EXHIBIT
99.1  CAUTIONARY STATEMENT  Forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995 (the PSLRA) are included in our Form 10-K.  The words or phrases believes, may, will, expects,
should, continue, anticipates, intends, will likely result,
estimates, projects or similar expressions identify forward-looking
statements in our Form 10-K and in our future filings with the Securities and
Exchange Commission, in our press releases, in our presentations to securities
analysts or investors, and in oral statements made by or approved by an
executive officer of Endocardial Solutions, Inc.  Forward-looking statements involve risks and uncertainties that
may materially and adversely affect our business, results of operation,
financial condition or prospects, and may cause our actual results to differ
materially from historical results or the results discussed in the
forward-looking statements.  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.  We
have a history of operating losses and expect future losses.  We have generated
increasing revenue, but have sustained significant operating losses each year
since our inception.  The fourth quarter
of 2003 was the first profitable quarter in the history of the Company.  We may never generate substantial operating
revenues or achieve profitability on an ongoing basis.  Our ability to continue to generate revenues
from operations and make a profit depends upon the successful development,
regulatory approval, manufacturing and commercialization of the EnSite System
and our successful transition from a research and development company to a
manufacturing, marketing and sales company.  Our
success depends on the commercialization and market acceptance of the EnSite
System.  The EnSite clinical
workstation, the EnSite Array catheter, EnSite NavX surface electrodes, and
EnSite DIF are currently our only products, and our success depends entirely on
the successful commercialization and market acceptance of the EnSite
System.  Problems in the following areas
could materially impact the commercialization of the EnSite System:  research
and development, clinical
testing, regulatory
submissions and approval, product
manufacturing and continued commercial growth, marketing,
or product
distribution.  We began to generate
revenue from the EnSite clinical workstation and the EnSite Array catheter in
the second quarter of 1998.  We began to
generate revenue from EnSite NavX and EnSite DIF in 2003.  We cannot assure you that we will continue
to derive revenues from the sale of the EnSite System sufficient to generate a
return on investment for our stockholders.  Our
products are subject to regulatory approval before they may be marketed in the
U.S. and abroad, and we may not obtain regulatory approval for use of the
EnSite Array for all chambers of the heart.  The manufacture and sale
of medical devices, including the EnSite System, is subject to extensive
regulation in the United States, principally by the U.S. Food and Drug
Administration and corresponding state agencies, and in other countries.  In the United States, human diagnostic
devices are regulated under the federal Food, Drug and Cosmetic Act, and are
subject to clinical testing mandated by the FDA before they will give clearance
for marketing.  The Food, Drug and
Cosmetic Act provides two basic review procedures, including a shortened
submission procedure under Section 510(k) whereby the manufacturer
notifies the FDA of its intent to market the product and attempts to establish
that the product to be marketed is substantially equivalent to another
FDA-cleared product.  If a device fails
to qualify for the 510(k) procedure, the manufacturer must file a pre-market
approval application, which typically involves more clinical testing and a
significantly longer FDA review process. 
During the third and fourth quarters of 1998, we submitted to the FDA
two pre-market notification applications under Section 510(k) containing
the results of our left ventricular and right atrium multi-center clinical
trials.  The FDA cleared the marketing
of the EnSite Array for use in the right atrium of the heart in
April 1999.  Following discussions
with the FDA, in March 1999, we announced that our FDA application for
left ventricular use of the EnSite Array would be submitted as a pre-market
approval application because the FDA did not find, based on  
   initial clinical data,
substantial equivalence with other devices used in the ventricles of the
heart.  We have submitted portions of
our pre-market approval application that have been approved by the FDA.  However, we may not be able to file a
complete pre-market approval application with the FDA until we complete more
clinical trials, and we have not yet undertaken another clinical study for use
of the EnSite Array in the left ventricle. 
