922717--6/28/2006--CHINDEX_INTERNATIONAL

related topics

{operation, international, foreign}

{regulation, government, change}

{product, liability, claim}

{personnel, key, retain}

{customer, product, revenue}

{regulation, change, law}

{control, financial, internal}

{provision, law, control}

{product, market, service}

{operation, natural, condition}

{system, service, information}

{stock, price, operating}

We experienced a net loss in each of fiscal 2004, fiscal 2005 and fiscal 2006 and may continue to experience net losses. Consequently, we may not have the ability to finance future operations. If we fail to manage our growth or maintain adequate internal accounting, disclosure and other controls, we would lose the ability to manage our business effectively and/or experience errors or information lapses affecting public reporting. If we lost the services of our key personnel, then our leadership, expertise, experience, business relationships, strategic and operational planning and other important business attributes would be diminished. Our business could be adversely affected by inflation or foreign currency fluctuation. Risks Relating to the Healthcare Services Division If we do not attract and retain qualified physicians, administrators or other hospital personnel, our hospital operations would be adversely affected. Our business is heavily regulated and failure to comply with those regulations could result in penalties, loss of licensure, additional compliance costs or other adverse consequences. Our operations could be adversely affected by the high cost of malpractice insurance. We depend on information systems, which if not implemented and maintained could adversely affect our operations. Our operations face competition that could adversely affect our results of operations. Expansion of healthcare services to reach the Chinese population depends to some extent on the development of an insurance product which is not now available. Our loan from the International Finance Corporation (IFC) places restrictions on the conduct of our healthcare services business. Risks relating to our Medical Products division We depend on our relations with suppliers and would be adversely affected by the termination of arrangements with, or shortage or loss of any significant product line from them. Our sales of medical products depend to some extent on our suppliers continuing to improve their products and introduce new models. If a supplier fails to upgrade its product line as quickly as competitive manufacturers have done this could adversely impact our revenues. Timing of revenues and fluctuations in financial performance vary significantly from quarter to quarter and are not necessarily indicative of our performance over longer periods. We have not been able to arrange financings, from third party banks or governments, for our customers in every year. Future periodic financings arranged on behalf of our customers cannot be assured. The absence of these financings could result in lower sales. We may be subject to product liability claims and product recalls, and in the future we may not be able to obtain insurance against these claims at a reasonable cost or at all. We face competition that may adversely impact us, which impact may be increased as a result of China s inclusion in the World Trade Organization. If we are not able to hire and retain qualified sales representatives and service specialists, then our marketing competitiveness, selling capabilities and related growth efforts will be impaired. We must maintain a significant investment in merchandise and parts inventories, which are costly and, if not properly managed, would result in an inability to provide timely marketing and delivery and could result in financial or operating imbalances and problems with liquidity and capital resources. If we do not maintain good relations with foreign trade corporations, our ability to import products may be adversely affected. Our dependence on sub-distributors and dealers could be detrimental to our financial condition if those sub-distributors or dealers do not sell our products. If the Chinese Government tightens controls on purchases of medical equipment our sales could be adversely affected. Risks Relating to Doing Business in China The economic policies of the Chinese government and economic growth of China could adversely affect us. The Chinese legal system is relatively new and may not provide protections to us or our investors. The conversion of Renminbi into foreign currency is regulated, which regulations could adversely affect us. The SARS outbreak or similar outbreak, such as Avian flu, could further adversely affect our operations. The Chinese Government could change its policies toward, or even nationalize, private enterprise, which could harm our operations. Risks Related to our Corporate Structure Control by insiders and their ownership of shares having disproportionate voting rights could have a depressive effect on the price of common stock, impede a change in control and impede management replacement.

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922717--6/28/2006--CHINDEX_INTERNATIONAL_INC