| CARDIODYNAMICS INTERNATIONAL CORP ITEM 1A RISK FACTORS In addition to the other information contained in this Form 10-K, you should consider the following risk factors which could affect our business, financial condition and results of operations |
| We depend upon on our BioZ product line, which is in its early stages of market acceptance |
| Our future is dependent upon the success of the BioZ product line and similar products that are based on the same core technology |
| The market for these products is in a relatively early stage of development and may never fully develop as we expect |
| The long-term commercial success of the BioZ product line requires widespread acceptance of our products as safe, efficient and cost-effective |
| Widespread acceptance would represent a significant change in medical practice patterns |
| In the past, some medical professionals have hesitated to use ICG products because of limitations experienced with older, analog-based monitors |
| Invasive procedures, such as PAC, are generally accepted in the medical community and have a long history of use |
| We have sponsored and intend to continue to sponsor or support clinical trials |
| We cannot be certain that clinical trials will be completed, that they will have a positive outcome or that a positive outcome in these trials will be sufficient to promote widespread acceptance of our products within the medical community |
| Our success depends in part upon the availability of adequate third-party reimbursement |
| Our success will depend in part on the availability of adequate reimbursement for our customers from third-party healthcare payers, such as Medicare, private health insurers and managed care organizations |
| Third-party payers increasingly are challenging the pricing of medical products and services |
| Reimbursement may not be at, or remain at, price levels adequate to allow medical professionals to realize an appropriate return on the purchase of our products |
| In addition, third-party payers may not cover all or a portion of the cost of our products and related services, or they may place significant restrictions on the circumstances in which coverage will be available |
| In January 2004, CMS issued an updated national coverage determination which served to restrict the number of hypertensive patients eligible for Medicare reimbursement for ICG monitoring |
| We must maintain and develop strategic relationships with third parties to increase market penetration of our product lines |
| We distribute our products to targeted international markets through our strategic alliance with GEMS-IT and a network of regional distributors and to the US market through our direct sales force and several regional and national distributors |
| We may enter into similar agreements with other companies and establish technology partnerships with other medical product, distribution and technology companies |
| Successfully managing the interaction of our direct sales force and strategic distribution partners is a complex process |
| Moreover, since each distribution method has distinct risks, gross margins and operation costs, our failure to implement and maintain the most advantageous balance in the delivery model for our products could adversely affect our revenues, gross margins and profitability |
| Widespread acceptance of our BioZ products may be dependent on our establishing and maintaining these strategic relationships with third parties and on the successful distribution efforts of third parties |
| Many aspects of our relationships with third parties, and the success with which third parties promote distribution of our products, are beyond our control |
| We may be unsuccessful in maintaining our existing strategic relationships and in identifying and entering into future development and distribution agreements with third parties |
| We may not be able to make future acquisitions or successfully integrate our acquisitions |
| As part of our growth strategy, we intend to continue to pursue opportunities to acquire or make investments in other technologies, products and businesses that could enhance our technical capabilities, complement our current products or expand the breadth of our markets or customer base |
| 16 ______________________________________________________________________ Potential and completed acquisitions and strategic investments involve numerous risks, including: • problems assimilating the purchased technologies, products or business operations; • unanticipated cost associated with the acquisition, including accounting charges and transaction expenses; • problems implementing and maintaining adequate standards, procedures, controls and policies; • diversion of management’s attention from our core business; • adverse effects on existing business relationships with suppliers and customers; • risks associated with entering markets in which we have no or limited prior experience; and • potential loss of key employees of acquired organizations |
| If we fail to properly evaluate and execute acquisitions and strategic investments, our management team may be distracted from our day-to-day operations, our business may be disrupted, and our operating results may suffer |
| In addition, if we finance acquisitions by incurring debt or issuing equity, our existing shareholders would be diluted or we would have to generate additional profits to cover the interest expense |
| Our future financial results could be adversely impacted by asset impairments or other charges |
| Statement of Financial Accounting Standards Nodtta 142, “Goodwill and Other Intangible Assets” requires that we cease amortization of goodwill and other intangible assets determined to have indefinite lives, and establish a method testing these assets for impairment on an annual or on an interim basis if certain events occur or circumstances change that would reduce the fair value of a reporting unit below its carrying value or if the fair value of intangible assets with indefinite lives falls below their carrying value |
| We evaluate intangible assets determined to have finite lives for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable |
