NOTE 2. GOING CONCERN UNCERTAINTY, FINANCIAL CONDITION AND MANAGEMENT’S PLANS

The Company believes that its available cash as of the date of this filing may not be sufficient to fund its anticipated level of operations for at least the next 12 months. The Company’s ability to continue as a “going concern” is dependent on a combination of several of the following factors: the Company’s ability to raise capital, the potential exercise for cash of outstanding warrants and options, the Company’s ability to monetize assets, the receipt of grants and access to an established line of credit. The Company has limited capital resources and its operations have been funded by the proceeds of equity and debt offerings. The Company has devoted substantially all of its cash resources to research and development (“R&D”) programs and incurred significant general and administrative expenses to enable it to finance and grow its business and operations. To date, the Company has not generated any significant revenue and may not generate any revenue for a number of years, if at all. If the Company is unable to raise additional funds in the future on acceptable terms, or at all, it may be forced to curtail its development activities. In addition, the Company could be forced to delay or discontinue certain or all product developments, and forego attractive business opportunities.

At December 31, 2015, the Company had a working capital deficit of approximately $1.4 million. Accumulated deficit amounted to $63.0 million and $45.8 million at December 31, 2015 and 2014, respectively. Net loss for the years ended December 31, 2015 and 2014 was $17.2 million and $23.6 million, respectively. Net cash used in operating activities was $13.9 million for both years ended December 31, 2015 and 2014. At December 31, 2015, the Company had cash and cash equivalents of $4.5 million.

The Company has historically funded its operations primarily through debt, the sale of its securities, including sales of common stock, convertible notes, preferred stock and warrants. During July 2015, the Company raised a total of up to $21.5 million through two financing agreements (“July 2015 financings”). The first, on July 29, 2015 with Hercules Capital (“Hercules”), was for a term loan of $4.5 million with the option to draw down additional capital of up to $5.0 million prior to June 15, 2016, subject to certain clinical milestones and other conditions, for which no additional capital has been drawn as of December 31, 2015. The second on July 28, 2015, was with Discover Growth Fund (“Discover”) through the issuance and sale of 947 shares of the Company’s Series D Preferred Stock for total gross proceeds of $9.0 million. On September 29, 2015, pursuant to the Stock Purchase Agreement the Company issued and sold an additional 316 shares of its Series D Preferred Stock, for a total gross proceeds of $3.0 million. The Company repaid the MidCap Financial Trust (“MidCap”) $2.1 million of its senior secured term loan and an early termination fee of $0.5 million from the proceeds of the July 2015 financings.

The Company will require additional financing in fiscal 2016 in order to continue at its expected level of operations. If the Company fails to obtain the needed capital, it will be forced to delay, scale back, partner out or eliminate some or all of its R&D programs, which could result in an impairment of the Company’s intangible assets and have a material adverse impact on its financial condition and results of operations. There is no assurance that the Company will be successful in any capital-raising efforts that it may undertake to fund operations during 2016. The Company anticipate that it will continue to issue equity and/or debt securities as a source of liquidity, when needed, until its able to generate positive cash flow to support its operations. The Company cannot give any assurance that the necessary capital will be raised or that, if funds are raised, it will be on favorable terms. Any future sales of securities to finance the Company will dilute existing stockholders' ownership. The Company cannot guarantee when or if it will ever generate positive cash flow. In addition, the Company may partner or license the Company’s assets, which may allow for additional non-dilutive financing in the future. The Company has previously received government grants in Israel and may receive additional grant funding in 2016. The Independent Registered Public Accounting Firms’ Report issued in connection with the Company’s audited consolidated financial statements for the year ended December 31, 2015 stated that there is “substantial doubt about the Company’s ability to continue as a going concern.”

The Company’s strategy to fund its operations is to monetize its multiple asset groups either through partnerships, asset-centric subsidiaries or joint ventures, raise capital, and the potential exercise for cash of warrants and options. On March 30, 2016, the Company executed a Capital Access Agreement with Regatta Select Healthcare LLC (“Regatta”) whereby Regatta shall purchase up to 7.0 million shares of the Company’s common stock over a twelve-month term at the discretion of the Company.