Exhibit 99.1

Risk Factors

         An investment in our stock involves a high degree of risk.  You
should carefully consider the following information, together with other
information in this prospectus, before buying shares of our stock.  If
any of the following risks or uncertainties occur, our business,
financial condition and results of operations could be materially and
adversely affected, the trading price of our stock could decline and you
may lose all or a part of the money you paid to buy our stock.

Risks Related to Our Company

         We have been the subject of a "going concern" opinion from our
independent auditors, which means that we may not be able to continue
operations.

         Our independent auditors have added an explanatory paragraph to
their audit opinion issued in connection with the fiscal year ended March
31, 2005 financial statements, which states that we had substantial net
losses for the fiscal years ended March 31, 2005 and 2004 which raises
substantial doubt about our ability to continue as a going concern. We
had net losses of $2,324,413 and $141,738 for the fiscal years ended
March 31, 2005 and 2004, respectively, and we had a stockholders'
deficiency of $1,010,391 at March 31, 2005.  Our financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.  This may have an adverse effect on our ability to obtain
financing for our operations and to further develop and market our
products.

          Our Prior Independent Accountants have ceased operations and
investors in the Company's Securities May Not Be Able to Effectively
Recover Against Our Prior Independent Accountants.

          Weinick Sanders Leventhal & Co., LLP ("Weinick") completed its
audit of the Company's consolidated financial statements at March 31,
2005 and for the fiscal years end March 31, 2005 and 2004 and dated its
report with rspect to such consolidated financial statements on July 13,
2005.  On July 31, 2005, Weinick ceased to audit publicly held companies
and ceased operations.  The Company retained new independent accountants
to re-audit the Company's consolidated financial statements at March 31,
2005 and for the fiscal year ended March 31, 2005.  However, investors in
the Company's securities may not be able to effectively recover against
Weinick for any claims they may have under securities or other laws as a
result of Weinick's previous role as our independent accountants and as
author of the audit report for the audited financial statements for the
fiscal year ended March 31, 2004.

          We may be exposed to product liability claims for which our
insurance  may be inadequate.

          Our business exposes us to potential product liability risks,
which are inherent in the testing, manufacturing and marketing of
chemical  products and medical devices.  Although we maintain a general
liability  insurance policy, which includes aggregate product liability
coverage of $2,000,000 for certain of our products, there can be no
assurance, that such insurance will be sufficient to cover potential
claims or that the  present level of coverage will be available in the
future at a reasonable cost.

          We do not have product liability coverage for our medical
device products  other than the SofPulse, which is covered by a $2.0
million product liability policy held by Ivivi.  While we are not aware
of side-effects resulting from the use of any of our products, there may
be unknown  long-term effects of their use that may result in product
liability claims in the future. Further, we cannot provide any assurance
that:

      o  our insurance will provide adequate coverage against potential
         liabilities if a product causes harm or fails to perform as
         promised;
      o  adequate product liability insurance will continue to be
         available in the future; or
      o  our insurance can be maintained on acceptable terms.

         The obligation to pay any product liability claim in excess of
whatever insurance we are able to obtain would  increase our expenses and
could greatly reduce our assets. See "Item 1. Business - Insurance."

         The loss of any of our executive officers or key personnel may
adversely affect our operations and our ability to execute our growth
strategy.

         Our ability to execute our business plan depends upon the
continued services of Andre' DiMino, our President and Chief Executive
Officer, as well as our key technology, marketing, sales and support
personnel.  We do not have employment or consulting agreements containing
non-compete agreements with Mr. DiMino and certain of our key personnel,
and we may not be able to retain these individuals.  If we lost the
services of Mr. DiMino or our key personnel, our business may be
adversely affected and our stock price may decline. In addition,
our ability to execute our business  plan is dependent on our ability to
attract and  retain  additional  highly  skilled  personnel.  We have
key  person  life insurance  in the amount of $2 million  for Mr.
DiMino,  but not for any of our other executive officers or key
employees.

          Our  President  and Chief  Executive  Officer  also serves as
Chairman and Chief Financial Officer of Ivivi, which may cause him to
devote a substantial  portion of his work-time to Ivivi.

         Andre' DiMino, our President and Chief Executive  Officer,  also
serves as Chairman and Chief  Financial  Officer of Ivivi.  While Mr.
DiMino  devotes a substantial portion of his work-time toward ADM
Tronics, the remaining amount of his work-time may be devoted  elsewhere,
including at Ivivi.  As a result,  Mr. DiMino's  attention  to our
business  and  operations  may be  diverted  by his obligations
elsewhere, including at Ivivi, and we may not be able to have access
to Mr. DiMino as needed by us.

         Our  executive  officers and directors  and entities  affiliated
with them have substantial  control  over us,  which  could  delay or
prevent  a change in our
corporate control favored by our other shareholders.

