JUNIPER CONTENT CORP (JNPC) - Description of business

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Company Description
Juniper Partners Acquisition Corp. is a blank check company formed on February 3, 2005 to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business. Our efforts in identifying a prospective target business will not be limited to a particular industry. Nevertheless, we are initially focusing on the media and entertainment industry.On July 20, 2005, we consummated our initial public offering of 250,000 Series A units, with each Series A unit consisting of two shares of our common stock, five Class W warrants and five Class Z warrants, each to purchase one share of our common stock at an exercise price of $5.00 per share, and 1,250,000 Series B units, with each Series B unit consisting of two shares of our Class B common stock, one Class W warrant and one Class Z warrant. On July 29, 2005, we closed on an additional 16,000 Series A units and 187,500 Series B units that were subject to the over-allotment option and on August 26, 2005, we closed on an additional 8,000 Series A Units that were subject to the over-allotment option. The Series A units were sold at an offering price of $10.50 per Series A unit and the Series B units were sold at an offering price of $10.10 per Series B unit, generating total gross proceeds of $17,395,750. After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to us from the offering were approximately $15,603,823 of which $14,518,750 was deposited into the trust account and the remaining proceeds ($1,085,073) became available to be used to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. Through December 31, 2005, net cash used to pay general and administrative expenses was $227,720. The net proceeds deposited into the trust fund remain on deposit in the trust fund earning interest. As of December 31, 2005, there was $14,746,925 held in the trust fund.We are not presently engaged in, and we will not engage in, any substantive commercial business until we consummate a business combination. We intend to utilize our cash, including the funds held in the trust fund, capital stock, debt or a combination of the foregoing in effecting a business combination. 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 or in its early stages of development or growth.The media and entertainment industryThe media and entertainment industry encompasses companies which create, produce, deliver, distribute, market, exhibit and/or sell entertainment and media services and content. Media services and content companies include a wide range of businesses with intellectual property and copyright related assets. Examples of segments of the media and entertainment industry include, but are not limited to: •  Film and television production, distribution and exhibition: companies that originate, acquire and or market audio visual and film products such as video publishers, television syndicators, and theatrical distributors; •  DVD and video production, distribution and sales: companies that originate, acquire and/or market programs on disc or tape to consumers through retail stores, catalogs, and on-line outlets; •  Internet content and delivery services: companies that provide on-line programming and/or distribution capability to consumers such as the downloading of music, film and television programming to computers and other devices; •  Advertiser-supported businesses: companies whose principal source of revenue is through media sales or sponsorships such as radio syndicators, advertising agencies, and media buyers and sellers; •  Television and radio broadcasting: companies that directly or indirectly operate in the broadcasting arena such as local television and radio stations, and programmers whose content is distributed over such stations; •  Magazine and book publishing: companies that originate, acquire and/or market printed materials through various means to trade and consumer accounts such as magazine and book publishers, catalog and newsletter organizations; •  Audio production, distribution and sales: companies that originate, acquire and/or market sound recordings to businesses and consumers such as books on tape publishers, or record music organizations; and •  Educational production, distribution and sales: companies that originate, acquire and/or market educational materials to schools, businesses and consumers such as distant learning firms, textbook publishers, and continuing professional education organizations.While we believe that there are numerous business opportunities in almost all segments of the media and entertainment industry, we are initially concentrating on businesses in the nonfiction programming and distribution marketplace as our management has its extensive relationships and significant expertise in this segment of the media and entertainment industry.Selection of a target business and structuring of a business combinationWe anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including securities broker-dealers, investment bankers, venture capitalists, bankers and other members of the financial community, who may present solicited or unsolicited proposals. Our initial securityholders, including our officers and directors (collectively, our ‘‘Founders’’), as well as their affiliates, may also bring to our attention target business candidates. We have engaged certain professional firms that specialize in business acquisitions to assist us in our search for a target business and we may be required to pay such firms finder’s fees or other compensation. In no event, however, will we pay any of our Founders 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.Subject to the requirement that our initial business combination must be with a target business with a fair market value of at least 80% of our net assets at the time of the business combination, our management has virtually unrestricted flexibility in identifying and selecting a prospective target business. In evaluating a prospective target business, our management considers, among other factors, the following: •  financial condition and results of operation; •  growth potential; •  experience and skill of management and availability of additional personnel; •  capital requirements; •  the value and extent of its content library; •  