1331931--4/2/2007--Echo_Healthcare_Acquisition

related topics

{interest, director, officer}

{acquisition, growth, future}

{stock, price, share}

{debt, indebtedness, cash}

{regulation, government, change}

{control, financial, internal}

{personnel, key, retain}

{stock, price, operating}

{condition, economic, financial}

{operation, natural, condition}

{investment, property, distribution}

{system, service, information}

{cost, regulation, environmental}

{loss, insurance, financial}

{financial, litigation, operation}

{loan, real, estate}

Risks Associated with Our Company If we are unable to complete the business combination with XLNT, we will not have enough time to negotiate and consummate another business combination and will be required to liquidate. If third parties bring claims against us, the proceeds held in trust could be reduced and the per share liquidation price received by stockholders could be less than their purchase price per share. Upon consummation of our business combination with XLNT, there will be a substantial number of shares of our common stock available for resale in the future that may increase the volume of common stock available for sale in the open market and may cause a decline in the market price of our common stock. Our initial stockholders, including our officers and directors, control a substantial interest in us and thus may influence certain actions requiring stockholder vote. Changes in the market price of our common stock may increase the our liability and expense related to our derivative instruments. Our outstanding warrants and options may have an adverse effect on the market price of our common stock and make it more difficult to effect a business combination. We are a development stage company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective. If we are forced to liquidate before a business combination, our public stockholders will receive less than $8.00 per share upon distribution of the trust fund and our warrants will expire worthless. You will not be entitled to protections normally afforded to investors of blank check companies. We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure the transaction or abandon a particular business combination. If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders may be adversely affected. We intend to issue shares of our capital stock to complete a business combination with XLNT, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership. It is likely that some of our current officers and directors will resign upon consummation of a business combination and we will have only limited ability to evaluate the management of the target business. If management were to negotiate to be retained by the company post-business combination as a condition to any potential business combination, such negotiations may result in a conflict of interest. Our officers and directors may allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This could have a negative impact on our ability to consummate a business combination. Certain of our officers and directors are currently affiliated with XLNT and thus may have conflicting fiduciary duties. Certain of our officers and directors could become affiliated with entities engaged in business activities similar to those conducted by XLNT and accordingly may have conflicting fiduciary duties in determining to which entity a business opportunity should be presented. All of our directors own shares of our securities that will not participate in liquidation distributions and therefore they may have a conflict of interest in determining whether a particular target business is appropriate for a business combination. Our initial stockholders will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the portion of net proceeds of the offering that is not placed in the trust account, unless the business combination is consummated, and therefore they may have a conflict of interest. If our common stock becomes subject to the SEC s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected. It is probable that we will only be able to complete one business combination, which will cause us to be solely dependent on a single business. We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure the transaction or abandon a particular business combination. Our initial stockholders, including our officers and directors, control a substantial interest in us and thus may influence certain actions requiring a stockholder vote. Our outstanding warrants may have an adverse effect on the market price of common stock and may make it more difficult to effect a business combination. If our initial stockholders and purchasers of the Founding Director Warrants exercise their registration rights, it may have an adverse effect on the market price of our common stock and the existence of these rights may make it more difficult to effect a business combination. If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination. Our directors may not be considered independent under the policies of the North American Securities Administrators Association, Inc. Acquisitions that we may undertake would involve a number of inherent risks, any of which could cause us not to realize the benefits anticipated to result. In the event we acquire a business that is unable to satisfy regulatory requirements relating to internal controls, or if its internal controls over financial reporting are not effective, our business and our stock price could suffer. XLNT s inability to fulfill its indemnification obligations to us under our acquisition agreements could increase our liabilities and adversely affect our results of operations and financial position. If the directors and officers who committed to make loans to us fail to do so, such failure could have a material adverse effect on the financial condition of our Company. Risks Associated with XLNT and the Veterinary Healthcare Industry XLNT has a limited operating history and may incur losses in the foreseeable future. XLNT may be unable to successfully execute and manage its growth strategy. XLNT may have difficulties integrating acquired businesses. The significant competition in the animal heath care services industry could cause XLNT to reduce prices or lose market share. Loss of key personnel could adversely affect our business. XLNT may experience difficulties recruiting or retaining skilled veterinary professionals. XLNT requires a significant amount of cash to service our debt and expand our business as planned. If XLNT s subsidiaries cannot make distributions or dividends to XLNT, XLNT will not have funds to make payments to service its current debt or future debt. Incurring substantial amounts of debt could adversely affect our business. XLNT s liquidity may not be sufficient to pay its expenses. XLNT is subject to local market risks as a result of the geographic concentration of its operations. A economic downturn could materially adversely affect XLNT s business. Any failure in our information technology systems could adversely affect XLNT s operations. Governmental regulation could adversely affect XLNT s business. The possible implementation of pet insurance could adversely affect XLNT s business. A decrease in the frequency of animal vaccinations could adversely affect our business. Environmental liabilities could adversely affect our business.

Full 10-K form ▸

1331931--4/2/2007--Echo_Healthcare_Acquisition_Corp.