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•	continued market acceptance of our endovascular systems;

•	our ability to successfully commercialize products which incorporate the technology obtained as part of the Nellix acquisition;

•	the level and availability of third party payor reimbursement for our products;

•	our ability to effectively manage our business and keep pace with our anticipated revenue growth;

•	our ability to protect our intellectual property rights and proprietary technologies;

•	our ability to operate our business without infringing the intellectual property rights and proprietary technology of third parties;

•	our ability to effectively develop new or complementary technologies;

•	our ability to attract, retain, and motivate qualified personnel;

•	our ability to manufacture our endovascular systems to meet demand;

•	the nature of regulatory requirements that apply to us, our suppliers, and competitors, and our ability to obtain and maintain any required regulatory approvals;

•	our ability to maintain adequate liquidity to fund our operational needs;

•	our ability to effectively compete with the products offered by our competitors;

•	general macroeconomic and world-wide business conditions; and

•	other risks set forth under “Risk Factors” in Item 1A of this Annual Report on Form 10-K.

Item 1.	Business

•	The 30-day mortality rate of all patients in the study undergoing EVAR was approximately 1.2%, as compared to 4.8% for open surgical repair.

•	Patients treated by EVAR were three times as likely to be discharged to their homes rather than another rehabilitation facility as compared to patients treated with open repair.

•	The average hospital stay for patients in the study undergoing EVAR was 3.4 days versus 9.3 days for patients undergoing open surgical repair.

•	Focus exclusively on the aorta for the commercialization of innovative products.

•	Design and manufacture ELG Systems that are easy to use and result in excellent clinical outcomes.

•	Provide exceptional clinical and technical support to physicians through an experienced and knowledgeable sales and marketing organization.

•

Anatomical Fixation. Our ELG Device is unique in that the main body of the device sits on the patient's natural aortoiliac bifurcation. This provides a solid foundation for the long-term stability of the device. Alternative ELG devices rely on hooks, barbs and radial force to anchor within the aorta (generally referred to as "proximal fixation") near the renal arteries. We have proven in our clinical studies that anatomical fixation inhibits device migration within the aorta due to the inherent foundational support of the patients own anatomy.

•

Unique, Minimally Invasive Delivery System. In the majority of procedures, our ELG System requires only a small incision in one leg. The other leg needs only percutaneous placement of a non-surgical introducer sheath, three millimeters in diameter. With the expected FDA approval of our totally percutaneous EVAR in the first half of 2013 (see "PEVAR" section below), we will have the only FDA approval for a label for this advantageous treatment option. Our competitors' ELG systems typically require surgical exposure of the femoral artery in both legs to introduce multiple device components.

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Preserves Aortic Bifurcation. Our ELG Device allows for future endovascular procedures when continued access across the aortic bifurcation is required. Approximately 30% to 40% of AAA patients also have peripheral arterial disease (“PAD”).  Our ELG Device is the only one presently available that preserves the physician's ability to go back over the aortic bifurcation for future interventions. This is a meaningful feature of our ELG System, as many AAA patients are today living longer and returning to the hospital for PAD procedures.

•	clinical effectiveness;

•	product safety, reliability, and durability;

•	ease of use;

•	sales force experience and relationships; and

•	price.

•	The trial primary endpoint was met, definitively demonstrating the non-inferiority of PEVAR using the accompanying closure device to surgical access EVAR.

•	A 94% procedural technical success rate was achieved in a multicenter setting.

•	Mean procedure time was reduced in PEVAR patients by 34 minutes.  Likewise, mean procedure time to femoral artery hemostasis was reduced following PEVAR by 13 minutes.

•	PEVAR patients required significantly fewer concomitant procedures.

•	Favorable trending of PEVAR was observed in several clinical utility outcomes including reduced anesthesia time, reduced blood loss and need for transfusion, shorter hospital length of stay, and less analgesics prescribed for groin pain.

