1222244--3/26/2009--ProUroCare_Medical

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Important Notices to Investors; Safe Harbor Statement Risk Factors Associated with our Business, Operations and Securities We are a development stage company. We have no operating history and our business plan has not yet been fully tested. We anticipate incurring future losses and may continue incurring losses after our products are completed, regulatory clearance or approval is secured and our products are introduced and accepted in the United States and worldwide markets. We have a history of operating losses and have received a going-concern qualification from our independent registered public accounting firm. We will need additional financing, and any such financing will likely be dilutive to our existing shareholders. Our assets are pledged to secure $1.6 million of senior bank notes and a $600,000 note issued to an investor which become due in March 2010 and, as a result, are not available to secure other senior debt financing. Upon the occurrence of an event of default, our assets will be assigned to guarantors of the senior bank note and the holder of such $600,000 promissory note. If adequate funds are not available on a timely basis, we could potentially be forced to cease operations. The current unprecedented volatility in the worldwide credit and equity markets may have an impact on our ability to obtain future financing. The ProUroScan System has not been, and may never be, fully commercially completed and developed. We are relying upon Artann to submit and obtain 510(k) clearance of the ProUroScan System. There is no guarantee that the FDA will grant timely 510(k) clearance of the ProUroScan System, if at all, and failure to obtain such timely clearance would adversely affect our ability to market that product and expand utilization of the technology in other prostate applications or in other soft tissue organs in the body, which may affect our ability to grow our business. Even if successfully developed, our products may not be commercially viable or may not be accepted by the marketplace. There is no guarantee that the FDA will grant 510(k) clearance or PMA approval of our future products and claims and failure to obtain necessary clearances or approvals for our future products and claims would adversely affect our ability to expand utilization of the technology in other prostate applications or in other soft tissue organs in the body, which may affect our ability to grow our business. We are relying upon Artann to conduct a non-significant risk clinical trial necessary to obtain the initial 510(k) clearance of the ProUroScan System. The results of that clinical trial may not support a basic mapping and data maintenance claim or may result in the discovery of adverse side effects. If Artann does not perform, or if any third parties on which we will rely to conduct our clinical trials in the future do not perform, as contractually required or expected, we may not be able to obtain regulatory clearance or approval for, or commercialize, our products. Clinical trials necessary to support our future products and claims will be expensive and may require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. These trials may require the submission of an IDE, for which there is not guarantee that the FDA will approve. Delays or failures in our clinical trials will prevent us from commercializing any modified or new products and will adversely affect our business, operating results and prospects. We have no manufacturing experience, and will rely on third parties to manufacture the ProUroScan System in an efficient manner. If design specification changes are needed to develop an efficient manufacturing process, those changes may require FDA clearance of a new 510(k) or approval of a PMA, which we may not be able to obtain in a timely manner, if at all. If we or our third-party manufacturers or suppliers fail to comply with ongoing FDA or other foreign regulatory authority requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market. Our products may in the future be subject to product recalls that could harm our reputation, business and financial results. If our marketed products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. We will depend upon others for the manufacturing of our products, which will subject our business to the risk that we will be unable to fully control the supply of our products to the market. We may incur significant liability if it is determined that we are promoting off-label use of our products in violation of federal and state regulations in the United States or elsewhere. Federal regulatory reforms may adversely affect our ability to sell our products profitably. A failure to successfully implement a patient pay sales model prior to establishing third party reimbursement would have a material adverse effect on our product sales and financial results. The financial success of the ProUroScan System and other future medical device products will materially depend on our ability to obtain coverage and reimbursement for them. Our failure to receive the third-party coverage for our products could result in diminished marketability of our products. Even if covered, our failure to receive appropriate reimbursement from third-party payors could slow market uptake of our products. Even if a unique CPT code is obtained for the test, the level of reimbursement established may not provide adequate economic incentive to physicians, which could deter them from using our products and limit our sales growth. If we commercialize the ProUroScan System, we will be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws and regulations and could face substantial penalties if we are unable to fully comply with such laws. Any failure in our efforts or our contractor s efforts to train physicians or other medical staff could result in lower than expected product sales. Rapid technological change in our competitive marketplace may render the ProUroScan System obsolete or may diminish our ability to compete in the marketplace. We may not be able to enter into manufacturing agreements or other collaborative agreements on terms acceptable to us, if at all, which could have a material adverse effect on our business. We expect to rely materially on Artann and other consultants and contractors, some of whom may be partially or wholly paid through issuances of common stock dilutive to our shareholders. We are highly dependent on the services provided by certain key personnel. If we lose our right to license and use from Artann certain critical intellectual property for any reason, our entire business would be in jeopardy. The protections for our key intellectual property may be successfully challenged by third parties. As we lose patent protection on our critical technologies, it may have a material adverse effect on our business. The government has rights to certain of our patents. We may not be able to successfully compete against companies in our industry with greater resources, or with any competition. The Shares and Warrants issued in the 2009 Public Offering constitute an ownership change as defined by the Internal Revenue Code of 1986, as amended (the Code ) and our ability to use operating loss carryforwards to offset income in future years will be limited. Our business and products subject us to the risk of product liability claims. We have never paid dividends and do not expect to pay dividends in the foreseeable future.

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1222244--3/26/2009--ProUroCare_Medical_Inc.