1011060--6/27/2007--CARDIOTECH_INTERNATIONAL

related topics

{product, liability, claim}

{customer, product, revenue}

{stock, price, share}

{regulation, government, change}

{condition, economic, financial}

{control, financial, internal}

{property, intellectual, protect}

{acquisition, growth, future}

{product, market, service}

{personnel, key, retain}

{cost, regulation, environmental}

{product, candidate, development}

{operation, international, foreign}

Risks Related to Our Growth Strategy Risks Related to Our Business The medical device industry is cyclical, and an industry downturn could adversely affect our operating results. The failure to complete development of our medical technology, obtain government approvals, including required FDA approvals, or to comply with ongoing governmental regulations could delay or limit introduction of our proposed products, negatively impact our operations and result in failure to achieve revenues or maintain our ongoing business. Our markets are subject to technological change and our success depends on our ability to develop and introduce new products. The number of patients undergoing bypass surgery may continue to decline, resulting in a reduction of our market potential. We have limited manufacturing experience and if our coronary bypass graft is approved, we may not be able to manufacture sufficient quantities at an acceptable cost. We depend on outside suppliers and subcontractors, and our production and reputation could be harmed if they are unable to meet our volume and quality requirements and alternative sources are not available. A portion of our contract manufacturing revenue comes from relatively few large customers, and any decrease in sales to these customers could harm our operating results. Our ability to grow and sustain growth levels may be adversely affected by slowdowns in the U.S. economy. We could be harmed by litigation involving patents and other intellectual property rights. We may not be able to protect our intellectual property rights adequately. Our future success depends on the continued service of management, engineering and sales personnel and our ability to identify, hire and retain additional personnel. Periods of rapid growth and expansion could place a significant strain on our resources, including our employee base. We are exposed to product liability and clinical and pre-clinical liability risks which could place a substantial financial burden on us, if we are sued. Although we have $5 million in product liability insurance coverage, that amount may not be sufficient to cover all potential claims made against us. Additionally, we face the risk of financial exposure to product liability claims alleging that the use of devices that incorporate our products resulted in adverse effects. We may be affected by environmental laws and regulations. If we are unable to complete our assessments as to the adequacy of our internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock. Risks Related to Pricing Pressure Risks Related to Our Dependence on International Sales Risks Related to Our Securities Our stock price is volatile. Additional authorized shares of our common stock and preferred stock available for issuance may adversely affect the market. Risk of Market Withdrawal or Product Recall Risks Associated with Healthcare Reform Proposals

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1011060--6/27/2007--CARDIOTECH_INTERNATIONAL_INC