1037649--3/16/2006--INTERLEUKIN_GENETICS

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We have a history of operating losses and expect these losses to continue in the future. The market for genetic risk assessment tests is unproven. The market for personalized health is unproven. We rely heavily on third parties to perform sales, marketing and distribution functions on our behalf, which could limit our efforts to successfully market products. If we fail to obtain additional capital, or obtain it on unfavorable terms, then we may have to end our research and development programs and other operations. Because a single shareholder has a controlling percentage of our voting power, other stockholders voting power is limited. The Series A Preferred Stock has certain rights which are senior to common shareholder rights and this may reduce the value of the common stock. If we are unsuccessful in establishing additional strategic alliances, our ability to develop and market products and services may be damaged. If we fail to obtain an adequate level of reimbursement for our products or services by third-party payers, then our products and services may not be commercially viable. If we fail to obtain patent protection for our products and preserve our trade secrets, then competitors may develop competing products and services, which will likely decrease our sales and market share. Third parties may own or control patents or patent applications and require us to seek licenses, which could increase our costs or prevent us from developing or marketing our products or services. Technological changes may cause our products and services to become obsolete. We may be prohibited from fully using our net operating loss carryforwards, which could affect our financial performance. We could become subject to intense competition from other companies, which may damage our business. We are subject to government regulation which may significantly increase our costs and delay introduction of future products. We may be subject to product liability claims that are costly to defend and that could limit our ability to use some technologies in the future. Ethical, legal and social issues related to genetic testing may reduce demand for our products. Our dependence on key executives and scientists could adversely impact the development and management of our business. In a circumstance in which Alticor enters a business in competition with our own, our Directors might have a conflict of interest. We do not expect to pay dividends for the foreseeable future and you should not expect to receive any funds without selling your shares of common stock, which you may only be able to do at a loss.

Full 10-K form ▸

1037649--3/16/2006--INTERLEUKIN_GENETICS_INC