1114365--3/30/2006--CURON_MEDICAL

related topics

{product, liability, claim}

{property, intellectual, protect}

{product, market, service}

{customer, product, revenue}

{stock, price, share}

{control, financial, internal}

{regulation, government, change}

{cost, operation, labor}

{provision, law, control}

{acquisition, growth, future}

{product, candidate, development}

We have limited capital resources and we will need to raise additional funds if we want to continue our current level of operations, which we may not be able to do. We are not in compliance with the minimum bid price requirement of the Nasdaq Capital Market. We may consequently be delisted in the near future. This may adversely affect trading in our stock and our ability to raise capital. If we fail to comply with Nasdaq s stockholders equity requirement, our stock will be subject to delisting. We may never achieve or maintain significant revenues or profitability. We have recently undergone a restructuring, which could adversely impact our business. We have outsourced the manufacturing of our disposable products to a single contract manufacturer, and if that manufacturer is unable or unwilling to produce our product requirements in quality and quantity to our satisfaction, our business will be harmed. Our internal controls may not be sufficient to ensure timely and reliable financial information. If health care providers are not adequately reimbursed for the procedures, in which our products are used, or for the products themselves, we may never achieve significant revenues. Reimbursement from third-party health care payers is uncertain due to factors beyond our control and changes in third-party health care payers policies could adversely affect our sales growth. If physicians do not adopt our products, we will not achieve future sales growth. If the effectiveness and safety of our products are not supported by long-term data, our sales could decline and we could be subject to liability. Failure in our physician education efforts could significantly reduce product sales. We face competition from more established GERD treatments and from competitors with greater resources, which will make it difficult for us to achieve significant market penetration. We have limited sales and marketing resources, and failure to manage our sales force or to market and distribute our products effectively will hurt our revenues. Internationally, we rely on third-party distributors to sell our products, and we cannot assure you that these distributors will commit the necessary resources to effectively market and sell our products. We depend on the suppliers who provide the materials and components used in our products, and if we lose our relationship with any individual suppliers, we will face regulatory requirements with regard to replacement suppliers that could delay the manufacture of our products. If we, or our suppliers, fail to comply with the FDA Quality System Regulation, manufacturing operations could be delayed and our business could be harmed. Our failure to obtain or maintain necessary FDA clearances or approvals could hurt our ability to commercially distribute and market our products in the United States. If we market our products for uses that the FDA has not approved, we could be subject to FDA enforcement action. Modifications to our marketed devices may require new 510(k) clearances or PMA approvals or require us to cease marketing or recall the modified devices until such clearances are obtained. We face risks related to our international operations, including the need to obtain necessary foreign regulatory approvals. Product liability suits against us may result in expensive and time-consuming litigation, payment of substantial damages and an increase in our insurance rates. We have limited protection for our intellectual property. If our intellectual property does not sufficiently protect our products, third parties will be able to compete against us more directly and more effectively. Because of our reliance on unique technology to develop and manufacture innovative products, we depend on our ability to operate without infringing or misappropriating the proprietary rights of others. If we lose our rights to intellectual property that we have licensed we may be forced to develop new technology and we may not be able to develop that technology or may experience delays in manufacturing as a result. Our stockholder rights plan, certificate of incorporation, bylaws and Delaware law contain provisions that could discourage a takeover.

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1114365--3/30/2006--CURON_MEDICAL_INC