49930--3/31/2009--IMPERIAL_INDUSTRIES

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{condition, economic, financial}

{operation, natural, condition}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{capital, credit, financial}

{acquisition, growth, future}

{interest, director, officer}

{product, liability, claim}

{personnel, key, retain}

{stock, price, operating}

{system, service, information}

{competitive, industry, competition}

{financial, litigation, operation}

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Our business is dependent on demand for construction, renovation and repair of residential and commercial buildings. Such demand is influenced by changes in the overall condition of the U. S. economy Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. Additional adverse changes in economic conditions where we conduct our operations and where prospective customers live could further reduce the demand for our products and, as a result, could further reduce our results of operations and continue to adversely affect our financial condition. If we lost our existing financing arrangements and are otherwise not able to obtain suitable replacement financing, our business and results of operations could be adversely affected. We have substantial fixed costs, and as a result, our operating income is sensitive to changes in our net sales. Declines in net sales would adversely affect operating results. Our business is subject to intense competition. Our operating results are affected by fluctuations in our costs and the availability of raw materials and building material products from our vendors. We are subject to continuing business risk related to insurance coverage. We have been unable to obtain product liability coverage for certain types of product applications since March 15, 2004. Losses from claims in excess of insurance coverage, or for matters not insured, could have a material adverse effect on our operating results and financial condition. Future litigation could adversely affect our operating results and financial condition. We depend on our senior management team and key personnel for their expertise and leadership. The loss of any member of our senior management could adversely affect our operations. Because our business is working capital intensive, we rely on our ability to manage our product purchasing and customer credit policies. If we are not successful in managing our working capital, our financial condition would be adversely affected. We require a significant amount of liquidity to service our debt, fund operations and meet cash requirements of capital expenditures. If we are unable to meet the financial covenants under our line of credit, the lender could elect to accelerate the repayment of the outstanding balance and, in that event, we would be forced to seek alternate sources of financing. Our Common Stock may not meet minimum listing requirements to remain on the NASDAQ Capital Market in the future. We are dependent on our information systems. Delays in the implementation of our new computer system, or interruptions in the proper functioning of our information system, could disrupt our operations and cause unanticipated increases in costs and adversely affect our operating results and financial condition. The seasonal nature of our operations may adversely affect our quarterly financial results. Fluctuations in our quarterly results may also have an adverse effect on the market price of our common stock. Implementation of our growth strategy has certain risks. If we are unable to effectively implement or manage our growth strategy, our operating results and financial condition could be materially and adversely effected. We are subject to environmental and safety regulations that are subject to change. Such regulations could cause us to make modifications to how we manufacture and distribute our products. Natural disasters could negatively affect our operating results and financial condition. Actual and perceived vulnerabilities as a result of terrorist activities and armed conflict may adversely impact consumer confidence and our business. We do not expect to pay dividends on our common stock for the foreseeable future. Dividends are payable at the discretion of our Board of Directors. The failure to declare and pay dividends may have an adverse effect on the market price of our common stock. Certain anti-takeover provisions may make our stock less attractive to investors.

Full 10-K form ▸

49930--3/31/2009--IMPERIAL_INDUSTRIES_INC