            Our executive  officers and directors and entities
affiliated  with them may be deemed to beneficially own, in the
aggregate, approximately 51.7% of our outstanding common stock. In
particular,  Mr. DiMino,  together with members of the DiMino family,
may be deemed to beneficially own approximately  38.7% of the outstanding
shares of our common stock. The interests of our current officer and
director   shareholders   may  differ  from  the  interests  of  our
other shareholders.  As a result,  the current  officers and directors
would have the ability to exercise  substantial  control over all
corporate  actions  requiring shareholder  approval,  irrespective  of
how our  other  shareholders  may vote, including the following actions:

         o the election of directors;
         o adoption of stock option plans;
         o the amendment of charter documents; or
         o the  approval  of  certain   mergers  and  other   significant
           corporate transactions,  including a sale of substantially all
           of our assets.

Penny stock regulations may impose certain  restrictions on marketability
of oursecurities.

         If our common  stock were to be subject  to penny  stock  rules,
these rules may discourage  broker-dealers  from effecting  transactions
in our common stock or affect their ability to sell our  securities.  As
a result,  purchasers and current holders of our securities could find it
more difficult to sell their securities. Our stock is traded on the OTC
Bulletin Board. Trading volume of OTC Bulletin Board stocks have been
historically lower and more volatile then stocks traded on an exchange or
the Nasdaq Stock Market.  In addition we may be subject to rules of the
Securities  and  Exchange  Commission  that  impose  additional
requirements on  broker-dealers  when selling penny stocks to persons
other than established  customers  and  accredited  investors.  In
general,  an  accredited investor  is a person  with  assets  in excess
of  $1,000,000  or annual  income exceeding  $200,000  individually,  or
$300,000 together with his or her spouse.  The relevant Securities
Exchange Commission  regulations  generally define penny stocks to
include  any equity  security  not traded on an exchange or the Nasdaq
Stock Market with a market price (as defined in the regulations) of less
than $5 per  share.  Under the penny  stock  regulations,  a  broker-
dealer  must make a special  suitability  determination  as to  the
purchaser  and  must  have  the purchaser's  prior written consent to the
transaction.  Prior to any transaction in a penny  stock  covered  by
these  rules,  a  broker-dealer  must  deliver  a disclosure  schedule
about the penny stock  market  prepared by the  Securities Exchange
Commission.   Broker-dealers  must  also  make  disclosure  concerning
commissions payable to both the broker-dealer and any registered
representative and provide current quotations for the securities.
Finally,  broker-dealers are required to send monthly statements
disclosing recent price information for the penny stock held in an
account and  information  on the limited  market in penny stocks.

Our stock price, like that of many small companies, has been and may
continue to be volatile.

         We expect that the market price of our common stock will
fluctuate as a result of variations in our quarterly operating results
and other factors beyond our control.  These fluctuations may be
exaggerated if the trading volume of our common stock is low.

We have not paid dividends in the past and do not expect to pay dividends
in the future, and any return on investment may be limited to the value
of your stock.

         We have never paid any cash  dividends  on our common  stock and
do not anticipate  paying any cash  dividends  on our common  stock in
the  foreseeable future and any return on  investment  may be limited to
the value of your stock. We plan to retain any future earnings to finance
growth.







                     Risks Relating to Our Chemical Business

New environmental or other  regulations  could increase the Company's
operating costs.

         Like other  manufacturers,  the  Company is subject to a broad
range of Federal,  state and  local  laws and  requirements,  including
those  governing discharges  in the air and  water,  the  handling  and
disposal  of  solid  and hazardous  substances and wastes,  the
remediation of  contamination  associated with the release of hazardous
substances, work place safety and equal employment opportunities.  The
Company has made  expenditures  to comply with such laws and
requirements.  The Company believes, based on information currently
available to management,  that it is in compliance  with applicable
environmental  and other legal  requirements  and that the  Company  will
not  require  material  capital expenditures to maintain  compliance
with such  requirements in the foreseeable future.  Governmental
authorities have the power to enforce compliance with such laws and
regulations, and violators may be subject to penalties,  injunctions or
both. Third parties may also have the right to enforce compliance with
such laws and  regulations.  As the Company  develops  new  formulations
for its chemical products,  those products may become  subject to
additional  review and approval requirements governing the sale and use
of its products.  Although the Company's manufacturing  processes do not
currently  result in the generation of hazardous wastes, this may not
always be the case and material costs or liabilities may be
incurred  by the  Company  in  the  future  as a  result  of  the
manufacturing operations.  It is also possible that other developments,
such as additional or increasingly  strict  requirements  of laws and
regulations of these types,  or enforcement  policies  thereunder,  could
significantly  increase the Company's costs of operations.

         Because we use various  materials and substances in
manufacturing  our chemical products,  our production facilities are
subject to operating hazards that could cause personal  injury and loss
of life,  severe damage to, or  destruction  of, property and equipment
and environmental contamination.

We are  dependent  on the  continued  operation of our  production  and
distribution  facility.  This facility is subject to hazards associated
with the manufacture,  handling,  storage and  transportation  of
chemical  materials and products, including natural disasters, mechanical
failure, unscheduled downtime, labor difficulties,  transportation
interruptions,  and environmental  hazards, such as spills,  discharges
or releases of toxic or  hazardous  substances  and
remediation  complications.  These hazards can cause personal injury and
loss of life,   severe  damage  to,  or  destruction  of,  property  and
equipment  and environmental  contamination  and other  environmental
damage  and could have a material  adverse  effect on our financial
condition.  In addition,  due to the nature of our  business  operations,
we could become  subject to scrutiny  from environmental action groups.