competitive position; •  barriers to entry into other industries; •  stage of development of the products, processes or services; •  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 •  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, in addition to the above factors, on any 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 is made available to us.Fair Market Value of Target BusinessThe 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, although we may acquire a target business whose fair market value significantly exceeds 80% of our net assets. To this end, we may seek to raise additional funds through the sale of our securities or through loan arrangements if such funds are required to consummate such a business combination, although we have not engaged or retained, had any discussions with, or entered into any agreements with, any third party regarding any such potential financing transactions. If we were to seek such additional funds, any such arrangement would only be consummated simultaneously with our consummation of a business combination. 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 with respect to the satisfaction of such criteria. 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.Opportunity for Class B stockholder approval of business combinationPrior to the completion of a business combination, we will submit the transaction to our Class B 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 Class B 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.We will not proceed with a business combination if the holders of a majority of the then outstanding shares of Class B common stock present at the meeting to approve the business combination fail to vote in favor of such business combination or if stockholders owning 20% or more of the outstanding shares of Class B common stock both exercise their conversion rights and vote against the business combination.Conversion rightsAt the time we seek stockholder approval of any business combination, we will offer the holders of our Class B common stock the right to have such shares converted to cash if the stockholder votes against the business combination and the business combination is approved and completed. The holders of our common stock will not be entitled to seek conversion of their shares. The actual per-share conversion price will be equal to the amount in the trust fund, inclusive of any interest, as of two business days prior to the consummation of the business combination, divided by the total number of shares of Class B common stock. As of December 31, 2005, the per-share conversion price would have been $5.13. An eligible Class B 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 Class B 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 Class B stockholders entitled to convert their shares who elect conversion will be distributed promptly after completion of a business combination. We will not complete any business combination if Class B stockholders owning 20% or more of the Class B shares outstanding both vote against the business combination and exercise their conversion rights. Any Class B stockholder who converts his, her or its stock into his, her or its share of the trust fund still has the right to exercise the Class W and Class Z warrants that he, she or it received as part of the Series B units.Liquidation if no business combinationIf we do not complete a business combination by July 20, 2006, or by January 20, 2007 if the extension criteria described below have been satisfied, we will be dissolved and will distribute to all holders of Class B common stock, in proportion to the number of Class B shares held by them, an aggregate sum equal to the amount in the trust fund, inclusive of any interest, plus any remaining net assets. There will be no distribution from the trust fund with respect to our Class W and Class Z warrants.If we enter into either a letter of intent, an agreement in principle or a definitive agreement to complete a business combination prior to July 20, 2006, but are unable to complete the business combination prior to this date, 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 by January 20, 2007, we will then liquidate. Upon notice from us, the trustee of the trust fund will commence liquidating the investments constituting the trust fund and will turn over the proceeds to our transfer agent for distribution to our Class B stockholders. We anticipate that our instruction to the trustee would be given promptly after the expiration of the applicable time periods.If we were to expend all of the net proceeds of our initial public offering, other than the proceeds deposited in the trust fund, the per-share liquidation price as of December 31, 2005 would have been $5.13. However, the proceeds deposited in the trust fund could become subject to the claims of our creditors which could be prior to the claims of our Class B stockholders. Stuart B. Rekant, our chairman of the board and chief executive officer, and Robert Becker, our chief financial officer, treasurer and secretary, have agreed that, if we liquidate prior to the consummation of a business combination, they will be personally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or for products sold to us to the extent they have claims against the funds in our trust account.CompetitionIn identifying, evaluating and selecting a target business, we expect to encounter intense competition from other entities having a business objective similar to ours. There are numerous blank check companies that have completed initial public offerings that are seeking to carry out a business plan similar to our business plan. Additionally, we may be subject to competition from other companies looking to expand their operations through the acquisition of a target business. 