1099590--2/26/2010--MERCADOLIBRE

related topics

{operation, international, foreign}

{system, service, information}

{regulation, government, change}

{product, market, service}

{condition, economic, financial}

{stock, price, share}

{acquisition, growth, future}

{tax, income, asset}

{cost, contract, operation}

{financial, litigation, operation}

{competitive, industry, competition}

{property, intellectual, protect}

{provision, law, control}

{stock, price, operating}

{regulation, change, law}

{loan, real, estate}

{control, financial, internal}

{product, liability, claim}

{customer, product, revenue}

{personnel, key, retain}

Internet regulation in the countries where we operate is scarce, and several legal issues related to the Internet are uncertain. We are subject to a number of other laws and regulations, and governments may enact laws or regulations that could adversely affect our business. Our business is an Internet platform for commercial transactions in which all commercial activity depends on our users and is therefore largely outside of our control. We could face liability for the sale of regulated and prohibited items, unpaid items or undelivered purchases, and the sale of defective items. We could face legal and financial liability for the sale of items that infringe on the intellectual property and distribution rights of others and for information disseminated on the MercadoLibre marketplace. We are subject to risks with respect to information and material disseminated thorugh our platforms. The market in which we operate is rapidly evolving and we may not be able to maintain our profitability. If we continue to grow, we may not be able to appropriately manage the increased size of our business. Our systems may fail or suffer interruptions due to human acts, technical problems, or natural disasters. We are subject to security breaches or other confidential data theft from our systems, which can adversely affect our reputation and business. We depend on key personnel, the loss of which could have a material adverse effect on us. Currently our revenues depend substantially on up-front and final value fees we charge to sellers and may decrease if market conditions force us to lower such fees or if we fail to diversify our sources of revenue. We are subject to consumer trends and could lose revenue if certain items become less popular. The success of other e-commerce companies such as eBay and Amazon is not an indication of our future financial performance. We could be subject to liability and forced to change our MercadoPago business practices if we were found to be subject to or in violation of any laws or regulations governing banking, money transmission, or electronic funds transfers in any country where we operate. MercadoPago is susceptible to illegal uses, and we could potentially face liability for any illegal use of MercadoPago. Our failure to manage MercadoPago customer funds properly would harm our business. MercadoPago is a relatively new service that faces competition from other payment methods, and competitors may adversely affect the success of MercadoPago. We rely on banks or payment processors to fund transactions, and changes to credit card association fees, rules or practices may adversely affect our business. Our operating results may be impacted by an economic crisis. The failure of the financial institutions with which we conduct business may have a material adverse effect on our business, operating results, and financial condition. A rise in interest rates may negatively affect our MercadoPago payment volume . Changes in MercadoPago s funding mix could adversely affect MercadoPago s results. We have no business insurance coverage, which would require us to spend significant resources in the event of a disruption of our services or other contingency. We may not be able to adequately protect and enforce our intellectual property rights. We could potentially face claims alleging that our technologies infringe the property rights of others. We may not be able to secure licenses for third-party technologies upon which we rely. Problems that affect our third-party service providers could potentially adversely affect us as well. Complaints from customers or negative publicity about our services can diminish consumer confidence and adversely affect our business. We may incur unexpected liabilities in connection with our acquisition of CMG. We may incur unexpected liabilities in connection with our acquisition of DeRemate operations. If our goodwill become impaired, we may be required to record a significant charge to earnings. We may not realize benefits from recent or future strategic acquisitions of businesses, technologies, services or products despite their costs in cash and dilution to our stockholders. Our required contributions to the real estate trust for the construction of our headquarters in Argentina may be materially higher than we currently estimate. We are subject to seasonal fluctuations in our results of operations. We have spent significant resources to launch and market classified advertisements on the MercadoLibre marketplace, which may not be successful in generating sufficient revenues for us. We operate in a highly competitive and evolving market, and therefore face potential reductions in the use of our service. Risks related to doing business in Latin America Political and economic conditions in Venezuela may have an adverse impact on our operations. We face the risk of political and economic crises, instability, terrorism, civil strife, expropriation and other risks of doing business in emerging markets. Latin American governments have exercised and continue to exercise significant influence over the economies of the countries where we operate. This involvement, as well as political and economic conditions, could adversely affect our business. Latin America, including Argentina, has experienced adverse economic conditions. Local currencies used in the conduct of our business are subject to depreciation, volatility and exchange controls. Our reporting currency is the U.S. dollar but our revenues are paid in foreign currencies. Therefore, if the U.S. dollar strengthens relative to these foreign currencies (i.e. the foreign currencies devaluate against the U.S. dollar), the economic value of our revenues in U.S. dollar terms will decline. Inflation and certain government measures to curb inflation may have adverse effects on the economies of the countries where we operate, our business and our operations. Developments in other markets may affect the Latin American countries where we operate, our financial condition and results of operations. E-commerce transactions in Latin America may be impeded by the lack of secure payment methods. Risks related to our shares The price of our shares of common stock may fluctuate substantially, and our stockholders investment may decline in value. We continue to be significantly influenced by a group of stockholders that control a significant percentage of our common shares and the value of our common stock could be negatively effected by any significant disposition of our shares by any of these stockholders. Provisions of our certificate of incorporation and Delaware law could inhibit others from acquiring us, prevent a change of control, and may prevent efforts by our stockholders to change our management. We may require additional capital in the future, and this additional capital may not be available on acceptable terms or at all. Shares eligible for future sale may cause the market price of our common stock to drop significantly, even if our business is doing well.

Full 10-K form ▸

1099590--2/26/2010--MERCADOLIBRE_INC