FYR Sapphire Indus Corp

An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this Report before making a decision to invest in our securities. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below.

We are a development stage company with no operating history and, accordingly, investors 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. Since we do not have an operating history, investors have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire one or more operating businesses. We have recently begun the process of evaluating and identifying prospective target businesses concerning a business combination but may be unable to complete a business combination. We will not generate any operating revenues until, at the earliest, after the consummation of a business combination. If we expend all of the $125,000 in proceeds from our initial public offering not held in trust and interest income earned of up to $6,000,000 on the balance of the trust account that may be released to us to fund our working capital requirements in seeking a business combination, but fail to complete such a combination, we will never generate any operating revenues.

We may not be able to consummate a business combination within the required time frame, in which case, we would be forced to liquidate our assets.

Our amended and restated certificate of incorporation provides that we have until January 17, 2010 to complete a business combination. If we have entered into a definitive agreement with respect to an initial business combination prior to January 17, 2010 and we anticipate that we may not be able to complete the initial business combination by such date, we may seek stockholder approval to extend the period of time to consummate an initial business combination by up to 12 months. In such case, we will present such proposal to our stockholders. The time period in which we must complete our initial business combination will not be extended unless, in addition to the requirements of Delaware law, (i) holders of a majority of our common stock sold in our initial public offering who vote at the meeting called for approving such extension approve the extension and (ii) conversion rights are exercised with respect to less than 33.33% of the shares sold in our initial public offering. If we fail to consummate a business combination within the required time frame, our corporate existence will, in accordance with our amended and restated certificate of incorporation, cease except for the purposes of winding up our affairs and liquidating. The foregoing requirements are set forth in Article Sixth of our amended and restated certificate of incorporation and may not be amended without the affirmative vote of all stockholders except in connection with, and upon closing of, the initial business combination. We may not be able to find suitable target businesses within the required time frame. In addition, our negotiating position and

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our ability to conduct adequate due diligence on any potential target may be reduced as we approach the deadline for the consummation of a business combination.

Unlike many other blank check companies, we will be permitted, pursuant to our amended and restated certificate of incorporation, to seek to extend the date before which we must complete an initial business combination to up to 36 months. As a result, the funds raised in our initial public offering may be held in the trust account for up to three years.

Unlike many other blank check companies, if we have entered into a definitive agreement prior to January 17, 2010, we may seek to extend the date before which we must complete our business combination, to avoid being required to liquidate, by up to 12 months by calling a special (or annual) meeting of our stockholders for the purpose of soliciting their approval for such extension. Without the option of extending by up to an additional 12 months, if we enter into such agreement near the end of the period ending January 17, 2010, we may not have sufficient time to secure the approval of our stockholders and satisfy customary closing conditions. If the proposal for the extension by up to 12 months is approved by our stockholders, we will have up to an additional 12 months beyond the initial 24 month period ending January 17, 2010 with which to complete our initial business combination. As a result we may be able to hold the funds raised in our initial public offering in the trust account until January 17, 2011 and thus delay the receipt by our public stockholders funds from the trust account on liquidation.

If we are forced to liquidate before a business combination and distribute the trust account, our public stockholders may receive less than $10.00 per share and our warrants will expire worthless.

Approximately $12,725,000 of the gross proceeds of our initial public offering and the sale of insider warrants were used to pay a portion of the underwriting discounts and commissions as well as filing, listing, legal, accounting and other fees and expenses associated with our initial public offering. In addition, $125,000 of the gross proceeds of our initial public offering was held outside the trust for our operational needs, up to $6,000,000 of the interest income of the trust may be released to us to fund expenses related to investigating and selecting a target business or businesses and our other working capital requirements, and any additional amounts of interest income we may need to pay our income or other tax obligations may also be released to us. If we are unable to complete a business combination within the prescribed time frames and are forced to liquidate our assets, the per-share liquidation distribution will be no more than $10.00 per share because of the expenses of our initial public offering, our general and administrative expenses and the anticipated costs of seeking a business combination, unless interest income or other gains in the trust account serve to increase such amount. 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.

If we are unable to consummate a business combination, our public stockholders will be forced to wait until January 17, 2010 (or until up to January 17, 2011 if extended pursuant to a stockholder vote) before receiving liquidation distributions.

We have until January 17, 2010 (or until up to January 17, 2011 if extended pursuant to a stockholder vote) to complete a business combination. We have no obligation to return funds to investors prior to such date unless we consummate a business combination prior thereto, and only then in cases where investors have sought conversion of their shares. Only after the expiration of this full time period will public stockholders be entitled to liquidation distributions if we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until such date.

We may need to raise additional funds in order to consummate our initial business combination and may not be able to arrange financing on favorable terms.

Our business combination may require us to use substantially all of our cash to pay the purchase price. In such a case, because we will not know how many stockholders may exercise their conversion rights, we may

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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 expect. Additionally, even if our business combination does not require us to use substantially all of our cash to pay the purchase price, if a significant number of stockholders exercise their conversion rights, we will have less cash available to use in furthering our business plans following a business combination and may need to arrange third party financing. We have not taken any steps to obtain third party financing for either situation. We may not be able to obtain such third party financing on terms favorable to us if at all.

Investors are not entitled to protections normally afforded to investors in blank check companies.

