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                                                                    Exhibit 99.1

                              CAUTIONARY STATEMENT

     Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other
filings with the Securities and Exchange Commission, as well as other documents
incorporated by reference therein, contain certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements represent the Company's expectations, beliefs,
intentions or strategies concerning future events, including, but not limited
to, any statements regarding its current assumptions about future financial
performance; the continuation of historical trends; the sufficiency of its cash
balances and cash generated from operating activities for future liquidity and
capital resource needs; the expected impact of changes in accounting policies on
the Company's results of operations, financial condition or cash flows;
anticipated problems and its plans for future operations; and the economy in
general or the future of the medical device industry, all of which are subject
to various risks and uncertainties.

     When used in our Form 10-K, Form 10-Qs and in other filings by the Company
with the Securities and Exchange Commission, in our press releases,
presentations to securities analysts or investors, in oral statements made by or
with the approval of an executive officer , the words or phrases "believes,"
"may," "will," "expects," "should," "continue," "anticipates," "intends," "will
likely result," "estimates," "projects" or similar expressions and variations
thereof are intended to identify such forward-looking statements. However, any
statements that are not statements of historical fact should be deemed to be
forward-looking statements.

     We caution that these statements by their nature involve risks and
uncertainties, certain of which are beyond our control, and actual results may
differ materially depending on a variety of important factors, including, but
not limited to such factors as the successful completion of the sale of the
Company's intermittent testing business; the Company's ability to raise an
adequate level of capital to fund its operations; market demand and pressures on
the pricing for its products; changing market conditions, competition and growth
rates within the medical device industry; changes in accounting policies; risks
associated with operations outside of the U.S.; changing economic conditions
such as general economic slowdown, decreased consumer confidence and the impact
of war on the economy; and other risks and uncertainties, including those
described below.

     You should consider carefully the following cautionary statements if you
own our common stock or are planning to buy our common stock. We intend to take
advantage of the "safe harbor" provisions of the PSLRA by providing this
discussion. We are not undertaking to address or update each factor in future
filings or communications regarding our business or results except to the extent
required by law.

The failure to complete the sale of our intermittent testing business may result
in a decrease in the market value of our common stock and may create substantial
doubt as to our ability to grow and implement our current business strategies.

     The sale of our intermittent testing business is subject to a number of
contingencies and other customary closing conditions, including the requirement
that we obtain the approval of the sale by our shareholders, and we cannot
predict whether we will succeed in obtaining this approval. In addition, the
asset purchase agreement may be terminated if the sale is not closed within 120
days of the asset purchase agreement through no fault of the terminating party;
if any governmental entity takes action to enjoin the asset sale; or if we
became insolvent, file for bankruptcy or cease, wholly or substantially, the
operation of our intermittent testing business.

     We cannot guarantee that we will be able to meet the closing conditions set
forth in the asset purchase agreement or the events that would lead to
termination of the asset purchase agreement will not happen. As a result, we
cannot assure you that the sale of our intermittent testing business will be
completed. If our shareholders fail to approve the proposal at the special
meeting or if the sale of our intermittent testing business is not completed for
any other reason, the market price of our common stock may decline. In addition,
failure to complete the sale of our intermittent testing business may
substantially limit our ability to grow and implement our current business
strategies. Finally, we cannot support the cash flow requirements of running
both our intermittent testing business and our continuous monitoring business
and, in the event sufficient additional funding cannot be secured on a timely

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basis, we may not be able to sustain our operations if our intermittent testing
business cannot be sold in the near future.

Our financial success will depend upon our ability to successfully implement our
new business model.

     In accordance with our current restructuring efforts, we are currently
transitioning our business and realigning our strategic focus towards our
continuous monitoring products. Many factors may negatively impact our ability
to implement our strategic focus, including our ability or possible inability to
manage the implementation and development of our continuous monitoring business,
sustain the productivity of our workforce and retain key employees, manage
operating expenses and quickly respond to and recover from unforeseen events
associated with the restructuring. We may be required by market conditions and
other factors to undertake additional restructuring efforts in the future. Our
business, results of operations or financial condition could be materially
adversely affected if we are unable to manage the implementation and development
of our new business strategy, sustain the productivity of our workforce and
retain key employees, manage our operating expenses or quickly respond to and
recover from unforeseen events associated with any future restructuring efforts.

