prospectus for - Pumpkin Patch investor relations

isk and special trade factorsPrincipal RisksSharesThe principal risk to investors under the Share Offer is that they may not be able to recoup their originalinvestment or they may not receive the returns they expect. This could happen for a number of reasonsincluding that:• The price at which the Shares trade may be lower than the price paid for them;• There is no ready market for Pumpkin Patch shares;• Pumpkin Patch does not have funds available to pay dividends;• Pumpkin Patch becomes insolvent or does not have sufficient assets to pay returns to holders of the Shares;• The operational and financial performance of Pumpkin Patch falls below expectation; and/or• The Company is placed in receivership or liquidation.The Shares will be ordinary fully paid shares and holders of Shares will have no liability to Pumpkin Patch for anyfurther payment in respect of the Shares.Risk factors exist that are both specific to Pumpkin Patch’s business activities and of a general nature. Thesefactors may, individually or in combination, affect the future operating performance of Pumpkin Patch and thevalue of a holder’s investment in Pumpkin Patch.Many factors will affect the price of the Shares including economic conditions in New Zealand and elsewhere,the operational and financial performance of Pumpkin Patch, changes in government policies and regulationsin countries where Pumpkin Patch operates and movements in interest rates or currency exchange rates.An investor in Shares will also face the business risks arising from the assets and undertakings of the PumpkinPatch Group.OptionsThe principal risk to holders of Options under the Option Offer is that the Options cannot be exercised becausethe Share price does not meet the stipulated performance benchmark. This could happen for a number ofreasons including those set out above in relation to Shares. In addition once a holder of Options has paid theExercise Price and had the Options converted to Shares, he or she is subject to the same risks as anyshareholder, as set out generally in this section.Exchange RatesPumpkin Patch is exposed to movements in exchange rates (in particular the exchange rates between theAustralian dollar, the New Zealand dollar and the United States dollar) as:• In excess of 75% of Pumpkin Patch’s inventory is purchased internationally in United States dollars; and• The majority of Pumpkin Patch’s stock is sold in currencies other than New Zealand dollars with approximately60% of the Company’s sales denominated in Australian dollars.Exchange rate movements affecting these currencies will impact the financial performance and financialposition of Pumpkin Patch to the extent the foreign exchange rate is not hedged.28