1014672--3/14/2007--CALIPER_LIFE_SCIENCES

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Risks Related To Our Business Our LabChip products may not achieve widespread market acceptance, which could cause our revenue to grow slowly or decline and make it more difficult for us to achieve or maintain profitability. If our in vivo biophotonic imaging products and services do not become widely used by pharmaceutical, biotechnology, biomedical and chemical researchers, our revenue will grow more slowly than expected or decline and make it more difficult for us to achieve or maintain profitability. We had no sales of our GCAS automated target preparation system to Affymetrix during the year ended December 31, 2006, and the future revenue growth of our laboratory automation business depends to a significant extent on additional sales of GCAS systems by Affymetrix. If Affymetrix discontinues selling the GCAS system, or if end-user demand for this product is not as strong as anticipated by Affymetrix, our revenue targets may not be achieved. Because we receive revenue principally from pharmaceutical, biotechnology and chemical companies and biomedical research institutions, the economic conditions and regulatory requirements faced by those companies and institutions and their capital spending policies may have a significant effect on the demand for our products. Our future revenue is unpredictable and could cause our operating results to fluctuate significantly from quarter to quarter. Our intellectual property rights may not provide meaningful commercial protection for our products, which could enable third parties to use our technology, or very similar technology, and could reduce our ability to compete in the market. We are currently involved in patent litigation and we may need to initiate other lawsuits to protect or enforce our patents or other proprietary rights, which would be expensive and, if we lose, may cause us to lose some of our intellectual property rights, which would reduce our ability to compete in the market and may cause our stock price to decline. Acquisitions may have unexpected consequences or impose additional costs on us. Our future revenue growth depends to a significant extent on the revenue growth of our NovaScreen business, which we acquired in October 2005. If NovaScreen s revenue does not grow as we anticipate, our future revenue targets may not be achieved. We may not realize all of the anticipated benefits of the Xenogen acquisition. We expect to incur future operating losses and may not achieve profitability. Failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new products could reduce our ability to compete and result in lower revenue. The termination or non-renewal of a large contract or the loss of, or a significant reduction in, sales to any of our significant customers could harm our operating results. We may not fully realize our revenue under long-term contracts, which could harm our business and result in higher losses than anticipated. Our success will depend partly on our ability to operate without infringing or misappropriating the proprietary rights of others. Our rights to the use of technologies licensed to us by third parties are not within our control, and without these technologies, our products and programs may not be successful and our business prospects could be harmed. Our tax net operating losses and credit carryforwards may expire if we do not achieve or maintain profitability. If we are unable to meet customer demand or quality expectations, it would adversely impact our financial results and restrict our sales growth. We depend on a limited number of suppliers for components of IVIS Imaging Systems, and we will be unable to manufacture or deliver our products if shipments from these suppliers are interrupted or are not supplied on a timely basis. We face competition from companies with established technologies for in vivo biological assessment, which may prevent us from achieving significant market share for our products. Contamination in our animal populations could damage our inventory, harm our reputation and result in decreased sales. Terrorist acts, acts of war and natural disasters may seriously harm our business and revenues, costs and expenses and financial condition. We use hazardous materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly. Compliance with governmental regulations could increase our operating costs, which would adversely affect the commercialization of our technology. Public perception of ethical and social issues may limit or discourage the use of mice for scientific experimentation, which could reduce our revenues and adversely affect our business. Our stock price is extremely volatile, and you could lose a substantial portion of your investment. We have been sued, and are at risk of future securities class action litigation. Provisions of our charter documents and Delaware law may inhibit a takeover, which could limit the price investors might be willing to pay in the future for our common stock.

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1014672--3/14/2007--CALIPER_LIFE_SCIENCES_INC