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<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">    We
are a medical device company with expertise in advanced skin permeation technology.  We are developing our Symphony</font><font style="font-size: 7pt">®</font><font style="font-size: 10pt">
CGM System (“Symphony”) as a non-invasive, wireless continuous glucose monitoring (“CGM”) system for use
in hospital critical care units and for people with diabetes.  The Prelude</font><font style="font-size: 7pt">®</font><font style="font-size: 10pt"><b> </b>SkinPrep
System (“Prelude”), a component of our Symphony CGM System, allows for enhanced skin permeation that will enable extraction
of analytes such as glucose.  Prelude’s platform skin preparation technology also allows for needle-free, transdermal
drug delivery. Additional applications for needle-free analyte extraction and topical and systemic drug delivery are planned.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The accompanying
unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Sontra Medical,
Inc., a Delaware corporation. All significant intercompany balances and transactions have been eliminated in consolidation.  These
financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the
United States consistent with those applied in, and should be read in conjunction with, the Company’s audited consolidated
financial statements and related footnotes for the year ended December 31, 2012 included in the Company’s Annual Report on
Form 10-K as filed with the United States Securities and Exchange Commission (“SEC”) on March 18, 2013.  These
financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair presentation of the Company’s financial position as of June 30, 2013 and its results of operations and
cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for
the full year.  These interim financial statements do not include all of the information and footnotes required by GAAP
for complete financial statements and allowed by the relevant SEC rules and regulations; however, the Company believes that its
disclosures are adequate to ensure that the information presented is not misleading. Certain amounts in prior periods have been
reclassified to conform to current presentation.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> On June 7, 2013,
the Company effected a 1-for-10 reverse stock split of its common stock. All share and per share information has been retroactively
restated to reflect this reverse stock split.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><u>Liquidity and Management’s
Plans</u></i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The accompanying
consolidated financial statements have been prepared on a basis assuming that the Company is a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business.  As of June 30, 2013,
the Company had cash of approximately $11,608,000, working capital of approximately $8,453,000, and an accumulated deficit of
approximately $104,232,000.  The Company continues to incur recurring losses from operations.  The Company
will require additional capital to fund our product development, research, manufacturing and clinical programs in accordance with
our current planned operations.  Management intends to pursue additional financing to fund these operations and the
Company has funded its operations in the past primarily through debt and equity issuances.  Management believes that
it will be successful in meeting the milestones required under their current financing arrangement and/or raising additional capital.  No
assurances can be given that additional capital will be available on terms acceptable to the Company. The consolidated financial
statements do not include any adjustments that might result from the outcome of these uncertainties.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><u>Cash and Cash Equivalents</u></i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> As of June
30, 2013, the Company held approximately $11,608,000 in cash and cash equivalents.  The Company’s cash equivalents
consist solely of bank money market funds.  The Company maintains its cash in bank deposit accounts which, at times,
may exceed federally insured limits.  The Company has never experienced any losses related to these balances.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b><i><u>Restricted Cash</u></i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> As of June 30,
2013, restricted cash consists of two $250,000 letters of credit issued in favor of one of the Company’s key product development
vendors and a $157,463 letter of credit issued in favor of a landlord.  As of December 31, 2012, restricted cash consisted
of one $250,000 letter of credit issued in favor of one of the Company’s key product development vendors and a $157,463 letter
of credit issued in favor of a landlord.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Company’s
intangible assets are related to the acquisition of assets from Durham Pharmaceuticals Ltd. in 2007.  As of June 30,
2013 and 2012, intangible assets related to this Acquisition are summarized as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2013</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2012</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Estimated</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Accumulated</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Life</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: justify; line-height: 115%; text-indent: 14pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Cost</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Amortization</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Net</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Net</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Contract related intangible asset:</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 43%; padding-right: 5.05pt; padding-left: 0.25in; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Cato Research discounted contract</font></td>
<td style="width: 9%; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3 years</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">355,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">355,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Technology related intangible assets:</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; padding-left: 0.25in; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Patents for the AzoneTS-based product candidates and formulation</font></td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.5 years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,305,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,305,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,305,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 5.05pt; padding-left: 0.25in; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Drug Master Files containing formulation, clinical and safety documentation used by the FDA</font></td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.5 years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,500,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,500,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,500,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; padding-left: 0.25in; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">In-process pharmaceutical products for 2 indications</font></td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.5 years</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,820,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,820,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,820,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td colspan="2" style="padding-right: 5.05pt; padding-left: 0.25in; text-indent: 0.25in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total technology related intangible assets</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; text-indent: 0.75in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total, net</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,980,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">355,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> Intangible assets
related to technology are expected to be amortized on a straight-line basis over the period ending 2019, when the underlying patents
expire, and will commence upon revenue generation which the Company estimates may occur as early as the middle of 2015.  The
Cato Research contract related to this intangible asset was amortized over a three year period, which ended in 2010.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> Estimated amortization
expense for each of the next five calendar years is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Estimated</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Amortization Expense</b></p></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 89%; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2015</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,069,000</font></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"></td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2,139,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2017</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2,139,000</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Company’s
intangible assets are related to the acquisition of assets from Durham Pharmaceuticals Ltd. in 2007.  As of June 30,
2013 and 2012, intangible assets related to this Acquisition are summarized as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2013</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2012</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Estimated</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Accumulated</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Life</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: justify; line-height: 115%; text-indent: 14pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Cost</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Amortization</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Net</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Net</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Contract related intangible asset:</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 43%; padding-right: 5.05pt; padding-left: 0.25in; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Cato Research discounted contract</font></td>