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 and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous potential target businesses that we could acquire, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of a target business. Further: •  our obligation to seek Class B stockholder approval of a business combination may delay the completion of a transaction; •  our obligation to convert into cash shares of Class B common stock held by our Class B stockholders if such holders both vote against the business combination and also seek conversion of their shares 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 our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities having a similar business objective as us in acquiring a target business 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 . In particular, certain industries which experience rapid growth frequently attract an increasingly larger number of competitors, including competitors with increasingly greater financial, marketing, technical and other resources than the initial competitors in the industry. The degree of competition characterizing the industry of any prospective target business cannot presently be ascertained. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively.EmployeesWe have two executive officers. These individuals are not obligated to contribute 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 devote in any time period will vary based on the availability of suitable target businesses to investigate. We do not intend to have any full time employees prior to the consummation of a business combination. Risks associated with our businessIn addition to other information included in this report, the following factors should be considered in evaluating our business and future prospects. We are a development stage company with no operating history and very limited resources.We are a recently incorporated development stage company with no operating results to date. 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 will not generate any revenues until, at the earliest, after the consummation of a business combination. If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by Class B stockholders will be less than $5.13 per share.Our placing of funds in trust may not protect those funds from third party claims against us. The proceeds held in trust could be subject to claims which could take priority over the claims of the holders of our Class B common stock. We cannot assure you that the per-share distribution from the trust fund will not be less than the $5.13 per share held in trust as of December 31, 2005 due to claims of creditors. If we are unable to complete a business combination and are forced to distribute the proceeds held in trust, Stuart B. Rekant, our chairman of the board and chief executive officer, and Robert Becker, our chief financial officer, treasurer and secretary, have agreed that they will be personally liable to ensure that the proceeds in the trust fund are not reduced by the claims of target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. However, we cannot assure you that they will be able to satisfy those obligations. Furthermore, even after our liquidation (including the distribution of the monies then held in the trust fund), under the Delaware General Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. Accordingly, we cannot assure you that third parties will not seek to recover from our stockholders amounts owed to them by us. Because there are numerous companies with a business plan similar to ours seeking to effectuate a business combination, it may be more difficult for us to do so.There are numerous similarly structured blank check companies have completed initial public offerings in the United States with business plans similar to ours and there are a number of additional offerings for blank check companies that are still in the registration process but have not completed initial public offerings. While some of those companies must complete a business combination in specific industries, a number of them may consummate a business combination in any industry they choose. Therefore, we may be subject to competition from these and other companies seeking to consummate a business plan similar to ours. Because of this competition, we cannot assure you that we will be able to effectuate a business combination within the required time periods. Since we are not limited to any particular industry or target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of the industry in, or business, which we may ultimately operate.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 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 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 securities will not ultimately prove to be less favorable than a direct investment, if an opportunity were available, in 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 likely cause a change in control of our ownership.Our certificate of incorporation authorizes the issuance of up to 20,000,000 shares of common stock, par value $.0001 per share, 5,000,000 shares of Class B common stock, par value $.0001 per share, and 5,000 shares of preferred stock, par value $.0001 per share. We currently have 8,811,900 and 2,000,000 authorized but unissued shares of our common stock and Class B common stock, respectively, available for issuance (after appropriate reservation for the issuance of shares upon conversion of the Class B common stock and upon full exercise of our outstanding Class W warrants, Class Z warrants and the purchase option issued in connection with our initial public offering) and all of the 5,000 shares of preferred stock available for issuance. Although we currently have no commitments to issue our securities, we will, in all likelihood, 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 stockholders; •  may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded to our common stock; •  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 most likely 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 revenues 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. Our ability to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following a business combination.Our ability to successfully effect a business combination will be totally dependent upon the efforts of our key personnel. The future role of our key personnel in the target business, however, cannot presently be ascertained. Although it is possible that some of our key personnel will remain associated in various capacities with the target business following a business combination, it is likely that the management of the target business at the time of the business combination will remain in place. Moreover, our key personnel will be able to remain with the company after the consummation of a business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination, the terms of which, including the compensation to be paid to such individuals, would be determined at such time between the respective parties. However, the ability of our key personnel to remain with the company after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. While 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. These individuals may be unfamiliar with the requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations. Because our officers and directors allocate their time to other businesses, it 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 time to our affairs and could have a negative impact on our ability to consummate a business combination. 