-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 OF3MBS7kPiVfklUQY2fk3P3NEUoHZ9dQeBwrU7arau5tgTXnAZ34vGpS2+4cj9kH
 UP1A9/lFccx6/zjdQWlJTw==

<SEC-DOCUMENT>0000950123-09-009437.txt : 20090526
<SEC-HEADER>0000950123-09-009437.hdr.sgml : 20090525
<ACCEPTANCE-DATETIME>20090526110617
ACCESSION NUMBER:		0000950123-09-009437
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090526
DATE AS OF CHANGE:		20090526

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ELECTRO OPTICAL SCIENCES INC /NY
		CENTRAL INDEX KEY:			0001051514
		STANDARD INDUSTRIAL CLASSIFICATION:	SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
		IRS NUMBER:				133986004

	FILING VALUES:
		FORM TYPE:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-159274
		FILM NUMBER:		09850821

	BUSINESS ADDRESS:	
		STREET 1:		3 WEST MAIN STREET, SUITE 201
		CITY:			IRVINGTON
		STATE:			NY
		ZIP:			10533
		BUSINESS PHONE:		914-591-3783

	MAIL ADDRESS:	
		STREET 1:		3 WEST MAIN STREET, SUITE 201
		CITY:			IRVINGTON
		STATE:			NY
		ZIP:			10533
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>y77300b3e424b3.htm
<DESCRIPTION>424B3
<TEXT>
<HTML>
<HEAD>
<TITLE>424B3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 94%; margin-left: 3%"><!-- BEGIN PAGE WIDTH -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Filed pursuant to Rule 424(b)(3)</B>
</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Registration No. 333-159274</B>
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>PROSPECTUS</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 24pt">ELECTRO-OPTICAL SCIENCES,
    INC.</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">3,527,000&#160;Shares</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=84 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus relates to the resale of up to
    3,527,000&#160;shares of our common stock by the selling
    stockholder named herein. On May&#160;7, 2009, we entered into a
    common stock purchase agreement with Kingsbridge Capital
    Limited, or Kingsbridge, pursuant to which we may, in our sole
    discretion with no obligation to do so, sell to Kingsbridge up
    to 3,327,000&#160;shares of our common stock. On the same date,
    we issued Kingsbridge a warrant to purchase up to
    200,000&#160;shares of our common stock. To the extent that we
    elect to sell any shares of our common stock to Kingsbridge
    pursuant to the common stock purchase agreement or Kingsbridge
    elects to exercise the warrant to acquire shares, this
    prospectus may be used by the selling stockholder named under
    the section titled &#147;Selling Stockholder&#148; to resell
    such shares. We are not selling any securities under this
    prospectus and will not receive any of the proceeds from the
    sale of shares by the selling stockholder, however, we will
    receive the proceeds of the shares sold under the common stock
    purchase agreement or under the warrant on its exercise.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selling stockholder may sell the shares of common stock
    described in this prospectus in a number of different ways and
    at varying prices. We provide more information about how the
    selling stockholder may resell its shares of our common stock in
    the section titled &#147;Plan of Distribution&#148; beginning on
    page&#160;27. Kingsbridge is an &#147;underwriter&#148; within
    the meaning of the Securities Act of 1933 with respect to any
    shares resold under this prospectus by the selling stockholder.
    Although we will pay the expenses incurred in registering the
    shares, we will not be paying any underwriting discounts or
    commissions in this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our common stock is listed on the NASDAQ Capital Market under
    the symbol &#147;MELA.&#148; On May&#160;21, 2009, the last
    reported sale price of our common stock, as reported in the
    NASDAQ Capital Market, was $8.21&#160;per share.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=84 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 5%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Investing in our securities involves a high degree of risk.
    We refer you to &#147;Risk Factors,&#148; beginning on
    page&#160;6, as well as the risks discussed under the caption
    &#147;Risk Factors&#148; in the documents we subsequently file
    with the Securities and Exchange Commission.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=84 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <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>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=84 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The date of this prospectus is May&#160;22, 2009
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'>Prospectus Summary</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#102'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#103'>Special Note Regarding Forward-Looking
    Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#104'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'>Selling Stockholder</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#106'>Plan of Distribution</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    27
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#107'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#108'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#109'>Where You Can Find More Information</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#110'>Incorporation of Certain Documents By
    Reference</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>In this prospectus, references to &#147;EOS,&#148; the
    &#147;Company,&#148; &#147;we,&#148; &#147;our&#148; or
    &#147;us,&#148; unless the context otherwise requires, refer to
    Electro-Optical Sciences, Inc.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>This prospectus contains references to our
    U.S.&#160;registered trademarks:
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and the corporate logo for &#147;eos&#160;&#151; electro-optical
    sciences,
    inc.<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>&#148;

    All other trademarks, tradenames and service marks appearing in
    this prospectus are the property of their respective owners.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should rely only on the information contained in this
    prospectus. We have not authorized any other person to provide
    you with different information. This prospectus may only be used
    where it is legal to sell these securities. The information in
    this prospectus is accurate as of the date on the front cover.
    You should not assume that the information contained in this
    prospectus is accurate as of any other date.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus does not constitute an offer to sell, or a
    solicitation of an offer to purchase, the securities offered by
    this prospectus or the solicitation of a proxy, in any
    jurisdiction to or from any person to whom or from whom it is
    unlawful to make an offer, solicitation of an offer or proxy
    solicitation in that jurisdiction.