<td style="width: 9%; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3 years</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">355,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">355,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Technology related intangible assets:</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; padding-left: 0.25in; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Patents for the AzoneTS-based product candidates and formulation</font></td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.5 years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,305,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,305,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,305,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 5.05pt; padding-left: 0.25in; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Drug Master Files containing formulation, clinical and safety documentation used by the FDA</font></td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.5 years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,500,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,500,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,500,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; padding-left: 0.25in; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">In-process pharmaceutical products for 2 indications</font></td>
<td style="text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.5 years</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,820,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,820,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,820,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td colspan="2" style="padding-right: 5.05pt; padding-left: 0.25in; text-indent: 0.25in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total technology related intangible assets</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; text-indent: 0.75in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total, net</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,980,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">355,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,625,000</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Company
leases approximately 37,000 square feet of manufacturing, laboratory and office space in a single-story building located in Franklin,
Massachusetts under a lease expiring October 31, 2017 and approximately 1,060 square feet of residential space as a corporate
apartment in Franklin, Massachusetts under a lease expiring July 24, 2014.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt">The Company also leases approximately 7,900 square feet
of corporate office space in a multi-story building located in Philadelphia, Pennsylvania under a lease expiring May 31, 2017.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> Future minimum
lease payments for each of the next 5 years under these operating leases are as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Franklin</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Philadelphia</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Total</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">For the period ending June 30,</font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 67%; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">226,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">93,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">319,000</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">447,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">187,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">634,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2015</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">444,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">192,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">636,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">454,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">196,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">650,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2017</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">382,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">82,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">464,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,953,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">750,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2,703,000</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Company’s
facilities lease expense, including accruals for lease incentives, was approximately $99,000 and $74,000 for the three months ended
June 30, 2013 and 2012, respectively, and $389,000 and $151,000 for the six months ended June 30, 2013 and 2012, respectively.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> Future minimum
lease payments for each of the next 5 years under these operating leases are as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Franklin</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Philadelphia</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Total</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">For the period ending June 30,</font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 67%; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">226,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">93,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">319,000</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">447,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">187,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">634,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2015</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">444,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">192,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">636,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">454,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">196,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">650,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2017</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">382,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">82,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">464,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,953,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">750,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2,703,000</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> At June 30,
2013 and December 31, 2012, the Company had outstanding warrants to purchase 1,050,454 and 1,254,004 shares of its Common Stock,
respectively. Included in these outstanding warrants at June 30, 2013 and December 31, 2012 are warrants to purchase 700,000 and
736,015 shares, respectively, that are considered to be derivative financial instruments because the warrant agreements contain
“down round” provisions whereby the number of shares covered by the warrants is subject to change in the event of certain
future dilutive stock issuances. The fair value of these derivative instruments at June 30, 2013 and December 31, 2012 was approximately
$909,000 and $5,585,000, respectively, and is included in Derivative Warrant Liability, a current liability, in the Consolidated
Balance Sheet. Changes in fair value of the derivative financial instruments are recognized in the Consolidated Statement of Operations
as a gain or loss on revaluation of derivative warrant liability. The Gain on Revaluation of Derivative Warrant Liability for the
three and six months ended June 30, 2013 was approximately $2,995,000 and $4,676,000, respectively.  The Gain on Revaluation
of Derivative Warrant Liability for the three and six months ended June 30, 2012 was approximately $370,000 and $601,000, respectively.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Derivative
Warrant Liability represents the risk exposure pertaining to the warrants and is based on the fair value of the underlying common
stock and the Gain on Revaluation of Derivative Warrant Liability is a result of the change in that fair value.  For
the three months ended June 30, 2013, no derivative warrants were exercised and none expired. For the six months ended June
30, 2013, no derivative warrants were exercised and 45,164 expired. For the six months ended June 30, 2012, 11,850 derivative warrants
were exercised, which resulted in a reclassification of approximately $42,000 from the Derivative Warrant Liability to Additional
Paid-in Capital.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The table below
presents the changes in the Level 3 Derivative Warrant Liability measured for the six months ended June 30, 2013 and 2012:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2013</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2012</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 78%; padding-right: 2.15pt; padding-left: 9pt; text-indent: 9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Derivative Warrant Liability as of January 1</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">5,585,141</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,035,337</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 2.15pt; padding-left: 9pt; text-indent: 27pt; line-height: 115%; font-size: 11pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total unrealized losses included in net loss </font><font style="font: 7pt Times New Roman, Times, Serif; color: black">(1)</font><font style="font: 10pt Times New Roman, Times, Serif; color: black">	</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">781,682</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 2.15pt; padding-left: 9pt; text-indent: 27pt; line-height: 115%; font-size: 11pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total unrealized gains included in net loss </font><font style="font: 7pt Times New Roman, Times, Serif; color: black">(1)</font><font style="font: 10pt Times New Roman, Times, Serif; color: black">	</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(5,305,000</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(539,648</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 2.15pt; padding-left: 9pt; text-indent: 27pt; line-height: 115%; font-size: 11pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total realized gains included in net loss </font><font style="font: 7pt Times New Roman, Times, Serif; color: black">(1)</font><font style="font: 10pt Times New Roman, Times, Serif; color: black">	</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(152,668</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(61,633</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 2.15pt; padding-left: 0.75in; text-indent: -0.25in; line-height: 115%; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Reclassification of derivative warrant liability to additional paid-in capital for derivative warrants exercised</font></td>