We  rely  significantly  on raw  materials  in the  production  of our
chemical products and  fluctuations  in costs of such raw  materials
would  increase our operating expenses.

      Our manufacturing  operations with respect to our chemical products
depend upon  obtaining  adequate  supplies of our raw materials on a
timely basis.  The loss of a key  source of supply or a delay in
shipments  could  have an adverse effect on our business.  We are exposed
to price risks associated with these raw material purchases.  The
availability and prices of raw materials may be subject to  curtailment
or change due to, among other things,  new laws or  regulations,
suppliers'  allocations  to other  purchasers,  interruptions  in
production by suppliers,  changes in exchange  rates,  cost  components
of raw  materials and worldwide price levels. Our results of operations
could be adversely affected if we were unable to obtain  adequate
supplies of raw materials in a timely manner or if the costs of raw
materials increased significantly.

We face competition from other chemical companies, which could adversely
affect our revenue and financial condition.

         We  actively  compete  with  companies  producing  the same or
similar products and, in some instances,  with companies  producing
different  products designed  for the same  uses.  We  encounter
competition  in  price,  delivery, service,  performance,  product
innovation and product  recognition and quality, depending on the product
involved. For some of our products, our competitors are larger and have
greater financial resources.  As a result, these competitors may be
better able to  withstand a change in  conditions  within the  industries
in which we  operate,  a change in the prices of raw  materials  or a
change in the economy as a whole.  Our  competitors can be expected to
continue to develop and introduce  new and  enhanced  products,  which
could  cause a decline in market acceptance of our chemical products.
Current and future consolidation among our competitors  and  customers
may also cause a loss of market share as well as put downward  pressure
on pricing.  Our  competitors  could cause a reduction in the prices  for
some of our  chemical  products  as a result  of  intensified  price
competition.  Competitive  pressures  can  also  result  in the  loss  of
major customers. If we cannot compete successfully,  our business,
financial condition and results of operations could be adversely
affected.

We face competition from other chemical companies, which could force us
to lower our  prices  thereby  adversely  affecting  our  operating
margins,   financial condition, cash flows and profitability.

         The  markets  in which we  operate  are  highly  competitive,
and this competition  could  harm our  business,  results  of
operations,  cash flow and financial  condition.  Our competitors include
major international  producers as well as smaller regional competitors.
We believe that a significant competitive factor for our products is
selling price. We could be subject to adverse results caused  by  our
competitors'  pricing  decisions.  In  addition,   current  and
anticipated future  consolidation  among our competitors and customers
may cause us  to  lose  market  share  as  well  as  put  downward
pressure  on  pricing. Furthermore,  there is a trend in the chemical
industry  toward  relocation  of manufacturing facilities to lower-cost
regions such as Asia. Such relocation may permit  some  of  our
competitors  to  lower  their  costs  and  improve  their competitive
position. Some of our competitors are larger, have greater financial
resources and have less debt than we do. As a result,  those  competitors
may be better  able to  withstand  a change  in  conditions  within  our
industry  and throughout  the  economy  as a whole.  If we do not
compete  successfully,  our business,  operating margins,  financial
condition, cash flows and profitability could be adversely affected.

Failure to develop new chemical  products  and/or improve our existing
products will make us less competitive.

      Our results of  operations  depend,  in part, on our ability to
expand our chemical product offerings. We are committed to remaining a
competitive producer and  believe  that our  portfolio  of new or  re-
engineered  products is strong.  However, we may not be able to continue
to develop new products, re-engineer our existing products successfully
or bring them to market in a timely manner. While we believe  that the
products,  pricing  and  services we offer  customers  are competitive,
we may not be able to continue to attract and retain  customers to
which to sell our chemical products.

Failure  to make  continued  improvements  in our  productivity  could
hurt our competitive position.

         In order to obtain and maintain a competitive position, we
believe that we must continue to make improvements in our productivity.
When we invest in new technologies  or  processes,   we  face  risks
related  to  cost  overruns  and unanticipated technical difficulties.
Our inability to anticipate, respond to or utilize  changing
technologies  could  have a  material  adverse  effect on our business
and our results of operations.

Changes in our  customers'  products  could  reduce the demand for our
chemical products, which may decrease our net sales and operating
margins.

         Our chemical products are used for a broad range of applications
by our customers.  Changes, including technological changes, in our
customers' products or processes may make our chemical products
unnecessary,  which would reduce the demand for those  products.  Other
customers may find  alternative  materials or processes  that no longer
require our products.  If the demand for our chemical products is
reduced, our net sales and operating margins may be reduced as well.

We have few proprietary rights with respect to our chemical  products,
the lack of which may make it easier for our competitors to compete
against us.

