EXHIBIT 99

                              CAUTIONARY STATEMENT

     The  statements  contained  in  this  Form  10-K  include   forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 ("PSLRA"). When used in this Form 10-K and in future filings by the Company
with the Securities and Exchange  Commission,  in the Company's  press releases,
presentations to securities analysts or investors, or in oral statements made by
or with the  approval  of an  executive  officer  of the  Company,  the words or
phrases  "believes,"  "may,"  "will  likely  result,"  "estimates,"  "projects,"
"anticipates,"  "expects"  or similar  expressions  and  variations  thereof are
intended  to  identify  such  forward-looking  statements.  Any  forward-looking
statement  involves  risks and  uncertainties  that may have a material  adverse
effect on the business, results of operations, financial condition or prospects,
financial or other, of the Company and may cause the Company's actual results to
differ  materially  from  historical  results or the  results  discussed  in the
forward-looking statements.

     The  following  discussions  contain  cautionary  statements  regarding the
Company's business that investors and others should consider. This discussion is
intended to take  advantage of the "safe  harbor"  provisions  of the PSLRA.  In
making these cautionary statements, the Company is not undertaking to address or
update each factor in future filings or  communications  regarding the Company's
business or results.

RECENT OPERATING LOSSES; NEED FOR ADDITIONAL FINANCING

     The Company incurred operating losses of $12,331,000 in fiscal 2000 and has
an  accumulated  deficit of  $41,132,000  at March 31, 2000.  In response to the
losses incurred,  management has implemented  certain corrective actions and has
taken steps to improve operations and provide for adequate resources to fund the
Company's  capital needs for the next twelve  months.  In view of these matters,
management   believes  the  Company  has  the  ability  to  meet  its  financing
requirements  on a  continuing  basis.  However,  if the  Company's  fiscal 2001
planned  cash  flow  projections  are not met,  management  could  consider  the
reduction of certain  discretionary  expenses and sale of certain assets. In the
event that these plans are not  sufficient and the Company's  credit  facilities
are not available, the Company's ability to operate could be adversely affected.

DEPENDENCE ON PRODUCTS

     The  Company's  revenues are primarily  generated  from sales of its CDR(R)
system  and,  to a lesser  extent,  other  products,  including  the  CDRCam(R),
CDRPan(TM) and accuDEXA(R).  There can be no assurance that any of these devices
will not be rendered  obsolete or inferior as a result of technological  change,
changing customer needs or new product introductions, each of which would have a
material  adverse  effect on the  Company.  There can be no  assurance  that the
Company's  competitors will not succeed in developing or marketing  technologies
and products that are superior to and/or more  commercially  attractive than the
Company's.  The Company's  success will depend in part on its ability to improve
and enhance its products in a timely manner.  There can be no assurance that the
Company  will be able to do so.  The  failure to  enhance  any of the  Company's
products in a timely manner could have a material adverse effect on the Company.

DEPENDENCE ON EXCLUSIVE NORTH AMERICAN DISTRIBUTOR

     As of May 1, 2000, the Company  markets and  distributes its CDR(R) product
line in the United  States  and  Canada  exclusively  through  Patterson  Dental
Company.  The  Company  anticipates  that  Patterson  Dental  will be the single
largest  contributor to the Company's  revenues in the coming fiscal year. While
the  Distributorship  Agreement  between the Company and  Patterson  Dental does
provide for a minimum  purchase quota,  there can be no assurance that Patterson
will meet any minimum  purchase  quota or that it will  continue to purchase any
product at all from the Company.  If Patterson  fails to purchase a  significant
volume of product from the Company,  it would have a material  adverse effect on
the Company.


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DEPENDENCE ON THIRD-PARTY DISTRIBUTORS

     Outside of North America,  the Company  distributes its CDR(R) product line
through international  third-party  independent  distributors.  Historically,  a
limited number of distributors  have accounted for a significant  portion of the
Company's revenues.  In general,  these distributors could discontinue marketing
the  Company's  products  with  little or no notice.  Certain  of the  Company's
distributors  also  could  market  products  which  compete  with the  Company's
products. The loss of or significant reduction in sales volume of one or more of
the Company's distributors could have a material adverse effect on the Company.

