1476170--9/28/2010--Unilife

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We have received an audit report with a going concern disclosure on our consolidated financial statements. Our success depends in large part on our ability to complete the industrialization program for our primary product, the Unifill syringe, and achieve substantial commercial sales of this product to customers. If we experience problems or delays in completing our industrialization program or securing favorable agreements to supply the Unifill syringe to customers, our business, including our ability to generate significant revenues, will be materially and adversely affected. Our business is substantially dependent on our relationship with our strategic partner, sanofi-aventis. Our research and development and other operating expenses are significant and we do not expect to be profitable unless and until we complete our industrialization program, negotiate a supply agreement with sanofi-aventis or other pharmaceutical companies and begin commercial sale of the Unifill syringe. The Unifill syringe has been designed to be compatible with the drug manufacturing systems currently utilized by sanofi-aventis, which may hinder our ability to sell the product to other pharmaceutical customers whose manufacturing processes may not be compatible with our current product designs. Our ability to successfully market and sell our safety syringes outside of the pharmaceutical market may be impaired until we are able to offer a full range of safety syringes in sizes commonly used in acute-care facilities. Our success will depend on the full commercialization of our current products, and the development and commercialization of other pipeline products. There can be no assurance that we will be successful in these efforts. We may encounter difficulties managing our growth, which could materially harm our business. We depend on our executive officers and key personnel and the loss of them could adversely affect our business. We will incur increased costs as a result of being a reporting company in both Australia and the United States and we have limited experience as a US reporting company. If our internal control over financial reporting or our disclosure controls and procedures are found not to be effective by management or by an independent registered public accounting firm or if we make disclosure of existing or potential significant deficiencies or material weaknesses in those controls, investors could lose confidence in our financial reports, the price of our shares of common stock may decline, and we may be subject to increased risks and liabilities. We have limited sales, marketing and distribution experience. We have outsourced the development of automated assembly systems for our Unifill syringe to Mikron Assembly Technology, a third-party contractor. Our ability to commercialize the Unifill syringe will be dependent on the ability of this contractor to provide these systems according to specifications and in a timely manner. If we experience delays in developing our new manufacturing facility, our ability to produce our Unifill syringe in commercial quantities would be impaired, which would harm our business. In addition, all of our current commercial and production activity takes place in one facility which subjects us to risk if we were to experience a catastrophic event at this facility. Our manufacturing facilities and the manufacturing facilities of our suppliers must comply with applicable regulatory requirements. If we or they fail to achieve or maintain regulatory approval for these manufacturing facilities, our business and our results of operations would be harmed. The costs of raw materials have a significant impact on the level of expenses that we incur. If the prices of raw materials and related factors such as energy prices increase, and we cannot pass those price increases on to our customers, our results of operations and financial condition would suffer. Disruptions in the supply of key raw materials and difficulties in the supplier qualification process could adversely impact our operations. Some companies we may utilize for the supply of components are also competitors, and they could elect to cease supply relationships with us in the future for competitive reasons. The medical device industry is very competitive. We may be adversely impacted by next generation drug delivery technologies. We are subject to extensive regulation. Future changes, if any, to the FDA 510(k) clearance or premarket approval processes may impact our ability to market and sell our products. We may face significant uncertainty in the industry due to government healthcare reform. We are subject to regulation by governments around the world, and if these regulations are not complied with, existing and future operations may be curtailed, and we could be subject to liability. Product defects could adversely affect the results of our operations. We may be sued for product liability, which could adversely affect our business. We may not be able to effectively protect our intellectual property rights which could have an adverse effect on our business, financial condition or results of operations. Intellectual property litigation could be costly and disruptive to us. If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected. Impairment of our goodwill, which represents a significant portion of our total assets, would adversely affect our operating results and we may never realize the full value of our goodwill. Fluctuations in foreign currency exchange rates could adversely affect our financial condition and results of operations. Risk Factors Related to Our Shares of Common Stock The trading price of our shares of common stock may fluctuate significantly. If there are substantial sales of our shares of common stock, our share price could decline. We do not intend to pay cash dividends in the foreseeable future.

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1476170--9/28/2010--Unilife_Corp