Until 2009, we had incurred net losses for each of the previous eight years. Our net losses during 2005 through 2008 were
approximately $11.2 million in 2005, $50.3 million in 2006, $28.1 million in 2007 and $44.2 million in 2008. Although we reported
net income and positive operating cash flow in 2009 and 2010, we may not be able to maintain profitability on a quarterly or annual
basis. If we are unable to do so, our financial condition and the value of our shares may be materially adversely affected.
Some of our products are complex in design and could contain defects that are not detected until deployed by our customers
and could lead to product liability claims, which could materially adversely affect our business and results of operations.
Laser and pulsed light systems are inherently complex in design and require ongoing scheduled maintenance. Despite testing, the
technical complexity of our products, changes in our or our suppliers’ manufacturing processes, the inadvertent use of defective
materials by us or our suppliers and other factors could decrease product reliability.