| These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, sales or disposition of a significant portion of the business, or other factors such as a decline in our market value below our book value for an extended period of time |
| In the case of intangible assets with indefinite lives, we evaluate whether events or circumstances continue to support an indefinite useful life |
| We also evaluate the estimated lives of all intangible assets on an annual basis, including those with indefinite lives, to determine if events and circumstances continue to support an indefinite useful life or the remaining useful life, as applicable, or if a revision in the remaining period of amortization is required |
| The amount of any such annual or interim impairment charge could be significant, and could have a material adverse effect on reported financial results for the period in which the charge is taken |
| Utilization of our deferred tax assets may be limited and is dependant on future taxable income |
| We have federal operating loss carryforwards of approximately dlra28cmam400cmam000 for federal income tax purposes |
| The Tax Reform Act of 1986 contains provisions under section 382 of the Internal Revenue Code that limit the federal net operating loss carryforwards that may be used in any given year in the event of specified occurrences, including significant ownership changes |
| If these specified events occur we may lose some or all of the tax benefits of these carryforwards |
| We determined, based on our assessment of both positive and negative evidence and objective and subjective evidence, which takes into consideration our forecasted taxable income, that it is more likely than not that we will benefit from the use of the deferred tax assets, and therefore we reduced our valuation allowance on the existing deferred tax assets related to these NOL’s to zero in the fourth quarter of fiscal 2004 as required by SFAS Nodtta 109 “Accounting for Income Taxes” |
| Upon reducing the valuation allowance and recognizing the 17 ______________________________________________________________________ deferred tax assets, we recognized the tax benefit of deferred tax assets |
| The favorable impact of the tax benefit distorts the trends in our operating results and impacts the comparability of our current period results of operations with other periods |
| At November 30, 2005, in light of recent losses, we determined, based on our assessment of both positive and negative evidence and objective and subjective evidence, which takes into consideration our forecasted taxable income, that it is more likely than not that we will not realize all or a portion of the deferred tax assets, and recorded a valuation allowance for the full amount of the deferred tax assets which resulted in recognition of income tax expense and lower earnings in 2005 |
| In calculating our tax provision and assessing the likelihood that we will be able to use the deferred tax assets we will continue to evaluate our ability to realize these deferred tax assets |
| As we generate taxable income for book purposes, we will realize the benefit of the deferred tax assets to offset the tax expense associated with pre-tax income, resulting in a reduced net tax expense for the period and greater net income than would normally be expected |
| Technological change is difficult to predict and new product transitions are difficult to manage |
| Our product line has required, and any future products will require, substantial development efforts and compliance with governmental clearance or approval requirements |
| We may encounter unforeseen technological or scientific problems that force abandonment or substantial change in the development of a specific product or process |
| In addition, as we introduce new products and product enhancements, we may not be able to effectively segregate or transition from existing products which could negatively impact revenue, gross margin and overall profitability |
| Among the risks associated with the introduction of new products are delays in development or manufacturing, variations in cost, delays in customer purchases in anticipation of new introductions, difficulty in predicting customer demand for the new and existing offerings and effectively managing inventory levels and the risks that new products may have quality or other defects |
| Furthermore, sales of our new products may replace sales, or result in discounting of our current offerings |
| We depend on management and other key personnel |
| We are dependent on a limited number of key management and technical personnel |
| The loss of one or more of our key employees may hurt our business if we are unable to identify other individuals to provide us with similar services |
| We do not maintain “key person” insurance on any of our employees |
| We face intense competition in our recruiting activities and may not be able to attract or retain qualified personnel |
| We have historically used stock options as key components of our total employee compensation program |
| In recent periods, many of our employee stock options have had exercise prices in excess of our stock price, which reduces their value to employees and could affect our ability to retain and attract present and prospective employees |
| In addition, the implementation of FAS 123R will require us to record a charge to earnings for employee stock option grants and other equity incentives which will change our compensation strategy |
| Our ability to retain our existing personnel and attract additional highly qualified personnel will impact our future success |
| We are subject to stock exchange and government regulation |
| The Sarbanes-Oxley Act of 2002 and recent SEC and stock exchange regulations have increased financial reporting and disclosure requirements, corporate governance and internal control requirements, including compliance of our acquired businesses that have significantly increased the administrative costs of documenting and auditing internal processes, gathering data, and reporting information |
| In 2004 and 2005, costs related to compliance with these regulations amounted to approximately dlra500cmam000 and dlra1dtta2 million, respectively |