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<A name='101'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS
    SUMMARY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following summary highlights information contained in
    this prospectus or incorporated by reference. While we have
    included what we believe to be the most important information
    about EOS and this offering, the following summary may not
    contain all the information that may be important to you. You
    should read this entire prospectus carefully, including the
    risks of investing discussed under &#147;Risk Factors&#148;
    beginning on page&#160;6, and the information to which we refer
    you and the information incorporated into this prospectus by
    reference, for a complete understanding of our business and this
    offering.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    Company</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are a medical device company focused on the design,
    development and commercialization of a non-invasive,
    <FONT style="white-space: nowrap">point-of-care</FONT>
    instrument to assist in the early diagnosis of melanoma. Our
    flagship product
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    features a hand-held imaging device that emits light of multiple
    wavelengths to capture images of suspicious pigmented skin
    lesions and extract data. The data are then analyzed utilizing
    image processing classification algorithms, &#145;trained&#146;
    on our proprietary database of melanomas and benign lesions, to
    provide information to assist in the management of the patient,
    including information useful in the decision of whether to
    biopsy the lesion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The components of the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    system include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a hand-held imaging device, which employs high precision optics
    and multi-spectral illumination (multiple colors of light
    including near infra-red);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our proprietary database of pigmented skin lesions, which we
    believe to be the largest in the U.S.;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our lesion classifiers, which are sophisticated mathematical
    algorithms that extract lesion feature information and classify
    lesions
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have entered into a binding Protocol Agreement with the
    U.S.&#160;Food and Drug Administration (&#147;FDA&#148;), which
    is an agreement for the conduct of the pivotal trial in order to
    establish the safety and effectiveness of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    We believe the presence of the Protocol Agreement significantly
    enhances our ability to expedite the FDA approval process. On
    October&#160;12, 2006, we announced that the FDA had informed us
    that when submitted the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    premarket approval, or PMA, application, would receive an
    expedited review. Expedited review means that upon filing our
    PMA, the FDA will conduct a team review, prioritize the
    application, and allocate sufficient resources toward a
    180&#160;day review period. While the expedited review could
    shorten the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    FDA approval process, we can give no assurances that this will
    be the case. The data accrual phase of the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    pivotal trial was completed in the third quarter of 2008 and the
    image processing classification algorithms were finalized in the
    fourth quarter. At year end 2008, the databases were undergoing
    third-party statistical validation and the classification
    algorithms were undergoing software verification and validation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On February&#160;13, 2009, the Company announced that a third
    party, independent bio-statistician had provided positive top
    line results from the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    pivotal clinical trial. This blinded study was conducted at
    seven clinical sites and included 1,831 pigmented skin lesions
    from 1,383&#160;patients. We are working to complete our PMA
    application, which includes the final study reports, and expect
    to file it with the FDA during the second quarter of 2009. Upon
    obtaining approval from the FDA, we plan to launch
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    commercially in the United States. To date, we have not
    generated any revenues from
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Corporate
    Information</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We originally incorporated in the State of New York in 1989 and
    subsequently reincorporated under the laws of the State of
    Delaware in 1997. Our executive offices are located at
    3&#160;West Main Street, Suite&#160;201, Irvington, New York
    10533. Our telephone number is
    <FONT style="white-space: nowrap">(914)&#160;591-3783.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our website is <U>www.eosciences.com</U>. We make available on
    our website free of charge a link to our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K,</FONT>
    Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q,</FONT>
    Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    and amendments to those reports as soon as practicable after we
    electronically file such material with the
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Securities and Exchange Commission, or SEC. The information
    contained on our website or connected to our website is not
    incorporated by reference into and should not be considered part
    of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Committed
    Equity Financing Facility with Kingsbridge</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On May&#160;7, 2009, we entered into a committed equity
    financing facility, or CEFF, with Kingsbridge, pursuant to which
    Kingsbridge committed to purchase, subject to certain
    conditions, up to the lesser of $45&#160;million or
    3,327,000&#160;shares of our common stock. In connection with
    the CEFF, we entered into a common stock purchase agreement and
    registration rights agreement with Kingsbridge, both dated
    May&#160;7, 2009, and on that date we also issued a warrant to
    Kingsbridge to purchase up to 200,000&#160;shares of our common
    stock at an exercise price of $11.35 per share, representing a
    50% premium to the average closing price of our common stock for
    the five days preceding the signing of the CEFF agreement. This
    warrant is exercisable beginning on November&#160;7, 2009 and
    for a period of five years thereafter.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The shares of common stock that may be issued to Kingsbridge
    under the common stock purchase agreement and the warrant will
    be issued pursuant to an exemption from registration under the
    Securities Act of 1933, as amended, or the Securities Act.
