RISKS RELATING TO OUR BUSINESS

We may not be able to maintain and increase the sales and profitability of our restaurant.

Our restaurant's sales is a critical factor affecting our revenue and profit. It will also affect our sales growth. Our ability to increase our restaurant sales depends in part on our ability to successfully implement our initiatives to increase customer traffic and seat turnover rate, such as extending operating hours, driving customer traffic in non-peak hours and offering value-added services, maintaining a strong brand image in the existing market. We do not guarantee that we will be able to achieve our targeted sales growth and profitability for our restaurant or that existing restaurant sales would not decrease. Sales and profits growth may be materially and adversely affected if any of these were to happen.

If we cannot secure renewal of existing lease agreement on commercially reasonable terms, our business, results of operations and ability to implement our growth strategy will be materially and adversely affected.

We compete with other retailers and restaurants for locations in the competitive markets for retail premises. Based on their size advantage and/or their greater financial resources, some of our competitors may have the ability to negotiate more favorable lease terms than we can and some landlords and developers may offer priority or grant exclusivity to some of our competitors for desirable locations. We cannot assure you that we will be able to renew existing lease agreement on commercially reasonable terms, if at all.

Our current restaurant location may become unattractive, while attractive new locations may not be available for a commercially reasonable price.

Our current restaurant location may no longer be attractive as economic or demographic patterns change. In addition, demographics surrounding of our current restaurant location may deteriorate. If this happens, we may need to close or relocate our restaurant. However, we cannot assure you that we will be able to identify and secure suitable locations and at commercially reasonable prices, which may have a material adverse effect on our results of operation.

Our business is affected by changes in consumer taste and discretionary spending, and we may not be able to update our menus, develop new products and innovate new dishes in a timely manner that are responsive to such changes.

The restaurant industry is affected by consumer taste and preference. Our success relies, in part, upon our ability to update our menus, develop new products and innovate new dishes successfully, which in turn depends on our ability to anticipate the consumer preferences, including the dietary habit of consumers, and to market our products in ways that would appeal to their preferences. Although we constantly update our menus and innovate new dishes to adapt to changes in dining trends, shifts in consumer taste and nutritional trends in the United States. Failure to do so may adversely affect our results of operation and financial performance.

Our historical financial and operating results are not indicative of future performance.

Our revenue, operating expenses and results of operations may vary from period to period and from year to year in response to a variety of factors beyond our control, including general business and economic conditions, employment rates, inflation and interest rates, and consumer discretionary income, retail spending, and confidence and therefore our historical results may not be indicative of our future performance.
 

Our business depends significantly on the market recognition of our brand.

Our business depends significantly on the market recognition of our brand name “Uni-Boil” or “煮道”  which is crucial for us to maintain our competitive advantage. Whether we can do so depends on our ability to:

• develop new products and innovate new dishes;
• maintain the uniqueness and deliciousness of our menu offerings;
• provide our food and services at affordable prices;
• Provide pleasant dining environments; and
• respond to any change in the competitive restaurant industry in the United States.

However, our ability to maintain our brand recognition very often depends on a number of factors and some of which are beyond our control. Failure to maintain, protect, promote and enhance our brand could materially and adversely impact our business and results of operations. 

Our restaurant is susceptible to risks in relation to rental increases.

Rental expenses represent a significant portion of our total operating expenses and thus our profitability and financial performance may be adversely affected by any substantial increase in the rental expenses of our restaurant premises.

Shortages or interruptions in the availability and delivery of our food and other raw materials may have a material adverse effect on our business operations and financial performance.

If our suppliers do not deliver our food and other raw materials in a timely manner, we may experience supply shortages or interruptions, which could have a material adverse effect on our business operations and financial performance. In addition, our suppliers may increase the prices of  our food and other raw materials, which may lead to a shrinking of our operating margin and therefore our financial performance if we cannot increase the prices of our dishes. Moreover, the ability to source quality food ingredients from reliable sources that meet our food safety and quality specifications at competitive prices is crucial to our ability to maintain consistent quality and our menu offerings.

