1017813--5/9/2008--CAREGUIDE

related topics

{regulation, government, change}

{stock, price, share}

{stock, price, operating}

{customer, product, revenue}

{acquisition, growth, future}

{property, intellectual, protect}

{personnel, key, retain}

{cost, contract, operation}

{tax, income, asset}

{product, market, service}

{system, service, information}

{product, liability, claim}

{cost, operation, labor}

{operation, natural, condition}

{debt, indebtedness, cash}

Risks Related to Our Business We have a history of losses, and we must successfully execute on our modified business model and restructuring plan if we are to sustain our operations. We might fail to operate successfully under our modified business model. We might not be able to execute under our business strategy if we lose key management or technical personnel, on whose knowledge, leadership and technical expertise we rely. The contracts with our largest customer were terminated effective January 31, 2007. Our current liabilities exceed our current assets. We may be unable to repay our line of credit upon its maturity. We may be obligated to pay additional amounts in connection with our acquisition of Haelan Corporation. Our operating results have fluctuated in the past and could fluctuate in the future. If we do not manage our growth successfully, our growth may slow, decline or stop, and we may never become profitable. Our current product and service offerings may not be accepted in the marketplace. Our agreements with our customers may be terminated by our customers on relatively short notice. The success of our programs is highly dependent on the accuracy of information provided by members. Our business is dependent on data processing and transmission capabilities. Any inability to adequately protect our intellectual property could harm our competitive position. If our actual financial results vary from any publicly disclosed forecasts, our stock price could decline materially. We depend on payments from our customers, and pressures on these entities to reduce costs may adversely affect our business and results of operations. Our inability to perform well under our contracts could have a material adverse effect on our business and results of operations. The profitability of certain of our contracts is dependent upon the type and number of cases that we process. Our revenues may be subject to seasonal pressure from the disenrollment processes of its contracted health plans. Risks Related to the Healthcare Industry We are subject to extensive changes in the healthcare industry. Our business is subject to extensive government regulation. Compliance with new federal and state legislative and regulatory initiatives could adversely affect our results of operations or may require us to spend substantial amounts acquiring and implementing new information systems or modifying existing systems. Government regulators may interpret current regulations governing our operations in a manner that negatively impacts our ability to provide services. We face competition for staffing, which may increase our labor costs and reduce profitability. We may face costly litigation that could force us to pay damages and harm our reputation. We could share in potential liability resulting from adverse medical consequences of patients. Risks Related to our Common Stock The market price of our common stock may be highly volatile. Stockholders affiliated with our directors own a significant percentage of our outstanding common stock, and shares of preferred stock convertible into common stock, and will be able to exercise significant influence over our operations. As a result of our acquisition of Haelan, we may be obligated to issue additional shares of our common stock, which could dilute the ownership of existing stockholders. A large number of shares of our common stock may be sold in the market, which could depress the market price. Our common stock qualifies as a penny stock under SEC rules which may make it more difficult for stockholders to resell their shares of common stock. The majority of our assets is comprised of goodwill acquired in acquisitions, which goodwill could become further impaired.

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1017813--5/9/2008--CAREGUIDE_INC