10-K/A 1 v150071_10ka.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K/A
(Amendment No. 2)
 
x
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
For the fiscal year ended: December 31, 2008
 
¨
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
For the transition period from ______________to ______________
 
Commission File Number 000-51200
 
Pantheon China Acquisition Corp.
 
(Exact name of registrant as specified in its charter)
 
Delaware
(State of Incorporation)
  
20-4665079
(I.R.S. Employer I.D. Number)
     
Suite 10-64, #9 Jianguomenwai Avenue, Chaoyang District, Beijing, China, 100600
(Address of principal executive offices)
  
Not applicable
(Zip code)
 
86-10-85322720
 
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act: None
 
Securities registered pursuant to Section 12(g) of the Act:
 
Common Stock, $.0001 par value per share
 
Common Stock Purchase Warrants
 
Units consisting of one share of Common Stock, par value $.0001 per share,
 
and two Common Stock Purchase Warrants
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
Yes  ¨  No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
 
Yes  ¨  No x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No ¨
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer     ¨                                                                                              Accelerated filer¨
 
Non-accelerated filer       ¨  (Do not check if a smaller reporting company)           Smaller reporting companyx
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  x  No ¨
 
As of June 30, 2008, the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, was approximately $33,120,000.
 
As of March 30, 2009, there were 6,070,387 shares of Common Stock, $.0001 par value per share, outstanding.
 
 
EXPLANATORY NOTE
 
This Amendment No. 2 (this "Amendment") to the Annual Report on Form 10-K for the fiscal year ended December 31, 2008 of Pantheon China Acquisition Corp. (“Pantheon”) filed on March 31, 2009 (the “Original Filing”), is being filed for the purpose of updating the financial information in Part II, Item 8, Financial Statements and Supplementary Data by replacing the fiscal year ended December 31, 2008 financial statements and notes thereto.
 
Other than as expressly set forth above, this Amendment does not, and does not purport to, update or restate the information in any Item of the Original Filing or reflect any events that have occurred after the Original Filing was filed.  The filing of this Amendment shall not be deemed an admission that the Form 10-K, when made, included any known, untrue statement of material fact or knowingly omitted to state a material fact necessary to make a statement not misleading.
 
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as a result of this Amendment No. 2, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed and furnished respectively, as exhibits to the Original Filing, have been amended  and refiled as of the date of this Amendment No. 2 and are included as Exhibits 31.1, 31.2 and 32 hereto.
 
PART II
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Financial statements are attached hereto beginning  with page F-1.
 
1
 
ITEM 15. EXHIBITS
 
(a)
(1)
Financial Statements
 
 
Balance Sheets
 
 
Statement of Operations
 
 
Statement of Shareholders’ Equity
 
 
Statement of Cash Flows
 
(2)
Schedules: None.
 
(b)
Exhibits
 
The following Exhibits are filed as part of this report
 
 
Exhibit No.
  
 
Description
3.1
  
Certificate of Incorporation. (1)
3.2
  
By-laws. (1)
3.3
  
Amendment to Certificate of Incorporation. (4)
4.1
  
Specimen Unit Certificate. (1)
4.2
  
Specimen Common Stock Certificate. (1)
4.3
  
Specimen Warrant Certificate. (1)
4.4
  
Form of Unit Purchase Option to be granted to Representative. (2)
4.5
  
Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant. (1)
10.1
  
Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Mark D. Chen. (1)
10.2
  
Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Jennifer J. Weng. (1)
10.3
  
Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Christina Jun Mu. (1)
10.4
  
Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Kevin Kezhong Wu. (1)
10.5
  
Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Qiang Sean Wang. (1)
10.6
  
Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Hunter S. Reisner. (1)
10.7
  
Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and John H. Friedman. (1)
10.8
  
Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Francisco A. Garcia. (1)
10.9
  
Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Super Castle Investments Limited. (1)
10.10
  
Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant. (1)
10.11
  
Form of Stock Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders. (1)
10.12
  
Form of Letter Agreement between Beijing Kiview Real Estate Agency Co., Ltd. and Registrant regarding administrative support. (2)
10.13
  
Form of Promissory Note issued to each of Mark D. Chen, Christina Jun Mu and Kevin Kezhong Wu. (1)
10.14
  
Form of Registration Rights Agreement among the Registrant and the Initial Stockholders. (3)
10.15
  
Subscription Agreement among the Registrant, Graubard Miller and each of Pantheon China Acquisition Limited, Christina Jun Mu, Kevin Kezhong Wu, John H. Friedman, Francisco A. Garcia and Hunter S. Reisner. (1)
10.16
  
Letter Agreement between the Registrant and Mark D. Chen, Jennifer J. Weng, Christina Jun Mu and Kevin Kezhong Wu. (3)
 
2
 
Exhibit No.
  
 
Description
10.17
  
Agreement and Plan of Merger, Conversion and Share Exchange dated as of November 3, 2008 by and between Pantheon, Pantheon Arizona Corp., China Cord Blood Services Corporation, Golden Meditech Company Limited, and the selling shareholders named therein. (5)
10.18
  
Put and Call Option Agreement dated December 10, 2008 by and between Pantheon, Modern Develop Limited, Mark D. Chen, Victory Park Credit Opportunities Master Fund, Ltd. and Victory Park Special Situations Master Fund, Ltd. (6)
10.19
  
Put and Call Option Agreement dated December 10, 2008 by and between Pantheon, Modern Develop Limited, Mark D. Chen and YA Global Investments, L.P. (6)
10.20   Amendment No. 1 to Investment Management Trust Agreement, dated as of December 14, 2008 (7)
31.1
  
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
  
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32
  
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
(1)
Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (SEC File No. 333-136590), as originally filed on August 14, 2006.
 