We are still in discussions with the FDA regarding the extent of
additional clinical trials that may be required and the best approach to obtain
market approval for use of the EnSite Array in the left ventricle.  In the meantime, we received FDA approval in
January 2001 to conduct a left atrium multi-center clinical trial for the
EnSite Array that we began in the second quarter of 2001.  We received clearance from the FDA under
Section 510(k) in April of 2003 to market the use of EnSite NavX in
all chambers of the heart, and have received similar regulatory approvals to
market EnSite NavX in Europe, as well as all other geographies in which the
EnSite Array is currently sold and distributed.  We discontinued the left atrium multi-center clinical trial for
the EnSite Array in the fourth quarter of 2004 due to the fact that clinical
practice with the EnSite System had shifted to use of EnSite NavX for
electrophysiology procedures in the left atrium, and EnSite NavX has been
cleared for use in all chambers of the heart.  Sales of medical devices
outside the United States are subject to international regulatory requirements
that vary from country to country, and approval for sale internationally may
take more or less time than that required for FDA approval.  Prior to clearance for marketing in Europe,
the EnSite System was required to meet regulatory standards outlined in several
directives administered by the European Union. 
In order to affix a CE Mark to the EnSite System, allowing it to be
marketed in Europe, we followed the conformity assessment procedures applicable
to our product classification and submitted a declaration of conformity.  We have obtained CE Mark certification for
the EnSite Array for use in the right atrium and left ventricle of the heart,
allowing us to sell the EnSite Array in member countries of the European
Union.  We also obtained CE Mark
certification for EnSite NavX for use in all chambers of the heart.  We may encounter significant costs and
requests for additional information in our continuing efforts to obtain
regulatory approvals for other clinical applications of the EnSite Array in
Europe, and in other countries, which could substantially delay or preclude us
from marketing our products for those clinical applications
internationally.  We have obtained
regulatory approval to market and sell EnSite NavX in all other international
geographies in which we have approval to market and sell the EnSite Array.  Marketing approvals, if
granted for some but not all chambers of the heart, require us to limit the
indicated use of our EnSite Array.  FDA
enforcement policy strictly prohibits the marketing of approved medical devices
for unapproved uses.  Product approvals
could be withdrawn for failure to comply with regulatory standards or the
occurrence of unforeseen problems following the initial marketing.  We will be required to follow FDA
regulations regarding Good Manufacturing Practices and similar regulations in
other countries, which include testing, control, and documentation
requirements.  Ongoing compliance with
Good Manufacturing Practices and other applicable regulatory requirements will
be monitored through periodic inspections by federal and state agencies,
including the FDA, and by comparable agencies in other countries.  If we fail to comply with applicable
regulatory requirements, we could be subjected to warning letters, fines,
injunctions, civil penalties, recall or seizure of products, total or partial
suspension of production, refusal of the government to grant pre-market
approval, withdrawal of approvals and criminal prosecution.  We cannot assure you that
we will be able to obtain the necessary regulatory approvals on a timely basis
or at all for future applications of the EnSite System.  Delays in receipt of or failure to receive
the approvals, the loss of previously obtained approvals, or failure to comply
with existing or future regulatory requirements could materially limit our
ability to market the EnSite System and generate substantial revenue from
additional sales of EnSite Array catheters and EnSite NavX surface electrode
kits.  Additional
clinical testing of our EnSite Array may not be completed in a timely manner or
prove to be safe and effective in all chambers of the heart.  We have conducted
clinical trials in the use of the EnSite Array in patients for ventricular
tachycardia and supraventricular tachycardia in the United States and in
Europe.  In 1999, we received clearance
from the FDA to market the EnSite Array in the U.S. for use in the right atrium
of the heart, but we believe we will be required to conduct more clinical
testing in the United States in order to support a pre-market approval
application to the FDA for marketing approval for use of the EnSite Array in
the left ventricle of the heart.  In
January 2001, we received FDA approval to also conduct a left atrium
multi-center clinical trial that we began in the second quarter of 2001.  2 
   We discontinued the left