We have received a "going concern" opinion from our independent auditors, have a
history of operating losses, and may not achieve profitability sufficient to
generate a positive return on your investment.

     We have incurred net operating losses since our inception. We have prepared
our consolidated financial statements for the year ended December 31, 2002 and
three months ended March 31, 2003 on a going-concern basis, which contemplates
the realization of assets and satisfaction of liabilities and other commitments
in the normal course of business. The report of our independent auditors
covering the December 31, 2002 consolidated financial statements contains an
explanatory paragraph expressing substantial doubt about our ability to continue
as a going concern as a result of negative working capital, recurring losses and
negative cash flows. Our net loss for the three months ended March 31, 2003 was
$2,890,621 and we incurred net losses of $7,531,016, $3,875,899 and $2,647,617
for the years ended December 31, 2002, 2001 and 2000, respectively. Our
accumulated deficit as of March 31, 2003 was $146,309,107. We expect financial
results for the year ending December 31, 2003 to show an increase in net loss
relative to 2002, due to lower expected revenue, primarily impacted by our
transition to our new distribution and direct sales force channel model,
partially offset by expected net gain from the refinancing of our convertible
notes and reduced operating loss and net gain from the sale of our intermittent
testing business. We expect to incur net operating losses at least through 2004.
We cannot assure you that we will ever generate substantial revenues or achieve
profitability at a level sufficient to generate a positive return on your
investment. If we are unable to raise an adequate level of additional capital or
generate sufficient cash flows from operations, our ability to execute our
business plan and remain a going concern will be significantly impaired.

We may be unable to raise additional funds or generate sufficient cash from
operations to meet our future capital requirements and execute our business
plan.

     Our long-term capital requirements for the development of our continuous
monitoring business will depend upon numerous factors, including the impact of
changes in distribution relationships and methods on revenue, the rate of market
acceptance of our products, the level of resources devoted to expanding our
business and manufacturing capabilities, and the level of research and
development activities. However, as described above, we have a history of
operating losses. Cash and marketable securities decreased by approximately $2.5
million during the three months ended March 31, 2003 to $1.5 million. We are
monitoring our cash position carefully and evaluating our future operating cash
requirements in the context of our strategy, business objectives and expected
business performance. As part of this, we have elected to delay project spending
and capital expenditures, and are implementing other cost-cutting measures
across all areas of our operations, including personnel, facilities and
discretionary spending. A significant amount of available instrument inventory
will allow a reduction of our inventory purchases and production requirements
during 2003. Further, we are positioning our business for future sales and
earnings growth with the pursuit of strategic partners for our business as well
as the expansion of our global distribution channels, including a direct sales
force in the United States, the United Kingdom and Germany, and third-party
distributors outside of these countries. Proceeds from the sale of our
intermittent business will increase our cash reserves, and the sale will reduce
our cash burn rate. This combined with proceeds from the sale of $1,500,000 of
Series E convertible preferred stock on May 12, 2003, are expected to meet our
funding requirements for support of our operations for approximately the next
twelve months. This period could be shortened if the

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holders of our Series E convertible preferred stock elect to exercise their
put option to sell up to 7,500 shares of the outstanding Series E convertible
preferred stock back to us after completion of the asset sale. We will be
required to raise additional capital during that period in order to sustain and
fund our operations over the long term. We may pursue the issuance of additional
equity or debt securities to the extent funding raised from other business
alternatives is not sufficient to meet our funding requirements. While we
believe that we will be able to raise adequate funding to meet our operational
requirements, there can be no assurance that adequate funds will be available
when needed and on acceptable terms.

Our common stock is traded on the Over-the-Counter Bulletin Board, which may
result in reduced liquidity for our common stock.

     On July 1, 2003, we announced that we received a notice from The Nasdaq
Stock Market indicating that the Nasdaq Listing Qualifications Panel determined
to delist our common stock from The Nasdaq SmallCap Market effective with the
open of business on Wednesday, July 2, 2003. Our common stock became immediately
eligible to trade on the OTC Bulletin Board effective with the open of business
on July 2, 2003 under the symbol "DMED". Trading our common stock through the
OTC Bulletin Board may be more difficult because of lower trading volumes,
transaction delays and reduced security analyst and news media coverage of
Diametrics. These factors could contribute to lower prices and larger spreads in
the bid and ask prices for our common stock. Trading of our common stock in an
over-the-counter market may also attract a different type of investor in our
common stock, which may limit further our future equity funding options.

