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addition, our ability to compete successfully is dependent, in part, upon our
response to changes in technology and to our efforts to develop and market new
products which achieve significant market acceptance. Competing companies with
substantially greater resources than us are actively engaged in research and development
of diagnostic and interventional methods, treatments and procedures that could
limit the market for our products and eventually make certain products obsolete.
A reduction in the demand for a significant number of our products, or a few key
products, could have a material adverse effect on our business, operations or
financial condition. The market price of our common stock
has been, and may continue to be, volatile. The
market price of our common stock has been, and may continue to be, highly volatile
for various reasons, including the following, which could have a material adverse
effect on the Company’s business, operations or financial condition: - Our
announcement of new products or technical innovations, or similar announcements
by our competitors;
- Development of new procedures
that use, or do not use, our technology;
- Quarter-to-quarter
variances in our financial results;
- Claims involving
potential infringement of patents and other intellectual property rights;
- Analysts’
and other projections or recommendations regarding our common stock or medical
technology stocks generally;
- Any restatement of
our financial statements or any investigation of us by the SEC or another regulatory
authority; and
- A general decline, or rise, of
stock prices in the capital markets generally.
Fluctuations
in Euro and GBP exchange rates may negatively impact our financial results. Fluctuations
in the rate of exchange between the Euro and GBP relative to value of the U.S.
Dollar could have a negative impact on our margins and financial results. For
example, during 2005, the exchange rate between the Euro and the U.S. Dollar resulted
in an increase in our gross revenues of approximately $263,000 and 0.09% in gross
profit. For the year ended December 31, 2005, approximately
$20.0 million, or 12.0%, of our sales were denominated in Euros and GBP. If the
rate of exchange between the Euro and the GBP declines, against the U.S. Dollar,
we may not be able to increase the prices we charge our European customers for
products whose prices are denominated in Euros and GBP. Furthermore, we may be
unable or elect not to enter into hedging transactions which could mitigate the
effect of declining exchange rates. As a result, as the rate of exchange between
Euros and GBP declines, against the U.S. Dollars, our financial results may be
negatively impacted. We are dependent upon key personnel.
Our success is dependent on key management personnel,
including Fred P. Lampropoulos, our Chairman of the Board, President and Chief
Executive Officer. Mr. Lampropoulos is not subject to any agreement prohibiting
his departure, and the Company does not maintain key man life insurance on his
life. The loss of Mr. Lampropoulos, or of certain other key management personnel,
could materially adversely affect our business and operations. Our success also
depends, among other factors, on the successful recruitment and retention of key
operations, manufacturing, sales and other personnel. We
are subject to work stoppage, transportation and related risks. We
manufacture products at various locations in the United States and in Ireland
and sell our products worldwide. We depend on third-party transportation companies
to deliver supplies necessary to manufacture Merit products from vendors to our
various facilities and to move our products to customers, operating divisions
and other subsidiaries located | |
