CAUTIONARY STATEMENTS
Published on April 15, 2005
EXHIBIT 99.01
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 provides public
companies with a "safe harbor" from liability for forward-looking statements if
those statements are accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ materially from
those contained in the forward-looking statements. The Company hereby identifies
the following important factors which could cause the Company's actual results
to differ materially from those contained in any forward-looking statements made
by the Company from time to time in any report, proxy statement, registration
statement or other written communication or in oral forward-looking statements
made from time to time by the Company's officers or agents.
THE COMPANY HAS A DEPENDENCE ON A MAJOR CUSTOMER
The future survivability of the Company depends on adequate royalty income
from Novartis to fund continuing operations. Currently the Company has no other
licensing arrangements in place.
PATENTS AND OTHER PROPRIETARY RIGHTS PROVIDE UNCERTAIN PROTECTION OF OUR
PROPRIETARY INFORMATION AND OUR INABILITY TO PROTECT A PATENT OR OTHER
PROPRIETARY RIGHT MAY ADVERSELY AFFECT OUR BUSINESS
The patent position of companies engaged in the sale of products such as
ours is uncertain and involves complex legal and factual questions. Issued
patents can later be held invalid by the patent office issuing the patent or by
a court. We cannot assure you that our patents will not be challenged,
invalidated or circumvented or that the rights granted there under will provide
us a competitive advantage. In addition, many other organizations are engaged in
research and development of products similar to our therapeutic consumer
products. Such organizations may currently have, or may obtain in the future,
legally blocking proprietary rights, including patent rights, in one or more
products or methods under development or consideration by us. These rights may
prevent us from commercializing new technology, or may require us to obtain a
license from the organizations to use their technology.
We also rely on trade secrets and other unpatented proprietary information
in the manufacturing of our therapeutic consumer products. To the extent we rely
on confidential information to maintain our competitive position, there can be
no assurance that other parties will not independently develop the same or
similar information.
There has been substantial litigation regarding patent and other
intellectual property rights in the consumer products industry. Litigation could
result in substantial costs and a diversion of our effort, but may be necessary
to enforce any patents issued to us, protect our trade secrets or know-how,
defend against claimed infringement of the rights of others, or determine the
scope and validity of the proprietary rights of others. We cannot assure you
that third parties will not pursue litigation that could be costly to us. An
adverse determination in any litigation could subject us to significant
liabilities to third parties, require us to seek licenses from or pay royalties
to third parties or prevent us from manufacturing or selling our products, any
of which could have a material adverse effect on our business.
WE HAVE A HISTORY OF LOSSES
Although we have generated differing levels of revenue and net income or
(losses) over the last several years, the Company was profitable in 2004, but
was unprofitable over the last several years. We may incur losses in the future.
52
IF LICENSEES OF OUR PATENTS DO NOT COMPLY WITH REGULATORY REQUIREMENTS WHEN
MARKETING PRODUCTS WHICH RELY ON OUR PATENTS, OUR ROYALTIES COULD BE NEGATIVELY
AFFECTED
The research, development, manufacture, labeling, distribution, marketing
and advertising of products which are sold by licensees in reliance on our
patents are subject to extensive regulation by governmental regulatory
authorities in the United States and other countries. Failure by such licensees
to comply with regulatory requirements for marketing their products could
subject them to regulatory or judicial enforcement actions, including, but not
limited to, product recalls or seizures, injunctions, civil penalties, criminal
prosecution, refusals to approve new products and suspensions and withdrawals of
existing approvals. This in turn could decrease the revenues generated by such
patent licensees and thereby decrease our royalty income.
IF PRODUCTS RELYING ON OUR PATENTS ARE NO LONGER REGULATED AS
OVER-THE-COUNTER PRODUCTS, OUR ROYALTIES COULD BE NEGATIVELY AFFECTED
Currently, many of the therapeutic consumer products which are sold that
rely on our patents are regulated as over-the-counter products. We cannot assure
you that the FDA will continue to regulate these products as over-the-counter
products. If the FDA changed its approach to regulating such therapeutic
consumer products, the licensees would be faced with significant additional
costs and may be unable to sell some or all of the products. Any such change
could have a negative affect on the licensee's revenues, which in turn could
decrease our royalty income.
WE HAVE LIMITED STAFFING
Our success is dependent upon the efforts of the Board of Directors. The
Company currently has one full time employee whose efforts are focused on the
external reporting requirements of the Company and day to day operations. If key
individuals leave, we could be adversely affected if suitable replacement
personnel or directors are not quickly recruited. The current condition of the
Company may make it difficult to retain and attract, if necessary, qualified
personnel.
THE PRICE OF OUR COMMON STOCK COULD BE HIGHLY VOLATILE DUE TO A NUMBER OF
FACTORS
The trading price of our common stock may fluctuate widely as a result of a
number of factors, including:
- trading of our common stock on the OTC Bulletin Board;
- performance of our therapeutic consumer products in the marketplace;
- regulatory developments in both the United States and foreign countries;
- market perception and customer acceptance of our therapeutic consumer
products;
- increased competition;
- relationships with resellers of our products;
- economic and other external factors;
- timing and frequency of dividend distributions, if any;
- period-to-period fluctuations in financial results.
In addition, the price of our common stock has from time to time experienced
significant price and volume fluctuations that may be unrelated to our operating
performance.
53