949876--1/16/2007--NORTH_AMERICAN_SCIENTIFIC

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We have experienced significant losses and may continue to incur such losses in the future. As a result, the amount of our cash, cash equivalents, and investments in marketable securities has materially declined. If we continue to incur significant losses and are unable to access sufficient working capital from our operations or through external financings, we will be unable to fund future operations and operate as a going concern. Future financing transactions may have a dilutive or other negative effect on our existing shareholders. Success of our recently announced plans to introduce a breast brachytherapy product will be dependent upon a variety of factors. We may encounter insurmountable obstacles or incur substantially greater costs and delays than anticipated in the development process. We have experienced a significant deterioration of revenues in our IMRT/IGRT business. If we are unable to successfully develop and market new generations of IMRT/IGRT products, such as nomosSTAT, we may be unable to retain our existing customers or attract new customers. All of our product lines are subject to intense competition. Our most significant competitors have greater resources than we do. As a result, we cannot be certain that our competitors will not develop superior technologies or otherwise be able to compete against us more effectively. If we fail to maintain our competitive position in key product areas, we may lose significant sources of revenue. We are highly dependent on our direct sales organization, which is small compared to many of our competitors and which has relatively limited marketing and sales experience in our products. We have also experienced a high degree of turnover in our sales organization. Any failure to build , manage and maintain our direct sales organization could negatively affect our revenues. We depend partially on our relationships with distributors and other industry participants to market some of our products, and if these relationships are discontinued or if we are unable to develop new relationships, our revenues could decline. One of our primary markets in our IMRT product line is the market for upgrading linear accelerators that do not have IMRT capabilities to provide them with IMRT capabilities. This market will shrink over time, thereby limiting our potential revenues from the upgrading of linear accelerators. We might not be able to make our IMRT products compatible with some existing linear accelerators and other radiation therapy products. In addition, any future changes in the configuration of the most common linear accelerators could require costly and time-consuming modifications to our products that could harm our business. If alternative technologies prove to be superior to IMRT/IGRT or brachytherapy, physician adoption of our products could substantially decrease. There is currently a lack of long-term data regarding the safety and effectiveness of IMRT products and negative data or the continued lack of adequate supporting data could adversely affect market acceptance of our IMRT products. IMRT treatments expose patients to increased radiation leakage, which could potentially cause long-term deleterious side effects, including induced cancer. Our IMRT/IGRT products are used in connection with the delivery of intense radiation. Defects in, or misuse of, our products, or any detrimental side effects that result from the use of our products, could result in serious injury or death and could require costly recalls or subject us to costly and time-consuming product liability claims. This could harm future sales and require us to pay substantial damages. If we are sued for product-related liabilities, the cost could be prohibitive to us. Currently, our products are predominantly used in the treatment of tumors of the prostate, head, neck and spinal cord. If we do not obtain wider acceptance of our products to treat other types of cancer, our sales could fail to increase and we could fail to achieve our desired growth rate. We may be required to record additional goodwill impairment in the future. We rely on several sole source suppliers and a limited number of other suppliers to provide raw materials and significant components used in our products. A material interruption in supply could prevent or limit our ability to accept and fill orders for our products. If we are unable to attract and retain qualified employees, we may be unable to meet our growth and revenue needs. The medical device industry is characterized by competing intellectual property, and we could be sued for violating the intellectual property rights of others. If we fail to protect our intellectual property rights or if our intellectual property rights do not adequately cover the technologies we employ, or if such rights are declared to be invalid, other companies may take advantage of our technology ideas and more effectively compete directly against us, or we might be forced to discontinue selling certain products. We use radioactive materials which are subject to stringent regulation and which may subject us to liability if accidents occur Healthcare reforms, changes in health-care policies and unfavorable changes to third-party reimbursements for use of our products, could cause declines in the revenues of our products. We are subject to extensive government regulation applicable to the manufacture and distribution of our products. Complying with the Food And Drug Administration and other domestic and foreign regulatory bodies is an expensive and time-consuming process, whose outcome can be difficult to predict. If we fail or are delayed in obtaining regulatory approvals or fail to comply with applicable regulations, we may be unable to market and distribute our products or may be subject to civil or criminal penalties. Doctors and hospitals may not adopt our products and technologies at levels sufficient to sustain our business or to achieve our desired growth rate. Our future growth depends, in part, on our ability to penetrate foreign markets, particularly in Asia and Europe. However, we may encounter difficulties in gaining acceptance of our products in foreign markets, where we have limited experience marketing, servicing and distributing our products, and where we will be subject to additional regulatory burdens and other risks. As part of our business strategy, we intend to pursue transactions that may cause us to experience significant charges to earnings that may adversely affect our stock price and financial condition Operating results for a particular period may fluctuate and are difficult to predict. Being a public company significantly increases our administrative costs. Our publicly-filed SEC reports are reviewed by the SEC from time to time and any significant changes required as a result of any such review may result in material liability to us and have a material adverse impact on the trading price of our common stock. The liquidity of our common stock could be adversely affected if we are delisted from The Nasdaq Global Market. Market volatility and fluctuations in our stock price and trading volume may cause sudden decreases in the value of an investment in our common stock.

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949876--1/16/2007--NORTH_AMERICAN_SCIENTIFIC_INC