Since the net proceeds from our initial public 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 our securities are listed on the American Stock Exchange, a national securities exchange, and we have net tangible assets in excess of $5,000,000 and have filed a current report on Form 8-K that includes audited financial statements demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules such as completely restricting the transferability of our securities, requiring us to complete a business combination within 18 months of January 17, 2008, the effective date of the initial registration statement and restricting the use of interest earned on the funds held in the trust account. Because we are not subject to Rule 419, our securities are currently tradable, we are entitled to withdraw a certain amount of interest earned on the funds held in the trust account prior to the completion of a business combination and we have a longer period of time to complete such a business combination than we would if we were subject to such rule.

We may be required to subsequently take write-downs or write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause our investors to lose some or all of their investment.

We must conduct a due diligence investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming and expensive due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process. Even if we conduct extensive due diligence on a target business with which we combine, this diligence may not reveal all material issues that may affect a particular target business, and factors outside the control of the target business and outside of our control may arise later. If our diligence fails to identify issues specific to a target business, industry or the environment in which the target business operates, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our common stock. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing.

If the net proceeds of our initial public offering not being held in trust are insufficient to allow us to operate until at least January 17, 2010 (or until up to January 17, 2011 if extended pursuant to a stockholder vote), we may be unable to complete a business combination.

We believe that, following the closing of our initial public offering, the $125,000 of funds available to us outside of the trust account, plus the $6,000,000 of interest earned on the funds held in the trust account that may be available to us in addition to amounts we may withdraw to satisfy tax liabilities, will be sufficient to allow us to operate until at least January 17, 2010 (or up to January 17, 2011 if extended pursuant to a stockholder vote), assuming that a business combination is not consummated during that time. However, actual operating expenses could differ materially from our estimates. We could use a portion of the funds available to us to pay commitment fees for financing or fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of

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intent designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.

The $755,350,000 of net offering proceeds from our initial public offering plus the $12,500,000 we received from the sale of the insider warrants and $31,800,000 in deferred underwriting discounts held in trust may only be invested in accordance with the terms of the trust agreement, which requires the account agent, upon our written instruction, to invest and reinvest the proceeds in the trust account in (a) a Mellon Bank, N.A. money market deposit account or (b) one or more money market funds we select for which The Dreyfus Corporation, an affiliate of the account agent, or any subsidiary or affiliate thereof serves as investment advisor, administrator, shareholder servicing agent, custodian or subcustodian and (c) upon our written request, the account agent shall be required to (x) invest such requested amount directly in United States treasury bonds, bills or notes identified by us and (y) sell, transfer or otherwise dispose of treasuries identified by us, provided, that the amount of treasuries held at any time may not exceed $10 million. Such money market funds must invest principally either in short-term securities issued or guaranteed by the United States having a rating in the highest investment category granted thereby by a recognized credit rating agency at the time of acquisition or in tax exempt municipal bonds issued by governmental entities located within the United States. The current range of interest rates for such types of investments is approximately 1.2 % to 3.5 % per year. A decline in interest rates could result in the trust receiving lower interest proceeds and therefore less available funds upon liquidation for an initial business combination.

A decline in interest rates applicable to amounts included in the trust account could limit the amount available to fund our search for one or more target businesses and complete a business combination since we will depend on interest earned on the trust account to fund our search, to pay our tax obligations and to complete the initial business combination.

Of the net proceeds of our initial public offering and the sale of insider warrants, only $125,000 was available to us initially outside the trust account to fund our working capital requirements. We depend on sufficient interest being earned on the proceeds held in the trust account to provide us with additional working capital we will need to identify one or more target businesses and to complete the initial business combination, as well as to pay any tax obligations that we may owe. While we are entitled to have released to us for such purposes certain interest earned on the funds in the trust account, a substantial decline in interest rates may result in our having insufficient funds available with which to structure, negotiate or close an initial business combination. In such event, we would need to borrow funds from Lazard to operate or may be forced to liquidate. Lazard is under no obligation to advance funds in such circumstances.

We may in the future hire consultants or advisors on a contingent basis, who would only receive payment in the event a business combination occurred and therefore they might be viewed as having an interest in such business combination occurring.

We may in the future hire consultants or advisors to assist us with our search for a target business or businesses or otherwise advise us in connection with our initial business combination and any compensation payable to such persons may be contingent upon the closing of our initial business combination. As a result, such consultants and advisors who provide advice to us would only receive compensation if a business combination occurred and therefore they might be viewed as having an interest in such business combination occurring.

If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by public stockholders may be less than approximately $10.00 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 and service providers we engage and prospective target businesses we negotiate

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with, 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. Furthermore, there is no guarantee that, even if such entities execute such agreements with us, they will not seek recourse against the trust account. Nor is there any guarantee that a court would uphold the validity of such agreements.

Pursuant to a letter agreement entered into with Lazard in connection with our initial public offering, Lazard has agreed that it will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or vendors, service providers or other entities that are owed money by us for services rendered or contracted for or products sold to us but only if such entities have not waived any claims they have against the trust account. Lazard will not have any personal liability as to any claimed amounts owed to a third party (including target businesses) who execute a waiver even if the waiver is subsequently found to be invalid or unenforceable. Lazard’s indemnification also does not extend to any third-party claims that are not for money owed by us for services rendered or contracted for, such as tort claims or as to any claims under our indemnity of the underwriter of our initial public offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Further, while Lazard’s obligation to indemnify is not limited to any maximum dollar amount, Lazard is liable only to the extent necessary to ensure that the amounts in the trust account are not reduced.

Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public stockholders at least $10.00 per share.

Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them and stockholders’ liability to third parties could extend indefinitely because we do not intend to comply with the liquidation procedures set forth in Section 280 of the Delaware General Corporation Law.

