1281696--3/17/2008--BMP_Sunstone

related topics

{operation, international, foreign}

{customer, product, revenue}

{regulation, change, law}

{product, market, service}

{acquisition, growth, future}

{cost, operation, labor}

{product, liability, claim}

{cost, regulation, environmental}

{stock, price, operating}

{personnel, key, retain}

{product, candidate, development}

{debt, indebtedness, cash}

{stock, price, share}

{operation, natural, condition}

{control, financial, internal}

{capital, credit, financial}

{investment, property, distribution}

{property, intellectual, protect}

{regulation, government, change}

If we and Sunstone are not able to integrate their combined operations into a cohesive operating unit in a timely manner, the anticipated benefits of the acquisition may not be realized in a timely fashion, or at all, and our existing businesses may be adversely affected. The integration of Sunstone with our existing business will make substantial demands on our resources, which could divert needed attention away from our other operations. The commercial success of our products depends upon the degree of market acceptance among the medical community. Failure to attain market acceptance among the medical community would have an adverse impact on our operations and profitability. We may experience delays in product introduction and marketing or interruptions in supply. Sales of Sunstone products could decline or be inhibited if supplier relationships are disrupted by the acquisition, which would harm our business. We may be unable to compete successfully against new and existing competitors. If we fail to increase our brand recognition, we may face difficulty in obtaining new customers and business partners. Our operating results may fluctuate as a result of factors beyond our control. We could be exposed to unknown liabilities of Hong Kong Health Care and Sunstone, which could cause us to incur substantial financial obligations and harm our business. We may be unable to obtain additional capital when necessary and on terms that are acceptable to us. We may be unsuccessful in attracting or retaining key sales, marketing and other personnel. The Company s failure to retain current key employees and attract additional qualified personnel could prevent it from implementing its business strategy or operating its business effectively and from achieving the full benefits of the acquisition. We may be unable to manage our growth effectively. We only offer products and services related to pharmaceuticals and, if demand for these products and services decreases, or if competition increases, we will have no other ways to generate revenue. Product sales by Sunstone are concentrated in a limited number of products. Competition for sales to pharmaceutical distributors in China is intense. Our business strategy to use our marketing arm to create demand for products that we will offer exclusively through a distribution arm may fail. Because we only recently became subject to the reporting requirements of the Exchange Act, we have limited experience in complying with public company obligations. Attempting to comply with these requirements will increase our costs and require additional management resources and we still may fail to comply. If we are unable to continue to satisfy the regulatory requirements relating to internal controls, or if our internal controls over financial reporting are not effective, our stock price could decline. The auditors of Hong Kong Health Care have determined that there are a material weakness and significant deficiencies in the internal controls over financial reporting of Hong Kong Health Care. We may not achieve our projected development goals in the time frames we announce and expect. We are a holding company with no operations of our own and depend on our subsidiaries for revenue. Risks Relating to Our Acquisitions We may be unable to acquire, or may be delayed in acquiring, Shanghai Rongheng Pharmaceutical Company Limited, or Rongheng. We may not be able to complete the joint venture transaction contemplated by our non-binding letter of intent with Biaodian Medical Information Co., Ltd., or Biaodian. Because we do not or will not initially have majority control of a number of our subsidiaries and joint ventures, we are dependent on the majority owners of these subsidiaries and joint ventures to operate these enterprises in a manner consistent with our plans and requirements. Risks Relating to Doing Business in China We face increased risks of doing business due to the extent of our operations in China. Fluctuations in the Chinese Renminbi could adversely affect our results of operations. Government control of currency conversion could adversely affect our operations and financial results. The ability of our Chinese operating subsidiaries to pay dividends may be restricted due to our corporate structure. We may be restricted in our ability to transfer funds to our Chinese operating subsidiaries, which may restrict our ability to act in response to changing market conditions. China s economic, political and social conditions, and its government policies, could adversely affect our business. A slow-down of the Chinese economy could adversely affect our growth and profitability. The legal system in China has inherent uncertainties that could limit the legal protections available to us. We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could have a material adverse effect on our business. Remedial measures undertaken by Sunstone may not prevent recurrences of certain of its historical business practices. We have limited business insurance coverage in China. Risks Relating to Pharmaceutical Distribution in China and Wanwei and Sunstone The absence of express laws and regulations in China regarding foreign investment in China s pharmaceutical distribution sector may cause uncertainty. Wanwei may be unable to obtain renewals of necessary pharmaceutical distribution permits. Anti-corruption measures taken by the Chinese government to correct improper sales practices in the pharmaceutical industry could adversely affect our revenue and reputation. Price control regulations may decrease our profitability. The bidding process with respect to the purchase of pharmaceutical products may lead to reduced revenue. If the medicines Wanwei distributes and Sunstone manufactures are replaced by other medicines or are removed from China s Insurance Catalogue in the future, our revenue may suffer. Risks Relating to Our Common Stock Sales of substantial amounts of our common stock in the public market could depress the market price of our common stock. Our common stock may experience extreme price and volume fluctuations, which could lead to costly litigation for us and make an investment in us less appealing. A substantial number of shares will be eligible for future sale by Zhiqiang Han and Zhijun Tong and the sale of those shares could adversely affect our stock price.

Full 10-K form ▸

1281696--3/17/2008--BMP_Sunstone_CORP