| In addition, the reporting timeframes have been compressed |
| The need to commit substantial resources and management attention in these areas could impact our ability to deploy those same resources to other areas of our business |
| If we are unable to comply with the requirements, it could significantly impact our market valuation |
| 18 ______________________________________________________________________ We may not have adequate intellectual property protection |
| Our patents and proprietary technology may not be sufficient to protect our intellectual property rights |
| In addition, we have received communications from third parties asserting that our ‘754 patent is invalid |
| For example, during 2005, we became aware of a company that was selling non-FDA cleared ICG sensors for use with our BioZ systems |
| We believe their sensors are in violation of our patent and have filed a patent infringement suit |
| They have in turn countersued to invalidate the patent as well as for tortious interference with contracts, unlawful tying and unlawful restraint of trade |
| We intend to vigorously defend against these claims and protect our intellectual property rights |
| Any claims resulting in intellectual property litigation, whether defensive or offensive would have no certain outcome and would be costly and time-consuming |
| In addition, if our actions to enforce our patents are found to be a violation of laws related to unlawful tying or restraint of trade, we may be required to pay damages to third parties, which could be costly and could harm our business |
| The validity and breadth of claims in medical technology patents involve complex legal and factual questions |
| There can be no assurance that pending patent applications will result in issued patents, that future patent applications will be issued, that patents issued to or licensed by us will not be challenged or circumvented by competitors or that such patents will be found to be valid or sufficiently broad to protect our technology or to provide us with a competitive advantage |
| Our patents may be found to be invalid and other companies may claim rights in or ownership of the patents and other proprietary rights held or licensed by us |
| Also, our existing patents may not cover products that we develop in the future |
| Moreover, when our patents expire, the inventions will enter the public domain |
| We also rely on nondisclosure and noncompetition agreements with employees, consultants and other parties to protect trade secrets and other proprietary technology |
| There can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, that others will not independently develop equivalent proprietary information or that third parties will not otherwise gain access to our trade secrets and proprietary knowledge |
| We face competition from other companies and technologies |
| We compete with other companies that are developing and marketing noninvasive hemodynamic monitors |
| In mid-2004, Analogic released the LifeGard ICG Monitor, which is also available to be sold by Philips |
| We are also subject to competition from companies that support invasive technologies |
| Many of these companies have more established and larger marketing and sales organizations, significantly greater financial and technical resources and a larger installed base of customers than we do |
| The introduction by others of products embodying new technologies and the emergence of new industry standards may render our products obsolete and unmarketable |
| In addition, other technologies or products may be developed that have an entirely different approach or means of accomplishing the intended purposes of our products |
| Accordingly, the life cycles of our products are difficult to estimate |
| To compete successfully, we must develop and introduce new products that keep pace with technological advancements, respond to evolving consumer requirements and achieve market acceptance |
| We may be unable to develop new products that address our competition |
| Our business plan contemplates an income stream from sales of disposable sensors that are compatible with an installed base of our monitors |
| We may be subject to price competition from other sensor manufacturers whose products are also compatible with our monitors |
| In addition, our current and potential competitors may establish cooperative relationships with large medical equipment companies to gain access to greater research and development or marketing resources |
| Competition may result in price reductions, reduced gross margins and loss of market share |
| 19 ______________________________________________________________________ If market conditions cause us to reduce the selling price of our products or sensors, our margins and operating results will decrease |
| The selling price of our products and sensors are subject to market conditions |
| Market conditions that could impact these aspects of our operations include: • Changes in the reimbursement policies of government and third-party payers; • Hospital or physician practice budgetary constraints; • The introduction of competing products; • Price reductions by our competitors; • Development of more effective products by our competitors; and • Lengthening of buying or selling cycles; If such conditions force us to sell our products and systems at lower prices, or if we are unable to effectively develop and market competitive products, our market share, margins and operating results will likely decrease |
| Effective December 1, 2005, we will be required to account for stock options under our employee stock plans as a compensation expense, our net income and earnings per share could be significantly reduced |
| For employee option grants, we calculate compensation expense and disclose the impact on net income (loss) and net income (loss) per share in a footnote to our financial statements |
| Recent accounting pronouncements will require us to record compensation expense for employee stock option grants in our statement of operations |
| Note 1, “Stock-Based Compensation,” to our financial statements, reflects the impact that adoption of FAS 123 would have had on our net income (loss) and net income (loss) per share had we adopted this provision during the past three years |