         None of our chemical  products are protected by patents.  We do
attempt to protect the names of some of our chemical  products  through
trademarks  and some  of  our  other  limited   proprietary   property
through  trade  secret, nondisclosure and confidentiality  measures;
however,  such protections may not preclude competitors from developing
similar technologies.

                  Risks Relating to Our Medical Device Business

The medical  products  market is highly  competitive  and  susceptible
to rapid change and such changes could render any products  developed by
us  uneconomical or obsolete.

         The medical products market is characterized by extensive
research and development  activities and  significant  technological
change.  Our ability to execute our  business  strategy  depends in part
upon our ability to develop and commercialize  efficient and effective
products based on our  technologies.  We compete against  established
companies as well as numerous  independently owned small  businesses,
including  Diapulse  Corporation  of  America,  Inc.,  which manufactures
and markets devices that are deemed by the FDA to be substantially
equivalent to SofPulse;  Regenesis  Biomedical,  which  manufactures and
markets devices  that are  similar  to our first  generation  SofPulse
device;  and KCI Concepts,  Inc., which  manufactures and markets
negative pressure wound therapy devices in the wound care market.  We
also face  competition from companies that have developed  other forms of
treatment,  such as hyperbaric  oxygen  chambers, thermal  therapies and
hydrotherapy.  In addition,  companies are developing or may, in the
future,  engage in the development of products  and/or  technologies
competitive with our products.  We expect that  technological
developments will occur and that  competition  is  likely to  intensify
as new  technologies  are employed.  Many of our competitors  are capable
of developing  products based on similar  technology,  have  developed
and are capable of  continuing to develop products based on other
technologies,  which are or may be competitive with our products and
technologies.  Many of these companies are  well-established,  and
have  substantially   greater  financial  and  other  resources,
research  and development  capabilities and more experience in obtaining
regulatory approvals, manufacturing  and  marketing  than we do. Our
ability to execute  our  business strategy and  commercially  exploit our
SofPulse  device must be  considered  in light  of  the  problems,
expenses,  difficulties,   complications  and  delays frequently
encountered  in  connection  with  the  development  of new  medical
processes,  devices and  products and their level of  acceptance  by the
medical community.  Our  competitors  may succeed in developing
competing  products and technologies that are more effective than our
products and technologies, or that receive   government   approvals
more   quickly  than  our  new  products  and technologies,  which may
render our  existing  and new  products  or  technology uncompetitive,
uneconomical or obsolete. See "Item 1. Business - Competition."

A portion of our revenues are  currently  dependent on our products that
utilize PEMF  technology,  and  increasing  our  revenues  will depend on
our ability to increase market penetration, as well as our ability to
develop and commercialize new products and technologies.

         Products  based  on   non-invasive,   electrotherapeutic
technologies represent  known methods of treatment  that we believe have
been  under-utilized clinically.  Physicians and other healthcare
professionals may not use SofPulse or other  potential  products  and
technologies  developed  by us  unless  they determine  that the
clinical  benefits to the  patient  are greater  than those available
from competing  products or therapies or represent equal efficacy with
lower  cost.  Even  if  the  advantage  of  our  products  and
technologies  is established  as  clinically  and  fiscally  significant,
physicians  and  other healthcare  professionals  may not elect to use
SofPulse or other  products and technologies  developed by us for any
number of reasons.  For example, the first generation  of the SofPulse
device  cannot be used in hospital  intensive  care units  because  the
power  output  of the  device  can  interfere  with  medical monitoring
equipment.  The rate of adoption and  acceptance of our products and
technologies,  including the SofPulse device,  may also be affected
adversely by unexpected  side  effects  or   complications   associated
with  our  products, consumers'  reluctance to invest in new products and
technologies,  the level of third-party  reimbursement  and  widespread
acceptance  of other  products  and technologies.  Consequently,
physicians  and  other  healthcare  professionals, healthcare  payors and
consumers may not accept  SofPulse device products or new products  or
technologies  developed  by us.  Broad  market  acceptance  of the
SofPulse device products and other products and technologies  developed
by us in the future may require the  education  and training of numerous
physicians  and other healthcare professionals, as well as conducting or
sponsoring clinical and fiscal  studies to  demonstrate  the cost
efficiency and other benefits of such products and technologies. The
amount of time required to complete such training and studies  could be
costly and result in a delay or  dampening  of such market acceptance.
Moreover,  healthcare  payors' approval of use for our products and
technologies  in development may be an important  factor in establishing
market acceptance.

