<SEC-DOCUMENT>0001144204-13-022968.txt : 20130419
<SEC-HEADER>0001144204-13-022968.hdr.sgml : 20130419
<ACCEPTANCE-DATETIME>20130419163705
ACCESSION NUMBER:		0001144204-13-022968
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20130419
DATE AS OF CHANGE:		20130419

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ATOSSA GENETICS INC
		CENTRAL INDEX KEY:			0001488039
		STANDARD INDUSTRIAL CLASSIFICATION:	SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
		IRS NUMBER:				264753208
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-187770
		FILM NUMBER:		13771959

	BUSINESS ADDRESS:	
		STREET 1:		4105 E MADISON STREET
		STREET 2:		SUITE 320
		CITY:			SEATTLE
		STATE:			WA
		ZIP:			98112
		BUSINESS PHONE:		206 325 6086

	MAIL ADDRESS:	
		STREET 1:		4105 E MADISON STREET
		STREET 2:		SUITE 320
		CITY:			SEATTLE
		STATE:			WA
		ZIP:			98112
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>v341858_424b3.htm
<DESCRIPTION>424B3
<TEXT>
<HTML>
<HEAD>
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<P STYLE="margin: 0; text-align: right">Filed pursuant to Rule 424(b)(3)</P>

<P STYLE="margin: 0; text-align: right">Registration No. 333-187770</P>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"><B><I>PROSPECTUS</I></B></P>

<P STYLE="margin: 0"><B><I></I>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ATOSSA GENETICS INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>2,833,519 shares of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This prospectus covers the sale of an aggregate
of 2,833,519 shares of our common stock, $0.001 par value per share (the &ldquo; <B><I>Common Stock</I></B> &rdquo;), by Aspire
Capital Fund, LLC (&ldquo;<B><I>Aspire Capital</I></B>&rdquo; or the &ldquo;<B><I>Selling Stockholder</I></B>&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The prices at which the Selling Stockholder
may sell the shares of Common Stock will be determined by the prevailing market price for the shares or in negotiated transactions.&nbsp;
We will not receive proceeds from the sale of the shares by the Selling Stockholder.&nbsp; However, we have received $1 million
in gross proceeds, and in the future may receive up to $29 million in gross proceeds, from the sale of our Common Stock to the
Selling Stockholder, pursuant to a common stock purchase agreement entered into with the Selling Stockholder on March 27, 2013
(the &ldquo;<B><I>Purchase Agreement</I></B>&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Selling Stockholder is an &ldquo;underwriter&rdquo;
within the meaning of the Securities Act of 1933, as amended.&nbsp; We will pay the expenses of registering these shares, but all
selling and other expenses incurred by the Selling Stockholder will be paid by the Selling Stockholder.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company&rsquo;s Common Stock is traded
on the NASDAQ Capital Market under the symbol &ldquo;ATOS&rdquo;. On April 17, 2013, the closing sale price of our Common Stock
on the NASDAQ Capital Market was $9.59 per share. Our principal executive offices are located at 4105 E. Madison Street, Suite
320, Seattle, Washington 98112 and our telephone number is (206) 325-6086.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Investing in our securities involves
risks. You should carefully consider the risk factors beginning on page&nbsp;10 of this prospectus before you make an investment
in our securities.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The date of this prospectus
is&nbsp;April 18, 2013</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TABLE OF CONTENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top; width: 92%">PROSPECTUS SUMMARY</TD>
    <TD STYLE="vertical-align: bottom; width: 8%; text-align: right">1</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">RISK FACTORS</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">10</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">USE OF PROCEEDS</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">10</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">DIVIDEND POLICY</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">10</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">SELLING STOCKHOLDER</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">10</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>

<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">THE ASPIRE CAPITAL TRANSACTION</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">12</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>

<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">PLAN OF DISTRIBUTION</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">16</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">MANAGEMENT</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">17</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">DIRECTOR COMPENSATION</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">20</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">EXECUTIVE COMPENSATION</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">23</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">28</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">PRINCIPAL STOCKHOLDERS</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">31</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>

<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">DESCRIPTION OF SECURITIES TO BE REGISTERED</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">32</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION&nbsp;FOR SECURITIES ACT LIABILITIES</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">33</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">LEGAL MATTERS</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">33</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">EXPERTS</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">33</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">WHERE YOU CAN FIND ADDITIONAL INFORMATION</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">33</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">INCORPORATION OF CERTAIN INFORMATION BY REFERENCE</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">33</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should read
this prospectus, any applicable prospectus supplement and the information incorporated by reference in this prospectus before
making an investment in the securities of Atossa Genetics Inc. See &ldquo;Where You Can Find Additional Information&rdquo; on
page  33 for more information. You should rely only on the information contained in or incorporated by reference in this
prospectus or a prospectus supplement. The Company has not authorized anyone to provide you with different information. This
document may be used only in jurisdictions where offers and sales of these securities are permitted. You should assume that
information contained in this prospectus, or in any document incorporated by reference, is accurate only as of any date on
the front cover of the applicable document. Our business, financial condition, results of operations and prospects may have
changed since that date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTE REGARDING FORWARD-LOOKING STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus and
the documents incorporated by reference into it contain, in addition to historical information, certain information, assumptions
and discussions that may constitute forward-looking statements within the meaning of Section&nbsp;27A of the Securities Act of
1933, as amended (the &ldquo;<B><I>Securities Act</I></B>&rdquo;) and Section&nbsp;21E of the Securities Exchange Act of 1934,
as amended (the &ldquo;<B><I>Exchange Act</I></B>&rdquo;). We have made these statements in reliance on the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties, which
could cause actual results to differ materially from those projected or anticipated. Although we believe our assumptions underlying
our forward-looking statements are reasonable as of the date of this prospectus, we cannot assure you that the forward-looking
statements set out in this prospectus will prove to be accurate. We typically identify these forward-looking statements by the
use of forward-looking words such as &ldquo;expect,&rdquo; &ldquo;potential,&rdquo; &ldquo;continue,&rdquo; &ldquo;may,&rdquo;
&ldquo;will,&rdquo; &ldquo;should,&rdquo; &ldquo;could,&rdquo; &ldquo;would,&rdquo; &ldquo;seek,&rdquo; &ldquo;intend,&rdquo; &ldquo;plan,&rdquo;
&ldquo;estimate,&rdquo; &ldquo;anticipate&rdquo; or the negative version of those words or other comparable words. Forward-looking
statements contained in this prospectus include, but are not limited to, statements about:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to successfully sell our products and services at currently
expected prices or otherwise at prices acceptable to us;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to successfully develop and commercialize new tests, tools
and technologies currently in development and in the time frames currently expected;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to engage third-party suppliers to manufacture the MASCT
or Microcatheter System and its components at quantities and costs acceptable to us;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to satisfy ongoing Food and Drug Administration requirements
for the MASCT and Microcatheter System and to obtain regulatory approvals for our other products and services in development, including
our ability to timely and adequately respond to the warning letter we received from the FDA on February 21, 2013 and any issues
resulting therefrom;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the benefits and clinical accuracy of the ForeCYTE and ArgusCYTE tests
and whether any product or service that we commercialize is safer or more effective than competing products and services;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to establish and maintain intellectual property rights
covering our products and services;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the willingness of health insurance companies, including those who
are members of the MultiPlan and FedMed networks, and other third-party payors to approve our products and services for coverage
and reimbursement;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to establish and maintain an independent sales representative
force, including with Clarity Women&rsquo;s Health, a division of Diagnostic Test Group LLC, and its distributors, to market our
products and services that we may develop, both regionally and nationally;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our expectations regarding, and our ability to satisfy, federal, state
and foreign regulatory requirements;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the accuracy of our estimates of the size and characteristics of the
markets that our products and services may address;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our expectations as to future financial performance, expense levels
and liquidity sources;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding-right: 0.8pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to attract and retain key
personnel; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.8pt 0pt 0; text-indent: 2.25pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to sell additional shares of our Common Stock to Aspire
Capital under the terms of our Purchase Agreement with them.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 2.25pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This prospectus also
contains estimates and other statistical data provided by independent parties and by us relating to market size and growth and
other industry data. These and other forward-looking statements made in this prospectus are presented as of the date on which the
statements are made. We have included important factors in the cautionary statements included in this prospectus, particularly
in the section entitled &ldquo;Risk Factors,&rdquo; that we believe could cause actual results or events to differ materially from
the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any new information,
future events or circumstances that may affect our business after the date of this prospectus. Except as required by law, we do
not intend to update any forward-looking statements after the date on which the statement is made, whether as a result of new information,
future events or circumstances or otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: center"><B>PROSPECTUS SUMMARY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-indent: 0.5in"><I>This summary highlights some
information from this prospectus. It may not contain all the information important to making an investment decision. You should
read the following summary together with the more detailed information regarding our Company and the securities being sold in this
offering, including &ldquo;Risk Factors&rdquo; and other information incorporated by reference herein. Unless otherwise noted,
(1)&nbsp;the term &ldquo;Atossa Genetics&rdquo; refers to Atossa Genetics Inc., a Delaware corporation, (2)&nbsp;the terms &ldquo;Atossa,&rdquo;
the &ldquo;Company,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo; and &ldquo;our,&rdquo; refer to the ongoing business operations
of Atossa and its wholly-owned subsidiary, whether conducted through Atossa Genetics or its subsidiary and (3)&nbsp;the term &ldquo;Common
Stock&rdquo; refers to shares of Atossa Genetics Inc.&rsquo;s Common Stock and the term &ldquo;stockholder(s)&rdquo; refers to
the holders of Common Stock or securities exercisable for Common Stock.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: center"><B>Our Business</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are a healthcare company focused on
the prevention of breast cancer through the commercialization of diagnostic medical devices and laboratory developed tests that
can detect precursors to breast cancer, and through the research, development, and ultimate commercialization of treatments for
pre-cancerous lesions and ductal carcinoma in situ, or DCIS.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our leading diagnostic test,
the ForeCYTE Breast Health Test, consists of a patented medical device that can collect  samples of nipple aspirate fluid, or
NAF, from the breast milk ducts, where, according to the National Cancer Institute, over 95% of breast cancers arise. These
samples are processed at our wholly-owned National Reference Laboratory for Breast Health, which has been certified pursuant
to the Clinical Laboratory Improvement Amendments, or CLIA. CLIA certification is legally required to receive reimbursement
from federal or state medical benefit programs, like Medicare and Medicaid, and is a practical requirement for most
third-party insurance benefit programs. Our CLIA-certified laboratory, which is permitted to accept samples from all 50
states under its CLIA certification, its state licenses, or, in New York under recognized exemption provisions while its
license application is pending, examines the specimens by microscopy for the presence of normal, pre-malignant, or malignant
changes as determined by cytopathology and biomarkers that distinguish &ldquo;usual&rdquo; ductal hyperplasia, a benign
condition, from atypical ductal hyperplasia, which may lead to cancer. These cytopathological results provide patients and
physicians with information about the care path that should be followed, depending on the individual risk of future cancer as
determined by the results. Our other diagnostic test is the ArgusCYTE Breast Health Test for breast cancer survivors. This is
a blood sample test that provides information to help inform treatment options and to help monitor risk of
recurrence.&nbsp;Other tests under development are the FullCYTE Breast Health Test and the NextCYTE Breast Cancer Test.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Additionally, we are conducting research
on the treatment of these pre-cancerous cells and DCIS by using our patented and FDA-cleared microcatheters to deliver, directly
into the milk ducts, pharmaceutical formulations that can be used to treat these conditions. By using this localized delivery method,
patients are expected to receive high local concentrations of these drugs at the site of the pre-cancerous lesions or DCIS potentially
promoting efficacy of the treatment while limiting systemic exposure, which has the potential to lower the overall toxicity of
these treatments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We launched our commercial
operations in late 2011 and, as of December 31, 2012, have enrolled and sold MASCT System kits or provided ArgusCYTE
collection kits to 37 doctors and clinics as providers of the ForeCYTE and/or ArgusCYTE tests. We have received, processed,
and reported the results to physicians from 1,664 NAF samples processed and reported with our ForeCYTE Test and 41 ArgusCYTE
samples as of December 31, 2012. When we launched operations in December 2011, we did so as part of our field experience
trial to collect information about the ease or difficulty of adoption of the ForeCYTE and ArgusCYTE tests in both mammography
clinics and physicians&rsquo; offices, the number of sales calls to receive the first orders, and the growth of sales
of specimen collection kits on a monthly basis. We are using the data from this field experience trial to form our
national marketing efforts as we scale up our commercial operations going forward.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For the year ended December 31, 2012, we
generated $481,842 in revenue from the sale of our products and services and we incurred a net loss of $5,079,851. Through December
31, 2012 we had an accumulated deficit of approximately $9.7 million. As of the date of this prospectus, we expect that our existing
resources to be sufficient to fund our planned operations for at least the next four months. However, to fund our operations for
at least the next 12 months under our current business plan, we estimate that we will need between $4 million and $10 million of
additional capital. We have not yet established an ongoing source of revenue sufficient to cover our operating costs and allow
us to continue as a going concern. Our ability to continue as a going concern is dependent on obtaining adequate capital to fund
operating losses until we become profitable. We plan to obtain additional capital resources by selling our equity securities, selling
the MASCT System and generating laboratory service revenue from our tests, and making short-term borrowings when needed. For example,
we have the right under our Purchase Agreement with Aspire Capital Fund, LLC, or Aspire Capital, to sell to Aspire Capital during
the three-year term of the agreement up to $29 million in Common Stock. The Aspire Capital registration statement may not remain effective and
we cannot be certain that we will be able to sell Common Stock to Aspire Capital when necessary. If we are unable to raise the
amount of capital we anticipate needing, from Aspire Capital or otherwise, we would be forced to curtail or cease operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In September 2012, we acquired the assets
of Acueity Healthcare, Inc., which included 35 issued patents (18 issued in the U.S. and 17 issued in foreign countries) and 41
patent applications (32 in the U.S. and 9 in foreign countries), six 510(k) FDA marketing authorizations related to the manufacturing,
use, and sale of the Viaduct Miniscope and accessories, the Manoa Breast Biopsy system, the Excisor Bioptome, the Acueity Medical
Light Source, the Viaduct Microendoscope and accessories, and cash in the amount of $400,000. In January 2013, we announced the
launch of our national sales effort of the ForeCYTE Breast Health test through Clarity Women&rsquo;s Health, a division of Diagnostic
Test Group LLC, or Clarity, which together with its subdistributors has over 5,000 sales representatives calling on 33,000 obstetric-gynecologists.
As of the date of this prospectus, we have entered into contracts with two reimbursement organizations, MultiPlan, Inc. and FedMed,
Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On March 27, 2013, we entered into the
Purchase Agreement with the Selling Stockholder, which provides that, upon the terms and subject to the conditions and limitations
set forth therein, Aspire Capital is committed to purchase up to an aggregate of $30 million of shares of our Common Stock over
the three-year term of the agreement. Under the agreement, Aspire Capital purchased $1 million of our Common Stock on March 27,
2013 for $12 per share. Other terms and conditions
of the Purchase Agreement, including our issuance of 250,000 shares to Aspire Capital as a commitment fee, are described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our operations began in December 2008 around
acquiring the MASCT System patent rights and assignments and the FDA clearance for marketing, which was completed in January 2009.
We were incorporated in Delaware in April 2009. Our operations to date have consisted primarily of securing manufacturing for the
MASCT and the Mammary Duct Microcatheter Systems, establishing our CLIA-certified laboratory, validating the laboratory developed
tests we use in the ForeCYTE and ArgusCYTE tests, conducting research and development on the FullCYTE and NextCYTE tests, beginning
the national launch of the ForeCYTE test and preparing for the commercialization of our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Summary of Our Diagnostic Tests</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left; text-indent: 0.5in">We currently
offer two diagnostic tests and plan to offer two additional tests in 2013. The tests that we currently offer and that are in development
consist of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%"><B><I>ForeCYTE</I></B></TD>
    <TD STYLE="width: 88%">The ForeCYTE Breast Health Test, launched in December 2011, provides personalized information about
    the 10-year and lifetime risk of breast cancer for women between ages 18 and 73. It involves collecting a specimen of nipple
    aspirate fluid, or NAF, using our patented <I>Mammary Aspirate Specimen Cytology Test</I>, or MASCT, System (our MASCT device
    received 510(k) clearance from the FDA in 2003). The NAF specimen is collected by a physician and returned to our
    CLIA-certified laboratory. We study the patient&rsquo;s NAF specimen and use a proprietary molecular and cellular biomarker
    test that detects basal or luminal cells to identify the presence of atypical ductal hyperplasia, or ADH, which is considered
    a precursor to breast cancer. We then input these cytopathological test results, together with the patient&rsquo;s personal
    medical and reproductive history and family history, into a clinically-validated risk assessment algorithm that calculates
    10-year and lifetime risk of breast cancer and presents these results in one of three risk tiers developed by The National
    Comprehensive Cancer Network: Normal (&lt;15% lifetime risk), Intermediate (15&nbsp;&ndash;&nbsp;20% lifetime risk), or High
    (&gt;20% lifetime risk). The ForeCYTE Test results contain recommendations for care paths in each risk group and personalized
    information so that patients and healthcare providers can make more informed treatment decisions. The algorithm was developed
    from a Swedish registry of 158,041 individuals, in whom 3,257 cancers occurred, and was validated by E. Amir, D.G. Evans, A.