(2)
Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (SEC File No. 333-136590), as amended and filed on October 24, 2006.
 
(3)
Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (SEC File No. 333-136590), as amended and filed on September 22, 2006.
 
(4)
Incorporated by reference to the Registrant’s Current Report on Form 8-K (SEC File No. 000-52275), filed on December 16, 2008.
 
(5)
Incorporated by reference to the Registrant’s Current Report on Form 8-K (SEC File No. 000-52275), filed on November 11, 2008.
 
(6)
Incorporated by reference to the Registrant’s Current Report on Form 8-K (SEC File No. 000-52275), filed on December 9, 2008 and as amended on December 11, 2008 and as further amended on December 15, 2008.
   
(7)  Incorporated by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-52275), filed on March 26, 2009.
 
3
 
Pantheon China Acquisition Corp.
 
(a corporation in the development stage)
 
Report of Independent Registered Public Accounting Firm
     F-2  
         
Financial Statements
        
         
Balance Sheets
     F-4  
         
Statements of Income
     F-5  
         
Statement of Stockholders’ Equity
     F-6  
         
Statements of Cash Flows
     F-7  
         
Notes to Financial Statements
     F-8  
 
F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Pantheon China Acquisition Corp.

We have audited the accompanying consolidated balance sheets of Pantheon China Acquisition Corp. (a corporation in the development stage) (the “Company”) as of December 31, 2008 and 2007 and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended and the amounts included in the cumulative columns in the consolidated statements of operations and cash flows for the period from April 10, 2006 (inception) to December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements for the period from April 10, 2006 (inception) to December 31, 2006 were audited by other auditors and our opinion, insofar as it relates to cumulative amounts included for such period is based solely on the report of such auditors.

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

In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Pantheon China Acquisition Corp. as of December 31, 2008 and 2007, and the results of its operations and its cash flows for the years then ended and for the amounts included in the cumulative columns in the statements of operations and cash flows for the period from April 10, 2006 (inception) to December 31, 2008, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that Pantheon China Acquisition Corp. will continue as a going concern. As discussed in Note 1 to the financial statements, the Company may face a mandatory liquidation by September 30, 2009 unless a business combination is consummated or prior to September 30, 2009 under certain circumstances. The Company has a working capital deficiency without including funds held in trust. These factors raise a substantial doubt about the Company’s ability to continue as a going concern. Management’s plans to address the Company’s ability to continue as a going concern are disclosed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ McGLADREY & PULLEN, LLP
McGladrey & Pullen, LLP
New York, New York
March 31, 2009

F-2

 
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Pantheon China Acquisition Corp.

We have audited the statements of operations and cash flows of Pantheon China Acquisition Corp. for the period from April 10, 2006 (inception) to December 31, 2006 (not separately presented herein) and the statement of stockholders’ equity for the period from April 10, 2006 (inception) to December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Pantheon China Acquisition Corp. for the period from April 10, 2006 (inception) to December 31, 2006 in conformity with United States generally accepted accounting principles.

/s/ GOLDSTEIN GOLUB KESSLER LLP
Goldstein Golub Kessler LLP
New York, New York
March 29, 2007

F-3

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
CONSOLIDATED BALANCE SHEETS

   
  December 31,
2008		   December 31,
2007
ASSETS
                  
Current assets:
                  
Cash   $ 18,863     $ 339,220  
Short-term investments     —       145,270  
Investments held in trust     28,839,727       33,659,431  
Prepaid expenses     8,803       37,298  
Current assets     28,867,393       34,181,219  
Total assets   $ 28,867,393     $ 34,181,219  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
Current liabilities:
                  
Accrued expenses   $ 873,756     $ 23,713  
Advances from Officers     213,166       38,910  
Deferred underwriting discount and commission     345,000       345,000  
Franchise tax payable     1,473       17,207  
Deferred interest     330,600       182,265  
Total liabilities     1,763,995       607,095  
Commitments
                  
Common stock subject to possible conversion of 1,149,425 shares at conversion value     6,546,225       6,546,225  
Stockholders’ equity:
                  
Preferred stock, $.0001 par value Authorized 1,000,000 shares;
none issued		     —       —  
Common stock, $.0001 par value 25,000,000 shares authorized, 6,070,387 and 7,000,000 shares issued and outstanding as of December 31, 2008 and 2007, respectively     607       700  
Additional paid-in capital     21,315,719       26,631,712  
Earnings (deficit) accumulated during the development stage     (759,153 )      395,487  
Total stockholders’ equity     20,557,173       27,027,899  
Total liabilities and stockholders’ equity   $ 28,867,393     $ 34,181,219  

 
 
See notes to consolidated financial statements

F-4

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
CONSOLIDATED STATEMENTS OF OPERATIONS

