1369140--8/16/2010--RainEarth

related topics

{operation, international, foreign}

{capital, credit, financial}

{stock, price, share}

{product, liability, claim}

{control, financial, internal}

{tax, income, asset}

{product, market, service}

{personnel, key, retain}

{property, intellectual, protect}

{regulation, change, law}

{financial, litigation, operation}

Risks Related to Our Business We have no operating history to provide you with an adequate basis to judge our future prospects and results of operations. If hospitals and patients do not accept China RainEarth s products, we may be unable to generate sufficient cash flow from our operating activities and our prospects and results of operations could be negatively affected. We derive substantially all of our revenues from sharing China RainEarth s revenue according to the Agreement. China RainEarth is currently manufacturing and marketing medical instruments, especially blood dialysis. If there is a downturn in the medical instruments industry, especially blood dialysis consumption, we may not be able to diversify our revenue sources and our ability to generate revenues and our results of operations could be materially and adversely affected. When China RainEarth s facility reaches production limit, we may be unable to produce additional products to satisfy all of the clients needs, which could hamper China RainEarth s ability to generate higher levels of revenues and profitability over time. If certain registration certificates are not obtained for our operations where such registration certificates are deemed to be required, we may be subject to administrative sanctions, including the discontinuation of our business where the required advertising registration is not obtained. Because China RainEarth relies on third-party agencies to help marketing the products, failure to retain key third-party agencies or attract additional agencies on favorable terms could materially and adversely affect our revenue growth. We face significant competition in the PRC medical instruments industry, and if we do not compete successfully against new and existing competitors, we may lose our market share, and our profitability may be adversely affected. Our business depends substantially on the continuing efforts of our senior executives, and our business may be severely disrupted if we lose their services. We may be subject to intellectual property infringement claims, which may force us to incur substantial legal expenses and, if determined adversely against us, may materially disrupt our business. We do not have any business liability, disruption or litigation insurance, and any business disruption or litigation we experience might result in our incurring substantial costs and the diversion of resources. Risks Related to Regulation of Our Business and to Our Structure Contractual arrangements we have entered into among our subsidiaries and variable interest entity may be subject to scrutiny by the PRC tax authorities and a finding that we owe additional taxes or are ineligible for our preferential tax treatment, or both, could substantially increase our taxes owed, and reduce our net income and the value of your investment. The contractual agreements between the Company and China RainEarth may not be as effective in providing operational control as direct ownership of these businesses and may be ineffective to permit consolidation of the financial results of the business. Risks Related to Doing Business in China Adverse changes in the political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our services and have a material adverse effect on our competitive position. Fluctuations in exchange rates may have a material adverse effect on your investment. Restrictions on currency exchange may limit our ability to receive and use our revenues or financing effectively. We may have difficulty establishing adequate management, legal and financial controls in the People's Republic of China. Risks Related to the Common Stock There may not be sufficient liquidity in the market for our securities in order for investors to sell their securities. The market price of our common stock may be volatile. Our Common Stock is considered penny stock.

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1369140--8/16/2010--RainEarth_Inc.