    Shenton, and others in an independent study of 3,150 women, 64 of whom developed breast cancer. The algorithm incorporates
    family history, personal reproductive history, and the presence or absence of usual ductal hyperplasia, or UDH (which is
    benign), ADH (which is pre-malignant), or malignant changes. The present methods used by pathologists to analyze traditional
    biopsy specimens, i.e., microscopy and, when needed, immunohistochemistry, are the same methods used to analyze ForeCYTE
    specimens and would be expected to achieve similar results for patients with similar medical conditions.
Halo Healthcare, Inc., or Halo, also manufactures and sells
a device which collects NAF samples and some of those samples have been sent to us for analysis and reporting using our ForeCYTE
Test.&nbsp; Our growth strategy is to focus on the placement of our MASCT System at physician offices and to process samples sent
to our laboratory from these placements and to offer to physician offices using the Halo device the opportunity to collect NAF
samples with the MASCT System.&nbsp; We plan to continue to process NAF samples from physician offices using the Halo device.




</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 79pt; text-align: justify; text-indent: -57pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%"><B><I>ArgusCYTE</I></B></TD>
    <TD STYLE="width: 88%">The ArgusCYTE Breast Health Test, launched in December 2011, provides information to help inform breast cancer treatment options and to help monitor potential recurrence. It involves collecting a blood specimen from a patient using our patented blood collection tube and submitting it to our CLIA-certified laboratory (our ArgusCYTE Breast Health Test blood collection tube was registered with the FDA in 2011 as a 510(k)-exempt device). It can monitor breast cancer distant recurrence by obtaining a &ldquo;liquid biopsy&rdquo; or blood sample, and analyzing it for the presence of circulating tumor cells, which can then be analyzed to determine the expression of ER/PR and Her2 in those cells, a predictor of the cancer&rsquo;s sensitivity to existing treatment options. The presence of circulating tumor cells in the blood sample may serve as an early indicator of the recurrence of breast cancer and the data obtained from the ArgusCYTE sensitivity analysis may help physicians better select which treatment options to use with a particular patient. The ArgusCYTE test uses a proprietary blood collection tube to obtain a blood sample for shipment and analysis at our CLIA-certified laboratory. The supplier of the blood collection tube owns patents with respect to the tube, while we own patents concerning laboratory features utilized in the testing process. Because the ArgusCYTE test involves the collection of a blood sample to be analyzed for the presence of circulating tumor cells, there is no comparable method relating to the analysis of traditional biopsy specimens that could be used to achieve results similar to or better than those provided by our ArgusCYTE test.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 79pt; text-align: justify; text-indent: -57pt">&nbsp;</P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%"><B><I>FullCYTE</I></B></TD>
    <TD STYLE="width: 88%">The FullCYTE Breast Health Test, which we intend to launch in 2013 and is currently in development, is designed to assess the individual breast ducts for pre-cancerous changes in women previously identified to be at high risk for breast cancer. It involves collecting ductal lavage samples from each of the 5 to 7 individual breast milk ducts using our patented Mammary Ductal Microcatheter System (our Microcatheter System received 510(k) clearances from the FDA in 1999 and 2000) and analyzing the samples by the same molecular and cellular biomarkers used in the ForeCYTE test described above. From these tests, we are able to ascertain which individual duct contains pre-malignant or malignant changes, which may allow the physician to better target treatment to the specific duct with the pre-malignant changes or malignant changes and therefore avoid side effects associated with systemic treatment. Traditional biopsies, involving invasive procedures in which tissue is removed surgically, typically cut across the natural anatomy of the breast ductal system, making subsequent intraductal treatment difficult or, in certain cases, impossible. The present methods used by pathologists to analyze traditional biopsy specimens, i.e., microscopy and, when needed, immunohistochemistry, are the same methods used to analyze FullCYTE specimens and would be expected to achieve similar results for patients with similar medical conditions.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 79pt; text-align: justify; text-indent: -57pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 12%"><B><I>NextCYTE</I></B></TD>
    <TD STYLE="width: 88%">The NextCYTE Breast Cancer Test, which is in the prevalidation phase and which we intend to launch in 2013, is designed to profile breast cancer specimens for prediction of treatment outcomes and distant recurrence in women newly diagnosed with breast cancer. It involves using surgery specimens and advanced genome sequencing techniques to quantify and analyze the entire tumor genetic transcriptome, which represents all genes that are being actively expressed within the tumor. Because our NextCYTE test analyzes traditional biopsy specimens using advanced genome sequencing techniques, we believe that other present methods of analyzing traditional biopsy specimens would not achieve results similar to or better than results provided by our NextCYTE test and we expect that physicians will be able to use the information provided by the NextCYTE test to better customize treatment options for women, based on the genetic composition of the individual tumor. The NextCYTE Breast Cancer Test is intended to use microarray-based genome-wide transcriptome data from surgical breast cancer biopsy specimens to predict a patient&rsquo;s 10-year survival probability and response to treatment. The algorithm was created from 2,400 unique genome-wide microarrays and validated against a separate sample of over 1600 microarray data sets. A correct classification was obtained for over 85% of both estrogen receptor negative and positive tumors. We have signed a term sheet for the exclusive license of the intellectual property related to this algorithm and we expect to complete the license in the first half of 2013 and to complete validation of the test in our laboratory soon thereafter, with an intent to launch this product before year end 2013.&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 79pt; text-align: justify; text-indent: -57pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 0.5in">The Medicare
reimbursement rates set forth in this prospectus are the 2012 rates, unless otherwise noted. These rates may be different than
the 2013 rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our Diagnostic Tools</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The assets we acquired from Acueity
included 35 issued patents (18 issued in the U.S. and 17 issued in foreign countries) and 41 patent applications (32 in the
U.S. and 9 in foreign countries), six 510(k) FDA marketing authorizations related to the manufacturing, use, and sale of the
Viaduct Miniscope and accessories, the Manoa Breast Biopsy system, the Excisor Bioptome, the Acueity Medical Light Source,
the Viaduct Microendoscope and accessories, and cash in the amount of $400,000. The microendoscopes are less than 0.9 mm
outside diameter and can be inserted into a milk duct. This permits a physician to pass a microendoscope into the milk duct
system of the breast and view the duct system via fiberoptic video images. Abnormalities that are visualized can then be
biopsied from inside the duct with the biopsy tools that are inserted adjacent to the microendoscope. The patents relate to
intraductal diagnostic and therapeutic devices and methods of use. We did not, however, acquire an inventory of these
diagnostic tools, manufacturing capabilities or any personnel to market and sell the tools. Following the launch of our four
diagnostic tests in the U.S., we will then begin to allocate human and financial resources to further develop and ultimately
commercialize these medical devices. We intend to complete the steps necessary to begin marketing and selling these tools,
such as re-establishment of the supply chain of component parts, securing manufacturers, performing test builds and
commercial scale manufacturing, in late 2013. This asset purchase is not expected to have an impact on the development and
commercialization timetables of our existing product lines. We cannot, however, provide any assurances that delays related to
the launch of our four diagnostic tests, independent of the asset purchase, would not delay the expected development of
these diagnostic tools or that we will ultimately be successful selling these tools.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We may not, however, achieve commercial
market acceptance of any of our products and services. We must first demonstrate to physicians and other healthcare professionals
the benefits of our tests and the MASCT System for their practice and these physicians and healthcare professionals may be reluctant
to introduce new services into their practice due to uncertainty regarding reliability of the results of a new product or the learning
curve associated with adoption of new services and techniques. Moreover, if third-party payors continue to refuse to cover the
cost of collection of the NAF sample, whether from our MASCT System or competitors&rsquo; NAF collection devices, physicians may
be less likely to recommend or use our products and services if the cost of performing a particular test will not be reimbursed.
Even if we are successful in convincing physicians and other healthcare professionals to utilize our tests and services, we must
obtain adequate capital to fund our operations until we become profitable and we may not be able to do so. Additionally, we have
no prior experience with commercializing any products or services and will need to create an infrastructure to scale operations
for commercialization, including hiring experienced personnel (including anatomic pathologists, cytologists, histotechnologists,
skilled laboratory and information technology staff, and sales representatives) and building a network of regional, specialty distributors,
each with a staff of independent sales representatives who have experience in women&rsquo;s health products to target physicians
and mammography clinics in the United States.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; color: #4F81BD">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Intraductal Treatment Research</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our Intraductal Treatment Research Program
comprises our patented microcatheter-delivery technology and our patented pharmaceutical formulations for the intraductal treatment
of breast pre-cancerous changes and DCIS. The method uses our Mammary Ductal Microcatheter System, invented by Dr. Susan Love,
President of the Dr. Susan Love Research Foundation, and her colleagues, and acquired by us, to administer proprietary pharmaceutical
formulations into milk ducts that display pre-cancerous changes or DCIS with high local concentrations of the drugs in order to
promote greater efficacy and limited systemic exposure, potentially lowering the overall toxicity of the treatment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">An October 2011 peer-reviewed paper published
in&nbsp; <I>Science Translational Medicine</I> documented a study conducted at the Johns Hopkins Medical School demonstrating the
prevention of breast cancer in rats with intraductal non-systemic chemotherapy, and a proof-of-principle Phase 1 clinical trial
involving 17 women with breast cancer who subsequently received surgery. An accompanying editorial commented that &ldquo;intraductal
treatment could be especially useful for women with premalignant lesions or those at high risk of developing breast cancer, thus
drastically improving upon their other, less attractive options of breast-removal surgery or surveillance (termed &lsquo;watch
and wait&rsquo;).&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In a December 2012 peer-reviewed paper
published in <I>Cancer Prevention Research,</I> Dr. Susan Love and her colleagues report a Phase I clinical trial to show the safety
and feasibility of intraductal administration of chemotherapy drugs into multiple ducts within one breast in women awaiting mastectomy
for treatment of invasive cancer. Thirty subjects were enrolled in this dose escalation study conducted at a single center in Beijing,
China. Under local anesthetic, one of two chemotherapy drugs, carboplatin or pegylated liposomal doxorubicin (PLD), was administered
into five to eight ducts at three dose levels. Pharmacokinetic analysis has shown that carboplatin was rapidly absorbed into the
bloodstream, whereas PLD, though more erratic, was absorbed after a delay. Pathologic analysis showed marked effects on breast
duct epithelium in ducts treated with either drug compared with untreated ducts. The investigators concluded the study showed the
safety and feasibility of intraductal administration of chemotherapy into multiple ducts for the purpose of breast cancer prevention
and that this was an important step toward implementation of this strategy as a &quot;chemical mastectomy&quot;, potentially eliminating
the need for surgery.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We intend to build on these academic studies
with a research program targeted initially as neoadjuvant therapy in DCIS and to begin preclinical studies during 2013. We may
partner with a third party to provide the pharmaceutical for the program. However, we have not as of the date of this prospectus
contracted with such a partner nor have we begun the process of applying for FDA approval of our Intraductal Treatment Research
Program.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: justify; text-indent: 9pt">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Our Commercialization Strategy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7pt; text-align: justify; text-indent: 10pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The ForeCYTE Test provides us with two revenue
sources:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7pt; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left">(i)</TD><TD STYLE="text-align: justify">revenue from the sale of the MASCT System device and
patient kits to physicians, breast health clinics, mammography clinics and distributors; and</TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left">(ii)</TD><TD STYLE="text-align: justify">service revenue from the preparation and interpretation
of the NAF samples sent to our laboratory for analysis.</TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The ArgusCYTE test provides only laboratory
service revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We offer each component of the MASCT System
for sale separately. Our NAF sample collection devices are currently priced to physicians at approximately $299 per starter kit,
which includes the pump device and five patient collections kits, and our patient collection kits are currently priced at approximately
$35 per kit, however, our sale prices to our distributors are significantly below these prices and these prices are subject to
change. During our initial launch, we plan to provide a rebate to the physician after the physician submits patient collection
kits to our lab. The cytology and molecular diagnostics testing and analysis services are billed to federal and/or state health
plans at the 2012 Medicare reimbursement rates of either $384 or $1,275 per patient, depending on the complexity of the analysis
performed and at higher rates for patients covered by private insurance plans as is customary for our industry. We expect that
the substantial majority of patients will be billed at the $384 rate and that we would perform the more complex tests, corresponding
with a reimbursement rate of $1,275, for only those patients who have an initial test result that requires further analysis. Currently,
Medicare and certain insurance carriers do not reimburse for the NAF collection procedure by our MASCT System or for other NAF
collection device systems similar to our MASCT System, although Medicare and certain insurance carriers do reimburse for the laboratory
analysis of the NAF sample. Although we have received reimbursement from insurance carriers and Medicare for our ForeCYTE test,
any lack of Medicare or insurance coverage for the NAF collection procedure will require patients to bear the full costs of the
NAF sample acquisition process used with the MASCT System, which may result in physicians and other healthcare professionals not
adopting the MASCT System or recommending its use in patients. If this were to occur, we may be forced to reduce the price of the
MASCT System, provide discounted pricing arrangements to secure sales, or we may not be able to sell the product and services components
of the MASCT System at acceptable margins, all of which could limit our ability to generate revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7pt; text-indent: 29pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">During our initial marketing efforts we
are not charging for our ArgusCYTE collection kits and we currently price the ArgusCYTE test at approximately $1,500. Because we
do not currently have sufficiently reliable prior history of reimbursement with respect to the ArgusCYTE test, we currently do
not recognize revenue until we have received reimbursement. We have billed the testing and analysis regarding the 41 ArgusCYTE
samples processed through December 31, 2012 at $1,500 per patient. We have received reimbursement from insurance carriers for our
ArgusCYTE test.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7pt; text-indent: 29pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our National Launch Through Clarity</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In September 2012, we entered into a co-exclusive
marketing agreement with Diagnostic Test Group LLC, or DTG, for the supply and distribution of the MASCT System, under the DTG
Clarity brand. Under the terms of the agreement, DTG will purchase the MASCT System from us and will use its best efforts to establish
product codes and contracted agreements for the sale and placement of the Clarity branded MASCT product line with the following
distributors: Henry Schein, McKesson, PSS World Medical, Cardinal Health, VWR, Vaxserve, Mercedes Medical, Fisher, NDC members,
Imco members, B&amp;H Surgical, Marshall Medical and Cascade HealthCare Products. These distributors have collectively over 5,000
employee sales representatives and/or independent sales representatives selling their products to a target market of 33,000 obstetric-gynecologists
in the United States.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We will coordinate the sales and marketing
effort, plan, and budget with DTG, with us paying agreed expenses. We can terminate the agreement if DTG fails to achieve set minimum
sales over a certain period of time. In consideration for DTG&rsquo;s marketing of the MASCT System, we have agreed to pay DTG
a minimal cash fee for each test performed by us on MASCT samples sold by DTG, as well as warrants to purchase our Common Stock,
which warrants are earned based on the annual number of ForeCYTE tests performed by the National Reference Laboratory for Breast
Health, provided that the total number of warrants cannot exceed 1,000,000. These warrants have an exercise price equal to the
fair market value of our Common Stock on the day of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In January 2013, we launched the ForeCYTE
Breast Health Test with Clarity and its distributors. We may not be successful, however, in selling the Clarity branded MASCT product
line and we may not achieve any level of commercial success from Clarity&rsquo;s efforts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Reimbursement Organizations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of the date of this prospectus, we have
two contracts with third parties to facilitate the reimbursement process from insurers, one with MultiPlan, Inc. and another with
FedMed, Inc. MultiPlan is a leading provider of healthcare cost management solutions for diagnostic laboratory testing involving
our tests. Approximately 20% of Americans are covered by MultiPlan. The agreement allows us to participate in the MultiPlan, PHCS
and PHCS Savility Networks. In March of 2013, we entered into an agreement with FedMed, which is a National Provider Network and
Healthcare Financial Services Organization. FedMed is one of the largest proprietary Preferred Provider Organization (PPO) networks
in the U.S. for diagnostic laboratory testing. FedMed&rsquo;s network is comprised of over 550,000 total providers, including 4,000
hospitals and more than 60,000 ancillary facilities, serving over 40 million Americans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our agreements with MultiPlan and FedMed
will give their participating providers and their patients greater access to our tests, including the ForeCYTE and ArgusCYTE Breast
Health Tests. We anticipate that the agreements with MultiPlan and FedMed will help ensure that more doctors and their patients
have access to the ForeCYTE and ArgusCYTE Breast Health Tests and that patients will receive insurance reimbursement for the laboratory
costs associated with these tests.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our agreements with MultiPlan and FedMed
provide that reimbursement will be provided to us at a prescribed rate when insurers agree to reimburse for the ForeCYTE and ArgusCYTE
Breast Health Tests. The prescribed rates of reimbursement are within the range of reimbursement that we have historically received.
