1.	Nature of Business

Foundation Medicine, Inc., and its wholly-owned subsidiaries, Foundation Medicine Securities Corporation and FMI Germany GmbH (collectively, the “Company”), is a molecular information company focused on fundamentally changing the way in which patients with cancer are evaluated and treated. The Company believes an information-based approach to making clinical treatment decisions based on comprehensive genomic profiling will become a standard of care for patients with cancer. The Company derives revenue from selling services that are enabled by its molecular information platform to physicians and biopharmaceutical companies.

The Company’s molecular information services for genomic profiling, FoundationOne for solid tumors, FoundationOneHeme for blood-based cancers, or hematologic malignancies, including leukemia, lymphoma, myeloma, pediatric cancers, and advanced sarcomas, FoundationACT, a blood-based (liquid biopsy) assay to measure circulating tumor DNA (“ctDNA”), and FoundationFocus CDxBRCA, an FDA-approved, companion diagnostic assay to aid in identifying women with ovarian cancer for whom treatment with Rubraca™ (rucaparib) is being considered, are widely available comprehensive genomic profiles designed for use in the routine care of patients with cancer. In November 2017, the Company received FDA approval for FoundationOne CDx, a broad companion diagnostic assay for solid tumors. FoundationOne CDx was approved as part of the parallel review process for breakthrough devices with the FDA and The Centers for Medicare and Medicaid Services (“CMS”). Concurrent with FDA approval, CMS issued a preliminary National Coverage Determination (“NCD”) for FoundationOne CDx. The preliminary NCD would provide coverage for FDA-approved companion diagnostic claims for solid tumors including NSCLC, CRC, breast and ovarian cancers, and melanoma, as well as a provide a pathway for additional coverage with evidence development in other solid tumor types. The Company expects to commercialize FoundationOne CDx following the issuance of the final coverage policy by CMS and activation of our proprietary billing code. To accelerate its commercial growth and enhance its competitive advantage, the Company is developing and commercializing new molecular information services for physicians and biopharmaceutical companies, strengthening its commercial organization, introducing new marketing, education and provider engagement efforts, growing its molecular information knowledgebase, called FoundationCORE, aggressively pursuing reimbursement from regional and national third-party payors, publishing scientific and medical advances, and fostering relationships throughout the oncology community.

The Company believes that its existing cash and cash equivalents and available borrowings at December 31, 2017 will be sufficient to allow the Company to fund its current operating plan through at least a period of one year after the date the financial statements are issued. As the Company continues to incur losses, its transition to profitability is dependent upon a level of revenues adequate to support the Company’s cost structure. If the Company’s transition to profitability is not consistent with its current operating plan, the Company may have to seek additional capital.