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Acro Biomedical Co Ltd (ACBM)
OTHER OTC:ACBM
Risk Overview Q2, 2020
Risk Distribution
38% Finance & Corporate
23% Production
15% Ability to Sell
12% Legal & Regulatory
8% Tech & Innovation
4% Macro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Acro Biomedical Co Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q2, 2020
Main Risk Category
Finance & Corporate
With 10 Risks
Finance & Corporate
With 10 Risks
Number of Disclosed Risks
26
No changes from last report
S&P 500 Average: 31
26
No changes from last report
S&P 500 Average: 31
Recent Changes
0Risks added
0Risks removed
0Risks changed
Since Jun 2020
0Risks added
0Risks removed
0Risks changed
Since Jun 2020
Number of Risk Changed
0
No changes from last report
S&P 500 Average: 3
0
No changes from last report
S&P 500 Average: 3
See the risk highlights of Acro Biomedical Co in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 26
Finance & Corporate
Total Risks: 10/26 (38%)Above Sector Average
Share Price & Shareholder Rights7 | 26.9%
Share Price & Shareholder Rights - Risk 1
Our auditors' report includes a going concern paragraph.Share Price & Shareholder Rights - Risk 2
There is presently no active market for our common stock, which may make it difficult for you to sell your stock.Our common stock is quoted on the OTCQB marketplace under the symbol ACBM. There is no active trading market for our common stock, and the OTC Markets website shows that there are many days on which there is no trading volume or very limited trading volume. Accordingly, even if a market develops, as to which we can give no assurance, there can be no assurance as to the liquidity of our common stock, the ability of holders of our common stock to sell our common stock, or the prices at which holders may be able to sell our common stock. Further, if a market develops, it is likely that there will not be any significant float, with the result that the reported bid and asked prices may have little relationship to the price you would pay if you wanted to buy shares or the price you would receive if you wanted to sell shares.
Share Price & Shareholder Rights - Risk 3
Because our common stock is a penny stock, you may have difficulty selling our common stock in the secondary trading market.If a market for our common stock develops, it is likely that our common stock will fit the definition of a penny stock and therefore is subject to the rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks. The SEC rules may have the effect of reducing trading activity in our common stock making it more difficult for investors to purchase and sell their shares. The SEC's rules require a broker or dealer proposing to effect a transaction in a penny stock to deliver the customer a risk disclosure document that provides certain information prescribed by the SEC, including, but not limited to, the nature and level of risks in the penny stock market. The broker or dealer must also disclose the aggregate amount of any compensation received or receivable by him in connection with such transaction prior to consummating the transaction. In addition, the SEC's rules also require a broker or dealer to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction before completion of the transaction. The existence of the SEC's rules may result in a lower trading volume of our common stock and lower trading prices. Further, some broker-dealers will not process transactions in penny stocks.
Share Price & Shareholder Rights - Risk 4
We do not have any independent directors.We do not have any independent directors. Our sole director is Pao-Chi Chu, who is our chief executive officer, chief financial officer and principal stockholder. Because we have no independent director, we do not have any checks and balances on Mr. Chu, which may make it difficult for us to develop internal controls and to raise money in the financial markets.
Share Price & Shareholder Rights - Risk 5
Our stock price may be volatile and your investment in our common stock could suffer a decline in value.As of the date of this annual report, there has no active trading activity in our common stock. There can be no assurance that any significant market, or any market, will ever develop in our common stock. Because of the low public float and the lack of trading volume, any reported prices may not reflect the price at which you would be able to sell shares if you want to sell any shares you own or buy shares if you wish to buy share. Further, stocks with a low public float may be more subject to manipulation than a stock that has a significant public float. The price may fluctuate significantly in response to a number of factors, many of which are beyond our control. These factors include, but are not limited to, the following, in addition to the risks described above and general market and economic conditions:
- our low stock price, which may result in a modest dollar purchase or sale of our common stock having a disproportionately large effect on the stock price; - the market's perception as to our ability to generate revenue and positive cash flow or earnings; - changes in our or securities analysts' estimate of our financial performance; - our ability or perceived ability to obtain necessary financing for our operations; - the perception of the future market for our products; - the anticipated or actual results of our operations; - changes in market valuations of other natural supplement companies; - any discrepancy between anticipated or projected results and actual results of our operations; - actions by third parties to either sell or purchase stock in quantities which would have a significant effect on our stock price; and - other factors not within our control.