Our agreements do not, however, ensure that each test performed will be deemed medically necessary and ultimately reimbursed by
insurers as the insurers may still determine the medical necessity of each test on a case-by-case basis. Our strategy is to contract
with additional reimbursement organizations and insurers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 2pt"><B>Risk Factors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 2pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-indent: 0.5in">Our business is subject to numerous
risks as discussed more fully in the section entitled &ldquo;Risk Factors&rdquo; beginning on page 10. Principal risks of our
business include, but are not limited to, the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 2pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding-right: 31.5pt">our existing capital resources may only be sufficient for the next four to twelve months and
as a result we may face issues related to a lack of funding;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding-right: 27pt">we will need significant additional capital to execute our business strategy as currently contemplated
and additional capital maybe not be available from Aspire Capital or otherwise;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>we have a history of operating losses and expect to incur losses for the foreseeable future and may never achieve profitability;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding-right: 27pt">the MASCT System and other risk assessment tools, diagnostic tests and tools and other predictive
and personalized medicine products that we may develop may never achieve significant commercial market acceptance;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>we are dependent on the commercial success of the MASCT System and the ForeCYTE and ArgusCYTE Tests;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding-right: 27pt">we may not be successful in commercializing the MASCT System because physicians and clinicians
may be slow to adopt our product and, even if commercialized, the fees we receive for our products and services may be significantly
lower than currently expected;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 27pt 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding-right: 27pt">additional shares becoming available for sale on the market, for example because of expiration
of the lock-up agreement with our stockholders entered into in connection with our initial public offering or because of the sale
and subsequent resale of shares we may sell to Aspire Capital or other sources of capital, could adversely affect our stock price
and could dilute our existing stockholders;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding-right: 31.5pt">our ability to commercialize the MASCT System may be limited because Medicare and certain insurance
carriers are not expected to provide reimbursement for the NAF sample collections which are necessary for our tests (even though
Medicare and certain insurance carriers do provide reimbursement for the laboratory analysis of the collected NAF samples through
our ForeCYTE and ArgusCYTE tests); and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="padding-right: 27pt">we may not be able to hire, train or maintain the independent sales representatives and build the
distributorship arrangements necessary to market and sell the MASCT System and our services as planned.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 0; text-align: justify"><B>Implications of being an Emerging
Growth Company</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: justify; text-indent: 10pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left; text-indent: 0.5in">As a company
with less than $1 billion in revenue during our last fiscal year, we qualify as an &ldquo;emerging growth company&rdquo; as defined
in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified
reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Only two years of audited financial statements in addition to any
required unaudited interim financial statements with correspondingly reduced &ldquo;Management's Discussion and Analysis of Financial
Condition and Results of Operations&rdquo; disclosure.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 43pt; text-align: justify; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Reduced disclosure about our executive compensation arrangements.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 43pt; text-align: justify; text-indent: -15.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Not having to obtain non-binding advisory votes on executive compensation
or golden parachute arrangements.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 43pt; text-align: justify; text-indent: -15.75pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Exemption from the auditor attestation requirement in the assessment
of our internal control over financial reporting.</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt; text-indent: 0.5in">We may take advantage of these
exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an
emerging growth company if we have more than $1 billion in annual revenue, we have more than $700 million in market value of our
stock held by non-affiliates, or we issue more than $1 billion of non-convertible debt over a three-year period. We may choose
to take advantage of some but not all of these reduced burdens. We have taken advantage of these reduced reporting burdens in this
prospectus, and the information that we provide may be different than what you might get from other public companies in which you
hold stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt"><B>Corporate Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt; text-indent: 0.5in">We were incorporated in Delaware
in April 2009. Our principal executive offices are located at 4105 East Madison Street, Suite 320, Seattle, Washington 98112, and
our telephone number is (206) 325-6086. Our corporate website is located at <I>www.atossagenetics.com</I> and our laboratory website
is located at <I>www.nrlbh.com</I>. Information contained on, or that can be accessed through, our websites is not a part of this
prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt; text-indent: 0.5in">MASCT is our registered trademark
and Oxy-MASCT and our name and logo are our trademarks. ForeCYTE, FullCYTE, NextCYTE, and ArgusCYTE are our service marks. This
prospectus also includes additional trademarks, trade names and service marks of third parties, which are the property of their
respective owners.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>THE OFFERING</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 27%"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Common stock covered by this Prospectus:</B></FONT></TD>
    <TD STYLE="width: 73%; vertical-align: bottom; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Up to 2,833,519 shares of Common Stock, including 333,333 shares currently outstanding.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Common stock outstanding as of<BR>
 March 31, 2013:</B></FONT></TD>
    <TD STYLE="vertical-align: bottom; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">14,508,019 shares,
including 333,333 shares issued to Aspire Capital on March 27, 2013.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Use of proceeds:</B></FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Aspire Capital will receive all of the proceeds from the sale of the shares offered for sale by it under this prospectus. We will not receive proceeds from the sale of the shares by Aspire Capital. However, we may receive up to $30 million in gross proceeds from the sale of our Common Stock to Aspire Capital (including $1 million of shares sold to Aspire Capital on March 27, 2013) under the Purchase Agreement described below, which we currently intend to use for working capital and general corporate purposes. See &ldquo;Use of Proceeds.&rdquo;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Risk factors:</B></FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The shares offered hereby involve a high degree of risk. See &ldquo;Risk Factors&rdquo; beginning on page&nbsp;10.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Dividend policy:</B></FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not currently anticipate paying cash dividends on our Common Stock.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Trading Symbol:</B></FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Our Common Stock currently trades on the NASDAQ Capital Market under the symbol &ldquo;ATOS&rdquo;.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Our Purchase Agreement with Aspire Capital
Fund, LLC</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On March 27, 2013, we entered into a purchase
agreement, or the &ldquo;Purchase Agreement,&rdquo; with Aspire Capital Fund, LLC, or Aspire Capital, which provides that, upon
the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate
of $30 million of shares of our Common Stock over the three-year term of the agreement. In consideration for entering into the
Purchase Agreement, concurrently with the execution of the Purchase Agreement, we issued to Aspire Capital 250,000 shares of our
Common Stock, or the &ldquo;Commitment Shares,&rdquo; as a commitment fee. Upon execution of the Purchase Agreement, Aspire Capital
purchased 83,333 shares on March 27, 2013 for $1 million, or the &ldquo;Initial Purchase Shares.&rdquo; Other terms and conditions of the Purchase Agreement are described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Concurrently with entering into the Purchase
Agreement, we also entered into a registration rights agreement with Aspire Capital, or the &ldquo;Registration Rights Agreement.&rdquo;&nbsp;
The Registration Rights Agreement provides that we will file one or more registration statements, as necessary, to register under
the Securities Act, the sale of the shares that have been and may be issued to Aspire Capital under the Purchase Agreement.&nbsp;
We agreed to file an initial registration statement registering the sale of the shares by Aspire Capital with the Securities and
Exchange Commission, or SEC, within 10 business days of entering into the Purchase Agreement with Aspire Capital.&nbsp; We further
agreed to keep the registration statement effective and to indemnify Aspire Capital for liabilities in connection with the sale
of the shares under the terms of the Registration Rights Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of March 31, 2013, there were 14,508,019
shares of our Common Stock outstanding, including the Initial Purchase Shares and the Commitment Shares, but excluding the 2,500,186
shares offered that may be sold to Aspire Capital pursuant to the Purchase Agreement. If all of the 2,833,519 shares of our Common
Stock offered hereby were issued and outstanding as of the date hereof, such shares would represent approximately 16.7% of the
total Common Stock outstanding or approximately 23.6% of the non-affiliate shares of Common Stock outstanding as of March 31, 2013.&nbsp;
The number of shares of our Common Stock ultimately offered for sale by Aspire Capital is dependent upon the number of shares purchased
by Aspire Capital under the Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to the Purchase Agreement and
the Registration Rights Agreement, we are registering under the Securities Act 2,833,519 shares of our Common Stock, which includes
the Commitment Shares and the Initial Purchase Shares that have already been issued to Aspire Capital, as well as an additional
2,500,186 shares of Common Stock that we may issue to Aspire Capital. All 2,833,519 shares of Common Stock are being offered pursuant to this
prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As described in more detail below, generally
under the Purchase Agreement we have two ways we can elect to sell shares of Common Stock to Aspire Capital on any business day
we select: (1)&nbsp;through a regular purchase of up to 100,000 shares (but not to exceed $400,000) at a known price based on the
market price of our Common Stock prior to the time of each sale, and (2)&nbsp;through a volume-weighted average price, or VWAP,
purchase of a number of shares up to 30% of the volume traded on the purchase date at a price equal to the lesser of the closing
sale price or 95% of the VWAP for such purchase date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On April 17, 2013, all of the
conditions to commencement under the Purchase Agreement were met. Therefore, on any business day on which the closing
sale price of our Common Stock equals or exceeds $2.00 per share, over the three-year term of the Purchase Agreement, we have
the right, in our sole discretion, to present Aspire Capital with a purchase notice directing Aspire Capital to purchase up
to 100,000 shares of our Common Stock per business day; however, no sale pursuant to such purchase notice may exceed
$400,000 per business day.&nbsp; The purchase price per share is the lower of (i)&nbsp;the lowest sale price for our Common
Stock on the purchase date or (ii)&nbsp;the arithmetic average of the three lowest closing sale prices for our Common Stock
during the 12 consecutive business days ending on the business day immediately preceding the purchase date.&nbsp;
The applicable purchase price will be determined prior to delivery of any purchase notice.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, on any date on which we have
submitted a purchase notice to Aspire Capital in the amount of 100,000 shares, we also have the right, in our sole discretion,
to present Aspire Capital with a volume-weighted average price purchase notice, or a &ldquo;VWAP Purchase Notice,&rdquo; directing
Aspire Capital to purchase an amount of our Common Stock equal to a percentage (not to exceed 30%) of the aggregate shares of Common
Stock traded on the next business day subject to a maximum number of shares determined by us.&nbsp; The purchase price per share
pursuant to such VWAP Purchase Notice shall be generally the lower of (i)&nbsp;the closing sale price on the purchase date and
(ii)&nbsp;95% of the VWAP of our Common Stock traded on the NASDAQ Capital Market on the purchase day.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The number of shares covered by,
and the timing of, each purchase notice are determined by us, at our sole discretion.&nbsp; We may deliver multiple purchase notices
to Aspire Capital from time to time during the term of the Purchase Agreement, so long as the most recent purchase has been completed.
There are no trading volume requirements or other restrictions under the Purchase Agreement.&nbsp; Aspire Capital has no right
to require any sales from us, but is obligated to make purchases as directed in accordance with the Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Purchase Agreement contains customary
representations, warranties, covenants, closing conditions and indemnification and termination provisions.&nbsp; The Purchase Agreement
may be terminated by us at any time, at our discretion, without any cost or penalty. Aspire Capital has covenanted not to cause
or engage in any manner whatsoever, any direct or indirect short selling or hedging of our Common Stock.&nbsp; We did not pay any
additional amounts to reimburse or otherwise compensate Aspire Capital in connection with the transaction other than the Commitment
Shares.&nbsp; There are no limitations on use of proceeds, financial or business covenants, restrictions on future financings,
rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. Dawson James Securities,
Inc. acted as our placement agent in connection with the transaction and we agreed to pay Dawson James a cash fee equal to 3% of
proceeds from any sales of shares to Aspire Capital and a four-year warrant to purchase a number of shares equal to 3% of the total
shares actually sold to Aspire Capital. The warrant may not be exercised on a cashless basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our gross proceeds will depend on the purchase
prices and the frequency of sales of shares to Aspire Capital;&nbsp;<I>provided, however,</I> that the maximum aggregate proceeds
from sales of shares, including the Initial Purchase Shares, is $30 million.&nbsp; Our delivery of purchase notices will be made
subject to market conditions, in light of our anticipated capital needs from time to time and under the limitations contained in
the Purchase Agreement.&nbsp; We expect to use proceeds from sales of shares for general corporate purposes and working capital
requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The issuance of the all shares to Aspire
Capital under the Purchase Agreement is exempt from registration under the Securities Act, pursuant to the exemption for transactions
by an issuer not involving any public offering under Section&nbsp;4(a)(2)&nbsp;of the Securities Act and Rule&nbsp;506 of Regulation
D promulgated thereunder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 13pt 0pt 7pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>RISK FACTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A purchase of our shares
of Common Stock is an investment in our securities and involves a high degree of risk. You should carefully consider the risks
and uncertainties and all other information contained in or incorporated by reference in this prospectus, including the risks and
uncertainties discussed under &ldquo;Risk Factors&rdquo; in our Annual Report on Form 10-K for the year ended December 31, 2012.
All of these risk factors are incorporated by reference herein in their entirety. If any of these risks actually occur, our business,
financial condition and results of operations would likely suffer. In that case, the market price of the Common Stock could decline,
and you may lose part or all of your investment in our company. Additional risks of which we are not presently aware or that we
currently believe are immaterial may also harm our business and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>USE OF PROCEEDS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Selling Stockholder will receive all
of the proceeds from the sale of the shares offered for sale by it under this prospectus. We will not receive proceeds from the
sale of the shares by the Selling Stockholder. However, we may receive up to an aggregate of $30 million in proceeds from the sale
of our Common Stock to the Selling Stockholder under the Purchase Agreement (including the $1 million we already received upon
the Selling Stockholder&rsquo;s purchase of 83,333 shares of our Common Stock on March 27, 2013). We will bear all reasonable expenses
incident to the registration of the shares under federal and state securities laws other than expenses incident to the delivery
of the shares to be sold by the Selling Stockholder. Any transfer taxes payable on these shares and any commissions and discounts
payable to underwriters, agents, brokers or dealers will be paid by the Selling Stockholder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Assuming the sale
by us of all $30 million of shares of our Common Stock to the Selling Stockholder and estimated expenses of $1 million, the total
net proceeds to us under the Purchase Agreement would be $29 million, which we currently intend to use for general corporate purposes,
including capital expenditures, the advancement of NextCYTE, FullCYTE and our intraductal treatment program and to meet working
capital needs. The amounts and timing of the expenditures will depend on numerous factors, such as the timing and progress the
national launch of ForeCYTE and research and development efforts. We expect from time to time to evaluate the acquisition of businesses,
products and technologies for which a portion of the net proceeds may be used, although we currently are not planning or negotiating
any such transactions. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net
proceeds to us from the sale of shares to the Selling Stockholder. Accordingly, we will retain broad discretion over the use of
these proceeds, if any.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DIVIDEND POLICY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have has not declared
any dividends and do not anticipate that we will declare dividends in the foreseeable future; rather, we intend to retain any future
earnings for the development of the business. Payment of future cash dividends, if any, will be at the discretion of our Board
of Directors after taking into account various factors, including our financial condition, operating results, current and anticipated
cash needs, outstanding indebtedness and plans for expansion and restrictions imposed by lenders, if any.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SELLING STOCKHOLDER</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have included in
this prospectus 333,333 shares of Common Stock issued to the Selling Stockholder, Aspire Capital Fund, LLC, on March 27, 2013 and
up to an additional 2,500,186 shares of Common Stock that may be issued in the future to Aspire Capital pursuant to the Purchase
Agreement. Prior to entering into the Purchase Agreement, Aspire Capital did not own any shares of our Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth certain
information regarding the Selling Stockholder and the shares of Common Stock beneficially owned by it, which information is available
to us as of March 31, 2013. The Selling Stockholder may offer shares under this prospectus from time to time and may elect to sell
none, some or all of the shares set forth below. As a result, we cannot estimate the number of shares of Common Stock that the
Selling Stockholder will beneficially own after termination of sales under this prospectus. However, for the purposes of the table
below, we have assumed that the Selling Stockholder will sell all shares covered by this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: left; border-bottom: Black 1pt solid">Selling&nbsp;Stockholder</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Shares <BR>Beneficially Owned &nbsp;Before Offering (1)</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Percentage of Outstanding Shares Beneficially Owned Before Offering</TD><TD STYLE="font-size: 10pt; font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Shares to be Sold in the Offering</TD><TD STYLE="font-size: 10pt; font-weight: bold; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Shares <BR>Beneficially <BR>Owned&nbsp;After <BR>Offering</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Percentage &nbsp;of&nbsp; <BR>Outstanding <BR>Shares Beneficially Owned&nbsp;After <BR>Offering</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 30%; font-size: 10pt; text-align: left">Aspire Capital Fund, LLC&nbsp;(2)</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">333,333</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">(3)</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">2.30</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">%</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">2,833,519</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">0</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right">0</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(1)</TD><TD STYLE="text-align: justify">Beneficial ownership is determined in accordance with
the rules and regulations of the SEC. In general, a person is deemed to be the beneficial owner of (i) any shares of our Common
Stock over which such person has sole or shared voting power or investment power, plus (ii) any shares which such person has the
right to acquire beneficial ownership of within 60 days, whether through the exercise of options, warrants or otherwise. The percentage
of ownership set forth above assumes the sale by the Company to Aspire Capital of all shares being offered pursuant to this prospectus
and is based on 14,508,019 shares of our Common Stock outstanding as of March 31, 2013, including the 333,333 shares previously
issued to Aspire Capital pursuant to the Purchase Agreement, together with securities exercisable or convertible into shares of
Common Stock within 60 days of the date hereof for the Selling Stockholder.</TD>
</TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

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<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(2)</TD><TD STYLE="text-align: justify">As of the date of the Purchase Agreement,&nbsp;Aspire
Capital&nbsp;beneficially owned no shares of Common Stock of the Company.&nbsp; Steven G. Martin, Erik J. Brown and Christos Komissopoulos,
the principals of&nbsp;Aspire Capital, are deemed to be beneficial owners of all of the shares of Common Stock owned by&nbsp;Aspire
Capital.&nbsp; Although Messrs. Martin, Brown and Komissopoulos are deemed to have shared voting and investment power over the
shares being offered under the prospectus filed with the SEC in connection with the transactions contemplated under the Purchase
Agreement, each disclaims beneficial ownership of these shares except to the extent of their pecuniary interest therein.&nbsp;Aspire
Capital&nbsp;is not a licensed broker dealer or an affiliate of a licensed broker dealer.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(3)</TD><TD STYLE="text-align: justify">As of the date hereof, 333,333 shares of our Common Stock
have been acquired by Aspire Capital under the Purchase Agreement. The Company may elect in its sole discretion to sell to Aspire
Capital up to an additional number of shares under the Purchase Agreement equal to $29 million in value, but Aspire Capital does
not presently beneficially own those shares as determined in accordance with the rules of the SEC.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>THE ASPIRE CAPITAL TRANSACTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>General</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On March 27, 2013, we entered into the
Purchase Agreement, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire
Capital is committed to purchase up to an aggregate of $30 million of shares of our Common Stock over the three-year term of the
Purchase Agreement. In consideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase
Agreement, we issued to Aspire Capital the Commitment Shares and Aspire Capital purchased the Initial Purchase Shares. Concurrently
with entering into the Purchase Agreement, we also entered into the Registration Rights Agreement, in which we agreed to file one
or more registration statements, as permissible and necessary to register under the Securities Act, the sale of the shares of our
Common Stock that have been and may be issued to Aspire Capital under the Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of March 31, 2013, there were 14,508,019
shares of our Common Stock outstanding, including the Initial Purchase Shares and Commitment Shares, but excluding the additional
2,500,186 shares offered pursuant to this prospectus that may be sold to Aspire Capital pursuant to the Purchase Agreement. If
all of the 2,833,519 shares of our Common Stock offered hereby were issued and outstanding as of the date hereof, such shares would
represent approximately 16.7% of the total Common Stock outstanding or approximately 23.6% of the non-affiliate shares of Common
Stock outstanding as of March 31, 2013.&nbsp; The number of shares of our Common Stock ultimately offered for sale by Aspire Capital
is dependent upon the number of shares purchased by Aspire Capital under the Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to the Purchase Agreement and
the Registration Rights Agreement, we are registering under the Securities Act 2,833,519 shares of our Common Stock, which includes
the Commitment Shares and the Initial Purchase Shares that have already been issued to Aspire Capital, as well as an additional
2,500,186 shares of Common Stock that we may issue to Aspire Capital. All 2,833,519 shares of Common Stock are being offered pursuant to this
prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the Purchase Agreement, we have the
right, but not the obligation, to sell more than the 2,833,519 shares of Common Stock offered by this prospectus.&nbsp; The Purchase
Agreement provides that the number of shares that may be sold pursuant to the Purchase Agreement shall be limited to 2,833,519,
or the &ldquo;Exchange Cap,&rdquo; which represents 19.99% of our outstanding shares as of March 27, 2013, unless shareholder approval
