Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Huaizhong Health Group Inc disclosed 13 risk factors in its most recent earnings report. Huaizhong Health Group Inc reported the most risks in the “Finance & Corporate” category.

Risk Overview Q2, 2018

Risk Distribution

54% Finance & Corporate

31% Ability to Sell

8% Production

8% Macro & Political

0% Tech & Innovation

0% Legal & Regulatory

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

Huaizhong Health Group Inc 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.

Risk Highlights Q2, 2018

Main Risk Category

Finance & Corporate

With 7 Risks

Finance & Corporate

With 7 Risks

Number of Disclosed Risks

No changes from last report

S&P 500 Average: 31

No changes from last report

S&P 500 Average: 31

Recent Changes

0Risks added

0Risks removed

0Risks changed

Since Jul 2018

0Risks added

0Risks removed

0Risks changed

Since Jul 2018

Number of Risk Changed

No changes from last report

S&P 500 Average: 2

No changes from last report

S&P 500 Average: 2

See the risk highlights of Huaizhong Health Group Inc 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 13

Finance & Corporate

Total Risks: 7/13 (54%)Below Sector Average

Share Price & Shareholder Rights2 | 15.4%

Share Price & Shareholder Rights - Risk 1

Because the company's headquarter and assets are primarily located outside the united states, in latvia and the russian federation, investors may experience difficulties in attempting to effect service of process and to enforce judgments based upon U.S. Federal securities laws against the company and its non-U.S. Resident officer and director.

While we are organized under the laws of State of Nevada, our officer and Director is a non-U.S. resident and our headquarters and assets are located outside the United States, our headquarters are in Latvia and our major asset, the sewing shop is located in the Russian Federation. Consequently, it may be difficult for investors to affect service of process on him in the United States and to enforce in the United States judgments obtained in United States courts against him based on the civil liability provisions of the United States securities laws, enforce in a Latvian court United States judgments based on the civil liability provisions of the United States securities laws or bring an original action against him in a Latvian court to enforce liabilities based upon the United States federal securities laws. Since all our assets will be located outside U.S. it may be difficult or impossible for U.S. investors to collect a judgment against us.

Share Price & Shareholder Rights - Risk 2

Because our officer and director owns 80% or of our outstanding common stock he may make and control corporate decisions that may be disadvantageous to minority shareholders.

Mr. Titov, our president and director, owns 80% of the outstanding shares of our common stock. Accordingly, he has full control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Titov may differ from the interests of the other stockholders and may result in corporate decisions that are disadvantageous to other shareholders. In addition, sales of significant amounts of shares held by Mr. Titov, or the prospect of these sales, could adversely affect the market price and liquidity of our common stock. His stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

Accounting & Financial Operations4 | 30.8%

Accounting & Financial Operations - Risk 1

Risks associated to our business we are a development stage company and have commenced limited operations in our business. It is very likely we will incur significant operating losses for the foreseeable future.

We were incorporated on September 12, 2013 and to date have been involved primarily in organizational activities and limited business operations. Accordingly, we have no way to evaluate the likelihood that our business will be successful. Potential investors should be aware of the difficulties normally encountered by new distribution companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business, and additional costs and expenses that may exceed current estimates. It is very likely that we will incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate sufficient operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

Accounting & Financial Operations - Risk 2

We have earned only limited revenue and our ability to sustain our operations is dependent on our ability to raise financing.

We have accrued a net loss of $25,342 for the period from our inception on September 12, 2013 to October 31, 2017, and have $279,285 in revenues as of this date. Our future is dependent future profitable operations in the neck, head, donut, lumbar, decorative, throw and orthopedic pillows distribution business. Further, the finances required to fully develop our plan cannot be predicted with any certainty and may exceed any estimates we set forth. If we fail to raise sufficient capital when needed, we may not be able to complete our business plan. As a result we may have to liquidate our business and you may lose your investment. You should consider our independent registered public accountant's comments when determining if an investment in Adaiah Distribution Inc. is suitable. If we experience a shortage of funds we may utilize funds loaned to us from Nikolay Titov, our officer and director, who has informally agreed to advance funds to allow us to pay for professional fees and operation expenses. However, Mr. Titov has no formal commitment, arrangement or legal obligation to advance or loan funds to the company. We may need additional financing. We do not currently have any arrangements for additional financing.

Accounting & Financial Operations - Risk 3

We will incur ongoing costs and expenses for sec reporting and compliance. Without revenue we may not be able to remain in compliance, making it difficult for investors to sell their shares, if at all.

We are required to file annual, quarterly and current reports, or other information with the SEC as provided by the Securities Exchange Act. In order for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. The costs associated with being a publicly traded company in the next 12 month will be approximately $10,000. If we are unable to generate sufficient revenues to remain in compliance it may be difficult for you to resell any shares you may purchase, if at all. Also, if we are not able to pay the expenses associated with our reporting obligations we will not continue to qualify for quotation on the OTC Bulletin Board.

