| COLUMBIA LABORATORIES INC Item 1A Risk Factors We have a history of losses and we may continue to incur losses |
| We have had a history of losses in each fiscal year since our founding |
| For the fiscal year ended December 31, 2005, we had a net loss of dlra9dtta3 million |
| If we and our partners are unable to successfully market our products, and otherwise increase sales of our products, and contain our operating expenses, we may not have sufficient funds to continue operations unless we are able to raise additional funds from sales of securities or otherwise |
| Additional financing may not be available to us on acceptable terms, if at all |
| Our business is heavily dependent on the continued sale of Crinone^®,^ Replens^®, RepHresh^®, Advantage-S^® and Striant^® by our marketing partners |
| If revenues from these partnered products fail to increase as anticipated, or materially decline, our financial condition and results of operations will be materially harmed |
| Our operating results are heavily dependent on the revenues and royalties derived from the sale of Crinone^® to Serono, the sale of Replens^®, RepHresh^® and Advantage-S^® to Lil’ Drug Store Products, Inc |
| We do not control the amount and timing of marketing resources that our partners devote to our products |
| If Serono fails to effectively market Crinone^®,^ Lil’ Drug Store Products fails to effectively market Replens^®, RepHresh^® and Advantage-S^® , or Ardana fails to effectively market Striant^® in Europe, this could have a material adverse effect on our business, financial condition and results of operations |
| Our Marketing Agreement for Prochieve^® may be terminated under certain circumstances |
| We market Prochieve^® under a June 2002 sublicense from Serono under the worldwide license we granted to Serono for our progesterone gel |
| Under the terms of the license and sublicense, Serono markets Crinone^® in the US to a defined list of fertility specialists |
| We are free to market Prochieve^® to all other physicians in the US, including obstetricians, gynecologists and primary care physicians |
| Serono receives a 30prca royalty on all Prochieve^® sales dispensed to patients of physicians outside its target list of fertility specialists and an additional 40prca royalty on all Prochieve^® sales dispensed to patients of physicians on Serono’s target list of fertility specialists |
| 17 _________________________________________________________________ Serono may terminate our marketing agreement for Prochieve^® by sending us written notice if (i) Prochieve^® is dispensed to patients of physicians on Serono’s target list of fertility specialists in any one calendar quarter at the rate of 10prca or more of the amount of Crinone^® dispensed to those patients, (ii) Serono notifies us in writing of its intent to terminate the marketing agreement and (iii) such rate continues to equal or exceed 10prca during the three month period following such notice or a subsequent three month period |
| If the marketing agreement is terminated and Serono does not market Crinone^® to the physicians we call on, our profitability with respect to Crinone^®/Prochieve^® may be reduced significantly |
| Healthcare insurers and other payors may not pay for our products or may impose limits on reimbursement |
| Our ability to commercialize our prescription products will depend, in part, on the extent to which reimbursement for our products is available from third-party payors, such as health maintenance organizations, health insurers and other public and private payors |
| If we succeed in bringing new prescription products to market, we cannot be assured that third-party payors will pay for such products, or establish and maintain price levels sufficient for realization of an appropriate return on our investment in product development |
| Many health maintenance organizations and other third-party payors use formularies, or lists of drugs for which coverage is provided under a healthcare benefit plan, to control the costs of prescription drugs |
| Each payor that maintains a drug formulary makes its own determination as to whether a new drug will be added to the formulary and whether particular drugs in a therapeutic class will have preferred status over other drugs in the same class |
| This determination often involves an assessment of the clinical appropriateness of the drug and, in some cases, the cost of the drug in comparison to alternative products |
| Our current or our future products may not be added to payors’ formularies, our products may not have preferred status to alternative therapies, and formulary decisions may not be conducted in a timely manner |
| Once reimbursement at an agreed level is approved by a third-party payor, we may lose that reimbursement entirely or we may lose the similar or better reimbursement we receive compared to competitive products |
| As reimbursement is often approved for a period of time, this risk is greater at the end of the time period, if any, for which the reimbursement was approved |
| We may also decide to enter into discount or formulary fee arrangements with payors, which could result in us receiving lower or discounted prices for Prochieve^® and Striant^® or future products |
| We face significant competition from pharmaceutical and consumer product companies, which may adversely impact our market share |
| We and our marketing partners compete against established pharmaceutical and consumer product companies that market products addressing similar needs |
| Further, numerous companies are developing, or may develop, enhanced delivery systems and products that compete with our present and proposed products |
| It is possible that we may not have the resources to withstand these and other competitive forces |
| Some of these competitors may possess greater financial, research and technical resources than our company or our partners |