or an exception pursuant to the rules&nbsp;of the NASDAQ Capital Market is obtained to issue more than 19.99%. This limitation
shall not apply if, at any time the Exchange Cap is reached and at all times thereafter, the average price paid for all shares
issued and sold under the Purchase Agreement is equal to or greater than $9.55, which was the closing sale price of our Common
Stock on March 27, 2013. We are not required or permitted to issue any shares of Common Stock under the Purchase Agreement if such
issuance would breach our obligations under the rules&nbsp;or regulations of the NASDAQ Capital Market. If we elect to sell more
than the 2,833,519 shares of Common Stock offered hereby, we must first obtain the approval of our stockholders to do so, if necessary,
and register under the Securities Act the sale of any additional shares we may elect to sell to Aspire Capital before we can put
such additional shares to Aspire Capital under the Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On April 17, 2013, all of the
conditions to commencement under the Purchase Agreement were met. Therefore, on any day that the closing sales price of our
shares equals or exceeds $2.00 per share, we have the right, in our sole discretion, to present Aspire Capital with a
Purchase Notice, directing Aspire Capital (as principal) to purchase up to 100,000 shares of our Common Stock per business
day, up to $29 million of our Common Stock in the aggregate at a Purchase Price calculated by reference to the prevailing
market price of our Common Stock over a preceding 12-business day period (as more specifically described below); however, no
sale pursuant to a Purchase Notice may exceed $400,000 per trading day.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, on any date on which we submit
a Purchase Notice to Aspire Capital in an amount equal to 100,000 shares, we also have the right, in our sole discretion, to present
Aspire Capital with a VWAP Purchase Notice directing Aspire Capital to purchase an amount of stock equal to up to 30% of the aggregate
shares of the Company&rsquo;s Common Stock traded on the NASDAQ Capital Market on the purchase date, subject to the VWAP Purchase
Share Volume Maximum and the VWAP Minimum Price Threshold. The VWAP Purchase Price is calculated by reference to the prevailing
market price of our Common Stock (as more specifically described below).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Purchase Agreement provides that in
no event will any shares of Common Stock be sold at a Purchase Price less than $2.00, or the &ldquo;Floor Price,.&rdquo;. This
Floor Price and the respective prices and share numbers in the preceding paragraphs shall be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction. Additionally, the Purchase
Agreement provides that the Company and Aspire Capital shall not effect any sales under the Purchase Agreement if such shares proposed
to be issued and sold, when aggregated with all other shares of the Company&rsquo;s Common Stock that Aspire Capital and its affiliates
beneficially own, would result in Aspire Capital and its affiliates beneficially owning more than 19.99% of the Company&rsquo;s
then issued and outstanding Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">There are no trading volume requirements
or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales of our Common Stock to Aspire
Capital. Aspire Capital has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance
with the Purchase Agreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future
financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. The Purchase
Agreement may be terminated by us at any time, at our discretion, without any penalty or cost to us. The rights and obligations
of Aspire Capital under the Purchase Agreement are not assignable or transferable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Purchase of shares under the Purchase Agreement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the Purchase Agreement, on any trading
day selected by us on which the closing price of our Common Stock is not less than $2.00 per share, we may direct Aspire Capital
to purchase up to 100,000 shares of our Common Stock per trading day so long as sales pursuant to such Purchase Notice do not exceed
$400,000 per trading day. The Purchase Price of such shares is equal to the lesser of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the lowest sale price of our Common Stock on the purchase date; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63pt; text-indent: 6pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the arithmetic average of the three lowest closing sale prices for our Common Stock during the twelve consecutive trading days
ending on the trading day immediately preceding the purchase date.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, on any date on which we submit
a Purchase Notice to Aspire Capital in an amount equal to 100,000 shares we also have the right to direct Aspire Capital to purchase
an amount of stock equal to up to 30% of the aggregate shares of the Company&rsquo;s Common Stock traded on the NASDAQ Capital
Market on the purchase date, subject to the VWAP Purchase Share Volume Maximum and the VWAP Minimum Price Threshold, which is equal
to the greater of (a) 90% of the closing price on the NASDAQ Capital Market on the business day immediately preceding the VWAP
Purchase Date or (b) such higher price as set forth by the Company in the VWAP Purchase Notice. The VWAP Purchase Price of such
shares is the lower of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the closing sale price on the VWAP Purchase Date; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 21pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>95% of the volume-weighted average price for our Common Stock traded on the NASDAQ Capital Market during normal trading hours:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">a.</TD><TD>on the VWAP Purchase Date, if the aggregate shares traded on the NASDAQ Capital Market have not exceeded the VWAP Purchase
Share Volume Maximum; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">b.</TD><TD>the portion of the VWAP Purchase Date until such time as the sooner to occur of (i) the time at which the aggregate shares
traded on the NASDAQ Capital Market has exceeded the VWAP Purchase Share Volume Maximum or (ii) the time at which the sale price
of the Common Stock falls below the VWAP Minimum Price Threshold.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Purchase Price will be adjusted for
any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring
during the period(s) used to compute the Purchase Price. We may deliver multiple Purchase Notices and VWAP Purchase Notices to
Aspire Capital from time to time during the term of the Purchase Agreement, so long as the most recent purchase has been completed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Minimum Share Price</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the Purchase Agreement, the Company
and Aspire Capital may not effect any sales of shares of our Common Stock on any trading day that the closing sale price of our
Common Stock is less than $2.00 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Compliance with the NASDAQ Capital Market Price</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Purchase Agreement provides that the
number of shares that may be sold pursuant to the Purchase Agreement shall be limited to 2,833,519, or the Exchange Cap, which
represents 19.99% of our outstanding shares as of March 27, 2013, unless shareholder approval or an exception pursuant to the rules&nbsp;of
the NASDAQ Capital Market is obtained to issue more than 19.99%, to be in compliance with the applicable listing maintenance rules&nbsp;of
the NASDAQ Capital Market. This limitation shall not apply if, at any time the Exchange Cap is reached and at all times thereafter,
the average price paid for all shares issued and sold under the Purchase Agreement is equal to or greater than $9.55, which was
the closing sale price of our Common Stock on March 27, 2013. We are not required or permitted to issue any shares of Common Stock
under the Purchase Agreement if such issuance would breach our obligations under the rules&nbsp;or regulations of the NASDAQ Capital
Market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Beneficial Ownership Limitation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the Purchase Agreement, we and Aspire
Capital may not effect any sales of shares of our Common Stock if such shares proposed to be issued and sold, when aggregated with
all other shares of our Common Stock beneficially owned by Aspire Capital and its affiliates, would result in the beneficial ownership
by Aspire Capital and its affiliates of more than 19.99% of our then issued and outstanding shares of Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Events of Default</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt; text-indent: 0.5in">Generally, Aspire Capital may terminate
the Purchase Agreement upon the occurrence of any of the following events of default:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the effectiveness of any registration statement that is required to be maintained effective pursuant to the terms of the Registration
Rights Agreement between us and Aspire Capital lapses for any reason (including, without limitation, the issuance of a stop order)
or is unavailable to Aspire Capital for sale of our shares of Common Stock, and such lapse or unavailability continues for a period
of ten consecutive business days or for more than an aggregate of thirty business days in any 365-day period, which is not in connection
with a post-effective amendment to any such registration statement; provided, however, that in connection with any post-effective
amendment to such registration statement that is required to be declared effective by the SEC, such lapse or unavailability may
continue for a period of no more than twenty consecutive business days, which such period shall be extended for an additional thirty
business days if we receive a comment letter from the SEC in connection therewith;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 21pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the suspension from trading or failure of our Common Stock to be listed on a Principal Market (as defined in the Purchase Agreement)
for a period of three (3) consecutive business days;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 21pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the delisting of our Common Stock from the NASDAQ Capital Market, provided our Common Stock is not immediately thereafter trading
on the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the NYSE MKT or the OTCOB or OTCOX market
places of the OTC markets;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 21pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our transfer agent&rsquo;s failure to issue to Aspire Capital shares of our Common Stock which Aspire Capital is entitled to
receive under the Purchase Agreement within five business days after an applicable purchase date;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 21pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any breach by us of the representations, warranties, covenants or other term or condition contained in the Purchase Agreement
or any related agreements that would reasonably be expected to have a material adverse effect except, in the case of a breach of
a covenant which is reasonably curable, only if such breach continues for a period of at least five business days;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 21pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>if at any time the issuance of shares of Common Stock upon the submission of a Purchase Notice or VWAP Purchase Notice under
the Purchase Agreement would result in the issuance of an aggregate of number of shares of Common Stock that would exceed the number
of shares of Common Stock that we may issue under this agreement without breaching our obligations under the rules&nbsp;or regulations
of the NASDAQ Capital Market;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 21pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>if we become insolvent or are generally unable to pay our debts as they become due; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 21pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any participation or threatened participation in insolvency or bankruptcy proceedings by or against us.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our Termination Rights</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Purchase Agreement may be terminated
by us at any time, at our discretion, without any cost to us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>No Short-Selling or Hedging by Aspire Capital</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Aspire Capital has agreed that neither
it nor any of its agents, representatives and affiliates shall engage in any direct or indirect short-selling or hedging, which
establishes a net short position with respect to our Common Stock during any time prior to the termination of the Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Effect of Performance of the Purchase Agreement on Our Stockholders</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Purchase Agreement does not limit the
ability of Aspire Capital to sell any or all of the 2,833,519 shares registered in this offering. It is anticipated that shares
registered in this offering will be sold over a period of up to approximately three years from the date we entered into the Purchase
Agreement. The sale by Aspire Capital of a significant amount of shares registered in this offering at any given time could cause
the market price of our Common Stock to decline or to be highly volatile. Sales to Aspire Capital by us pursuant to the Purchase
Agreement also may result in dilution to the interests of other holders of our Common Stock. However, we have the right to control
the timing and amount of sales of our shares to Aspire Capital, and the Purchase Agreement may be terminated by us at any time
at our discretion without any penalty or cost to us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Amount of Potential Proceeds to be Received under the Purchase
Agreement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In connection with entering into the Purchase
Agreement, we authorized the sale to Aspire Capital of up to $30 million of shares of our Common Stock. However, we estimate that
we will sell no more than 2,833,519 shares to Aspire Capital under the Purchase Agreement (inclusive of the Commitment Shares and
Initial Purchase Shares), all of which are included in this offering.&nbsp; Subject to any required approval by our Board of Directors
and our stockholders, we have the right but not the obligation to issue more than the 2,833,519 shares included in this prospectus
to Aspire Capital under the Purchase Agreement.&nbsp; In the event we elect to issue more than 2,833,519 shares under the Purchase
Agreement, we will be required to file a new registration statement and have it declared effective by the SEC. The number of shares
ultimately offered for sale by Aspire Capital in this offering is dependent upon the number of shares purchased by Aspire Capital
under the Purchase Agreement.&nbsp; The following table sets forth the number and percentage of outstanding shares to be held by
Aspire Capital after giving effect to the sale of shares of Common Stock issued to Aspire Capital covered by the registration statement
of which this prospectus is a part at varying purchase prices in addition to the Initial Purchase Shares and the Commitment Shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 96pt; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 96pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><B>Assumed&nbsp;Average<BR>
<FONT STYLE="font-family: Times New Roman, Times, Serif"> </FONT>Purchase&nbsp;Price&nbsp;of <BR>
the&nbsp;Additional&nbsp;Shares<BR>
 Sold Under the Purchase<BR>
 Agreement</B></TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of <BR>
Additional Shares <BR>to&nbsp;be&nbsp;Sold (1)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Percentage&nbsp;of <BR>Outstanding Shares After&nbsp;Giving&nbsp;Effect <BR>to the&nbsp;Aspire Capital <BR>Transaction (2)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Proceeds&nbsp;from&nbsp;the&nbsp; <BR>Sale&nbsp;of Shares&nbsp;to&nbsp;Aspire Capital Under&nbsp;the&nbsp; <BR>Purchase Agreement</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 22%; font-size: 10pt; text-align: right">2.00</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 22%; font-size: 10pt; text-align: right">2,500,186</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 21%; font-size: 10pt; text-align: right">14.70</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">%</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 21%; font-size: 10pt; text-align: right">5,000,372</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">4.00</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2,500,186</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">14.70</TD><TD STYLE="font-size: 10pt; text-align: left">%</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">10,000,744</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">6.00</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2,500,186</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">14.70</TD><TD STYLE="font-size: 10pt; text-align: left">%</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">15,001,116</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">8.00</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2,500,186</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">14.70</TD><TD STYLE="font-size: 10pt; text-align: left">%</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">20,001,488</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">10.00</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2,500,186</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">14.70</TD><TD STYLE="font-size: 10pt; text-align: left">%</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">25,001,860</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">12.00</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2,416,666</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">14.28</TD><TD STYLE="font-size: 10pt; text-align: left">%</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">29,000,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">14.00</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2,071,428</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">12.49</TD><TD STYLE="font-size: 10pt; text-align: left">%</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">29,000,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left">(1)</TD><TD STYLE="text-align: justify">Based on total aggregate sales of the lesser of (a) $29
million of shares of Common Stock and (b) the 2,500,186 additional Purchase Shares registered herein. Excludes the Commitment
Shares and the Initial Purchase Shares.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left">(2)</TD><TD STYLE="text-align: justify">The denominator is based on 14,508,019 shares outstanding
on March 31, 2013, plus the number of shares set forth in the adjacent column which we would have sold to Aspire Capital at the
assumed price in the first column. The numerator is based on the number of shares which we would have sold under the Purchase
Agreement at the corresponding assumed purchase price set forth in the first column and assuming a maximum of $29 million of shares
are sold to Aspire Capital.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PLAN OF DISTRIBUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The shares may be sold or distributed
from time to time by the Selling Stockholder directly to one or more purchasers or through brokers, dealers, or underwriters who
may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at
negotiated prices, or at fixed prices, which may be changed. The sale of the shares offered by this prospectus may be effected
in one or more of the following methods:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 58.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">ordinary brokers&rsquo; transactions;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 58.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">transactions involving cross or block trades;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 58.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">through brokers, dealers, or underwriters who may act solely as agents;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 58.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&ldquo;at the market&rdquo; into an existing market for the Common
Stock;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 58.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">in other ways not involving market makers or established business markets,
including direct sales to purchasers or sales effected through agents;in privately negotiated transactions; or any combination
of the foregoing.</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In order to comply with the securities
laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition,
in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption
from the registration or qualification requirement is available and complied with.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Selling Stockholder may also sell shares
of Common Stock under Rule 144 promulgated under the Securities Act, if available, rather than under this prospectus. In addition,
the Selling Stockholder may transfer the shares of Common Stock by other means not described in this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Brokers, dealers, underwriters, or agents
participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts, or concessions
from the Selling Stockholder and/or purchasers of the Common Stock for whom the broker-dealers may act as agent. The Selling Stockholder
has informed us that each such broker-dealer will receive commissions from Aspire Capital which will not exceed customary brokerage
commissions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Selling Stockholder and its affiliates
have agreed not to engage in any direct or indirect short selling or hedging of our Common Stock during the term of the Purchase
Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Selling Stockholder is an &ldquo;underwriter&rdquo;
within the meaning of the Securities Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have advised Selling Stockholder that
while it is engaged in a distribution of the shares included in this prospectus it is required to comply with Regulation M promulgated
under the Exchange Act. With certain exceptions, Regulation M precludes the Selling Stockholder, any affiliated purchasers, and
any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce
any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution
of that security. All of the foregoing may affect the marketability of the shares offered hereby this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We may suspend the sale of shares by Aspire
Capital pursuant to this prospectus for certain periods of time for certain reasons, including if the prospectus is required to
be supplemented or amended to include additional material information.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">This offering will terminate on the date
that all shares offered by this prospectus have been sold by the Selling Stockholder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
regarding the members of the Board of Directors of the Company and its executive officers as of the date of this prospectus:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Executive Officers and Directors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 24%; border-bottom: windowtext 1pt solid"><B>Name</B></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 10%; border-bottom: windowtext 1pt solid; text-align: center"><B>Age</B></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 62%; border-bottom: windowtext 1pt solid"><B>Position(s)</B></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Steven C. Quay, M.D., Ph.D.</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">62</TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Board of Directors, Chief Executive Officer and President</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>Kyle Guse</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">49</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Financial Officer, General Counsel and Secretary</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Shu-Chih Chen, Ph.D.</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">51</TD>
    <TD>&nbsp;</TD>
    <TD>Director, Chief Scientific Officer</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>John Barnhart</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">56</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>Stephen Galli, M.D.</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">66</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD>Alexander Cross, Ph.D.</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">81</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD>H. Lawrence Remmel</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">61</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company&rsquo;s bylaws provide that the
number of directors authorized to serve on the Board of Directors of the Company may be established, from time to time, by action
of the Board of Directors of the Company. Vacancies in the existing Board of Directors of the Company are filled by a majority
vote of the remaining directors on the Board of Directors of the Company. Our Board of Directors is divided into three classes
and directors serve for a three-year term until the third annual meeting following their election and until their respective successors
have been elected and qualified or until death, resignation or removal. Dr. Quay and Mr. Barnhart are Class I directors (whose
terms will expire on the date of the 2013 annual meeting), Dr. Cross and Dr. Galli are Class II directors (whose terms will expire
on the date of the 2014 annual meeting), and Dr. Chen and Mr. Remmel are Class III directors (whose terms will expire on the date
of the 2015 annual meeting). The Company&rsquo;s executive officers are appointed by and serve at the discretion of the Board of
Directors of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Dr. Quay is the Chief Executive Officer and
Chairman of the Board of Directors of the Company. Dr. Shu-Chih Chen is the Chief Scientific Officer and a director. Drs. Quay
and Chen are husband and wife. They currently beneficially own a substantial minority of the outstanding voting securities of the
Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Steven C. Quay, M.D., Ph.D.</I></B>
&nbsp;&nbsp;Dr. Quay has served as Chief Executive Officer and Chairman of the Board of Directors of the Company since the Company
was incorporated in April 2009. Prior to his work at the Company, Dr. Quay served as Chairman of the Board, President and Chief
Executive Officer of MDRNA, Inc., a biotechnology company focused on the development and commercialization of RNAi-based therapeutic
products, from August 2000 to May 2008, and as its Chief Scientific Officer until November 30, 2008 (MDRNA, Inc. was formerly known
as Nastech Pharmaceutical Company Inc. and is currently known as Marina Biotech, Inc.). From December 2008 to April 2009, Dr. Quay
was involved in acquiring the Company&rsquo;s assets and preparing the Company&rsquo;s business plan. Dr. Quay is certified in
Anatomic Pathology with the American Board of Pathology, completed both an internship and residency in anatomic pathology at the
Massachusetts General Hospital, a Harvard Medical School teaching hospital, is a former faculty member of the Department of Pathology,
Stanford University School of Medicine, and is a named inventor on 14 U.S. and foreign patents covering the MASCT System. He oversaw
the clinical testing and regulatory filing of the MASCT device with the FDA that led to its ultimate marketing clearance. Including
the patents for the MASCT System, Dr. Quay has a total of 76 U.S. patents, 108 pending patent applications and is a named inventor
on patents covering five pharmaceutical products that have been approved by the FDA. Dr. Quay received an M.D. in 1977 and a Ph.D.