DEPENDENCE ON DEVELOPING AND MARKETING NEW PRODUCTS AND ENHANCEMENTS TO EXISTING
PRODUCTS

     The Company intends to develop and/or is currently  developing new products
for the dental and medical  markets.  There can be no assurance that the Company
will continue with and/or succeed in its efforts to develop such  products.  The
Company expects to file 510(k)  applications with the FDA in connection with its
future  products.  There  can  be  no  assurance  that  the  Company  will  file
applications for or obtain regulatory  approval from the FDA, either in the form
of a pre-market clearance or a 510(k) clearance, for any of its future products,
or that in order to obtain FDA  clearance,  the Company  will not be required to
submit   additional   data  or  meet  additional  FDA   requirements   that  may
substantially delay the application process and result in substantial additional
expense.  Moreover, such pre-marketing clearance, if obtained, may be subject to
conditions  on  marketing  or  manufacturing  which could  impede the  Company's
ability to manufacture and/or market its products.  Furthermore, the anticipated
market for the  Company's  planned  digital  mammography  sensor is unproven and
there  can be no  assurance  that it will  develop  according  to the  Company's
expectations.  While the Company is actively engaged in research and development
to develop new  products,  there can be no  assurance  that the Company  will be
successful  in such  endeavors.  There  can be no  assurance  that  the  digital
mammography sensors or any other products to be developed by the Company will be
approved by or receive  marketing  clearance  from  applicable  domestic  and/or
international  governmental or regulatory authorities.  If the Company is unable
to  develop,  obtain  regulatory  approval  for  and  market  new  products  and
enhancements to existing products, it will have a material adverse effect on the
Company.

RAPID AND SIGNIFICANT TECHNOLOGICAL CHANGE

     The  market  for the  Company's  products  is  characterized  by rapid  and
significant  technological  change,  evolving industry standards and new product
introductions.  The Company's  products require  significant  planning,  design,
development  and testing  which  require  significant  capital  commitments  and
investment by the Company. There can be no assurance that the Company's products
or  proprietary  technologies  will not become  uncompetitive  or  obsolete as a
result of  technological  change,  evolving  industry  standards  or new product
introductions  or that the Company will be able to generate any economic  return
on  its  investment  in  product  development.  If  the  Company's  products  or
technologies become uncompetitive or obsolete,  it would have a material adverse
effect on the Company.

DEPENDENCE ON KEY SUPPLIERS; VOLATILITY OF SEMICONDUCTOR MARKET

     The Company relies on several key suppliers as sole sources for a number of
critical components.  Of these,  semiconductors are the most significant product
components the Company purchases. The availability and price of these components
may be subject to change due to  interruptions  in production,  changing  market
conditions and other events. Furthermore, availability may be adversely impacted
if the Company fails to make timely payments to its key suppliers.  There can be
no assurance that, if the Company were to enter into purchase  arrangements with
other suppliers,  such suppliers would be able to deliver such semiconductors at
an acceptable price or in a timely manner. If the Company were unable to develop
reasonably-priced  alternative  sources in a timely  manner,  or if the  Company
encountered  delays or other  difficulties  in the supply of such  products  and
other materials from third parties,  there could be a material adverse effect on
the Company.  In past years,  semiconductors  have been  subject to  significant
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price fluctuations.  There can be no assurance that the Company can mitigate the
effect of future price  increases  on its results of  operations  and  financial
condition.

INTENSE COMPETITION

     Competition  relating  to the  Company's  current  products  is intense and
includes various  companies,  both within and outside of the United States.  The
Company  anticipates  that  competition  for its  future  products  will also be
intense and  include  various  companies,  both within and outside of the United
States. Many of the Company's competitors are large companies with substantially
greater financial, sales and marketing, and technical resources, larger and more
experienced  research and development staffs, more extensive physical facilities
and substantially  greater experience in obtaining  regulatory  approvals and in
marketing products than the Company. In addition, there can be no assurance that
the Company's competitors are not currently  developing,  or will not attempt to
develop,  technologies  and products  that are more  effective  than those being
developed by the Company or that would otherwise  render the Company's  existing
and new technology and products obsolete or  uncompetitive.  No assurance can be
given that the Company will be able to compete  successfully.  The  inability of
the  Company  to  compete  successfully  or the  development  by  the  Company's
competitors  of technology and products that are more effective than those being
developed by the Company would have a material adverse effect on the Company.