| Moreover, these companies may possess greater marketing capabilities than our company or our partners, including the resources to implement extensive advertising campaigns |
| The pharmaceutical industry is subject to change as new delivery technologies are developed, new products enter the market, generic versions of available drugs become available, and treatment paradigms evolve to reflect these and other medical research discoveries |
| We face significant competition in all areas of our business |
| The rapid pace of change in the pharmaceutical industry continually creates new opportunities for existing competitors and start-ups, and can quickly render existing products less valuable |
| Customer requirements and physician and patient preferences continually change as new treatment options emerge, are more or less heavily promoted, and become less expensive |
| 18 _________________________________________________________________ Crinone^®/Prochieve^®, a natural progesterone product, competes in markets with other progestins, both synthetic and natural, that may be delivered orally, by injection or by pharmacy compounded vaginal suppository |
| Some of the more successful orally-dosed products include Provera® (medroxyprogesterone acetate) marketed by Pfizer Inc, Prometrium® (oral micronized progesterone) marketed by Solvay SA, Prempro® (conjugated estrogens/medroxyprogesterone acetate tablets), and Premphase® (conjugated estrogens/medroxyprogesterone acetate tablets) marketed by Wyeth |
| Striant^® competes against other testosterone products that can be delivered by injection, transdermal patch and transdermal gel |
| Some of the more successful testosterone products include AndroGel® (testosterone gel) marketed by Unimed Pharmaceuticals, Inc, Testim® (testosterone gel) marketed by Auxilium Pharmaceuticals Inc, and Androderm® (testosterone transdermal system) marketed by Watson Pharma, Inc |
| Competition is based primarily on delivery method |
| Transdermal testosterone gels currently have the largest market share and transdermal testosterone patches have the next largest market share, followed by injectable products |
| Striant^® is priced comparably to the gels and patches |
| In the past, certain studies of female hormone replacement therapy products, such as estrogen, have reported an increase in health risks |
| Progesterone is a natural female hormone, present at normal levels in most women through their lifetimes |
| However, some women require progesterone supplementation due to a natural or chemical-related progesterone deficiency |
| It is possible that data suggesting risks or problems may come to light in the future which could demonstrate a health risk associated with progesterone or progestin supplementation or our 8prca and 4prca progesterone gels |
| It is also possible that future study results for hormone replacement therapy could be negative and could result in negative publicity about the risks and benefits of hormone replacement therapy |
| As a result, physicians and patients may not wish to prescribe or use progestins, including our progesterone gels |
| Similarly, while testosterone is a natural male hormone, present at normal levels in most men through their lifetime, some men require testosterone replacement therapy, or TRT, to normalize their testosterone levels |
| It is possible that data suggesting risks or problems may come to light in the future which could demonstrate a health risk associated with TRT or Striant^® |
| It is also possible that future study results for hormone replacement therapy could be negative and could result in negative publicity about the risks and benefits of hormone replacement therapy |
| In addition investors may become concerned about these issues and decide to sell our common stock |
| These factors could adversely affect our business and the price of our common stock |
| We may be exposed to product liability claims |
| We could be exposed to future product liability claims by consumers |
| Although we presently maintain product liability insurance coverage in the amount of dlra15 million, such insurance may not be sufficient to cover all possible liabilities |
| An award against us in an amount greater than our insurance coverage could have a material adverse effect on our operations |
| Some customers require us to have a minimum level of product liability insurance coverage before they will purchase or accept our products for distribution |
| If we fail to satisfy insurance requirements, our ability to achieve broad distribution of our products could be limited |
| This could have a material adverse effect upon our business and financial condition |
| 19 _________________________________________________________________ Steps taken by us to protect our proprietary rights might not be adequate, in which case competitors may infringe on our rights or develop similar products |
| The United States and foreign patents upon which our original Bioadhesive Delivery System was based have expired |
| Our success and competitive position are partially dependent on our ability to protect our proprietary position for our technology, products and product candidates |
| We rely primarily on a combination of patents, trademarks, copyrights, trade secret laws, third-party confidentiality and nondisclosure agreements, and other methods to protect our proprietary rights |
| The steps we take to protect our proprietary rights, however, may not be adequate |
| Third parties may infringe or misappropriate our patents, copyrights, trademarks, and similar proprietary rights |
| Moreover, we may not be able or willing, for financial, legal or other reasons, to enforce our rights |
| To date, we have never been a party to a proprietary rights action |
| Bio-Mimetics, Inc |
| held the patent upon which our original Bioadhesive Delivery System, or BDS, was based and granted us a license under that patent |