Conversion of our Series E convertible preferred stock to common stock may have
a dilutive effect to our common shareholders and a negative effect on the
trading price of our common stock.

     On May 12, 2003, we completed the sale in a private placement of 15,000
shares of Series E convertible preferred stock, at a price of $100 per share,
resulting in aggregate gross proceeds of $1,500,000. The stock is convertible at
any time into common stock at 88% of the volume weighted average trading price
of the common stock for the five consecutive trading days before the conversion
date, but at an exercise price no greater than $0.75 per share and no less than
$0.35 per share. The closing trading price for our common stock on May 12, 2003
was $1.18. The holders of the Series E convertible preferred stock have agreed
not to short sell our common stock. Nevertheless, conversion of the Series E
convertible preferred stock into common stock at a discount to market may have a
dilutive effect to our common shareholders and result in a decline in the
trading price of our common stock.

Our financial success depends upon acceptance of our continuous monitoring
devices by the medical community.

     Our success depends upon acceptance of our products by the medical
community as reliable, accurate and cost-effective. Our point-of-care continuous
monitoring devices represent an alternative practice in critical or stat blood
testing, which is currently performed primarily by central and stat laboratories
of hospitals, or by point-of-care intermittent blood testing devices. Although
professional awareness of continuous blood gas monitoring is increasing, most
acute care hospitals have already installed expensive blood testing instruments
and may be reluctant to change standard operating procedures or incur additional
capital expenditures for new blood analysis equipment. We are unable to predict
how quickly, if at all, our products will be accepted by the medical community
or, if accepted, predict the volume of our products or the related disposable
sensors we can expect to sell.

We face significant competition in the medical device industry that may have a
negative impact on our product prices and market share.

     The medical technology industry is characterized by rapidly evolving
technology and intense competition. Many of our competitors have substantially
greater capital resources, research and development staff, and facilities than
we do, and many of these companies also have greater experience in research and
development, obtaining regulatory approvals, manufacturing, and sales and
marketing. We cannot assure you that our competitors will not succeed in
developing or marketing technologies and products that are more effective or
less expensive than ours that could render our products obsolete or
noncompetitive. Although we believe that our products may offer certain
technological advantages over our competitors' current products, earlier
entrants in the market in a therapeutic area often obtain and maintain
significant market share. Our product pricing is competitive with alternative
products of

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other suppliers. In the future, we may experience competitive pricing
pressures that may cause a decrease in unit prices and sales levels.

Our financial success will depend upon our ability to manage any growth in our
business with limited resources.

     If we are successful in increasing the revenues of our continuous
monitoring business, we may be required to expand our operations. If we are
required to expand our operations, expansion will likely result in new and
increased responsibilities for our management personnel and place significant
strain on our management, operating and financial systems and other resources.
To accommodate any such growth and compete effectively, we will be required to
implement improved information systems, procedures and controls, and to expand,
train, motivate and manage our work force. Our future success will depend to a
significant extent on the ability of our current and future management personnel
to operate effectively both independently and as a group. We cannot assure you
that our personnel, systems, procedures and controls will be adequate to support
our future operations.

We are transitioning to a new distribution and direct sales force channel model
as a result of the termination of our exclusive distribution agreement with
Philips Medical Systems, which may result in lower sales volume for our products
until our new distribution and direct sales force are fully established.