•	The PEVAR non-inferiority to surgical access EVAR in terms of the procedure success persisted through the final six-month follow-up.

a)	The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private payors. A violation of this statute is a felony and may result in fines, imprisonment, and/or exclusion from government sponsored programs.

b)	The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious, or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment.

c)

Standards govern the conduct of certain electronic transmission of health care information and to protect the security and privacy of individually identifiable health information maintained or transmitted by health care providers, health plans, and health care clearinghouses. These standards include: (i) Standards for Electronic Transactions and (ii) Standards for Privacy and Security of Individually Identifiable Information.

i)	The Standards for Electronic Transactions establishes standards for common health care transactions such as claims information, plan eligibility, and payment information. It also establishes standards for the use of electronic signatures, unique identifiers for providers, employers, health plans, and individuals.

ii)

The Standards for Privacy of Individually Identifiable Information restrict our use and disclosure of certain individually identifiable health information. The HIPAA privacy and security regulations establish a uniform federal “floor” and do not supersede state laws that are more stringent or provide individuals with greater rights with respect to the privacy or security of, and access to, their records containing patient/private health information (“PHI”). As a result, we are required to comply with both HIPAA privacy regulations and varying state privacy and security laws, which include physical and electronic safeguard requirements. These laws contain significant fines and other penalties for wrongful use or disclosure of PHI.

Item 1A.	Risk Factors

•	greater financial and human resources for product development, sales and marketing and patent litigation;

•	greater name recognition;

•	long established relationships with physicians, customers, and third-party payors;

•	additional lines of products, and the ability to offer rebates or bundle products to offer greater discounts or incentives;

•	more established sales and marketing programs, and distribution networks; and

•	greater experience in conducting research and development, manufacturing, clinical trials, preparing regulatory submissions, and obtaining regulatory clearance or approval for products and marketing approved products.

•	the results of future clinical trials of the Nellix System.

•	the receipt of further CE Mark approvals of enhanced versions of the Nellix System from our European Union notified body;

•	the receipt of approval from the FDA to sell the Nellix System in the U.S.;

•	obtaining and maintaining patent rights relating to the Nellix technology; and

•	further developing an effective direct sales and marketing organization in Europe.

•	difficulties in enforcing or defending intellectual property rights;

•	pricing pressure that we may experience internationally;

•	a shortage of high-quality sales people and distributors;

•	changes in third-party reimbursement policies that may require some of the patients who receive our products to directly absorb medical costs or that may necessitate the reduction of the selling prices of our products;

•	the imposition of additional U.S. and foreign governmental controls or regulations;

•	economic instability;

•	changes in duties and tariffs, license obligations and other non-tariff barriers to trade;

•	the imposition of restrictions on the activities of foreign agents, representatives and distributors;

•	scrutiny of foreign tax authorities which could result in significant fines, penalties and additional taxes being imposed on us;

•	laws and business practices favoring local companies;

•	longer payment cycles;

•	foreign currency translation adjustments;

•	difficulties in maintaining consistency with our internal guidelines;

•	difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;

•	the imposition of costly and lengthy new export licensing requirements;

•	the imposition of U.S. or international sanctions against a country, company, person or entity with whom we do business that would restrict or prohibit continued business with the sanctioned country, company, person or entity; and

•	the imposition of new trade restrictions.

•	the FDA, institutional review boards or other regulatory authorities do not approve a clinical study protocol, force us to modify a previously approved protocol, or place a clinical study on hold;

•	patients do not enroll in, or enroll at the expected rate, or complete a clinical study;

•	patients or investigators do not comply with study protocols;

•	patients do not return for post-treatment follow-up at the expected rate;

•	patients experience serious or unexpected adverse side effects for a variety of reasons that may or may not be related to our products such as the advanced stage of co-morbidities that may exist at the time of treatment, causing a clinical study to be put on hold;

•	sites participating in an ongoing clinical study may withdraw, requiring us to engage new sites;

•	difficulties or delays associated with establishing additional clinical sites;

