1043914--3/16/2007--GENE_LOGIC

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Risks Related to Our Drug Repositioning Division may not yield sufficient new indications and thus measurable successes to gain market acceptance. Others are developing and could provide drug repositioning research and services that could compete with us and jeopardize our business and financial objectives. The time required to present and negotiate our drug repositioning agreements is lengthy; we may spend considerable resources on unsuccessful sales efforts or may not be able to negotiate and enter into drug development partnership agreements on the schedule we anticipate. We may be unable to obtain access to sufficient numbers of acceptable candidates for evaluation by our platform to meet our business objectives We may be required to invest significant resources in identifying alternative uses for our partners candidates. We will not receive any revenue from our partners unless they decide to return candidates to their pipeline and our ability to earn revenue under our drug development agreements is based in part on factors over which we may have little or no control. The drug indication discovery platform for our Drug Repositioning Division currently relies in part on inventions of third parties that may not always be available to us. Risks Related to Our Genomics Division The Genomics Division is currently our sole source of revenue and, to continue to derive revenue from this division in the short term and to achieve our strategic objectives, we need to maintain the existing business. We may not be able to identify or implement a business strategy that will achieve our objectives. As a result of uncertainty about our long-term Genomics business strategy and as a result of restructuring our operations, we may have difficulty attracting and retaining customers and employees. Our genomics and toxicogenomics databases may require upgrading and expansion to keep existing and find new customers, but such upgrading and expansion may be difficult or expensive. The sales cycle for our Genomics Division is lengthy; we may spend considerable resources on unsuccessful sales efforts or may not be able to complete deals on the schedule we anticipate. We rely on microarrays and other products supplied by Affymetrix to maintain and add to the underlying genomics and toxicogenomics data of our databases and to provide our microarray data generation and analysis and other services. We have a history of operating losses that are likely to continue for some time. Our ability to use our Federal Net Operating Loss carryforwards may be limited. Our ability to retain and recruit and retain qualified personnel may be adversely affected by the substantial changes we are undergoing. We may not be able to obtain necessary funding as required to develop and operate our Drug Repositioning Business and our Genomics Business. Our revenue is derived primarily from, and is subject to risks faced by, the pharmaceutical and biotechnology industries in the United States, Japan and Europe; our revenue is also subject to foreign currency risk. We sold our Preclinical Division in December 2006, but are still subject to certain risks from that sale. Certain investments made by the Company may fluctuate in value and may create an adverse impact on our financial performance; the value of certain of our intangibles and long-term investments creates risk to our financial performance. We may not be able to obtain adequate patent protection for new technologies and methods required for achieving our business objectives. We may need to initiate patent enforcement litigation or be subject to future infringement claims. Our activities involve hazardous materials and may subject us to environmental liability. If we are unable to maintain compliance with NASDAQ s listing requirements, our stock could be delisted which would negatively impact our liquidity and our stockholders ability to sell shares.

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1043914--3/16/2007--GENE_LOGIC_INC