Item 2.01 Completion of Acquisition
or Disposition of Assets
Closing of Stock Purchase
Agreement
Murray
United Development Corp. (MRAY) announced on May 29, 2007 that a closing has
taken place with respect to the purchase of American Metal Technology Group, a
Nevada corporation (AMTG), pursuant to a Stock Purchase Agreement dated as of
November 6, 2006 (the Agreement), as first disclosed in an 8-K filing on January
10, 2007. Pursuant to the terms of the Agreement, MRAY issued 1,213,295,563
shares to the stockholders and consultants of AMTG (1,142,388,273 shares to
AMTGs former shareholders, including 20,000,000 shares of common stock issued to
AMTG as investment upon completion of the due diligence period pursuant to the
Agreement, and redistributed proportionally to AMTGs shareholders on May 22,
2007, and 70,907,300 shares to AMTGs consultants). These shares represent more
than eighty five (85%) of the MRAYs issued and outstanding shares of voting
capital stock on a fully diluted basis, and therefore the former shareholders of
AMTG and its consultants effectively have control of MRAY. AMTG is now a wholly
owned subsidiary of MRAY.
To
accomplish the foregoing, MRAY first increased its authorized shares of common
stock to 1,500,000,000 and 100,000,000 shares of preferred stock. Second, MRAY
transferred its assets and all liabilities associated with said assets to
Anthony Campo, its largest stockholder, Executive Vice President, Secretary
Treasurer, Chief Financial Officer and one of its directors, in partial
consideration for Mr. Campo canceling debt owed to him by MRAY. Third, MRAY
cancelled all outstanding consulting agreements.
Reflecting
the change of ownership, MRAY filed a Certificate of Amendment to its
Certificate of Incorporation to change its name to American Metal &
Technology, Inc., which became effective June 1, 2007.
DESCRIPTION OF OUR BUSINESS
Forward Looking
Statements
This report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Actual results and events
could differ materially from those projected, anticipated, or implicit, in the
forward-looking statements as a result of the risk factors set forth below and
elsewhere in this report. With the exception of historical matters, the matters
discussed herein are forward looking statements that involve risks and
uncertainties. Forward-looking statements include, but are not limited to, the
date of introduction or completion of our products, projections concerning
operations and available cash flow. Our actual results could differ materially
from the results discussed in such forward-looking statements.
History
and Development (Organization within Last 5 Years)
American
Metal Technology Group ("AMTG", "We", "Us", "Our" or the "Company") was
incorporated on January 13, 2004 under the laws of the state of Nevada. On May
22, 2007, AMTG became a wholly owned subsidiary of Murray United Development
Corp. (MRAY), and MRAYs primary asset. AMTG was initially formed for the purpose
of acquiring a Chinese company and providing the acquired company with knowledge
and access to the U.S markets for its products. On June 1, 2004, the Company
entered into an Equity Purchase Agreement with Beijing Sande Technology Group
("BST") to acquire 80% ownership of Beijing Tong Yuan Heng Feng Technology Co.,
Ltd. ("BJTY"), for 7,200,000 shares of AMTG. On August 2, 2004, the Company
incorporated a wholly owned subsidiary, American Metal Technology (Lang Fang)
Co., Ltd., ("AMLF") in Lang Fang, Hebei, China, for the purpose of expanding its
production capacity and acquiring the remaining 20% ownership of BJTY. On August
8, 2004, the Company via its wholly owned subsidiary AMLF entered into an Equity
Purchase Agreement with Beijing Sande Shang Mao Co., Ltd. ("BSS") to acquire the
remaining 20% ownership of BJTY for 1,800,000 shares of AMTG. On November 1,
2005, AMFL transferred its title of ownership of 20% BJTY back to AMTG. On
November 10, 2005, Mr. Wen Ge Ren, a natural citizen of Peoples Republic of
China acquired 5% ownership in BJTY from AMTG for a consideration of $240,000.
