What are the risks involved in international business?

Risks Associated with International Business

The Company’s expansion strategy includes expansion into various countries around the world. While the Company endeavors to limit its exposure by entering only countries where the political, social and economic environments are conducive to doing business, there can be no assurances that the respective business environments will remain favorable. In the future, the Company’s international operations and sales may be affected by the following risks, which may adversely affect United States companies doing business in foreign countries:

•

Political and economic risks, including political instability;

•

Various forms of protectionist trade legislation that currently exist, or have been proposed;

•

Expenses associated with customizing products;

•

Local laws and business practices that favor local competition;

•

Dependence on local vendors;

•

Multiple, conflicting and changing governmental laws and regulations;

•

Potentially adverse tax consequences;

•

Local accounting principles, practices and procedures and limited familiarity with US GAAP;

•

Foreign currency exchange rate fluctuations;

•

Communication barriers, including those arising from language, culture, custom and times zones; and

•

Supervisory challenges arising from distance, physical absences and such communication barriers.