1411861--3/12/2009--MAKO_Surgical

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Risks Related to Our Business Adverse changes in economic conditions and reduced spending on innovative medical technology may adversely impact our business. Current credit and financial market conditions could delay, or prevent our customers from obtaining financing to purchase a robotic arm system, which would adversely affect our business, financial condition and results of operations. Negative worldwide economic conditions and the long lead times required by certain suppliers could prevent us from accurately forecasting demand for our products, which could adversely affect our operating results. We may not have sufficient funding to complete the development and commercialization of our existing products and the weak worldwide economic conditions may hamper our efforts to raise additional capital to run our business. Our reliance on third-party suppliers, including single source suppliers, for our implants and nearly all components of our robotic arm systems could harm our ability to meet demand for our products in a timely and cost effective manner. We are an early-stage medical device company with a limited operating history and our business may not become profitable. We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for at least the next two or three years. We rely heavily on intellectual property that we license from others, and if we are unable to maintain these licenses or obtain additional licenses that we may need, our ability to compete will be harmed. We are currently required by the FDA to refrain from using certain terms to label and market our products, which could harm our ability to market and commercialize our current or future products. Modifications to our currently FDA cleared products or the introduction of new products may require new regulatory clearances or approvals or require us to recall or cease marketing our current products until clearances or approvals are obtained. We depend on the success of a single line of products for our revenue, which could impair our ability to achieve profitability. If our knee MAKOplasty solution does not gain market acceptance, we will not be able to generate the revenue necessary to develop a sustainable, profitable business. We have only limited clinical data to support the value of knee MAKOplasty, which may make patients, surgeons and hospitals reluctant to purchase our products. We have limited sales and marketing experience and capabilities, which could impair our ability to achieve profitability. Surgeons, hospitals and orthopedic product agents and distributors may have existing relationships with other medical device companies that make it difficult for us to establish new relationships with them, and as a result, we may not be able to sell and market our products effectively. Because the markets for our products are highly competitive, customers may choose to purchase our competitors products, resulting in reduced revenue and harm to our financial results. If we do not timely achieve our development goals for new products, the commercialization of these products will be delayed and our business and financial results may be adversely affected. We have limited experience in assembling and testing our products and may encounter problems or delays in the assembly of our products or fail to meet certain regulatory requirements that could result in a material adverse effect on our business and financial results. Any failure in our efforts to train surgeons or hospital staff could result in lower than expected product sales and potential liabilities. We will likely continue to experience extended and variable sales cycles, which together with the unit price of the RIO system, could cause significant variability in our results of operations for any given quarter. If we receive a significant number of warranty claims or our robotic arm system units require significant amounts of service after sale, our costs will increase and our business and financial results will be adversely affected. We could become subject to product liability claims, product actions, including product recalls, and other field or regulatory actions that could be expensive, divert management s attention and harm our business. If hospitals, surgeons and other healthcare providers are unable to obtain coverage or reimbursement from third-party payors for MAKOplasty procedures, hospitals may not purchase the RIO system and surgeons may not perform knee MAKOplasty, which would harm our business and financial results. We may attempt to acquire new products or technologies, and if we are unable to successfully complete these acquisitions or to integrate acquired businesses, products, technologies or employees, we may fail to realize expected benefits or harm our existing business. We depend on key employees, and if we fail to attract and retain employees with the expertise required for our business, we cannot grow or achieve profitability. If we do not effectively manage our growth, we may be unable to successfully develop, market and sell our products. If we are successful in our efforts to market and sell knee MAKOplasty internationally, we will be subject to various risks relating to our international activities, which could adversely affect our business and financial results. Our operations are currently conducted primarily at a single location in Florida, which may be at risk from hurricanes, storm, fire, terrorist attacks or other disasters. Certain of our directors, executive officers and key employees have an interest in Z-Kat that could pose potential conflicts of interest, which could harm our business. Risks Related to Our Intellectual Property If we, or the third parties from whom we license intellectual property, are unable to secure and maintain patent or other intellectual property protection for the intellectual property contained in our products, our ability to compete will be harmed. If we are unable to prevent unauthorized use or disclosure of our proprietary trade secrets and unpatented know-how, our ability to compete will be harmed. We could become subject to patent and other intellectual property litigation that could be costly, result in the diversion of management s attention, require us to pay damages and force us to discontinue selling our products. We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers. Risks Related to Regulatory Compliance If we fail to comply with the extensive government regulations relating to our business, we may be subject to fines, injunctions and other penalties that could harm our business. Failure to obtain regulatory approval in additional foreign jurisdictions will prevent us from expanding the commercialization of our products abroad. If we or our third-party manufacturers or suppliers fail to comply with the FDA s Quality System Regulation, our manufacturing operations could be interrupted and our product sales and operating results could suffer. Our products may in the future be subject to product actions that could harm our reputation, business operations and financial results. If our products, or malfunction of our products, cause or contribute to a death or a serious injury, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. 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, resulting in damage to our reputation and business. Federal regulatory reforms may adversely affect our ability to sell our products profitably. We may 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. Risks Related to Ownership of our Common Stock We expect that the price of our common stock will fluctuate substantially, which could lead to losses for stockholders, possibly resulting in class action securities litigation. Securities analysts may issue negative reports or cease to cover our common stock, which may have a negative impact on the market price of our common stock. Our principal stockholders, directors and executive officers own a large percentage of our voting stock, which allows them to exercise significant influence over matters subject to stockholder approval. We have not paid dividends in the past and do not expect to pay dividends in the foreseeable future. Sales of a substantial number of shares of our common stock in the public market, or the perception that they may occur, may depress the market price of our common stock. Our recent capital raising transaction, and our need to raise additional capital in the future, could have a negative effect on your investment. We are obligated to develop and maintain proper and effective internal control over financial reporting, and we may not complete our analysis of our internal control over financial reporting in a timely manner or this internal control may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.

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1411861--3/12/2009--MAKO_Surgical_Corp.