On March 20, 2006, the Company conducted a Reg S Private Placement Offering for
$200,000 at $1 per share of common stock and closed the offering in the same
month after raising $120,000.
Electronic Circuit Board
In 2006,
AMTG expanded its business to the high profit margin industry of design and
manufacturing of electronic circuit board for home appliances and motion
controllers. With our newly built manufacturing facility under AMLF, the Company
was able to realize a net profit in its first quarter of operation by providing
controller solutions to NEC customers in China. In the first year, the Company
focused on the washing machine market in China, an estimated $315 million
market. Currently, the Company has been working closely with top brand home
appliances and washing machine manufacturers in China, such as Haier, Little
Duck, Little Swan, etc.
Our
principal executive office is located at 633 W. 5th Street, 26th Floor, Los
Angeles, CA 90071. We currently maintain a web site at http://www.amtg-usa.com.
Our
Business
Murray
United Development Corp., through its wholly owned subsidiary American Metal
Technology Group, a Nevada corporation, and through AMTGs subsidiaries,
Beijing Tong Yuan Heng Feng Technology Co., Ltd. ("BJTY") and American Metal
Technology (Lang Fang) Co., Ltd., ("AMLF"), primarily specializes in precision
casting, machining, mold design and manufacturing in the People's Republic of
China ("China"). We manufacture investment casting and machined products,
including valves, pipe fittings, regulators, dispensers, machinery spare parts,
marine hardware, water treatment parts, automotive and airplane accessories, and
other equipment parts based upon blueprints supplied to us by our customers. We
use a wide range of ferrous and non-ferrous materials such as stainless steel,
carbon steel, low alloy steel and aluminum. Our factory is certified with
ISO9001 and ISO14001 standards.
Beijing
Tong Yuan Heng Feng Technology Co., Ltd. ("BJTY") was incorporated on December
11, 2001 with its principal place of business in Beijing, China. Since its
organization, BJTY has been a manufacturer of precision metal parts for original
equipment manufacturers ("OEMs").
American
Metal Technology (Lang Fang) Co., Ltd., ("AMLF") was incorporated as a wholly
owned subsidiary by AMTG on August 2, 2004 in Lang Fang city, Hebei, China. AMLF
was formed to expand the production and operation of BJTY. Following the
incorporation, AMLF had purchased the rights to use a total area of 30,291.3
square meters (approximately 326,053 square foot) of land from the Chinese
government. The land is located at east side of Meison street and north of Lang
Fang development zone garden in Lang Fang, Hebei, China. The term of the
land-use-rights is fifty (50) years from September 1, 2004 to September 1, 2054.
The land is semi-developed in terms of readied access to supplies of water,
electricity, heat, natural gas and internet connections. AMLF has completed its
construction of a two story manufacturing plant with a total occupational space
of 5,000 square meters (53,819 square foot) and a monthly output capacity of
1,000,000 parts.
We own
and operate 40 LGMazak CNC lathes, 2 machining centers with 4 axis, CNC milling
machine, laser sculptor, in-center grinding, with 2D Video Measurement,
ultrasonic cleaning line and other high technology functions. CNC Lathes are
manufactured by Yamazaki Mazak Corporation (Japan), a machine tool maker in
Japan, which is a global manufacturer of CNC machine tools with operations in
Japan, the US, England, and Singapore. We are able to manufacture parts between
0.003 - 35 kg in weight, +/- 1
∘
of normal
angle tolerance up to +/-0.5
∘
of
special angle tolerance and Ra1.6 - Ra 3.2
∘
in
surface roughness.
We have a
dedicated management team with over fifty years of combined experience in the
casting and metal fabrication industries. There are twenty (20) trained and
skilled engineers among our one hundred and eighty (180) full time employees.
We
manufacture our products through a process called "Investment Casting Process",
also called the "lost wax process" and through a process called "CNC Machining
Process".
