1002811--9/13/2006--KENSEY_NASH

related topics

{product, liability, claim}

{property, intellectual, protect}

{customer, product, revenue}

{stock, price, operating}

{financial, litigation, operation}

{acquisition, growth, future}

{product, market, service}

{product, candidate, development}

{cost, regulation, environmental}

{personnel, key, retain}

{provision, law, control}

Risks Related to Our Business The TriActiv FX System, the QuickCat catheter and the ThromCat System endovascular products were recently introduced or gained regulatory approval in the United States. If any or all of these three products fail to gain or lose market acceptance, our business will suffer. We may not be able to obtain the necessary regulatory approvals for the TriActiv ProGuard System or any future generations of the endovascular product platform in the United States. We may not be successful commercializing current or future generations of our endovascular product platform through a direct sales force. We derive a substantial majority of our revenues from only three customers. We anticipate that a substantial portion of our revenues will continue to come from the Angio-Seal, which is manufactured, marketed and distributed by St. Jude Medical. If our biomaterials products are not successful, our operating results and business may be substantially impaired. We depend on our customers to market and obtain regulatory approvals for their biomaterials products. The markets for our products are highly competitive and are likely to become more competitive, and our competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements. If our products are not accepted by the medical community or if our products are replaced by new technologies, our business may suffer. The loss of, or interruption of supply from, key vendors could limit our ability to manufacture our products. We may have problems manufacturing and delivering our biomaterials products in the future. Our use of hazardous materials exposes us to the risk of material environmental liabilities. Our customers, and licensees, including St. Jude Medical s and our international sales are subject to a number of risks that could harm future international sales of Angio-Seal and our ability to successfully commercialize new products in international markets. Our success depends on key personnel, the loss of whom could impair our operating results and business. Our failure to expand our management systems and controls to support anticipated growth or integrate future acquisitions could seriously harm our operating results and business. Any acquisitions, including our acquisition of IntraLuminal Therapeutics in May 2006, that we undertake could be difficult to integrate, disrupt our business, dilute stockholder value and harm our operating results. Our future operating results are difficult to predict and may vary significantly from quarter to quarter. Risks Related to Our Intellectual Property If we are unable to protect our patents and proprietary rights, our reputation and competitiveness in the marketplace may be materially damaged. We may be accused of infringing upon the proprietary rights of others and any related litigation could materially damage our operating results and business. We do not own or control the use of the Angio-Seal device trademark. Risks Related to Our Industry We may face product liability claims that could result in costly litigation and significant liabilities. We face uncertainty relating to third party reimbursement for our products. Our products and manufacturing activities are subject to extensive governmental regulation that could make it more expensive and time consuming for us to introduce new and improved products. Risks Related To Our Securities The trading price of our common stock is likely to fluctuate substantially in the future. Future sales of our common stock in the public market by management and other stockholders with significant holdings could cause our stock price to fall. Our second amended and restated certificate of incorporation and Delaware law may discourage an acquisition of our company.

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1002811--9/13/2006--KENSEY_NASH_CORP