in 1975 from the University of Michigan Medical School. He also received his B.A. degree in biology, chemistry and mathematics
from Western Michigan University in 1971. Dr. Quay is a member of the American Society of Investigative Pathology, the Association
of Molecular Pathology, the Society for Laboratory Automation and Screening and the Association of Pathology Informatics. He was
selected to serve on the Company&rsquo;s Board of Directors because of his role as the founder of the Company and the inventor
of the MASCT System, as well as his qualifications as a physician and the principal researcher overseeing the clinical and regulatory
development of the MASCT System.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;<B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Kyle Guse, Esq., CPA.</I></B> Mr.&nbsp;Guse
has served as Chief Financial Officer, General Counsel and Secretary since January 2013. His experience includes more than 20 years
of counseling life sciences and other rapid growth companies through all aspects of finance, corporate governance, securities laws
and commercialization. Mr. Guse has practiced law at several of the largest international law firms, including from January 2012
through January 2013 as a partner at Baker Botts LLP and, prior to that, from October 2007 to January 2012, as a partner at McDermott
Will &amp; Emery LLP. Before working at McDermott Will &amp; Emery, Mr. Guse previously served as a partner at Heller Ehrman LLP.
Mr. Guse began his career as an accountant at Deloitte &amp; Touche and he is a licensed Certified Public Accountant in the state
of California. Mr.&nbsp;Guse earned a B.S. in Business Administration and an M.B.A. from California State University, Sacramento,
and a J.D. from Santa Clara University School of Law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Shu-Chih Chen, Ph.D.</I></B> &nbsp;&nbsp;Dr.
Chen has served as Chief Scientific Officer and director of the Company since the Company was incorporated in April 2009. Prior
to joining the Company, Dr. Chen served as President of Ensisheim beginning in 2008, was founder and President of SC2Q Consulting
Company from 2006 to 2008, and served as Head, Cell Biology, Nastech Pharmaceuticals Company, Inc. from 2002 to 2006. During 1995
and 1996, she was an Associate Professor at National Yang Ming University, Taipei, Taiwan, and served as the principal investigator
of an NIH RO1 grant studying tumor suppression by gap junction protein connexin 43 at the Department of Molecular Medicine at Northwest
Hospital before working in the research department at Nastech Pharmaceutical Company. She is named as an inventor on four patent
applications related to cancer therapeutics. Dr. Chen received her Ph.D. degree in microbiology and public health from Michigan
State University in 1992 and has published extensively on Molecular Oncology. She received her B.S. degree in medical technology
from National Yang Ming University, Taipei, Taiwan in 1984. Dr. Chen was selected to serve on the Company&rsquo;s Board of Directors
because of her qualifications in medical technology and as a professor and researcher in the field of cancer therapeutics.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>John Barnhart.</I></B> &nbsp;&nbsp;Mr.
Barnhart has served as a director of the Company since July 2009. He is the founder and has been the Managing Director of the Visconti
Group, a management consulting group in Seattle, Washington, since November 2003. He held prior executive positions at The Walt
Disney Company, Sony Pictures Entertainment, and Walt Disney Imagineering. He received a B.S. degree in engineering from California
State University, Long Beach in 1983. Mr. Barnhart was selected to serve on the Company&rsquo;s Board of Directors because of his
understanding and experience with development and marketing of consumer-oriented products and services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Stephen J. Galli, M.D.</I></B> &nbsp;&nbsp;Dr.
Galli has served as a director of the Company since July 2011. Dr. Galli is Chair of the Department of Pathology, Professor of
Pathology and of Microbiology &amp; Immunology and the Mary Hewitt Loveless, M.D., Professor, Stanford University School of Medicine,
Stanford, California, and has served in these capacities since February 1999. Before joining Stanford, he was on the faculty of
Harvard Medical School. He holds 13 U.S. patents and has over 340 publications. He is past president of the American Society for
Investigative Pathology and current president of the Collegium Internationale Allergologicum. In addition to receiving awards for
his research, he was recently recognized with the 2010 Stanford University President&rsquo;s Award for Excellence Through Diversity
for his recruitment and support of women and underrepresented minorities at Stanford University. He received his B.A. degree in
biology, magna cum laude, from Harvard College in 1968 and his M.D. degree from Harvard Medical School in 1973 and completed a
residency in anatomic pathology at the Massachusetts General Hospital in 1977. Dr. Galli has been selected to serve on the Company&rsquo;s
Board of Directors because of his qualifications as a professor and physician, and his specialized expertise as a pathologist.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Alexander D. Cross, Ph.D</I>.</B>&nbsp;&nbsp;Dr.
Cross has served as a director of the Company since July 2011. Dr. Cross has served on the board and as a member of the Audit,
Compensation, and Nominating and Governance Committees of a number of public companies, including Marina Biotech, Inc. (formerly
MDRNA, Inc. and, before that, Nastech Pharmaceutical Company Inc. from July 2005 through May 2009). Dr. Cross also served as Chairman
of the Board and CEO of CytoPharm, Inc., a company engaged in the development of light-activated drugs for the treatment of various
diseases, until August 2006. Dr. Cross has been a consultant in the fields of pharmaceuticals and biotechnology since January 1986
and has served as a principal of NDA Partners, LLC, a consulting firm that provides strategic advisory services for the development
of medical products, since 2003. Previously, Dr. Cross served as President and CEO of Zoecon Corporation, a biotechnology company,
from April 1983 to December 1985, and Executive Vice President and Chief Operating Officer from 1979 to 1983. Dr. Cross also previously
held several corporate management positions at Syntex Corporation from 1961 through 1979. Dr. Cross holds 109 issued U.S. patents
and is the author of 90 peer-reviewed publications. Dr. Cross received his B.Sc., Ph.D. and D.Sc. degrees from the University of
Nottingham, England, and is a Fellow of the Royal Society of Chemistry. Dr. Cross has been selected to serve on the Company&rsquo;s
Board of Directors because of his qualifications as a scientist, business executive and audit committee financial expert, and his
prior experience as a director and committee member of public companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>H. Lawrence Remmel, Esq.</I></B> &nbsp;&nbsp;Mr.
Remmel served as a director of the Company since February 2012. He is currently a partner of the law firm Pryor Cashman LLP, located
in New York City, where he chairs the Banking and Finance practice group. Mr. Remmel joined Pryor Cashman in 1988. His practice
includes corporate and banking financings, issues relating to the Investment Company Act of 1940, and intellectual property and
licensing issues, in particular in the biotechnology and biocosmeceutical areas. He was an associate of the law firm Reboul, MacMurray,
Hewitt, Maynard &amp; Kristol from 1984 to 1988, and began his legal career at Carter, Ledyard &amp; Milburn, where he was an associate
from 1979 to 1984. He was admitted to the New York bar in 1980 and is a member of the New York State Bar Association. He received
his J.D. from the Washington &amp; Lee University School of Law in 1979 and his B.A. from Princeton University in 1975. Mr. Remmel
has been selected to serve on the Company&rsquo;s Board of Directors because of his substantial experience as a corporate attorney
advising biotechnology companies and his familiarity with the fiduciary duties and the regulatory requirements affecting publicly
traded companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Scientific Advisory Board</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company has established a Scientific
Advisory Board to provide strategic resources to the Company&rsquo;s management and its Board of Directors. It is intended that
the Company&rsquo;s scientific advisory board has knowledge in breast cancer, NAF, breast cancer biomarkers, and Next Generation
Sequencing technologies. The Company expects to expand the size of the advisory board in the future. The members of the Scientific
Advisory Board work individually with the Company to advise the Company on matters of research interest to the Company and which
are within the expertise of the advisor. Accordingly, the Scientific Advisory Board does not meet as a full board and the Company
does not anticipate having a need for such meetings in the future. The initial Scientific Advisory Board currently consists of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Dr. Edward Sauter, M.D., Ph.D</I>.</B>&nbsp;&nbsp;Dr.
Sauter is the Associate Dean for Research and Professor of Surgery at the University of North Dakota School of Medicine &amp; Health
Sciences and has served in this position since Fall 2008. He received his M.D. from the Louisiana State School of Medicine and
his Ph.D. from the University of Pennsylvania. He completed his general surgery residency at the Ochsner Clinic, in New Orleans,
Louisiana. Dr. Sauter also completed a Surgical Oncology Fellowship at Fox Chase Cancer Center in Philadelphia, Pennsylvania. Dr.
Sauter was Vice-Chair for Research in the Department of Surgery and Professor at the University of Missouri-Columbia from 2002
to 2008. He also completed his MHA while at the University of Missouri. Dr. Sauter is widely recognized for his research and clinical
experience in breast cancer. Among his many accomplishments, Dr. Sauter and a team of researchers pioneered noninvasive and minimally
invasive techniques to predict breast cancer risk using NAF. Dr. Sauter is the co-author of over 100 peer-reviewed publications
on breast cancer, the majority of which pertain to cytology and molecular diagnostic biomarkers in NAF.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Dr. Sauter and the Company entered into a
consulting agreement on February 18, 2010 which provides a $5,000 signing fee and $1,000 per month for up to four hours per month
of Dr. Sauter&rsquo;s time. The agreement also provides reasonable travel expenses in connection with his work for the Company.
This is the only compensation received for being a member of the Scientific Advisory Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Dr. Timothy Hunkapiller, Ph.D.</I></B><FONT STYLE="font-size: 10pt">
</FONT>Dr. Hunkapiller has been a pioneering presence in computational biotechnology since its infancy 30 years ago and is co-inventor
of the largest selling analytical research instrument in the world: the Perkin Elmer/Applied Biosystems DNA sequencer. Through
his Seattle, Washington-based company, DiscoveryBiosciences, he provides technical consulting and commercialization services to
both established and upcoming biotech companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Dr. Hunkapiller earned a Ph.D. from California
Institute of Technology and was Research Assistant Professor in the Department of Molecular Biotechnology at the University of
Washington from 1992 until 1999. As a scientist, Dr. Hunkapiller&rsquo;s research focus included molecular immunology, evolution,
computational genetics and comparative genomics. He is considered a leading expert on the genetics, genomic organization and functional
diversity of the immune system. For the last 20 years, he has also been involved in bioinformatics, algorithm and database development
and experimental process optimization.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">While at Caltech, Dr. Hunkapiller originated
the model for the automated, fluorescent DNA sequencer. The manifestation of this idea in products such as the ABI 3700 <FONT STYLE="font-size: 10pt"><SUP>TM</SUP></FONT>
and the MD Megabase <FONT STYLE="font-size: 10pt"><SUP>TM</SUP></FONT> sequencers catalyzed and enabled the completion of the first
drafts of the Human Genome and helped to revolutionize the field of genomics. He continues to work with Applied Biosystems today
on improving the throughput and quality of data from these instruments and their associated chemistry.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Dr. Hunkapiller has been an advisor to a
number of biotechnology companies as well as technology companies servicing the biotechnology and pharmaceutical industry. These
efforts range from helping with SNP association studies for target discovery in breast cancer to the application of novel computer
technologies in intelligently searching very large, unstructured text sources to improve intellectual property analysis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In April 2011, Dr. Hunkapiller received options
to purchase up to 45,000 shares of our Common Stock at an exercise price of $1.25 per share, the then fair market value. This is
the only compensation received for being a member of the Scientific Advisory Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DIRECTOR COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The non-employee directors of the Company
receive the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 33pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD>upon joining the Board, an initial director compensation fee of $50,000, paid in shares of the Company&rsquo;s Common Stock
and that vests ratably over one year from the date of grant;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 51pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 33pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD>an annual director retainer of $50,000, paid in shares of the Company&rsquo;s Common Stock and/or options to purchase Common
Stock and that vests ratably over one year; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 51pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 33pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD>a fee of $2,000 for the chairperson for each Board or committee meeting attended in person, a fee of $1,500 for the members
for each Board or committee meeting attended in person, a fee of $1,500 for the chairperson for each Board or committee meeting
attended via telephone and a fee of $1,000 for the members for each Board or committee meeting attended via telephone.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 51pt; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition to the above, annual compensation
for service on the Audit Committee is $12,000 for the Chair and $8,000 for each member, paid in fully vested shares of the Company&rsquo;s
Common Stock and/or options to purchase Common Stock, payable in arrears; and annual compensation for service on the Compensation
Committee and Nominating/Governance Committee is $10,000 for the Chair and $6,000 for each member, paid in fully vested shares
of the Company&rsquo;s Common Stock and/or options to purchase Common Stock, payable in arrears.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The employee directors receive no compensation
for their board service. Pursuant to the policies of Pryor Cashman, the law firm of which Mr. Remmel is a partner, the compensation
Mr. Remmel receives for his services as a director (other than expense reimbursement) is paid to the firm directly. All directors
receive reimbursement for reasonable travel expenses. The following table sets forth information regarding compensation earned
by our non-employee directors during the fiscal year ended December 31, 2012:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B>&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; font-weight: bold; border-bottom: Black 1pt solid">Name</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Fees Earned&nbsp;or <BR>Paid&nbsp;in&nbsp;Cash (6)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 68%; font-size: 10pt; text-align: left">John Barnhart (1)(5)</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">88,500</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">88,500</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">Stephen Galli, M.D. (2)(5)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">73,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">73,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">Alexander Cross, Ph.D. (3)(5)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">85,500</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">85,500</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">H. Lawrence Remmel, Esq. (4)(5)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">77,500</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">77,500</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(1)</TD><TD STYLE="text-align: justify">Fees earned or paid in cash consists of (a) $14,500
in meeting attendance fees; (b) $8,000 paid in fully vested options, payable in arrears, for service as a member of the Audit
Committee; (c) $10,000 paid in fully vested options, payable in arrears, for service as chairperson of the Compensation Committee;
(d) $6,000 paid in fully vested options, payable in arrears, for service as a member of the Nominating/Governance Committee; and
(e) $50,000 paid in shares of Common Stock and/or options to purchase shares of Common Stock for 2012 annual director fees. Excludes
the grant of an option to purchase 7,903 shares of Common Stock at $6.00 per share granted on April 30, 2012 for service as a
board member prior to 2012.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(2)</TD><TD STYLE="text-align: justify">Fees earned or paid in cash consists of (a) $7,000
in meeting attendance fees; (b) $6,000 paid in fully vested options, payable in arrears, for service as a member of the Compensation
Committee; (c) $10,000 paid in fully vested options, payable in arrears, for service as chairperson of the Nominating/Governance
Committee; and (d) $50,000 paid in shares of Common Stock and/or options to purchase shares of Common Stock for 2012 annual director
fees. Excludes the grant of an option to purchase 5,927 shares of Common Stock at $6.00 per share granted on April 30, 2012 for
service as a board member prior to 2012.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(3)</TD><TD STYLE="text-align: justify">Fees earned or paid in cash consists of (a) $17,500
in meeting attendance fees; (b) $12,000 paid in fully vested options, payable in arrears, for service as chairperson of the Audit
Committee; (c) $6,000 paid in fully vested options, payable in arrears, for service as a member of the Compensation Committee;
and (d) $50,000 paid in shares of Common stock and/or options to purchase shares of Common Stock for 2012 annual director fees.
