776008--3/14/2006--STAR_SCIENTIFIC

related topics

{product, liability, claim}

{acquisition, growth, future}

{stock, price, operating}

{regulation, change, law}

{competitive, industry, competition}

{product, candidate, development}

{personnel, key, retain}

{stock, price, share}

{property, intellectual, protect}

{control, financial, internal}

{gas, price, oil}

{financial, litigation, operation}

The Company s business has been operating at a loss for the past three years and continues to use more cash than is being generated from operations; absent improving results of operations, we will need to raise additional capital in early 2007 to meet working capital and MSA escrow obligations Our cigarette business, which has generated a substantial majority of our revenues in the past, continues to experience declines in shipments as well as increased market pressures and we may not be able to reverse this trend Our prospects for success as a technology-oriented tobacco company with a mission to reduce toxins in tobacco leaf and tobacco smoke are dependent, over the long term, on the distribution and consumer acceptance of our very low-TSNA smokeless tobacco products, as well as the continued development of new very low-TSNA smokeless tobacco products, independently and through alliances with tobacco manufacturers and potentially other third parties The combination transaction between RJR and B W may impact negatively upon the Company We have had important relationships with B W We are dependent on the domestic tobacco business Competition from other tobacco companies could adversely affect us Tobacco companies may use low-TSNA tobacco that does not infringe on the technology to which we are the exclusive licensee or may develop technology for low-TSNA tobacco that could make our technology obsolete The tobacco industry is subject to substantial and increasing regulation and taxation We have substantial obligations under state laws adopted under the Master Settlement Agreement We may be assessed additional sales and use taxes by the Commonwealth of Virginia Lawsuits may affect our profitability; we have limited insurance coverage We may not properly manage our growth We may not be successful in protecting our intellectual property rights We depend on key personnel Management and significant stockholders can exercise influence over the Company Our stock price has been and may continue to be volatile and an investment in our common stock could suffer a decline in value Future sales of our common stock would have a dilutive effect on current stockholders Our research development efforts may not result in commercially viable products and may continue to be curtailed by our lack of available research funds If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results, as a result, current and potential stockholders could lose confidence in our financial reporting, which could harm our business and our stock price

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776008--3/14/2006--STAR_SCIENTIFIC_INC