    Pursuant to the registration rights agreement, we have filed a
    registration statement of which this prospectus is a part,
    covering the possible resale by Kingsbridge of any shares that
    we may issue to Kingsbridge under the common stock purchase
    agreement or upon exercise of the warrant.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The common stock purchase agreement entitles us to sell and
    obligates Kingsbridge to purchase, from time to time over a
    period of three years from the first trading day following the
    effectiveness of the registration statement of which this
    prospectus is a part, shares of our common stock for cash
    consideration up to an aggregate of the lesser of
    $45&#160;million or 3,327,000&#160;shares of our common stock,
    subject to certain conditions and restrictions. We are not
    obligated to sell any shares of our common stock to Kingsbridge
    under the common stock purchase agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For a period of 36&#160;months from the first trading day
    following the effectiveness of the registration statement of
    which this prospectus is a part, we may, from time to time, at
    our sole discretion, and subject to certain conditions that we
    must satisfy, &#147;draw down&#148; funds under the CEFF by
    selling shares of our common stock to Kingsbridge. The purchase
    price of these shares will be at a discount ranging from six to
    ten percent of the volume weighted average of the price of our
    common stock for each of the eight consecutive trading days
    following our election to sell shares or &#147;draw down&#148;
    under the CEFF. The discount on each of these consecutive eight
    trading days will be determined as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="80%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Percent<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(Applicable<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>VWAP*</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>VWAP</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Discount)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greater than $10.00 per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    94
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Less than or equal to $10.00 per share but greater than or equal
    to $6.75 per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    92
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (8
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Less than $6.75 per share but greater than or equal to $2.00 per
    share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    90
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (10
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    As set forth in the common stock purchase agreement,
    &#147;VWAP&#148; means the volume weighted average price (the
    aggregate sales price of all trades of our common stock during
    each trading day divided by the total number of shares of common
    stock traded during that trading day) of our common stock during
    any trading day as reported by Bloomberg L.P. using the AQR
    function. The VWAP and corresponding discount will be determined
    for each of the eight trading days during a draw down pricing
    period.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During the eight trading day pricing period for a draw down, if
    the VWAP for any trading day is less than the greater of
    (i)&#160;$2.00; (ii)&#160;90% of the closing price of our common
    stock for the trading day immediately preceding the beginning of
    the draw down pricing period; or (iii)&#160;the price specified
    in the applicable draw down notice, the VWAP for that trading
    day will not be used in calculating the number of shares to be
    issued in connection with that draw down, and the draw down
    amount for that pricing period will be reduced by one-eighth
    (1/8) of the draw down amount we had initially specified. In
    addition, if trading in
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    our common stock is suspended for any reason for more than three
    consecutive or non-consecutive hours during trading hours on any
    trading day during a draw down pricing period, that trading day
    will not be used in calculating the number of shares to be
    issued in connection with that draw down, and the draw down
    amount for that pricing period will be reduced by one-eighth
    (1/8) of the draw down amount we had initially specified.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The maximum number of shares of common stock that we can issue
    pursuant to the CEFF is 3,327,000&#160;shares. An additional
    200,000&#160;shares of common stock are issuable if Kingsbridge
    exercises the warrant that we issued to it in connection with
    the CEFF. We intend to exercise our right to draw down amounts
    under the CEFF, if and to the extent available, at such times as
    we have a need for additional capital and when we believe that
    sales of stock under the CEFF provide an appropriate means of
    raising capital.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our ability to require Kingsbridge to purchase our common stock
    is subject to various limitations. We have two options under
    which to make individual draw downs, the fixed purchase amount
    option and the purchase amount option. The maximum amount of an
    individual draw down under the fixed purchase amount option is
    the lesser of $10&#160;million or 2.5% of our market
    capitalization as of the date of delivery of the applicable draw
    down notice. The maximum amount of an individual draw down under
    the purchase amount option is the lesser of $10&#160;million or
    3.5% of our market capitalization as of the date of delivery of
    the applicable draw down notice or the product of the average
    trading volume of our common stock (as calculated in accordance
    with the formula set forth in the common stock purchase
    agreement) multiplied by the closing price of our common stock
    on the trading day preceding the delivery of the applicable draw
    down notice multiplied by 8 (the number of trading days during a
    draw down pricing period) multiplied by 0.25. Unless we and
    Kingsbridge agree otherwise, a minimum of three trading days
    must elapse between the expiration of any draw down pricing
    period and the beginning of the next succeeding draw down
    pricing period. We are not obligated to sell shares of our
    common stock to Kingsbridge when the volume weighted average of
    the price of our common stock is below $2.00 per share.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Furthermore, we have the right, up until October&#160;1, 2009,
    to effect one draw down with a maximum amount equal to the
    lesser of $4&#160;million or 3.5% of our market capitalization
    as of the date of delivery of the draw down notice and a draw
    down discount price equal to 90% of the VWAP on each trading day
    during the associated draw down pricing period, which will be
    used in calculating the number of shares to be issued in
    connection with such draw down, subject to certain limitations
    set forth in the common stock purchase agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During the term of the CEFF, without Kingsbridge&#146;s prior
    written consent, we may not issue securities that are, or may
    become, convertible or exchangeable into shares of our common
    stock where the purchase, conversion or exchange price for our
    common stock is determined using any floating discount or other
    post-issuance adjustable discount to the market price of our
    common stock, including pursuant to an equity line or other
    financing that is substantially similar to the arrangement
    provided for in the CEFF, with certain exceptions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The issuance of our common stock under the CEFF or upon exercise
    of the Kingsbridge warrant will have no effect on the rights or
    privileges of existing holders of common stock except that the
    economic and voting interests of each stockholder will be
    diluted as a result of any issuance. Although the number of