| We have not yet determined the specific impact of FAS 123R on future periods |
| We have a history of losses and may experience continued losses |
| With the exception of 2002 through 2004, we have experienced losses every year because we have expended more money in the course of researching, developing and enhancing our technology and products and establishing our sales, marketing and administrative organizations than we have generated in revenues |
| We expect that our operating expenses will continue to increase in the foreseeable future as we increase our sales and marketing activities, expand our operations and continue to develop our technology |
| It is possible that we will not be able to achieve the revenue levels required to achieve and sustain profitability |
| We may need additional capital, which may be unavailable |
| The commercialization of our current product line, acquisition of complimentary technologies and the development and commercialization of any additional products may require greater expenditures than expected in our current business plan |
| Our capital requirements will depend on numerous factors, including: • our rate of sales growth—fast growth may actually increase our need for additional capital to hire additional staff, purchase additional inventory, and finance the increase in accounts receivable; • our progress in marketing-related clinical evaluations and product development programs, all of which will require additional capital; • our receipt of, and the time required to obtain, regulatory clearances and approvals—the longer regulatory approval takes, the more working capital we will need to support our regulatory and development efforts in advance of sales; • the level of resources that we devote to the development, manufacture and marketing of our products—any decision we make to improve, expand, acquire complimentary technologies or simply change our process, products or technology will require increased funds; 20 ______________________________________________________________________ • facilities requirements—as we grow we need additional manufacturing, warehousing and administration facilities and the costs of the facilities will be borne before substantially increased revenue from growth would occur; • market acceptance and demand for our products—although growth may increase our capital needs, the lack of growth and continued losses would also increase our need for capital; • customer financing strategies—our attempt to accelerate the purchasing processes by offering internal leasing programs as an alternative to outright purchasing and by providing purchasers with extended payment terms and financing options will consume additional capital; and • large electrode contracts—we intend to bid on several large electrode manufacturing contracts, any one of which, if awarded would require substantial capital investment in equipment at our Vermed division |
| We may be unable to predict accurately the timing and amount of our capital requirements |
| We may be required to raise additional funds through public or private financing, bank loans, collaborative relationships or other arrangements earlier than expected |
| It is possible that banks, venture capitalists and other investors may perceive our capital structure, our history of losses or the need to achieve widespread acceptance of our technology as too great a risk to bear |
| As a result, additional funding may not be available at attractive terms, or at all |
| If we cannot obtain additional capital when needed, we may be forced to agree to unattractive financing terms, to change our method of operation or to curtail our operations |
| We may default on our credit agreements and have to immediately repay all amounts outstanding |
| Our credit agreement contains certain reporting, profitability and liquidity covenants which if not met, could result in an event of default under the credit agreement under which the lenders could elect to declare all amounts outstanding under the credit agreement, together with accrued interest, to be immediately due and payable |
| If we were unable to repay those amounts, the lenders could proceed against the collateral guaranteed to them to secure such indebtedness |
| In addition, the operating and financial restrictions and covenants in our credit agreement, and any future financing agreements may adversely affect our ability to finance future operations and meet our capital needs |
| Our current credit agreement restricts our ability to incur additional indebtedness, create liens, sell assets, make certain investments, pay dividends or make distributions, repurchase equity interests, redeem subordinated indebtedness, enter into certain transactions with affiliates, or enter into mergers or acquisitions |
| We may not be able to manage growth successfully |
| If successful, we will experience a period of growth that could place a significant strain upon our managerial, financial and operational resources |
| Our infrastructure, procedures, controls and information systems may not be adequate to support our operations and to achieve the rapid execution necessary to successfully market our products |
| Our future operating results will also depend on our ability to continually upgrade our information systems, expand our direct sales force and our internal sales, marketing and support staff |
| If we are unable to manage future expansion effectively, our business, results of operations and financial condition will suffer, our senior management will be less effective, and our revenues and product development efforts may decrease |
| Our international sales expose us to unique risks |
| We believe that international sales could represent a meaningful portion of our revenue in the future |
| We rely on regional distributors and GEMS-IT to assist us with our international sales efforts |
| In June of 2004, we purchased 80prca of the outstanding common stock of Medis, which is located in Ilmenau, Germany |
| As such, we are exposed to risks from international sales, which include unexpected changes in regulatory requirements, tariffs and other barriers and restrictions and reduced protection for intellectual property rights |