Any failure to maintain effective quality control systems for our restaurant could have a material adverse effect on our reputation, results of operations and financial performance.

The quality and safety of the food we serve is critical to our success. Maintaining consistent food quality and safety of food depends significantly on the effectiveness of our quality control systems, which in turn depends on a number of factors, including the design of our  quality control systems and our ability to ensure that our employees adhere to those quality control policies and guidelines. Any significant failure or deterioration of our quality control systems could have a material adverse effect on our reputation, results of operations and financial performance.

Any failure or perceived failure to deal with customer complaints or adverse publicity involving our food or services could materially and adversely impact our business and results of operations.

Negative publicity or news reports or allegations in printed and online media, whether accurate or not, regarding our restaurant, food quality and safety standard can adversely affect our business. Negative customer perception of our business may potentially be induced by reports on public health concerns, negative media attention concerning our competitors or catering services providers across the food industry supply chain. Any such negative publicity could materially harm our business, brands and results of operations.

Any significant liability claims, food contamination complaints from our customers or reports of incidents of food tampering could adversely affect our reputation, business and operations.

We face an inherent risk of food contamination and liability claims. Our food quality depends partly on the quality of the food ingredients and raw materials provided by our suppliers and we may not be able to detect all defects in our supplies. In addition, due to the nature of hot pot, we serve raw food, which creates a greater chance of food contamination.

We may be unable to receive compensation from suppliers for contaminated ingredients used in our dishes and indemnity provisions in our supply contracts may be insufficient.

In the event that we become subject to food safety claims caused by contaminated or otherwise defective ingredients or raw materials from our suppliers, we can attempt to seek compensation from the relevant suppliers. However, indemnities provided by suppliers may be limited and the claims against suppliers may be subject to certain conditions precedent which may not be satisfied. Further, our supply contracts usually do not have provisions to cover lost profits and indirect or consequential losses. If no claim can be asserted against a supplier, or amounts that we claim cannot be recovered from the supplier, to the extent that our insurance coverage is insufficient, we may be required to bear such losses and compensation at our own costs. This could have a material adverse effect on our business, financial condition and results of operations.

Events that disrupt the operations of any of our restaurant, such as fires, floods, earthquakes or other natural or man-made disasters, may materially and adversely affect our business operations.

Our operations are vulnerable to interruption by fires, floods, hurricanes, power failures and shortages, hardware and software failures, computer viruses, terrorist attacks and other events beyond our control. Our business is also dependent on prompt delivery and transportation of our food ingredients and raw materials. Certain events, such as adverse weather conditions, natural disasters, severe traffic accidents and delays and labor strikes, could also lead to delayed or lost deliveries of food supplies to our restaurant which may result in the loss of potential business. Perishable food ingredients may also deteriorate due to delivery delays, malfunctioning of refrigeration facilities or poor handling during transportation by our suppliers or our logistics partners. In addition, fires, floods, earthquakes and terrorist attacks may lead to evacuations and other disruptions in our operations, which may also prevent us from providing quality food and services to customers. Any such event could materially and adversely affect our business operations and results of operations.

Increases in the cost of ingredients may lead to declines in our margins and operating results.

Any rise in the cost of the food ingredients may lead to declines in our margins and operating results. The cost of the food ingredients we use in our restaurant depends on a variety of factors and many of which are beyond our control.

We may not be able to adequately protect our intellectual property, which could harm the value of our brands and adversely affect our business and operation.

Our brand is essential to our success. However, we may face claims of infringement that could interfere with the use of our proprietary know-how, concepts, recipes or trade secrets. Defending against such claims may be costly and, if we are unsuccessful, we may be prohibited from continuing to use such proprietary information in the future or be forced to pay damages, royalties or other fees for using such proprietary information, any of which could negatively affect our sales, profitability and prospects.

Our success depends on the continuing efforts of our senior management team and other key personnel and our business may be harmed if we lose their services.

Our success depends upon the continuing services of our management team. We must continue to attract, retain and motivate a sufficient number of qualified personnel to maintain consistency in the quality and operation of our restaurant. In addition, competition for experienced management and operating personnel in the restaurant industry is intense, and the pool of qualified candidates is limited. We may not be able to retain the services of our key management and operating personnel or attract and retain high-quality personnel in the future.