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, our officers and directors may become aware of business opportunities which may be appropriate for presentation to us as well as the other entities with which they have fiduciary obligations to. Accordingly, they may have 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. All of our officers and directors own securities of ours which will not participate in the distribution of the trust fund or liquidation distributions. This may cause them to have a conflict of interest in determining whether a particular target business is appropriate for a business combination.The common stock, Class W warrants and Class Z warrants owned by our directors and officers will be worthless if we do not consummate a business combination. The personal and financial interests of our directors and officers may influence their motivation in identifying and selecting a target business and completing a business combination timely. Consequently, our directors’ and officers’ 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. It is probable that we will only be able to complete one business combination, which will cause us to be solely dependent on a single business and a limited number of products or services.As of December 31, 2005, we had $14,746,925 on deposit in a trust fund that we may use to complete a business combination. 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, although this may entail the simultaneous acquisitions of several closely related operating businesses at the same time. By consummating a business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be: •  solely dependent upon the performance of a single business, or •  dependent upon the development or market acceptance of a single or limited number of products, processes or services.Alternatively, if our business combination entails the simultaneous acquisitions of several operating businesses at the same time from different sellers, each such seller will need to agree that the purchase of its business is contingent upon simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. If we were to consummate a business combination with several operating businesses, we could also face additional risks, including burdens and costs with respect to possible multiple negotiations and due diligence investigations and the additional risks associated with the subsequent assimilation of the operations into a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations. The ability of our Class B stockholders to exercise their conversion rights may not allow us to effectuate the most desirable business combination or optimize our capital structure.When we seek Class B stockholder approval of any business combination, we will offer each Class B stockholder the right to have his, her or its shares of Class B common stock converted to cash if such stockholder votes against the business combination and the business combination is approved and completed. Such holder must both vote against such business combination and then exercise his, her or its conversion rights to receive a pro rata portion of the trust account. 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 Class B stockholders may exercise such conversion rights, we may either need to reserve part of the trust account 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 Class B stockholders exercise their conversion rights than we expect. 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. Because of our limited resources and structure, we may not be able to consummate an attractive business combination.We expect to encounter intense competition from other entities having a business objective similar to ours, including venture capital funds, leveraged buyout 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 and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Further, the obligation we have to seek Class B stockholder approval of a business combination may delay the consummation of a transaction. Additionally, our outstanding Class W warrants and Class Z 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. Additionally, because of our structure, there may be fewer attractive target businesses available to acquire or privately held target businesses may not be not inclined to enter into a transaction with a publicly held blank check companies like us. 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 our current assets 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 we require further funds, either because of the size of the business combination or the depletion of our available cash in search of a target business, or because we become obligated to convert into cash a significant number of shares of Class B common stock from dissenting Class B 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 outstanding warrants may have an adverse effect on the market price of common stock and make it more difficult to effect a business combination.We currently have outstanding Class W warrants to purchase 3,620,000 shares of common stock, Class Z warrants to purchase 3,620,000 shares of common stock and an option to purchase 12,500 Series A units and/or 62,500 Series B units which, if exercised, will result in the issuance of an additional 250,000 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 options 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 options 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 options 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 options are exercised, you may experience