If we are unable to complete a business combination prior to January 17, 2010 (or up to January 17, 2011 if our corporate existence is extended pursuant to a stockholder vote), our corporate existence will cease except for the purposes of winding up our affairs and liquidating pursuant to Section 278 of the Delaware General Corporation Law, in which case we will as promptly as practicable thereafter adopt a plan of distribution in accordance with Section 281(b) of the Delaware General Corporation Law. Section 278 provides that our existence will continue for at least three years after its expiration for the purpose of prosecuting and defending suits, whether civil, criminal or administrative, by or against us, and of enabling us gradually to settle and close our business, to dispose of and convey our property, to discharge our liabilities and to distribute to our stockholders any remaining assets, but not for the purpose of continuing the business for which we were organized. Our existence will continue automatically even beyond the three-year period for the purpose of completing the prosecution or defense of suits begun prior to the expiration of the three-year period, until such time as any judgments, orders or decrees resulting from such suits are fully executed. Section 281(b) will require us to pay or make reasonable provision for all then-existing claims and obligations, including all contingent, conditional, or unmatured contractual claims known to us, and to make such provision as will be reasonably likely to be sufficient to provide compensation for any then-pending claims and for claims that have not been made known to us or that have not arisen but that, based on facts known to us at the time, are likely to arise or to become known to us within 10 years after the date of dissolution. Accordingly, we would be required to provide for any creditors known to us at that time or those that we believe could be potentially brought against us within the subsequent 10 years prior to distributing the funds held in the trust to stockholders. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors that we engage after the closing of our initial public offering (such as accountants, lawyers, investment bankers, etc.) and potential target businesses. We intend to have all vendors that we engage and prospective target businesses

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execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. Accordingly, we believe the claims that could be made against us should be limited, thereby lessening the likelihood that any claim would result in any liability extending to the trust. However, we may not properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, third parties may seek to recover from our stockholders amounts owed to them by us.

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders (including Lazard and our directors to the extent they purchased shares in our initial public offering or in the open market) promptly after January 17, 2010 (or January 17, 2011 if our corporate existence is extended pursuant to a stockholder vote), this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and the company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Claims may be brought against us for these reasons.

An effective registration statement may not be in place when an investor desires to exercise warrants, or such exercise may not be registered, qualified or deemed exempt under the securities laws of the state of residence of the holder, thus precluding such investor from being able to exercise his, her or its warrants and causing such warrants to be practically worthless.

No warrant held by public stockholders will be exercisable and we will not be obligated to issue shares of common stock unless at the time such holder seeks to exercise such warrant, a registration statement relating to the common stock issuable upon exercise of the warrant is effective and current. Under the terms of the warrant agreement governing our outstanding warrants, we have agreed to use our best efforts to meet these conditions and to maintain a current prospectus relating to the common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we may not be able to do so, and if we do not maintain a current prospectus related to the common stock issuable upon exercise of the warrants, holders will be unable to exercise their warrants and we will not be required to settle any such warrant exercise.

We expect that stand-alone acquired company and pro forma combined financial statements will be required in connection with our initial business combination as well as for any significant subsequent business combinations or significant acquisitions. In connection with any such combination or other acquisition, we may be unable to maintain a current prospectus because stand-alone acquired company and/or pro forma combined financial statements may not be available on an immediate or timely basis.

In addition, no warrants will be exercisable and we will not be obligated to issue shares of common stock unless the common stock issuable upon such exercise 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. At the time that the warrants become exercisable (following our completion of a business combination), we expect to continue to be listed on a national securities exchange, which would provide an exemption from registration in every state. Accordingly, we believe holders in every state will be able to exercise their warrants as long as our prospectus relating to the common stock issuable upon exercise of the warrants is current. However, we cannot assure holders of this fact.

If the prospectus relating to the common stock issuable upon the exercise of the warrants sold in our initial public offering is not current or the exercise of such warrants is not registered, qualified or exempt under the laws of the state of residence of the holder or prospective holder, the warrants held by public stockholders may have

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no value, the market for such warrants may be limited and such warrants may expire worthless. Notwithstanding the foregoing, the insider warrants, as well as warrants comprising part of the founder units that are currently outstanding, may be exercisable for unregistered shares of common stock even if no registration relating to the common stock issuable upon exercise of the warrants is effective and current.

If we redeem the warrants sold in our initial public offering, the insider warrants and the founder warrants, which are non-redeemable while held by Lazard, our directors and their permitted transferees, could provide the holders thereof with the ability to realize a larger gain than the public warrant holders.

The warrants sold in our initial public offering may be called for redemption at any time while the warrants are exercisable and there is an effective and current registration statement covering the shares of common stock issuable upon exercise of such warrants:

As a result of the insider warrants and the founder warrants not being subject to the redemption features that our publicly-held warrants are subject to while such warrants are held by Lazard, our directors and their permitted transferees, holders of the insider warrants and the founder warrants, or their permitted transferees, could realize a larger gain than our public warrant holders in the event we redeem the publicly-held warrants.

Since we have not yet selected a 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 or business in which we may ultimately operate.

Because we have not yet identified a prospective target business, investors in our securities currently have no basis to evaluate the possible merits or risks of the target business’ operations. To the extent we complete a business combination with a financially unstable company, we may be affected by numerous risks inherent in the business operations of such entities. Although our management will evaluate the risks inherent in a particular target business, they may not properly ascertain or assess all of the significant risk factors inherent in a particular industry or target business. An investment in our units may ultimately prove to be less favorable to investors than a direct investment, if such opportunity were available, in a target business. Except for the limitation that a target business have a collective fair market value of at least 80% of the balance in the trust account (exclusive of deferred underwriting discounts and commissions of $31,800,000), and the limitations set forth below, we will have virtually unrestricted flexibility in identifying and selecting prospective acquisition candidates, though it is our current intention to focus primarily on general industrial companies in North America.