Share Price & Shareholder Rights - Risk 6
Raising funds by issuing equity or convertible debt securities could dilute the net tangible book value of the common stock and impose restrictions on our working capital.If we were to raise additional capital by issuing equity securities, either alone or in connection with a non-equity financing, the net tangible book value of the then outstanding common stock could decline. If the additional equity securities were issued at a per share price less than the market price, which is customary in the private placement of equity securities, the holders of the outstanding shares would suffer a dilution, which could be significant. We may have difficulty in raising funds through the sale of debt securities because of both our financial position, the lack of any collateral on which a lender may place a value, and the absence of any revenue or operations. If we are able to raise funds from the sale of debt securities, the lenders may impose restrictions on our operations and may impair our working capital as we service any such debt obligations. Further, it is not uncommon for investors who provide private funding to companies with weak financial positions, to require the issuer to issue convertible securities which are convertible at a discount to the market price at the time the convertible security is converted. Such securities typically have a materially adverse effect on the market price for the issuer's stock.
Share Price & Shareholder Rights - Risk 7
Because of our chief executive officer's stock ownership, he has the power to elect all directors and to approve any action requiring stockholder approval.Mr. Pao-Chi Chu, our chief executive officer, owns 30,000,000 shares of common stock, representing approximately 62.8% of our outstanding common stock. As a result, Mr. Chu has the power, without the vote of any other stockholders, to elect all of our directors and take any action requiring stockholder approval, including any amendment to our certificate of incorporation, merger, sale of assets or other major corporate transaction.
We do not intend to pay any cash dividends in the foreseeable future. We have not paid any cash dividends on our common stock and do not intend to pay cash dividends on our common stock in the foreseeable future.
Accounting & Financial Operations2 | 7.7%
Accounting & Financial Operations - Risk 1
Our lack of internal controls over financial reporting may affect the market for and price of our common stock.Accounting & Financial Operations - Risk 2
We cannot assure you that we can operate profitably.Although we generated net income of $419,660 on revenues of $8,014,500for the year ended September 30, 2018, for the year ended September 30, 2019, we incurred a loss of $370,747 on sales of $1,354,000. Our gross margin for the year ended September 30, 2019 was 10%. We will not be able to operate profitably until and unless we are able to generate sufficient revenue so that our gross profit can cover our operating expenses. we cannot assure you that we be able to operate at a profit. We do not have any full-time employees and our chief executive officer, who provides his services on a part-time basis, has not received any salary. If we increase our operations and engage in selling, marketing and research and development activities, we will incur significant selling, general and administrative expenses. Unless we can significantly increase our revenue and gross profit or raise funds from other sources, including the sale or our equity securities, we may not be able to operate profitably. The lack of an active trading market in our common stock combined with our lack of sales and can materially impair our ability to raise money through the sale of equity securities. Further, to the extent that we are not able to sell our inventory before it becomes unsaleable because of its age, we would need to write off any unsaleable inventory which would materially impact our financial conditions, the results of our operations and our ability to raise funds.
Debt & Financing1 | 3.8%
Debt & Financing - Risk 1
We require significant funding for us to conduct our business.Production
Total Risks: 6/26 (23%)Above Sector Average
Manufacturing1 | 3.8%
Manufacturing - Risk 1
The market for cordyceps or metallothionein products may be affected by recalls or successful litigation arising from claimed adverse reactions to cordyceps products.Employment / Personnel4 | 15.4%
Employment / Personnel - Risk 1
We are dependent upon our chief executive officer.Employment / Personnel - Risk 2
If we are unable to attract, train and retain technical and financial personnel, our business may be materially and adversely affected.Our future success depends, to a significant extent, on our ability to attract, train and retain key management, marketing, sales, technical and financial personnel. Recruiting and retaining capable personnel, particularly those with expertise in the natural supplement business are vital to our success. There is substantial competition for qualified personnel, and we cannot assure you we will be able to attract or retain our technical and financial personnel. If we are unable to attract and retain qualified employees, our business may be materially and adversely affected. Our financial condition, including our 83% decline in sales from the year ended September 30, 2018 to the year ended September 30, 2019 and the lack of sales in the second, third and fourth quarters of 2019 may make it difficult for us to attract qualified personnel.
Employment / Personnel - Risk 3
Our chief executive officer may have a conflict of interest.Pao-Chi Chu, our chief executive officer, chief financial officer and principal stockholder, has served as the chairman of Mucho Biotech Co., Ltd., Mucho Furich Co., Ltd., and Mucho Biomedical Co., Ltd., companies engaged in applications of cordyceps since 2006. These companies are controlled by Mr. Chu. As a result, he may have a conflict of interest in allocating his time and available resources among us and the other companies in related fields which he controls. We cannot assure you that Mr. Chu will be able to allocate sufficient time and resources to our business to enable us to develop our business plan.