| Bio-Mimetics’ patent contained broad claims covering controlled release products that include a bioadhesive |
| However, this United States patent and its corresponding foreign patents expired in November 2003 |
| Based upon the expiration of the original Bio-Mimetics patent, other parties will be permitted to make, use or sell products covered by the claims of the Bio-Mimetics patent, subject to other patents, including those which we hold |
| We have obtained numerous patents with claims covering improved methods of formulating and delivering therapeutic compounds using the BDS We cannot assure you that any of these patents will enable us to prevent infringement, or that our competitors will not develop alternative methods of delivering compounds, potentially resulting in competitive products outside the protection that may be afforded by our patents |
| Other companies may independently develop or obtain patent or similar rights to equivalent or superior technologies or processes |
| Additionally, although we believe that our patented technology has been independently developed and does not infringe on the proprietary rights of others, we cannot assure you that our products do not and will not infringe on the proprietary rights of others |
| In the event of infringement, we may be required to modify our technology or products, obtain licenses or pay license fees |
| We may not be able to do so in a timely manner or upon acceptable terms and conditions |
| This may have a material adverse effect on our operations |
| The standards that the US Patent and Trademark Office and its foreign counterparts use to grant patents are not always applied predictably or uniformly and can change |
| Limitations on patent protection in some countries outside the US, and the differences in what constitutes patentable subject matter in these countries, may limit the protection we seek outside of the US For example, methods of treating humans are not patentable subject matter in many countries outside of the US In addition, laws of foreign countries may not protect our intellectual property to the same extent as would laws of the US In determining whether or not to seek a patent or to license any patent in a particular foreign country, we weigh the relevant costs and benefits, and consider, among other things, the market potential of our product candidates in the jurisdiction and the scope and enforceability of patent protection afforded by the law of the jurisdiction |
| We own or are seeking registration of the following as trademarks in countries throughout the world: Crinone^®, Prochieve^®, Striant^®, and Striant^® SR These trademarks, however, may not afford us adequate protection or we may not have the financial resources to enforce our rights under these trademarks |
| 20 _________________________________________________________________ We are subject to government regulation, which could affect our ability to sell products |
| Nearly every aspect of the development, manufacture and commercialization of our approved pharmaceutical products is subject to time-consuming and costly regulation by various governmental entities, including the Food and Drug Administration, or FDA, the Drug Enforcement Administration and state agencies, as well as regulatory agencies in those foreign countries in which our products are manufactured or distributed |
| The FDA has the power to seize adulterated or misbranded products and unapproved new drugs, to require their recall from the market, to enjoin further manufacture or sale, and to publicize certain facts concerning a product |
| We employ various quality control measures in our efforts to ensure that our products conform to their intended specifications and meet the standards proscribed by applicable governmental regulations, including FDA’s current Good Manufacturing Practices regulations |
| Notwithstanding our efforts, our products or the ingredients we purchase from our suppliers for inclusion in our products may contain undetected defects or non-conformities with specifications |
| Such defects or non-conformities could compel us to recall the affected product, make changes to or restrict distribution of the product, or take other remedial actions |
| The occurrence of such events may harm our relations with or result in the loss of customers, injure our reputation, impair market acceptance of our products, harm our financial results, and, in certain circumstances, expose us to product liability or other claims |
| The development of our pharmaceutical products, including the development of Prochieve^® 8prca for the prevention of preterm birth, is uncertain and subject to a number of significant risks |
| Some of our pharmaceutical products are in various stages of development |
| In the United States and most foreign countries, we must complete extensive human clinical trials that demonstrate the safety and efficacy of a product in order to apply for regulatory approval to market the product |
| The process of developing product candidates involves a degree of risk and may take several years |
| Product candidates that appear promising in the early phases of development may fail to reach the market for several reasons, including: · Clinical trials may show our product candidates to be ineffective or to have harmful side effects; · Product candidates may fail to receive regulatory approvals required to bring the products to market; · Manufacturing costs or other factors may make our product candidates uneconomical; and · The proprietary rights of others and their competing products and technologies may prevent our product candidates from being effectively commercialized |
| Clinical results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory approvals |
