1040666--3/14/2006--VNUS_MEDICAL_TECHNOLOGIES

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Competition from existing and new products and procedures may decrease our market share and cause our revenues to decline. We may experience significant fluctuations in our quarterly results and we project that we will not maintain our recent profitability. If we fail to meet the requirements of the NASDAQ Stock Market, our stock could be delisted. If we fail to achieve and maintain effective disclosure controls and procedures and internal control over financial reporting on a consolidated basis, our ability to provide accurate financial reports could be impaired and our stock price and investor confidence in our company could be materially and adversely affected. Changes in financial accounting standards to share-based payments are expected to have a significant effect on our reported results. Our intellectual property rights may not provide meaningful commercial protection for our products, which could enable third parties to use our technology or methods, or very similar technology or methods, and could reduce our ability to compete. If we do not execute effectively our plan to move our headquarters and manufacturing facility in 2006, we may experience interruptions or delays in our ability to manufacture our products and we may be unable to meet customer demand for our products. To successfully grow our business, we will need to attract additional qualified personnel and retain key personnel. Inadequate levels of reimbursement for our Closure procedure from governmental or other third-party payors could affect the adoption or use of our Closure system and may cause our revenues to decline. Our manufacturing operations are dependent upon third-party suppliers, making us vulnerable to supply problems and price fluctuations, which could harm our business. We depend on our officers and if we are not able to retain them or recruit additional qualified personnel, our business will suffer. We lack published long-term randomized trial data comparing the efficacy of our Closure procedure with vein stripping and EVL. If future data proves to be inconsistent with our clinical results, our revenues may decline. If we are unable to manufacture an adequate supply of our products, we could lose customers and revenues and our growth could be limited. If we become subject to product liability claims and our product liability insurance coverage is inadequate or inapplicable, we may be required to engage in costly litigation or pay significant damages and our business may be harmed. The medical device industry is characterized by patent litigation and we could become subject to litigation that could be costly, result in the diversion of management s attention and require us to pay damages and discontinue selling our products. If we fail to comply with the extensive government regulations relating to our business, we may be subject to fines, injunctions and penalties. If we choose to acquire new and complementary businesses, products or technologies instead of developing them ourselves, we may be unable to complete these acquisitions or to successfully integrate them in a cost-effective and non-disruptive manner. Any failure in our efforts to train physicians could reduce the market acceptance of our products and reduce our revenues. We spend considerable time and money complying with federal, state and foreign regulations and, if we are unable to fully comply with such regulations, we could face substantial penalties. Product sales or introductions may be delayed or canceled as a result of the Food and Drug Administration s regulatory process, which could cause our sales or profitability to decline. Modifications to our products may require new marketing clearances or approvals or require us to cease marketing or recall the modified products until such clearance or approvals are obtained. We sell our products internationally and are subject to various risks relating to such international activities which could harm our international sales and profitability. We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or off-label uses. We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their former employers. Our stock price may be volatile which may cause the value of our stock to decline or subject us to a securities class action litigation. If there are substantial sales of our common stock, our stock price could decline. Our business may be harmed by a natural disaster, terrorist attacks or other unanticipated problems. Our future capital needs are uncertain; we may need to raise additional funds in the future and such funds may not be available on acceptable terms, if at all. Concentration of ownership among our existing directors, executive officers and principal stockholders may prevent new investors from influencing significant corporate decisions. Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could cause our stock price to decline and prevent attempts by our stockholders to replace or remove our current management.

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1040666--3/14/2006--VNUS_MEDICAL_TECHNOLOGIES_INC