Overview of our Investment Casting
Process
Investment
casting, often called lost wax casting, is regarded as a precision casting
process to fabricate near-net-shaped metal parts that could readily be put into
their final form. The investment process can be performed from a variety of
metal alloys such as stainless steels, carbon alloy steels, tool alloys, monel
alloys, hastelly c alloys, nickel base alloys, cobalt base alloys, aluminum
alloys and brass alloys. Although its history lies to a great extent in the
production of art items such as statues, jewelry and etc., the most common use
of investment casting in more recent history has been the production of
components requiring complex, often thin-wall castings. Our investment casting
process begins with the injection of high temperature melted wax into a ceramic
shell mold to form a pattern. The formed pattern is based on customer's
technical drawing and is within the same basic geometrical shape and dimension
as the finished metal cast part. Because the pattern is made of wax, it can be
melted away very easily. Once a wax pattern is produced, we then dip the pattern
in a mixture of ceramic slurry. This would result in the pattern covered with
sand stucco. We then allow it to dry. The dipping and stuccoing process is
repeated until a shell of 6 to 8 mm (1/4 to 3/8 in) is formed.
Once the
ceramic has dried, we would place the entire assembly in a steam autoclave to
remove most of the wax. A steam autoclave is a piece of equipment that can
produce pressurized high temperature steam in a closed chamber for melting wax.
After autoclaving, the remaining amount of wax that soaked into the ceramic
shell is burned out in a furnace. At this point, all of the residual wax pattern
and material is removed, and the ceramic mold remains. Next, we would preheat
the mold to a specific temperature and fill it with molten metal, creating the
metal casting. Then, we will allow the metal casting to cool down. Once the
metal casting has cooled and set, we'll remove the mold shell from the casting.
At this point, the investment metal casting process is completed. The last step
is to conduct qualification check and other tests, such as leakage inspections
according to customer specification. Depending on the specific design
requirements, we may need to perform CNC machining to bring the castings to
their precise final form.
Overview of our CNC Machining
Process
CNC
stands for computer numerical control. CNC Machining is the process by which
material is removed from a work-piece with Computer Numerical Control ("CNC")
equipment that cuts away unwanted material. The CNC machining process is a
versatile system that allows us to control the motion of tools and parts through
computer programs that use numeric data. Machining is possible on virtually any
material. Parts are machined directly from your 3D CAD models. 3D CAD
(computer-aided design) refers to the use of computer systems to design detailed
three-dimensional models of physical objects, such as mechanical parts,
buildings, and molecules.
The CNC
machines in our facilities include machining centers (mills) and turning centers
(lathes). CNC machining center is a numerically controlled computer mill that
cuts metal with a multiple-tooth cutting tool called a milling cutter. The
work-piece is fastened to the milling machine table and is fed against the
revolving milling cutter. The work-piece can be fed to the milling cutter either
horizontally or vertically. The milling cutters can have cutting teeth on the
edge or sides or both. The cutting teeth can be straight or spiral. CNC turning
center is a computer numerically controlled lathe with the capability to hold a
number of cutting tools. The CNC turning center is designed to remove metal by
moving cutting tools against a rotating work-piece. The work-piece is rotated
around its axis and a cutting tool is fed parallel to the axis to create a
cylinder or at right angles to the axis to create a face. The rotating
work-piece can be either parallel or vertical to the floor.
Industry
Everyday
tasks such as dialing on the telephone, turning on a light, starting an
automobile, or using a computer would not be possible without metal casting
components. Telephone equipment parts, the steel plate in light switches,
automobile starters and many other automobile parts, metal hinges on desktop
computers, or door handles, knots and taps, dispensers and regulators etc., are
all made by using the investment casting process. The metal casting industry has
been integral to the U.S. economic growth and has helped the U.S. to become the
world benchmark in fields such as manufacturing, science, medicine, and
aerospace. Nearly all manufactured goods and capital equipments contain one or
more of the cast components or rely on casting components for their manufacture.