     
  For the Year Ended
December 31, 2008		   For the Year Ended
December 31, 2007		   Period from April 10, 2006
(Inception) to
December 31,
2008
Travel   $ 52,273     $ 185,422     $ 237,695  
Consulting fees     —       58,157       58,157  
Professional fees     1,227,594       65,244       1,292,838  
Administrative management expense     90,045       90,000       184,545  
Marketing expense     —       1,817       1,817  
Other operating expenses     61,649       119,764       185,413  
Insurance     26,204       27,903       54,107  
Franchise taxes     25,540       30,187       77,068  
Option related charges     245,600       —       245,600  
Operating loss     (1,728,905 )      (578,494 )      (2,337,240 ) 
Loss on investments     (28,014 )      (50,980 )      (78,994 ) 
Dividend and interest income     8,633       24,895       33,769  
Interest income on trust fund investment     593,646       997,744       1,623,312  
(Loss) income before tax     (1,154,640 )      393,165       (759,153 ) 
Less: provision for income tax     —       —       —  
Net (loss) income   $ (1,154,640 )    $ 393,165     $ (759,153 ) 
Weighted average shares outstanding     6,997,460       7,000,000        
Basic and diluted net (loss) income per share   $ (0.17 )    $ 0.06        

 
 
See notes to consolidated financial statements

F-5

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

         
  Common
Stock Shares		   Amount   Additional
Paid-In
Capital		   Earnings
(Deficit)
Accumulated
During the
Development
Stage		   Stockholders’
Equity
Common shares issued April 10, 2006 at $0.02 per share     1,250,000     $ 125     $ 24,875     $ —     $ 25,000  
Sale of 5,750,000 units, net of underwriters' discount and offering expenses (includes 1,149,425 shares subject to possible conversion)     5,750,000       575       31,903,339       —       31,903,914  
Proceeds from issuance of insider warrants     —       —       1,250,000       —       1,250,000  
Proceeds subject to possible conversion of 1,149,425 shares     —       —       (6,546,225 )      —       (6,546,225 ) 
Proceeds from issuance of additional underwriting purchase option     —       —       100       —       100  
Net income for the period     —       —       —       2,322       2,322  
Balance at December 31, 2006     7,000,000       700       26,632,089       2,322       26,635,111  
Net income for the year ended December 31, 2007     —       —       —       393,165       393,165  
Additional expenses of public offering     —       —       (377 )      —       (377 ) 
Balance at December 31, 2007     7,000,000       700       26,631,712       395,487       27,027,899  
Net loss for the year ended
December 31, 2008		     —       —       —       (1,154,640 )      (1,154,640 ) 
Option related charges     —       —       245,600       —       245,600  
Distribution to converting
shareholders (see Note 1)		     (929,613 )      (93 )      (5,561,593 )      —       (5,561,686 ) 
Balance at December 31, 2008     6,070,387     $ 607     $ 21,315,719     $ (759,153 )    $ 20,557,173  

 
 
See notes to consolidated financial statements

F-6

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  

CONSOLIDATED STATEMENTS OF CASH FLOWS

     
  For the Year
Ended
December 31,
2008		   For the Year
Ended
December 31,
2007		   Period from
April 10, 2006
(Inception) to
December 31,
2008
Cash flows from operating activities:
                           
Net (loss) income   $ (1,154,640 )    $ 393,165     $ (759,153 ) 
Adjustments to reconcile net (loss) income to net cash used in operating activities:
                           
Accrued interest income on investments held in trust     (741,982 )      (1,172,034 )      (1,953,913 ) 
Loss on investments     28,014       50,980       78,994  
Option related charges     245,600       —       245,600  
Change in operating assets and liabilities:
                           
Decrease (increase) in prepaid expenses     28,495       (16,798 )      (8,803 ) 
Increase in accrued expenses     850,044       19,213       873,756  
Increase (decrease) in accrued franchise taxes     (15,735 )      (4,134 )      1,473  
Increase in deferred interest     148,335       174,289       330,600  
Net cash used in operating activities     (611,869 )      (555,319 )      (1,191,446 ) 
Cash flows from investing activities:
                           
(Purchase) sale of short-term investments, net     117,256       (196,250 )      (78,994 ) 
Investments held in trust fund              —       (32,747,500 ) 
Disbursement of investments held in trust     5,561,686       —       5,561,686  
Disbursement of interest earned on investments held in the trust     —       300,000       300,000  
Net cash provided by (used in) investing activities     5,678,942       103,750       (26,964,808 ) 
Cash flows from financing activities:
                           
Proceeds from sale of shares of common stock to founding stockholders     —       —       25,000  
Proceeds from notes payable to stockholders     —       —       100,000  
Repayment of notes payable to stockholders     —       (37,000 )      (100,000 ) 
Proceeds from advances from Officers     174,256       38,910       213,166  
Gross proceeds from initial public offering     —       —       34,500,000  
Proceeds from sale of insider warrants     —       —       1,250,000  
Proceeds from issuance of underwriting purchase option     —       —       100  
Payment of costs associated with offering     —       (131,256 )      (2,251,463 ) 
Payment to converting shareholders     (5,561,686 )      0       (5,561,686 ) 
Net cash (used in) provided by financing activities     (5,387,430 )      (129,346 )      28,175,117  
Net (decrease) increase in cash     (320,357 )      (580,915 )      18,863  
Cash at beginning of period     339,220       920,135       —  
Cash at end of period   $ 18,863     $ 339,220     $ 18,863  
Supplemental schedule of non-cash financing activities:
                           
Accrual of deferred underwriting discount & commission               $ 345,000  

 
 
See notes to consolidated financial statements

F-7

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business Operations

Pantheon China Acquisition Corp. (the “Company”) was incorporated in Delaware on April 10, 2006 as a blank check company whose objective is to acquire, through a stock exchange, asset acquisition or other similar business combination, an operating business, or control such operating business through contractual arrangements, that has its principal operations located in the People’s Republic of China.