Excludes the grant of an option to purchase 5,927 shares of Common Stock at $6.00 per share granted on April 30, 2012 for service
as a board member prior to 2012.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(4)</TD><TD STYLE="text-align: justify">Fees earned or paid in cash consists of (a) $13,500 in meeting attendance fees; (b) $8,000
                                                                                   paid in fully vested options, payable in arrears, for service as a member of the Audit Committee; (c) $6,000 paid in fully
                                                                                   vested options, payable in arrears, for service as a member of the Nominating/Governance Committee; and (d)
                                                                                   $50,000                                                                                    paid in
                                                                                   shares of                                                                                    Common Stock and/or options
                                                                                   to                                                                                            purchase shares of Common
                                                                                   Stock                                                                                    for 2012 annual director fees.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(5)</TD><TD STYLE="text-align: justify">Fees that were payable in stock and/or options for
2012 service on the board will be granted on or before the 2013 annual meeting of stockholders.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(6)</TD><TD STYLE="text-align: justify">Includes the dollar value of fees payable for service
on the Board of Directors and for service as a member or Chairman of the committees of the Board which will be paid in Common
Stock and/or options to purchase Common Stock, the amounts and exercise prices of which will be determined on or before the 2013
annual meeting of stockholders.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Director Independence</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Board of Directors
of the Company has reviewed the materiality of any relationship that each of our directors has with the Company, either directly
or indirectly. Based on this review, the Board of Directors of the Company has determined that John Barnhart, Stephen J. Galli,
M.D., Alexander Cross, Ph.D. and Lawrence Remmel, Esq. are &ldquo;independent directors&rdquo; as defined under the applicable
rules of the NASDAQ Capital Market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Committees of the Board of Directors
of the Company</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Board of Directors
of the Company has established an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. The composition
and function of each of these committees is described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Audit Committee</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Audit Committee
is comprised of Dr. Cross (chair), Mr. Barnhart and Mr. Remmel. The Board of Directors of the Company has determined that Dr.
Cross is an &ldquo;Audit Committee Financial Expert,&rdquo; as defined by the rules of the SEC. The Audit Committee is authorized
to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">approve and retain the independent registered public accounting firm
to conduct the annual audit of the Company&rsquo;s financial statements;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">review the proposed scope and results of the annual audit;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">review and pre-approve audit and non-audit fees and services;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">review proposed changes in the Company&rsquo;s financial and accounting
standards and principles;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">review the Company&rsquo;s policies and procedures with respect to
its internal accounting, auditing and financial controls;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">review and approve transactions between the Company and its directors,
officers and affiliates; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">establish procedures for complaints received by the Company regarding
accounting matters.&nbsp;</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company believes
that the composition of its Audit Committee meets the independence requirements of the Exchange Act and the NASDAQ Capital Market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Compensation Committee</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Compensation Committee
is comprised of Mr. Barnhart (chair), Dr. Cross, and Dr. Galli. All members of the Compensation Committee qualify as independent
directors under the current definition promulgated by the NASDAQ Capital Market. The Compensation Committee is authorized to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">review and recommend the compensation arrangements for management,
or approve such arrangements, if directed by the board;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">establish and review general compensation policies with the objective
to attract and retain superior talent, to reward individual performance and to achieve corporate goals;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">administer stock incentive and purchase plans; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">review and recommend to the board the compensation paid to non-employee
directors for their service on the Board of Directors.&nbsp;</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Nominating and Governance Committee</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Nominating and
Governance Committee is comprised of Dr. Galli (chair), Mr. Barnhart, and Mr. Remmel. All members of the Nominating and Governance
Committee qualify as independent directors under the current definition promulgated by the NASDAQ Capital Market. The Nominating
and Governance Committee is authorized to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">identify and nominate candidates for election to the Board of Directors
of the Company;</FONT></TD></TR></TABLE>












<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">establish
policies under which stockholders may recommend a candidate for consideration for nomination as a director;</FONT></TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">annually review and evaluate the performance, operations, size and
composition of the Board; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">periodically assess and review the Company&rsquo;s Corporate Governance
Guidelines and recommend any changes deemed appropriate to the Board for its consideration.</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Compensation Committee Interlocks and
Insider Participation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No member of our Compensation
Committee has at any time been an employee of ours. None of our executive officers serves as a member of the Board of Directors
or Compensation Committee of any other entity that has one or more executive officers serving as a member of our Board of Directors
or Compensation Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Code of Ethics</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have adopted a
Corporate Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including those
officers responsible for financial reporting. The Corporate Code of Business Conduct and Ethics is available on our website. We expect that any
amendments to the code, or any waivers of its requirements, will be disclosed on our website.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>Limitation of Directors&rsquo; and Officers&rsquo;
Liability and Indemnification</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Delaware General
Corporation Law authorizes corporations to limit or eliminate, subject to specified conditions, the personal liability of directors
to corporations and their stockholders for monetary damages for breach of their fiduciary duties. Our certificate of incorporation
and amended and restated bylaws limit the liability of our directors to the fullest extent permitted by Delaware law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have obtained director
and officer liability insurance to cover liabilities that our directors and officers may incur in connection with their services
to us. Our certificate of incorporation and amended and restated bylaws also provide that we will indemnify and advance expenses
to any of our directors and officers who, by reason of the fact that he or she is an officer or director, is involved in a legal
proceeding of any nature. We will repay certain expenses incurred by a director or officer in connection with any civil, criminal,
administrative or investigative action or proceeding, including actions by us or in our name. Such indemnifiable expenses include,
to the maximum extent permitted by law, attorney&rsquo;s fees, judgments, fines, settlement amounts and other expenses reasonably
incurred in connection with legal proceedings. A director or officer will not receive indemnification if he or she is found not
to have acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interest.<FONT STYLE="font-size: 10pt">
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Such limitation of liability
and indemnification does not affect the availability of equitable remedies. In addition, we have been advised that in the opinion
of the SEC, indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities
Act and is therefore unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no pending
litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required
or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXECUTIVE COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Remuneration of Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Compensation Committee
is responsible for reviewing and evaluating key executive employee base salaries, setting goals and objectives for executive bonuses
and administering benefit plans. The Compensation Committee provides advice and recommendations to our Board of Directors on such
matters. See &ldquo;Committees of the Board of Directors&nbsp;&mdash;&nbsp;Compensation Committee&rdquo; for further details on
the role of the Compensation Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Summary Compensation Table</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table
sets forth the compensation earned by our Chief Executive Officer, Chief Scientific Officer and Chief Financial Officer (collectively,
the &ldquo;Named Executive Officers&rdquo;) for fiscal year 2012:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; font-weight: bold; border-bottom: Black 1pt solid">Name&nbsp;and&nbsp;Position</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; border-bottom: Black 1pt solid">Salary</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; border-bottom: Black 1pt solid">Bonus (1)</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 36%; font-size: 10pt; text-align: left">Steven C. Quay, M.D., Ph.D.</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 14%; font-size: 10pt; text-align: center">2012</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">250,000</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">72,590</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">322,590</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">President and Chief Executive Officer</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: center">2011</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">250,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">61,905</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">311,905</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">Christopher Benjamin (2)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: center">2012</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">109,300</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">109,300</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">Chief Financial Officer</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center">2011</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">38,968</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">38,968</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">Shu-Chih Chen, Ph.D.</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: center">2012</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">200,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">43,554</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">243,554</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">Chief Scientific Officer</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: center">2011</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">200,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">37,143</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">237,143</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(1)</TD><TD STYLE="text-align: justify">No options were granted to the Named Executive Officers
in 2012. The bonuses payable to Drs. Quay and Chen for 2012 were paid on March 11, 2013 in the form of fully-vested options with
Dr. Quay receiving an option to purchase 44,194 shares of Common Stock at $6.57 per share, the fair market value of our Common
Stock on the date of grant, and Dr. Chen receiving an option to purchase 26,516 shares at $6.57 per share, the fair market value
of our Common Stock on the date of grant. See &ldquo;Employment Agreements&rdquo; below for a further description of the compensation
arrangements with these officers.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.75pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(2)</TD><TD STYLE="text-align: justify">Mr. Benjamin served as a part-time employee and was compensated
pursuant to a consulting agreement, as described below. Mr. Benjamin served as our interim Chief Financial Officer through January
3, 2013. Kyle Guse was appointed as our Chief Financial Officer, General Counsel and Secretary on January 4, 2013.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.75pt; color: #4F81BD"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Outstanding Equity Awards at Fiscal Year-End</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table shows information regarding
our outstanding equity awards at December 31, 2012 for the Named Executive Officers:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; font-weight: bold; border-bottom: Black 1pt solid">Name</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of <BR>Securities <BR>Underlying <BR>Unexercised <BR>Options<BR>(#) Exercisable</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of <BR>Securities <BR>Underlying <BR>Unexercised <BR>Options<BR>(#) Unexercisable</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Option <BR>Exercise <BR>Price</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Option<BR>Expiration<BR>
Date</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 36%; font-size: 10pt; text-align: left">Steven C. Quay, M.D., Ph.D. (1)</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">187,500</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">62,500</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">$</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">5.00</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; font-size: 10pt; text-align: right">7/22/2015</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left">Christopher Benjamin</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-size: 10pt; text-align: left">Shu-Chih Chen, Ph.D. (2)</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">75,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">25,000</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">$</TD><TD STYLE="font-size: 10pt; text-align: right">5.00</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">7/22/2015</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(1)</TD><TD STYLE="text-align: justify">Dr. Quay received an option to purchase up to 250,000
shares of Common Stock at an exercise price of $5.00 per share, the fair market value of the Common Stock on the date of grant,
as determined by the Board of Directors. One quarter of the shares of Common Stock underlying the option, or 62,500 shares, vested
on December 31, 2010, and the remaining 75%, or 187,500 shares, vest in equal quarterly installments over the next three years,
so long as Dr. Quay remains employed with us.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(2)</TD><TD STYLE="text-align: justify">Dr. Chen received an option to purchase up to 100,000
shares of Common Stock at an exercise price of $5.00 per share, the fair market value of the Common Stock on the date of grant,
as determined by the Board of Directors. One quarter of the shares of Common Stock underlying the option, or 25,000 shares, vested
on December 31, 2010, and the remaining 75%, or 75,000 shares, vest in equal quarterly installments over the next three years,
so long as Dr. Chen remains employed with us.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employment Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Employment Agreement with Steven Quay,
M.D., Ph.D.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has entered
into an employment agreement with Dr. Quay to act as the Company&rsquo;s Chief Executive Officer. The agreement provides for an
initial base salary of $250,000 per year and an annual target bonus of up to 40% of Dr. Quay&rsquo;s then-current base salary,
payable upon the achievement of performance goals to be established annually by the Compensation Committee. These salary and bonus
levels continued for 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The goals for fiscal
2012 included completion of a financing transaction, national launch of ForeCYTE and ArgusCYTE, field test launch of FullCYTE,
regulatory filings for NextCYTE and intraductal treatment, identify an additional product, evaluate potential modifications to
the ArgusCYTE test, recruit and retain additional personnel, establish business model for foreign markets and manage the company
through the IPO process. In February 2013, the Compensation Committee reviewed the performance of Dr. Quay for 2012 against these
goals and determined that his bonus for 2012 would be $72,590. In lieu of receiving a cash bonus, Dr. Quay received a fully-vested
option to purchase 44,194 shares of Common Stock at $6.57 per share, the fair market value of the Company&rsquo;s Common Stock
on the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under his employment
agreement, Dr. Quay received an option to purchase up to 250,000 shares of Common Stock at an exercise price of $5.00 per share,
the fair market value of the Common Stock on the date of grant, as determined by the Board of Directors. One-quarter of the shares
of Common Stock underlying the option, or 62,500 shares, vested on December 31, 2010, and the remaining 75%, or 187,500 shares,
vest in equal quarterly installments over the next three years, so long as Dr. Quay remains employed with the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the employment
term, the Company will make available to Dr. Quay employee benefits provided to other key employees and officers of the Company.
To the extent these benefits are based on length of service with the Company, Dr. Quay will receive full credit for prior service
with the Company. Participation in health, hospitalization, disability, dental and other insurance plans that the Company may have
in effect for other executives, all of which shall be paid for by the Company with contribution by Dr. Quay as set for the other
executives, as and if appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dr. Quay will be entitled
to six weeks of paid vacation per year for each full year of employment, pro-rated for each partial year. Vacation time not taken
during a calendar year will not be accrued to the next calendar year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dr. Quay has also agreed
that, for the period commencing on the date of his employment agreement with the Company and during the term of his employment
and for a period of 12 months following voluntary termination of his employment with the Company that he will not compete with
the Company in the United States. The employment agreement also contains provisions relating to confidential information and assignment
of inventions, which require Dr. Quay to refrain from disclosing any proprietary information and to assign to the Company any inventions
which directly concern the MASCT System, Oxy-MASCT System, or future products, research, or development, or which result from work
they perform for the Company or using its facilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Consulting Agreement with Christopher
Benjamin.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has entered
into an agreement with Christopher Benjamin to act as the Company&rsquo;s interim Chief Financial Officer during 2011 and 2012.
The agreement provided a monthly retainer fee of $2,250 for up to 25 hours of work per month and $100 per hour beyond that level.
The agreement was terminated on January 3, 2013 in connection with Mr. Benjamin&rsquo;s departure as the interim Chief Financial
Officer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Employment Agreement with Shu-Chih Chen,
Ph.D.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has entered
into an employment agreement with Dr. Chen to act as the Company&rsquo;s Chief Scientific Officer. The agreement provides for an
initial base salary of $200,000 per year and an annual target bonus of up to 30% of Dr. Chen&rsquo;s then-current base salary,
payable upon the achievement of performance goals to be established annually by the Compensation Committee. These base salary and
bonus levels continued for 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The goals for fiscal
2012 included completion of a financing transaction, national launch of ForeCYTE and ArgusCYTE, field test launch of FullCYTE,
regulatory filings for NextCYTE and intraductal treatment, identify an additional product, evaluate potential modifications to
the ArgusCYTE test, recruit and retain additional personnel, establish business model for foreign markets and manage the company
through the IPO process. In February 2013, the Compensation Committee reviewed the performance of Dr. Chen for 2012 against these
goals and determined that her bonus for 2012 would be $43,554. In lieu of receiving a cash bonus, Dr. Chen received a fully-vested
option to purchase 26,516 shares at $6.57 per share, the fair market value of the Company&rsquo;s Common Stock on the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under her employment
agreement, Dr. Chen received an option to purchase up to 100,000 shares of Common Stock at an exercise price of $5.00 per share,
the fair market value of the Common Stock on the date of grant, as determined by the Board of Directors. One quarter of the shares
of Common Stock underlying the option, or 25,000 shares, vested on December 31, 2010, and the remaining 75%, or 75,000 shares,
vest in equal quarterly installments over the next three years, so long as Dr. Chen remains employed with the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the employment
term, the Company will make available to Dr. Chen employee benefits provided to other key employees and officers of the Company.