dilution to your holdings. If we are unable to effect a business combination and are forced to liquidate, our warrants will expire worthless.If we do not complete a business combination by July 20, 2006, or by January 20, 2007 if certain criteria have been satisfied, we will distribute to all holders of Class B common stock an aggregate sum equal to the amount in the trust fund, inclusive of any interest. Thereafter, we will dissolve and any remaining net assets will be distributed to the holders of our common stock. In such event, there will be no distribution with respect to our outstanding Class W warrants and Class Z warrants. Accordingly, the warrants will expire worthless. If our Founders exercise their registration rights, it may have an adverse effect on the market price our common stock and the existence of these rights may make it more difficult to effect a business combination.Our Founders are entitled to demand that we register the resale of their 100 shares of common stock and their 812,500 Class W warrants and 812,500 Class Z warrants as well as the 1,625,000 shares of common stock underlying their warrants at any time after we consummate a business combination. Thus, if our Founders exercise their registration rights with respect to these securities, there will be an additional 100 shares of common stock and 1,625,000 warrants (or an additional 1,625,000 shares of common stock issuable upon exercise of the warrants) eligible for trading in the public market. The presence of this additional number of shares of common stock and warrants 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. Our securities are quoted on the OTC Bulletin Board, which limits the liquidity and price of our securities.Our securities are traded 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 limits 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, we may be subject to certain restrictions that may make it more difficult for us to complete a business combination, including: •  restrictions on the nature of our investments; and •  restrictions on the issuance of securities.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. Risks related to the media and entertainment industryOur search for a target business is not limited to any particular industry. However, we are currently focusing our search on target businesses in the media and entertainment industry. We believe the following risks would apply to us following the completion of a business combination with a target business in the media and entertainment industry. The speculative nature of the media and entertainment industry could cause our revenues and profit to decrease following a business combination.Certain segments of the media and entertainment industry are highly speculative and historically have involved a substantial degree of risk. For example, the success of a particular film, video game, television program or series or recreational attraction depends upon unpredictable and changing factors, including the success of promotional efforts, the availability of alternative forms of entertainment and leisure time activities, general economic conditions, public acceptance and other tangible and intangible factors, many of which are beyond our control. If we complete a business combination with a target business in such a segment, our revenues and profit could be reduced. Changes in technology and distribution methods may render the services we provide, or technologies and distribution methods we use, obsolete.The media and entertainment industry is substantially affected by rapid and significant changes in technology and distribution methods. These changes may render certain existing services, technologies and distribution methods used in the industry obsolete. We cannot assure you that the technologies used by or relied upon by a target business with which we effect a business combination will not be subject to such obsolescence. While we may attempt to adapt and apply the services provided by the target business to newer technologies and distribution methods, we cannot assure you that we will have sufficient resources to fund these changes or that these changes will ultimately prove successful. If, following a business combination, the program, services or content that we market or sell are not accepted by the public, we may not be profitable.Certain segments of the media and entertainment industry are dependent on developing and marketing new programs, services or content that respond to technological and competitive developments and changing customer needs and distribution platforms. We cannot assure you that the programs, services or content of a target business with which we effect a business combination will gain or maintain market acceptance. Any significant delay or failure in developing new or enhanced technology, including new product and service offerings, could result in a loss of actual or potential market share and a decrease in revenues. If we are unable to protect our patents, trademarks, copyrights and other intellectual property rights following a business combination, competitors may be able to use our technology or intellectual property rights, which could weaken our competitive position.If we are successful in acquiring a target business and the target business is the owner of proprietary programming, libraries, software or technology, our success will depend in part on our ability to obtain and enforce intellectual property rights for those assets, both in the United States and in other countries. In those circumstances, we may file applications for patents, copyrights and trademarks as our management deems appropriate. We cannot assure you that these applications, if filed, will be approved, or that we will have the financial and other resources necessary to enforce our proprietary rights against infringement by others. Additionally, we cannot assure you that any patent, trademark or copyright obtained by us will not be challenged, invalidated or circumvented. If we are alleged to have infringed on the intellectual property or other rights of third parties, it could subject us to significant liability for damages and invalidation of our proprietary rights.If, following a business combination, third parties allege that we have infringed on their intellectual property