     We market and distribute our products through both direct and indirect
distribution channels. With the termination effective November 1, 2002 of our
agreement with Philips for exclusive worldwide distribution of our TrendCare
continuous blood gas monitoring systems and intermittent testing blood analysis
systems, we began establishing a direct sales force in the United States, the
United Kingdom and Germany, and entered into new nonexclusive arrangements with
third-party distributors outside of these countries for sale of these products.
As of March 31, 2003, we have expanded our direct sales organization to 11 sales
personnel and clinical application specialists based in the United States, the
United Kingdom and Germany, with future additions dependent upon the rate and
timing of sales growth. Further, we have expanded our global distribution
network with the appointment of 20 third-party distributors primarily addressing
markets in Europe, the Far East and the Middle East. We also continue to sell
disposable cartridges, sensors and related accessories to Philips for Philips'
nonexclusive distribution to its customer base through October 31, 2004. Our
sales to Philips represented approximately 92% of our total sales in 2002, 90%
of our total sales in 2001 and 82% of our total sales in 2000. Due to the
significant purchases of our products by Philips for their internal use in the
sales process and to meet minimum purchase commitments, Philips sales to
end-user customers over the last three years were estimated to be approximately
50% of our product sales to Philips. Sales to Philips were $15.8 million for the
first nine months of 2002 (94% of our total revenue). Since termination of the
exclusive agreement with Philips, sales to Philips were $1.4 million in the
fourth quarter of 2002 (73% of our total revenue) and $1.0 million in the first
quarter of 2003 (48% of our total revenue), and are expected to continue to
decline until the end of the current contract term on October 31, 2004. While we
believe we will be successful in establishing effective distribution channels,
failure to do so under reasonable terms or within a reasonable timeframe could
have a material and adverse effect on our ability to sell and market our
products, and on our financial condition and results of operations. Once
established, any significant failure of our new distributors to perform under
the terms of the respective agreements, the significant failure of our direct
sales force to meet sales objectives, or a significant failure on our part to
adequately support the requirements of these parties, could also have a material
and adverse effect on our operations and financial performance.

We have limited manufacturing experience, and we may not be able to produce
large commercial quantities of our products in a cost-effective manner if demand
increases.

     We must manufacture our products in compliance with regulatory
requirements, in sufficient quantities and on a timely basis, and still maintain
product quality and acceptable manufacturing costs. Our products consist of two
principal components: portable, microprocessor-based instruments and disposable
sensors. We have limited experience producing our products in large commercial
quantities. Although we believe that we will be able to achieve and maintain
product accuracy and reliability when producing in large quantities, on a timely
basis and at an acceptable cost, we cannot assure you that we will be able to do
so. Also, product design changes, equipment failures and manufacturing process
changes may disrupt our existing operations and impact sales.

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We depend on patents and proprietary technology, that we may not be able to
protect in a manner that will provide us any competitive advantage.

     Our success will depend in part on our ability to obtain patent protection
for our products and processes, to preserve our trade secrets and to operate
without infringing the intellectual property rights of others. The patent
positions of medical device companies are uncertain and involve complex and
evolving legal and factual questions. We cannot assure you that any of our
pending or future patent applications will result in issued patents, that any
current or future patents will not be challenged, invalidated or circumvented,
that the scope of any of our patents will exclude competitors or that the patent
rights granted to us will provide us any competitive advantage. In addition, we
cannot assure you that our competitors will not seek to apply for and obtain
patents that will prevent, limit or interfere with our ability to make, use or
sell our products either in the United States or in international markets.
Further, the laws of certain foreign countries may not protect our intellectual
property rights to the same extent as do the laws of the United States.

     In addition to patents, we rely on trade secrets and proprietary knowledge
that we seek to protect, in part, through confidentiality agreements with
employees, consultants and others. We cannot assure you that our proprietary
information or confidentiality agreements will not be breached, that we will
have adequate remedies for any breach, or that our trade secrets will not
otherwise become known to or independently developed by competitors.

We may face intellectual property infringement claims which would be costly to
resolve and may exceed our financial resources to assert or defend our claim.

     There has been substantial litigation regarding patent and other
intellectual property rights in the medical device industry and our competitors
may resort to intellectual property litigation as a means of competition.
Intellectual property litigation is complex and expensive and the outcome is
difficult to predict. We cannot assure you that we will not become subject to
patent infringement claims or litigation. Litigation or regulatory proceedings
may also be necessary to enforce our patents or other intellectual property
rights. We may not always have the financial resources to assert patent
infringement suits or to defend ourselves from claims. An adverse result in any
litigation could subject us to liabilities to, or require us to seek licenses
from or pay royalties to, others that may be substantial. Furthermore, we cannot
assure you that the necessary licenses would be available to us on satisfactory
terms, if at all.

The demand for and price of our products may depend in part on uncertain
government health care policies and reimbursement by third parties, and which
could decline as a result of future health care reform.