         We may be required to undertake  time-consuming  and costly
development activities  and seek  regulatory  clearance  or  approval
for new  products  or technologies.  Although we have received FDA
clearance for the SofPulse  device for the treatment of edema and pain in
soft tissue, we may not be able to obtain regulatory  clearance  or
approval  of  new  products  or  technologies  or new treatments through
existing products.  In addition,  we have not demonstrated an ability to
market and sell our  SofPulse  device  products,  much less  multiple
products  simultaneously.  If we are unable to increase market acceptance
of our current  products or develop and  commercialize  new products in
the future,  we will not be able to increase our revenues.  The
completion of the development of any new products or  technologies  or
new uses of existing  products will remain subject to all the risks
associated with the  commercialization  of new products
based on innovative technologies, including:

o  our  ability  to fund  and  establish  research  that  supports  the
   efficacy of new technologies and products;
o  our  ability to obtain  regulatory  approval  or  clearance  of such
   technologies and products, if needed;
o  our ability to obtain market acceptance of such new technologies and
   products;
o  our ability to  effectively  and  efficiently  market and distribute
   such new products;
o  the ability of ADM Tronics or other manufacturers  utilized by us to
   effectively and efficiently manufacture such new products; and
o  our  ability to sell such new  products at  competitive  prices that
   exceed our per unit costs for such products.

We will need additional  capital to market our existing  medical device
products and to  develop  and  commercialize  new  technologies  and
products  and it is uncertain whether such capital will be available.

         Our medical  device  business  is capital  intensive  and will
require additional financing in order to:

     o     fund research and development;
     o     expand sales and marketing activities;
     o     develop new or enhanced technologies or products;
     o     respond to competitive pressures; and
     o     acquire  complementary   technologies  or  take  advantage  of
           unanticipated opportunities.

Our need for additional capital will depend on:

     o     the  costs  and  progress  of  our  research  and  development
           efforts;
     o     the preparation of pre-market  application  submissions to the
           FDA for our new products and technologies and costs associated
           therewith;
     o     the  number  and  types  of   product   development   programs
           undertaken;
     o     the number of medical devices,  including the SofPulse device,
           we have manufactured for sale or rental;
     o     the  costs  and  timing of  expansion  of sales and  marketing
           activities;
     o     the  amount  of  revenues  from  sales  of  our  existing  and
           potentially new products;
     o     the cost of obtaining and maintaining, enforcing and defending
           patents and other intellectual property rights;
     o     competing technological and market developments; and
     o     developments  related to regulatory and  third-party  coverage
           matters.

We will need to obtain  capital  to  continue  to operate  and grow our
medical device business.  Our ability to obtain additional  financing in
the future will depend in part upon the  prevailing  capital market
conditions,  as well as our business  performance.  There can be no
assurance  that we will be successful in our efforts to arrange
additional  financing on terms  satisfactory to us or at
all. If  additional  financing is raised by the issuance of common stock
you may suffer  additional  dilution and if additional  financing is
raised through debt financing,  it may involve significant  restrictive
covenants which could affect our ability to operate our business. If
adequate funds are not available, or are not  available  on  acceptable
terms,  we  may  not be  able  to  continue  our operations,  grow our
medical device business or take advantage of opportunities
or otherwise respond to competitive pressures and remain in business.

If  we  are  unable  to  receive  reimbursement  from  third-parties,
including reimbursement from Medicare,  our growth and revenues will be
adversely affected in markets where we rely on insurance coverage for
payment.

         Some  healthcare  providers  such  as  hospitals  and
physicians  that purchase,  lease or rent medical devices in the United
States  generally rely on third-party  payors,  principally  Medicare and
private health  insurance plans, including health maintenance
organizations, to reimburse all or part of the cost of the treatment for
which the medical  device is being used.  Commercialization of our
medical device  products and  technologies  marketed in the United States
will depend in part upon the availability of  reimbursement  for the cost
of the treatment from third-party healthcare payors such as Medicare and
private health insurance plans,  including health maintenance
organizations,  in non-capitated markets,  markets  where  we  rely  on
insurance  coverage  for  payment.  Such third-party payors are
increasingly challenging the cost of medical products and services,
which have and could  continue  to have a  significant  effect on the
ratification of such  technologies  and services by many  healthcare
providers.  Several proposals have been made by federal and state
government  officials that may  lead to  healthcare  reforms,  including
a  government  directed  national healthcare  system  and  healthcare
cost-containment  measures.  The  effect of changes in the  healthcare
system or method of  reimbursement  for the SofPulse device and any other
products or  technologies  that we may market in the United
States cannot be determined.

         While third-party  payors generally make their own decisions
regarding which medical procedures, technologies and services to cover,
Medicare and other third-party  payors  may  apply  standards  similar
to  those  used  by  CMS in determining whether to provide coverage for a
particular  procedure,  technology or service.  The Medicare statute
prohibits payment for any medical  procedures, technologies or services
that are not reasonable and necessary for the diagnosis or  treatment  of
illness or injury.  In 1997,  CMS,  which is  responsible  for
administering the Medicare  program,  had interpreted this provision to
prohibit Medicare  coverage of procedures that,  among other things,  are
not deemed safe and effective  treatments  for the  conditions for which
they are being used, or which are still investigational. However, in July
2004, reimbursement of the use of the  technology  used in our SofPulse
device in the treatment of non-healing wounds was  reinstated  by CMS
after being  discontinued  from July 1997 through July 2004. In October
2004,  CMS issued a quarterly  update that allows  skilled nursing
facilities,  or SNFs, and providers of healthcare in the home to use the
electromagnetic therapy code in the Healthcare Common Procedure Code
System, the standardized   coding   system   developed  by  CMS  to
ensure  that   Medicare reimbursement  claims are  processed  in an
orderly  and  consistent  manner for consolidated  billing  enforcement.
Although CMS has provided for reimbursement for the use of
electromagnetic  therapy by SNFs,  CMS has not yet  provided for
reimbursement for the use of electromagnetic  therapy by providers of
healthcare in the home. In addition, the regulatory  environment could
again be changed to
bar CMS coverage for treatment of chronic wounds  utilizing our SofPulse
device or to limit the  amount of  coverage  patients  or  providers  are
entitled  to receive.  Either  of these  events  would  adversely  affect
our  revenues  and operating results. See "Item 1. Business -
Reimbursement."