RELIANCE ON PATENTS AND PROPRIETARY TECHNOLOGY; RISK OF PATENT INFRINGEMENT

     The  Company  currently  has  issued  patents  and patent  applications  as
described in Item 1 - "Business,"  of this Form 10-K.  There can be no assurance
that any of the Company's patents,  any of the patents of which the Company is a
licensee or any patents  which may issue to the Company or which the Company may
license in the future, will provide the Company with a competitive  advantage or
afford the  Company  protection  against  infringement  by  others,  or that the
patents will not be  successfully  challenged or  circumvented by competitors of
the Company.

     The Company is the licensee in certain  fields of  biomedical  radiology of
certain  patents,   patent  applications  and  other  know-how  related  to  APS
technology  (collectively,  the "APS  Technology"),  which was  developed at the
California Institute of Technology. The Company has been advised by the licensor
of the APS Technology  that the Company's  rights to such technology are subject
to  government  rights  to  use,  noncommercial  educational  rights  to  use by
California Tech and the right of a third party to obtain a nonexclusive  license
from the California Institute of Technology with respect to such technology. The
Company  believes  that,  as of the date of this  filing,  except for such third
party's  exercise  of its  right to  obtain a  nonexclusive  license  to use APS
Technology  in a field other than  biomedical  radiology,  none of the foregoing
parties have given notice of their exercise of any of their respective rights to
the APS Technology.  There can be no assurance that this will continue to be the
case, and any such exercise could have a material adverse effect on the Company.
In  addition,   the  license  to  the  APS  technology  is  subject  to  certain
requirements  relating  to  product  introduction,  improvement,  marketing  and
distribution.  There can be no  assurance  that the Company will be able to meet
the  requirements  necessary  to  maintain  its  license,  and  any  loss  of or
restriction in its license may have a material adverse effect on the Company.

     The Company is also the owner of certain trade  secrets,  which it protects
by,  among  other  things,   entering  into   non-disclosure,   confidentiality,
non-solicitation  and  non-competition  agreements.  However,  there  can  be no
assurance  that the  duties  imposed  by these  agreements,  such as the duty to
maintain  confidentiality and the duty not to compete,  will not be breached, or
that such breaches will not have a material adverse effect on the Company.

     There also can be no assurance that the technology practiced by the Company
will not infringe  upon the patents of others.  The  Company's  CDR(R) system is
currently the subject of litigation  regarding the patent rights of others.  See
Item 3 - "Legal  Proceedings." In the event that any such infringement  claim is
successful,  there  can be no  assurance  that  the  Company  would  be  able to
negotiate with the patent holder for a license,  in which case the Company could
be prevented  from  practicing  the subject  matter  claimed by such patent.  In
addition,  there can be no assurance  that the Company would be able to redesign
its products

<PAGE>


to avoid  infringement.  The  inability  of the Company to practice  the subject
matter of  patents  claimed  by  others or to  redesign  its  products  to avoid
infringement could have a material adverse effect on the Company.

LITIGATION AND INSURANCE

     The  Company  and/or  certain  of its  officers  and former  officers,  are
involved in the proceedings described below:

     I. The Company is a named  defendant in two lawsuits  instituted  by Trophy
Radiologie, S.A. (`Trophy S.A.'), a subsidiary of Trex Medical Corporation.  One
lawsuit was instituted in France and the other in the United States.

     The French  lawsuit was filed in November  1995,  in the tribunal de Grande
Instance de Bobigny,  the French patent court,  and originally  alleged that the
Company's  CDR(R)system  infringes French Patent No. 2,547,495,  European Patent
No. 129,451 and French Certificate of Addition No. 2,578,737. These patents, all
of which are  related,  are  directed to a CCD-based  intra-oral  sensor.  Since
filing its lawsuit,  Trophy S.A. has  withdrawn its  allegation of  infringement
with respect to the Certificate of Addition.  Trophy S.A. is seeking a permanent
injunction and  unspecified  damages,  including  damages for its purported lost
profits.

