1095691--3/23/2009--DigitalFX_International

related topics

{stock, price, share}

{product, market, service}

{property, intellectual, protect}

{operation, international, foreign}

{acquisition, growth, future}

{customer, product, revenue}

{personnel, key, retain}

{interest, director, officer}

{product, candidate, development}

{control, financial, internal}

{financial, litigation, operation}

We may be unable to continue as a going concern if we do not successfully raise additional capital or if our sales decrease substantially. Our operating results may fluctuate significantly based on customer and Affiliate acceptance of our products. If we do not successfully generate additional products and services, or if such products and services are developed but not successfully commercialized, we could lose revenue opportunities. While we previously achieved an operating profit, we have a history of operating losses and there can be no assurance that we can achieve, maintain or increase profitability. We may not be able to effectively manage our growth. If we continue to experience technological difficulties with our products our Affiliate base could shrink, customer growth could decrease and our business could suffer. Eighty-three percent of our revenues for the year ended December 31, 2008 have been derived from sales of our products and services to our Affiliates, and our future success depends on our ability to grow our Affiliate base, as well as to expand our retail subscriptions and initiate advertising revenue. Our ability to conduct business, particularly in international markets, may be affected by political, economic, legal and regulatory risks, which could adversely affect the expansion of our business in those markets. We also face legal and regulatory risks in the United States, the affect of which could reduce our sales and revenues. If we incur substantial liability from litigation, complaints, or enforcement actions resulting from misconduct by our multi-level Affiliates, our financial condition could suffer. We may be unable to compete successfully against existing and future competitors, which could decrease our revenue and margins and harm our business. We may not be able to adequately protect our intellectual property rights which would affect our ability to compete in our industry. We may become subject to litigation for infringing the intellectual property rights of others the affect of which could cause us to cease marketing and exploiting our products. We may have to expend significant resources developing alternative technologies in the event that third party licenses for intellectual property upon which our business depends are not available or are not available on terms acceptable to us. We may be unable to attract and retain qualified, experienced, highly skilled personnel, which could adversely affect the implementation of our business plan. Our senior management had limited experience managing a publicly traded company prior to serving as our executive officers. This limited experience may divert our management s attention from operations and harm our business. If we are not able to respond to the adoption of technological innovation in our industry and changes in consumer demand, our products will cease to be competitive, which could result in a decrease in revenue and harm our business. Other Risks Related to an Investment in Our Common Stock There is limited trading, and consequently limited liquidity, of our common stock. The market price of our common stock is likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your shares at or above the price at which you purchased such shares. Substantial future sales of our common stock in the public market could cause our stock price to fall. The sale of securities by us in any equity or debt financing could result in dilution to our existing shareholders and have a material adverse effect on our earnings. We have not paid dividends in the past and do not expect to pay dividends on our common stock for the foreseeable future, and any return on investment may be limited to potential future appreciation on the value of our common stock.

Full 10-K form ▸

1095691--3/23/2009--DigitalFX_International_Inc