1347022--2/12/2009--VeriChip

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Risks Occasioned by the Xmark Transaction We will be unable to compete with Xmark s business for four years from the date of closing. We will continue to incur the expenses of complying with public company reporting requirements. Risks Related to Our VeriMed Health Link Business Which Utilizes the Implantable Microchip We may never achieve market acceptance or significant sales of this system. We believe that sales of our implantable microchip, and the extent to which our VeriMed Health Link system achieves market acceptance, will depend, in part, on the availability of insurance reimbursement from third-party payers, including federal and state governments under programs, such as Medicare and Medicaid, and private insurance plans. Insurers may not determine to cover the cost of the implant procedure, or it may take a considerable period of time for this to occur. Implantation of our implantable microchip may be found to cause risks to a person s health, which could adversely affect sales of our systems which incorporate the implantable microchip. If we are required to effect a recall of our implantable microchip, our reputation could be materially and adversely affected and the cost of any such recall could be substantial, which could adversely affect our results of operations and financial condition. Interruptions in access to, or the hacking into, our VeriMed Health Link patient information database may have a negative impact on our revenue, damage our reputation and expose us to litigation. Regulation of products and services that collect personally-identifiable information or otherwise monitor an individual s activities may make the provision of our services more difficult or expensive and could jeopardize our growth prospects. If we fail to comply with anti-kickback and false claims laws, we could be subject to costly and time-consuming litigation and possible fines or other penalties. If we are found liable in lawsuits that have been brought against us or if we are found liable in other litigation to which we may become subject in the future, we may be forced to pay substantial damages, which could have a material adverse effect on our business. If we fail to continue to meet all applicable Nasdaq Stock Market requirements, our stock could be delisted by the Nasdaq Stock Market. If delisting occurs, it would adversely affect the market liquidity of our common stock and harm our businesses.

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1347022--2/12/2009--VeriChip_CORP