     The  lawsuit in the United  States was filed in March 1996 by Trophy  S.A.,
Trophy  Radiology,  Inc., a United  States  subsidiary  of Trophy S.A.  (`Trophy
Inc.') and the named inventor on the patent in suit,  Francis  Mouyen,  a French
citizen.  The suit was  brought  in the  United  States  District  Court for the
Eastern  District  of New York,  and  alleges  that the  Company's  CDR(R)system
infringes  United  States  Patent No.  4,593,400  (the `400  patent'),  which is
related to the patents in the French  lawsuit.  Trophy  S.A.,  Trophy  Inc.  and
Mouyen are seeking a permanent  injunction and  unspecified  damages,  including
damages for purported lost profits, enhanced damages for the Company's purported
willful infringement and an award of attorney fees.

     In addition,  the Company has counter-sued  Trophy S.A. and Trophy Inc. for
infringement of United States Patent No. 4,160,997,  an expired patent which was
exclusively  licensed to the Company by its inventor,  Dr. Robert Schwartz,  and
for false advertising and unfair competition.

     On September 12, 1997,  after having been given  permission to do so by the
Court, the Company served two motions for summary judgment seeking  dismissal of
the action pending in the United States District Court for the Eastern  District
of New York,  on the  grounds  of  non-infringement  and patent  invalidity.  On
February 22, 2000,  oral argument on these  motions was heard by the Court.  The
motions are currently pending.

     There  can be no  assurance  that the  Company  will be  successful  in its
defense  of any of these  actions,  or in its  counter-suit.  If the  Company is
unsuccessful  in its defense of any of these  actions,  it could have a material
adverse  effect upon the Company.  Moreover,  regardless of their  outcome,  the
Company  may be forced to expend  significant  amounts of money in legal fees in
connection with these lawsuits.

     II. In late 1998 through early 1999, nine shareholder complaints purporting
to be class action  lawsuits were filed in the United States  District Court for
the Eastern  District of New York.  Plaintiffs  filed a Consolidated and Amended
Complaint on or about May 27, 1999 and, on or about  November 24, 1999,  filed a
Second Amended and Consolidated Complaint (the "Complaint"). The Complaint names
as  defendants  the Company,  David B. Schick,  Thomas E.  Rutenberg,  and David
Spector   (collectively,    the   "Individual    Defendants"),    as   well   as
PricewaterhouseCoopers LLP.

     The Complaint alleged, inter alia, that certain defendants issued false and
misleading  statements  concerning the Company's  publicly  reported earnings in
violation of the federal securities laws. The

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Complaint sought certification of a class of persons who purchased the Company's
Common Stock between July 1, 1997 and February 19, 1999, inclusive,  and did not
specify the amount of damages sought.

     On May 23, 2000,  the Company  entered into an agreement in principle  with
the  plaintiff  for the  settlement  of the  class  action  lawsuit.  Under  the
settlement  agreement,  reflected in a Memorandum of  Understanding,  all claims
against the Company and the Individual  Defendants  are to be dismissed  without
presumption or admission of any liability or wrongdoing.  The principal terms of
the settlement agreement call for payment to the Plaintiffs,  for the benefit of
the class, of the sum of $3.4 million. The settlement amount will be paid in its
entirety by the  Company's  insurance  carrier  and is not  expected to have any
material  impact on the  financial  results of the Company.  The  settlement  is
subject to approval by the Court.

     III.In August 1999, the Company, through its outside counsel, contacted the
Division of Enforcement of the  Securities  and Exchange  Commission  ("SEC") to
advise it of certain matters  related to the Company's  restatement of earnings.
See "Item 7 - Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations - Matters  Relating to Restatement of Financial  Results."
The SEC has made a request for the voluntary  production  of certain  documents.
The  Company  intends to  cooperate  fully  with the SEC staff and has  provided
responsive  documents  to it.  This  matter  is in a  preliminary  stage and the
Company cannot predict its potential outcome.

The Company may be a party to a variety of legal  actions (in  addition to those
referred to above),  such as employment  and  employment  discrimination-related
suits,  employee  benefit  claims,  breach of  contract  actions,  tort  claims,
shareholder suits, including securities fraud,  governmental  investigations and
intellectual property related litigation. In addition,  because of the nature of
its business,  the Company is subject to a variety of legal actions  relating to
its business  operations.  Recent court decisions and  legislative  activity may
increase the Company's exposure for any of these types of claims. In some cases,
substantial  punitive damages may be sought. The Company currently has insurance
coverage for some of these potential  liabilities.  Other potential  liabilities
may not be covered by insurance, insurers may dispute coverage, or the amount of
insurance  may not be  sufficient  to cover the damages  awarded.  In  addition,
certain  types of  damages,  such as  punitive  damages,  may not be  covered by
insurance  and  insurance  coverage for all or certain  forms of  liability  may
become unavailable or prohibitively expensive in the future.