There is substantial doubt about the Company’s ability to continue as a going concern as a result of the requirement that the Company complete a business combination by September 30, 2009 or prior as disclosed below and as a result of a working capital deficiency as of December 31, 2008, as discussed in the following paragraph.

Prior to Pantheon’s filing of an amendment to its certificate of incorporation on December 14, 2008, the Company’s Amended and Restated Certificate of Incorporation provided for mandatory liquidation of the Company in the event that the Company did not consummate a Business Combination by December 14, 2008. On December 14, 2008 Pantheon held a special meeting of its stockholders to approve amending its Certificate of Incorporation to extend the deadline by which a business combination must be approved or Pantheon would be obligated to liquidate from December 14, 2008 to September 30, 2009, and provide conversion rights to the holders of up to 20% of its public shares (5,750,000 shares sold in the IPO) in connection with such vote to approve the amendment of its certificate of incorporation. At the special meeting, the holders of a total of 4,857,699 shares voted in favor of the amendment to its charter and the granting of such conversion rights and the holders of 929,613 of Pantheon’s public shares perfected their conversion rights in connection therewith and the converting shareholders received approximately $5.6 million in cash. Accordingly, on December 14, 2008 Pantheon filed an amendment to its certificate of incorporation with the Secretary of State of the State of Delaware effecting the amendment approved by its stockholders. As a result, if the Company has not completed a Business Combination by September 30, 2009, its corporate existence will cease and it will dissolve and liquidate for the purposes of winding up its affairs. In addition pursuant to the Put and Call Option Agreement (see below), Pantheon has agreed to effect a liquidation in accordance with Delaware law in the event the business combination with CCBS (see merger agreement below) is abandoned prior to exercise of either the Put and Call Option (see below) or if Modern elects not to extend the period of the call options. In the event of liquidation, it is likely that the per share value of the residual assets remaining available for distribution (including Trust Fund assets) will be less than the initial public offering price per share in the Offering (assuming no value is attributed to the Warrants contained in the Units sold in the Offering discussed in Note 3). The Company plans to address these matters by working toward completing a business combination (see merger agreement below) and funding its operations by obtaining advances from its Executive Officers and Directors and potentially from the Company with which it has signed a merger agreement. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

On December 10, 2008, Pantheon entered into a Put and Call Option Agreement with Modern Develop Limited and YA Global and a separate Put and Call Option Agreement with Modern Develop Limited and Victory Park. Modern Develop Limited, YA Global and Victory Park are all independent third parties. YA Global and Victory Park acquired from several of Pantheon’s largest stockholders 4,547,399 shares of common stocks of Pantheon in the aggregate, through negotiated private transactions, at approximately $5.97 per share. Pantheon believes that the purchase prices reflected a $0.00 to $0.03 discount (varying from seller to seller) on the anticipated $5.97 per share liquidation amount, depending on, among other things, when the shares where transferred, the seller’s cost of capital and how long the liquidation of Pantheon would have been expected to take. Under the agreements with Pantheon’s selling stockholders, Pantheon’s representatives were granted such selling stockholders’ irrevocable proxy in voting for the Extension Proposal.

Pursuant to the Put and Call Option Agreements, Modern has the right to purchase an aggregate of 4,547,399 shares of common stock of Pantheon from YA Global and Victory Park at an exercise price of $5.97 per share. Modern’s call options have an initial term commencing on the date of the Agreements and

F-8

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business Operations  – (continued)

ending on June 30, 2009, which may be extended to September 30, 2009, or on the record date of a business combination if not exercised sooner. Modern paid an option fee for the initial term and in the event Modern elects to extend the call options it will be required to pay an additional extension option fee to YA Global and Victory Park, in each case pro rata to the number of shares held by the two investors. The option fee of $2,501,070 in the aggregate for the initial term is equivalent to approximately $0.55 per share. If Modern chooses to exercise its call option on or before June 30, 2009, Modern will pay a total of $29,649,042 for the 4,547,399 shares which is equivalent to approximately $6.52 per share. If Modern chooses to pay an additional extension option fee of $1,931,280 (which is equivalent to approximately $0.42 per share) and exercise the call options during the extension period, Modern will pay a total of $31,580,322 for the 4,547,399 shares or $6.94 per share. Due to the fact that none of YA Global, Victory Park nor Modern are obligated to vote in favor of the Redomestication or Business Combination, stockholders should not view these arrangements as indicative that the Redomestication or Business Combination will be approved. The percentage of the IPO shares remaining outstanding subject to the Put and Call Option Agreements is, however, approximately 94.3%, which correspondingly gives each of YA Global, Victory Park or Modern (to the extent it exercises its call option with YA Global or Victory Park) the ability to block the Redomestication and Business Combination should any of them seek to convert more than 1,149,999 of the shares subject to the Put and Call Option Agreements, and only 272,988 IPO shares remain outstanding that are not subject to such agreements. While Pantheon believes that it is unlikely that Modern would allow its pre-paid options to expire unexercised, and expects the transactions under the Put and Call Agreements will be consummated, it cannot predict whether Modern would vote in favor of the proposals to be considered at the Special Meeting or seek conversion if such transactions are consummated. Given the likelihood of Modern’s exercise of its options with YA Global and Victory Park, Pantheon does not expect Golden Meditech to be required to make any purchases of its stock pursuant to the obligation to do so contained in the Acquisition Agreement (as defined below).

