1010566--4/15/2010--CHINA_LONGYI_GROUP_INTERNATIONAL_HOLDINGS

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{stock, price, share}

{condition, economic, financial}

{regulation, change, law}

{cost, regulation, environmental}

{stock, price, operating}

{gas, price, oil}

{property, intellectual, protect}

{control, financial, internal}

{competitive, industry, competition}

{interest, director, officer}

{operation, natural, condition}

{acquisition, growth, future}

{personnel, key, retain}

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RISKS RELATED TO OUR BUSINESS The recent financial crisis could negatively affect our business, results of operations, and financial condition. We are an early stage development company and we have a limited operating history of our current business. We have earned only insignificant revenues and it is uncertain whether we will earn any revenues in the future or whether we will ultimately be profitable. Our industry is highly fragmented and competitive, and increased competition could reduce our operating income. Our products could be subject to product liability claims by consumers, which would adversely affect our profit margins, results from operations and stockholder value. We may not be able to adequately protect our proprietary intellectual property and technology, which may harm our competitive position and result in increased expenses incurred to enforce our rights. Compliance with environmental regulations can be expensive, and our failure to comply with these regulations may result in adverse publicity and may have a material adverse effect on our business. We depend heavily on key personnel, and turnover of key employees and senior management could harm our business. We may be exposed to potential risks relating to our internal controls over financial reporting and our ability to have the operating effectiveness of our internal controls attested to by our independent auditors. Our holding company structure may limit the payment of dividends to our stockholders. RISKS RELATED TO DOING BUSINESS IN CHINA Changes in China s political or economic situation could harm us and our operational results. Our business is largely subject to the uncertain legal environment in China and your legal protection could be limited. The Chinese government exerts substantial influence over the manner in which we must conduct our business activities. Future inflation in China may inhibit our ability to conduct business profitably in China. Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem, could harm our operations. If consumer spending power in China declines, our ability to market SOD products may weaken. If health problems relating to SOD products made in China emerge, then SOD sales may fall or be banned entirely. Restrictions on currency exchange may limit our ability to receive and use our revenues effectively. We may be unable to complete a business combination transaction efficiently or on favorable terms due to complicated merger and acquisition regulations which became effective on September 8, 2006. The value of our securities will be affected by the foreign exchange rate between U.S. dollars and RMB. RISKS RELATED TO THE MARKET FOR OUR STOCK Our common stock is quoted on the OTC Bulletin Board which may have an unfavorable impact on our stock price and liquidity. We may be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock. Our controlling stockholder, Wei Wang, holds a significant percentage of our outstanding voting securities and accordingly may make decisions regarding our daily operations, significant corporate transactions and other matters that other stockholders may believe are not in their best interests.

Full 10-K form ▸

1010566--4/15/2010--CHINA_LONGYI_GROUP_INTERNATIONAL_HOLDINGS_LTD