| The length of time necessary to complete clinical trials and to submit an application for marketing approval for a final decision by a regulatory authority varies significantly and may be difficult to predict |
| The speed with which we can complete clinical trials and applications for marketing approval will depend on several factors, including the following: · The rate of patient enrollment, which is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the study, and the nature of the study protocol; · Institutional review board, or IRB, approval of the study protocol and the informed consent form; · Prior regulatory agency review and approval; · Analysis of data obtained from clinical activities, which are susceptible to varying interpretations and which interpretations could delay, limit or prevent regulatory approval; · Changes in the policies of regulatory authorities for drug approval during the period of product development; and 21 _________________________________________________________________ · The availability of skilled and experienced staff to conduct and monitor clinical studies and to prepare the appropriate regulatory applications |
| In addition, developing product candidates is very expensive and will continue to have a significant impact on our ability to generate profits |
| Factors affecting our product development expenses include: · Our ability to raise any additional funds that we need to complete our trials; · The number and outcome of clinical trials conducted by us and/or our collaborators; · The number of products we may have in clinical development; · In-licensing or other partnership activities, including the timing and amount of related development funding, license fees or milestone payments; and · Future levels of our revenue |
| Clinical trials are expensive and can take years to complete, and there is no guarantee that the clinical trials will demonstrate sufficient safety and/or efficacy of the products to meet FDA requirements, or those of foreign regulatory authorities |
| In November 2003, the Company announced a Phase III multi-center, randomized, double-blind, placebo-controlled, clinical trial designed to assess the efficacy, safety and tolerability of Prochieve^® 8prca (progesterone gel) in preventing preterm delivery in pregnant women who are at increased risk for preterm birth |
| The study protocol defines “at risk” patients as pregnant women who have either a history of a spontaneous preterm delivery, or who have a cervical length of 2dtta5 cm or less, as measured by transvaginal ultrasound, with the current pregnancy |
| Patients are randomized to receive either Prochieve^® 8prca or placebo |
| Treatment is initiated between 18 and 22 weeks of gestation and administered daily until delivery, withdrawal from the study, development of preterm rupture of the membranes, or until 37 completed weeks of gestation |
| This study is designed to enroll 636 patients; 414 patients were enrolled at the end of February, 2006 |
| From October 2005 through February 2006, enrollment averaged 35 patients per month, a rate the Company expects to maintain going forward through the addition of new study centers and execution of its study-related marketing efforts |
| From October 2005 through February 2006, the Company added 10 study centers |
| The Company had 53 study centers (42 domestic and 11 foreign) open at the end of February, 2006, and plans to open up to 10 more in March and April 2006 |
| The Company projects that enrollment in the preterm study will be complete by the end of third quarter 2006 |
| The Company expects, if positive results are obtained, to file with the FDA for a label indication in mid-2007 |
| Because there is no approved treatment for preterm birth, and because of the growing incidence, and economic and social impact, of this problem, the Company is hopeful that the FDA will grant an expedited review during 2007 |
| Enrollment of patients may not be completed in a timely manner and the study may not be successful |
| If the study does not demonstrate that Prochieve^® 8prca (progesterone gel) prevents preterm delivery in pregnant women who are at increased risk for preterm birth, our future sales opportunities and profitability would be reduced significantly |
| We may experience adverse events in clinical trials, which could delay or halt our product development |
| Our product candidates may produce serious adverse events |
| These adverse events could interrupt, delay or halt clinical trials of our product candidates and could result in FDA or other regulatory authorities denying approval of our product candidates for any or all targeted indications |
| An IRB or independent data safety monitoring board, the FDA, other regulatory authorities, or we ourselves may suspend or terminate clinical trials at any time |
| Our product candidates may prove not to be safe for human use |
| Delays or failures in obtaining regulatory approvals may delay or prevent marketing of the products that we are developing |
| Other than Prochieve^®, all of our product candidates are in clinical development and have not received regulatory approval from the FDA or any foreign regulatory authority |
| The regulatory approval process typically is extremely expensive, takes many years, and the timing or likelihood of any approval cannot be accurately predicted |
| Delays in obtaining regulatory approval can be extremely costly in terms of lost sales opportunities and increased clinical trial costs |
| If we fail to obtain regulatory approval for our current or future product candidates or expanded indications for currently marketed products, we will be unable to market and sell such products and indications and therefore may never be profitable |
| 22 _________________________________________________________________ As part of the regulatory approval process, we must conduct clinical trials for each product candidate to demonstrate safety and efficacy |