    shares of common stock that stockholders presently own will not
    decrease, these shares will represent a smaller percentage of
    our total shares that will be outstanding after any issuances of
    shares of common stock to Kingsbridge. If we draw down amounts
    under the CEFF when our share price is decreasing, we will need
    to issue more shares to raise the same amount than if we were to
    issue shares when our stock price is higher. Such issuances will
    have a dilutive effect and may further decrease our stock price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Kingsbridge agreed in the common stock purchase agreement that
    during the term of the CEFF, neither Kingsbridge nor any of its
    affiliates, nor any entity managed or controlled by it, will
    enter into, execute, or cause or assist any other person to
    enter into or execute, any short sale of any of our securities,
    including our common stock, or engage, through related parties
    or otherwise, in derivative transactions directly related to
    shares of our common stock, except during the term of a draw
    down pricing period with respect to the shares that Kingsbridge
    purchased pursuant to the CEFF during that draw down pricing
    period. Subject to the
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    foregoing restrictions, Kingsbridge has the right during any
    draw down pricing period to sell shares of our common stock
    equal in number to the aggregate number of shares of common
    stock purchased pursuant to the applicable draw down.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Before Kingsbridge is obligated to buy any shares of our common
    stock pursuant to a draw down, certain conditions must be met as
    of the date we notify Kingsbridge of our election to sell shares
    pursuant to the CEFF, each trading day during the draw down
    pricing period and the date upon which each settlement of the
    purchase and sale of our common stock occurs with respect to
    such draw down, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Each of our representations and warranties in the common stock
    purchase agreement must be true and correct in all material
    respects as of the date when made as though made at that time,
    except for representations and warranties that are expressly
    made as of a particular date.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We must have performed, satisfied and complied in all material
    respects with all covenants, agreements and conditions required
    by the common stock purchase agreement, the registration rights
    agreement and the warrant to be performed, satisfied or complied
    with by us.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The registration statement, of which this prospectus is a part,
    must have previously become effective and must remain effective
    and neither us nor Kingsbridge shall have received notice that
    the SEC has issued or intends to issue a stop order with respect
    to the registration statement or that the SEC, either
    temporarily or permanently, intends or has threatened to do so
    and no other suspension of the use or withdrawal of the
    effectiveness of the registration statement or this prospectus
    shall exist.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Trading in our common stock must not have been suspended by the
    SEC, the NASDAQ Capital Market or the Financial Industry
    Regulatory Authority and trading in securities generally on the
    NASDAQ Capital Market must not have been suspended or limited.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We must have sufficient shares of common stock, calculated using
    the closing sale price of our common stock as of the trading day
    immediately preceding the date we notify Kingsbridge of our
    election to sell shares to Kingsbridge pursuant to the CEFF,
    registered under the registration statement of which this
    prospectus is a part to issue and sell such shares in accordance
    with such draw down.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We must not be in default in any material respect under the
    warrant.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There is no guarantee that we will be able to meet the
    conditions precedent or that we will be able to draw down any
    portion of the amounts available under the CEFF.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also entered into a registration rights agreement with
    Kingsbridge, dated May&#160;7, 2009. Pursuant to the
    registration rights agreement, we have filed the registration
    statement, of which this prospectus is a part, with the SEC
    relating to the resale by Kingsbridge of any shares of common
    stock purchased by it under the common stock purchase agreement
    or issued to it upon the exercise of its warrant. The
    effectiveness of this registration statement is a condition
    precedent to our ability to sell common stock to Kingsbridge
    under the common stock purchase agreement. We are entitled in
    certain circumstances, including the existence of certain kinds
    of material nonpublic information, to deliver a
    &#147;blackout&#148; notice to Kingsbridge to suspend the use of
    this prospectus and prohibit Kingsbridge from selling shares
    under this prospectus for a period of not more than
    30&#160;days. If we deliver a blackout notice in the 20 trading
    days following the settlement of a draw down or if the
    registration statement, of which this prospectus is a part, is
    not effective in circumstances not permitted by the registration
    rights agreement, then we must pay amounts to Kingsbridge or
    issue Kingsbridge additional shares in lieu of payment. The
    payment or issuance would be calculated by means of a varying
    percentage of an amount based on the number of shares held by
    Kingsbridge that were purchased pursuant to such draw down and
    the change in the market price of our common stock between the
    date the blackout notice is delivered (or the registration
    statement is not effective) and the date the prospectus again
    becomes available.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may terminate the CEFF upon one trading day&#146;s notice to
    Kingsbridge, except that we may not terminate the CEFF during
    any draw down pricing period. Kingsbridge may, upon one trading
    day&#146;s notice to us, terminate the CEFF if we enter into a
    transaction prohibited by the common stock purchase agreement
    without Kingsbridge&#146;s prior written consent or if
    Kingsbridge provides notice to us of a material adverse event
    relating to our business and the event continues for 10 trading
    days after the notice. Kingsbridge may also
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    terminate the CEFF upon one trading day&#146;s notice to us at
    any time in the event that a registration statement is not
    initially declared effective in accordance with the registration
    rights agreement. In addition, either we or Kingsbridge may
    terminate the CEFF upon one trading day&#146;s notice if the
    other party has breached a material representation, warranty or
    covenant to the common stock purchase agreement and such breach
    is not remedied within 10 trading days after notice of such
    breach is delivered to the breaching party. In the event of a
    termination of the CEFF by Kingsbridge or us pursuant to the
    terms of the CEFF, Kingsbridge would retain the warrant to
    purchase 200,000&#160;shares of our common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with the CEFF, we will pay up to $75,000 to
    Kingsbridge to cover the costs of their legal fees and expenses.
    In addition, we must pay Kingsbridge $12,500 per quarter for
    each quarter we do not make a drawdown under the CEFF of at
    least 2% of the our market capitalization.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing summary of the CEFF does not purport to be
    complete and is qualified by reference to the common stock
    purchase agreement, the registration rights agreement and the
    warrant, copies of which have been filed as exhibits to the
    registration statement of which this prospectus is a part.