atrium multi-center clinical trial for the EnSite Array in the fourth quarter
of 2004 due to the fact that clinical practice with the EnSite System had
shifted to use of EnSite NavX for electrophysiology procedures in the left
atrium, and EnSite NavX has been cleared for use in all chambers of the heart.  Patients selected for
clinical trials must meet stringent guidelines to undergo testing, and we
cannot assure you that patients can be enrolled in clinical trials on a timely
basis.  Further, we cannot assure you
that use of our EnSite Array will prove to be safe and effective in clinical
trials under United States or international regulatory guidelines for all
chambers of the heart.  As to be
expected when performing delicate and invasive procedures involving the heart,
we have at times experienced complications in our clinical trials.  The clinical procedures employing the EnSite
Array for diagnosis are often combined with other diagnostic catheters and
procedures to treat the arrhythmia, and complications arising from such
procedures are often pooled together because of the difficulty of determining
which device or procedure is the true cause of any adverse event.  Major complications, as defined by the FDA,
that we have experienced during clinical trials of the EnSite Array requiring
surgical repair and/or blood transfusion include: cardiac perforation (a
puncture of the heart wall); myocardial infarction (heart attack); and hematoma
(localized swelling resulting from a broken blood vessel).  Additional clinical trials of the EnSite
Array may identify significant technical or other obstacles to be overcome
prior to obtaining approvals.  We believe
further clinical studies will be required in order to obtain clearance from the
FDA to market the use of the EnSite Array in other chambers of the heart.  If the EnSite Array does not prove to be
safe and effective in clinical trials involving other chambers of the heart,
our ability to market the EnSite Array, and generate substantial revenue from
additional sales of EnSite Array catheters, EnSite NavX upgrades to the EnSite
System, or EnSite NavX surface electrodes, may be materially limited.  Our
EnSite System assists electrophysiologists in the diagnosis and treatment of
cardiac arrhythmias, and enables the non-fluoroscopic navigation and
positioning of conventional linear electrophysiology catheters,  but we depend on other companies to develop products
to treat cardiac arrhythmias that will increase the usefulness of our EnSite
System.  Current treatments for
cardiac arrhythmias include therapeutic drugs, implantable defibrillators,
implantable pacemakers or bi-ventricular stimulation devices, surgery and
catheter ablation.  We believe the
EnSite System enables increased use of catheter ablation for treating both
complex and less complex arrhythmias which, in turn, could increase the
volume of use of our EnSite System. 
Catheter ablation is a procedure in which a physician inserts a catheter
through a vein in the groin or neck and advances it into one or more chambers
of the heart.  While in contact with the
internal wall of a heart chamber, a high radio frequency energy is applied
through the tip of the catheter to deaden the heart tissue at the site causing
the arrhythmia.  Our EnSite System
enables electrophysiologists to pinpoint the location within a heart chamber to
be ablated and visualize and navigate the catheter to that spot.  Because ablation treatment is relatively
new, the long-term effects of ablation on patients are unknown.  As a result, the long term success of
ablation therapy in treating arrhythmias may not be known for several years.  Catheter ablation devices require approval by
the FDA, and we cannot assure you that a catheter ablation market will continue
to develop.  Moreover, we cannot assure
you of the extent to which the EnSite Array is useful in diagnosing arrhythmias
for treatment by catheter ablation products, and the extent to which EnSite
NavX is useful in guiding and navigating conventional linear diagnostic and
ablation catheters.  We are not in the
process of developing a catheter for ablation treatment and are entirely dependent
upon other medical device companies to develop those devices.  If a market for treating cardiac arrhythmias
by catheter ablation does not continue to develop, our ability to market the
EnSite System and generate substantial revenue from additional sales of EnSite
Array catheters and EnSite NavX surface electrodes may be limited.  Our
products may be unable to diagnose or assist in the treatment of atrial
fibrillation.  In addition to assisting
the diagnosis and treatment of complex arrhythmias such as atrial tachycardia
and ventricular tachycardia, we intend to apply the EnSite System to the
diagnosis of atrial fibrillation. 
Atrial fibrillation is the most common type of sustained arrhythmia, and
the ability to diagnose atrial fibrillation, and to navigate linear catheters
during the diagnosis and treatment of atrial fibrillation, could lead to a
significant market opportunity for us. 
