VNUS Medical Technologies, Inc. (VNUS), incorporated in January 1995, is a provider of medical devices for the minimally invasive treatment of venous reflux disease. Venous reflux disease, a progressive condition caused by incompetent vein valves, is characterized by the poor return of blood from the legs to the heart. The disease results in symptoms, such as leg pain, swelling, fatigue, skin ulcers and painful varicose veins. The Company's primary product line, the Closure system, consists of its own radio frequency (RF) generator and proprietary disposable endovenous catheters to close diseased veins through the application of temperature-controlled RF energy. VNUS also sells accessory products, such as sterile supply kits and other accessory supplies used to conduct its Closure procedure. On July 15, 2004, VNUS established the entity VNUS Medical Technologie GmbH in Weinstadt, Germany. The subsidiary is responsible for direct marketing and sales in the European Union of medical devices supplied by the Company for the treatment of venous disease. The Closure system provides advantages over minimally invasive treatments that use laser energy to treat the vein in a procedure referred to as endovenous laser ablation (EVL). The Company's Closure procedure effectively treats venous reflux disease and painful varicose veins, is minimally invasive, can be used in an outpatient or physician office setting and allows patients to quickly resume normal activities. Moreover, the Closure procedure is supported by a significant amount of clinical data. VNUS sponsored a randomized trial that compared the Closure procedure to vein stripping, and found the Closure procedure to be as effective as vein stripping at two years following treatment, with fewer side effects and faster recovery. As of March 15, 2004, the Closure procedure is accepted by the policies of approximately 100 health insurers, representing over 220 million covered lives in the United States. VNUS directly sells the Closure system in the United States and markets the Closure system in selected international markets, primarily through distributors. The Company's own disposable endovenous catheters are used to deliver RF energy to heat the walls of saphenous veins. Each catheter has a set of collapsible electrodes located at the tip. The electrodes expand to contact the inner wall of the vein to be treated and produce uniform heating on all sides of the vein wall, as well as a localized depth of heating to limit damage to surrounding tissue. The electrodes collapse as the vein shrinks in response to heating. A temperature sensor located on one of the electrodes measures and transmits the temperature of the vein wall to the RF generator, which automatically adjusts the power level. This enables the generator to use the minimum amount of power necessary for the catheter to deliver a consistent temperature and close the vein. The catheters also have a hollow center, or lumen, which allows fluid delivery or standard guidewire usage. They are available in two sizes, which allow doctors to treat saphenous vein diameters that encompass over 95% of patients. The RF generator delivers energy to the catheter and continuously monitors the temperature at the vein wall, automatically adjusting the power delivered to the catheter to achieve a target temperature. This feedback system is designed to allow the physician to perform the Closure procedure at a relatively constant temperature over the entire length of the treated vein. The RF generator is controlled by its own embedded software, which allows it to recognize each catheter model and to automatically select the appropriate algorithm. The product is a table top unit and has a digital display panel that can be configured for multiple languages and provides readings of the temperature of the vein wall at the point where energy is applied, the power used during treatment and the impedance, or amount of resistance between electrodes, so that the physician can determine whether the electrodes are maintaining adequate conta