In addition, Pantheon’s CEO transferred his rights, title and interest in 250,000 founder shares to Victor Park and YA Global. Pursuant to SEC Staff Accounting Bulletin Topic 5T, the Company recorded an expense of $245,600 with an offseting credit to additional paid-in capital in connection with this transaction based upon managements estimate of the fair value of the shares utilizing a probability method.

Pursuant to the Put and Call Option Agreements, Pantheon has agreed to effect a liquidation in accordance with Delaware law in the event the business combination is abandoned prior to the exercise of the call option or if Modern elects not to extend the period of the call options.

All activity from April 10, 2006 (inception) through December 20, 2006 relates to the Company’s formation and initial public offering described below. Subsequent to December 20, 2006, the Company has been seeking a business combination with an operating business as described below.

The registration statement for the Company’s initial public offering (“Offering”) was declared effective December 14, 2006. The Company consummated the offering on December 20, 2006. Simultaneous to the consummation of the Offering, certain of the Company’s officers, directors and special advisors purchased an aggregate of 2,083,334 insider warrants from the Company in a private placement (the “Private Placement”) (Note 3). The insider warrants sold in the Private Placement were identical to the warrants underlying the units sold in the Offering, except that if the warrants are called for redemption, the insider warrants may be exercisable on a cashless basis, as described in Note 3 below. The Company received net proceeds from the Offering and the Private Placement of $33,153,914 (Note 3). The Company’s management has broad discretion with respect to the specific application of the net proceeds of this Offering, although substantially all of the net proceeds of this Offering are intended to be generally applied toward consummating a business combination with an operating business that has its principal operations located in the People’s Republic of China (“Business Combination”). Furthermore, there is no assurance that the Company will be able to successfully

F-9

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business Operations  – (continued)

effect a Business Combination. Upon the closing of the Offering, including the over-allotment option, an amount of $32,747,500 of the net proceeds was deposited in an interest-bearing trust account (“Trust Account”) until the earlier of (i) the consummation of a Business Combination or (ii) liquidation of the Company. Under the agreement governing the Trust Account, funds will only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 with a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940. The placing of funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, prospective target businesses or other entities it engages, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account, there is no guarantee that they will execute such agreements. The Company’s Chairman of the Board, Chief Executive Officer and President has agreed that he will be personally liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for services rendered, contracted for or products sold to the Company. However, there can be no assurance that he will be able to satisfy those obligations. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. In addition Pantheon was allowed to withdraw and did withdraw $300,000 of interest earned on the trust account on December 31, 2007, to fund working capital. Further, approximately $5.6 million was withdrawn from trust to pay shareholders electing to convert their shares in connection with the aforementioned special meeting of shareholders on December 14, 2008.

The Company, after signing a definitive agreement for the acquisition of a target business, will submit such transaction for stockholder approval. In the event that stockholders owning 20% or more of the shares sold in the Offering vote against the Business Combination and exercise their conversion rights described below, the Business Combination will not be consummated.

All of the Company’s stockholders prior to the Offering, including all of the officers and directors of the Company (“Initial Stockholders”), have agreed to vote their 1,250,000 founding shares of common stock in accordance with the vote of the majority in interest of all other stockholders of the Company (“Public Stockholders”) with respect to any Business Combination. After consummation of a Business Combination, these voting safeguards will no longer be applicable.

With respect to a Business Combination which is approved and consummated, any Public Stockholder who voted against the Business Combination may demand that the Company convert his or her shares. The per share conversion price will equal the amount in the Trust Account, calculated as of two business days prior to the consummation of the proposed Business Combination, divided by the number of outstanding shares of common stock held by Public Stockholders at the consummation of the Offering. Accordingly, Public Stockholders holding 19.99% of the aggregate number of shares sold in the IPO may seek conversion of their shares in the event of a Business Combination. Such Public Stockholders are entitled to receive their per share interest in the Trust Account computed without regard to the shares held by Initial Stockholders. Accordingly, a portion of the net proceeds from the offering (19.99% of the amount held in the Trust Account) has been classified as common stock subject to possible conversion and 19.99% of the related interest earned has been classified as deferred interest in the accompanying December 31, 2008 and 2007 balance sheets.

Merger Agreement

On November 3, 2008, the Company entered into an agreement and plan of merger, conversion and share exchange (“Merger Agreement”) with China Cord Blood Services Corporation (“CCBS”) and certain shareholders of CCBS, including Golden Meditech Company Limited (“Golden Meditech”, Stock Code: 8180.HK) (collectively, the “Selling Shareholders”). Pursuant to the Merger Agreement, following receipt of stockholder

F-10

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Business Operations  – (continued)

approval by both Pantheon and closing conditions defined in the agreement, Pantheon will complete a corporate reorganization that will result in holders of Pantheon securities holding securities in Pantheon Cayman Acquisition Corp. (“Pantheon Cayman”), a Cayman Islands exempted company formed as a result of a redomestication procedure, and the Selling Shareholders will exchange the outstanding shares of CCBS held by them for ordinary shares of Pantheon Cayman.