<td style="line-height: 115%; padding-bottom: 1pt"> </td>
<td style="line-height: 115%; border-bottom: Black 1pt solid"> </td>
<td style="text-align: right; line-height: 115%; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%; padding-bottom: 1pt"> </td>
<td style="line-height: 115%; padding-bottom: 1pt"> </td>
<td style="line-height: 115%; border-bottom: Black 1pt solid"> </td>
<td style="text-align: right; line-height: 115%; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(41,520</font></td>
<td style="line-height: 115%; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 2.15pt; padding-left: 9pt; text-indent: 9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Derivative Warrant Liability as of June 30</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">909,155</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">392,536</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%; border-bottom: Black 1pt solid"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td colspan="8" style="line-height: 115%; font-size: 11pt"><font style="font: 7pt Times New Roman, Times, Serif; color: black">(1)</font><font style="font: 10pt Times New Roman, Times, Serif; color: black">	Included in Gain on Revaluation of Derivative Warrant Liability in the Consolidated Statement of Operations.</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Company
is authorized to issue up to 40,000,000 shares of preferred stock with such rights, preferences and privileges as are determined
by the Board of Directors.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b><i>Series C Convertible Preferred Stock</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Company
has authorized 10,000 shares of Series C Preferred Stock (the “Series C Stock”), of which 9,974.185 shares were issued
and outstanding as of June 30, 2013 and December 31, 2012.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Series D Convertible Preferred
Stock</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Company
has authorized 3,600,000 shares of Series D Convertible Preferred Stock (the “Series D Stock”), of which 3,006,000
shares were issued and outstanding as of June 30, 2013 and December 31, 2012.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Company
has authorized 150,000,000 shares of Common Stock, of which 10,679,790 and 4,437,346 shares were issued and outstanding as of June
30, 2013 and December 31, 2012, respectively.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>January 2013 Financing</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> On
January 31, 2013 and February 1, 2013, the Company entered into underwriting agreements (collectively, the “Underwriting
Agreements”) with Aegis Capital Corp., with respect to the issuance and sale in an underwritten public offering by the
Company of an aggregate of 1,567,833 shares of the Company’s Common Stock (including 204,500 shares sold pursuant to the
over-allotment option), at a price to the public of $7.50 per share.  The net proceeds to the Company, after
deducting the underwriting discount and other offering expenses payable by the Company, from the sale of the shares in the
offering were approximately $10,626,000.  Subsequent to the offering, the Company used a portion of the net proceeds of
the offering to pay off the Promissory Note issued to Platinum-Montaur Life Sciences, LLC (“Montaur”) in connection
with the $20 million non-revolving draw credit facility with Montaur.  The Note will mature on August 31,
2017.  See Note 13.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>June 2013 Financing</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> On June 13,
2013, the Company entered into an underwriting agreement with Aegis Capital Corp., as a representative of several underwriters
(collectively, the “Underwriters”), with respect to the issuance and sale in an underwritten public offering by the
Company of an aggregate of 4,628,750 shares of the Company’s Common Stock (including 603,750 shares sold pursuant to the
over-allotment option), at a price to the public of $2.70 per share.  The net proceeds to the Company, after deducting
the underwriting discount and other offering expenses payable by the Company, from the sale of the shares in the offering were
approximately $11,338,000.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Stock Issued in Exchange for Services</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> During the six
months ended June 30, 2013 and 2012, the Company issued 7,450 and 2,867 shares, respectively, of Common Stock with a fair value
of $89,970 and $50,299, respectively, to vendors in exchange for their services.  Expenses associated with these transactions
were included in Selling, General and Administrative Expenses in the Consolidated Statements of Operations.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> In March 2003,
the Company’s shareholders approved its 2003 Stock Option and Incentive Plan (the “2003 Plan”). Pursuant to the
2003 Plan, the Company’s Board of Directors (or its committees and/or executive officers delegated by the Board of Directors)
may grant incentive and nonqualified stock options, restricted stock, and other stock-based awards to the Company’s employees,
officers, directors, consultants and advisors.  As of June 30, 2013, there were 31,125 restricted shares of Common Stock
issued and options to purchase an aggregate of 82,125 shares of Common Stock outstanding under the 2003 Plan and none are available
for future grants due to the plan’s expiration.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> In May 2008,
the Company’s shareholders approved the 2008 Equity Compensation Plan (the “2008 Plan”). The 2008 Plan provides
for grants of incentive stock options to employees and nonqualified stock options and restricted stock to employees, consultants
and non-employee directors of the Company.  In May 2013, the Company’s shareholders approved an amendment to the
2008 Plan to fix the maximum number of shares available under the 2008 Plan at 10,000,000 shares following shareholder approval
of a 1-for-10 reverse stock split effective June 7, 2013.  As of June 30, 2013, there were 295,528 restricted shares
of Common Stock issued and options to purchase an aggregate of 531,278 shares of Common Stock outstanding under the 2008 Plan and
9,455,722 shares available for future grants.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The following
table shows the remaining shares available for future grants for each plan and outstanding shares:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Equity Compensation Plans</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2003 Plan</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2008 Plan</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Shares Available For Issuance</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-align: justify; line-height: 115%; text-indent: -9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total reserved for stock options and restricted stock</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">160,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">10,000,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-align: justify; line-height: 115%; text-indent: 9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Net restricted stock issued net of cancellations</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(31,125</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(295,528</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.25in; text-align: justify; line-height: 115%; text-indent: 9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Stock options granted</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(154,449</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(324,250</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-align: justify; line-height: 115%; text-indent: 9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Add back options cancelled before exercise</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">67,849</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">75,500</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.25in; text-align: justify; line-height: 115%; text-indent: 9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Less shares no longer available due to Plan expiration</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(42,275</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-align: justify; line-height: 115%; text-indent: -9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Remaining shares available for future grants</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,455,722</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td colspan="9" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Not Pursuant to a Plan</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; width: 66%; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total granted</font></td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">154,449</font></td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">324,250</font></td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">310,000</font></td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: top; width: 1%; line-height: 115%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Less:  Options cancelled</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(67,849</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(75,500</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(138,333</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%; text-indent: 27pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Options exercised</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(35,600</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(13,000</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(66,667</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Net shares outstanding before restricted stock</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">51,000</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">235,750</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">105,000</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Net restricted stock issued net of cancellations</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">31,125</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">295,528</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">28,484</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding shares at June 30, 2013</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">82,125</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">531,278</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">133,484</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The following