The metal casting industry produces both simple and complex components of
unlimited variety, whether they are produced once as a prototype or thousands of
times for use in a manufactured product. In addition to producing components of
larger products, foundries may also do machining, assembling, and coating of the
castings. Major end-use applications for castings include automobiles and
trucks, farm and construction equipment, railroads, pipes and fittings, valves,
and engines.
The basic
metals casting process consists of pouring or injecting molten metal into a mold
or a die containing a cavity of the desired shape. The most commonly used method
for small and medium-sized castings is green sand molding, accounting for
approximately 60 percent of castings produced. Other methods, accounting for
approximately 40 percent, include die casting, shell molding, permanent molding,
investment casting, lost foam casting, and squeeze casting. Markets for metal
castings are increasingly competitive and casting customers are placing greater
emphasis on high-quality, competitively priced castings. Casting process must
continually evolve and improve to remain completive in today's market place.
Markets
for metal castings are increasingly competitive and casting customers are
placing greater emphasis on high-quality, competitively priced castings. There
is increasing demand for lighter-weight, high-strength ferrous and nonferrous
cast metal components and castings that meet demanding design specifications.
Casting processes must continually evolve and improve to remain competitive in
today's marketplace.
Management
believes there is significant room for expansion for AMTG and our subsidiaries
in the metal casting and metal fabrication industry worldwide. We are in a
multi-billion dollar metal casting industry. At least ninety percent of all
manufactured goods contain one or more cast metal components. Metal castings
components are integral in the U.S. transportation, energy, aerospace,
manufacturing, and national defense.
Our
Strategies
We are
committed to the development of new manufacturing techniques, and to bring new
and technological advanced metal fabricated products to the global market.
Management believes that our future growth and profitability depend on our
ability to maintain product quality, control production costs, increase
production capacity, improve our marketing and distribution channels, increase
product offerings, and to effectively react to market changes.
Capitalize
on our cost structure and logistical advantages:
Our
business objectives are to maintain current growth rate while expanding customer
base both domestically and to the international market. When introducing our
products and services to the international market, we hope to take advantage of
the low overhead costs and inexpensive labor available in China based upon the
location of our principal manufacturing facility in Beijing, and our future
facilities in Hebei, China. In the event we are successful in attracting foreign
customers, the close proximity of the factory complex to the Tianjin sea port,
one of the main seaports in China, should provide us convenient transportation
of our products to those foreign customers. There are, however, limitations in
having all our manufacturing facility in China. There would be additional
shipping, handling, and possible tariff costs associated with potential overseas
customers. This may make finding international clients difficult as it would
increase their overall costs.
Change
our product line in response to market demand:
Our
strategy is to respond to changes in market conditions by changing product lines
respectively. Management believes the demand market is changing rapidly. In
order for us to capture the most profitable products in the future, we plan to
setup a professional market intelligence team to monitor and respond to market
changes and reported to the management on a timely basis.
Maintain
high product quality:
Management
believes that identifying each customer's needs and efficiently addressing its
needs are vital to maintaining a competitive advantage to the success of the
business. Management believes that our commitment to services levels and
attention to detail and quality has the effect of providing customers with a
sense of confidence and security that their product requirements will be met and
their products will be delivered on time. The factory complex in Beijing, China,
at which we conducted all of our manufacturing operations, was designed paying
particular attention to factory layout, cleanliness, incoming material control,
in-process quality control, finished goods quality control and final quality
examination.
Competition
The metal
casting industry is highly competitive in China. According to the Perspective of
China's Foundry Industry report of 1998, there were approximately 24,000 metal
foundries and metal casting manufacturers in China, differing widely either in
technology level or in production scale.