| The number of clinical trials that will be required varies depending on the product candidate, the indication being evaluated, the trial results, and the regulations applicable to any particular product candidate |
| The results of initial clinical trials of our product candidates do not necessarily predict the results of later-stage clinical trials |
| Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through initial clinical trials |
| The data collected from the clinical trials of our product candidates may not be sufficient to support FDA or other regulatory approval |
| In addition, the continuation of a particular study after review by an IRB or independent data safety monitoring board does not necessarily indicate that our product candidate will achieve the clinical endpoint |
| The FDA and other regulatory agencies can delay, limit or deny approval for many reasons, including: · A product candidate may not be deemed to be safe or effective; · The manufacturing processes or facilities we have selected may not meet the applicable requirements; and · Changes in their approval policies or adoption of new regulations may require additional clinical trials or other data |
| Any delay in, or failure to receive, approval for any of our product candidates could prevent us from growing our revenues or achieving profitability |
| We are dependent on a principal supplier, the loss of which could impair our ability to manufacture and sell our products |
| Medical grade, cross-linked polycarbophil, the polymer used in our BDS-based products is currently available from only one supplier, Noveon, Inc, or Noveon |
| We believe that Noveon will supply as much of the material as we require because our products rank among the highest value-added uses of the polymer |
| In the event that Noveon cannot or will not supply enough of the product to satisfy our needs, we will be required to seek alternative sources of polycarbophil |
| An alternative source of polycarbophil may not be available on satisfactory terms or at all, which would impair our ability to manufacture and sell our products |
| We are dependent upon third-party developers and manufacturers, the loss of which could result in a loss of revenues |
| We rely on third parties to develop and manufacture our products |
| These third parties may not be able to satisfy our needs in the future, and we may not be able to find or obtain FDA approval of alternate developers and manufacturers |
| Delays in the development and manufacture of our products could have a material adverse effect on our business |
| This reliance on third parties could have an adverse effect on our profit margins |
| Any interruption in the manufacture of our products would impair our ability to deliver our products to customers on a timely and competitive basis, and could result in the loss of revenues |
| The loss of our key executives could have a significant impact on our company |
| Our success depends in large part upon the abilities and continued service of our executive officers and other key employees, particularly Robert S Mills, our President and Chief Executive Officer |
| We have entered into an employment agreement with Mr |
| Mills, which expires in March 2007 |
| The loss of services of our officers and directors could have a material adverse effect on our business and prospects |
| 23 _________________________________________________________________ We may be limited in our use of our net operating loss carryforwards |
| As of December 31, 2005, we had certain net operating loss carryforwards of approximately dlra128 million that may be used to reduce our future US federal income tax liabilities |
| Our ability to use these loss carryforwards to reduce our future US federal income tax liabilities could be lost if we were to experience more than a 50prca change in ownership within the meaning of Section 382(g) of the Internal Revenue Code |
| If we were to lose the benefits of these loss carryforwards, our future earnings and cash resources would be materially and adversely affected |
| Sales of large amounts of common stock may adversely affect our market price |
| The issuance of preferred stock may adversely affect rights of common stockholders |
| On March 10, 2006, we entered into a Securities Purchase Agreement with certain investors for the private placement of 7cmam428cmam220 shares of our common stock, par value $ |
| 01 per share (the “Shares”), at a price of dlra4dtta04 per share and warrants to purchase 1cmam857cmam041 shares of common stock (the “Warrants”) |
| We expect gross proceeds from the sale of the Shares will be approximately dlra30 million |
| The Warrants are exercisable for our common stock at dlra5dtta39 per share beginning 180 days from the date they are issued, which is expected to occur on or about March 15, 2006, and expiring 5 years thereafter |
| The exercise price and number of shares issuable upon exercise are subject to adjustment in the event of stock split, stock dividend, recapitalization, reclassification, combination or exchange of shares, reorganization, liquidation, dissolution, consolidation, or merger |
| Under the terms of the Securities Purchase Agreement, we have agreed to file, within 30 days, a registration statement with the Securities and Exchange Commission to register for resale the Shares and the shares of common stock issuable upon the exercise of the Warrants, which registration statement is required under the Securities Purchase Agreement to become effective within 120 days following the closing |
| We will be required to pay certain cash penalties if we do not meet our registration obligations under the Securities Purchase Agreement |
| As of March 3, 2006, we had 41cmam754cmam784 shares of common stock outstanding, of which 41cmam354cmam784 shares were freely tradable |