However, we have conducted only limited clinical studies of our
technology on patients suffering from atrial fibrillation.  Although it is possible for atrial fibrillation
to originate in the right atrium, medical research has shown that atrial
fibrillation most often originates in the left atrium.  In January 2001, we received clearance
from the FDA to market the use of the EnSite Array in the left atrium in a multi-center
clinical study for mapping and diagnosing  3 
   arrhythmias including
atrial fibrillation.  We may be unable
to successfully extend our EnSite Array technology to the mapping of atrial
fibrillation or obtain regulatory approval to market any products developed
using the technology to map atrial fibrillation.  In April of 2003 we received clearance from the FDA to
market the use of EnSite NavX in all chambers of the heart, including the left
atrium.  We discontinued the left atrium
multi-center clinical trial for the EnSite Array in the fourth quarter of 2004
due to the fact that clinical practice with the EnSite System had shifted to
use of EnSite NavX for electrophysiology procedures in the left atrium, and
EnSite NavX has been cleared for use in all chambers of the heart.  We have made, and expect to continue to
make, research and development expenditures to extend the application of the
EnSite System technology to the diagnosis of atrial fibrillation.  We cannot assure you that we will realize
any benefit from these expenditures.  Atrial fibrillation is a
complex disease and the subject of continuing research.  The device therapies and techniques for
diagnosing and treating atrial fibrillation presently available continue to
develop and evolve, and the long-term effectiveness of such treatments are
still unknown.  Even if we are
successful in extending our EnSite technology to map, diagnose, and navigate
catheters used in the treatment of atrial fibrillation, we cannot assure you
that these treatments for atrial fibrillation will prove effective over the
long-term, or that the diagnostic and navigation capabilities of any of our
EnSite products will continue to be utilized or prove to be effective for
atrial fibrillation.  As a result, the
commercial market for the diagnosis and treatment of atrial fibrillation may
not continue to develop for any of our current or future EnSite products.  We have no present intention to develop any
medical devices on our own for the treatment of atrial fibrillation.  Our
products may not succeed in the market.  The commercial success of
the EnSite System ultimately depends upon the number of diagnostic and
therapeutic ablation procedures performed by electrophysiologists using the
EnSite System.  Our EnSite System may
not gain any significant increased market acceptance among
electrophysiologists, patients, health care insurers or managed care providers.   Electrophysiologists and other physicians
may elect not to recommend diagnostic or therapeutic procedures for any number
of reasons, including safety and efficacy, the availability of alternative
procedures and treatment options, or inadequate levels of reimbursement.  Broad use of the EnSite System also requires
time-consuming training of electrophysiologists and electrophysiology lab
staff, which also could adversely affect market acceptance.  We
face significant industry competition.  The cardiac medical
device market is highly competitive, and the EnSite System must compete with
more established devices.  Certain of
our competitors are developing new approaches and new products for diagnosing
and treating arrhythmias, including mapping systems that use single or
multiple-point catheters that physically must come in contact with the heart
wall in order to record electrical activity. 
Certain of our competitors have integrated product lines that include
products for both diagnosis and ablation treatment of cardiac arrhythmias, which
may afford them opportunities for product bundling and other marketing
advantages.  Many of our competitors
have an established presence in the field of electrophysiology and established
relationships with electrophysiology labs. 
Many of our competitors have substantially greater financial and other
resources than we do, including larger research and development staffs and more
experience and capabilities in conducting research and development activities,
testing products in clinical trials, obtaining regulatory approvals, and
manufacturing, marketing and distributing products.  Some of our competitors may achieve patent protection, regulatory
approval or product commercialization more quickly than us, which may decrease
our ability to compete.  Our
products may become obsolete if we are unable to anticipate and adapt to
rapidly changing technology.  The medical device
industry is subject to rapid technological innovation and, consequently, the
life cycle of any particular product is short. 
Alternative diagnostic systems or other discoveries and developments
with respect to mapping cardiac arrhythmias, and navigating and positioning
catheters used to diagnose and treat cardiac arrhythmias, may render our
products obsolete.  Furthermore, the
greater financial and other resources of many of our competitors may permit
them to respond more rapidly than us to technological advances.  If we fail to demonstrate the safety,
benefit, efficacy, and cost-effectiveness of our products as compared to those
of our competitors, or if we fail to develop new technologies and products or
upgrade our existing products before our competitors, our ability to market our
products and generate substantial revenues may be limited.  4 
   We
depend on our patents and proprietary technology, which we may not be able to
protect.  Our success will depend
in part on our ability to obtain and maintain 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.  We may discover that our technology
infringes patents or other rights owned by others, and we cannot be certain
that we were the first to make the inventions covered by each of our issued
patents and our pending patent applications, or that we were the first to file
patent applications for such inventions. 
