Note issued to each of Roger Stone, Matthew Kaplan, John Chapman, Jonathan Furer and Muhit Rahman.
10.3
Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant.
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Exhibit No.
Description
10.4
Form of Stock Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders.
10.5
Form of Letter Agreement between Stone-Kaplan Investments LLC and Registrant regarding administrative support.
10.6
Form of Registration Rights Agreement among the Registrant and the Initial Stockholders.
10.7
Form of Warrant Purchase Agreements among each of the Initial Stockholders and Morgan Joseph & Co. Inc.
23.1
Consent of Eisner LLP.
23.2
Consent of Loeb & Loeb LLP (included in Exhibit 5.1). *
24
Power of Attorney (included on signature page of this Registration Statement).
*
To be filed by amendment.
Item 17. Undertakings.
(a)     The undersigned registrant hereby undertakes:
(1)     To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
i.     To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
ii.     To reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
iii.     To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such information in
the registration statement.
(2)     That, for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3)     To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(b)     The undersigned hereby undertakes to provide to the underwriter at the closing specified
in the underwriting agreements, certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each purchaser.
(c)     Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred or paid by a
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director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(d)     The undersigned registrant hereby undertakes that:
(1)     For purposes of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2)     For the purpose of determining any liability under the Securities Act of 1933, each
post-effective amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused
this registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 2nd day of May, 2005.
STONE ARCADE ACQUISITION CORPORATION
By:
/s/ Roger W. Stone
Roger W. Stone
Chairman of the Board and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Roger Stone and John Chapman his true and lawful attorney-in-fact, with full power of
substitution and resubstitution for him and in his name, place and stead, in any and all capacities
to sign any and all amendments including post-effective amendments to this registration statement,
and to file the same, with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact or his substitute, each acting alone, may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates indicated.
Name
Position
Date
/s/ Roger W. Stone
Roger W. Stone
Chairman of the Board and Chief
Executive Officer (Principal
Executive Officer and Principal
Accounting and Financial Officer)
May 2, 2005
/s/ Matthew Kaplan
Matthew Kaplan
President, Secretary and Director
May 2, 2005
/s/ John M. Chapman
John M. Chapman
Director
May 2, 2005
/s/ Jonathan R. Furer
Jonathan R. Furer
Director
May 2, 2005
/s/ Muhit U. Rahman
Muhit U. Rahman
Director
May 2, 2005
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