table shows the remaining shares available for future grants for each plan and outstanding shares:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Equity Compensation Plans</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2003 Plan</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2008 Plan</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Shares Available For Issuance</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-align: justify; line-height: 115%; text-indent: -9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total reserved for stock options and restricted stock</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">160,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">10,000,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-align: justify; line-height: 115%; text-indent: 9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Net restricted stock issued net of cancellations</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(31,125</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(295,528</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.25in; text-align: justify; line-height: 115%; text-indent: 9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Stock options granted</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(154,449</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(324,250</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-align: justify; line-height: 115%; text-indent: 9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Add back options cancelled before exercise</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">67,849</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">75,500</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.25in; text-align: justify; line-height: 115%; text-indent: 9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Less shares no longer available due to Plan expiration</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(42,275</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-align: justify; line-height: 115%; text-indent: -9pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Remaining shares available for future grants</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,455,722</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td colspan="9" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Not Pursuant to a Plan</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; width: 66%; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total granted</font></td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">154,449</font></td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">324,250</font></td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: bottom; width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">310,000</font></td>
<td style="vertical-align: bottom; width: 1%; line-height: 115%"> </td>
<td style="vertical-align: top; width: 1%; line-height: 115%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Less:  Options cancelled</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(67,849</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(75,500</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(138,333</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%; text-indent: 27pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Options exercised</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(35,600</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(13,000</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(66,667</font></td>
<td style="vertical-align: bottom; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Net shares outstanding before restricted stock</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">51,000</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">235,750</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">105,000</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Net restricted stock issued net of cancellations</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">31,125</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">295,528</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">28,484</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
<tr style="background-color: white">
<td style="vertical-align: bottom; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding shares at June 30, 2013</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">82,125</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">531,278</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="vertical-align: bottom; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">133,484</font></td>
<td style="vertical-align: bottom; line-height: 115%"> </td>
<td style="vertical-align: top; line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The fair value
of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model with certain assumptions
noted below. Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent
with the expected term of the options. The Company uses historical data, as well as subsequent events occurring prior to the issuance
of the financial statements, to estimate option exercise and employee termination and forfeitures within the valuation model.
The expected term of stock options granted under the Company’s stock plans is based on the average of the contractual term
(generally 10 years) and the vesting period (generally 24 to 42 months).  The risk-free rate is based on the yield of
a U.S. Treasury security with a term consistent with the option.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt">The assumptions used principally for stock options granted to
employees and members of the Company’s Board of Directors in the six months ended June 30, 2013 and 2012 were as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2013</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2012</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 60%; padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Risk-free interest rate</font></td>
<td style="width: -1mm; text-align: right; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">0.13% - 1.41</font></td>
<td style="width: 2%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td>
<td style="width: 1%; text-align: right; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 16%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">0.94% - 2.05</font></td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Expected dividend yield</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Expected term</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td colspan="2" style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1 - 6.5 years</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td colspan="2" style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6.5 years</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Forfeiture rate (excluding fully vested stock options)</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Expected volatility</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">129% - 141</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">131% - 137</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> A summary of
stock option activity as of and for the six months ended June 30, 2013 is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>Stock Options</b></p></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Shares</b></p></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Price</b></p></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Remaining</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Contractual</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Term</b></p></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Intrinsic</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Value</b></p></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding at January 1, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">343,334</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">14.75</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">69,750</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.66</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Exercised</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Forfeited or expired</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(21,334</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">23.88</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 59%; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding at June 30, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="width: 8%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">391,750</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">12.45</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 8%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6.99 years</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Exercisable at June 30, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">240,575</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">11.04</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">5.57 years</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The weighted-average
grant-date fair value of stock options granted during the six months ended June 30, 2013 was $4.05 per share. Share-based compensation
expense recognized in the six months ended June 30, 2013 and 2012 was approximately $456,000 and $407,000, respectively. As of
June 30, 2013, there was approximately $1,745,000 of total unrecognized compensation expense related to non-vested share-based
option compensation arrangements. With the exception of the unrecognized share-based compensation related to certain restricted
stock grants to officers and employees that contain performance conditions related to United States Food and Drug Administration
(“FDA”) approval for Symphony or the sale of substantially all of the stock or assets of the Company (see Note 10 on