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.  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, or interference proceedings declared by the United States Patent
and Trademark Office, or the patent regulatory agencies of foreign
jurisdictions, to determine the priority of inventions.  Litigation or regulatory proceedings may
also be necessary to enforce our patent 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.  We
have limited manufacturing experience necessary for high-volume manufacturing
capacity.  We have limited
experience manufacturing our products in the volumes that may be necessary for
us to achieve significant growth in the commercial sales of our products.  We may need to expend significant capital
resources and develop the necessary expertise to establish large-scale
manufacturing capabilities.  We may
encounter the following difficulties in scaling up production of our products:  problems
involving production yields, quality
control and assurance, component
supply shortages, shortages
of qualified personnel, compliance
with U.S. and foreign regulations, or the
need for further U.S. or foreign regulatory approval of new manufacturing
processes.  Our manufacturing
facilities are periodically inspected by United States and foreign regulatory
authorities.  In order to manufacture
products for sale in the United States, our operations must undergo Good
Manufacturing Practices compliance inspections conducted by the FDA.  We passed inspection of our facility and
manufacturing processes by the FDA in the fourth quarter of 2001.  We will also be required to comply with ISO
9001 Quality System requirements and CE Mark regulations in order to continue
to sell our products in Europe.  We
received ISO 9001 Quality System Certification in August 1997.  We began placing the CE Mark on the EnSite  5 
   Array catheter and the
EnSite clinical workstation in the second quarter of 1998.  We began using the CE Mark on the EnSite
NavX surface electrodes in second quarter of 2003.  If we fail to comply with Good Manufacturing Practices or ISO
9001 and CE Mark regulations in future audits, we may be required to modify our
manufacturing policies and procedures. 
In addition, we may be required to stop all or part of our operations
until we can demonstrate that appropriate steps have been taken to comply with
the regulations.  We
depend on a few suppliers for key components of our products.  We purchase components
for the EnSite System from a variety of vendors.  While it is our goal to be able to have multiple sources to
procure these components, in some cases it is not economically practical to do
so.  While we do have some components
that we currently obtain from a single source, such as the EnSite computer
workstation from an OEM vendor, and EnSite NavX surface electrodes from a
division of Tyco, Inc., we are aware of alternate supply sources that could
provide such components or products with minimal modification to the current
versions of the EnSite clinical workstation, the EnSite Array catheter, or
EnSite NavX surface electrodes. 
Additionally, we practice supply chain management and maintain safety
stocks of critical components and products, and have put agreements in place
with our key vendors to manage the availability of critical components and
products.  Despite our efforts to
mitigate this risk, if our vendors are unable to provide an adequate supply of
components or products in a timely manner, or if we are unable to locate
qualified alternate vendors for components or products at a reasonable cost,
the availability of some or all of our EnSite System products to our customers
and our ability to generate substantial revenues could be materially limited.  Our
sales and marketing efforts may not be successful.  We continue to gain
experience in marketing and selling the EnSite System through a direct sales
organization in the U.S., but we have limited experience in marketing and
selling the EnSite System through a direct sales organization in parts of
Europe, and through third-party distributors in other geographies in which the
EnSite System is sold and distributed. 
We cannot assure you that we will be able to maintain a suitable sales
force in the U.S. or abroad or enter into or maintain satisfactory marketing
and distribution arrangements with others. 
Our sales and marketing efforts may not be successful.  We
will need to carefully manage our expanding operations in order to achieve
sustainable growth.  In order to achieve
increased sales levels, complete clinical trials, prepare additional products
for clinical trials, and develop future products, we believe that we will be
required to periodically expand our operations, particularly in the areas of
research and development, manufacturing, quality assurance, and sales and
marketing.  As we expand our operations
in these areas, the expansion likely will result in new and increased
responsibilities for management.  To
accommodate any growth and compete effectively, we must implement and improve
our information systems, procedures and controls, and expand, train, motivate and
manage our work force.  Our future success
will depend significantly on the ability of our current and future management
to operate effectively.  We cannot
assure you that our personnel, systems, procedures and controls will be
adequate to support our future operations.  International
operations will expose us to additional risks.  We are marketing and will
continue to market and sell the EnSite System either through a direct sales
force or through distributors in international markets, subject to our receipt
of the requisite foreign regulatory approvals. 
We have distribution arrangements with approximately seventeen
distributors in international markets, and currently retain all distribution
rights in the United States and several countries in Europe.  We cannot assure you that international distributors
for our products will devote adequate resources to selling and servicing our
products.  Changes in overseas
economic conditions, currency exchange rates, foreign tax laws or tariffs or
other trade regulations could materially and adversely affect our ability to
market our products internationally. 
Our business is also expected to subject us and our representatives,
agents and distributors to laws and regulations of the foreign jurisdictions in
which we operate or our products are sold. 
