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.

Arem Pacific disclosed 18 risk factors in its most recent earnings report. Arem Pacific reported the most risks in the “Finance & Corporate” category.

Risk Overview Q2, 2023

Risk Distribution

50% Finance & Corporate

22% Legal & Regulatory

11% Production

11% Macro & Political

6% Ability to Sell

0% Tech & Innovation

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

Arem Pacific 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, 2023

Main Risk Category

Finance & Corporate

With 9 Risks

Finance & Corporate

With 9 Risks

Number of Disclosed Risks

From last report

S&P 500 Average: 31

From last report

S&P 500 Average: 31

Recent Changes

0Risks added

2Risks removed

2Risks changed

Since Jun 2023

0Risks added

2Risks removed

2Risks changed

Since Jun 2023

Number of Risk Changed

From last report

S&P 500 Average: 3

From last report

S&P 500 Average: 3

See the risk highlights of Arem Pacific 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 18

Finance & Corporate

Total Risks: 9/18 (50%)Above Sector Average

Share Price & Shareholder Rights5 | 27.8%

Share Price & Shareholder Rights - Risk 1

Our shareholders and prospective investors' ownership in the Company may be diluted in the future.

In the future, we may issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present shareholders or potential investors. We expect to need to issue a substantial number of shares of our common stock or other securities convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, raising additional capital in the future to fund our operations and other business purposes.

Share Price & Shareholder Rights - Risk 2

There is no active trading market for our shares of common stock.

Small trading volumes are generally understood to depress market prices. As a result, you may not always be able to resell shares of our common stock publicly at the time and prices that you feel are fair or appropriate, even if we are successful in obtaining public quotations of our common stock on a qualified quotation medium.

Share Price & Shareholder Rights - Risk 3

Our sole director and executive officer, Mr. Xin Jin, and our former President, Mr. Thomas Tang, and Mr. Yew Nic Kien Cheon, a business consultant to the Company, own a significant percentage of our capital stock, and they may be in a position to control decisions of the Company that our other shareholders do not consider to be in their best interests.

As of the date of this Annual Report, the foregoing persons beneficially own in the aggregate approximately 26.87% of our issued and outstanding shares of common voting stock. See the caption "Security Ownership of Certain Beneficial Owners and Management" in Part III, Item 12 hereof. As a result, they may have the ability to substantially control elections to our board of directors, the outcome of issues requiring approval by our shareholders and other corporate actions. This concentration of ownership may also have the effect of delaying or preventing a change in control of our Company that may be favored by other shareholders; and could prevent transactions in which shareholders might otherwise recover a premium for their shares over current market prices. This concentration of ownership and influence in management and board decision making could also harm the price of our capital stock by, among other things, discouraging a potential acquirer from seeking to acquire shares of our capital stock, whether by making a tender offer or attempting to obtain control of our Company. We have established a "Series" of 10,000,000 shares of Series A Preferred Stock. The Series A Preferred Stock shares has superiority voting rights equal to 1,000 votes per share. In the event that such votes do not total 51% of all votes, than regardless of the provisions of this Series, in any such case, the votes cast by Series A Preferred stock shall be equal to 51% of all votes cast at any meeting of shareholders, or any issue put to the shareholders for voting, and the Company may state that any such action was had by majority vote of all shareholders. Furthermore, the holders of Series A Preferred Stock have the right to the majority of the directors to the Board of the Company and to further amend the Certificate of Incorporation to ensure the furtherance of the Company and its operations as such holders determine. Management could issue one (1) share of this Series to control the approval on these and other matters affecting the Company and its shareholders without any vote of the shareholders. See Exhibit 4 in Part IV, Item 15, for a description of the Company's securities and this Series.

Share Price & Shareholder Rights - Risk 4

Our common stock is subject to the "penny stock" rules of the SEC, which may make it more difficult for shareholders to sell our common stock.