Restricted Stock below), unrecognized compensation is expected to be recognized over the next four years.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt">The assumptions used principally for stock options granted to
employees and members of the Company’s Board of Directors in the six months ended June 30, 2013 and 2012 were as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2013</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2012</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 60%; padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Risk-free interest rate</font></td>
<td style="width: -1mm; text-align: right; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 18%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">0.13% - 1.41</font></td>
<td style="width: 2%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td>
<td style="width: 1%; text-align: right; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 16%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">0.94% - 2.05</font></td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Expected dividend yield</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Expected term</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td colspan="2" style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1 - 6.5 years</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td colspan="2" style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6.5 years</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Forfeiture rate (excluding fully vested stock options)</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 5.05pt; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Expected volatility</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">129% - 141</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">131% - 137</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">%</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">A summary of stock option activity as
of and for the six months ended June 30, 2013 is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b>Stock Options</b></p></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Shares</b></p></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Price</b></p></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Remaining</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Contractual</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Term</b></p></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Intrinsic</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Value</b></p></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding at January 1, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">343,334</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">14.75</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">69,750</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.66</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Exercised</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Forfeited or expired</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(21,334</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">23.88</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 59%; padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding at June 30, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="width: 8%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">391,750</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">12.45</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 8%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6.99 years</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Exercisable at June 30, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">240,575</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">11.04</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">5.57 years</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> During the six
months ended June 30, 2013, the Company granted an aggregate of 38,638 restricted shares of Common Stock to certain officers, employees,
directors and consultants of the Company.  The grants were issued pursuant to the 2008 Plan.  The grant date
fair value of these restricted stock grants was approximately $250,316.  Share-based compensation expense related to
restricted stock recognized in the six months ended June 30, 2013 and June 30, 2012 was approximately $313,000 and $29,000, respectively.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> A summary of
the Company’s nonvested restricted stock activity as of and for the six months ended June 30, 2013, is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Restricted Stock</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Shares</b></p></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Grant-Date</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Fair Value</b></p></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 78%; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Nonvested at January 1, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">316,044</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">16.60</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted this period</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">38,638</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6.48</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Vested</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(22,953</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">19.75</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Forfeited</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(24,500</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9.94</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Nonvested at June 30, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">307,229</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15.62</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Among the 307,229 shares of non-vested
restricted stock, the various vesting criteria include the following:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0"></td><td style="width: 45pt">·</td><td>165,460 shares of restricted stock vest upon the FDA approval of Symphony or the sale of the Company; and</td></tr></table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt/normal Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0"></td><td style="width: 45pt">·</td><td>141,769 shares of restricted stock vest over one to four years, at each of the anniversary dates of the grants.</td></tr></table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> As of June 30,
2013, there was approximately $1,658,000 of total unrecognized compensation expense related to non-vested share-based restricted
stock arrangements granted pursuant to the Company’s equity compensation plans that vest over time in the foreseeable future.
As of June 30, 2013, the Company cannot estimate the timing of completion of performance vesting requirements required by certain
of these restricted stock grant arrangements.  Compensation expense related to these restricted share grants will be
recognized when the Company concludes that achievement of the performance vesting conditions is probable.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">A summary of the Company’s nonvested
restricted stock activity as of and for the six months ended June 30, 2013, is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Restricted Stock</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Shares</b></p></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Grant-Date</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Fair Value</b></p></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 78%; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Nonvested at January 1, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">316,044</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">16.60</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted this period</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">38,638</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6.48</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Vested</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(22,953</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">19.75</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 0.25in; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Forfeited</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(24,500</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9.94</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Nonvested at June 30, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">307,229</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15.62</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> At June 30,
2013, the Company had the following outstanding warrants:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number of</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Shares</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercisable</b></p></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Exercise Price</b></font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Date of Expiration</b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Outstanding warrants accounted for as derivative warrant liability:</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 69%; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to debt holder</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">400,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; text-align: right; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.00</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 9%; padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">8/31/2017</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to debt holder</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">100,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">21.30</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9/20/2017</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to debt holder</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">50,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">22.70</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">10/17/2017</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to debt holder</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">150,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">21.10</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">11/6/2017</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 0.25in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total outstanding warrants accounted for as derivative warrant liability</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">700,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average exercise price</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.61</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average time to expiration in years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.23 years</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Outstanding warrants accounted for as equity:</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement of preferred stock</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3,228</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">10.