In 2003,
there were approximately 12,000 metal foundries and metal casting manufacturers
in China. We also compete with many international companies. There are an
estimated 2,950 metal casting companies in the United States as of year 2002. An
example of one of our Chinese competitors is Beijing Hithertop Precision Casting
Co., Ltd. ("Hithertop"), with $14.5 million in sales,. Hithertop is a privately
owned high-tech export-oriented metal casting manufacturer. It occupies a total
plant area of 53,000m2. Hithertop is located in South-east suburb of Beijing,
35km southeast off the Beijing International Airport and 75km northwest of
Tianjin International Seaport. Other than competing on the same geographical
area in the city of Beijing, Hitherop is competing with our metal casting parts
in the Food and Beverage industry as well as metal casting components in other
industries.
An
example of one of our foreign competitors is Timken Company ("Timken") a U.S
based Corporation, which is a leading global manufacturer of engineered metal
parts and a provider of related products and services with operations in 27
countries. The company reported record sales of $4.5 billion in 2004 and
employed approximately 26,000 at year-end. Timken has been competing with us in
China through its subsidiaries in Yantai and Wuxi, China. According to Timken's
2003 annual report, it is building up another plant in Suzhou, China. As a
result, our competitive advantage on low labor cost structure in China over
foreign competitors may be significantly diminished by Timken's presence in
Yantai, Wuxi and Suzhou. Timken also have far greater financial and other
resources available to them and possess extensive manufacturing, distribution
and marketing capabilities far greater than those we possess. A majority of the
customer orders we receive so far are for dispenser, regulators and similar food
and beverage equipment parts.
We also
compete with other beverage equipment dispensing companies around the Globe. An
example of one of our foreign competitors is Lancer Corporation, which designs,
engineers, manufactures and markets fountain soft drink, beer and citrus
beverage dispensing systems, and other equipment for use in the foodservice and
beverage industry. Lancer is a vertically integrated manufacturer, employing
approximately 1,500 associates in the United States, Mexico, Australia, New
Zealand, and Far East, Western Europe and Russia. Lancer competes its products
in China via Lancer Hong Kong, and its authorized distributors in Shanghai,
China. The Company reported a sales of $124.2 million in fiscal year 2004 and a
net income of $10.1 million. Some of Lancer's production lines are similar to
products we have been manufacturing for our customers. Lancer offer more variety
in its production line and have far greater financial and other resource, such
as marketing and distribution, available to them.
An
example of one of our local competitor is Rising Instrument Co., Ltd, which
specializes in designing, researching, processing, manufacturing and selling all
kinds of pressure gauge, thermometer etc. Rising Instrument is located in
Ningbo, China. Their products include gas regulators and other equipment parts
that are used to control liquid pressure in dispensing systems. Rising is in the
same geographically and economic environment as we do and also enjoys the same
low labor cost. Rising competes with us in terms of gas regulators and offers
more variety than we do.
Environmental
Matters
China
adopted its Environmental Protection Law in 1989, and the State Council and the
State Environmental Protection Agency promulgate regulations as required from
time to time. The Environmental Protection Law addresses issues relating to
environmental quality, waste disposal and emissions, including air, water and
noise emissions. Environmental regulations have not had a material impact on our
results of operations. Our current production does not produce waste that
requires to be delivered to a waste disposal site approved by the local
government. We have not incurred any related cost. However, we expect that
environmental standards and their enforcement in China will, as in many other
countries, become more stringent over time, especially as technical advances
make achievement of higher standards more feasible. We believe we are in
compliance of this regulation and are not subject to enforcement of these rules.
Risk Factors
RISK FACTORS RELATED TO OUR
BUSINESS
Our
business and operations involve numerous risks, some of which are beyond our
control that may affect future results and the market price of our common
shares. In any such case, the market price of our common shares could decline,
and you may lose all or part of your investment. The following discussion
highlights all material risks known to us.
We have a limited operating history,
which may make it difficult to evaluate our business, and our limited
resources may affect our ability to manage the growth we expect to
achieve.