To the extent these benefits are based on length of service with the Company, Dr. Chen will receive full credit for prior service
with the Company. Participation in health, hospitalization, disability, dental and other insurance plans that the Company may have
in effect for other executives, all of which shall be paid for by the Company with contribution by Dr. Chen as set for the other
executives, as and if appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dr. Chen will be entitled
to six weeks of paid vacation per year for each full year of employment, pro rated for each partial year. Vacation time not taken
during a calendar year will not be accrued to the next calendar year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dr. Chen has also agreed
that, for the period commencing on the date of her employment agreement with the Company and during the term of her employment
and for a period of 12 months following voluntary termination of her employment with the Company that she will not compete with
the Company in the United States. The employment agreement also contains provisions relating to confidential information and assignment
of inventions, which require Dr. Chen to refrain from disclosing any proprietary information and to assign to the Company any inventions
that directly concern the MASCT System, Oxy-MASCT System, or future products, research, or development, or that result from work
she performs for the Company or using its facilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Severance Benefits and Change in Control Arrangements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has agreed
to provide the severance benefits and change in control arrangements described below to its named executive officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Dr. Steven Quay</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to his employment
agreement, if (i) the Company terminates the employment of Dr. Quay without cause, or (ii) Dr. Quay terminates his employment for
good reason, then Dr. Quay will be entitled to receive all accrued but unpaid compensation, plus a severance payment equal to 12
months of base salary. In addition, upon such event, the vesting of all shares of Common Stock underlying options then held by
Dr. Quay will accelerate, and the options will remain exercisable for the remainder of their terms. The cash severance payment
is required to be paid in substantially equal installments over a period of six months beginning on the Company&rsquo;s first payroll
date that occurs following the 30<FONT STYLE="font-size: 10pt"><SUP>th</SUP></FONT> day after the effective date of termination
of Dr. Quay&rsquo;s employment, subject to certain conditions. The Company will not be required, however, to pay any severance
pay for any period following the termination date if Dr. Quay materially violates certain provisions of his employment agreement
and the violation is not cured within 30 days following receipt of written notice from the Company containing a description of
the violation and a demand for immediate cure.<FONT STYLE="font-size: 10pt"> </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, under the
terms of his employment agreement, in the event of a &ldquo;change in control&rdquo; of the Company (as defined in the employment
agreement) during Dr. Quay&rsquo;s employment term, Dr. Quay will be entitled to receive a one-time payment equal to 2.9 times
his base salary, and the vesting of all outstanding equity awards then held by Dr. Quay will accelerate such that they are fully
vested as of the date of the change in control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Dr. Shu-Chih Chen</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to her employment
agreement, if (i) the Company terminates the employment of Dr. Chen without cause, or (ii) Dr. Chen terminates her employment for
good reason, then Dr. Chen will be entitled to receive all accrued but unpaid compensation, plus a severance payment equal to 12
months of base salary. In addition, upon such event, the vesting of all shares of Common Stock underlying options then held by
Dr. Chen will accelerate, and the options will remain exercisable for the remainder of their terms. The cash severance payment
is required to be paid in substantially equal installments over a period of six months beginning on the Company&rsquo;s first payroll
date that occurs following the 30<FONT STYLE="font-size: 10pt"><SUP>th</SUP></FONT> day after the effective date of termination
of Dr. Chen&rsquo;s employment, subject to certain conditions. The Company will not be required, however, to pay any severance
pay for any period following the termination date if Dr. Chen materially violates certain provisions of her employment agreement
and the violation is not cured within 30 days following receipt of written notice from the Company containing a description of
the violation and a demand for immediate cure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, under the
terms of her employment agreement, in the event of a &ldquo;change in control&rdquo; of the Company (as defined in the employment
agreement) during Dr. Chen&rsquo;s employment term, Dr. Chen will be entitled to receive a one-time payment equal to 2.9 times
her base salary, and the vesting of all outstanding equity awards then held by Dr. Chen will accelerate such that they are fully
vested as of the date of the change in control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2010 Stock Option and Incentive Plan</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company&rsquo;s
2010 Stock Option and Incentive Plan, or the 2010 Plan, provides for the grant of equity-based awards to employees, officers, non-employee
directors and other key persons providing services to the Company. Awards of incentive options may be granted under the 2010 Plan
until September 2020. No other awards may be granted under the 2010 Plan after the date that is 10 years from the date of stockholder
approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Plan Administration</I>.&nbsp;&nbsp;The
2010 Plan may be administered by the full board or the Compensation Committee. It is the current intention of the Company that
the 2010 Plan be administered by the Compensation Committee. The Compensation Committee has full power to select, from among the
individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants,
and to determine the specific terms and conditions of each award, subject to the provisions of the 2010 Plan. The Compensation
Committee may delegate to our Chief Executive Officer the authority to grant stock options to employees who are not subject to
the reporting and other provisions of Section 16 of the Exchange Act and not subject to Section 162(m) of the Code, subject to
certain limitations and guidelines.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Eligibility</I>.&nbsp;&nbsp;Persons
eligible to participate in the 2010 Plan will be those full or part-time officers, employees, non-employee directors and other
key persons (including consultants and prospective officers) of the Company and its subsidiaries as selected from time to time
by the Compensation Committee in its discretion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Plan Limits</I>.&nbsp;&nbsp;Initially,
the total number of shares of Common Stock available for issuance under the 2010 Plan is 1,000,000 shares (or 2,263,320 shares
prior to the reverse stock-split on September 28, 2010). As of January 1, 2012 and each January 1 thereafter, the number of shares
of Common Stock reserved and available for issuance under the 2010 Plan will be cumulatively increased by 4% of the number of shares
of Common Stock issued and outstanding on the immediately preceding December 31. Subject to these overall limitations, the maximum
aggregate number of shares of Stock that may be issued in the form of incentive stock options or stock appreciation rights to any
one individual will not exceed 50% of the initial 2010 Plan limit of 1,000,000, cumulatively increased on January 1, 2012 and each
January 1 thereafter by the lesser of (i) the 4% annual increase applicable to the 2010 Plan for such year or (ii) 500,000 shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Stock Options</I>.&nbsp;&nbsp;The
2010 Plan permits the granting of (i) options to purchase Common Stock intended to qualify as incentive stock options under Section
422 of the Code and (ii) options that do not so qualify. Options granted under the 2010 Plan will be non-qualified options if they
fail to qualify as incentive options or exceed the annual limit on incentive stock options. Incentive stock options may only be
granted to employees of the Company and its subsidiaries. Non-qualified options may be granted to any persons eligible to receive
incentive options and to non-employee directors and key persons. The option exercise price of each option will be determined by
the Compensation Committee but may not be less than 100% of the fair market value of the Common Stock on the date of grant. Fair
market value for this purpose will be the last reported sale price of the shares of Common Stock on the NASDAQ Capital Market on
the date of grant. The exercise price of an option may not be reduced after the date of the option grant, other than to appropriately
reflect changes in our capital structure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The term of each option
will be fixed by the Compensation Committee and may not exceed 10 years from the date of grant. The Compensation Committee will
determine at what time or times each option may be exercised. Options may be made exercisable in installments and the exercisability
of options may be accelerated by the Compensation Committee. In general, unless otherwise permitted by the Compensation Committee,
no option granted under the 2010 Plan is transferable by the optionee other than by will or by the laws of descent and distribution,
and options may be exercised during the optionee&rsquo;s lifetime only by the optionee, or by the optionee&rsquo;s legal representative
or guardian in the case of the optionee&rsquo;s incapacity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon exercise of options,
the option exercise price must be paid in full either in cash, by certified or bank check or other instrument acceptable to the
Compensation Committee or by delivery (or attestation to the ownership) of shares of Common Stock that are beneficially owned by
the optionee for at least six months or were purchased in the open market. Subject to applicable law, the exercise price may also
be delivered to the Company by a broker pursuant to irrevocable instructions to the broker from the optionee. In addition, the
Compensation Committee may permit non-qualified options to be exercised using a net exercise feature which reduces the number of
shares issued to the optionee by the number of shares with a fair market value equal to the exercise price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To qualify as incentive
options, options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to incentive
options that first become exercisable by a participant in any one calendar year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Stock Appreciation
Rights</I>.&nbsp;&nbsp;The Compensation Committee may award stock appreciation rights subject to such conditions and restrictions
as the Compensation Committee may determine. Stock appreciation rights entitle the recipient to shares of Common Stock equal to
the value of the appreciation in the stock price over the exercise price. The exercise price is the fair market value of the Common
Stock on the date of grant. The term of a stock appreciation right will be fixed by the Compensation Committee and may not exceed
10 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Restricted Stock</I>.&nbsp;&nbsp;The
Compensation Committee may award shares of Common Stock to participants subject to such conditions and restrictions as the Compensation
Committee may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued
employment with us through a specified restricted period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Restricted Stock
shares</I>.&nbsp;&nbsp;The Compensation Committee may award restricted stock shares to any participants. Restricted stock shares
are generally payable in the form of shares of Common Stock, although restricted stock shares granted to the chief executive officer
may be settled in cash. These shares may be subject to such conditions and restrictions as the Compensation Committee may determine.
These conditions and restrictions may include the achievement of certain performance goals (as summarized above) and/or continued
employment with the Company through a specified vesting period. In the Compensation Committee&rsquo;s sole discretion, it may permit
a participant to make an advance election to receive a portion of his or her future cash compensation otherwise due in the form
of a restricted stock unit award, subject to the participant&rsquo;s compliance with the procedures established by the Compensation
Committee and requirements of Section 409A of the Code. During the deferral period, the deferred stock awards may be credited with
dividend equivalent rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Adjustments for Stock
Dividends, Stock Splits, Etc.</I> &nbsp;&nbsp;The 2010 Plan requires the Compensation Committee to make appropriate adjustments
to the number of shares of Common Stock that are subject to the 2010 Plan, to certain limits in the 2010 Plan, and to any outstanding
awards to reflect stock dividends, stock splits, extraordinary cash dividends and similar events.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Tax Withholding</I>.&nbsp;&nbsp;Participants
in the 2010 Plan are responsible for the payment of any federal, state or local taxes that the Company is required by law to withhold
upon the exercise of options or stock appreciation rights or vesting of other awards. Subject to approval by the Compensation Committee,
participants may elect to have the minimum tax withholding obligations satisfied by authorizing the Company to withhold shares
of Common Stock to be issued pursuant to the exercise or vesting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Amendments and Termination</I>.&nbsp;&nbsp;The
Board of Directors of the Company may at any time amend or discontinue the 2010 Plan and the Compensation Committee may at any
time amend or cancel any outstanding award for the purpose of satisfying changes in the law or for any other lawful purpose. However,
no such action may adversely affect any rights under any outstanding award without the holder&rsquo;s consent. To the extent required
under the NASDAQ Capital Market rules, any amendments that materially change the terms of the 2010 Plan will be subject to approval
by our stockholders. Without approval by our stockholders, the Compensation Committee may not reduce the exercise price of options
or stock appreciation rights or effect repricing through cancellation or re-grants, including any cancellation in exchange for
cash. Amendments shall also be subject to approval by our stockholders if and to the extent determined by the Compensation Committee
to be required by the Code to preserve the qualified status of incentive options or to ensure that compensation earned under the
2010 Plan qualifies as performance-based compensation under Section 162(m) of the Code.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Other Benefits</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company offers health,
dental, disability, and life insurance to its full-time employees. All employees pay a portion of health, dental, and disability
insurance premiums and pay all life insurance premiums.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;<B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #365F91"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dr. Quay is the President,
Chief Executive Officer and Chairman of the Board of Directors of the Company. Dr. Chen is the Chief Scientific Officer and a director
of the Company. Drs. Quay and Chen are husband and wife. Drs. Quay and Chen are significant minority stockholders. Ensisheim Partners,
LLC, which holds approximately 30% of the outstanding Common Stock of the Company prior to this offering, is wholly owned by Drs.
Quay and Chen, and they are the beneficial owners of the shares of the Company&rsquo;s stock owned by that entity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Ensisheim was the original
owner of the patents covering the MASCT System, which were acquired by the Company in June 2010. Ensisheim has no further interest
or right to the U.S. patents and foreign counterparts that cover the manufacture, use, and sale of the MASCT System, the pending
patent applications for improvements, or the FDA marketing authorization for the MASCT System that was transferred to the Company.
Ensisheim did not receive any monetary compensation in connection with the transfer and assignment to the Company of the patents,
patent applications and FDA marketing authorization but received shares of Common Stock of the Company in consideration for its
contribution of these assets. Ensisheim holds patents and patent applications for inventions created by the owners in fields unrelated
to the Company&rsquo;s business and provides a corporate structure for consulting activities of the owners in fields unrelated
to the Company&rsquo;s business. Drs. Quay and Chen currently devote substantially all of their professional efforts to the business
of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Loans from Officer</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 26, 2009, the
Company borrowed $5,000 from its Chairman of the Board and Chief Executive Officer as a short-term, unsecured loan via an oral
agreement and did not bear any interest. Commencing June 30, 2010, the loan was converted into a written Promissory Note bearing
an annual interest rate of 10%, with a maturity date of December 31, 2010. This note was repaid in full on May 16, 2011, including
approximately $439 in accrued interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 30, 2010, the
Company borrowed an additional $100,000 from its Chairman of the Board and Chief Executive Officer pursuant to a promissory note.
The loan under the note was funded to the Company on July 12, 2010. The note bore interest at a rate of 10% per annum and carried
a $4,000 loan origination fee, which accreted to the loan balance over the life of the loan. The $4,000 loan origination fee was
fully accreted to the loan balance as of March 31, 2011 and December 31, 2010, and recorded as interest expense for the year ended
December 31, 2010. This note (including the $4,000 origination fee) was repaid in full on May 19, 2011, including approximately
$8,959 in accrued interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 3, 2010,
the Company entered into a line of credit for borrowing up to $500,000 from its Chairman of the Board and Chief Executive Officer
pursuant to a promissory note. The note bore interest at a rate of 10% per annum. An aggregate of $140,000 was funded to the Company
under the line of credit through March 31, 2011, which was repaid on May 31, 2011, including approximately $6,093 in accrued interest.
As of December 31, 2011, the unpaid principal balance drawn from the line of credit was $10,000. The note is payable in full on
or before December 31, 2011 for the outstanding balance borrowed. As of December 31, 2011, the unpaid principal balance drawn from
the line of credit was $5,078, which was fully repaid on March 31, 2012, as well as $823 in interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Exclusive License Agreement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 27, 2009, the
Company entered into an exclusive license agreement with Ensisheim Partners LLC (&ldquo;Ensisheim&rdquo;), an entity solely owned
by the Chairman and Chief Executive Officer of the Company and the Chief Scientific Officer of the Company, who is also the Company&rsquo;s
Chairman and CEO&rsquo;s wife. Pursuant to that agreement, Ensisheim granted the Company an exclusive, worldwide, perpetual, irrevocable,
royalty-bearing, license to the MASCT System, with the right to grant and authorize sublicenses. The license agreement provided
that the Company would pay Ensisheim a royalty equal to 2% of net sales revenue, with a minimum royalty of $12,500 per fiscal quarter
during the term of the agreement, which would have increased to a minimum royalty of $25,000 per fiscal quarter beginning in the
quarter in which the first commercial sale of a licensed product would have taken place. As of December 31, 2009, a total of $12,500
was payable to Ensisheim under the minimum royalty provisions. From inception through December 31, 2010, the Company had incurred
$16,250 in patent-related expenses under the license agreement with Ensisheim. The $16,250 in patent-related expenses relates to
legal fees in connection with filing and prosecuting the related patent applications and has been paid in full by the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 17, 2010, the
Company and Ensisheim entered into an Assignment Agreement whereby Ensisheim assigned to the Company all rights to the patents
and patent applications underlying the MASCT System. Pursuant to the assignment, the Company will have all responsibility for prosecution,
maintenance, and enforcement and will indemnify Ensisheim from any and all claims against the patent estate. Ensisheim retained
no residual rights with respect to the patents and patent applications. In conjunction with the assignment, the Company terminated
the exclusive license agreement between the Company and Ensisheim dated July 27, 2009. As a result of the termination, the Company
has no further obligations with respect to royalty payments to Ensisheim due under the old licensing agreement. As a result, the
$12,500 of patent royalty payable to Ensisheim recorded as accrued royalty payable at December 31, 2009 has been reversed through
royalty expense during the second quarter of 2010. Ensisheim did not receive further cash or equity consideration under the Assignment
Agreement other than the shares of Common Stock it had already received in April 2009 as a result of its contribution of intellectual
property rights and FDA marketing authorization for the MASCT System. Neither the Chief Executive Officer nor the Chief Technology
Officer of the Company received consideration under the Assignment Agreement. However, since Ensisheim has at all times held a
substantial equity position in the Company, the potential increased profits of the Company as a result of the removal of this royalty
payment obligation may provide more potential economic value to Ensisheim than the royalty payment would have provided.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Commercial Lease Agreement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 24, 2009,
the Company entered into a commercial lease agreement with Ensisheim for office space located in Seattle, Washington. The lease
provided for annual rent of $13,200, plus applicable sales tax. From inception through December 31, 2009, the Company incurred
$248 of rent expense for the lease. As of December 31, 2009, the security deposit for the lease amounted to $1,100. For the period
of January 1, 2010 through June 30, 2010, the Company incurred $6,600 of rent expense for the lease. On July 15, 2010 the Company
and Ensisheim terminated the lease, effective July 1, 2010, and the Company commenced use of the facility rent free until April
1, 2011 when the commercial lease agreement the Company entered into with Sanders Properties, LLC became effective. The $1,100
security deposit paid to Ensisheim remained outstanding and was recorded as Due from Related Party as of June 30, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Executive Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 19, 2010, the
Company entered into employment agreements with three executives, including its Chief Executive Officer, its former President,
and its Chief Scientific Officer. The annual base salaries under each agreement were calculated based on combined consideration
of the success of capital raise and the operating results of the Company, and capped at $360,000, $350,000, and $250,000, respectively
for the three executives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 22, 2010, in
connection with the resignation and departure of Robert L. Kelly, the President and a director, the Company entered into a consulting
agreement with a limited liability company controlled by Mr. Kelly. Under the agreement, the Company was to receive consulting
services relating to capital raising and investor relations. The agreement was terminated by the Company in September 2010, through
which time a total of $30,000 consulting expense had been paid.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On July 22, 2010, the Company amended and
restated the employment agreements with its Chief Executive Officer and Chief Scientific Officer. The agreements modified the annual
base salary amounts to $250,000 and $200,000, respectively, effective retroactively to May 19, 2010. These salaries were accrued
and amounted to $391,071 and $278,571 as of March 31, 2011 and December 31, 2010, respectively, and paid in full in April 2011.
