1107216--3/16/2009--ORCHID_CELLMARK

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{regulation, government, change}

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{cost, contract, operation}

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{cost, operation, labor}

{stock, price, operating}

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Risks Related to Our Business If we fail to maintain the service contracts we have with various governmental agencies or fail to enter into additional contracts, we would lose a significant source of revenues. The market in which we participate is intensely competitive and price sensitive, and if we do not compete effectively, our operating results may be harmed. We cannot guarantee the receipt of work from our government contracts. If general economic trends degrade, trends in government spending and, therefore, demand for DNA testing services may change and reduce demand for our services, which would have a materially negative impact on our business. Recent turmoil across various sectors of the financial markets may negatively impact our business, financial condition and/or operating results. We cannot guarantee that we will be awarded a significant portion of the service packages under the UK s National Procurement Plan. The change in the method of awarding CODIS contracts has adversely affected our CODIS business. We currently rely primarily on a single supplier for the majority of reagents and other components for the performance of our DNA testing services. Our future sales and marketing efforts may not be successful in achieving revenue growth. We have limited sales and marketing resources, and as a result, we may not achieve our expected levels of revenue. Work awarded to us in the UK may be subject to unanticipated TUPE expenses. Future acquisitions or mergers could disrupt our ongoing operations, increase our expenses and adversely affect our revenues. Our failure to comply with applicable government and industry regulations or to maintain accreditations may affect our ability to develop, produce or market our potential services and may adversely affect our results of operations. International sales are subject to increased costs and other risks, which could affect our revenues. We had an accumulated deficit of $324 million as of December 31, 2008. If we fail to reach profitability and need to raise additional capital to fund our current and future operating plans or obtain such capital on unfavorable terms, then we may have to take further cost-cutting measures. We may be held liable for any inaccuracies associated with our services, which may require us to defend ourselves in costly litigation. Our improvement of existing technologies and our ability to capture and develop future technologies to be utilized in our service offerings may not be commercially successful, which could adversely affect our revenues. We may be unable to hire an adequate number of DNA analysts or successfully apply new technology. Our ability to provide services may be seriously impaired by the occurrence of a natural disaster affecting any one or more of our laboratories. Our success will depend partly on our ability to operate without misappropriating the intellectual property rights of others. If we cannot enter into new development or licensing agreements, we may be unable to further enhance our service offerings. If our patent applications do not result in issued patents, our competitors may obtain rights to commercialize our discoveries, which would harm our competitive position. The scope of our issued patents may not provide us with adequate protection of our intellectual property, which would harm our competitive position. We may need to initiate lawsuits to protect or enforce our patents and other intellectual property rights, which could result in the forfeiture of these rights. Other rights and measures that we rely upon to protect our intellectual property may not be adequate to protect our services and could reduce our ability to compete in the market. Our ability to utilize our net operating loss carryforwards may be limited. Risks Associated with Our Common Stock Future issuance of our securities may dilute the rights of our stockholders. We have various mechanisms in place that stockholders may not consider favorable, which may discourage takeover attempts and may prevent or frustrate attempts by stockholders to change our direction or management. Our stock price has been, and likely will continue to be, volatile and your investment may suffer a decline in value. The liquidity of our common stock could be adversely affected if we are delisted from the NASDAQ Global Market. Fluctuations in our operating results may negatively impact our stock price.

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1107216--3/16/2009--ORCHID_CELLMARK_INC