1292470--3/30/2006--NightHawk_Radiology_Holdings

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Risks Related to Our Business and Industry We have a short operating history in an emerging market, which makes it difficult to evaluate our business and prospects. Our growth strategy depends on our ability to recruit and retain qualified radiologists and other skilled personnel. If we are unable to do so, our future growth would be limited and our business and operating results would be harmed. The market in which we participate is competitive and we expect competition to increase in the future, which will make it more difficult for us to sell our services and may result in pricing pressure, reduced revenue and reduced market share. If our arrangements with our affiliated radiologists or our customers are found to violate state laws prohibiting the corporate practice of medicine or fee splitting, our business, financial condition and our ability to operate in those states could be adversely impacted. If our affiliated radiologists are characterized as employees, we would be subject to employment and withholding liabilities and may be subject to prohibitions against the corporate practice of medicine. We have been subject to medical liability claims and may become subject to additional claims, which could cause us to incur significant expenses and may require us to pay significant damages if not covered by insurance. Our customers may terminate their agreements with us, or their agreements with the hospitals that they serve may be terminated, either of which could adversely affect our financial condition and operating results. Enforcement of federal and state laws regarding privacy and security of patient information may adversely affect our business, financial condition or operations. Our business could be adversely affected if additional patient privacy restrictions are imposed through federal or state legislation or regulation. Changes in the regulatory environment may constrain or require us to restructure our operations, which may harm our revenue and operating results. Our growth and our transition to a publicly-traded company could strain our personnel, management and infrastructure resources, which may harm our business. Our operating results may be subject to seasonal fluctuation, which makes our results difficult to predict and could cause our performance to fall short of quarterly expectations. We are exposed to foreign currency exchange risks, which could harm our business and operating results. Interruptions or delays in our information systems or in network or related services provided by third-party suppliers could impair the delivery of our services and harm our business. Hospital privileging requirements or physician licensure laws may limit our market, and the loss of hospital privileges or state medical licenses held by our affiliated radiologists could have a material adverse affect on our business, financial condition and results of operations. Changes in the healthcare industry or litigation reform could reduce the number of diagnostic radiology procedures ordered by physicians, which could result in a decline in the demand for our services, pricing pressure and decreased revenue. We may not have adequate intellectual property rights in our brand, which could limit our ability to enforce such rights. Any failure to protect our intellectual property rights in our workflow technology could impair its value and our competitive advantage. We may in the future become subject to intellectual property rights claims, which could harm our business and operating results. We are dependent on our management team, and the loss of any key member of this team may prevent us from implementing our business plan in a timely manner. 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. We may be unable to successfully expand our services beyond the off-hours emergency radiology market. If we fail to implement and maintain an effective system of internal controls, we may not be able to report our financial results in an accurate or timely manner, prevent fraud or comply with Section 404 of the Sarbanes-Oxley Act of 2002, which may harm our business and affect the trading price of our stock. We may be unable to enforce non-compete agreements with our affiliated radiologists. Enforcement of state and federal anti-kickback laws may adversely affect our business, financial condition or operations. Because our customers submit claims to the Medicare program based on the services we provide, it is possible that a lawsuit could be brought against us or our customers under the federal False Claims Act, and the outcome of any such lawsuit could have a material adverse effect on our business, financial condition and operations. Our business could be materially affected if a U.S. Department of Health Human Services Office of Inspector General, or HHS-OIG, study results in a recommendation that Medicare only pay for interpretations performed contemporaneously in an emergency room setting. The trading price of our common stock may be volatile. Failure to comply with the Nasdaq s requirements regarding the composition of our board of directors and audit committee could result in the delisting of our common stock from the Nasdaq National Market and adversely affect the market for our common stock. If securities analysts do not publish research or reports about our business, or if they downgrade our stock, the price of our stock could decline. Future sales of shares by existing stockholders could cause our stock price to decline. The concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters. Provisions in our certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

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1292470--3/30/2006--NightHawk_Radiology_Holdings_Inc