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>This offering involves a high degree of risk. You should
    carefully consider the risks and uncertainties described below
    in addition to the other information contained in this
    prospectus, or incorporated into this prospectus by reference,
    including the section entitled &#147;Special Note Regarding
    Forward-Looking Statements,&#148; before deciding whether to
    invest in shares of our common stock. If any of the following
    risks actually occur, our business, financial condition or
    operating results could be harmed. In that case, the trading
    price of our common stock could decline, and you may lose part
    or all of your investment. The risks and uncertainties described
    below are not the only ones facing EOS. Additional risks and
    uncertainties not currently known to us or that we currently
    deem immaterial may also impair our business operations and
    adversely affect the market price of our common stock.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Relating to Our Business</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    currently do not have, and may never develop, any commercialized
    products.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We currently do not have any commercialized products or any
    significant source of revenue. We have invested substantially
    all of our time and resources over the last seven years in
    developing
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    may require additional development and clinical evaluation and
    it will require regulatory approval, significant marketing
    efforts and substantial additional investment before it can
    provide us with any revenue. On February&#160;13, 2009, we
    announced the top-line results of our pivotal clinical trial
    relating to
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    While we believe that the top-line results support submission of
    the PMA, commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    remains subject to certain risks. Our efforts may not lead to
    commercially successful products for a number of reasons,
    including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may not be able to obtain regulatory approvals for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    or the approved indication may be narrower than we seek;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    may not prove to be safe and effective in clinical trials to the
    FDA&#146;s satisfaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    physicians may not receive any reimbursement from third-party
    payers, or the level of reimbursement may be insufficient to
    support widespread adoption of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>;

</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may experience delays in our continuing development program;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any products that are approved may not be accepted in the
    marketplace by physicians or patients;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may not have adequate financial or other resources to
    complete the continued development or to commence the
    commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and we will not have adequate financial or other resources to
    achieve significant commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>;

</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may not be able to manufacture our products in commercial
    quantities or at an acceptable cost;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rapid technological change may make our technology and products
    obsolete.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we are unable to obtain regulatory approval for or
    successfully commercialize
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    we will be unable to generate revenue.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have not received, and may never receive, FDA approval to market
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.</FONT></I></B>

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We do not have the necessary regulatory approvals to market
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in the U.S.&#160;or in any foreign market. We plan initially to
    launch
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    once approved, in the U.S.&#160;The regulatory approval process
    for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in the U.S.&#160;involves, among other things, successfully
    completing clinical trials and obtaining PMA approval from the
    FDA. The PMA process requires us to prove the safety and
    effectiveness of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    to the FDA&#146;s satisfaction. This process is expensive and
    uncertain, and requires detailed and comprehensive scientific
    and human clinical data. FDA review may take years after a PMA
    application is filed. The FDA may never grant approval. The FDA
    can delay, limit or deny approval of a PMA application for many
    reasons, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    may not be safe or effective to the FDA&#146;s satisfaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the data from our pre-clinical studies and clinical trials may
    be insufficient to support approval;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the manufacturing process or facilities we use may not meet
    applicable requirements;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in FDA approval policies or adoption of new regulations
    may require additional data.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No precedent has been established for FDA approval of a device
    such as
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    to assist in determining the appropriateness of biopsies of
    suspicious pigmented skin lesions. While the Company believes
    that top-line results from the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    pivotal trial, which was recently concluded, would support a
    favorable PMA review, the FDA may not consider the data gathered
    in the trial sufficient to support approval of a PMA. The FDA
    may determine that additional clinical trials are necessary, in
    which case the PMA approval may be delayed for several months or
    even years while the trials are conducted and the data acquired
    are submitted in an amendment to the PMA. The occurrence of
    unexpected findings in connection with any subsequent clinical
    trial that may be required by the FDA may prevent or delay
    obtaining PMA approval, and may adversely affect coverage or
    reimbursement determinations. If we are unable to complete
    subsequent clinical trials necessary to successfully support the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    PMA application, our ability to commercialize
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    and our business, financial condition, and results of operations
    would be materially adversely affected, thereby threatening our
    ability to continue operations. While the FDA had informed us
    that the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    PMA would receive expedited review when submitted, there is no
    assurances that the expedited review will shorten the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    FDA approval process.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    is approved by the FDA, it may be approved only for narrow
    indications.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Even if approved,
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    may not be approved for the indications that are necessary or
    desirable for successful commercialization. Our preference is to
    obtain a broad indication for use in assisting in the diagnosis
    of almost all pigmented melanomas (other than those on palms,
    soles of the feet, in or near the eye, and inaccessible areas
    such as the edge of the nose). The final
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    lesion classifier may not be able to identify the maximum number
    of types of melanoma possible. The indications for use must
    specify those lesion types for which the classifier has not been
    trained. Approximately five percent of melanoma lesions may be
    amelanotic, meaning they are not pigmented. These lesions cannot
    be differentiated by
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    which will be restricted to pigmented lesions. Approximately ten
    percent of pigmented melanoma lesions are nodular, a type of
    melanoma that is often missed by dermatologists in early stages.
    If nodular melanoma lesions are not sufficiently
    well-represented in the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    training database, the classifier may not differentiate nodular
    melanomas from non-melanomas with sufficient sensitivity and
    specificity. If we restrict the indications for use of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    to exclude certain melanoma lesion types, in addition to the
    other restrictions, then the size of the market for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and the rate of acceptance of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    by physicians may be adversely affected.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we wish to modify
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    after receiving FDA approval, including changes in indications
    or other modifications that could affect safety and
    effectiveness, additional approvals could be required from the
    FDA. We may be required to submit extensive pre-clinical and
    clinical data, depending on the nature of the changes. Any
    request by the FDA for additional data, or any requirement by
    the FDA that we conduct additional clinical studies, could delay
    the commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and require us to make substantial additional research,
    development and other expenditures. We may not obtain the
    necessary regulatory approvals to market
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in the U.S.&#160;or anywhere else. Any delay in, or failure to
    receive or maintain, approval for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    could prevent us from generating revenue or achieving
    profitability, and our business, financial condition, and
    results of operations would be materially adversely affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    may not be commercially viable if we fail to obtain an adequate
    level of reimbursement by Medicare and other third party payers.