         We cannot predict what additional  legislation or regulations,
if any, may be  enacted  or  adopted  in the  future  relating  to our
business  or the healthcare industry,  including third-party coverage and
reimbursement,  or what effect  any  such  legislation  or  regulations
may  have  on us.  Furthermore, significant  uncertainty  exists as to
the  coverage  status  of newly  approved healthcare  products,  and
there can be no assurance  that adequate  third-party coverage  will be
available  with  respect to any of our future  products or new
applications  for our present  products.  In  currently  non-capitated
markets, failure by physicians,  hospitals, nursing homes and other users
of our products to obtain sufficient  reimbursement for treatments using
our technologies  would adversely affect our revenues and operating
results.  Alternatively, as the U.S. medical  system  moves  to more
fixed-cost  models,  such as  payment  based on diagnosis  related
groups,  prospective  payment  systems  or  other  forms  of capitation,
the market  landscape may be altered,  and the amount we can charge
for our products may be limited.

If we are unable to achieve market  acceptance of our medical device
products or any new  technologies  or uses  we  develop  in new  markets
where  third-party reimbursement is unlikely,  our growth could be
impeded which could result in an inability to increase our revenues.

         As part of our growth strategy, we intend to market our SofPulse
device products to plastic surgeons and other plastic surgery
practitioners. The use of the SofPulse  device in these  markets is
unlikely to be reimbursed by insurance and, accordingly, we may
experience cost resistance from physicians and patients in these markets
that could adversely affect our growth strategy,  our operating results
and our ability to increase our revenues.

Our subsidiaries,  SMI and Ivivi,  outsource the manufacturing of their
products to us and  if our  operations  are  interrupted  or if  our
orders  exceed  our manufacturing  capabilities,  our  subsidiaries may
not be able to deliver their products to customers on time.

         Pursuant to a manufacturing agreement between SMI, Ivivi and us,
we are the exclusive manufacturer of the products of SMI and Ivivi. We
operate a single facility and have limited  capacity  that may be
inadequate if SMI's or Ivivi's customers place orders for unexpectedly
large quantities of their products,  or if our other  customers  place
large orders of  products,  which could limit our ability to produce the
products of SMI or Ivivi. In addition,  if our operations were halted or
restricted,  even temporarily,  or we are unable to fulfill large orders,
SMI and Ivivi could experience business  interruption,  increased costs,
damage to their reputations and loss of their customers.  Although SMI
and Ivivi have the right to utilize other  manufacturers if we are unable
to perform under our agreement, manufacturers of their products need to
be licensed with the FDA, and  identifying  and  qualifying  a new
manufacturer  to  replace  us  as  the manufacturer of their products
could take several months during which time, they would likely lose
customers  and their  revenues  could be  materially  delayed and/or
reduced. See "Item 1. Business - Manufacturer and Suppliers."

SMI and Ivivi  depend on a limited  number  of  suppliers  for their
respective components and raw materials and any  interruption in the
availability of these components  and  raw  materials  used  in  their
products  could  reduce  their respective revenues.

         SMI and Ivivi rely on a limited  number of suppliers for the
components and raw  materials  used in  their  medical  devices.
Although  there  are many suppliers  for  each of  their  component
parts  and raw  materials,  they  are dependent on a single or limited
number of suppliers for many of the significant components  and raw
materials.  This reliance  involves a number of significant
risks, including:

o        unavailability  of materials and  interruptions in delivery of
         components and raw materials from suppliers;
o        manufacturing   delays  caused  by  such   unavailability   or
         interruptions in delivery; and
o        fluctuations  in the quality and the price of  components  and
         raw materials.

         Neither  SMI  nor  Ivivi  has  any  long-term  or  exclusive
purchase commitments  with any of its  suppliers.  Their  failure  to
maintain  existing relationships  with their  suppliers or to establish
new  relationships  in the future could also negatively  affect their
ability to obtain  components and raw materials  used in their  products
in a timely  manner.  If they are  unable to obtain  ample  supply of
product from their  existing  suppliers or  alternative sources of
supply,  they may be unable to satisfy their customers'  orders which
could reduce their revenues and adversely affect their  relationships
with their customers. See "Item 1. Business - Manufacturers and
Suppliers."

