944763--3/14/2006--ENCORE_MEDICAL

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We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control. The indenture related to our notes and our senior credit facility imposes significant operating and financial restrictions on us, which may prevent us from capitalizing on business opportunities and taking some corporate actions. If we are not successful in integrating Compex, the anticipated benefits of the transaction may not be realized. Our integration of the acquisition of Empi is ongoing and we may incur substantial costs to achieve, and may not be able to realize, the anticipated cost savings, synergies or revenue enhancements from integrating Empi s operations with our current business and with Compex. Future acquisitions could entail risks of their own, in addition to risks we otherwise face. If adequate levels of reimbursement from third-party payors for our products are not obtained, surgeons and patients may be reluctant to use our products, and our sales may decline. Recent changes in coverage and reimbursement policies for our products by Medicare or reductions in reimbursement rates for our products could adversely affect our business and results of operations. Our international operations expose us to risks related to conducting business in multiple jurisdictions outside the United States. Changes in international regulations regarding coverage and reimbursement for our products could adversely affect our business and results of operations. Product liability claims may harm our business if our insurance proves inadequate or the number of claims increases significantly. We operate in a highly competitive business environment and our inability to compete effectively could adversely affect our business prospects and results of operations. If we are unable to develop or license new and innovative products or product enhancements or find new applications for our existing products, we will not remain competitive. We rely on our own direct distribution network for certain of our products, which may result in higher fixed costs and may slow our ability to reduce costs in the face of a sudden decline in demand for our products. If we fail to establish new sales and distribution relationships or maintain our existing relationships, or if our independent sales agents and third-party distributors fail to commit sufficient time and effort or are otherwise ineffective in selling our products, our results of operations and future growth will be adversely impacted. Our quarterly operating results are subject to substantial fluctuations, and you should not rely on them as an indication of our future results. Our reported results may be adversely affected by increases in reserves for uncollectible accounts receivable, sales allowances, product returns, rental credits and inventory. The success of our surgical implant products depends on our relationships with leading surgeons who assist with the development and testing of our products. The success of all of our products depends heavily on our relationships with healthcare professionals who prescribe and recommend our products, and our failure to maintain these relationships could adversely affect our businesses. Our products are subject to recalls even after receiving FDA or foreign regulatory clearance or approval. Recalls could harm our reputation and business. If we lose one of our key suppliers or one of our contract manufacturers stops making our products, we may be unable to meet customer orders for our products in a timely manner or within our budget. If a natural or man-made disaster strikes our manufacturing facilities, we may be unable to manufacture our products for a substantial amount of time, which could cause our sales to decline. Our business plan relies on certain assumptions concerning demographic and other trends that impact the market for our products, which, if incorrect, may adversely affect our expected results of operations. The loss of the services of our key management and personnel could adversely affect our ability to operate our business. We may be liable for contamination or other harm caused by hazardous materials that we use. Fluctuations in foreign exchange rates may adversely affect our financial position and results of operations. If our patents and other intellectual property rights do not adequately protect our products, we may lose market share to our competitors and be unable to operate our business profitably. Our operating results and financial condition could be adversely affected if we become involved in litigation regarding our patents or other intellectual property rights. We may expand into new markets and products and our expansion may not be successful. Consolidation in the healthcare industry could have an adverse effect on our revenues and results of operations. Our failure to comply with regulatory requirements or receive regulatory clearance or approval for our products or operations in the United States or abroad could adversely affect our business. Our marketing and sales practices may contain certain risks with respect to the manner in which these practices were historically conducted that could have a material adverse effect on us. Audits or denials of our claims by government agencies could reduce our revenues or profits. Healthcare reform, managed care and buying groups have put downward pressure on the prices of our products. If a significant number of shares of our common stock are sold into the market, the market price of our common stock could significantly decline, even if our business is doing well. Our certificate of incorporation, our bylaws and Delaware law contain provisions that could discourage, delay or prevent a takeover attempt. Our stock price may be volatile and your continued investment in our common stock could suffer a decline in value. Our executive officers, directors and significant stockholders may be able to influence matters requiring stockholder approval. We do not expect to pay dividends for the foreseeable future.

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944763--3/14/2006--ENCORE_MEDICAL_CORP