1117057--4/15/2008--American_Lorain

related topics

{operation, international, foreign}

{cost, regulation, environmental}

{regulation, change, law}

{customer, product, revenue}

{acquisition, growth, future}

{stock, price, share}

{provision, law, control}

{product, market, service}

{capital, credit, financial}

{stock, price, operating}

{tax, income, asset}

{debt, indebtedness, cash}

{control, financial, internal}

{property, intellectual, protect}

{personnel, key, retain}

{interest, director, officer}

{product, liability, claim}

{regulation, government, change}

{competitive, industry, competition}

{condition, economic, financial}

We may not be able to obtain sufficient raw materials to satisfy our production requirements and any decline in the amount or quality of raw materials could reduce our sales and negatively affect our financial prospects. The average price we paid for our raw materials experienced significant fluctuation during the three years ended December 31, 2005, 2006 and 2007. These price fluctuations could result in fluctuations in our profit margins and could materially adversely affect our financial condition. Our sales and reputation may be affected by product liability claims, litigation, product recalls, or adverse publicity in relation to our products. We may be unable to manage future rapid growth. Our expansion strategy may not prove successful and could adversely affect our existing business. The acquisition of other businesses could pose risks to our profitability. We are subject to risks of doing business internationally. If the international market does not grow as we expect, our business and financial condition may be adversely affected. We mainly rely on distributors to sell our products. Any delays in delivery or poor handling by distributors and third-party transport operators may affect our sales and damage our reputation. The development and introduction of new products is key to our expansion strategy. Failure to do so may cause us to lose our competitiveness in the food industry and may cause our profits to decline. We are dependent on certain key personnel and loss of these key personnel could have a material adverse effect on our research and development, operations and revenue. We face increasing competition from both domestic and foreign companies, which may affect our market share and profit margins. We may be adversely affected by a change in consumer preferences, which may result in decreased demand for our products. An increase in the cost of energy could affect our profitability. Our chestnut products and brand names may be subject to counterfeiting or imitation, which could impact upon our reputation and brand name as well as lead to higher administrative costs. We rely on an outside contractor to provide a majority of our labor. Government regulation could increase our costs of production and increase our legal and regulatory expenditures. Changes in the existing laws and regulations or additional or stricter laws and regulations on environmental protection in China may cause us to incur capital expenditures. Changes in existing PRC food hygiene laws may cause us to incur additional costs to comply with the more stringent laws and regulations, which could have an adverse impact on our financial position. We are subject to credit risk in respect of account receivables. Our operations are cash intensive, and our business could be adversely affected if we fail to maintain sufficient levels of working capital. Our borrowing levels and significant interest payment obligations could limit the funds we have available for various business purposes. The discontinuation of any preferential tax treatment or other incentives currently available to us in the PRC could materially and adversely affect our business, financial condition and results of operations. RISKS RELATING TO OUR CORPORATE GOVERNANCE STRUCTURE The concentration of ownership of our securities by our controlling stockholder who does not participate in the management of our business and who may have conflicting interests can result in stockholder votes that are not in our best interests or the best interests of our minority stockholders. We do not have any independent directors and may be unable to appoint any qualified independent directors. We may be exposed to potential risks relating to our internal controls over financial reporting and our ability to have those controls attested to by our independent auditors. RISKS RELATED TO DOING BUSINESS IN CHINA Changes in China s political or economic situation could harm us and our operating 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. Restrictions on currency exchange may limit our ability to receive and use our revenues effectively. Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident stockholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiaries, limit our PRC subsidiaries ability to distribute profits to us or otherwise materially adversely affect us. The value of our securities will be affected by the foreign exchange rate between U.S. dollars and Renminbi. Our licenses are subject to governmental control and renewal, failure to obtain renewal will cause all or part of our operations to be suspended or terminated. RISKS RELATED TO THE MARKET FOR OUR STOCK Certain of our stockholders may delay or prevent adoption of important business decisions by their ownership of significant percentage of outstanding voting securities. Our common stock is quoted on the OTC Bulletin Board which may have an unfavorable impact on our stock price and liquidity. We are subject to penny stock regulations and restrictions. Certain provisions of our Certificate of Incorporation may make it more difficult for a third party to effect a change- in-control.

Full 10-K form ▸

1117057--4/15/2008--American_Lorain_CORP