Mr. Drapkin’s agreement with his prior employer, M&F, provides that, with certain exceptions, he may not, until April 25, 2009, advise, engage in (as a principal, partner, director, officer, agent, employee consultant or otherwise), or be financially interested in any company which derived more than 50% of its net revenues and operating income for such company’s most recent fiscal year from a business or businesses that are directly competitive with any operating business of M&F owned as of April 25, 2007. Mr. Drapkin’s agreement also restricts him from engaging in an acquisition of any of Allied Security Holdings, LLC, Clarke American Corp., M&F Worldwide Corp., Revlon Consumer Products Corporation, Revlon, Inc. or Scientific Games Corporation. It is our current intention to focus our efforts in identifying a prospective target business or businesses primarily on general industrial companies in North America. We do not, and Mr. Drapkin has advised us that he does not, intend to take any action that would result in a violation by Mr. Drapkin of the terms of his agreement with

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M&F. According to a registration statement filed by a company organized by M&F, M&F has interests in the following entities: AlliedBarton Security Services; AM General; Deluxe Entertainment Services Group Inc.; M&F Worldwide Corp. (which owns and manages Harland Clarke Corp., Harland Financial Solutions, Scantron Corporation, and Mafco Worldwide Corp.); Panavision; Revlon; Scientific Games Corporation; SIGA Technologies, Inc.; and TransTech Pharma Inc.

Our stockholders’ only opportunity to evaluate and affect the investment decision regarding a potential business combination will be limited to voting for or against the business combination submitted to our stockholders for approval.

The only opportunity for our stockholders to evaluate and affect the investment decision regarding a potential business combination will be limited to voting for or against the business combination submitted to our stockholders for approval. In addition, a proposal that a stockholder votes against could still be approved if a sufficient number of public stockholders vote for the proposed business combination. Alternatively, a proposal that a stockholder votes for could still be rejected if a sufficient number of public stockholders vote against the proposed business combination.

We will not be required to obtain a fairness opinion from an independent investment banking firm as to the fair market value of the target business unless our board of directors is unable to independently determine the fair market value.

The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential revenues, earnings and cash flow and/or 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 FINRA 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 of the target business if our board of directors independently determines that the target business complies with the 80% threshold.

If we seek to effect a business combination with an entity that is directly or indirectly affiliated with members of our management team, conflicts of interest could arise.

Members of our management team either currently have, or may in the future have, affiliations with companies that we may seek to acquire. Both of our current officers are also employees of Lazard Frères & Co. LLC, an affiliate of our founding stockholder. Mr. Drapkin serves as Vice Chairman of Lazard International and as Chairman of Lazard’s investment committee, and Mr. Taylor is a Managing Director of Lazard Frères & Co. LLC and both may participate in transactions at and have obligations to clients of Lazard that may be in conflict or competition with our consummation of an initial business combination. Despite our agreement to obtain an opinion from an independent investment banking firm which is a member of FINRA that a business combination with an affiliated entity is fair to our stockholders from a financial point of view and to have any such transaction approved by a majority of our directors who do not have an interest in such transaction and our audit committee, which is comprised of independent directors, potential conflicts of interest may still exist, and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would have been absent any conflicts of interest.

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 cause a change in control of our ownership.

Our amended and restated certificate of incorporation authorizes the issuance of up to 600,000,000 shares of common stock, par value $0.001 per share, and 1,000,000 shares of preferred stock, par value $0.001 per share. There are currently 387,500,000 authorized but unissued shares of our common stock available for issuance (after appropriate reservation for the issuance of the shares upon full exercise of our outstanding

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warrants) and all of the 1,000,000 shares of preferred stock available for issuance. Although we have no commitment as of the date of this Annual Report on Form 10-K, we may issue a substantial number of additional shares of our common 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:

Similarly, if we issue debt securities, it could result in:

Resources could be wasted in researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

It is anticipated that the investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to complete a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate the business combination for any number of reasons including those beyond our control, such as that 33.33% or more of our public stockholders vote against the business combination and opt to have us convert their stock for a pro rata share of the trust account even if a majority of our stockholders approve the business combination. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

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 operations are dependent upon a relatively small group of individuals and, in particular, upon our chairman of the board, chief executive officer and president, Mr. Drapkin. We believe that our success depends on the continued service of Mr. Drapkin, at least until we have consummated a business combination. Mr. Drapkin also currently serves as Vice Chairman of Lazard International and as Chairman of Lazard’s investment committee. Mr. Drapkin intends to devote as much time as he deems necessary to properly conduct

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our affairs. We expect Mr. Drapkin will typically devote an average of 15 to 20 hours per week to our business. However, Mr. Drapkin may have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. Although Mr. Drapkin beneficially holds 4,000,000 founder units, such holdings are significantly smaller than are typical for the founding chief executive officer in a blank check company and may not provide Mr. Drapkin with the sufficient incentives to continue his role at the company. Mr. Drapkin has agreed that he will continue to serve as chairman and chief executive officer until the earlier of consummation of our initial business combination or our liquidation. However, he could resign at any time without forfeiting his units. In addition, we do not have key-man insurance on the life of Mr. Drapkin. The unexpected loss of the services of Mr. Drapkin could have a detrimental effect on us.