    The markets for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    may also be limited by the indications for which its use may be
    reimbursed.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The availability of medical insurance coverage and reimbursement
    for newly approved medical devices is uncertain. In the United
    States, physicians and other healthcare providers performing
    biopsies for suspicious skin lesions are generally reimbursed
    for all or part of the cost of the diagnosis and biopsy by
    Medicare, Medicaid, or other third-party payers.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The commercial success of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in both domestic and international markets will significantly
    depend on whether third-party coverage and reimbursement are
    available for services involving
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    Medicare, Medicaid, health maintenance organizations and other
    third-party payers are increasingly attempting to contain
    healthcare costs by limiting both the scope of coverage and the
    level of reimbursement of new medical devices, and as a result,
    they may not cover or provide adequate payment for the use of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    In order to obtain satisfactory reimbursement arrangements, we
    may have to agree to a fee or sales price lower than the fee or
    sales price we might otherwise charge. Even if Medicare and
    other third-party payers decide to cover procedures involving
    our product, we cannot be certain that the reimbursement levels
    will be adequate. Accordingly, even if
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    or future products we develop are approved for commercial sale,
    unless government and other third-party payers provide adequate
    coverage and reimbursement for our products, some physicians may
    be discouraged from using them, and our sales would suffer.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Medicare reimburses for medical devices in a variety of ways,
    depending on where and how the device is used. However, Medicare
    only provides reimbursement if the Centers for Medicare and
    Medicaid Services (&#147;CMS&#148;) determines that the device
    should be covered and that the use of the device is consistent
    with the coverage criteria. A coverage determination can be made
    at the local level by the Medicare administrative contractor
    (formerly called carriers and fiscal intermediaries), a private
    contractor that processes and pays claims on behalf of CMS for
    the geographic area where the services were rendered, or at the
    national level by CMS through a national coverage determination.
    There are new statutory provisions intended to facilitate
    coverage determinations for new technologies, but it is unclear
    how these new provisions will be implemented. Coverage
    presupposes that the device has been cleared or approved by the
    FDA and further, that the coverage will be no broader than the
    approved intended uses of the device as approved or cleared by
    the FDA, but coverage can be narrower. A coverage determination
    may be so limited that relatively few patients will qualify for
    a covered use of the device. Should a very narrow coverage
    determination be made for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    it may undermine the commercial viability of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Obtaining a coverage determination, whether local or national,
    is a time-consuming, expensive and highly uncertain proposition,
    especially for a new technology, and inconsistent local
    determinations are possible. On average, according to an
    industry report, Medicare coverage determinations for medical
    devices lag 15&#160;months to five years or more behind FDA
    approval for that device. The Medicare statutory framework is
    also subject to administrative rulings, interpretations and
    discretion that affect the amount and timing of reimbursement
    made under Medicare. Medicaid coverage determinations and
    reimbursement levels are determined on a state by state basis,
    because Medicaid, unlike Medicare, is administered by the states
    under a state plan filed with the Secretary of the
    U.S.&#160;Department of Health and Human Services
    (&#147;HHS&#148;). Medicaid generally reimburses at lower levels
    than Medicare. Moreover, Medicaid programs and private insurers
    are frequently influenced by Medicare coverage determinations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    FDA may require additional clinical trials and any adverse
    results in such clinical trials, or difficulties in conducting
    such clinical trials, could have a material adverse effect on
    our business.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While the Company has completed its pivotal clinical trials on
    which it intends to base the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    PMA, upon evaluation of the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    PMA, the FDA may require us to conduct additional clinical
    studies. The occurrence of unexpected findings in connection
    with any subsequent clinical trial required by the FDA may
    prevent or delay obtaining PMA approval. In addition, subsequent
    clinical studies would require the expenditure of additional
    Company resources and could be a long and expensive process
    subject to unexpected delays. Any adverse results in such
    clinical trials, or difficulties in conducting such clinical
    trials, could have a material adverse effect on our business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have incurred losses for a number of years, and anticipate that
    we will incur continued losses for the foreseeable
    future.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We began operations in December 1989. At that time, we provided
    research services, mostly to U.S.&#160;government agencies, on
    classified projects. We have financed our operations since 1999
    primarily through the sale of our equity securities and have
    devoted substantially all of our resources to research and
    development relating to
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    Our net loss for the three months ended March&#160;31, 2009 was
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    approximately $4.0&#160;million and as of March&#160;31, 2009,
    we had an accumulated deficit of approximately
    $64.8&#160;million. Our research and development expenses may
    continue to increase in connection with our clinical trials and
    other development activities related to
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    If we receive PMA approval for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    from the FDA, we expect to incur significant sales and marketing
    expenses, which will require additional funding, and
    manufacturing expenses. Additionally, our general and
    administrative expenses have also increased due to the
    additional operational and regulatory responsibilities
    applicable to public companies. As a result, we expect to
    continue to incur significant and increasing operating losses
    for the foreseeable future. These losses, among other things,
    have had and will continue to have an adverse effect on our
    stockholders&#146; equity.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    expect to operate in a highly competitive market, we may face
    competition from large, well-established medical device
    manufacturers with significant resources, and we may not be able
    to compete effectively.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We do not know of any product possessing the diagnostic
    assistance capabilities of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    We believe that electro-optical products designed to enhance the
    visualization and analysis of potential melanomas have been
    approved or are under development by: Welch Allyn, Inc., Heine
    Optotechnik, 3Gen, LLC, Derma Medical Systems, Inc., Medical
    High Technologies S.p.A., ZN Vision Technologies AG,
    Polartechnics, Ltd., Astron Clinica, Ltd., Biomips Engineering,
    and SciBase AB. The broader market for precision optical imaging
    devices used for medical diagnosis is intensely competitive,
    subject to rapid change, and significantly affected by new
