In December 2004, the FASB issued Staff Position No. FAS 109-2, Accounting for Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004 (“the Act”). The Act introduced a special one-time dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer, provided certain criteria are met. FAS 109-2 provides accounting and disclosure guidance for the repatriation provision, and was effective immediately upon issuance. The Company adopted the provisions of FAS 109-2 during the fourth quarter of 2005. The adoption of this pronouncement did not have a material effect the Company’s financial statements.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, a replacement of ABP Opinion No. 20 and FASB Statement No. 3. FASB No. 154 requires retrospective application for reporting a change in accounting principles unless such application is impracticable or unless transition requirements specific to a newly adopted accounting principle require otherwise. SFAS No. 154 also requires the reporting of a correction of an error by restating previously issued financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 31, 2005. Management will implement the requirements of SFAS No. 154 after its effective date, as applicable.

Reclassifications—Subsequent to the issuance of the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, the Company determined that certain of its liabilities associated with the acquisition of property, plant and equipment were erroneously reflected as cash inflows from operating activities and cash outflows from investing activities. Management has concluded that the error was not material to the Company’s consolidated financial statements, and accordingly the 2004 presentation has been revised by reducing net cash from operating activities and net cash used for investing activities by approximately $3.6 million. In addition, certain other amounts have been reclassified in the prior year’s financial statements to conform to the current year’s presentation.

On November 17, 2004, the Company acquired all of the assets and assumed certain liabilities of MedSource Packaging Concepts LLC (“MedSource”), a privately-held Virginia corporation, for a purchase price of approximately $1,464,409, consisting of $812,516 cash, 100,000 warrants issued at a fair value of approximately $323,170 and the assumption of liabilities in the amount of approximately $328,723. This acquisition has been accounted for as a purchase in accordance with SFAS No. 141, Business Combinations. The excess of the purchase price over the fair value of tangible and identifiable intangible assets of approximately $805,381 was allocated to goodwill. The 100,000 warrants issued to MedSource were issued at a price of $10.13, with immediate vesting, subject to their registration with the Securities and Exchange Commission. The fair value of these warrants was calculated using the Black-Scholes model based on the assumptions outlined in Footnote 1 of these financial statements. MedSource was a packager of custom procedure trays with sterile and non-sterile medical devices for use in the medical industry. The operating results of the operations acquired from MedSource have been included in the Company’s consolidated statements of operations from the date of acquisition.

On March 11, 2005, the Company acquired substantially all of the assets of Sub-Q (including know-how and certain formulas, but excluding patents), in a purchase transaction for $1,085,785, which included a $1.0 million promissory note advanced to Sub-Q during 2004 which was applied to the purchase price. The purchase price was allocated between fixed assets for $135,815, other intangibles (know-how and formulas) for $450,000, and goodwill for $499,970. The acquisition was accounted for as a purchase in accordance with SFAS No. 141, Business Combinations. The amount allocated to goodwill will be reviewed annually for impairment or more frequently if impairment indicators arise, in accordance with SFAS No. 142. Sub-Q is a Delaware corporation, formed in June of 1998, and located in San Clemente, California. Sub-Q was involved in the development, manufacture and marketing of vascular sealing devices. In addition, Sub-Q was developing proprietary gel foam products that may be used as an embolic and/or to stop bleeding in many areas of health care including, among others, interventional cardiology and radiology, wound care, gynecology, emergency room procedures and surgery. With the purchase of the Sub-Q assets, the Company plans to develop proprietary products to be used in interventional cardiology and radiology and, potentially, for additional medical applications.

On December 30, 2005, the Company acquired all of the issued and outstanding capital stock of MCTec Holding B.V, a Dutch company located in Venlo, The Netherlands from Angiotech Pharmaceuticals, Inc. for approximately $2.4 million in cash, net of cash acquired of $741,046. MCTec Holding B.V. is the sole shareholder of MCTec B.V., a Dutch entity primarily involved in the coating of wires and tubings for medical devices. The purchase price was allocated between tangible and intangible assets and liabilities assumed based on their estimated fair values. Net tangible assets and liabilities assumed totaled $1,556,090 and $370,955, respectively. The Company recorded goodwill for $345,356, Other identifiable assets include a customer list and royalty agreements with fair values of approximately $645,389 and $242,761, respectively, both of which will be amortized over five years.