1076939--4/2/2008--SKYSTAR_BIO-PHARMACEUTICAL

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{operation, international, foreign}

{stock, price, share}

{stock, price, operating}

{product, candidate, development}

{interest, director, officer}

{control, financial, internal}

{operation, natural, condition}

{customer, product, revenue}

{product, market, service}

{product, liability, claim}

{cost, regulation, environmental}

{acquisition, growth, future}

{personnel, key, retain}

{property, intellectual, protect}

Risks Relating to Our Business Our limited operating history makes it difficult to evaluate our future prospects and results of operations. If we fail to obtain additional financing we will be unable to execute our business plan. Our business will be materially and adversely affected if our collaborative partners, licensees and other third parties over whom we are very dependent fail to perform as expected. Our products will be adversely affected if we are unable to protect proprietary rights or operate without infringing the proprietary rights of others. Difficulties in manufacturing our products could have a material adverse effect on our profitability. Failure or delays in obtaining an adequate amount of raw material or other supplies would materially and adversely affect our revenue Our ability to generate more revenue would be adversely affected if we need more clinical trials or take more time to complete our clinical trials than we have planned. If we are unable to obtain the regulatory approvals or clearances that are necessary to commercialize our products, we will have less revenue than expected. Competitors may develop and market bio-pharmaceutical products that are less expensive, more effective or safer, making our products obsolete or uncompetitive. Our revenue will be materially and adversely affected if our products are unable to gain market acceptance. Our operations and the use of our products could subject us to damages relating to injuries or accidental contamination and thus reduce our earnings or increase our losses. If we were sued for product liability, we could face substantial liabilities that may exceed our resources. We have no business liability or disruption insurance coverage and therefore we are susceptible to catastrophic or other events that may disrupt our business. We will be unsuccessful if we fail to attract and retain qualified personnel. Risks Related to Our Corporate Structure Chinese laws and regulations governing our businesses and the validity of certain of our contractual arrangements are uncertain. If we are found to be in violation, we could be subject to sanctions. In addition, changes in such Chinese laws and regulations may materially and adversely affect our business. We may be adversely affected by complexity, uncertainties and changes in Chinese regulation of bio-pharmaceutical business and companies, including limitations on our ability to own key assets. In order to comply with Chinese laws limiting foreign ownership of Chinese companies, we conduct our bio-pharmaceutical business through Xian Tianxing by means of contractual arrangements. If the Chinese government determines that these contractual arrangements do not comply with applicable regulations, our business could be adversely affected. Our contractual arrangements with Xian Tianxing and its stockholders may not be as effective in providing control over these entities as direct ownership. The Chairman of the Board of Directors of Xian Tianxing has potential conflicts of interest with us, which may adversely affect our business. Risks Related to Doing Business in China Adverse changes in economic and political policies of the Chinese government could have a material adverse effect on the overall economic growth of China, which could adversely affect our business. If Chinese law were to phase out the preferential tax benefits currently being extended to foreign invested enterprises and new or high-technology enterprises located in a high-tech zone, we would have to pay more taxes, which could have a material and adverse effect on our financial condition and results of operations. Xian Tianxing is subject to restrictions on making payments to us. Uncertainties with respect to the Chinese legal system could adversely affect us. You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws against us, our management or the experts named in the prospectus. Governmental control of currency conversion may affect the value of your investment. Fluctuation in the value of RMB may have a material adverse effect on your investment. We face risks related to health epidemics and other outbreaks. Risks Related to an Investment in Our Securities To date, we have not paid any cash dividends and no cash dividends are expected to be paid in the foreseeable future. The application of the penny stock rules could adversely affect the market price of our common stock and increase your transaction costs to sell those shares. Our common shares are thinly traded and, you may be unable to sell at or near ask prices or at all if you desire to liquidate your shares. Volatility in our common share price may subject us to securities litigation. Our corporate actions are substantially controlled by our principal stockholders and affiliated entities. The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees. Legislative actions, higher insurance costs and potential new accounting pronouncements may impact our future financial position and results of operations. Past company activities prior to the reverse merger may lead to future liability for the company. The market price for our stock may be volatile. We may need additional capital, and the sale of additional shares or other equity securities could result in additional dilution to our stockholders. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

Full 10-K form ▸

1076939--4/2/2008--SKYSTAR_BIO-PHARMACEUTICAL_CO