•	third-party clinical investigators decline to participate in our clinical studies, do not perform the clinical studies on the anticipated schedule, or are inconsistent with the investigator agreement, clinical study protocol, good clinical practices, and other FDA and Institutional Review Board requirements;

•	third-party organizations do not perform data collection and analysis in a timely or accurate manner;

•	regulatory inspections of our clinical studies require us to undertake corrective action or suspend or terminate our clinical studies;

•	changes in federal, state, or foreign governmental statutes, regulations or policies;

•	interim results are inconclusive or unfavorable as to immediate and long-term safety or efficacy; or

•	the study design is inadequate to demonstrate safety and efficacy; or

•	do not meet the study endpoints.

•	failure of our supplier to comply with regulatory requirements;

•	any strike or work stoppage;

•	disruptions in shipping;

•	a natural disaster caused by fire, flood or earthquakes; or

•	a supply shortage experienced by our single source supplier.

•	we may fail to secure necessary patents prior to or after obtaining regulatory clearances, thereby permitting competitors to market competing products; and

•	our already-granted patents may be re-examined, re-issued or invalidated.

•	stop selling, making, or using products that use the disputed intellectual property;

•	obtain a license from the intellectual property owner to continue selling, making, licensing, or using products, which license may not be available on reasonable terms, or at all;

•	redesign our products, processes or services; or

•	subject us to significant liabilities to third parties.

•	John McDermott, our Chief Executive Officer and Chairman of our Board of Directors;

•	Todd Abraham, our Vice President of Operations;

•	Robert D. Mitchell, our President of International; and

•	Stefan G. Schreck, Ph.D., our Vice President of Technology

•	the possibility that we will pay more than the value we derive from the acquisition, which could result in future non-cash impairment charges;

•	difficulties in integration of the operations, technologies, and products of the acquired companies, which may require significant attention of our management that otherwise would be available for the ongoing development of our business;

•	the assumption of certain known and unknown liabilities of the acquired companies; and

•	difficulties in retaining key relationships with employees, customers, partners, and suppliers of the acquired company.

•	the results of our commercialization efforts for our existing and future products;

•	the need for additional capital to fund future development programs;

•	the costs involved in obtaining and enforcing patents or any litigation by third parties regarding intellectual property;

•	the establishment of high volume manufacturing and increased sales and marketing capabilities; and

•	our success in entering into collaborative relationships with other parties.

•	properly identify and anticipate physicians and patient needs;

•	develop and introduce new products or product enhancements in a timely manner;

•	avoid infringing upon the intellectual property rights of third parties;

•	demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials;

•	obtain the necessary regulatory clearances or approvals for new products or product enhancements;

•	be fully FDA-compliant with marketing of new devices or modified products;

•	provide adequate training to potential users of our products;

•	receive adequate coverage and reimbursement for procedures performed with our products; and

•	develop an effective and FDA-compliant, dedicated marketing and distribution network.

•	FDA Regulations (Title 21 CFR);

•	European Union CE mark requirements;

•	Medical Device Quality Management System Requirements (ISO 13485:2003);

•	Occupational Safety and Health Administration requirements; and

•	California Department of Health Services requirements.

•	physician acceptance of our products;

•	the conduct and results of clinical trials;

•	the timing and expense of obtaining future regulatory approvals;

•	fluctuations in our expenses associated with expanding our operations;

•	the introduction of new products by our competitors;

•	supplier, manufacturing or quality problems with our devices;

•	the timing of stocking orders from our distributors;

•	changes in our pricing policies or in the pricing policies of our competitors or suppliers; and

•	changes in third-party payors' reimbursement policies.

•	announcements by us or our competitors concerning technological innovations;

•	introductions of new products;

•	FDA and foreign regulatory actions;

•	developments or disputes relating to patents or proprietary rights;

•	failure of our results of operations to meet the expectations of stock market analysts and investors;

•	changes in stock market analyst recommendations regarding our common stock;

•	changes in healthcare policy in the U.S. or other countries; and

•	general stock market conditions and other factors unrelated to our operating performance.