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9/30/2013</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement of preferred stock</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">19,834</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">10/28/2013</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement of preferred stock</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">39,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">7.50</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2/28/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to vendor</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3/15/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">40,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15.90</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6/30/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">76,800</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">11/13/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to placement agent in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">25,695</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">11/13/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,300</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">12/3/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">34,146</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">22.50</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2/9/2015</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to placement agents in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2,853</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">22.50</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2/9/2015</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investor in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">638</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">22.50</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3/18/2015</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">95,960</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">30.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">12/7/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: 0.25in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total outstanding warrants accounted for as equity</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">350,454</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average exercise price</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.17</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average time to expiration in years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1.22 years</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Totals for all warrants outstanding:</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-indent: 0.25in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,050,454</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average exercise price</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.46</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average time to expiration in years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3.22 years</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A summary of warrant activity
for the six months ended June 30, 2013 is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Warrants</b></p></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>  </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>  </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 8.8pt"><b>Shares</b></p></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise Price</b></p></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 78%; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding at January 1, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,254,004</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.08</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 27pt; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,175</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">12.60</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 27pt; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Exercised</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">            Forfeited or expired</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(212,725</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">17.69</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding at June 30, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,050,454</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.46</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Exercise of Common Stock Warrants</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> During the six
months ended June 30, 2013, the Company issued no shares of its Common Stock upon the exercise of warrants.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">At June 30, 2013, the Company had the
following outstanding warrants:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number of</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Shares</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercisable</b></p></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Exercise Price</b></font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Date of Expiration</b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Outstanding warrants accounted for as derivative warrant liability:</b></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 69%; text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to debt holder</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">400,000</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; text-align: right; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.00</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 9%; padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">8/31/2017</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to debt holder</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">100,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">21.30</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9/20/2017</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to debt holder</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">50,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">22.70</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">10/17/2017</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to debt holder</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">150,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">21.10</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">11/6/2017</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 0.25in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total outstanding warrants accounted for as derivative warrant liability</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">700,000</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average exercise price</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.61</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average time to expiration in years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">4.23 years</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Outstanding warrants accounted for as equity:</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement of preferred stock</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3,228</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">10.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9/30/2013</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement of preferred stock</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">19,834</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">10/28/2013</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement of preferred stock</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">39,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">7.50</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2/28/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to vendor</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3/15/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">40,000</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15.90</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6/30/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">76,800</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">11/13/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to placement agent in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">25,695</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">15.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">11/13/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">6,300</font></td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">12/3/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">34,146</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">22.50</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2/9/2015</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to placement agents in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2,853</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">22.50</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2/9/2015</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investor in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">638</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">22.50</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3/18/2015</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 12pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted to investors in private placement</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">95,960</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">30.00</font></td>