Our
growth to date has placed, and our anticipated further expansion of our
operations will continue to place, a significant strain on our management,
systems and resources. In addition to training and managing our workforce, we
will need to continue to develop and improve our manufacturing process and our
product lines. There can be no assurance that we will be able to efficiently or
effectively manage the growth of our operations, and any failure to do so may
limit our future growth. Furthermore, should we be unable to maintain and manage
our growth, we may be unable to generate sufficient revenues to payback the
existing loans we currently hold. A failure to payback these loans could result
in collection proceeding against us and we may no longer be able to continue
operations.
We currently rely upon few suppliers
for our raw materials which exposes us to a potential financial
risk.
Historically,
we have relied on few suppliers for raw materials. Should we subsequently lose
any of these suppliers, we will be forced to seek other suppliers for raw
materials. Should we fail to locate suppliers of the raw materials that are
willing to sell at the same or similar price, we may be forced to purchase these
materials at a higher price. Should this occur, our profit margin may be lower
than expected on our existing contracts. Furthermore, we may not be able to
obtain additional contracts because our offered prices may not be competitive.
Should the price of the raw materials rise too high, we may be unable to
continue operations.
We have no written agreement or
contract for future production which places us at financial
risk.
Our sales
transactions to our customers are based on purchase orders periodically received
by us. Except for these purchase orders, we have no written agreements with our
customers for future orders of production or for future sales. Furthermore, the
percentage of sales to any of our customers may fluctuate from time to time.
Should we fail to maintain the level of production orders from our current
customers, or fail to obtain new customers, our revenues will substantially
decrease and we may not be able to continue operations.
A substantial portion of our sales
are on credit which exposes us to financial risk if a customer is unable to
honor its credit.
Our
current customers, as well as potential future customers, have and will place
orders with us based on credit. Should one or both of our customers be unable
honor its credit obligations and pay for our products or services, our revenues
will substantially decrease and we may not be able to continue
operations.
We compete against a number of
companies which are in a better position to offer products in higher volume and
at a lower price.
We
compete against numerous metal fabrication manufacturers, many of which have
financial and technical resources, name recognition, market access, commercial
and governmental connections, and research and development capabilities that far
exceed ours. Due to intense price competition, we may have to reduce our prices,
thereby adversely affecting our operating margins in our metal fabrication
operations. This will lead to lower sales, lower gross margins, and lower net
profits. During the past few years, except for an insignificant amount of
subcontracting income, we have refused all metal fabrication contracts from
potential new clients due to pricing pressures and limitation of production
facilities, which has affected our net sales.
Our directors and officers will have
substantial influence over our operations and control substantially all business
matters.
Our
officers are also directors, and are the only persons responsible for conducting
our day-to-day operations. We will not benefit from the multiple judgments that
a greater number of directors or officers may provide, and we rely completely
upon the judgment of such people in making business decisions, with the
assistance of our one independent director on matters which require the judgment
of the Board of Directors. Chen Gao and Xin Yin Yuan shall serve as the
management. Li Wei Gao shall serve only as a director, and shall not have any
involvement in the day-to-day operations.
We may be subject to additional risks
associated with doing business in foreign countries.
In the
future, we may distribute products in foreign countries, and would then face
significant additional business risks associated with doing business in those
countries. In addition to the language barriers, different presentations of
financial information, different business practices, and other cultural
differences and barriers which may make it difficult to evaluate business
decisions or transactions, ongoing business risks result from the international
political situation, uncertain legal systems and applications of law, prejudice
against foreigners, corrupt practices, uncertain economic policies and potential
political and economic instability which may be exacerbated in various foreign
countries. There can be no assurance that we would be able to enforce business
contracts or protect our intellectual property rights in foreign
countries.