The SEC has adopted Rule 15g-9, which established the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a person's account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of the Company's common stock if and when such shares are eligible for sale and may cause a decline in the market value of its stock.

Share Price & Shareholder Rights - Risk 5

If an active market for our common stock develops, there is a significant risk that the Company's common stock price may fluctuate dramatically in the future in response to any of the following factors, some of which are beyond our control, including, but not limited to:

- variations in our quarterly operating results;- announcements that our revenue or income are below analysts' expectations;- general economic slowdowns; and - sales of large blocks of our common stock by insiders and others.

Accounting & Financial Operations3 | 16.7%

Accounting & Financial Operations - Risk 1

We do not intend to pay dividends on our common stock for the foreseeable future.

All future revenues are anticipated to be utilized in the furtherance of our business plan, and accordingly, it is highly unlikely that you will receive any dividends from us in the near future, if ever.

Accounting & Financial Operations - Risk 2

Changed

We had material weaknesses in our internal controls in financial reporting as of June 30, 2023, and such material weaknesses could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

Our management identified material weaknesses in our internal controls and concluded that our internal control over financial reporting were not effective as of June 30, 2023. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The specific material weaknesses we identified in our internal control over financial reporting for the fiscal years ended June 30, 2023, related to: - lack of sufficient accounting personnel qualified in US GAAP and SEC reporting; and Although we have provided additional training to our accounting personnel relating to US GAAP and SEC reporting requirements to partially address the foregoing material weaknesses, we do not believe such weaknesses have been remediated, and we can provide no assurance that they will be remediated in a timely manner. Any failure to maintain effective internal controls could adversely impact our ability to report our financial results on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis as required by the SEC, we could face severe consequences from those authorities.

Accounting & Financial Operations - Risk 3

Changed

Our Auditor's Report on our consolidated financial statements for the fiscal years ended June 30, 2023, which is contained in this Annual Report, has been prepared assuming that we will continue as a "going concern" by reason of our losses, net current liabilities and our negative stockholders' deficit, and there is no assurance that we will not continue to experience losses in our business. As a result, we may be unable to continue as a going concern.

We incurred net losses of US$53,666 during the year ended June 30 2023. We had net current liabilities at June 30, 2023 of US$76,323, and we had at June 30, 2023 a negative net stockholders' deficit of US$45,092. These events or conditions indicate that a material uncertainty exist that may cast significant doubt on our ability to continue as a going concern. The consolidated financial statements have been prepared on a going concern basis in view of the Company being able to obtain continued financial support from its sole director, CEO and CFO or its ability to obtain external financing, as to which no assurance can be given. The validity of the going concern basis on which the consolidated financial statements have been prepared depends on our ability to operate as a going concern and assumptions are premised on future events, the outcome of which are inherently uncertain. Management's plans in regard to these matters are described in Note 1.3 of our consolidated financial statements, though our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Debt & Financing1 | 5.6%

Debt & Financing - Risk 1

We will need additional financing in order to grow our business, and there in no assurance that we will be successful in obtaining the required resources to expand our business or that any potential expansion will result in profitable operations.

We do not have significant assets with which to expand our business. To the extent we intend to expand our business in the future through the opening of additional locations, substantial additional capital will be required. These capital expenditures are intended to be funded from third party sources, including the incurring of debt and/or the sale of additional equity securities. In addition to requiring additional financing to fund expansion, we may require additional financing to fund working capital and operating losses in the future should the need arise. The incurrence of debt creates additional financial leverage, and therefore, an increase in the financial risk to our business operations. The sale of additional equity securities will be dilutive to the interests of current shareholders. In addition, there can be no assurance that such additional financing, whether debt or equity, will be available to us or that it will be available on commercially acceptable terms. Any inability to secure such additional financing on appropriate terms could have a materially adverse impact on any plans for expansion, and our business, financial condition and operating results. Factors affecting the availability and price of capital may include the following: - the availability and cost of capital generally;- our financial results;- the experience and reputation of our management team;- market interest, or lack of interest, in our business industry and our business plan;- the trading volume of, and volatility in, the market for our common stock, assuming there is a trading market for our common stock;- our ongoing success, or failure, in executing our business plan;- the amount of our capital needs; and - the amount of our debt, options, warrants and convertible securities that may be outstanding in our Company at any time and our authorized capital stock.

