1238579--3/16/2006--CLEARANT

related topics

{product, liability, claim}

{stock, price, share}

{product, market, service}

{control, financial, internal}

{product, candidate, development}

{regulation, change, law}

{acquisition, growth, future}

{interest, director, officer}

{cost, regulation, environmental}

{personnel, key, retain}

{property, intellectual, protect}

{competitive, industry, competition}

Risks Related to Our Business Our limited operating history may make it difficult to evaluate our business to date and our future viability. We have a history of and expect to continue to generate substantial losses, may not become profitable and will need to expand our licensing of the Clearant Process and sterilization services generate significant revenues. is at an early stage of commercial development and, if we are not able to clinically validate claims of our effectiveness in our target markets and obtain widespread commercial acceptance of the Clearant Process in our target markets, we may not be able to grow or attain profitability. Achieving market acceptance for the Clearant Process will depend on our ability to demonstrate the efficacy of the Clearant Process in our target markets, as well as how the Food and Drug Administration applies the Good Tissue Practice guidelines issued on November 18, 2004 and became effective on May 25, 2005. Our success will depend on our ability to retain our managerial personnel and to attract additional personnel. We need to develop our financial and reporting processes, procedures and controls to support our anticipated growth. has been commercialized only in the tissue market and our future success depends on its ability to successfully commercialize the Clearant Process for use in our other, larger target markets. The success of our business will depend on our ability to develop new uses of the Clearant Process that can be applied cost-effectively on a commercial scale, which may in some cases require potentially costly and time-consuming modification of the Clearant Process The success of our business will depend on our ability to develop and protect our intellectual property rights, which could be expensive, as well as our ability to conduct our business without infringing the intellectual property rights of others. We may be subject to products liability with respect to products which are treated with the Clearant Process under license, processor representative or sterilization service agreements and which cause harm to others or damage to products, including related and costly litigation or other proceedings, and our products liability insurance may not provide adequate coverage and may not be available in the future. We face environmental and other liabilities related to certain hazardous materials used in our operations. If our sterilization technology is not accepted by manufacturers of biological products in our target markets and the health care community at large, our business will suffer and we will not be able to successfully implement our business plan. We face competition from a number of companies, which may have greater resources or better technologies than we do, and rapid changes in technology in the sterilization industry could result in the failure of the Clearant Process to be accepted in the marketplace or to capture market share. Under our new processor representative arrangement, uncertainties regarding future health care reimbursement exist and may affect the amount and timing of revenues. Risks Related To Our Industry Our ability to commercialize our technology in our target markets will depend on the rates charged by operators of commercial gamma irradiation facilities at which the Clearant Process Products which could utilize the Clearant Process are in general subject to extensive regulation by domestic and foreign government agencies, which could result in significant delays in approval, or rejection, of the Clearant Process for use in connection with a particular product or significant additional costs to the manufacturers of such products, which would hinder the widespread adoption of the Clearant Process The success of our business depends on the results of clinical trials performed by third parties incorporating the Clearant Process into their products and no such clinical trials have been completed to date. Because our business model is based significantly on the receipt of royalties or service payments from users of the Clearant Process , our success is ultimately dependent on the ability of our customers to successfully market their products which have been treated by the Clearant Process , which is dependent on events and developments in their businesses which are beyond our control. Potential users of the Clearant Process may depend on third party payers for reimbursement for the use of their products by the end consumer, which may not be willing to reimburse the users at levels sufficient to permit us to generate significant payments. Outside influences on healthcare regulation may negatively impact our revenues or increase our expenses. Because the markets for our technology are dominated by a small number of participants, if we fail to properly market, price or license the Clearant Process to even a small number of the large potential customers in our markets, our business could be substantially harmed. Guidelines and recommendations published by various organizations could reduce the use of products made with the Clearant Process If we acquire any companies or technologies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results. Risks Related to Our Common Stock Our stock price may be subject to substantial volatility, and you may lose all or a substantial part of your investment. The sale of shares by our stockholders may significantly impact the market price of our common stock. We may need additional financing to fund our business. We have never paid cash dividends and do not intend to do so. We may incur increased costs as a result of recently enacted and proposed changes in laws and regulations relating to corporate governance matters. Our corporate compliance program cannot guarantee that we are in compliance with all potentially applicable federal and state regulations. Our common stock may be considered a penny stock and may be difficult to sell when desired. The possible issuance of additional shares may impact the price of our stock. CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING INFORMATION

Full 10-K form ▸

1238579--3/16/2006--CLEARANT_INC