We may depend on foreign distributors and agents for compliance and
adherence to foreign laws and regulations.  6 
   Our
success may depend on the ability of health care providers to achieve adequate
levels of third-party reimbursement.  Sales of our products
will continue to depend largely on the availability of adequate reimbursement
for diagnostic and therapeutic procedures for cardiac arrhythmias from
third-party payers, such as government and private insurance plans, health
maintenance organizations and preferred provider organizations.  In the United States, our products are
purchased primarily by health care providers such as doctors and hospitals who
then seek reimbursement for the health care services provided to their
patients.  Specific to Medicare, the use
of the EnSite Array or EnSite NavX is currently reimbursable under both
inpatient and outpatient procedure scenarios. 
For inpatient procedures, the EnSite Array and EnSite NavX will most
typically be reimbursed under Diagnosis Related Group 518.  For outpatient procedures, both the EnSite
Array and EnSite NavX is eligible for separate reimbursement in addition to the
hospitals Ambulatory Payment Classification for cardiac three-dimensional
mapping.  Third-party payers are
increasingly challenging the pricing of medical products and procedures they
consider unnecessary, inappropriate, not cost-effective, experimental or used
for a non-approved indication.  Even if
a procedure is eligible for reimbursement, the level of reimbursement may not
be adequate to enable us to achieve or maintain market acceptance of our
products or maintain price levels that exceed our costs of developing and
manufacturing our products.  The EnSite Array catheter
and EnSite NavX surface electrode kits are being sold at a premium price
compared to other single point catheters used in diagnostic, mapping, or
catheter navigation procedures.  In
addition, an initial capital outlay is required for acquiring an EnSite
clinical workstation (unless such workstation is leased or rented pursuant to a
third-party financing transaction). 
Assuming no increase in the level of reimbursement for electrophysiology
procedures utilizing our products, we will continue to be required to justify
the relative increased cost to the health care providers and payers of using
the EnSite System.  We will continue to
be required to demonstrate the enhanced benefits of the EnSite System to health
care providers and payers in terms of such factors as enhanced patient
procedural efficiencies, reduced radiation exposure, reduced procedure times,
and improved patient outcomes.  The
demonstration of these benefits may require us to conduct post-marketing
clinical studies, which may be costly, lengthy, and may not provide the cost or
clinical justification results we are seeking. 
Without adequate support from third-party payers, the market for our
products may be severely limited.  We are unable to predict
what additional legislation or regulation, if any, relating to the health care
industry or third-party coverage and reimbursement may be enacted in the
future, or what effect such legislation or regulation would have on us.  Reforms may include mandated basic health
care benefits, limitations on the growth of private health insurance premiums
and Medicare and Medicaid spending, greater reliance on prospective payment
systems, the creation of large insurance purchasing groups and fundamental
changes to the health care delivery system. 
We anticipate that Congress and state legislatures will continue to
review and assess alternative health care delivery systems and payment
methodologies.  We cannot predict
whether any reform proposals will be adopted or what impact they may have on us.  Reimbursement systems in
international markets vary significantly by country and by region within some
countries.  Many international markets
have government managed health care systems that control reimbursement for new
devices and procedures.  In most
international markets, there are private insurance systems as well as
government managed systems.  We cannot
assure you that reimbursement for our products will be available in
international markets under either government or private reimbursement systems.  Our
products may expose us to costly litigation.  We may be exposed to
product liability claims if a patient is adversely affected by our
products.  We currently carry product
liability insurance covering our clinical trial operations with an aggregate
limit of $5 million.  We cannot assure you
that our existing insurance coverage limits are adequate to cover any
liabilities we might incur in connection with the distribution of our
products.  Although we obtained product
liability insurance coverage in connection with the commercialization of the
EnSite System, insurance may not continue to be available on commercially
reasonable terms.  In addition,
insurance might not adequately cover any product liability claim.  7 
   We
may be unable to meet our future capital requirements.  We may require
substantial funds to meet our working capital requirements for expansion of
sales and marketing, research and development, clinical trials, regulatory
approval and manufacturing activities. 
In order to meet our funding needs, we may be required to raise
additional funds through public or private financings, including the sale of
equity or debt.  Any additional equity
financings may dilute current stockholders, and debt financing, if available,
may involve restrictive covenants. 
Adequate funds for our operations, whether from financial markets or
other sources, may not be available when needed on attractive terms, if at
all.  Insufficient funds may require us
to delay, scale back or eliminate some or all of our plans for growth.  8