In doing
business in foreign countries we may also be subject to such risks, including,
but not limited to, currency fluctuations, regulatory problems, punitive
tariffs, unstable local tax policies, trade embargoes, expropriation, corporate
and personal liability for violations of local laws, possible difficulties in
collecting accounts receivable, increased costs of doing business in countries
with limited infrastructure, risks related to shipment of raw materials and
finished goods across national borders and cultural and language differences. We
also may face competition from local companies which have longer operating
histories, greater name recognition, and broader customer relationships and
industry alliances in their local markets, and it may be difficult to operate
profitably in some markets as a result of such competition. Foreign economies
may differ favorably or unfavorably from the United States economy in growth of
gross national product, rate of inflation, market development, rate of savings,
and capital investment, resource self-sufficiency and balance of payments
positions, and in other respects.
Our success depends upon key members
of our management, the loss of any one or more of whom could disrupt our
business operations.
We depend
to a large extent on the services of our executive officers. The loss of
services of Chen Gao or Xin Yan Yuan could disrupt our operations.
RISK FACTORS RELATED TO THE PEOPLE'S
REPUBLIC OF CHINA ("PRC")
Substantially
all of our assets are located in China and substantially all of our revenues are
derived from our operations in China. Accordingly, our business, financial
condition, results of operations and prospects are subject, to a significant
extent, to economic, political and legal developments in China.
The PRC's legal system and
application of laws are uncertain which may impact our ability to enforce our
agreements and may expose us to lawsuits.
We
conduct most of our business in China, which utilizes a civil law system based
on written statutes. Unlike common law systems, it is a system in which
precedents set in earlier legal cases are not generally used. The overall effect
of legislation enacted over the past 20 years has been to enhance the
protections afforded to foreign invested enterprises in China. However, these
laws, regulations and legal requirements are relatively recent and are evolving
rapidly, and their interpretation and enforcement involves uncertainties. These
uncertainties could limit the legal protections available to foreign investors,
such as the right of foreign invested enterprises to hold licenses and permits,
such as requisite business licenses. In addition, all of our executive officers
and directors are residents of China and not of the U.S. and substantially
all of these persons are located outside the U.S. As a result, it could be
difficult for investors to effect service of process in the U.S., or to enforce
a judgment obtained in the U.S. against us or any of these persons.
Our business will be affected if we
lose our land use rights.
There is
no private ownership of land in China and all land ownership is held by the
government of the PRC, its agencies and collectives. Land use rights can be
obtained from the government for a period up to 70 years, and are typically
renewable. Land use rights can be transferred upon approval by the land
administrative authorities of the PRC (State Land Administration Bureau) upon
payment of the required land transfer fee. We have received the necessary land
use right certificate for our primary operating facilities, but we can give no
assurance that our land use rights will be renewed on terms favorable to us or
renewed at all.
We may be unable to fully comply with
local and regional laws which may expose us to financial
risk.
As is the
case with all businesses operating in China, we are often required to comply
with informal laws and trade practices imposed by local and regional government
administrators. Local taxes and other charges are levied depending on the local
needs for tax revenues and may not be predictable or evenly applied. These local
and regional taxes/charges and governmentally imposed business practices often
affect our cost of doing business and require us to constantly modify our
business methods to both comply with these local rules and to lessen the
financial impact and operational interference of such policies. In addition, it
is often extremely burdensome for businesses to comply with some of the local
and regional laws and regulations. At the moment, we believe we are in
compliance with applicable local and regional laws, but there is no assurance
that we will maintain compliance. Our failure to maintain compliance with the
local laws may result in hefty fines and fees which may substantially impact our
cash flow, cause substantial decrease in our revenues and may affect our ability
to continue operation.
Various administrative agencies have
informal rule enforcement that we may not be able to comply
with.
