In addition, when used in this report, the words or phrases “will likely result,” “expect,” “anticipate,” “will continue,”  “intend,” “plan,” “believe” and similar expressions are intended to help identify forward-looking statements. We wish to caution readers that our operating results are subject to various risks and uncertainties that could cause  our actual results and outcomes to differ materially from those discussed or anticipated. Reference is made to the risks and  uncertainties described below and factors described in our most recent Annual Report on Form 10-K (which contains a  more detailed discussion of the risks and uncertainties related to our business). We also wish to advise readers not to place  any undue reliance on the forward-looking statements contained in this report, which reflect our beliefs and expectations  only as of the date of this report. We assume no obligation to update or revise these forward-looking statements to reflect  new events or circumstances or any changes in our beliefs or expectations. Some of the risks and uncertainties that might  cause actual results to differ from those anticipated include, but are not limited to, the following: (c) As with any new technology, we have experienced technical issues in developing and manufacturing the BioPhotonic  Scanner. In addition, in March  2003  the FDA questioned the status of the BioPhotonic Scanner as a non-medical  device. We subsequently filed an application with the FDA to have it classified as a non-medical device. The FDA  has not yet acted on our application. There are various factors that could determine whether the BioPhotonic Scanner  is a medical device including the claims that we or our distributors make about it. We are facing similar uncertainties  and regulatory issues in other markets with respect to the status of the BioPhotonic Scanner as a non-medical device  50 (b) Chinese regulators have indicated that they intend to publish new direct selling regulations within the next several  months. There can be no assurance that these regulations will be adopted or, if adopted, that they will benefit us.  While we anticipate we will be able to obtain a direct selling license under any new proposed regulations, there  can be no assurance that we will be able to obtain such a license should we apply. There has been some uncertainty  and confusion regarding the direction of the new regulations and the type of restrictions or requirements that may  be imposed under such regulations. Although we currently do not operate a direct selling business in China, our  future growth could be harmed if the regulations are not adopted or are unfavorable, if the adoption or implementa- tion of new regulations are delayed further than anticipated, or if we are unable to obtain a license for direct sell- ing under these regulations. In the event the new regulations prevent us from offering a distributor compensation  model comparable to what we offer in other markets, our business may be negatively impacted. In addition, if the  Chinese government adopts new direct selling regulations, these regulations could negatively impact our current  business model in China if they incorporate changes that impose restrictions on us, or if interpretations of existing  laws change as a result of such new regulations which require us to make changes to our business model in ways  that could harm our business in this market. (a) Our expansion of operations in China is subject to risks and uncertainties. We continue to be subject to significant  regulatory scrutiny and have experienced challenges including interruption of sales activities at certain stores and  fines being paid in several cases, which in the aggregate have been less than  1 % of revenue in China. Because of  restrictions on direct selling activities, we have implemented a modified business model for this market using retail  stores and an employed sales force. We have, at times, received guidance from local regulators on conducting our  operations including limiting the size of our training meetings, controlling the activities of our sales employees,  controlling the distribution of product outside of our stores, keeping the number of sales employees at reasonable  levels and limiting the involvement of our overseas distributors. While we continuously update our operating model  to address this guidance, we believe we could experience similar challenges in the future as we expand operations in  China and continue to work with regulators to help them understand our business model. Our operations in China  may be modified or otherwise harmed by regulatory changes, subjective interpretations of laws or an inability to  work effectively with national and local government agencies. In addition, as our number of sales representatives  continues to rapidly grow we could face increasing risks that improper actions by these local sales employees, or  any overseas distributors, in violation of local laws or our policies could result in regulatory investigations and  penalties that could harm our business.  • our expectation that the self-manufacture of product will result in reduced cost of goods sold, and our plans to  manufacture more products in China for export; • our anticipation that the launch of Pharmanex products in China will have a negative impact on Hong Kong and  Taiwan revenue in  2005 ;  • our anticipation that we will incur expenses of approximately $ 6 . 5  million in  2005  related to a global distributor  convention we plan to hold later in  2005 ; • our plans to commence operations in Indonesia and Russia; • our anticipation that gross margins as well as selling expenses as a percentage of revenue will each be slightly lower  in  2005  compared to  2004  as a result of our continued expansion of the BioPhotonic Scanner program around the  world; and • our anticipation that the remittance of permanently reinvested earnings related to our foreign operations will be  postponed indefinitely.