CHINA EDUCATION ALLIANCE INC. - FORM 10-Q - XML - IDEA: XBRL DOCUMENT - November 9, 2011
Operating Risk | 9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2011 | |||
| Operating Risk |
(a)
Country risk
Currently,
the Company’s revenue is mainly derived from sale of
educational products and services in the People’s Republic of
China. The Company hopes to expand its operations in the
People’s Republic of China, however, there are no assurances
that the Company will be able to achieve such an expansion
successfully. Therefore, a downturn or stagnation in the economic
environment of the PRC could have a material adverse effect on the
Company’s financial condition.
(b)
Products risk
The
Company competes with larger companies, who have greater funds
available for expansion, marketing, research and development and
the ability to attract more qualified personnel. There can be no
assurance that the Company will remain competitive with larger
competitors.
(c)
Exchange risk
The
Company cannot guarantee that the current exchange rate will remain
steady, therefore there is a possibility that the Company could
post the same amount of profit for two comparable periods and
because of a fluctuating exchange rate actually post higher or
lower profit depending on exchange rate of Chinese Renminbi (RMB)
converted to U.S. dollars on that date. The exchange rate could
fluctuate depending on changes in the political and economic
environments without notice.
(d)
Political risk
Currently,
the People’s Republic of China is in a period of growth and
is openly promoting business development in order to bring more
business into the People’s Republic of China. Additionally,
the People’s Republic of China allows a Chinese corporation
to be owned by a United States corporation. If the PRC government
changes the laws or regulations, the Company’s ability to
operate in the People’s Republic of China could be
affected.
(e)
Key personnel risk
The
Company’s future success depends on the continued services of
executive management in the People’s Republic of China.
The loss of any of their services would be detrimental to the
Company and could have an adverse effect on business development.
The Company does not currently maintain key-man insurance on their
lives. Future success is also dependent on the ability to identify,
hire, train and retain other qualified managerial and other
employees. Competition for these individuals is intense and
increasing.
(f)
Non-compliance with financing requirements
The
Company might need to obtain future financing that require timely
filing of registration statements, and have declared effective
those registration statements, to register the shares being offered
by the selling stockholders in future financing. The Company might
be subject to liquidated damages and other penalties if they
continue to obtain future financing requiring registration
statements, and not having those registration statements filed and
declared effective in a prompt manner.
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