    product introductions and other market activities of industry
    participants. If our products are approved for marketing, we
    will potentially be subject to competition from major optical
    imaging companies, such as: Raytheon Corporation, General
    Electric Co., Siemens AG, Bayer AG, Eastman Kodak Company, Welch
    Allyn, Inc., Olympus Corporation, Carl Zeiss AG Deutschland, and
    others, each of which manufactures and markets precision optical
    imaging products for the medical market, and could decide to
    develop or acquire a product to compete with
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    These companies enjoy numerous competitive advantages, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    significantly greater name recognition;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    established relations with healthcare professionals, customers
    and third-party payers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    established distribution networks;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    additional lines of products, and the ability to offer rebates,
    higher discounts or incentives to gain a competitive advantage;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    greater experience in conducting research and development,
    manufacturing, clinical trials, obtaining regulatory approval
    for products, and marketing approved products;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    greater financial and human resources for product development,
    sales and marketing, and patent litigation.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As a result, we may not be able to compete effectively against
    these companies or their products.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Technological
    breakthroughs in the diagnosis or treatment of melanoma could
    render
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    obsolete.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The precision optical imaging field is subject to rapid
    technological change and product innovation.
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    is based on our proprietary technology, but a number of
    companies and medical researchers are pursuing new technologies.
    Companies in the medical device industry with significantly
    greater financial, technical, research, marketing, sales and
    distribution and other resources have expertise and interest in
    the exploitation of computer-aided diagnosis, medical imaging,
    and other technologies
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    utilizes. Some of these companies are working on potentially
    competing products or therapies, including confocal microscopy
    (a type of scanning microscopy for
    <FONT style="white-space: nowrap">3-dimensional</FONT>
    specimens, which produces blur-free images at various depths),
    various forms of spectroscopy (a study of the way molecules
    absorb and emit light), other imaging modalities, including
    molecular imaging in which tagged antibodies search for cancer
    cell antigens, and molecular and genetic screening tests.
    Molecular-based approaches are being investigated; Dermtech is
    exploring Messenger RNA analysis of surface cells, for example.
    Several additional approaches to detecting
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    9
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Melanoma have been identified. Balter Medical (Norway) uses
    &#145;Optical Transfer Diagnosis&#146; to identify Melanomas.
    The technology measures how much light is absorbed in healthy
    versus diseased tissue to determine whether cancer is present.
    Raytheon Corporation, partnered with Arizona Cancer Center,
    utilizes satellite-based remote imaging technology in detecting
    skin changes that could indicate the presence of cancer.
    Vanderbilt University has introduced technology called
    &#146;Confocal Raman Micro-Spectroscopy&#146;. The technology
    uses a reflective laser to produce a molecular fingerprint of
    the underlying tissue to indicate the presence or absence of
    disease. In addition, the National Institutes of Health and
    other supporters of cancer research are presumptively seeking
    ways to improve the diagnosis or treatment of melanoma by
    sponsoring corporate and academic research. There can be no
    assurance that one or more of these companies will not succeed
    in developing or marketing technologies and products or services
    that demonstrate better safety or effectiveness, superior
    clinical results, greater ease of use or lower cost than
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    or that such competitors will not succeed in obtaining
    regulatory approval for introducing or commercializing any such
    products or services prior to us. FDA approval of a commercially
    viable alternative to
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    produced by a competitor could significantly reduce market
    acceptance of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    Any of the above competitive developments could have a material
    adverse effect on our business, financial condition, and results
    of operations. There is no assurance that products, services, or
    technologies introduced prior to or subsequent to the
    commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    will not render
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    less marketable or obsolete.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">For
    any additional clinical trials required for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    by the FDA or with respect to clinical trials relating to the
    development of our core technology for other applications, we
    depend on clinical investigators and clinical sites and other
    third parties to manage the trials and to perform related data
    collection and analysis, and, as a result, we may face costs and
    delays that are outside of our control.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With respect to any additional clinical studies for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    which are required by the FDA or with respect to clinical trials
    relating to the development of the Company&#146;s core
    technology for other applications, we rely on clinical
    investigators and clinical sites, some of which are private
    practices, and some of which are research university- or
    government-affiliated, to enroll patients in our clinical
    trials. We rely on: pathologists and pathology laboratories; a
    contract research organization to assist in monitoring,
    collection of data, and ensuring FDA Good Clinical Practices
    (&#147;GCP&#148;) are observed at our sites; a consultant
    biostatistician; and other third parties to manage the trial and
    to perform related data collection and analysis. However, we may
    not be able to control the amount and timing of resources that
    clinical sites and other third parties may devote to our
    clinical trials. If these clinical investigators and clinical
    sites fail to enroll a sufficient number of patients in our
    clinical trials, or if the clinical sites fail to comply
    adequately with the clinical protocols, we will be unable to
    complete these trials, which could prevent us from obtaining
    regulatory approvals for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    or other products developed from our core technology. Our
    agreements with clinical investigators and clinical sites for
    clinical testing place substantial responsibilities on these
    parties and, if these parties fail to perform as expected, our
    trials could be delayed or terminated. If these clinical
    investigators, clinical sites or other third parties do not
    carry out their contractual duties or obligations or fail to
    meet expected deadlines, or if the quality or accuracy of the
    clinical data they obtain are compromised due to their failure
    to adhere to our clinical protocols or for other reasons, our
    clinical trials may be extended, delayed or terminated, and we
    may be unable to obtain regulatory approval for, or successfully
    commercialize,
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    or other products developed from our core technology.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to the foregoing, any additional clinical studies