| Approximately 400cmam000 shares of our common stock are restricted securities, but may be sold pursuant to Rule 144 under the Securities Act of 1933, as amended, or another exemption under the Securities Act |
| We also have the following securities outstanding: series B convertible preferred stock, series C convertible preferred stock, series E convertible preferred stock, warrants and options |
| If all of these securities are exercised or converted, an additional 10cmam845cmam895 shares of common stock will be outstanding, all of which will have been registered for resale under the Securities Act |
| When issued, these registered shares will be freely tradable and restricted shares will be saleable under Rule 144 in the future |
| The exercise and conversion of these securities is likely to dilute the book value per share of our common stock |
| In addition, the existence of these securities may adversely affect the terms on which we can obtain additional equity financing |
| In March 2002, our Board of Directors authorized shares of series D junior participating preferred stock in connection with its adoption of a stockholder rights plan, under which we issued rights to purchase series D convertible preferred stock to holders of our common stock |
| Upon certain triggering events, such rights become exercisable to purchase shares of common stock (or, in the discretion of our Board of Directors, series D convertible preferred stock) at a price substantially discounted from the then current market price of our common stock |
| Under our certificate of incorporation, our Board of Directors has the authority to issue up to 1dtta0 million shares of preferred stock and to determine the price, rights, preferences and privileges of those shares without any further vote or action by our stockholders |
| The rights of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any shares of preferred stock that may be issued in the future |
| While we have no present intention to authorize any additional series of preferred stock, such preferred stock, if authorized, may have other rights, including economic rights senior to the common stock, and, as a result, their issuance could have a material adverse effect on the market value of our common stock |
| 24 _________________________________________________________________ Changes in, or interpretations of, accounting principles could result in unfavorable accounting charges |
| We prepare our consolidated financial statements in conformity with US generally accepted accounting principles |
| These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles |
| A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions |
| Our accounting principles that recently have been or may be affected by changes in the accounting principles are as follows: · Revenue recognition; · Accounting for share-based payments; · Accounting for income taxes; and · Accounting for business combinations and related goodwill |
| In particular, the FASB recently issued SFAS 123R which requires the measurement of all share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in our consolidated statements of operations |
| The accounting provisions of SFAS 123R are effective for annual periods beginning after June 15, 2005 |
| We are required to adopt SFAS 123R in the first quarter of fiscal year 2006 |
| We believe that the adoption of SFAS 123R will have a significant adverse effect on our reported financial results and may impact the way in which we conduct our business |
| Please refer to the section entitled "e Recent Accounting Pronouncements "e for further information regarding SFAS 123R We do not intend to pay cash dividends on our common stock |
| As a result, you will not receive any periodic income from an investment in our common stock |
| We have never paid a cash dividend on our common stock and we do not anticipate paying cash dividends in the foreseeable future |
| We intend to retain any earnings for use in the development and expansion of our business |
| In addition, applicable provisions of Delaware law and our debt instruments may affect our ability to declare and pay dividends on our common stock and our preferred stock |
| Accordingly, you should not expect to receive any periodic income from owning our common stock |
| Any economic gain on your investment will be solely from an appreciation, if any, in the price of the stock |
| Anti-takeover provisions could impede or discourage a third-party acquisition of our company |
| This could prevent stockholders from receiving a premium over market price for their stock |
| We are a Delaware corporation |
| Anti-takeover provisions of Delaware law impose various obstacles to the ability of a third party to acquire control of our company, even if a change in control would be beneficial to our existing stockholders |
| In addition, our Board of Directors has adopted a stockholder rights plan and has designated a series of preferred stock that could be used defensively if a takeover is threatened |
| Our incorporation under Delaware law, our stockholder rights plan, and our ability to issue additional series of preferred stock, could impede a merger, takeover or other business combination involving our company or discourage a potential acquiror from making a tender offer for our common stock |
| This could reduce the market value of our common stock if investors view these factors as preventing stockholders from receiving a premium for their shares |
| We are exposed to market risk from foreign currency exchange rates |
| With two operating subsidiaries and third party manufacturers in Europe, economic and political developments in the European Union can have a significant impact on our business |
| All of our products are currently manufactured in Europe |
| We are exposed to currency fluctuations related to payment for the manufacture of our products in Euros and other currencies and selling them in US dollars and other currencies |