DILUTIVE EFFECT OF GREYSTONE TRANSACTION

     The  Company  has  entered  into  an  agreement  with   Greystone   Funding
Corporation  whereby  Greystone  and its  designees  may  exercise  Warrants  to
purchase up to 18 million  shares of the Company's  Common  Stock.  If Greystone
exercises  such  Warrants  or a portion  thereof,  it can be  expected to have a
significant  dilutive  effect on the  percentage of shares held by the Company's
current shareholders.

RESTRICTIVE COVENANTS IN LOAN AGREEMENTS

     The Loan Agreement,  as amended,  between the Company and Greystone Funding
Corporation as well as the Loan Agreement,  as amended,  between the Company and
DVI Financial  Services,  Inc. contain  covenants that may inhibit the Company's
ability to manage its business and/or implement its strategic  decisions.  These
restrictions,  among other  things,  will limit the  Company's  ability to incur
additional indebtedness; issue capital stock; create, incur or assume liens; and
merge, consolidate or sell assets.

PRODUCT WARRANTIES; RETURNS

     The Company  generally  warrants  each of its products  against  defects in
materials  and  workmanship  for a period of one year from the date of  shipment
(plus any extended  warranty period purchased by the customer).  The Company has
also generally  allowed its customers to return  products  within 30 days of the
purchase  date. The need for warranty  service as well as product  returns could
each have a material  adverse  effect on the  Company by,  among  other  things,
requiring  additional  expenditures  for parts and personnel as well as damaging
the Company's reputation and goodwill.


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REGULATORY AND LEGISLATIVE RISKS

     The Company must obtain certain approvals by and marketing  clearances from
governmental  authorities,  including the FDA and similar health  authorities in
foreign countries,  to market and sell its products in those countries.  The FDA
regulates the marketing,  manufacturing,  labeling, packaging, advertising, sale
and  distribution  of 'medical  devices,' as do various  foreign  authorities in
their  respective   jurisdictions.   The  FDA  enforces  additional  regulations
regarding the safety of equipment  utilizing x-rays.  Various states also impose
similar regulations.  The Company's CDR(R) system is currently regulated by such
authorities  and certain of the Company's new products will require  approval by
or marketing clearance from various governmental authorities, including the FDA.

     The FDA review process typically requires extended  proceedings  pertaining
to the safety and efficacy of new products.  A 510(k) application is required in
order to market a new or modified  medical device.  If specifically  required by
the FDA, a pre-market approval ("PMA") may be necessary. Such proceedings, which
must be  completed  prior to  marketing a new medical  device,  are  potentially
expensive and time consuming.  They may delay or hinder a product's timely entry
into the  marketplace.  Moreover,  there can be no assurance  that the review or
approval  process  for  these  products  by  the  FDA or  any  other  applicable
governmental  authorities  will occur in a timely  fashion,  if at all,  or that
additional  regulations  will not be adopted or current  regulations  amended in
such a manner as will adversely  affect the Company.  The FDA also regulates the
content of  advertising  and marketing  materials  relating to medical  devices.
Failure  to comply  with such  regulations  may  result in a delay in  obtaining
approval for the marketing of such  products or the  withdrawal of such approval
if previously obtained. There can be no assurance that the Company's advertising
and  marketing  materials  regarding  its products are and will be in compliance
with such regulations.  The Company is also subject to other federal,  state and
local laws, regulations and recommendations relating to safe working conditions,
laboratory and manufacturing practices. The extent of government regulation that
might result from any future  legislation  or  administrative  action  cannot be
accurately predicted.  Failure to comply with regulatory requirements could have
a material adverse effect on the Company.  International  sales of the Company's
products are subject to the regulatory agency product registration  requirements
of each country in which the Company's  products are sold. The regulatory review
process  varies  from  country to  country  and may in some  cases  require  the
submission of clinical data. The Company typically relies on its distributors in
foreign countries to obtain the required regulatory  approvals.  There can be no
assurance,  however,  that such approvals will be obtained on a timely basis, if
at all, or that the failure to obtain such  approval by a  distributor  will not
have a material adverse effect on the Company.  The Company's  customers operate
in the health care industry, which is highly regulated. Both existing and future
governmental  regulations  could  adversely  impact the  Company.  Additionally,
cost-containment  efforts  by health  maintenance  organizations  may  adversely
affect the potential market for the Company's devices.

