2. Basis of Presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Liquidity and Going Concern

The Company has experienced recurring losses and negative cash flow from operations and management expects these conditions to continue for the foreseeable future. As the result of these factors, the Company has been and continues to be dependent on raising capital from the sale of securities in order to continue to operate and to meet its obligations in the ordinary course of business. In mid-year 2013, management put in place a cost reduction program that included staff reductions, the elimination or deferral of all nonessential projects and activities and the scaling back or discontinuance of general corporate activities (referred to as “Cost Reduction Plan”) to preserve liquidity. In addition, in February 2014, the Company raised net proceeds of approximately $11,458 from the sale of convertible preferred stock, common stock and warrants and in July 2014, the Company raised proceeds of approximately $15,000 from the sale of senior secured convertible debentures, convertible preferred stock and warrants to strengthen the Company’s financial position.

The Company continues to incur net losses. These net losses have had a significant negative impact on the Company’s working capital and financial position and may impact its future ability to meet its obligations in the ordinary course of business. As a result, management believes that, even with cash and cash equivalents held at December 31, 2014, and estimated revenue, there is significant doubt about its ability to continue as a going concern. The Company continues to assess the effects of its previously announced Cost Reduction Plan and is prepared to further reduce various operational costs as necessary. Although the Company has no specific arrangements or plans, the Company will need additional capital during the next 12 months.

The Company expects to incur additional medical, marketing and sales expenses as well as additional contract manufacturing and inventory costs in the future that will require additional funding. As a result, the Company expects to continue to incur operating losses for the foreseeable future and cannot determine at this time when it will generate any significant revenues. As of December 31, 2014, the Company’s cash and cash equivalents was approximately $11,434. If existing cash is insufficient to satisfy its liquidity requirements, or if it develops additional products, the Company may seek to sell additional debt or equity securities. If additional funds are raised through the issuance of debt securities, these securities would have rights senior to those associated with the Company’s common stock and could contain covenants that would restrict the Company’s operations. Any additional financing may not be available in amounts or on terms acceptable to the Company, or at all. If the Company is unable to obtain any additional financing, it may be required to reduce the scope of, delay or eliminate some or all of planned product research development and commercialization activities, which could harm its business.

The Company’s financial statements are prepared in accordance with GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. In addition, as of December 31, 2014, the Company had an accumulated deficit of $182,293, had incurred a net loss for the year ended December 31, 2014, of $14,145 and had positive working capital of $14,517. Funding has been provided by related parties as well as new investors committed to making it possible to maintain, expand, and ensure the advancement of the MelaFind product. The Company has not made any adjustment to the financial statement regarding this uncertainty and continues to report as a going concern.