1277092--3/28/2008--ZHONGPIN

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{regulation, change, law}

{cost, regulation, environmental}

{operation, international, foreign}

{stock, price, share}

{customer, product, revenue}

{condition, economic, financial}

{stock, price, operating}

{acquisition, growth, future}

{control, financial, internal}

{product, liability, claim}

{capital, credit, financial}

{cost, contract, operation}

{product, market, service}

{operation, natural, condition}

{interest, director, officer}

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{financial, litigation, operation}

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{product, candidate, development}

Our limited operating history makes it difficult to evaluate our future prospects and results of operations. If there are any interruptions to or a decline in the amount or quality of our live pigs, raw pork or other major raw material supply, our production or sales could be materially and adversely affected. We may be unable to anticipate changes in consumer preferences for processed meat products, which may result in decreased demand for our products. If the chilled and frozen pork market in the PRC does not grow as we expect, our results of operations and financial condition may be adversely affected. We require various licenses and permits to operate our business, and the loss of or failure to renew any or all of these licenses and permits could require us to suspend some or all of our production or distribution operations. Our ability to export may be restricted if we cannot maintain current licenses or obtain additional licenses in other countries and regions. The loss of senior management or key research and development personnel or our inability to recruit additional personnel may harm our business. Our growth strategy may prove to be disruptive and divert management resources, which could adversely affect our existing businesses. We may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing when needed. Our operations are cash intensive and our business could be adversely affected if we fail to maintain sufficient levels of working capital. We may be unable to maintain our profitability in the face of a consolidating retail environment in the PRC. Our operating results may fluctuate from period to period and if we fail to meet market expectations for a particular period, our share price may decline. We derive a substantial portion of our revenues from sales in the PRC and any downturn in the Chinese economy could have a material adverse effect on our business and financial condition. We rely on our exclusive network of showcase stores, network stores and supermarket brand counters for the success of our sales and our brand image, and should they perform poorly, our revenues and brand image could be materially and adversely affected. We rely on the performance of our wholesale retailer and mass merchant customers for the success of our sales, and should they perform poorly or give priority to our competitors products, our sales performance and branding image could be materially and adversely affected. The loss of any of our significant customers could reduce our revenues and our profitability. Recent regulatory enforcement crackdowns on food processing companies in the PRC could increase our compliance costs and reduce our profitability. Our failure to comply with increasingly stringent environmental regulations and related litigation could result in significant penalties, damages and adverse publicity for our business. Our largest stockholder has significant influence over our management and affairs and could exercise this influence against your best interests. Deterioration of our perishable products may occur due to delivery delays, malfunctioning of freezer facilities or poor handling during transportation, which could adversely affect our revenues and the goodwill of our business. If we fail to develop and maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud; as a result, current and potential shareholders could lose confidence in our financial reports, which could harm our business and the trading price of our common stock. The pig slaughtering and processed meat industries in the PRC are subject to extensive government regulation, which is still evolving and could adversely affect our ability to sell products in the PRC or increase our production costs. The pig slaughtering and processed meat industries in the PRC may face increasing competition from both domestic and foreign companies, as well as increasing industry consolidation, which may affect our market share and profit margin. The outbreak of animal diseases, including the recent outbreak affecting those in contact with streptococcus suis-infected pigs in Sichuan and Guangdong Provinces, PRC, or other epidemics could adversely affect our operations. Consumer concerns regarding the safety and quality of food products or health concerns could adversely affect sales of our products. We may be subject to substantial liability should the consumption of any of our products cause personal injury or illness and, unlike most food processing companies in the United States, we do not maintain product liability insurance to cover our potential liabilities. Our product and company name may be subject to counterfeiting and/or imitation, which could have an adverse impact upon our reputation and brand image, as well as lead to higher administrative costs. Changes in the political and economic policies of the PRC government could have a material adverse effect on our operations. Social conditions in the PRC could have a material adverse effect on our operations as the PRC government continues to exert substantial influence over the manner in which we must conduct our business activities. Recent regulatory reforms in the PRC may limit our ability as an offshore company controlled by PRC residents to acquire additional companies or businesses in the PRC, which could hinder our ability to expand in the PRC and adversely affect our long-term profitability. The failure of the PRC residents that control our company to comply with various reporting obligations under PRC regulations governing the investment by foreign entities in domestic enterprises may restrict our foreign exchange activities and our ability to receive dividends from our subsidiaries located in the PRC. Further movements in exchange rates may have a material adverse effect on our financial condition and results of operations. Governmental control of currency conversion may affect the ability of our company to obtain working capital from our subsidiaries located in the PRC and the value of your investment. Henan Zhongpin is subject to restrictions on making payments to us, which could adversely affect our cash flow and our ability to pay dividends on our capital stock. Uncertainties with respect to the PRC legal system could adversely affect our ability to enforce our legal rights. It may be difficult to effect service of process upon us or our Directors or senior management who live in the PRC or to enforce any judgments obtained from non-PRC courts. Recent amendments to the corporate income tax law in the PRC may increase the income taxes payable by our operating subsidiaries located in the PRC, which could adversely affect our profitability. Recent amendments to the corporate income tax law in the PRC may increase the income taxes payable by our operating subsidiaries located in the PRC, which could adversely affect our profitability. Recent changes in the PRC s labor law restricts our ability to reduce our workforce in the PRC in the event of an economic downturn and may increase our productions costs. While cash dividends were paid by a deemed predecessor to our company in 2003 and 2002, we have not paid any cash dividends and no cash dividends will be paid in the foreseeable future. The market price for our stock may be volatile and subject to wide fluctuations, which may adversely affect the price at which you can sell our shares. Future sales of shares of our common stock may decrease the price for such shares.

Full 10-K form ▸

1277092--3/28/2008--ZHONGPIN_INC.