POTENTIAL FOR PRODUCT RECALL AND PRODUCT LIABILITY CLAIMS

     Products  such as those  sold by the  Company  may be subject to recall for
unforeseen  reasons.  In addition,  certain  applications,  including  projected
applications,  of the Company's  products  entail the risk of product  liability
claims.  Such risks will exist  even with  respect to those  products  that have
received, or in the future may receive, regulatory approval for commercial sale.
These  claims may be made by  consumers,  distributors,  wholesalers  or others.
Although  the  Company  has  maintained  insurance  coverage  related to product
liability  claims,  no assurance can be given that product  liability  insurance
coverage will continue to be available or, if available, that it can be obtained
in  sufficient  amounts or at  reasonable  cost or that it will be sufficient to
cover any claims that may arise.  The Company does not  maintain  any  insurance
relating to potential  recalls of its products.  Costs associated with potential
product recalls or product liability claims could have a material adverse effect
on the Company.

DEPENDENCE ON THIRD-PARTY REIMBURSEMENT

     Third-party payors, including government health administration authorities,
private health care insurers and other organizations  regulate the reimbursement
of  fees  related  to  certain  diagnostic  procedures

<PAGE>


or medical treatments. Third-party payors are increasingly challenging the price
and  cost-effectiveness  of medical  products  and  services.  While the Company
cannot  predict  what  effect the  policies  of  government  entities  and other
third-party  payors will have on future sales of the Company's  products,  there
can be no assurance that such policies would not have a material  adverse effect
on the Company.

UNCERTAINTIES ASSOCIATED WITH INTERNATIONAL MARKETS

     In fiscal 2000,  1999 and 1998,  sales to  customers  outside of the United
States were  approximately  32%,  13% and 18%,  respectively,  of the  Company's
revenues,  and the Company anticipates that international sales will continue to
account for a significant  percentage of the Company's  revenues.  International
revenues  are subject to a number of  uncertainties,  including  the  following:
agreements  may be  difficult to enforce and  receivables  difficult to collect;
foreign  customers and  distributors  may have longer  payment  cycles,  foreign
countries may impose additional withholding taxes or otherwise tax the Company's
foreign  income,  impose tariffs or adopt other  restrictions  on foreign trade;
fluctuations  in exchange rates may affect product demand in relation to foreign
competitors  that may  achieve  advantageous  pricing  based on the  comparative
strength of the United  States  dollar;  United  States  export  licenses may be
difficult to obtain;  and intellectual  property rights in foreign countries may
be  difficult  to  enforce.  Moreover,  many  foreign  countries  have their own
regulatory approval  requirements for the sale of the Company's  products.  As a
result, the Company's  introduction of new products into  international  markets
could be costly  and  time-consuming,  and there  can be no  assurance  that the
Company  will be able to obtain the  required  regulatory  approvals on a timely
basis,  if at all.  There can be no assurance that any of these factors will not
have a material adverse effect on the Company.

DEPENDENCE UPON KEY PERSONNEL

     The success of the Company is dependent,  in part, upon its ability to hire
and retain management,  sales,  technical and research personnel who are in high
demand  and  are  often  subject  to  competing  employment  opportunities.  The
inability of the Company to hire or retain key management,  sales,  technical or
research  personnel could have a material  adverse effect on the Company.  There
can be no assurance  that any of the Company's key employees will continue to be
active with the Company.  The Company  maintains  and is the named insured party
under a  $1,000,000  life  insurance  policy  on Mr.  David  Schick,  the  Chief
Executive Officer of the Company.  There is no assurance that such insurance can
be maintained or will be adequate to meet the Company's future needs.