Item 1B.	Unresolved Staff Comments

Item 2.	Properties

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Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

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Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

•	Market Overview and Opportunity

•	Our Products

•	Manufacturing and Supply

•	Marketing and Sales

•	Competition

•	Clinical Trials and Product Developments

(i)	The risks of ownership must have passed to our customer;

(ii)	The customer must have made a fixed and written commitment to purchase the ELG Systems;

(iii)	The customer must request that the transaction be on a bill and hold basis;

(iv)	There must be a fixed schedule for delivery of the ELG Systems. The date for delivery must be reasonable and must be consistent with the customer's business purpose;

(v)	We have no remaining specific performance obligations and our earnings process is complete;

(vi)	Our customer's ordered ELG Systems must be segregated from our inventory and cannot be used to fulfill other customer orders; and

(vii)	The ELG Systems must be complete and ready for shipment.

(i)	The date by which we expect payment, and whether we have modified our normal billing and credit terms for the customer;

(ii)	Our past experiences with, and pattern of, bill and hold transactions;

(iii)	Whether the customer has the expected risk of loss in the event of a decline in the market value of the ELG Systems;

(iv)	Whether our custodial risks are insurable and insured; and

(v)	Whether extended procedures are necessary in order to assure that there are no exceptions to the customer's commitment to accept and pay for the ELG Systems (i.e., that the business reasons for the bill and hold have not introduced a contingency to the customer's commitment).

•	the need for working capital to support our sales growth;

•	the need for additional capital to fund future development programs;

•	the need for additional capital to fund our sales force expansion;

•	the need for additional capital to fund strategic acquisitions;

•	our requirements for additional facility space or manufacturing capacity;

•	our requirements for additional information technology infrastructure and systems; and

•	adverse outcomes from potential litigation and the cost to defend such litigation.

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk

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(a)	Description of Business

•	The sales price for the ELG System (including device extensions and accessories) is established with the customer;

•	The ELG System has been used by the hospital in an EVAR procedure, or the distributor has assumed title with no right of return; and

(i)	The risks of ownership must have passed to the customer;

(ii)	The customer must have made a fixed and written commitment to purchase the ELG Systems;

(iii)	The customer must request that the transaction be on a bill and hold basis;

(iv)	There must be a fixed schedule for delivery of the ELG Systems. The date for delivery must be reasonable and must be consistent with the customer's business purpose;

(v)	The Company must have no remaining specific performance obligations and its earnings process must be complete;

(vi)	The customer's ordered ELG Systems must be segregated from the Company's inventory and cannot be used to fulfill other customer orders; and

(vii)	The ELG Systems must be complete and ready for shipment.

(i)	The date by which payment is expected from the customer, and whether the Company has modified its normal billing and credit terms for the customer;

(ii)	The Company's past experiences with, and pattern of, bill and hold transactions;

(iii)	Whether the customer has the expected risk of loss in the event of a decline in the market value of the ELG Systems;

(iv)	Whether the Company's custodial risks are insurable and insured; and

(v)	Whether extended procedures are necessary in order to assure that there are no exceptions to the customer's commitment to accept and pay for the ELG Systems (i.e., that the business reasons for the bill and hold have not introduced a contingency to the customer's commitment).

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9B.	Other Information

Item 10.	Directors, Executive Officers and Corporate Governance

Item 11.	Executive Compensation

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.	Certain Relationships and Related Transactions, and Director Independence

Item 14.	Principal Accountant Fees and Services

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Item 15.	Exhibits and Financial Statement Schedules

(1)	Deductions represent the actual write-off of accounts receivable balances.

†	Portions of this exhibit are omitted and were filed separately with the Securities and Exchange Commission pursuant to Endologix application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

(1)	These exhibits are identified as management contracts or compensatory plans or arrangements of Endologix pursuant to Item 15(a)(3) of Form 10-K.

(2)	Filed herewith

(3)	Furnished herewith and not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934.

(4)	Furnished herewith and not "filed" for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

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