The role of our key personnel in the target business cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following a business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after a business combination, our assessment of these individuals may not 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.

Our key personnel may negotiate employment or consulting agreements with a target business or businesses in connection with a particular business combination. These agreements may provide for them to receive compensation following a business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.

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. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business or businesses.

Our officers’ and directors’ interests in obtaining reimbursement for any out-of-pocket expenses incurred by them may lead to a conflict of interest in determining whether a particular target business is appropriate for an initial business combination and in the public stockholders’ best interest.

Unless we consummate the initial business combination, neither Lazard nor our officers and directors will receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the $125,000 not deposited in the trust account and the amount of interest income from the trust account up to a maximum of $6,000,000 that may be released to us as working capital. We do not have a policy that prohibits Lazard or our officers and directors from negotiating for the reimbursement of such expenses by a target business. If the owners of the target business do not agree to such repayment, this could cause our management to view such potential business combination unfavorably, thereby resulting in a conflict of interest. The financial interest of Lazard or our officers or directors could influence our officers’ and directors’ motivation in selecting a target business or businesses and therefore there may be a conflict of interest when determining whether a particular business combination is in the stockholders’ best interest.

Reimbursement for any out-of-pocket expenses incurred by Lazard and its affiliates, as well as our officers, directors and any of their affiliates, in connection with activities on our behalf, such as searching for and identifying potential target businesses as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations or meet with their representatives or owners, will be

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paid by us out of the $125,000 not held in trust and the $6,000,000 of interest earned on the trust account available to us.

Lazard or other entities with overlapping ownership or management may represent either a client in competition with us to acquire potential target businesses or potential target businesses, thereby causing conflicts of interest as to our knowledge of or ability to pursue potential targets. This conflict of interest could have a negative impact on our ability to consummate a business combination.

Lazard undertakes a wide range of financial advisory, investment banking, asset management and other activities for a wide variety of clients, including institutions, companies and individuals, and for its own account. Accordingly, there may be situations in which Lazard has an obligation or an interest that actually or potentially conflicts with our interests. These conflicts may not be resolved in our favor and, as a result, we may be denied certain investment opportunities or may be otherwise disadvantaged in some situations by our relationship to Lazard.

Lazard currently operates a merchant banking business in France, which is regulated as part of its Paris-based banking affiliate. In addition, certain current and former managing directors of Lazard, including its named executive officers, are the sole shareholders of LFCM Holdings, the parent company of LAI, which operates a number of investment vehicles that could compete with us for acquisition targets. Lazard has also entered into a business alliance agreement pursuant to which it has the option to acquire the merchant banking business of LAI. Lazard may also choose to operate, or have an interest in, investment entities similar to us or that otherwise compete with us in the future. Neither Lazard nor members of our management who are also employed by Lazard have any obligation to present us with any opportunity for a potential business combination of which they become aware unless such opportunity was expressly offered in writing to our management solely in their capacity as an officer or director of the company. Lazard and/or our management, in their capacities as officers or managing directors of Lazard or in their other endeavors, may choose to present potential business combinations to the related entities described above, current or future Lazard internal investment vehicles, including other blank check companies in which Lazard may participate, or third parties, including clients of Lazard, before they present such opportunities to us. In addition, Lazard’s chief executive officer and chairman, Bruce Wasserstein, is chairman of Wasserstein & Co., LP, an independent private equity and investment firm that may compete with us. In addition, Mr. Drapkin, our chairman, chief executive officer and president, is currently Vice Chairman of Lazard International and Chairman of Lazard’s investment committee. As a result, Mr. Drapkin may be subject to similar conflicts that may arise from the competing roles of Lazard and its affiliates in the course of their respective businesses and as principal stockholder of the company. These conflicts may not be resolved in our favor.

Our independent directors may have pre-existing duties or obligations that prevent them from presenting otherwise suitable target businesses to us.

Our independent directors, Thomas Dooley, R. Ian Molson, David M. Schizer and Ronald J. Kramer, may have pre-existing duties or obligations that prevent them from presenting otherwise suitable target businesses to us. Mr. Dooley is the Chief Financial Officer, Senior Executive Vice President, Chief Administrative Officer and a Director of Viacom Inc. Mr. Kramer is President and Director of Wynn Resorts and serves as a Director of Monster Worldwide, an online career site. Mr. Molson is a Partner and Director of Lennox Investment Management LLP, a London residential property investment fund, and serves as Chairman of the Board of Directors of World Golf Systems. Mr. Molson is also a Director and founding shareholder of Healthpoint Capital LLC, a private equity firm which focuses exclusively on the orthopedics industry and a Director of Alphatec Spine Inc. and Cayzer Continuation Protected Cell Company Ltd. Mr. Schizer is Dean of Columbia Law School and also serves on an advisory board at NASDAQ, which serves as an appellate body in disciplinary matters, as well as on the board of directors of a privately-held cable company.

While none of the current affiliations of our independent directors fall within a sector in which we expect to seek a target business or businesses, we have no assurance that this situation will not change in the future.

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Entities with which our independent directors are affiliated could expand operations into sectors in which we seek to effect a business combination, or attractive target businesses may arise in the sectors in which these entities currently operate. In such instances our independent directors may be constrained from presenting otherwise suitable or attractive target businesses to us.

Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest 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 could create a conflict of interest when allocating their time between our operations and their other commitments. We do not intend to appoint any other officers, or to have any full time employees, prior to the consummation of a business combination. Both of our current executive officers are engaged in several other business endeavors, including businesses that compete with ours (none of which are blank check companies), and are not obligated to devote any specific number of hours to our affairs. If our officers’ and directors’ 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. These conflicts may not be resolved in our favor. As a result, a potential target business may be presented to another entity prior to its presentation to us and we may miss out on a potential transaction.

Lazard and our officers and directors own units or warrants acquired prior to or concurrently with our initial public offering. These units and warrants will not participate in liquidation distributions and, therefore, our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for a business combination.

Lazard and our directors waived their right to receive distributions with respect to their founder units upon our liquidation if we are unable to consummate a business combination. Accordingly, the founder units, as well as any insider warrants transferred to our officers or directors by Lazard, 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 timely identifying and selecting a target business or businesses and completing a business combination. 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.

The American Stock Exchange may delist our securities from quotation on its exchange which could limit investors’ ability to execute transactions in our securities and subject us to additional trading restrictions.

Our securities are listed on the American Stock Exchange, a national securities exchange. Our securities may not continue to be listed on the American Stock Exchange in the future prior to a business combination if we are unable to maintain compliance with listing requirements, including due to events outside of our control such as our units or common stock being held by less than 400 public holders or our financial condition appearing unsatisfactory to the American Stock Exchange. Additionally, in connection with our business combination, it is likely that the American Stock Exchange will require us to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements. We may not be able to meet those initial listing requirements at that time.

If the American Stock Exchange delists our securities from trading on its exchange, we could face significant material adverse consequences, including:

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We may only be able to complete one business combination with the proceeds of our initial public offering, which may cause us to be solely dependent on a single business which may have a limited number of products or services.

Our business combination must be with one or more target businesses having a collective fair market value of at least 80% of the balance in the trust account (exclusive of deferred underwriting discounts and commissions of $31,800,000) at the time of such acquisition. However, we may not be able or desire to acquire more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. 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.

This 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.

We could face additional risks in our ability to consummate our initial business combination if we choose to simultaneously acquire several businesses.

If we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.

Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking conversion rights with respect to more than 10% of the shares sold in our initial public offering.

In connection with any stockholder approval in which we may seek to extend the period of time to consummate a business combination, or to approve our initial business combination, we will offer each public stockholder (other than Lazard or our directors) the right to have his, her or its shares of common stock converted to cash if the stockholder votes against a time extension or a business combination, as applicable, and, if the business combination or the extension of time, as applicable, is approved and completed. Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group”, will be restricted from seeking conversion rights with respect to more than 10% of the

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shares sold in our initial public offering, on a cumulative basis, which includes any stockholders who previously exercised their conversion rights in connection with the stockholder vote, if any, required to approve an extended period and the stockholder vote required to approve our initial business combination. Accordingly, holders of more than 10% of the shares sold in our initial public offering will not be able to seek conversion rights with respect to the full amount of the shares held by such holders and may be forced to hold such additional shares or sell them in the open market (although they will be able to vote such shares). We cannot provide any assurance that the value of such additional shares will appreciate over time or that the market price of the common stock will exceed the per share conversion price.

The ability of our stockholders to exercise their conversion rights, on a cumulative basis, may not allow us to effectuate the most desirable business combination or optimize our capital structure.

When we seek stockholder approval of any business combination or an extension of the time period within which we must complete our initial business combination, we will offer each public stockholder, other than Lazard or our directors, the right to have his, her or its shares of common stock converted to cash if the stockholder votes against the business combination or an extension of time and the business combination or an extension of time is approved and completed. Such holder must both vote against such business combination or extension and then exercise his, her or its conversion rights to receive a pro rata share 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 stockholders may exercise such conversion rights, we may either need to reserve part of the trust account for possible payment upon such conversion if the transaction is approved, 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 expect.

The conversion rights, on a cumulative basis, afforded to the public stockholders (including Lazard and our directors to the extent they have purchased shares in the initial public offering or in the open market) may result in the conversion into cash of up to 33.33% less one share of the aggregate number of the shares sold in our initial public offering. Therefore, as much as $266,523,335 (plus the converting stockholders’ share of all accrued interest after distribution of interest income on the trust account balance to us for working capital and tax obligations) may be required to fund the exercise of conversion rights. Since we have no specific business combination under consideration, we have not taken any steps to secure third party financing. We may have to secure third party financing which might result in us having a leverage ratio that is not optimal for our business combination. In the event that the acquisition involves the issuance of our stock as consideration, we may be required to issue a higher percentage of our stock to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at a higher than desirable level. This may limit our ability to effectuate the most attractive business combination available to us.

Unlike many other blank check offerings, we allow conversion rights to be exercised with respect to up to 33.33% less one share of the common stock purchased by the public stockholders in our initial public offering, on a cumulative basis. This higher threshold will make it easier for us to consummate a business combination with which investors may not agree.