HISTORY OF RAPID GROWTH; ABILITY TO MANAGE GROWTH

     There are  significant  risks,  expenses and  difficulties  associated with
managing the operation and sustaining the development of an expanding  business.
The  Company's  previous  growth  placed  significant  demands on the  Company's
financial and other resources.  In the past, the Company has experienced certain
inadequacies in its operating and financial systems, infrastructure and controls
and was not able to improve internal controls and upgrade personnel as needed to
accommodate  the Company's  growth.  The Company will be required to continually
improve operating,  financial, and other systems, as well as to train, motivate,
and manage its employees. If the Company's management is unable to manage growth
effectively  or new  employees  are  unable  to  achieve  appropriate  levels of
performance, it could have a material adverse effect on the Company.

CONTROL OF THE COMPANY BY CERTAIN STOCKHOLDERS; CONFLICTS OF INTEREST

     Currently, the executive officers and directors of the Company collectively
beneficially own approximately  35.5% of the outstanding shares of Common Stock.
Accordingly, they may effectively have the ability to elect all of the directors
of the Company and determine the outcome of all other matters  submitted for the
approval of the stockholders.  In particular, David B. Schick and members of his
immediate family beneficially own approximately 27% of the outstanding shares of
Common Stock and,  accordingly,  may be able to exert significant influence over
the  Company.  In  addition,  the  Company has entered  into an  agreement  with
Greystone  Funding  Corporation,  which  is a  lender  to  the  Company  whereby
Greystone  may  ultimately  control a majority of the Common Stock and up to one
half of the seats on the

<PAGE>


Company's Board of Directors and, accordingly,  may be able to exert significant
influence  over the Company.  An employee of  Greystone's  parent company (which
pays such  employee's  salary) is serving as  President  of the  Company,  and a
designee of  Greystone is serving as COO of the  Company.  Two of the  Company's
current directors are designees of Greystone. Accordingly, the relationship with
Greystone involves potential conflicts of interest.

NASDAQ DELISTING

     The  Company's  Common  Stock has been  delisted  from The Nasdaq  National
Market,  effective at the close of business on September 15, 1999, and currently
trades over the counter. The delisting could have a material adverse effect upon
the  Company in a number of ways,  including  its  ability  to raise  additional
capital.  In addition,  the absence of a trading system may adversely affect the
ability of  broker-dealers  to sell the Company's Common Stock, and consequently
may limit the public  market for such Stock and have a negative  effect upon its
trading price. There can be no assurance that the Company's Common Stock will be
relisted  on the Nasdaq  National  Market at any future  date or that such stock
will be listed or traded on any market or trading system.

POSSIBLE VOLATILITY OF STOCK PRICE

     The stock market historically has experienced volatility which has affected
the market price of securities of many companies and which has historically been
unrelated to the operating performance of such companies.  The market prices for
securities  of  medical  technology  companies  have  historically  been  highly
volatile. Future technological  innovations or new commercial products,  results
of clinical testing, changes in regulation, litigation and public concerns as to
product safety as well as period-to-period fluctuations in financial performance
and fluctuations in securities markets generally could cause the market price of
the Common Stock to fluctuate substantially. These broad market fluctuations may
adversely affect the market price of the Common Stock.

POTENTIALLY SIGNIFICANT FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY

     Several factors may significantly  affect the Company's revenues,  expenses
and results of operations  from quarter to quarter,  including the timing of new
product introductions by the Company or its competitors,  developments regarding
new  treatments  for  osteoporosis,  developments  in  government  reimbursement
policies,  product mix, the ability to supply  products to meet customer  demand
and  fluctuations  in  manufacturing  costs. In addition,  the Company's  CDR(R)
products are subject to seasonal variations.  Consequently, quarterly results of
operations can be expected to fluctuate.  Such fluctuations in quarterly results
of operation could adversely affect the market price of the Common Stock.

AUTHORIZATION OF PREFERRED STOCK

     The Company's  certificate  of  Incorporation  authorizes the issuance of a
series  or  designation  of  Preferred  Stock  with  such  rights,  preferences,
privileges  and  restrictions  as may be  determined  from  time  to time by the
Company's Board of Directors.  Accordingly, the Board of Directors is empowered,
without  the need  for  shareholder  approval,  to issue  Preferred  Stock  with
dividend, liquidation,  conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of the  company's  Common
Stock.  Other  than the  Series A  Preferred  Stock  offered  hereby,  there are
currently no other shares of Preferred Stock designated or issued.