1090514--3/6/2008--AMERICAN_ORIENTAL_BIOENGINEERING

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{operation, international, foreign}

{acquisition, growth, future}

{stock, price, share}

{operation, natural, condition}

{product, liability, claim}

{customer, product, revenue}

{competitive, industry, competition}

{stock, price, operating}

{regulation, government, change}

{provision, law, control}

{interest, director, officer}

{personnel, key, retain}

{property, intellectual, protect}

Risks Related to Our Business and Industry A disproportionate amount of our sales revenue is derived from five of our products and a disruption in, or a compromise of, our manufacturing or sales operations, or distribution channels related to any of these five products could materially and adversely affect our financial condition and results of operations. Intense competition from existing and new companies may adversely affect our revenues and profitability. We depend on our key management personnel and the loss of their services could adversely affect our business. We cannot assure you that we will be able to complete acquisitions or successfully integrate new businesses into our own. We may face difficulties in implementing our organic growth strategy. If we fail to manage our growth and current operations, we may not achieve future growth or our expected revenues. We may have difficulty defending our intellectual property rights from infringement which may undermine our competitive position. If we cannot procure our raw materials from our current sources we may be forced to seek alternative sources of supply, which may disrupt our operations or may result in the supply of lesser quality products. We do not have product liability insurance and we could be exposed to substantial liability. Our international operations require us to comply with a number of U.S. and international regulations. We may incur significant costs to ensure compliance with U.S. corporate governance and accounting requirements. There could be changes in government regulations toward the pharmaceutical and nutraceutical industries that may adversely affect our business. Certain political and economic considerations relating to China could adversely affect our company. The recent nature and uncertain application of many PRC laws applicable to us create an uncertain environment for business operations and they could have a negative effect on us. Currency conversion and exchange rate volatility could adversely affect our financial condition and the value of our common stock. Future inflation in China may inhibit our ability to conduct business in China. It may be difficult to effect service of process and enforcement of legal judgments upon us and our officers and certain of our directors because they reside outside the United States. Any future outbreak of avian influenza, or the Asian bird flu, or any other epidemic in China could have a material adverse effect on our business operations, financial condition and results of operations. Our business may be affected by unexpected changes in regulatory requirements in the jurisdictions in which we operate. Most of our assets are located in China, any dividends or proceeds from liquidation are subject to the approval of the relevant Chinese government agencies. There have been recent incidents in which patients have experienced severe adverse reactions following the use of pharmaceutical products manufactured in China. Anti-corruption measures taken by the government to correct corruptive practices in the pharmaceutical industry could adversely affect our sales and reputation. Risks Related to Our Common Stock Our common stock price may be extremely volatile, and you may not be able to resell your shares at or above the price you paid for the stock. Some of our existing stockholders can exert control over us and may not make decisions that are in the best interest of all the stockholders. Provisions of the Nevada Revised Statutes may discourage a change of control. We may never pay any dividends to our stockholders.

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1090514--3/6/2008--AMERICAN_ORIENTAL_BIOENGINEERING_INC