| Moreover, fluctuations in the rates of exchange may subject us to foreign currency losses related to the Medis deferred acquisition payments or increase the price in local currencies of our products in foreign markets and make our products relatively more expensive than competitive products |
| 21 ______________________________________________________________________ We may not receive approvals by foreign regulators that are necessary for international sales |
| Sales of medical devices outside the United States are subject to foreign regulatory requirements that vary from country to country |
| If we or our international distributors fail to obtain or maintain required pre-market approvals or fail to comply with foreign regulations, foreign regulatory authorities may require us to file revised governmental notifications, cease commercial sales of our products in the applicable countries or otherwise cure the problem |
| Such enforcement action by regulatory authorities may be costly |
| In order to sell our products within the European community, we must comply with the European community’s medical device directive |
| The CE marking on our products attests to this compliance |
| Future regulatory changes may limit our ability to use the CE mark, and any new products we develop may not qualify for the CE mark |
| If we lose this authorization or fail to obtain authorization on future products, we will not be able to sell our products in the European community |
| Our quarterly operating results frequently vary due to factors outside our control |
| We have experienced and expect to continue to experience fluctuations in quarterly operating results due to a number of factors |
| We cannot control many of these factors, which include the following: • the timing and number of new product introductions; • the number of selling days in a given quarter; • the mix of sales of higher and lower margin products in a quarter; • the market acceptance of, and changes in demand for our products; • the impact of any changes in generally accepted accounting principles; • the loss of any of our key distributors; • the impact of acquisitions, divestitures, strategic alliances, and other significant corporate events; • development and promotional expenses relating to the introduction of new products or enhancements of existing products; • product returns or bad debt write-offs; • changes in pricing policies by our competitors; • the timing of regulatory compliance audits; • the impact of weather related disasters such as hurricane Katrina; • the timing of orders from major customers and distributors; • delays in shipment of products or components to us by our vendors; and • The timing of customer orders and shipments |
| Our quarterly sales have reflected a pattern in which a disproportionate percentage of our total quarterly sales occur toward the end of each of our fiscal quarters |
| This uneven sales pattern makes prediction of revenue, earnings and working capital for each financial period difficult, increases the risk of unanticipated variations in quarterly results and financial condition and places pressure on our inventory management, staffing, and logistics systems |
| Accordingly, you should not rely on period-to-period comparisons of our financial results as indications of future results |
| We depend on third parties for development and manufacturing services |
| Our strategy for development and commercialization of some of our products depends upon entering into various arrangements with third parties and upon the subsequent success of these parties in performing their obligations |
| We may not be able to negotiate acceptable arrangements in the future, and our existing arrangements may not be successful |
| We rely on contracted engineering services, particularly from Rivertek |
| Also, we currently 22 ______________________________________________________________________ assemble our products from components manufactured by a limited number of manufacturers |
| Therefore, we are dependent on component and subassembly manufacturers |
| If we experience a termination, modification or disruption of any of our development or manufacturing arrangements, we may be unable to deliver products to our customers on a timely basis, which may lead to customer dissatisfaction and damage to our reputation |
| Our limited order backlog makes it difficult to predict sales and plan manufacturing requirements, which can lead to lower revenues, higher expenses and reduced margins |
| Our customers typically order products on a purchase order basis, and we do not generally have long-term purchase contracts |
| In limited circumstances, customer orders may be cancelled, changed or delayed on short notice |
| Lack of significant order backlog makes it difficult for us to forecast future sales with certainty |
| Varying sales cycles with our customers make it difficult to accurately forecast component and product requirements |
| These factors expose us to a number of risks: • If we overestimate our requirements we may be obligated to purchase more components or third-party products than is required; • If we underestimate our requirements, our third-party manufacturers and suppliers may have an inadequate product or product component inventory, which could interrupt manufacturing of our products and result in delays in shipments and revenues; • We may also experience shortages of product components from time to time, which also could delay the manufacturing of our products; and • Over or under production can lead to higher expense, lower than anticipated revenues, and reduced margins |
| Our common stock is subject to price volatility |
| The market price of our common stock has been and is likely to continue to be highly volatile |