     The willingness of hospitals to purchase our products may depend on the
extent to which hospitals limit their own capital expenditures due to existing
or future cost reimbursement regulations. In addition, sales volumes and prices
of our products in certain markets will depend in part on the level of
reimbursement to hospitals for blood analysis from third-party payors, such as
government and private insurance plans, health maintenance organizations and
preferred provider organizations. Third-party payors are increasingly
challenging the pricing of medical procedures they consider unnecessary,
inappropriate or not cost-effective. We cannot assure you that current
reimbursement amounts, if any, will not be decreased in the future, and that any
decrease will not reduce the demand for or the price of our products. Any
federal or state health care reform measures could adversely affect the price of
medical devices in the United States, including our products, or the amount of
reimbursement available. We cannot predict whether any reform measures will be
adopted or what impact they may have on us.

We must obtain regulatory approval in order to sell new products we develop,
which we may not be able to obtain on a timely or cost-effective basis.

     We and our products are regulated by the Food and Drug Administration under
the Food, Drug and Cosmetic Act. We have obtained pre-market notification
clearances under Section 510(k) of the Food, Drug and Cosmetic Act to market at
the point-of-care and in hospital laboratories our IRMA SL System to test blood
gases, electrolytes (i.e., inorganic compounds including sodium, potassium,
chloride and ionized calcium), blood urea nitrogen, glucose, lactate and
hematocrit (i.e., concentration of red blood cells) in whole blood, and to
market the Paratrend 7+ and Neotrend L to monitor blood gases and temperature,
and the Neurotrend system to monitor

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oxygen, carbon dioxide, acidity and temperature in the brain. A Section
510(k) clearance is subject to continual review, and later discovery of
previously unknown problems may result in restrictions on marketing or
withdrawal of the product from the market. Our long-term business strategy
includes development of sensors for performing additional blood and tissue
chemistry tests, and any new tests will be subject to the same regulatory
process. We cannot assure you that we will be able to develop additional
products or uses or that we will obtain the necessary clearances for new
products and uses on a timely basis or at all.

     We also market our products in several foreign markets. Requirements vary
widely from country to country, ranging from simple product registrations to
detailed submissions such as those required by the FDA. Our manufacturing
facilities are also subject to FDA inspection on a periodic basis and we and our
contract manufacturers must demonstrate compliance with current Quality System
Regulations promulgated by the FDA. Violations of the applicable regulations at
our manufacturing facilities or the manufacturing facilities of our contract
manufacturers may prevent us from marketing of our products.

Our products may expose us to costly product liability claims that may exceed
our insurance coverage.

     We may be exposed to product liability claims if a patient is adversely
affected by our products. We maintain a general insurance policy which includes
coverage for product liability claims. The policy is limited to a maximum of
$1,000,000 per product liability claim and an annual aggregate policy limit of
$10,000,000. We cannot assure you that our existing insurance coverage limits
are adequate to cover any liabilities we might incur or that insurance will
continue to be available on commercially reasonable terms, if at all.

We depend on contract manufacturers and suppliers for key components of our
products, which could have an adverse effect on our ability to manufacture our
products if the supply chain is interrupted.

     The majority of the raw materials and purchased components used to
manufacture our products are readily available. Many of these raw materials and
components are purchased from single sources due to technology, price, quality
or other considerations. Some of these single-sourced components are
manufactured to our specifications. Most of these items, however, may be sourced
from other suppliers, often after a requalification process. Sourcing from
alternative suppliers in some cases may require product design or software
changes to accommodate variations from the original components. In the event
that our supply of critical raw materials or components was interrupted due to
the time required to requalify materials or components or modify product
designs, our ability to manufacture the related product in desired quantities
and in a timely manner could be adversely affected, potentially negatively
impacting our financial condition and results of operations.

International operations will expose us to additional risks that could have an
adverse effect on our ability to market our products abroad.

     Our distributors sell our products globally, including international
markets, subject to receipt of required foreign regulatory approvals. We cannot
assure you that our distributors will devote adequate resources to selling our
products internationally. Doing business outside of the United States also
exposes us to various risks that could have a material and adverse effect on our
ability to market our products internationally, including:

     .    changes in overseas economic and political conditions,

     .    currency exchange rate fluctuations,

     .    foreign tax laws, or

     .    tariffs or other trade regulations.

     Our business is also expected to subject us and our representatives, agents
and distributors to laws and regulations of the foreign jurisdictions in which
they operate or our products are sold. We may depend on foreign distributors and
agents for compliance and adherence to foreign laws and regulations. We have no
control over most

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of these risks and may be unable to anticipate changes in international
economic and political conditions, and may be unable to alter our business
practices in time to avoid any adverse effects.

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