When we seek stockholder approval for the extended period, if applicable, and our initial business combination, we will offer each public stockholder (other than Lazard and our directors) the right to have its common stock converted to cash if the stockholder votes against the extended period or business combination, as the case may be, and such proposal is approved and, in the case of the business combination, it is also consummated. We will consummate the initial business combination only if the following three conditions are met: (i) a majority of the common stock voted by the public stockholders are voted in favor of the business combination, (ii) a majority of our outstanding common stock approve an amendment to our amended and restated certificate of incorporation allowing our perpetual existence, and (ii) public stockholders owning 33.33% or more of the shares sold in our initial public offering do not vote against the business combination and on a cumulative basis exercise their conversion rights (including any shares previously converted in connection with a

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vote, if any, on the extended period). Many other blank check companies have a conversion threshold of 20%, which makes it more difficult for such companies to consummate their initial business combination. Thus, because we permit a larger number of stockholders to exercise their conversion rights, it will be easier for us to consummate an initial business combination with a target business which certain stockholders may believe is not suitable for us, and stockholders may not receive the full amount of their original investment upon exercise of their conversion rights. We have increased the conversion percentage to 33.33% from the more typical 20% in order to reduce the likelihood that a small group of investors holding a block of our stock will be able to prevent the completion of a business combination that is otherwise approved by a majority of our public stockholders and to be similar to other offerings by blank check companies currently in the market.

We may require stockholders who wish to convert their shares to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.

We may require public stockholders who wish to convert their shares to either tender their certificates to our transfer agent at any time prior to the vote taken at the stockholder meeting or to deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, we cannot assure stockholders of this fact. Accordingly, if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares.

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 entities, including Lazard clients and investment vehicles having a business objective similar to ours, as well as 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. Furthermore, the obligation we have to seek stockholder approval of a business combination may delay the consummation of a transaction. Additionally, our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses or our stockholders. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to consummate a business combination with a target business or businesses within the prescribed time periods, we will be forced to liquidate.

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 or abandon a particular business combination.

Although we believe that the net proceeds of our initial public offering and the sale of insider warrants will be sufficient to allow us to consummate a business combination, because we have not yet identified any prospective target business or businesses, we cannot ascertain the capital requirements for any particular

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transaction. If the amount held in trust proves to be insufficient, either because of the size of the business combination, the depletion of the available funds in search of a target business or businesses, or the obligation to convert into cash a significant number of shares from dissenting stockholders, we will be required to seek additional financing. Such financing may not be available on acceptable terms, if at all. During the second half of 2007 and during the first quarter of 2008, the global financial markets experienced declining equity valuations and disruptions in the credit markets due to liquidity imbalances and repricing of risk. These factors have and may continue to cause disruptions in the credit markets, which may impact our ability to obtain additional financing on reasonable 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 either 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, including Lazard, is required to provide any financing to us in connection with or after a business combination.

Lazard holds a substantial interest in us and thus may influence certain actions requiring a stockholder vote.

Lazard and our Lazard-affiliated directors collectively own 24.7% of our issued and outstanding shares of common stock, which percentage may increase following the announcement of our business combination when Lazard is obligated to purchase up to an additional $37,500,000 of shares of common stock in the open market, depending on the market price of our common stock. In addition, Lazard’s proportionate interest in the company will increase if stockholders elect to convert their shares in connection with our initial business combination. 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. Although we intend to comply with the requirements under Delaware law regarding holding annual meetings, it is possible that we will complete a business combination prior to the time by which we are required to hold an annual meeting of stockholders, and therefore there would not 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 until at least 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 Lazard, because of its ownership position, will have considerable influence regarding the outcome. Accordingly, Lazard will have significant influence at least until the consummation of a business combination.

Limited information may be available for privately-held companies that could be our potential targets.

In accordance with our acquisition strategy, we may seek a business combination with one or more privately-held companies or one or more divisions or subsidiaries of one or more publicly-owned companies. Generally, very little public information exists about these companies compared to public companies, and we may be required to rely on the ability of Mr. Drapkin and our other officers and directors, with the assistance of advisors, including Lazard, to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to identify all material information about these companies, then we may not make a fully informed investment decision, and we may lose money on our investments.

Our management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.

If we call our warrants for redemption after the redemption criteria described elsewhere in this Annual Report on Form 10-K have been satisfied, our management will have the option to require any holder that wishes to exercise his warrant to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of common stock equal to the quotient obtained by dividing

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(x) the product of the number of shares of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” and (y) the fair market value. The “fair market value” shall mean the average reported last sales price of our common stock for the 10 trading days ending on the third trading day prior to the date on which notice of redemption is sent to the holders of the warrants. If our management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in our company.

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.

There are currently warrants to purchase 112,500,000 shares of our common stock outstanding. To the extent we issue shares of common stock to effect a business combination, the potential for the issuance of a substantial number of additional shares upon exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target business. 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 may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised, our stockholders may experience dilution to their respective holdings. The insider warrants will not be exercisable until the later of January 17, 2009 and the consummation of our initial business combination.

If Lazard and our directors exercise their registration rights with respect to their securities in the company, 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.

Lazard and our directors are entitled to make a demand that we register the resale of their securities in the company at any time commencing three months prior to the date on which their founder shares are released from escrow. Lazard has registration rights with respect to all of the common stock it holds. This includes its 15,144,000 founder shares, the 5,000,000 shares underlying the 5,000,000 units purchased by Lazard in our initial public offering and up to 3,750,000 shares (assuming a price of $10.00 per share) purchased in the open market by Lazard prior to the initial business combination for a total of 23,894,000 shares. Lazard has registration rights with respect to the shares of common stock underlying the warrants it holds, which includes 15,144,000 founder warrants, 12,500,000 insider warrants and 5,000,000 warrants underlying the units purchased by Lazard in our initial public offering, for a total of 32,644,000 shares. In addition, our directors have registration rights with respect to all of their common stock, consisting of an aggregate of 4,856,000 shares. Our directors also have registration rights with respect to the common stock underlying the warrants they hold, consisting of an aggregate of 4,856,000 founder warrants. The presence of the additional shares of common stock 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 acquiring the target business, as the stockholders of the target business may be discouraged from entering into a business combination with us or may request a higher price for their securities because of the potential effect the exercise of such rights may have on the trading market for our common stock.

