According to the American Society for Aesthetic Plastic Surgery, or the ASAPS, there were approximately 9.3 million non-surgical aesthetic procedures performed in the United States in 2005, representing a total consumer market of more than $4.1 billion. The leading non-surgical aesthetic procedure in 2005 was the administration of injectable aesthetic products, followed by laser hair removal, microdermabrasion, chemical peel and the treatment of varicose veins.

According to the ASAPS, injectable aesthetic treatments are the largest and the fastest growing segment of the non-surgical aesthetic treatment market. Injectable aesthetic products are administered through a syringe into the facial skin or deeper facial tissues in order to reduce the appearance of facial wrinkles and scars and to add fullness to the lips and cheeks.

The ASAPS reported that, in 2005, approximately 4.9 million injectable aesthetic procedures were performed in the United States, and U.S. consumers spent approximately $2.2 billion on injectable aesthetic treatments. Based on market research conducted by Medical Insight, Inc., it is believed that physicians purchased approximately $600 million of injectable aesthetic products for these treatments.

Industry research conducted by Medical Insight, Inc. projects that the market for injectable dermal filler treatments will expand at a compound annual growth rate through 2011 of more than 25% in the United States and 20% throughout the rest of the world.

ArteFill is composed of PMMA microspheres (20% by volume) suspended in a water-based carrier gel (80% by volume) containing bovine collagen and lidocaine, a local anesthetic. ArteFill is a smooth, opaque, off-white gel.

ArteFill is a proprietary combination of round and smooth PMMA microspheres, ranging from 30 to 50 microns in diameter, suspended in a bovine collagen-based solution. PMMA is a biocompatible synthetic polymer manufactured to the standards required for use as a long-term medical grade implant.

The Company manufactures its PMMA microspheres at its manufacturing facility in Frankfurt, Germany. The Company has developed a proprietary manufacturing process that generates round and smooth microspheres from medical grade PMMA. This proprietary process ensures that the Company’s PMMA microspheres are of the proper size and shape to meet the FDA’s stringent quality requirements.

The Company manufactures the bovine collagen contained in ArteFill at its manufacturing facility in San Diego, California. Bovine collagen has been used by plastic surgeons and dermatologists to treat wrinkles and scars for over 25 years.

ArteFill contains a local anesthetic, lidocaine (0.3%). Lidocaine reduces patient discomfort during and after the injection process, making ArteFill injections more convenient for patients and physicians than other injectable aesthetic products that do not contain a local anesthetic.

The Company intends to sell ArteFill in kits containing five sterile pre-filled syringes, sealed within a thermoformed tray. These kits must be maintained in refrigerated storage at standard domestic refrigerator temperatures (4° to 8° C) for the duration of the product shelf life. The Company ships each kit inside a container designed to maintain the 4° to 8° C temperature requirement during overnight transit.

Sales and marketing expense increased by $2.2 million from $2.0 million for the nine months ended September 30, 2005 to $4.2 million for the nine months ended September 30, 2006.

Net interest expense decreased by $1.6 million from $3.5 million for the nine months ended September 30, 2005 to $1.9 million for the nine months ended September 30, 2006.