Shareholders owning approximately 94% of the outstanding shares of CCBS have entered into the Merger Agreement. Each remaining shareholder of CCBS may elect to participate in the proposed transactions on the same terms and conditions as the other Selling Shareholders. If all of the remaining shareholders of CCBS elect to participate in the proposed transaction, immediately after the closing of the proposed transaction, the Selling Shareholders will receive an aggregate of 57,851,240 Pantheon Cayman ordinary shares. In addition, pursuant to an earn-out provision in the Merger Agreement, Pantheon Cayman has agreed to issue, over a period of three years, warrants exercisable for up to 9,000,000 ordinary shares of Pantheon Cayman to CCBS’s senior management based on the percentage increase in the number of new subscribers during the relevant periods. Each warrant will be exercisable for one ordinary share of Pantheon Cayman at an exercise price equal to the lower of $5.00 and the market price on the date of issuance and has a term of five years.

Assuming no other CCBS shareholders elect to participate in the proposed transactions, immediately after the closing of the proposed transactions, Pantheon Cayman will have acquired 93.94% of the issued and outstanding ordinary shares of CCBS through the issuance of 54,345,104 Pantheon Cayman ordinary shares, or approximately 90% of the combined company. Following closing, Pantheon Cayman will change its name to China Cord Blood Corporation.

2 Summary of Significant Accounting Policies

The consolidated financial statements include the accounts of Pantheon China Acquisition Corp. and its wholly owned subsidiary Pantheon Arizona Corp. (collectively referred to as the “Company”). All significant intercompany transactions and balances have been eliminated. The statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States.

Investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short term investments. All short term investments have been classified as trading securities and are recorded at market value.

Investments held in trust are invested in the UBS Selected Treasury Institutional Fund which is accounted for as a trading security and recorded at market value.

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and investments held in trust. The Company may maintain deposits in federally insured financial institutions in excess of federally insured limits. However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposit are held and the nature of investments held in trust.

The fair values of the Company’s assets and liabilities that are defined as financial instruments under Statement of Financial Accounting Standards (“SFAS”) No. 107 “Disclosures about Fair Value of Financial Instrument,” approximate their carrying amounts presented in the balance sheets at December 31, 2008 and 2007.

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date

F-11

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of Significant Accounting Policies  – (continued)

of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Deferred income taxes are provided for the differences between bases of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Pursuant to the provisions as prescribed in SFAS 157, the Company categorizes its financial instruments into a three-level hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priorty to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Financial assets recorded at fair value on the Company’s consolidated balance sheets are categorized as follows:

Level 1:  Unadjusted quoted prices for identical assets in an active market.

Level 2:  Quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the assets. Level 2 inputs include the following:

• Quoted prices for similar assets in active market,
• Quoted prices for identical or similar assets in non-active markets,
• Inputs other than quoted market prices that are observable, and
• Inputs that are derived principally from or corroborated by observable market data through correlation or other means.

Level 3:  Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect management’s own assumption about the assumptions a market participant would use in pricing the asset.

The following table presents the Company’s hierarchy for its financial instruments measured at fair value on a recurring basis as of December 31, 2008:

       
  December 31, 2008
     Total   Level 1   Level 2   Level 3
Investments Held in Trust   $ 28,839,727     $ 28,839,727     $ —     $ —  

Income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. The effect of the 11,500,000 outstanding warrants issued in connection with the initial public offering, and 2,083,334 outstanding warrants issued in connection with the private placement have not been considered in diluted income per share calculations since such warrants are contingently exercisable. The effects of the 500,000 units (representing 1,500,000 shares of common stock and equivalents) included in the underwriters’ option has not been considered in the calculation of diluted earnings per common share since the average market price of a unit through December 31, 2008 and 2007 was less than the exercise price per unit.

In December 2007, the FASB released SFAS 141(R), Business Combinations (revised 2007) ( “SFAS 141 (R)” ), which changes many well-established business combination accounting practices and significantly affects how acquisition transactions are reflected in the consolidated financial statements. Additionally, SFAS

F-12

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 Summary of Significant Accounting Policies  – (continued)

141 (R) will affect how companies negotiate and structure transactions, model financial projections of acquisitions and communicate to stakeholders. SFAS 141 (R) must be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company will apply the provisions of SFAS 141(R) to any acquisitions completed after January 1, 2009.

In December 2007, the FASB released SFAS 160, Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS 160”), which established accounting and reporting standards for the noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 requires consolidated net income to be reported at amounts that include the amount attributable to both the parent and the noncontrolling interests and requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. Previously, net income attributable to the noncontrolling interest was reported as an expense or other deduction in arriving at consolidated net income. SFAS 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company will apply the provisions of SFAS 160 to any acquisitions completed after January 1, 2009 that result in a non-controlling interest.