<td style="line-height: 115%"> </td>
<td style="padding-right: 8.1pt; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">12/7/2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: 0.25in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total outstanding warrants accounted for as equity</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">350,454</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average exercise price</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.17</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average time to expiration in years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1.22 years</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>Totals for all warrants outstanding:</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-indent: 0.25in; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total</font></td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,050,454</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average exercise price</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.46</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt; text-indent: -9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Weighted average time to expiration in years</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">3.22 years</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">A summary of warrant activity for the
six months ended June 30, 2013 is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Warrants</b></p></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>  </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>  </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 8.8pt"><b>Shares</b></p></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise Price</b></p></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 78%; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding at January 1, 2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,254,004</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.08</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 27pt; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Granted</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">9,175</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">12.60</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 27pt; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Exercised</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">            Forfeited or expired</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(212,725</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">17.69</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Outstanding at June 30, 2013</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,050,454</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">20.46</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> In 2009, the
Company entered into a License Agreement with Handok Pharmaceuticals Co., Ltd. (“Handok”) pursuant to which the Company
granted Handok a license to develop, use, market, sell and import Symphony for continuous glucose monitoring for use by medical
facilities and/or individual consumers in South Korea (the “Handok License”). The Handok License has a minimum term
of 10 years from the date of the first commercial sale of Symphony in South Korea.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The Company
received a licensing fee of approximately $500,000 upon execution of the Handok License and the right to receive future milestone
payments and royalties. The Company recognizes these upfront, nonrefundable payments as revenue on a straight-line basis over the
contractual or estimated performance period. During the three months ended June 30, 2013 and 2012, the Company recorded approximately
$23,000 and $31,000, respectively, of nonrefundable license revenue.  During the six months ended June 30, 2013 and 2012,
the Company recorded approximately $45,000 and $62,000, respectively, of nonrefundable license revenue.  As of June 30,
2013, approximately $45,000 of deferred revenue remains unrecognized, which will be recognized over the next 12 months and is shown
as Deferred Revenue From Licensing Arrangements among current liabilities on the Consolidated Balance Sheet.  Approximately
$90,000 of the remaining deferred revenue will be recognized over the period subsequent to the next 12 months and is shown as Deferred
Revenue From Licensing Arrangements among non-current liabilities.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> On August 31,
2012, the Company and Montaur entered into a Loan Agreement (the “Loan Agreement”) pursuant to which Montaur made a
non-revolving draw credit facility (the “Credit Facility”) of up to $20,000,000 available to the Company, a substantial
portion of which is subject to the successful achievement of certain clinical and regulatory milestones set forth in the Loan Agreement,
with an initial available principal amount of $5,000,000 (the “Maximum Draw Amount”).  The Company issued
to Montaur a Promissory Note dated August 31, 2012 (the “Note”), with a maturity date of five years from the date of
closing (the “Maturity Date”).  The Company has used the proceeds from the Credit Facility to fund operations.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The principal
balance of each draw will bear interest from the applicable draw date at a rate of 10% per annum, compounded monthly.  The
Company is required to make interest payments on the principal amount due in connection with each draw on the first business day
of each month until the Maturity Date.  The Company is also required to make a mandatory prepayment on each interest
payment date of an amount equal to one-third of its total revenue for the then prior fiscal quarter, up to the maximum amount
outstanding under the Note at that time.  The Company is not, however, required to make such interest payment or mandatory
prepayment if doing so would reduce the Company’s cash and cash equivalents to less than $5,000,000.  Any amounts
not previously paid in full will be due and payable on the Maturity Date.  The Company has the right to permanently
prepay any draw, in whole or in part, prior to the Maturity Date.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt">The Company’s subsidiary, Sontra Medical, Inc. (“Sontra”),
agreed to guarantee the obligations of the Company under the Note pursuant to a guaranty agreement entered into on August 31,
2012 (the “Guaranty”).  Additionally, the Note is secured by the Pledged Revenue (as defined in the Loan
Agreement) of the Company and the Company’s subsidiaries pursuant to a Security Agreement dated as of August 31, 2012 by
and among the Company, Sontra and Montaur.  Upon the earlier of the Maturity Date of the Note or an event of default,
as defined in the Loan Agreement, the Note shall be secured by substantially all of the assets of the Company and any of its subsidiaries,
which security interest shall not be effective until such event of default or maturity, pursuant to a Default Security Agreement
dated August 31, 2012 by and among the Company, Sontra and Montaur.  The Company also has agreed to pay all costs associated
with registering the shares underlying the Warrants (should it choose to register such shares) and to indemnify Montaur from liability
resulting from the registration of such shares (subject to certain standard exceptions) in accordance with a Registration Indemnity
Agreement between the Company and Montaur.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> Pursuant to
the Loan Agreement, the Company issued Montaur a warrant to purchase 400,000 shares of its Common Stock, with a term of five years
and an exercise price of $20.00 per share (the “Commitment Warrant”).  The fair value of the warrant was
determined to be approximately $4,840,000 and was recorded as a deferred financing cost that will be amortized to interest expense
over the term of the Note.  Of this cost, $968,004 is reflected in Current Assets, representing the portion which will
be amortized over the next twelve months. Amortization of the deferred financing cost for the three and six months ended June 30,
2013 was $242,000 and $484,000, respectively, and is included in interest expense.  In addition, for each $1,000,000
of funds borrowed pursuant to the Credit Facility, the Company will issue Montaur a warrant to purchase 100,000 shares of Common
Stock, with a term of five years and an exercise price equal to 150% of the market price of the Common Stock at the time of the
draw, but in no event less than $20.00 or more than $40.00 per share (together with the Commitment Warrant, the “Warrants”).  All
of the Warrants are immediately exercisable and will have a term of five years from the issue date. The exercise price of the Warrants
is subject to adjustment for stock splits, combinations or similar events.  An exercise under the Warrants may not result
in the holder beneficially owning more than 4.99% or 9.99%, as applicable, of all of the Common Stock outstanding at the time;
provided, however, that a holder may waive the 4.99% ownership limitation upon sixty-one (61) days’ advance written
notice to the Company.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> On September
14, 2012, the Company submitted a draw request to Montaur in the amount of $3,000,000 in the form required by the Loan Agreement
(the “September Request”).  The Company ultimately received the $3,000,000 in the following increments: $1,000,000
on September 20, 2012, $500,000 on October 17, 2012, and $1,500,000 on November 6, 2012.  These draws were recorded on
the Consolidated Balance Sheet under note payable, net of the initial $3,000,000 in discounts recorded related to the warrants
issued.  In accordance with the Loan Agreement and as a result of funding received from Montaur, the Company issued to
Montaur separate warrants concurrent with the three draws above to purchase 100,000, 50,000 and 150,000 shares of Common Stock
each with a term of five years, and exercise prices of $21.30, $22.70 and $21.10 per share, respectively.  The fair value
of the warrants issued to purchase 300,000 shares of Common Stock was determined to be approximately $3,455,000, of which $3,000,000
was treated as a debt discount and was to be accreted to interest expense over the term of the Note, and the balance of approximately
$455,000 was charged to interest expense in 2012.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> On March 1,
