1311538--6/29/2009--Castle_Brands

related topics

{customer, product, revenue}

{product, liability, claim}

{acquisition, growth, future}

{stock, price, operating}

{stock, price, share}

{product, market, service}

{financial, litigation, operation}

{provision, law, control}

{regulation, change, law}

{property, intellectual, protect}

{operation, international, foreign}

{control, financial, internal}

We have never been profitable, and believe we will continue to incur net losses for the foreseeable future. If our brands do not achieve more widespread consumer acceptance, our growth may be limited. We depend on a limited number of suppliers. Failure to obtain satisfactory performance from our suppliers or loss of our existing suppliers could cause us to lose sales, incur additional costs and lose credibility in the marketplace. We also have annual purchase obligations with certain suppliers. We depend on our independent wholesale distributors to distribute our products. The failure or inability of even a few of our distributors to adequately distribute our products within their territories could harm our sales and result in a decline in our results of operations. The sales of our products could decrease significantly if we cannot secure and maintain listings in the control states. If we are unable to identify and successfully acquire additional brands that are complementary to our existing portfolio, our growth will be limited, and, even if additional brands are acquired, we may not realize planned benefits due to integration difficulties or other operating issues. We may require additional capital to acquire additional brands, and our inability to raise such capital on beneficial terms or at all could restrict our growth. Currency exchange rate fluctuations and devaluations may have a significant adverse effect on our revenues, sales and overall financial results. We must maintain a relatively large inventory of our products to support customer delivery requirements, and if this inventory is lost due to theft, fire or other damage or becomes obsolete, our results of operations would be negatively impacted. Either our or our strategic partners failure to protect our respective trademarks, service marks and trade secrets could compromise our competitive position and decrease the value of our brand portfolio. Risks Related to Our Industry Adverse public opinion about alcohol could reduce demand for our products. Class action or other litigation relating to alcohol abuse or the misuse of alcohol could adversely affect our business. Regulatory decisions and legal, regulatory and tax changes could limit our business activities, increase our operating costs and reduce our margins. We could face product liability or other related liabilities that increase our costs of operations and harm our reputation. Contamination of our products and/or counterfeit or confusingly similar products could harm the image and integrity of, or decrease customer support for, our brands and decrease our sales. Risk Relating to Owning Our Stock We may not be able to maintain our listing on the NYSE Amex, which may limit the ability of our stockholders to sell their common stock. Our executive officers, directors and principal stockholders own a substantial percentage of our voting stock, which allows them to control matters requiring stockholder approval. They could make business decisions for us that cause our stock price to decline and may act by written consent. Provisions in our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law could make it more difficult for a third party to acquire us, discourage a takeover and adversely affect existing stockholders.

Full 10-K form ▸

1311538--6/29/2009--Castle_Brands_Inc