In June 2008, the FASB ratified EITF Issue No. 07-5, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5 provides guidance on how to determine if certain instruments or embedded features are considered indexed to our own stock, including instruments similar to our convertible notes and warrants to purchase our stock. EITF 07-5 requires companies to use a two-step approach to evaluate an instrument’s contingent exercise provisions and settlement provisions in determining whether the instrument is considered to be indexed to its own stock and exempt from the application of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. Although EITF 07-5 is effective for fiscal years beginning after December 15, 2008, any outstanding instrument at the date of adoption will require a retrospective application of the accounting through a cumulative effect adjustment to retained earnings upon adoption. The Company is currently evaluating the impact that adoption of EITF 07-5 will have on its consolidated financial statements.

3. Initial Public Offering

On December 20, 2006, the Company sold 5,750,000 units (“Units”), including 750,000 Units relating to the underwriters’ over-allotment option, in the Offering at an offering price of $6.00. Each Unit consists of one share of the Company’s common stock, $.0001 par value, and two Redeemable Common Stock Purchase Warrants (“Warrants”). Each Warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.00 commencing the later of the completion of a Business Combination or December 14, 2007 and expiring December 13, 2010. The Warrants will be redeemable, at the Company’s option, with the prior consent of EarlyBirdCapital, Inc., the representative of the underwriters in the Offering (“Representative”), at a price of $.01 per Warrant upon 30 days’ notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $8.50 per share for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given. If the Company redeems the Warrants as described above, 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, the holder would pay the exercise price by surrendering his Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (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” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to holders of Warrants. In accordance with the warrant agreement relating to the Warrants sold and issued in the Offering, the Company is only required to use its best efforts to

F-13

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Initial Public Offering – (continued)

maintain the effectiveness of the registration statement covering the Warrants. The Company will not be obligated to deliver securities, and there are no contractual penalties for failure to deliver securities, if a registration statement is not effective at the time of exercise. Additionally, in the event that a registration statement is not effective at the time of exercise, the holder of such Warrant shall not be entitled to exercise such Warrant and in no event (whether in the case of a registration statement not being effective or otherwise) will the Company be required to net cash settle the warrant exercise. Consequently, the Warrants may expire unexercised and unredeemed.

The Company paid the underwriters in the Offering an underwriting discount of 5.5% of the gross proceeds of the Offering and a non-accountable expense allowance of 0.5% of the gross proceeds of the Offering. However, the underwriters have agreed that 1.0% of the underwriting discount will not be payable unless and until the Company completes a Business Combination and has waived their right to receive such payment upon the Company's liquidation if it is unable to complete a Business Combination. Approximately $345,000 is being held in the Trust Account as deferred underwriting discount.

In connection with this Offering, the Company also issued an option (“Option”), for $100, to the Representative to purchase 500,000 Units at an exercise price of $6.60 per Unit. The Units issuable upon exercise of the Option are identical to the Units sold in the Offering. The Company accounted for the fair value of the Option, inclusive of the receipt of the $100 cash payment, as a cost of the Offering resulting in a charge directly to stockholders’ equity. The Company estimates that the fair value of the Option is approximately $1,440,951 ($2.88 per Unit) using a Black-Scholes option-pricing model. The fair value of the Option granted to the Underwriter is estimated as of the date of grant using the following assumptions: (1) expected volatility of 52.0%, (2) risk-free interest rate of 4.90% and (3) expected life of 5 years. The Option may be exercised for cash or on a `cashless` basis, at the holder's option, such that the holder may use the appreciated value of the Option (the difference between the exercise prices of the Option and the underlying Warrants and the market price of the Units and underlying securities) to exercise the Option without the payment of any cash. The Company will have no obligation to net cash settle the exercise of the Option or the Warrants underlying the Option. The holder of the Option will not be entitled to exercise the Option or the Warrants underlying the Option unless a registration statement covering the securities underlying the Option is effective or an exemption from registration is available. If the holder is unable to exercise the Option or underlying Warrants, the Option or Warrants, as applicable, will expire worthless. The Warrants underlying the Option Units are exercisable at the same price as the Public Warrants.

4. Private Placement

The Company’s directors and certain special advisors and their members purchased 2,083,334 Warrants (“Insider Warrants”) at $0.60 per Warrant (for an aggregate purchase price of approximately $1,250,000) privately from the Company. The purchase price of the Warrants was in excess of their estimated fair value. These purchases took place simultaneously with the consummation of the Offering. All of the proceeds received from these purchases were placed in the Trust Account. The Insider Warrants are identical to the Warrants underlying the Units sold in the Offering except that if the Company calls the Warrants for redemption, the Insider Warrants may be exercisable, at the Initial Stockholders’ option, on a “cashless basis” so long as such securities are held by such Initial Stockholders or their affiliates. Additionally, such purchasers have agreed that the Insider Warrants will not be sold or transferred by them until after the Company has completed a Business Combination.

F-14

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Investments Held in Trust

Reconciliation of investments held in trust as of December 31, 2008 is as follows:

     
  December 31,
2008		   December 31,
2007		   Period from
April 10, 2006
(Inception) to
December 31,
2008
Investments held in trust, beginning of period:   $ 33,659,432     $ 32,787,398     $ —  
Contribution to trust   $ —     $ —     $ 32,747,500  
Interest income received   $ 741,981     $ 1,172,034     $ 1,953,913  
Withdrawal to fund operations(a)   $ —     $ (300,000 )    $ (300,000 ) 
Distribution to converting shareholders on extension vote(b)   $ (5,561,686 )    $ —     $ (5,561,686 ) 
Withdrawals to fund estimated taxes   $ —     $ —     $ —  
Balance at end of period   $ 28,839,727     $ 33,659,432     $ 28,839,727  

(a) Amount is limited to $300,000.
(b) For shareholders who elected to convert their shares in the special meeting held in December 14, 2008.