While we
have, to date, been able to operate within changing administratively imposed
business practices and have otherwise been able to comply with the informal
enforcement rules of the various administrative agencies, no assurance can be
given that we will continue to be able to do so in the future. Should the local
or regional governments or administrators impose new practices or levies that we
cannot effectively respond to, or should the administrators suddenly commence
enforcing those rules that they have not previously enforced, our operations and
financial condition could be materially and adversely impacted. Our ability to
appeal many of the local and regionally imposed law and regulations is limited,
and we may not be able to seek adequate redress for laws that materially damage
our business and affect our ability to continue operation.
The Chinese judiciary is relatively
inexperienced in enforcing the laws that exist which may expose us to costly
litigation and uncertain outcomes.
Should we
be exposed to litigation in the PRC, we may not be able to properly evaluate the
possible outcomes. This may expose us to costly litigation. Furthermore, we may
be exposed to potential inequitable judicial results. Either of these scenarios
may result in failure to continue operation.
Currency fluctuations, while not
presently ascertainable, may adversely affect our earnings.
Should we
locate any customer in the United States, as we intend to do, we will be subject
to risks in currency fluctuations since all our products are manufactured in
China. Fluctuations in exchange rates, primarily those involving the U.S.
dollar, may affect our costs and operating margins which in turn, could affect
our revenues. In addition, these fluctuations could result in exchange losses
and increased costs.
Current vulnerability due to certain
concentrations
BJTY and
AMLFs operations are all carried out in China. Accordingly, AMTGs business,
financial condition and results of operations may be influenced by the
political, economic and legal environments in China, and by the general state of
the Chinas economy.
AMTGs operations in China are subject to
specific considerations and significant risks not typically associated with
companies in the North America and Western Europe. These include risks
associated with, among others, the political, economic and legal environments
and foreign currency exchange. The Company's results may be adversely affected
by changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates
and methods of taxation, among other things.
We may experience significant
fluctuations in our operating results.
AMTG
revenues and operating results may fluctuate due to a combination of factors,
including, but not limited to, the extent that our technologies have gained
acceptance and market share in their relevant markets, the cost involved in
research and development of the products developed utilizing our technologies,
and variations in the abundance and accessibility of raw materials.
Consequently, it is highly uncertain what AMTGs operating results will be in the
near future. Revenues and operating results may also fluctuate based upon the
number and extent of potential financing activities. Thus, there can be no
assurance that MRAY or AMTG will be able to reach profitability on a quarterly
or annual basis.
RISK FACTORS RELATED TO OUR SHARES OF
COMMON STOCK
We may be subject to the Securities
and Exchange Commission's "penny stock" rules if our Common Stock sells below
$5.00 per share.
If the
trading price of our Common Stock remains below $5.00 per share, trading in our
securities may be subject to the requirements of the Securities and Exchange
Commission's rules with respect to securities trading below $5.00, which are
referred to as "penny stocks". These rules require the delivery prior to any
transaction of a disclosure schedule explaining the penny stock market and all
associated risks and impose various sales practice requirements on
broker-dealers who sell "penny stocks" to persons other than established
customers and accredited investors, which are generally defined as institutions
or an investor individually or with their spouse, who has a net worth exceeding
$1,000,000 or annual income, individually exceeding $200,000 or, with their
spouse, exceeding $300,000. For these types of transactions the broker-dealer
must make a special suitability determination for the purchaser and have
received the purchaser's written consent to the transaction prior to the sale.
In addition, broker-dealers must disclose commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities they offer. The additional burdens imposed upon broker-dealers by
such requirements may discourage broker-dealers from effecting transactions in
our Common Stock, which could severely limit its market price and
liquidity.
Our Directors have the right to
authorize the issuance of Preferred Stock.
Our
directors, without further action by our shareholders, have the authority to
issue shares of Preferred Stock from time to time in one or more series, and to
fix the number of shares, the relative rights, conversion rights, voting rights,
terms of redemption, liquidation preferences and any other preferences, special
rights and qualifications of any such series. Any issuance of Preferred Stock
could adversely affect the rights of holders of Common Stock and the value of
such Common Stock.