Our business could be adversely affected by difficulties in employee recruiting and retention

Our ability to attract, motivate, and retain a sufficient number of qualified employees for our restaurant operations is a critical factor in our continued success. We cannot guarantee that we would be able to recruit or retain a sufficient number of qualified employees for our business. Any material increase in employee turnover rates in our restaurant and any failure to recruit skilled personnel and to retain key staff due to factors such as failure to keep up with market average employee salary levels may increase the difficulty to implement our growth strategy. Any increased labor costs due to factors like Competition, increased minimum wage requirements and employee benefits may potentially impact our operating costs. Any of the above would materially and adversely affect our business and results of operations.

We may need additional capital, and our ability to obtain additional capital is subject to uncertainties.

We believe that our current cash and cash equivalents, anticipated cash flow from operations and the proceeds from this offering will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for at least the next 12 months. We may, however, require additional cash resources to finance our continued growth or other future developments, including any investments we may decide to pursue. The amount and timing of such additional financing needs will vary depending on investments in new facilities, decorations and the amount of cash flow from our operations. If our resources are insufficient to satisfy our cash requirements, we may seek additional financing by selling additional equity or debt securities or obtaining a credit facility.

RISKS RELATING TO OUR INDUSTRY

Macro-economic factors have had and may continue to have a material adverse effect upon our business, financial condition and results of operations.

The restaurant industry is affected by macroeconomic factors, including changes in international, national, regional and local economic conditions, employment levels and consumer spending patterns. In particular, our restaurant is located in the United States and accordingly, our results of operations are closely affected by the macro-economic conditions in the United States. Any deterioration of the U.S. economy, decrease in disposable consumer income, fear of a recession and decreases in consumer confidence may lead to a reduction of customer traffic and average spending per customer at our restaurant, which could materially and adversely affect our financial condition and results of operations.

Intense competition in the restaurant industry could prevent us from increasing or sustaining our revenue and profitability.

Restaurants in the California is highly competitive, fragmented and subject to rapid change. If we cannot successfully compete in the marketplace, our business, financial condition and operating results will be adversely affected. Since our business is highly competitive, various competitive factors may reduce our revenues and profit margins. The number, size and strength of our competitors also vary widely. We compete with a number of other hot pot restaurants in the Los Angeles as well as other types of full-service restaurants, eating outlets, including fast food restaurants, cafes and bars. Our competitors include both locally-owned restaurants and other restaurants that are members of regional or national chains.

We face significant competition at our location from a variety of restaurants in various market segments, including locally-owned restaurants and regional and international chains. There are a number of well-established competitors with substantially greater financial, marketing, personnel and other resources than ours, and many of our competitors are well established in the markets where our restaurant is located. Our competitors may also develop new restaurants that operate with similar concepts and target our customers resulting in increased competition.

RISKS RELATED TO THE OFFERING

We determined the price of the shares arbitrarily.  

The offering price of the shares of common stock has been determined by management, and bears no relationship to our assets, book value, potential earnings, net worth or any other recognized criteria of value.  We cannot assure that price of the shares is the fair market value of the shares or that investors will earn any profit on them.

We cannot assure that we will pay dividends.  

We do not currently anticipate declaring and paying dividends to our shareholders in the near future.   It is our current intention to apply net earnings, if any, in the foreseeable future to increasing its capital base and marketing.  Prospective investors seeking or needing dividend income or liquidity should therefore not purchase shares of our common stock.  We cannot assure that we will ever have sufficient earnings to declare and pay dividends to the holders of our common stock, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors.

You can’t easily resell the securities.

There are restrictions on how you can resell your securities. More importantly, there is no market for these securities, and there might never be one. It’s unlikely that the company will ever go public or get acquired by a bigger company. That means the money you paid for these securities could be tied up for a long time.

Our failure to maintain effective internal controls over financial reporting could have an adverse impact on us. 

We are required to establish and maintain appropriate internal controls over financial reporting.  Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations.   In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.