3.	Liquidity and management's plans

The Company emerged from being a development stage company in 2010. Planned principal operations have commenced, but revenue has not been significant enough to fund ongoing operations. The Company's cash requirements for the twelve months ended December 31, 2011 arose out of general working capital needs and the acquisition of Surgical Biologics. The Company funded its cash requirements primarily through a combination of debt and equity financings. As of December 31, 2011, the Company had approximately $4,112,000 of cash and cash equivalents. The Company reported total current assets of approximately $6,882,000 and current liabilities payable in cash of approximately $4,732,000 after adjusting for the short term earn-out liability payable in MiMedx common stock in the second quarter of 2012. Also included in current liabilities is a convertible line of credit with a related party for approximately $1,296,000 which is due on December 31, 2012 which can be extended for an additional 12 months by paying a fee of five percent of the amount due or $65,000. The Company believes that its cash and cash equivalents and anticipated cash from operations will enable the Company to meet its operational liquidity needs, fund its planned investing activities and pay its debt when due for the next twelve months.