1279695--3/16/2010--UNIVERSAL_BIOSENSORS

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{product, market, service}

{customer, product, revenue}

{operation, international, foreign}

{gas, price, oil}

{operation, natural, condition}

{property, intellectual, protect}

{system, service, information}

{personnel, key, retain}

{control, financial, internal}

{acquisition, growth, future}

{condition, economic, financial}

We currently derive the vast majority of our revenue from the initial blood glucose product and we anticipate this will account for a significant part of our revenue for the foreseeable future. There is no guarantee that we will receive revenue under the Master Services and Supply Agreement, in a timely fashion or at all. We currently only have limited revenue from the sale or manufacturing of point-of-care tests. Increases in our costs to manufacturing products for LifeScan may decrease our margins or cause us to suffer a loss on the manufacture of blood glucose test strips for LifeScan. Termination of our Master Services and Supply Agreement with LifeScan would eliminate our ability to receive revenues from the commercialization of blood glucose products. Termination of our License Agreement would restrict or eliminate our ability to develop our existing or future point-of-care tests. Our Development and Research Agreement with LifeScan provides an ongoing source of income for us, the termination of which would result in the loss of that income. We have only manufactured limited commercial quantities of blood glucose tests strips and therefore have limited experience as a manufacturer. We face the risk of product liability claims. We face the risk of recalls of our products or of the products we have developed with LifeScan. We may in the future manufacture defective test strips that have to be discarded, or be subject to liability should product be recalled, which increases our costs of operations and may delay shipment of product to customers. There is a risk that we will not be able to enter into collaborative arrangements or strategic alliances with respect to our products which may mean that we are required to delay, reduce the scope of or eliminate some or all of our development programs. There is a significant degree of technical development risk associated with the tests we are developing. Clinical testing is a time consuming, expensive and uncertain process. Diagnostic tests are subject to extensive regulation and we or third parties may not be successful in obtaining clearances for some or all of the point-of-care tests we are developing. Even if the products we develop for LifeScan, or others receive regulatory approval, we may still face development and regulatory difficulties that may delay or impair future sales and we would be subject to ongoing regulatory obligations and restrictions, which may result in significant expense and limit our ability to commercialize our product. Our products, even if approved by foreign regulatory agencies and launched may not be accepted by customers. Adverse economic conditions may harm our business. Currency fluctuations may expose us to increased costs and decreases in revenue. The failure to secure adequate supplies of the raw materials and components required to manufacture products developed by us could compromise the commercialization and manufacture of products developed by us. We currently outsource some development and the manufacturing of our meters. We, and our contract manufacturers, are required to produce our clinical product and commercial product under FDA and E.U. current Good Manufacturing Practices in order to meet acceptable standards. If such standards change, our ability and the ability of contract manufacturers to produce our products when we require may be affected. We may require substantial additional capital which may not be available in the future. The success of our business is dependent upon the growth of the point-of-care testing market. If that market fails to develop as we anticipate, our results will be adversely affected. The success of a C-reactive protein test is dependent upon the acceptance of the use of C-reactive protein in a point-of-care setting for the management of inflammatory conditions. If that use of C-reactive protein fails to develop as we anticipate, our ability to secure a partner and our results will be adversely affected. The market for a prothrombin time test may be significantly reduced if new therapies appearing on the market are widely accepted and significantly reduce the need for testing. This may render the market for a point-of-care prothrombin time test unattractive for a partner. The performance of the point-of-care tests developed by us may not be perceived as being comparable with established laboratory methods, which may limit our ability to enter into partners with respect to these products. The in vitro diagnostics market is a highly competitive market and we and any partners face competition from large, well-established medical device manufacturers with significant resources. If we are unable to maintain protection for our intellectual property or if LifeScan is unable to maintain protection of the intellectual property which it licenses to us, the value of our technology and diagnostic tests may be adversely affected. The loss of a key employee or the inability to recruit and retain high caliber staff to manage future anticipated growth could have a material adverse effect on our business. All of our operations are conducted at a single location. Any disruption at our facility could adversely affect our operations and increase our expenses. Investors may be subject to Australian and/or US taxation. The price of our shares is highly volatile and could decline significantly. Our securities are not currently traded on any United States public markets and there are currently restrictions on the ability of United States persons to acquire our securities on the ASX. We are exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act. A significant amount of our shares are controlled by individuals or voting blocks, and the interests of such individuals or voting blocks could conflict with those of the other stockholders. We have never paid a dividend and we do not intend to pay dividends in the foreseeable future which means that holders of shares of common stock and CDIs may not receive any return on their investment from dividends. Our holders of CDIs are not stockholders and do not have stockholder rights. Our success is dependent on the accuracy, reliability and proper use of sophisticated information processing systems and management information technology and the interruption in these systems could have a material adverse effect on our business, financial condition and results of operations.

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1279695--3/16/2010--UNIVERSAL_BIOSENSORS_INC