Accounting & Financial Operations - Risk 4

Our officer and director has no experience managing a public company which is required to establish and maintain disclosure controls and procedures and internal control over financial reporting.

Nikolay Titov, our director, has no past experience managing a public company which is required to establish and maintain disclosure controls and procedures and internal control over financial reporting. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We comply with all of the various rules and regulations, which are required for a public company. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment in us.

Corporate Activity and Growth1 | 7.7%

Corporate Activity and Growth - Risk 1

Because our current president has other business interests, he may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail.

Nikolay Titov, our president and director, currently devotes approximately twenty hours per week providing management services to us. While he presently possesses adequate time to attend to our interest, it is possible that the demands on him from other obligations could increase, with the result that he would no longer be able to devote sufficient time to the management of our business. The loss of Mr. Titov's services to our company could negatively impact our business development. Mr. Titov does not owe fiduciary duties to any companies or entities other than Adaiah Distribution.

Ability to Sell

Total Risks: 4/13 (31%)Above Sector Average

Competition1 | 7.7%

Competition - Risk 1

We operate in a highly competitive environment, and if we are unable to continue to compete with our competitors, our business, financial condition, results of operations, cash flows and prospects could be materially adversely affected.

We operate in a highly competitive environment. Our competition includes large, small and midsized companies, and many of them may distribute similar neck, head, donut, lumbar, decorative, throw and orthopedic pillows in our markets at competitive prices. This highly competitive environment could materially adversely affect our business, financial condition, results of operations, cash flows and prospects.

Demand1 | 7.7%

Demand - Risk 1

Because we purchase our products from china and hong kong, and a limited number of specialty pillows may continue to be produced in our russian manufacuring plant, a disruption in the delivery of imported products may have a greater effect on us than on our competitors.

We import the majority of our product from China and Hong Kong, with a limited number of specialty pillows produced in our Russian plant. Because we import the majority of our product and deliver it directly to our customers, we believe that disruptions in shipping deliveries may have a greater effect on us than on competitors who manufacture and/or warehouse products in the United States, Russia and the European Union. Deliveries of our products may be disrupted through factors such as: (1) raw material shortages, work stoppages, strikes and political unrest;(2) problems with ocean shipping, including work stoppages and shipping container shortages;(3) increased inspections of import shipments or other factors causing delays in shipments; and (4) economic crises, international disputes and wars. Most of our competitors warehouse products they import from overseas, which allows them to continue delivering their products for the near term, despite overseas shipping disruptions. If our competitors are able to deliver products when we cannot, our reputation may be damaged and we may lose customers to our competitors.

Sales & Marketing2 | 15.4%

Sales & Marketing - Risk 1

Because we are small and do not have much capital, our marketing campaign may not be enough to attract sufficient customers to operate profitably. If we do not make a profit, we will suspend or cease operations.

Due to the fact we are small and do not have much capital, we must currently limit our marketing activities and may not be able to make our product known to potential customers. Because we must limit our marketing activities, we may not be able to attract enough customers to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations.

Sales & Marketing - Risk 2

If we do not attract additional customers, we will not make a profit, which ultimately will result in a cessation of operations.

Our sales to date have been to only one customer. We cannot guarantee we will be able to expand our customer base. Even if we obtain additional customers, there is no guarantee that we will sustain profits. If we cannot sustain profits, we will have to suspend or cease operations. You are likely to lose your entire investment if we cannot sell our neck, head, donut, lumbar, decorative, throw and orthopedic pillows at prices which generate a profit.

Production

Total Risks: 1/13 (8%)Below Sector Average

Employment / Personnel1 | 7.7%

Employment / Personnel - Risk 1

If nikolay titov, our president and director, should resign, we will not have a chief executive officer and that could result in our having to suspend operations. If that should occur, you could lose your investment.

We depend completely on the services of our president and director, Nikolay Titov, for the future success of our business. The loss of the services of Mr. Titov could have an adverse effect on our business, financial condition and results of operations. If he should resign, we will not have a chief executive officer. If that should occur, until we find another person to act as our chief executive officer, our operations could be suspended. In that event it is possible you could lose your entire investment.

Macro & Political

Total Risks: 1/13 (8%)Below Sector Average

Capital Markets1 | 7.7%

Capital Markets - Risk 1

Foreign currency fluctuations could adversely impact our financial condition.

We currently purchase our products in U.S. dollars and plan to do so in the future. However, we source all of our products from China and Hong Kong and, as such; the cost of our pillow products may be affected by changes in the value of the Chinese Yuan and the Hong Kong Dollar. Due to our dependence on manufacturing operations in China and Hong Kong, changes in the value of the Chinese Yuan or Hong Kong Dollar may have a material impact on our supply channels and manufacturing costs. Changes in the currency exchange rates may also affect the relative prices at which we and our foreign competitors sell products in the same market. If we are unsuccessful in mitigating these risks, foreign currency fluctuations may have a material adverse impact on the results of our operations.

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.

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