2013, the Company elected to prepay all outstanding draws under the Montaur Credit Facility totaling $3,113,366, which includes
interest accrued and unpaid to that date of $113,366.  After such date, no principal amount is outstanding under the
Credit Facility.  Concurrent with this prepayment, the Company recorded non-cash interest expense of approximately $2,879,166
in March 2013 relating to the unamortized debt discount on the outstanding draws paid off.</p>
5198303
13444077
75626
210321
968004
968004
407463
657463
3747210
8995571
3111342
11608289
1638395
1659852
1165398
1045825
2803793
2705677
818939
836471
156435
111980
728269
734772
-732296
-710011
367854
312443
20021592
27805321
13184894
12701392
10566
11066
3549328
3065326
9625000
9625000
9790986
5081258
90228
45114
90000
120834
1361
9578563
5036144
1581448
1769529
5585141
909155
2527
2656
90228
90228
45000
2319219
2264576
-93902015
-104231737
20021592
27805321
10230606
22724063
104058087
126818839
44374
106801
30060
30060
100
100
45114
61854
22557
30927
45114
61854
22557
30927
23000
31000
45000
62000
-11591552
-6724354
-6094939
-3504232
11636666
6786208
6117496
3535159
4397794
3194256
2098347
1334852
7238872
3591952
4019149
2200307
1261830
584240
2753542
349888
4675986
601281
2995000
369738
3415859
284
242078
134
1703
4515
620
1556
5987376
3895181
6594530
3916064
-1.73
-1.58
-0.51
-0.81
-10329722
-6140114
-3341397
-3154344
-21272
-21272
21272
484002
2879166
-4675986
-601281
768634
436056
188574
43757
-10642233
-5767283
188081
67147
-45114
-61854
-54643
318374
-500
9749
-134695
55799
33513
-460031
-468358
250000
157463
210031
310895
18963343
351412
194180
151680
1232
1115
3000000
21964575
6667
7861079
-5884229
113535
284
-82000
41520
8453000
104232000
1953000
750000
2703000
-41520
9455722
P1Y
42000
42000
P10Y
500000
37,000
1,060
7,900
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The table below
presents the changes in the Level 3 Derivative Warrant Liability measured for the six months ended June 30, 2013 and 2012:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2013</b></font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><b>2012</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 78%; padding-right: 2.15pt; padding-left: 9pt; text-indent: 9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Derivative Warrant Liability as of January 1</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">5,585,141</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,035,337</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 2.15pt; padding-left: 9pt; text-indent: 27pt; line-height: 115%; font-size: 11pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total unrealized losses included in net loss </font><font style="font: 7pt Times New Roman, Times, Serif; color: black">(1)</font><font style="font: 10pt Times New Roman, Times, Serif; color: black">	</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">781,682</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 2.15pt; padding-left: 9pt; text-indent: 27pt; line-height: 115%; font-size: 11pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total unrealized gains included in net loss </font><font style="font: 7pt Times New Roman, Times, Serif; color: black">(1)</font><font style="font: 10pt Times New Roman, Times, Serif; color: black">	</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(5,305,000</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(539,648</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 2.15pt; padding-left: 9pt; text-indent: 27pt; line-height: 115%; font-size: 11pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Total realized gains included in net loss </font><font style="font: 7pt Times New Roman, Times, Serif; color: black">(1)</font><font style="font: 10pt Times New Roman, Times, Serif; color: black">	</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(152,668</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(61,633</font></td>
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-right: 2.15pt; padding-left: 0.75in; text-indent: -0.25in; line-height: 115%; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Reclassification of derivative warrant liability to additional paid-in capital for derivative warrants exercised</font></td>
<td style="line-height: 115%; padding-bottom: 1pt"> </td>
<td style="line-height: 115%; border-bottom: Black 1pt solid"> </td>
<td style="text-align: right; line-height: 115%; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%; padding-bottom: 1pt"> </td>
<td style="line-height: 115%; padding-bottom: 1pt"> </td>
<td style="line-height: 115%; border-bottom: Black 1pt solid"> </td>
<td style="text-align: right; line-height: 115%; border-bottom: Black 1pt solid"><font style="font: 10pt Times New Roman, Times, Serif; color: black">(41,520</font></td>
<td style="line-height: 115%; padding-bottom: 1pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-right: 2.15pt; padding-left: 9pt; text-indent: 9pt; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">Derivative Warrant Liability as of June 30</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">909,155</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">392,536</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%; border-bottom: Black 1pt solid"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td colspan="8" style="line-height: 115%; font-size: 11pt"><font style="font: 7pt Times New Roman, Times, Serif; color: black">(1)</font><font style="font: 10pt Times New Roman, Times, Serif; color: black">	Included in Gain on Revaluation of Derivative Warrant Liability in the Consolidated Statement of Operations.</font></td></tr></table>
1069000
2139000
2139000
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt">Estimated amortization
expense for each of the next five calendar years is as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Estimated</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Amortization Expense</b></p></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 89%; text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2013</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">$</font></td>
<td style="width: 8%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2014</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">—</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2015</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black"><font style="font: 10pt Times New Roman, Times, Serif; color: black">1,069,000</font></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2016</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"></td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2,139,000</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify; line-height: 115%; text-indent: 12pt"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2017</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif; color: black">2,139,000</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
5585000
909000
313000
29000
-212725
1050454
4.66
9.94
11850
382000
82000
464000
454000
196000
650000
444000
192000
636000
447000
187000
634000
226000
93000
319000
<p style="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt">We
are a medical device company with expertise in advanced skin permeation technology.  We are developing our
Symphony</font><font style="font-size: 7pt">®</font><font style="font-size: 10pt"> CGM System (“Symphony”) as
a non-invasive, wireless continuous glucose monitoring (“CGM”) system for use in hospital critical care units and
for people with diabetes.  The Prelude</font><font style="font-size: 7pt">®</font><font style="font-size: 10pt"><b> </b>SkinPrep
System (“Prelude”), a component of our Symphony CGM System, allows for enhanced skin permeation that will enable
extraction of analytes such as glucose.  Prelude’s platform skin preparation technology also allows for
needle-free, transdermal drug delivery. Additional applications for needle-free analyte extraction and topical and systemic
drug delivery are planned.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> The accompanying
unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Sontra Medical,
Inc., a Delaware corporation. All significant intercompany balances and transactions have been eliminated in consolidation.  These
financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the
United States consistent with those applied in, and should be read in conjunction with, the Company’s audited consolidated
financial statements and related footnotes for the year ended December 31, 2012 included in the Company’s Annual Report on
Form 10-K as filed with the United States Securities and Exchange Commission (“SEC”) on March 18, 2013.  These
financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair presentation of the Company’s financial position as of June 30, 2013 and its results of operations and
cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for
the full year.  These interim financial statements do not include all of the information and footnotes required by GAAP
for complete financial statements and allowed by the relevant SEC rules and regulations; however, the Company believes that its
disclosures are adequate to ensure that the information presented is not misleading. Certain amounts in prior periods have been
reclassified to conform to current presentation.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> On June 7, 2013,
the Company effected a 1-for-10 reverse stock split of its common stock. All share and per share information has been retroactively
restated to reflect this reverse stock split.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="font-weight: normal">In
August 2013, a shareholder derivative action was filed in the Court of Common Pleas of Philadelphia County naming as defendant
the Company, its directors and certain of its officers.  The complaint seeks unspecified amount of damages and principally
alleges breaches of fiduciary duty and gross mismanagement related to the Loan Agreement and Company’s prepayment of the
Promissory Note it issued to Montaur.  Based on a preliminary review and analysis of the complaints, the Company believes
that this lawsuit is without merit and intends to defend vigorously. The Company is not presently able to estimate the potential
losses, if any, related to this lawsuit. </font></p>
<p style="margin: 0pt"></p>
Included in Gain (Loss) on Revaluation of Derivative Warrant Liability in the Consolidated Statement of Operations.