For the twelve-month periods ended December 31, 2011 and 2010, salaries and bonuses of the Chief Executive Officer and Chief Scientific
Officer amounted to $693,048 and $377,620, of which $492,095 and $0 was recorded to research and development expense, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Share-Based Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The amended and restated employment agreement
with the Chief Executive Officer granted options to purchase 250,000 shares (or 565,830 shares prior to the reverse stock split
on September 28, 2010) at a price of $5.00 per share (or $2.64 per share prior to the reverse stock split on September 28, 2010),
in consideration of his service to the Company. Of these options, 25% (or 62,500 shares) vested on December 31, 2010 with the remaining
75% (or 187,500 shares) to vest in equal quarterly installments over the next three years so long as the executive remains employed
with the Company. These options have five-year contractual terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The amended employment agreement with the
Chief Scientific Officer granted options to purchase 100,000 shares (or 226,332 shares prior to the reverse stock split on September
28, 2010) at a price of $5.00 per share (or $2.64 per share prior to the reverse stock split on September 28, 2010) in consideration
of her service to the Company. Of these options, 25% (or 25,000 shares) vested on December 31, 2010 with the remaining 75% (or
75,000 shares) to vest in equal quarterly installments over the next three years so long as the executive remains employed with
the Company. These options have five-year contractual terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The 2012 bonuses payable to Drs. Quay and
Chen for 2012, in the amount of $72,590 and $43,554, respectively, were paid on March 11, 2013 in the form of fully-vested options
with Dr. Quay receiving an option to purchase 44,194 shares of Common Stock at $6.57 per share, the fair market value on the date
of grant, and Dr. Chen receiving an option to purchase 26,516 shares at $6.57 per share, the fair market value on the date of grant.
See &ldquo;Employment Agreements&rdquo; above for a further description of the compensation arrangements with these officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On April 4, 2011, 45,000 non-qualified stock
options were granted under the 2010 Stock Option and Incentive Plan to Dr. Tim Hunkapiller for being a member of the Company&rsquo;s
Scientific Advisory Board and consulting services to be provided to the Company, at an exercise price of $1.25 per share. These
options have a ten-year contractual term and shall vest as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(i)</TD><TD STYLE="text-align: justify">11,250 option shares vest ninety (90) days after the
date of grant;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(ii)</TD><TD STYLE="text-align: justify">11,000 option shares vest one hundred and eighty (180)
days after the date of grant;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(iii)</TD><TD STYLE="text-align: justify">11,500 option shares vest two hundred and seventy
(270) days after the date of grant; and</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(iv)</TD><TD STYLE="text-align: justify">11,250 option shares vest three hundred and sixty
(360) days after the date of grant.</TD>
</TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On September 1, 2011,
219,000 incentive stock options were granted under the 2010 Stock Option and Incentive Plan to employees and officers as part of
their employment agreements, at an exercise price of $1.25 per share. These options have a ten-year contractual term and shall
vest and become exercisable as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(i)</TD><TD STYLE="text-align: justify">twenty-five percent (25%) of the underlying shares
on the first anniversary of the date of grant; and</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(ii)</TD><TD STYLE="text-align: justify">one-forty eighth (1/48) of the underlying shares monthly
thereafter.</TD>
</TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On September 1, 2011,
200,000 non-qualified stock options were granted under the 2010 Stock Option and Incentive Plan to non-employee directors for
services to be provided to the Company, at an exercise price of $1.25 per share. These options have a ten-year contractual term
and shall vest and become exercisable as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(i)</TD><TD STYLE="text-align: justify">80,000 option shares vest on September 1, 2011;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(ii)</TD><TD STYLE="text-align: justify">30,000 option shares vest on December 1, 2011;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(iii)</TD><TD STYLE="text-align: justify">30,000 option shares vest on March 1, 2012;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(iv)</TD><TD STYLE="text-align: justify">30,000 option shares vest on June 1, 2012; and</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">(v)</TD><TD STYLE="text-align: justify">30,000 option shares vest on September 1, 2012.</TD>
</TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On April 30, 2012, 19,757
non-qualified stock options were granted under the 2010 Stock Option and Incentive Plan to non-employee directors for serving as
directors of the Company, at an exercise price of $6.00 per share. These options have a ten-year term and shall vest and become
exercisable in full immediately as of the grant date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.7pt"><B>Indemnification Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has entered
into indemnification agreements with each of its directors and certain of its executive officers. These agreements require the
Company to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by
reason of their service to the Company, and to advance expenses incurred as a result of any proceeding against them as to which
they could be indemnified.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Related Party Transaction Policies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Related party transactions
that the Company is required to disclose publicly under the federal securities laws will require prior approval of the Company&rsquo;s
independent directors without the participation of any director who may have a direct or indirect interest in the transaction
in question. Related parties include directors, nominees for director, principal stockholders, executive officers and members
of their immediate families. For these purposes, a &ldquo;transaction&rdquo; will include all financial transactions, arrangements
or relationships, ranging from extending credit to the provision of goods and services for value and will include any transaction
with a company in which a director, executive officer immediate family member of a director or executive officer, or principal
stockholder (that is, any person who beneficially owns five percent or more of any class of the Company&rsquo;s voting securities)
has an interest by virtue of a 10% or greater equity interest. The Company&rsquo;s policies and procedures regarding related party
transactions are not expected to be a part of a formal written policy, but rather, will represent a course of practice determined
to be appropriate by the Board of Directors of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PRINCIPAL STOCKHOLDERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
as of March 31, 2013 regarding the beneficial ownership of our Common Stock by each of our executive officers and directors, individually
and as a group and by each person who beneficially owns in excess of five percent of the Common Stock after giving effect to any
exercise of warrants or options held by that person within 60 days after March 31, 2013. Unless indicated otherwise, the address
for the beneficial holders is c/o Atossa Genetics Inc., 4105 East Madison Street, Suite 320, Seattle, Washington.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">Name&nbsp;of&nbsp;Beneficial&nbsp;Owner</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Shares <BR>Beneficially <BR>Owned</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Percentage
    of<BR>
&nbsp;Common <BR>Stock <BR>Beneficially&nbsp;Owned (1)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 68%; font: 10pt Times New Roman, Times, Serif; text-align: left">Steven C. Quay, M.D., Ph.D. (2)</TD><TD STYLE="width: 2%; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; font: 10pt Times New Roman, Times, Serif; text-align: right">5,107,442</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; font: 10pt Times New Roman, Times, Serif; text-align: right">34.6</TD><TD STYLE="width: 1%; font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Shu-Chih Chen, Ph.D. (3)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">4,383,346</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">30.0</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">John Barnhart (4)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">185,342</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">1.3</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Kyle Guse</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&mdash;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">&mdash;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Stephen Galli, M.D. (5)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">63,601</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">*</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">Alexander D. Cross, Ph.D. (6)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">134,293</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">*</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">H. Lawrence Remmel, Esq. (7)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">2,000</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">*</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">All Current Officers and Directors as a Group (7 persons)</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">5,600,444</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</TD>
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: right">37.1</TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left">%</TD></TR>
</TABLE>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">*</TD><TD STYLE="text-align: justify">Less than 1%</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(1)</TD><TD STYLE="text-align: justify">Based on 14,508,019 shares of Common Stock issued and
outstanding as of&nbsp;March 31, 2013.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(2)</TD><TD STYLE="text-align: justify">Consists of (i) 584,543 shares of Common Stock directly
owned by Dr. Quay, (ii) 4,275,580 shares of Common Stock owned by Ensisheim and (iii) 247,319 shares of Common Stock issuable
upon the exercise of stock options held by Dr. Quay and exercisable within 60 days after March 31, 2013.&nbsp; Drs. Quay and Chen
share voting and investment power over the securities held by Ensisheim.&nbsp; Ensisheim is solely owned and controlled by Drs.
Quay and Chen, and, as a result, Drs. Quay and Chen are deemed to be beneficial owners of the shares held by this entity.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(3)</TD><TD STYLE="text-align: justify">Consists of (i) 4,275,580 shares of Common Stock owned
by Ensisheim and (ii) 107,766 shares of Common Stock issuable upon the exercise of stock options held by Dr. Chen and exercisable
within 60 days after March 31, 2013.&nbsp; Drs. Quay and Chen share voting and investment power over the securities held by Ensisheim.&nbsp;
Ensisheim is solely owned and controlled by Drs. Quay and Chen, and, as a result, Drs. Quay and Chen are deemed to be beneficial
owners of the shares held by this entity.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(4)</TD><TD STYLE="text-align: justify">Consists of (i) 39,765 shares of Common Stock held by
Mr. Barnhart (ii) 17,674 shares of Common Stock held by certain family members and for which Mr. Barnhart is the beneficial owner
and (iii) 127,903 shares of Common Stock issuable upon the exercise of stock options held by Mr. Barnhart and exercisable within
60 days of March 31, 2013.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(5)</TD><TD STYLE="text-align: justify">Consists of 17,674 shares of Common Stock held by Dr.
Galli and 45,927 shares of Common Stock issuable upon the exercise of stock options held by Dr. Galli and exercisable within 60
days of March 31, 2013.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(6)</TD><TD STYLE="text-align: justify">Consists of 88,366 shares of Common Stock held by the
Alexander D. Cross Family Trust (Mr. Alexander D. Cross has sole voting and investment power over the securities held by the trust
and as such, is deemed to be the beneficial owner of the shares held by this entity) and 45,927 shares of Common Stock issuable
upon the exercise of stock options held by Dr. Cross and exercisable within 60 days of March 31, 2013.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left">(7)</TD><TD STYLE="text-align: justify">Consists of 2,000 shares of Common Stock held by Mr.
Remmel.</TD>
</TR></TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF SECURITIES TO BE REGISTERED</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our authorized capital
stock consists of 75,000,000 shares of Common Stock, $0.001 par value per share, and 10,000,000 shares of preferred stock, $0.001
par value per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of
this prospectus, there were approximately 226 record holders of the Company&rsquo;s Common Stock. The number of shares of our
Common Stock outstanding as of the date of this prospectus is 14,508,019 which excludes 1,049,847 shares issuable upon the exercise
of options outstanding as of March 31, 2013 under our 2010 Stock Option and Incentive Plan, or 2010 Plan, as well as 900,427shares
of Common Stock reserved for future issuance under our 2010 Plan, and 605,000 shares issuable upon exercise of options granted
outside of our 2010 plan as inducement grants. The 2010 Plan contains an evergreen feature by which the initial 2010 Plan limit
of 1,000,000 will increase on each January 1 by the lesser of (i) the 4% annual increase applicable to the 2010 Plan for such
year or (ii) 500,000 shares. The 14,508,019 shares of Common Stock outstanding as of the date of this prospectus also excludes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">5,286,800 shares of Common Stock underlying outstanding warrants,
5,231,800 with an exercise price of $1.60 per share and 55,000 with an exercise price of $1.25 per share;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">325,000 shares of Common Stock issuable upon the exercise of warrants
with an exercise price of $5.00 per share issued in connection with our acquisition of substantially all the assets of Acueity
Healthcare, Inc.;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">60,000 shares of Common Stock issuable upon exercise of a warrant
exercisable at $4.24 per share; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">2,500 shares of Common Stock issuable upon exercise of a warrant at
an exercise price of $12.43 per share.</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of Common
Stock are entitled to receive ratably dividends out of funds legally available, if and when declared from time to time by our Board
of Directors. We have never paid any cash dividends on our Common Stock and our Board of Directors does not anticipate that we
will pay cash dividends in the foreseeable future. The future payment of dividends, if any, on our Common Stock is within the discretion
of the Board of Directors and will depend upon earnings, capital requirements, financial condition and other relevant factors.
Holders of Common Stock are entitled to one vote for each share held on each matter to be voted on by stockholders. There is no
cumulative voting in the election of directors. In the event of liquidation, dissolution or winding up of the affairs of us, holders
of Common Stock are to share in all assets remaining after the payment of liabilities and any preferential distributions payable
to preferred stockholders, if any. The holders of Common Stock have no preemptive or conversion rights and are not subject to further
calls or assessments. There are no redemption or sinking fund provisions applicable to the Common Stock. The rights of the holders
of the Common Stock are subject to any rights that may be fixed for holders of preferred stock, if any. All of the outstanding
shares of Common Stock are fully paid and non-assessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Certificate of Incorporation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under our Certificate
of Incorporation, as amended, our Board of Directors, without further action by our stockholders, currently has the authority to
issue up to 10,000,000 shares of preferred stock and to fix the rights (including voting rights), preferences and privileges of
these &ldquo;blank check&rdquo; preferred shares. Such preferred stock may have rights, including economic rights, senior to our
Common Stock. As a result, the issuance of the preferred stock could have a material adverse effect on the price of our Common
Stock and could make it more difficult for a third party to acquire a majority of our outstanding Common Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Anti-Takeover Devices</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our certificate of incorporation
and bylaws include a number of provisions that may have the effect of delaying, deferring or preventing another party from acquiring
control of us and encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate
with our Board of Directors rather than pursue non-negotiated takeover attempts. These provisions include the items described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>Board Composition
and Filling Vacancies.</I> &nbsp;&nbsp;In accordance with our certificate of incorporation, our Board of Directors is divided into
three classes serving staggered three-year terms, with one class being elected each year. Our certificate of incorporation also
provides that directors may only be removed from office for cause and only by the affirmative vote of holders of 75% or more of
the outstanding shares of capital stock then entitled to vote at an election of directors. Furthermore, any vacancy on our Board
of Directors, however occurring, including any vacancy resulting from an increase in the size of the board, may only be filled
by the affirmative vote of a majority of our directors then in office even if less than a quorum. The classification of directors,
together with the limitations on removal of directors and treatment of vacancies, has the effect of making it more difficult for
stockholders to change the composition of our Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Undesignated Preferred Stock.</I> &nbsp;&nbsp;Our
certificate of incorporation authorizes &ldquo;blank-check&rdquo; preferred stock, which means that our Board of Directors has
the authority to designate one or more series of preferred stock without stockholder approval. These series of preferred stock
may have superior rights, preferences and privileges over our Common Stock, including dividend rights, voting rights and liquidation
preferences. The ability of our Board of Directors to issue shares of our preferred stock without stockholder approval could deter
takeover offers and make it more difficult or costly for a third party to acquire us without the consent of our Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Section 203 of the Delaware General Corporation
Law.</I> &nbsp;&nbsp;In addition, our certificate of incorporation does not opt out of Section 203 of the Delaware General Corporation
Law, which protects a corporation against an unapproved takeover by prohibiting a company from engaging in any business combination
with any interested stockholder (defined as a stockholder owning more than 15% of the outstanding shares) for a period of three
years from the time such stockholder became a 15% holder unless approved by our Board of Directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Transfer Agent and Registrar</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have appointed VStock Transfer, LLC,
77 Spruce Street, Suite 201, Cedarhurst, New York 11516 (Telephone: (212) 828-8436; Facsimile (646) 536-3179) as our transfer agent
and registrar.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Listing</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Common Stock is
listed on the NASDAQ Capital Market under the symbol &ldquo;ATOS&rdquo;. Our Common Stock began trading on the NASDAQ Capital Market
on November 8, 2012 and, since that time through March 31, 2013, the high sales price has been $12.40 per share and the low price
has been $3.44 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION<FONT STYLE="font-family: Times New Roman, Times, Serif"> </FONT>FOR SECURITIES ACT LIABILITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers, and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain legal matters
relating to the validity of the Common Stock offered by this prospectus will be passed upon for us by Ropes &amp; Gray LLP, San
Francisco, California.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXPERTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">KCCW Accountancy Corp.,
an independent PCAOB registered public accounting firm, has audited the Company&rsquo;s consolidated balance sheets as of December
31, 2012 and 2011 and the related consolidated statements of operations, stockholders&rsquo; equity, and cash flows for the years
then ended and since inception (April 30, 2009), which are incorporated by reference in this prospectus. The consolidated financial
statements are included in reliance on the report of KCCW Accountancy Corp., given their authority as experts in accounting and
auditing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>WHERE YOU CAN FIND ADDITIONAL INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are required to
file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document
filed by us at the SEC&rsquo;s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for further information on the public reference room. Our filings with the SEC are also available to the public at the SEC&rsquo;s
Internet web site at <I>http://www.sec.gov</I>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have filed a registration
statement, of which this prospectus is a part, covering the securities offered hereby. As allowed by SEC rules, this prospectus
does not include all of the information contained in the registration statement and the included exhibits, financial statements
and schedules. You are referred to the registration statement, the included exhibits, financial statements and schedules for further
information. This prospectus is qualified in its entirety by such other information.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The SEC allows us to &ldquo;incorporate
by reference&rdquo; information from other documents that we file with it, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference that we filed with the SEC prior to the date of
this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We incorporate by reference into this
prospectus and the registration statement of which this prospectus is a part the information or documents listed below that we
have filed with the SEC (Commission File No. 001-35610)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our annual report on Form 10-K for the year ended December 31, 2012,
filed with the SEC on March 28, 2013; and</FONT></TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our current reports on Form 8-K filed with the SEC on January 4, 2013,
February 25, 2013, February 28, 2013 and March 13, 2013 (other than the portions of those reports not deemed to be filed).</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We will furnish without charge to you,
on written or oral request, a copy of any or all of the documents incorporated by reference, including exhibits to these documents.
You should direct any requests for documents to Kyle Guse, Chief Financial Officer, Atossa Genetics Inc., 1616 Eastlake Ave. E.,
Suite 510, Seattle, Washington, 98102. Copies of the above reports may also be accessed from our web site at <I>http://www.atossagenetics.com</I>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Any statement contained in a document incorporated
or deemed to be incorporated by reference in this prospectus will be deemed modified, superseded or replaced for purposes of this
prospectus to the extent that a statement contained in this prospectus modifies, supersedes or replaces such statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Up to 2,833,519 shares of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ATOSSA GENETICS INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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