1383183--3/27/2009--CombiMatrix

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Risks Related To Our Business We may not be able to meet our cash requirements beyond September 2009 without obtaining additional capital from external sources, and if we are unable to do so, we may not be able to continue as a going concern. We may need to raise additional capital in the future, and if additional capital is not available on acceptable terms, we may have to curtail or cease operations. We have a history of losses and expect to incur additional losses in the future. If our stock price declines, this could result in a goodwill impairment. The recent financial crisis could negatively affect our business, results of operations and financial condition. Because our business operations are subject to many uncontrollable outside influences, we may not succeed. Our revenues will be unpredictable, and this may harm our financial condition. We are deploying new and unproven technologies, which makes evaluation of our business and prospects difficult, and we may be forced to cease operations if we do not develop commercially successful products. If we do not enter into successful partnerships and collaborations with other companies, we may not be able to fully develop our technologies or products, and our business would be harmed. We have limited experience commercially manufacturing, marketing, or selling any of our potential products and services, and unless we develop these capabilities, we may not be successful. We face intense competition, and we cannot assure you that we will be successful competing in the market. If our new and unproven technology is not used by researchers in the pharmaceutical, biotechnology and academic communities, or by physicians and laboratories in the diagnostics market, our business will suffer. If third-party payors, such as insurance companies, managed care organizations and Medicare, do not provide reimbursement for our products, the commercial viability of our products may be limited. Our product development efforts may be hindered if we are unable to gain access to patients' tissue and blood samples. If our current laboratory facility becomes inoperable or loses certification, we will be unable to perform our tests and our business will be harmed. Our future success depends on the continued service of our engineering, technical and key management personnel and our ability to identify, hire and retain additional engineering, technical and key management personnel. The expansion of our product lines may subject us to regulation by the FDA and foreign regulatory authorities, of which regulation could prevent or delay our introduction of new products. As our operations expand, our costs to comply with environmental laws and regulations will increase, and failure to comply with these laws and regulations could harm our financial results. Our business depends on issued and pending patents, and the loss of any patents or our failure to secure the issuance of patents covering elements of our business processes could materially harm our business and financial condition. Any inability to adequately protect our proprietary technologies could materially harm our competitive position and financial results. Any litigation to protect our intellectual property, or any third-party claims of infringement, could divert substantial time and money from our business and could shut down some of our operations. We could face substantial liabilities if we are sued for product liability. Failure to effectively manage our growth could place strains on our managerial, operational and financial resources and could adversely affect our business and operating results. Our future success depends on our ability to expand our organization to match the growth of our subsidiaries. As a public company, we are subject to complex legal and accounting requirements that will require us to incur substantial expense and will expose us to risk of non-compliance. Ethical, legal and social concerns surrounding the use of genetic information could reduce demand for our products. Risks Related To Investment In Our Securities Technology company stock prices are especially volatile, and this volatility may depress the price of our stock. While warrants to purchase our common stock are outstanding, it may be more difficult to raise additional equity capital. Rights associated with previously issued securities and restrictions on new issuances of securities by us may adversely affect our ability to sell additional securities and raise needed capital on commercially reasonable terms. Future sales or the potential for future sales of our securities may cause the trading price of our common stock to decline and could impair our ability to raise capital through subsequent equity offerings. We may fail to meet market expectations because of fluctuations in our quarterly operating results, all of which could cause our stock price to decline. Risks Related To Our Split-Off From Acacia Research Corporation As a result of the redemption of AR-CombiMatrix stock for our common stock, we may be subject to certain tax liabilities under the Internal Revenue Code. Delaware law, our charter documents and the indemnity provisions under the tax allocation agreement between CombiMatrix and Acacia contain provisions that could discourage or prevent a potential takeover of CombiMatrix where such a takeover might otherwise result in our shareholders receiving a premium over the market price of their shares. We may not be able to engage in desirable strategic transactions and equity issuances following the Split-Off. We may be subject to certain tax liability under the Internal Revenue Code for actions taken by us following the Split-Off. Acacia and CombiMatrix may be required to indemnify the other for tax liability resulting from the Split-Off, of which indemnity may interfere with both companies' ability to engage in desirable strategic transactions and issue their equity securities. CombiMatrix and its shareholders could have federal income tax liabilities if the tax ruling was revoked. Our separation agreements with Acacia require us to assume the past, present and future liabilities related to our business and may be less favorable to us than if they had been negotiated with unaffiliated third parties. Holders of terminated AR-CombiMatrix stock options could claim that the Split-Off was not a change in control as defined in the stock option plans and as a result, we may be required to defend against claims.

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1383183--3/27/2009--CombiMatrix_Corp