| Our stock price could be subject to wide fluctuations in response to various factors beyond our control, including: • actual or anticipated quarterly variations in operating results; • announcements of technological innovations, new products or pricing by our competitors; • changes in, or failure to meet, financial estimates of securities analysts; • the rate of adoption by physicians of ICG technology in targeted markets; • the timing and extent of technological advancements, patent and regulatory approvals; • the impact of acquisitions, divestitures, strategic alliances, and other significant corporate events; • anything other than unqualified reports by our outside auditors; • results of clinical studies; • changes in reimbursement policies of third-party payers; • the sales of our common stock by affiliates or other shareholders with large holdings; and • general economic and market conditions |
| Our future operating results may fall below the expectations of securities industry analysts or investors |
| Any such shortfall could result in a significant decline in the market price of our common stock |
| In addition, the stock market has at times experienced significant price and volume fluctuations that have affected the market prices of the stock of many medical device companies that often have been unrelated to the operating performance of such companies |
| These broad market fluctuations may directly influence the market price of our common stock |
| 23 ______________________________________________________________________ We may not continue to receive necessary FDA or other regulatory clearances or approvals |
| Our products and activities are subject to extensive, ongoing regulation by the Food and Drug Administration and other governmental authorities |
| Delays in receipt of, or failure to obtain or maintain, regulatory clearances and approvals, or any failure to comply with regulatory requirements, could delay or prevent our ability to market or distribute our product line |
| We are subject to product liability claims and product recalls that may not be covered by insurance |
| The nature of our business exposes us to risks of product liability claims and product recalls |
| Medical devices as complex as ours frequently experience errors or failures, especially when first introduced or when new versions are released |
| Our products are sometimes used in procedures where there is a high risk of serious injury or death |
| These risks will exist even with respect to those products that have received, or may in the future receive, regulatory clearance for commercial sale |
| We did not carry product liability insurance during some periods before May 15, 1995 |
| We currently maintain product liability insurance, however our product liability insurance may not be adequate |
| In the future, insurance coverage may not be available on commercially reasonable terms, or at all |
| In addition, product liability claims or product recalls could damage our reputation even if we have adequate insurance coverage |
| A low stock price could result in our being de-listed from the NASDAQ Market and subject us to regulations that could reduce our ability to raise funds |
| If our stock price were to drop below dlra1dtta00 per share and remain below dlra1dtta00 per share for an extended period of time, or if we fail to maintain other NASDAQ criteria, NASDAQ may de-list our common stock from the Nasdaq National Market |
| In such an event, our shares could only be traded on over-the-counter bulletin board system |
| This method of trading could significantly impair our ability to raise new capital |
| In the event that our common stock was de-listed from the Nasdaq National Market due to low stock price, we may become subject to special rules, called penny stock rules that impose additional sales practice requirements on broker-dealers who sell our common stock |
| The rules require, among other things, the delivery, prior to the transaction, of a disclosure schedule required by the SEC relating to the market for penny stocks |
| The broker-dealer also must disclose the commissions payable both to the broker-dealer and the registered representative and current quotations for the securities, and monthly statements must be sent disclosing recent price information |
| In the event that our common stock becomes characterized as a penny stock, our market liquidity could be severely affected |
| The regulations relating to penny stocks could limit the ability of broker-dealers to sell our common stock and thus the ability of purchasers in this offering to sell their common stock in the secondary market |
| Corporate scandals involving accounting irregularities have resulted in unavailability of or significantly higher premiums for director and officer liability insurance |
| As a result of well-publicized corporate business failures involving improper acts by executives and accounting irregularities, director and officer liability insurance has become more difficult to obtain |
| If we are unable to obtain sufficient director and officer liability insurance at rates that are reasonable or at all or if the possibility of director and officer liability is expanded by regulatory or judicial developments, we may not be able to retain our current officers and directors or attract qualified directors and officers in the future |
| We do not know the effects of healthcare reform proposals |
| The healthcare industry is undergoing fundamental changes resulting from political, economic and regulatory influences |
| In the United States, comprehensive programs have been suggested that would increase 24 ______________________________________________________________________ access to healthcare for the uninsured, control the escalation of healthcare expenditures within the economy and use healthcare reimbursement policies to balance the federal budget |
| We expect that the US Congress and state legislatures will continue to review and assess various healthcare reform proposals, and public debate of these issues will likely continue |
| We cannot predict which, if any, of such reform proposals will be adopted and when they might be effective |
| Other countries also are considering healthcare reform |
| Significant changes in healthcare systems could have a substantial impact on the manner in which we conduct our business and could require us to revise our strategies |
| We do not intend to pay dividends in the foreseeable future |
| We do not intend to pay any cash dividends on our common stock in the foreseeable future |