1279695--3/30/2009--UNIVERSAL_BIOSENSORS

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{product, candidate, development}

{product, liability, claim}

{stock, price, share}

{stock, price, operating}

{product, market, service}

{tax, income, asset}

{operation, international, foreign}

{property, intellectual, protect}

{system, service, information}

{control, financial, internal}

{personnel, key, retain}

{acquisition, growth, future}

There is no guarantee that we will receive the inflows contemplated under the Master Services and Supply Agreement, in a timely fashion or at all. Our products and the blood glucose products we develop with LifeScan, even if approved by foreign regulatory agencies and launched may not be accepted by customers. Termination of our Master Services and Supply Agreement with LifeScan would eliminate our ability to receive revenues from the commercialization of blood glucose products. We have not yet manufactured commercial quantities of blood glucose tests strips or of any of our other products. 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. There is a significant degree of technical risk associated with the tests we are developing. 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 our products or the products we develop for LifeScan, ourselves 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. Currency fluctuations may expose us to increased costs and decreases in revenue. Increases in our costs to manufacturing products for LifeScan may decrease our revenues or cause us to suffer a loss on the manufacture of blood glucose test strips for LifeScan Clinical testing is a time consuming, expensive and uncertain processes. There is a risk that we will not be able to enter into collaborative arrangements or strategic alliances with respect to our products. To the extent we are able to enter into collaborative arrangements or strategic alliances, we will be exposed to risks related to those collaborations and alliances. The failure to secure adequate supplies of the materials required to manufacture our products and the products we develop with LifeScan could compromise the commercialization of our products and our manufacture of blood glucose products for LifeScan. We currently have limited manufacturing capacity for meters and outsource some development and manufacturing activities which place us at risk of lengthy and costly delays of bringing our products to market. 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 experience significant fluctuations in our operating results. Termination of our License Agreement would restrict or eliminate our ability to develop our existing or future point-of-care tests. We do not currently have any revenue from the sale or manufacturing of 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 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 our 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 results will be adversely affected. The performance of our point-of-care tests may not be perceived as being comparable with established laboratory methods, which may limit the market acceptance of our product. LifeScan may undertake more of its own manufacturing of the blood glucose products which we have developed or may use other contract manufacturers. We operate in a highly competitive market and face competition from large, well-established medical device manufacturers with significant resources. If we fail to compete effectively, our business will suffer. If our competitors or LifeScan s competitors are able to develop and market products that are preferred over the products we develop, our commercial opportunity may be significantly reduced or eliminated. 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. 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--3/30/2009--UNIVERSAL_BIOSENSORS_INC