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.

A company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment Company Act of 1940. Since we will invest the proceeds held in the trust account, it is possible that we could be deemed an investment company.

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Notwithstanding the foregoing, we do not believe that our anticipated principal activities will subject us to the Investment Company Act of 1940. To this end, our agreement with the account agent requires the account agent, upon our written instruction, to invest and reinvest the proceeds in the trust account in (a) a Mellon Bank, N.A. money market deposit account or (b) one or more money market funds we select for which The Dreyfus Corporation, an affiliate of the account agent, or any subsidiary or affiliate thereof serves as investment advisor, administrator, shareholder servicing agent, custodian or subcustodian and (c) upon our written request, the account agent shall be required to (x) invest such requested amount directly in United States treasury bonds, bills or notes identified by us and (y) sell, transfer or otherwise dispose of treasuries identified by us, provided, that the amount of treasuries held at any time may not exceed $10 million.

Such money market funds must invest principally either in short-term securities issued or guaranteed by the United States having a rating in the highest investment category granted thereby by a recognized credit rating agency at the time of acquisition or in tax exempt municipal bonds issued by governmental entities located within the United States.

If we are nevertheless 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:

In addition, we may have imposed upon us certain burdensome requirements, including:

Compliance with these additional regulatory burdens would require additional expense for which we have not allotted funds.

We do not currently intend to pay dividends on shares of our common stock in the foreseeable future.

We have not paid any cash dividends on our common stock to date and do not currently intend to pay cash dividends prior to the completion of a business combination. The payment of cash dividends in the future will be dependent upon various factors, including our earnings, if any, cash balances, 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 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 currently anticipate declaring any dividends in the foreseeable future. Because we do not expect to pay cash dividends on our common stock, any gains on an investment in our securities will be limited to the appreciation, if any, of the market value of our units, common stock and warrants.

If we effect a business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.

We may effect a business combination with a company located outside of the United States. If we did, we would be subject to any special considerations or risks associated with companies operating in the target business’ home jurisdiction, including any of the following:

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We may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.

If we effect a business combination with a company located outside of the United States, the laws applicable to such company may govern all of our material agreements and we may not be able to enforce our legal rights.

If we effect a business combination with a company located outside of the United States, the laws of the country in which such company operates may govern almost all of the material agreements relating to its operations. The target business may not be able to enforce any of its material agreements or that remedies will not be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may be different from the implementation and interpretation in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties against our directors and officers under Federal securities laws.

Because we must furnish our stockholders with target business financial statements, we may not be able to complete a business combination with some prospective target businesses.

We will provide stockholders with audited financial statements of the prospective target business as part of the proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in conformity with United States generally accepted accounting principles. A target business identified by us as a potential acquisition candidate may not have financial statements prepared in conformity with United States generally accepted accounting principles and may not be able to prepare its financial statements in conformity with United States generally accepted accounting principles. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business. These financial statement requirements may limit the pool of potential target businesses with which we may combine.

Our obligations under laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related regulations, may increase our cost of completing a business combination.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that management assess and report on the effectiveness of our internal control beginning with our Annual Report on Form 10-K for the year ending

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December 31, 2008. If we fail to develop and maintain effective internal control, we may be subject to regulatory scrutiny, civil or criminal penalties and/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 provide a report on the effectiveness of our internal control over financial reporting. In addition, a target company may not be in compliance with the provisions of the Sarbanes-Oxley Act. The development and maintenance of the internal control of any such entity to ensure compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to develop and maintain effective internal control may harm our operating results and/or result in difficulties in meeting our reporting obligations. Inadequate internal control 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.

There may be tax consequences associated with our acquisition, holding and disposition of target companies and assets.

We may incur significant taxes in connection with: effecting acquisitions; holding, receiving payments from, and operating target companies and assets; and disposing of target companies and assets.

A U.S. corporation generally will be classified as a personal holding company (“PHC”) for U.S. federal income tax purposes in a given taxable year if (i) at any time during the last half of such taxable year, five or fewer individuals (without regard to their citizenship or residency and including as individuals for this purpose certain entities such as certain tax-exempt organizations and pension funds) own or are deemed to own (pursuant to certain constructive ownership rules) more than 50% of the stock of the corporation by value and (ii) at least 60% of the corporation’s adjusted ordinary gross income, as determined for U.S. federal income tax purposes, for such taxable year consists of PHC income (which includes, among other things, dividends, interest, royalties, annuities and, under certain circumstances, rents). While we do not believe that we will be a PHC, there can be no assurance that we will not be classified from time to time as a PHC. If we are or were to become a PHC in a given taxable year, we would be subject to an additional 15% PHC tax on our undistributed PHC income, which generally includes the company’s taxable income, subject to certain adjustments. For taxable years beginning after December 31, 2010, the PHC tax rate on undistributed PHC income will be equal to the highest marginal rate on ordinary income applicable to individuals (currently 35%). Any such additional taxes would reduce the cash available for distributions (current or upon liquidation) by the company with respect to shares of our common stock and the cash available to us in connection with a business combination.

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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

We have made statements under the captions “Business”, “Risk Factors,” and Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Annual Report on Form 10-K that are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predicts,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Annual Report on Form 10-K may include, for example, statements about our:

The forward-looking statements contained in this Annual Report on Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.