Legal & Regulatory

Total Risks: 4/18 (22%)Above Sector Average

Regulation3 | 16.7%

Regulation - Risk 1

Our business will be subject to compliance with current and future government regulation that may increase the anticipated cost of any potential expansion program.

Currently, there are no governmental regulations that materially restrict the wellness business in Australia. We are subject to the laws of Victoria, Australia, as administered by Victoria's Business Licensing Authority ("BLA") as we carry out our business. We may be required to obtain additional work permits in the event that we do not have enough local personnel for any operations in which we engage, and to negotiate with shopping malls or others prospective lessors on lease or rental terms, recruitment and training, shop fittings and refurbishment to comply with rules and regulations of any shopping mall or other lessors, including but not limited to operational hours, signage, promotions and cleanliness. There is a risk that new regulations could increase our costs of doing business and prevent us from carrying out any expansion or franchising program we may undertake. We may also have to sustain the cost of renovation or improvement on any outlet once every five (5) years as is customarily required by shopping malls. If renovation costs exceed our cash reserves, we may be unable to complete any expansion program and have to abandon the related outlet(s).

Regulation - Risk 2

Compliance with the reporting requirements of federal securities laws can be expensive.

We are a public "reporting company" in the United States, and accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, rules and regulations, including compliance obligations under the Sarbanes-Oxley Act of 2002. The costs of preparing and filing annual and quarterly reports and other information with the SEC and furnishing audited and reviewed financial statements in reports filed with the SEC, along with required communications with our shareholders, are substantial. We have incurred and expect to continue to incur costs associated with continuing as a public company, including, but not limited to, legal, accounting, filing and other related costs and expenses. Failure to comply with applicable securities laws, rules and regulations could result in private or governmental legal action against us or our officers and directors, which could have a detrimental impact on our business and financial condition, the value of our common stock or other equity securities we may issue and the ability of our shareholders to resell these securities.

Regulation - Risk 3

Because of increased regulatory efforts of governmental and quasi-governmental agencies regarding the trading of securities that are deemed to be penny stocks, the cost and expense of depositing and inducing a broker-dealer to effect sales of these shares is very costly, which can be in excess of value of the shares sought to be sold, and often includes requirements of legal opinions of both the selling shareholder's counsel and the broker-dealer's counsel, both at the expense of the selling shareholder.

Currently, broker-dealers require legal opinions of shareholders of almost all over-the-counter stocks to deposit and sell these shares, and all of these legal opinions are required to be paid for by the shareholder; and often, two (2) legal opinions are required, one (1) from the shareholder's legal counsel and one (1) from the broker-dealer's legal counsel. This policy has been required of mostly all low-priced over-the-counter shares, regardless of whether the shares have been registered with the SEC, or whether there is no legend on the stock certificate representing the shares and always if the shares are designated as "restricted securities." Larger, national broker-dealers will generally not even trade these securities. The high cost of these types of legal opinions is often more than the value of the shares sought to be sold, and the process can take two (2) to three (3) weeks or more. Accordingly, shareholders with limited shares of low-priced stocks will be unable to economically sell their shares, regardless of whether an "established trading market" for the shares exists, and if they could sell their shares, the required selling process will inhibit their ability to sell the shares when they desire to sell their shares.

Litigation & Legal Liabilities1 | 5.6%

Litigation & Legal Liabilities - Risk 1

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in Australia based on United States or other foreign laws against us, our management or any experts named in this Annual Report.

