EXHIBIT 99.1 - RISK FACTORS
Forward-Looking Statements
From time to time, the Company may make or publish forward-looking
statements relating to such matters as anticipated financial performance,
business prospects, technological developments, new products, and similar
matters. Such statements are necessarily estimates reflecting the Company's best
judgment based on current information. The Private Securities Litigation Reform
Act of 1995 provides a safe harbor for forward-looking statements. Such
statements are usually identified by the use of words or phases such as
"believes," "anticipates," "expects," "estimates," "planned," "outlook," and
"goal." Because forward-looking statements involve risks and uncertainties, the
Company's actual results could differ materially. In order to comply with the
terms of the safe harbor, the Company notes that a variety of factors could
cause the Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements.
While it is impossible to identify all such factors, the risks and
uncertainties that may affect the operations, performance and results of the
Company's business include the following:
1. The Company's revenues are highly dependent on research and
development expenditures and compliance testing expenditures by the
pharmaceutical and biotechnology industries. Decreases in such
expenditures, including those resulting from a general economic
decline in these industries, could have a material adverse effect on
the Company.
2. The Company's new product, Culex(R) Automated Blood Sampling Device is
a significant new product. Non- acceptance or major difficulties with
the device could have a material adverse effect on the Company's
business, operations and financial condition.
3. The Company has benefited from the growing tendency of companies to
engage independent organizations to conduct development and testing
projects. Any reduction in the outsourcing of research, development or
testing activities, or any reduction in public funding of science and
technology could have a material adverse effect on the Company's
business, operations and financial condition.
4. During 2001, two major pharmaceutical companies accounted for
approximately 30% of the Company's total revenues. There can be no
assurance that the Company's business will not continue to be
dependent on continued relationships with certain clients or
distributors or that annual results will not be dependent upon
performance of a few large projects. In addition, there can be no
assurance that significant clients or distributors in any one period
will continue to be significant clients or distributors in other
periods.
5. The Company's business is labor intensive and involves the delivery of
highly specialized professional services. The Company's future growth
and success depends in large part upon its ability to attract,
develop, manage and retain highly skilled professional, scientific and
technical operating staff. There is significant competition from the
Company's competitors as well as from the in-house research
departments of pharmaceutical and biotechnology companies and other
enterprises for employees with the skills required to perform the
services offered by the Company. Although the Company has
confidentiality agreements with its scientific and technical operating
personnel, the Company does not have in place covenants not to compete
that would directly preclude the employees from being employed by a
competitor. There can be no assurance that the Company will be able to
attract, develop, manage and retain a sufficient number of highly
skilled employees in the future or that it will continue to be
successful in training, retaining and managing its current employees.
The loss of a significant number of employees or the Company's
inability to hire sufficient numbers of qualified employees could have
a material adverse effect on the Company's business, operations and
financial condition.
6. The Company relies to a significant extent on a number of key
executives, including Peter T. Kissinger, Ph.D., its President and
Chairman of the Board. The Company maintains key man life insurance on
Dr. Kissinger in the amount of $1.0 million. The loss of the services
of any of the Company's key executives could have a material adverse
effect on the Company's business, operations and financial condition.
7. The Company's business depends in part on government regulation of the
drug development process by the United States and foreign governments.
More stringent governmental regulation of the drug development process
increases the need for services and products provided or produced by
the Company. Recently, legislation has been proposed that would
substantially modify the current requirements for FDA administration
of the drug and device approval process. Under the proposed
legislation, applications for approval of new drugs could be made to
private accredited facilities in lieu of the FDA. As a result, the
number of clinical trials of new drugs would be reduced and other
rules administered by the FDA would be simplified. Any change in the
scope of regulatory requirements or the introduction of simplified
drug or device approval procedures could adversely affect the
Company's business, operations and financial condition.
8. The Company's revenues are dependent, in part, upon continued
compliance with governmental requirements applicable to facilities and
techniques used in the manufacture of products for clinical use and
the provision of services. The Company's facilities are subject to
scheduled periodic regulatory inspections to ensure compliance with
FDA requirements. Failure on the part of the Company to comply with
applicable requirements could result in the termination of ongoing
research, the discontinuance of selected Company operations, the
disqualification of data for submission to regulatory authorities and
fines and penalties being assessed against the Company, any of which
could have a material adverse effect on the Company's business,
operations and financial condition.
9. With respect to its products, the Company primarily competes with
several large equipment manufacturers and, with respect to its
services, the Company primarily competes against in-house research
departments of pharmaceutical and biotechnology companies and other
full-service CROs. Many of the Company's competitors possess
substantially greater capital, technical and other resources than the
Company. The Company's failure to compete effectively in any one or
more of these areas could have a material adverse effect on the
Company's business, operations and financial condition.
10. Generally, the Company's service contracts are terminable by the
client upon notice at any time. Contracts may be terminated for a
variety of reasons, including the client's decision to forego a
particular study, failure of products to satisfy safety requirements
and unexpected or undesired product testing results. The loss of
business from a significant client or the cancellation of a major
contract or series of commitments could have a material adverse effect
on the Company's business, operations and financial condition.
11. The Company's business is dependent, in part, on its ability to obtain
patents in various jurisdictions on its current and future
technologies and products, to defend its patents and protect its trade
secrets and to operate without infringing on the proprietary rights of
others. There can be no assurance that the Company's patents will not
be challenged by third parties or that, if challenged, those patents
will be held valid. In addition, there can be no assurance that any
technologies or products developed by the Company will not be
challenged by third parties owning patent rights and, if challenged,
will be held to not infringe those patent rights. The expense involved
in any patent litigation can be significant. The Company also relies
on unpatented, proprietary technology, and there can be no assurance
that others will not independently develop or obtain similar products
or technologies.
12. The Company's business may become subject to other risk factors which
may be identified from time to time in the Company's periodic SEC
filings and other public announcements.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in the forward-looking statement. The Company does not intend to
update forward-looking statements.
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