930095--3/30/2007--EDEN_BIOSCIENCE

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Factors That May Affect Our Business, Future Operating Results and Financial Condition Risks Related to Our Home and Garden Business Our business is dependent on the success of our Home and Garden Business, which has a limited operating history, has generated only limited revenue to date and in which we do not currently expect to substantially increase our investment. If PHC does not perform its obligations under the promissory note issued in connection with the sale of our Harpin Protein Technology and if Plant Health Care plc does not perform its obligations under the guaranty, we may not receive some or all of the deferred consideration payable by PHC under the Asset Purchase Agreement, which could adversely affect our operations. Management could spend or invest the net proceeds from the sale in ways with which our shareholders may not agree. As we redeploy our assets, we will continue to incur significant operating losses and negative cash flow, and we may never be profitable. As a result of the sale of our Harpin Protein Technology, we are dependent on PHC for the manufacture and supply of harpin proteins and harpin protein-based products for our Home and Garden Business, and any failure of PHC to provide timely delivery of high quality products could adversely affect our business and results of operations. Our Home and Garden Business is relatively new and has limited market awareness, and we may not be successful in building greater market awareness and increasing sales. We may be unable to establish or maintain successful relationships with independent distributors and retailers, which could adversely affect our sales and our ability to generate revenue from our Home and Garden Business. The market for Home and Garden Products is competitive and we may not have the resources required to compete effectively. The high level of competition in these markets may result in price reductions, reduced margins or the inability of our products to achieve market acceptance. We are unable to compete with PHC s Harpin Protein Technology business until after February 28, 2009. We may not be able to become profitable unless we identify and acquire other businesses on favorable terms. Our Home and Garden Business currently depends on products that are based on the same new technology, and our commercialization of those products may not be successful. Our inability to obtain regulatory approvals, or to comply with ongoing and changing regulatory requirements, could delay or prevent sales of our current or any future Home and Garden Products. If we do not adequately distinguish our products from genetically modified plants and products, public concerns over those products could negatively impact market acceptance and regulatory approval of our products. We may be exposed to product liability claims, which could adversely affect our operations. Rapid changes in technology could render our current or any future products we may develop unmarketable or obsolete. If we are unable to retain our existing personnel, we may not be able to successfully manage our business or achieve our objectives. Our liquidity and financial condition could be materially impaired if we are required to pay any severance amounts to Mr. Powell under his employment agreement and/or change of control agreement. Risks Related to Our Business Plan to Utilize Tax Loss Carryforwards Our business objective of realizing potential value from our tax loss carryforwards is highly speculative and subject to numerous material uncertainties. We may not be able to realize value from our tax loss carryforwards. We may not be able to use our tax loss carryforwards because we may not generate taxable income. The IRS could challenge the amount of our tax loss carryforwards. Possible changes in legislation could negatively affect our ability to use the tax benefits associated with our tax loss carryforwards. Limits on ownership of our common stock could have an adverse consequence to you and could limit your opportunity to receive a premium on our stock. Risks Related to Our Common Stock There is limited trading volume in our common stock and you may find it difficult to dispose of your shares of common stock; it is possible that our stock may be delisted from the Nasdaq Capital Market. Our financial results may fluctuate significantly, which could cause our stock price to decline. Certain provisions in our charter documents and Washington law could discourage a change of control or make it difficult to change the composition of directors and management.

Full 10-K form ▸

930095--3/30/2007--EDEN_BIOSCIENCE_CORP