We conduct substantially all of our operations in Australia and substantially all of our assets are located in Australia. In addition, all of our senior executive officers reside within Australia. As a result, it may not be possible to affect service of process within the United States or elsewhere outside Australia upon our senior executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Australia does not have treaties with the United States providing for the reciprocal recognition and enforcement of court judgments, it is uncertain with regard to whether courts of Australia would recognize or enforce judgments of U.S. courts against us or our directors or officers pursuant to civil liability provisions of the securities laws of the United States or any state in the United States; or exercise jurisdiction over actions brought against us or our directors or officers pursuant to the securities laws of the United States or any state in the United States.

Production

Total Risks: 2/18 (11%)Below Sector Average

Supply Chain1 | 5.6%

Supply Chain - Risk 1

Supply chain disruptions could adversely affect our business.

Supply chain dislocations resulting from global geopolitical and public health issues such as the Russian invasion of Ukraine, the Covid-19 pandemic and other causes may have a material adverse impact on our business and results of operations. Such disruptions may increase our costs of doing business, including through significant increases in the price the products and equipment required for our business operations and the related costs of shipment. Supply chain disruptions may also adversely affect our access to suppliers, manufacturers, customers and vendors and may impair our ability to perform wellness services. Delays in our ability to meet our obligations as a result of supply chain issues may negatively affect our reputation, our relationships with customers and results of operations.

Costs1 | 5.6%

Costs - Risk 1

Our fees are based on numerous factors outside of our control.

Numerous factors beyond our control may affect the marketability of our services and our fee structure. These factors include the local and regional economies, the competition, shortage of human resources, government regulations, supply chain issues and the current inflation in many economies related to our supply chain. The exact effect of these factors cannot be accurately predicted, but the combination of any these factors may result in our failure to achieve an adequate return on invested capital and our business may fail, thereby resulting in the loss of any shareholders entire investment in our Company.

Macro & Political

Total Risks: 2/18 (11%)Above Sector Average

Economy & Political Environment1 | 5.6%

Economy & Political Environment - Risk 1

Rising inflation may negatively affect our operating results.

Since 2021, global economic conditions have deteriorated, with significantly increased inflation and the risks of further inflation and recession in 2023 and beyond. These unfavorable economic conditions may lead to decreased demand for our services, less disposable income of our customers and higher prices for our customers. To the extent that we are unable to increase the prices of our services in response to increased costs resulting from inflation, our operating margins will be compressed.

Natural and Human Disruptions1 | 5.6%

Natural and Human Disruptions - Risk 1

The Covid-19 pandemic presents ongoing risks to our business.

In response to the Covid-19 pandemic, governments and other authorities around the world have implemented significant measures intended to control the spread of the virus. While many of these restrictions have been lifted as the rates of Covid-19 infection have decreased or stabilized and as various vaccines have become more widely available, a resurgence of Covid-19 and the impact of variants of the virus that causes Covid-19 may result in the reinstatement of social distancing measures; business closures; lockdowns; restrictions on operations; and quarantines and travel bans. In addition, any governmental mandates that require Covid-19 vaccination or other employee behaviors may result in employee attrition at the Company or its suppliers or customers and may create difficulties in satisfying future employment and supply requirements.

Ability to Sell

Total Risks: 1/18 (6%)Below Sector Average

Competition1 | 5.6%

Competition - Risk 1

Our industry is highly competitive with limited barriers to entry, which could limit our ability to maintain or increase market share.

Our industry is highly competitive with limited barriers to entry. We provide our services in local markets and compete with companies providing similar services. The barriers to entry in this industry are limited, which makes it easy for competitors to open new shops near our current location or any future locations. Many of our competitors have greater marketing, financial and other resources than us that, among other things, could enable them to attempt to maintain or increase their market share by reducing prices or utilizing other strategies. In order to be competitive, we may have to similarly reduce our prices or modify our plan of operations, which in turn may affect our results of 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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