Our  ability  to  execute  our  business  plan  depends  on  the  scope
of  our intellectual property rights and not infringing the intellectual
property rights of others. The validity, enforceability and commercial
value of these rights are highly uncertain.

         Our ability to compete  effectively  with other companies is
materially dependent upon the proprietary nature of our technologies.  We
rely primarily on patents and trade secrets to protect our medical device
technologies.

         We have:

o   one patent on the SofPulse  device, which expires in 2015, as well as
    two other patents for certain  embodiments of PEMF and other aspects
    of the SofPulse device, and four patents on the Sonotron Technology,
    which expire in 2006, 2011, 2012 and 2016.
o   one U.S. patent application with respect to the SofPulse device
    pending; and
o   seven U.S. patents with respect to the SofPulse device pending.

Third  parties  may  seek  to  challenge,   invalidate,   circumvent  or
render unenforceable  any patents or  proprietary  rights  owned by us
based on,  among
other things:

o    subsequently discovered prior art;
o    lack of  entitlement to the priority of an earlier, related
     application; or
o    failure to comply with the written description, best mode,
     enablement or other applicable requirements.

         In general,  the patent position of medical device  companies is
highly uncertain,  still evolving and involves  complex  legal,
scientific and factual questions. We are at risk that:


o    other patents may be granted with respect to the patent applications
     filed by us; and
o    any patents issued to us may not provide commercial benefit to us or
     will be infringed, invalidated or circumvented by others.

         The  United  States  Patent  and  Trademark   Office  currently
has  a significant  backlog of patent  applications,  and the  approval
or rejection of patents may take several years. Prior to actual issuance,
the contents of United States patent  applications are generally
published 18 months after filing. Once issued,  such a patent would
constitute  prior art from its filing date,  which might predate the date
of a patent  application  on which we rely.  Conceivably, the  issuance
of such a prior art  patent,  or the  discovery  of "prior art" of which
we are  currently  unaware,  could  invalidate a patent of ours or
prevent commercialization of a product claimed thereby.

         Although we generally  conduct a cursory review of issued
patents prior to engaging in research or development activities,  we may
be required to obtain a  license  from  others  to  commercialize   any
of  our  new  products  under development.  If patents  that cover our
existing or new products are issued to other companies,  there can be no
assurance that any necessary  license could be obtained on favorable
terms or at all.

         There can be no  assurance  that we will not be  required  to
resort to litigation to protect our patented  technologies and other
proprietary rights or that we will not be the subject of  additional
patent  litigation to defend our existing  and  proposed   products  and
processes   against  claims  of  patent infringement or any other
intellectual  property claims.  Such litigation could result in
substantial costs, diversion of management's attention,  and diversion
of our  resources.  In fact, on June 29, 2005,  Ivivi filed a complaint
against Regenesis  Biomedical,  Inc.  alleging  that  Regenesis is
infringing on one of Ivivi's U.S.  patents  through its sales of a
product that competes with Ivivi's SofPulse(R)  product.  Although Ivivi
is seeking money damages and an injunction against future sales of the
competing product, there can be no assurance that it will be successful.
See "Item 3. Legal Proceedings."

         We  also  have  applied  for  patent   protection  in  several
foreign countries.  Because  of the  differences  in  patent  laws and
laws  concerning proprietary rights between the United States and foreign
countries,  the extent of protection  provided by patents and
proprietary  rights granted to us by the United States may differ from
the protection provided by patents and proprietary rights granted to us
by foreign countries.

         We attempt to  protect  our trade  secrets,  including  the
processes, concepts, ideas and documentation associated with our
technologies,  through the use of  confidentiality  agreements  and  non-
competition  agreements  with  our current  employees  and with other
parties to whom we have  divulged such trade secrets. If our employees or
other parties breach our confidentiality agreements and  non-competition
agreements or if these  agreements  are not  sufficient to protect our
technology or are found to be  unenforceable,  our competitors could
acquire and use information  that we consider to be our trade secrets and
we may not be able to compete  effectively.  Most of our competitors have
substantially greater financial, marketing, technical and manufacturing
resources than we have and we may not be profitable if our  competitors
are also able to take advantage of our trade secrets.

         We may decide for business reasons to retain certain  knowledge
that we consider  proprietary as confidential and elect to protect such
information as a
trade  secret,  as business  confidential  information  or as know-how.
In that event,  we  must  rely  upon  trade  secrets,   know-how,
confidentiality  and non-disclosure  agreements and continuing
technological  innovation to maintain our  competitive  position.  There
can be no  assurance  that  others  will not independently  develop
substantially   equivalent  proprietary  information  or otherwise gain
access to or disclose such information.

If the FDA or other state or foreign agencies impose regulations that
affect our medical device products, our development, manufacturing and
marketing costs will be increased.