Employment / Personnel - Risk 4
Our lack of a full-time chief financial officer could affect our ability to develop financial controls, which could affect the market price for our common stock.We do not have a full-time chief financial officer. At present, our chief executive officer, who does not have an accounting background, is also acting as our chief financial officer. We do not anticipate that we will be able to hire a qualified chief financial officer unless our financial condition improves significantly. The lack of an experienced chief financial officer, together with our lack of internal controls, may impair our ability to raise money through a debt or equity financing, the market for our common stock.
Supply Chain1 | 3.8%
Supply Chain - Risk 1
We need to develop additional sources of supply.Ability to Sell
Total Risks: 4/26 (15%)Above Sector Average
Competition1 | 3.8%
Competition - Risk 1
The market for our product is very competitive, and we may not be able to compete successfully.Demand1 | 3.8%
Demand - Risk 1
We have not conducted any study of the potential market for cordyceps-based or metallothionein products in the United States and we cannot assure you that there is a significant market for these products in the United States.Sales & Marketing2 | 7.7%
Sales & Marketing - Risk 1
We need to develop and maintain marketing and distribution channels.Sales & Marketing - Risk 2
If we are not able to increase revenue and our customer base, we may not be able to operate profitably.Through September 30, 2019, our revenue has primarily resulted from sales to two customers in Hong Kong. Our largest customer accounted for 94% of our sales in the year ended September 30, 2019, all of which were made in the first quarter of the year, and 53% of our sales in the year ended September 30, 2018. Our second largest customer for the year ended September 30, 2018 accounted for 47% of our sales for the year, but did not generate any sales in the year ended September 30, 2019. As a result, our sales decreased $6,660,500, or more than 83%, from the year ended September 30, 2018 to the year ended September 30, 2019. We do not have any long-term agreement with our customers and they may cease purchasing from us for any reason. Unless we are successful in generating revenue from other customers, our ability to operate will be impaired. Further, we believe that the nature of the market is such that we have little ability to improve our gross margin.
Legal & Regulatory
Total Risks: 3/26 (12%)Below Sector Average
Regulation2 | 7.7%
Regulation - Risk 1
If we sell products or commence operations in the United States, we would be subject to government regulations in the United States.Regulation - Risk 2
Since we sell our products to customers in the Hong Kong, we may be subject Hong Kong laws and regulations relating to our products.We do not sell products for retail sale to consumers. Our customers purchase our products in bulk and use our products as ingredients in their products. Countries into which our products are sold have regulations relating to the marketing, labeling and claims for dietary supplements. Since we do not sell products in form for use by consumers, our customers must comply with applicable government regulations. Our present customers are located in Hong Kong, which has laws concerning the ingredients in products sold for consumption, including the purity of the ingredients. If products which include our products as ingredients are sold in Hong Kong or any other country, the products may be subject to the food and supplement regulations of the country. We do not make any of the products we sell. To the extent a claim arises either as a result of the use by a consumer of products which contain our ingredients or a government agency raises questions about the purity of ingredients purchased from us, we may incur liability for any adverse reactions to the products purchased by consumers or failures of our products to conform to the stated purity of our products and we cannot assure you that we will be able to claim over against our supplier. Although we do not sell products in Hong Kong or any other country, we may be subject to liability or penalties in the event that our products do not have the purity which we claim We may, in the future, sell products that are designed and packaged for use by consumers, in which event we may be subject to laws relating to such products, including the purity and labeling of the products and any other regulations that may be applicable in the country in which the products are sold.
Litigation & Legal Liabilities1 | 3.8%
Litigation & Legal Liabilities - Risk 1
We may not have sufficient product liability insurance to protect us against any claims we may sustain.Tech & Innovation
Total Risks: 2/26 (8%)Below Sector Average
Innovation / R&D1 | 3.8%
Innovation / R&D - Risk 1
We may not be successful in any research and development activities in which we may engage.Trade Secrets1 | 3.8%
Trade Secrets - Risk 1
We may not be able to protect any intellectual property which we may develop.Macro & Political
Total Risks: 1/26 (4%)Below Sector Average
Economy & Political Environment1 | 3.8%
Economy & Political Environment - Risk 1
We believe that the decrease in our sales was affected by recent government efforts to politically stabilize Hong Kong.See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.