rights, privacy rights or publicity rights or have defamed them, we could become a party to litigation. These claims and any resulting lawsuits could subject us to significant liability for damages and invalidation of our proprietary rights and/or restrict our ability to publish and distribute the infringing or defaming content. We may not be able to comply with government regulations that may be adopted with respect to the media and entertainment industry.Certain segments of the media and entertainment industry, including broadcast networks, cable networks and radio stations, have historically been subject to substantial regulation at the federal, state and local levels. In the past, the regulatory environment, particularly with respect to the telecommunications industry and the television and radio industry, has been fairly rigid. We cannot assure you that regulations currently in effect or adopted in the future will not cause any target business acquired by us to alter or cease its operations. Risks related to the nonfiction programming and distributionsegment of the media and entertainment industryAlthough we may consummate a business combination in any industry, including any segment of the media and entertainment industry, our management is currently focusing on the nonfiction programming and distribution segment of the media and entertainment industry. Accordingly, we believe the following additional risks would apply to us following a business combination in this segment. If demand for the products, services or content we offer following a business combination decreases, our revenues may decline and we may not be profitable.Substantially all of the revenues of companies that operate principally in the film and television programming industry are derived from production and licensing fees paid by theatrical exhibitors and distributors and broadcast and cable television channels, from the distribution of DVD and video products to home entertainment markets and from advertising fees and subscription revenues. Each film and television program is an individual artistic work and its commercial success is primarily determined by audience reaction and acceptance, which is unpredictable. Audience demands and tastes change with time and can be heavily influenced by shifting social mores, local, national and world events, and cultural trends and fads. Even if a film or television program proves initially popular, its popularity could wane prior to the time that production/acquisition costs associated with it are recouped. We cannot assure you that a target business with which we effect a business combination will possess the rights to film and television programming libraries that will appeal to audiences on a broad basis. We also cannot assure you that management will be successful in predicting changing audience demand or that we will have the necessary resources to acquire or produce films and programming to meet such demand. If we are unable to secure sources of financing for our products or services following a business combination, we may not be able to conduct our operations successfully.Following a business combination, a significant amount of time may elapse between our expenditure of funds to produce or acquire films and television programming titles and the receipt of commercial revenues from such titles. This time lapse could require us to fund a significant portion of our capital requirements from various resources, including credit facilities, loans and sales of equity or debt securities. This time lag could also result in material fluctuations in our operating results and cash flows. If, following a business combination, we amortize film and television programming costs, it may accentuate fluctuations in our operating results.In addition to the general cyclical nature of the industry, accounting practices that are standard for the industry may accentuate fluctuations in our operating results following a business combination. In accordance with generally accepted accounting principles and industry practice, film and television programming costs are amortized using the ‘‘individual-film-forecast’’ method. Under this method, the costs of a title are amortized based on the following ratio: (A) revenue earned by title in the current period divided by (B) estimated total revenues for the title. We would be required to regularly review, and revise when necessary, total revenue estimates on a title-by-title basis. This review could result in a change in the rate of amortization and/or a write-down of the film or television asset to its estimated fair value. Results of operations would depend upon our amortization of our film and television costs. Periodic adjustments in amortization rates could significantly affect these results. We may engage in international distribution activities following a business combination, which activities would present specific risks.Numerous companies operating in the film and television programming and distribution businesses engage in international distribution activities as part of their overall operating strategy. If we engage in international distribution activities following a business combination, we will be forced to compete with companies operating domestically in such jurisdictions. Governments often provide incentives to domestic distribution companies to make them more competitive. Such incentives could make it extremely difficult for us to compete effectively. Additionally, any such international distribution activities could negatively affect us as a result of any or all of the following: •  changes in foreign currency exchange rates and currency controls; •  changes in tax and repatriation laws; •  trade protection measures, including programming quotas favoring programming produced in the foreign countries which we seek to penetrate; •  differing degrees of protection for intellectual property rights; •  programming piracy under laws less stringent and less thoroughly policed than those in the United States; •  longer accounts receivable collection patterns than experienced with outlets in the United States; •  changes in local regulatory requirements, including restrictions on content; or •  changes in regional or worldwide economic or political conditions.

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