         The  development,  testing,  production  and  marketing of our
existing medical  devices are, and devices we may develop in the future
will be,  subject to regulation by the FDA as devices under the 1976
Medical Device  Amendments to the Federal Food, Drug and Cosmetic Act.
Although we have received FDA clearance for the  SofPulse  device for the
treatment  of pain and edema in soft  tissue, alternative  uses for the
SofPulse  device and any new products  developed by us may be subject to
FDA regulation as well. In addition, although we have not been asked by
the FDA to seek pre-market approval for the SofPulse device,  there can
be no assurance that we will not be required to do so and that, if
required,  we will be able to comply with such requirement for the
SofPulse  device.  Before a new medical  device,  or a new use of, or
claim for, an existing  product can be marketed in the United States,  it
must first receive either 510(k) clearance or pre-market  approval from
the FDA, unless an exemption  applies.  Either process can be expensive
and lengthy.  The FDA's 510(k) clearance  process usually takes from
three to twelve months,  but it can take longer and is  unpredictable.
The process of obtaining  pre-market approval is much more costly and
uncertain than the 510(k) clearance  process and it generally takes from
one to three years, or even longer,  from the time the  application is
filed with the FDA. See "Item 1. Business - Government Regulation."

         In the United States, medical devices must be:

o        manufactured in registered and quality approved establishments
         by the FDA; and
o        produced in accordance with the FDA Quality System  Regulation
         ("QSR") for medical devices.

As a result, we, as well as ADM  Tronics,  the  exclusive  manufacturer
of our SofPulse  device,  are required to comply with QSR requirements
and if they fail to comply  with  these  requirements,  we will need to
find  another  company to manufacture  our SofPulse  devices which could
delay the shipment of our product to our customers. In addition, the
Company's manufacturing facility:

o        is required to be registered as a medical device manufacturing
         site with the FDA; and
o        is subject to inspection by the FDA.

The FDA requires  producers of medical  devices to obtain FDA licensing
prior to commercialization  in the  United  States.  Testing,
preparation  of  necessary applications  and the processing of those
applications  by the FDA is expensive and time  consuming.  We do not
know if the FDA will act favorably or quickly in making such reviews, and
significant difficulties or costs may be encountered by us in our efforts
to obtain FDA licenses.  The FDA may also place  conditions on licenses
that could restrict commercial  applications of such products.  Product
approvals  may be  withdrawn  if  compliance  with  regulatory  standards
is not maintained or if problems occur following initial  marketing.
Delays imposed by the FDA licensing  process may materially reduce the
period during which we have the  exclusive  right  to  commercialize
patented   products.   We  have  made modifications to our devices and
may make additional modifications in the future that we believe do not or
will not require  additional  clearances or approvals.  If the  FDA
disagrees,  and  requires  new  clearances  or  approvals  for  the
modifications,  we may be required to recall and to stop  marketing the
modified devices.  We also are subject to Medical  Device  Reporting
regulations,  which require us to report to the FDA if our products
cause or  contribute to a death or serious injury, or malfunction in a
way that would likely cause or contribute to a death or serious  injury.
We are not aware of any death or serious  injury caused by or contributed
to by our medical device products,  however,  we cannot assure you that
any such problems will not occur in the future with our existing
or future products.

         Additionally,  our  existing  and  future  products  may be
subject to regulation by similar agencies in other states and foreign
countries.  While we believe  that we  have  complied  with  all
applicable  laws  and  regulations, continued  compliance with such laws
or  regulations,  including any new laws or regulations in connection
with our medical devices or any new products developed by us,  might
impose  additional  costs on us or  marketing  impediments  on our
products  which could  adversely  affect our revenues and increase our
expenses.  The FDA and state  authorities  have broad  enforcement
powers.  Our failure to comply with  applicable  regulatory  requirements
could  result in  enforcement action by the FDA or state  agencies,
which may  include  any of the  following sanctions:

o  warning letters, fines, injunctions, consent decrees and civil
   penalties;
o  repair, replacement, refunds, recall or seizure of our products;
o  operating restrictions or partial suspension or total shutdown of
   production;
o  refusing our requests for 510(k) clearance or premarket approval of
   new products, new intended uses, or modifications to existing
   products;
o  withdrawing 510(k) clearance or premarket approvals that have already
   been granted; and
o  criminal prosecution.

If any of these events were to occur, it could harm our business.

The FDA can impose civil and criminal enforcement actions and other
penalties on us if we or our manufacturer fails to comply with stringent
FDA regulations.

         Medical device  manufacturing  facilities must maintain records,
which are available for FDA inspectors documenting that the appropriate
manufacturing procedures  were followed.  The FDA has authority to
conduct  inspections of our facility, as well as the facility of our
manufacturer.  Labeling and promotional activities are also subject to
scrutiny by the FDA and, in certain instances, by the  Federal  Trade
Commission.  Any failure by us or the  manufacturer  of our products  to
take  satisfactory  corrective  action in  response  to an  adverse
inspection  or to  comply  with  applicable  FDA  regulations  could
result  in enforcement  action against us or our  manufacturer,
including a public warning letter, a shutdown of manufacturing
operations, a recall of our products, civil or criminal penalties or
other sanctions.  From time to time, the FDA may modify such
requirements,  imposing  additional  or different  requirements  which
may require  us to alter our  business  methods  which  could  result  in
increased expenses. See "Item 1. Business - Governmental Regulation."




44