6. Notes Payable, Stockholders

The Company borrowed $100,000 from its Initial Stockholders, who are also officers and directors of the Company, in June 2006. The notes were non-interest-bearing and were paid following the consummation of the Offering from the net proceeds of the Offering.

7 Related Party Transactions

The advances from officers totalled $213,166 and $38,910 on December 31, 2008 and 2007, respectively. None of these advances are interest bearing. In November 2008, one of the Company’s directors advanced an aggregate of $115,482 to the Company, on a non-interest bearing basis, for payment of professional fees on the Company’s behalf. The director also advanced another $40,000, on a non-interest bearing basis, to the Company to fund its working capital.

8. Commitments

The Company presently occupies office space provided by Beijing Kiview Real Estate Agency Co., Ltd. Such entity has agreed that, until the Company consummates a Business Combination, it will make such office space, as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company has agreed to pay such entity $7,500 per month for such services commencing on December 14, 2006. The statement of income includes administrative management expense of $90,045 and $90,000 relating to this agreement for the years ended December 31, 2008 and December 31, 2007, respectively, and $184,545 for the cumulative period from April 10, 2006 (inception) to December 31, 2008.

Pursuant to letter agreements dated as of June 26, 2006 with the Company and the Representative, the Initial Stockholders have waived their right to receive distributions with respect to their founding shares upon the Company's liquidation.

The Initial Stockholders and holders of the Insider Warrants (or underlying securities) will be entitled to registration rights with respect to their founding shares or Insider Warrants (or underlying securities), as the case may be. The holders of the majority of the founding shares are entitled to demand that the Company register these shares at any time commencing three months prior to the first anniversary of the consummation of a Business Combination. The holders of the Insider Warrants (or underlying securities) are entitled to

F-15

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Commitments  – (continued)

demand that the Company register such securities at any time after the Company consummates a Business Combination. In addition, the Initial Stockholders and holders of the Insider Warrants (or underlying securities) have certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of a Business Combination.

The Representative has been engaged by the Company to act as the Company’s non exclusive investment banker in connection with a proposed Business Combination. For assisting the Company in structuring and negotiating the terms of a Business Combination, the Company will pay the Representative a cash transaction fee equal to 1% of the total consideration paid in connection with the Business Combination, with a maximum fee to be paid of $300,000.

In connection with the Offering, the Company has agreed to pay the underwriters 1.0% of the underwriting discounts upon completion of its Business Combination, as described in Note 3 above. The Company has recorded the deferred underwriting fees payable to the underwriters as an expense of the public offering resulting in a charge directly to stockholders’ equity.

9. Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors.

The agreement with the underwriters prohibits the Company, prior to a Business Combination, from issuing preferred stock which participates in the proceeds of the Trust Account or which votes as a class with the Common Stock on a Business Combination.

10. Common Stock

At December 31, 2008 and 2007, 15,083,334 shares of common stock were reserved for issuance upon exercise of the Warrants and the Option.

F-16

 
 

 

PANTHEON CHINA ACQUISITION CORP.
(A Corporation in the Development Stage)
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Income Taxes

The components of the provision for income taxes are as follows:

   
  Year Ended
December 31,
2008		   Year Ended
December 31,
2007
Current:
                  
Federal   $ —     $ —  
Deferred:
                  
Federal     —       —  
Total provision for income taxes   $ —     $ —  

The tax effect of temporary differences that give rise to the deferred tax assets is as follows:

   
  December 31,
2008		   December 31,
2007
Net operating loss carryforward   $ 98,226     $ 8,974  
Unrealized losses on short-term investments     9,525       17,333  
Expenses deferred for income tax purposes     684,954       189,314  
Less valuation allowance     (792,705 )      (215,621 ) 
Net deferred tax asset   $ —     $ —  

In recognition of the uncertainty regarding the ultimate amount of income tax benefits to be derived, the Company has recorded a full valuation allowance.

The effective tax rate differs from the statutory rate due to the following:

   
  December 31, 2008   December 31, 2007
Statutory rate     34 %      34 % 
Effect of tax free income     17 %      (86 )% 
Decrease (increase) in valuation allowance     (51 )%      52 % 
Effective tax rate     —       —  

F-17

 
 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 19th day of May, 2009.
 
 
PANTHEON CHINA ACQUISITION CORP.
  
       
By:
/s/  Mark D. Chen  
    Mark D. Chen  
   
Chairman, Chief Executive Officer and President
  
       
 
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
Name
  
Title
  
Date
         
         
/s/ Mark D. Chen
        
Mark D. Chen
  
Chairman of the Board, Chief Executive Officer and President
(Principal Executive Officer)
  
May 19, 2009
         
         
/s/ Jennifer J. Weng
        
Jennifer J. Weng
  
Chief Financial Officer and Secretary
(Principal Accounting and Financial Officer)
  
May 19, 2009
         
         
/s/ Christina Jun Mu
        
Christina Jun Mu
  
Vice President and Director
  
May 19, 2009
 
4