    for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    which are required by the FDA and any clinical trials relating
    to the development of the Company&#146;s core technology for
    other applications may be delayed or halted, or be inadequate to
    support PMA approval, for numerous other reasons, including, but
    not limited to, the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the FDA, an Institutional Review Board (&#147;IRB&#148;) or
    other regulatory authorities place our clinical trial on hold;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    patients do not enroll in clinical trials at the rate we expect;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    patient
    <FONT style="white-space: nowrap">follow-up</FONT> is
    not at the rate we expect;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    IRBs and third-party clinical investigators delay or reject our
    trial protocol;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    10
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    third-party organizations do not perform data collection and
    analysis in a timely or accurate manner;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    regulatory inspections of our clinical trials or manufacturing
    facilities, among other things, require us to undertake
    corrective action or suspend or terminate our clinical trials,
    or invalidate our clinical trials;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in governmental regulations or administrative
    actions;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the interim or final results of the clinical trial are
    inconclusive or unfavorable as to safety or effectiveness.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    is approved for reimbursement, we anticipate experiencing
    significant pressures on pricing.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Even if Medicare covers a device for certain uses, that does not
    mean that the level of reimbursement will be sufficient for
    commercial success. We expect to experience pricing pressures in
    connection with the commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and our future products due to efforts by private and
    government-funded payers to reduce or limit the growth of
    healthcare costs, the increasing influence of health maintenance
    organizations, and additional legislative proposals to reduce or
    limit increases in public funding for healthcare services.
    Private payers, including managed care payers, increasingly are
    demanding discounted fee structures and the assumption by
    healthcare providers of all or a portion of the financial risk.
    Efforts to impose greater discounts and more stringent cost
    controls upon healthcare providers by private and public payers
    are expected to continue. Payers frequently review their
    coverage policies for existing and new diagnostic tools and can,
    sometimes without advance notice, deny or change their coverage
    policies. Significant limits on the scope of services covered or
    on reimbursement rates and fees on those services that are
    covered could have a material adverse effect on our ability to
    commercialize
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and therefore, on our liquidity and our business, financial
    condition, and results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In some foreign markets, which we may seek to enter in the
    future, pricing and profitability of medical devices are subject
    to government control. In the United States, we expect that
    there will continue to be federal and state proposals for
    similar controls. Also, the trends toward managed healthcare in
    the United States and proposed legislation intended to control
    the cost of publicly funded healthcare programs could
    significantly influence the purchase of healthcare services and
    products, and may force us to reduce prices for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    or result in the exclusion of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    from reimbursement programs.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    may never achieve market acceptance even if we obtain regulatory
    approvals.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To date, only those patients who were treated by physicians
    involved in our clinical trials have been evaluated using
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and even if we obtain regulatory approval, patients with
    suspicious lesions and physicians evaluating suspicious lesions
    may not endorse
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    Physicians tend to be slow to change their diagnostic and
    medical treatment practices because of perceived liability risks
    arising from the use of new products and the uncertainty of
    third party reimbursement. Physicians may not utilize
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    until there is long-term clinical evidence to convince them to
    alter their existing methods of diagnosing or evaluating
    suspicious lesions and there are recommendations from prominent
    physicians that
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    is effective. We cannot predict the speed at which physicians
    may adopt the use of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    By limiting the capital cost of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    to the physician, we believe we will accelerate its adoption and
    usage. However, by charging on a per patient basis we will
    increase the initial capital burden on the Company. If
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    receives the appropriate regulatory approvals but does not
    achieve an adequate level of acceptance by patients, physicians
    and healthcare payers, we may not generate significant product
    revenue and we may not become profitable. The degree of market
    acceptance of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    will depend on a number of factors, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    perceived effectiveness of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>;

</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    convenience of use;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    cost of use of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>;

</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    availability and adequacy of third-party coverage or
    reimbursement;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    approved indications and product labeling;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    publicity concerning
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    or competitive products;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    11
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    potential advantages over alternative diagnostic methodologies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    introduction and acceptance of competing products or
    technologies;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    extent and success of our sales, marketing and distribution
    efforts.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The success of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    will depend upon the acceptance by dermatologists and other
    physicians who perform skin examinations and treat skin
    disorders, including industry opinion leaders, that the
    diagnostic information provided by
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    is medically useful and reliable. We will be subject to intense
    scrutiny before physicians will be comfortable incorporating
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in their diagnostic approaches. We believe that recommendations
    by respected physicians will be essential for the development
    and successful marketing of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>;

    however, there can be no assurance that any such recommendations
    will be obtained. To date, the medical community outside the
    limited circle of certain dermatologists specializing in
    melanoma has had little exposure to us and
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    Because the medical community is often skeptical of new
    companies and new technologies, we may be unable to gain access
    to potential customers in order to demonstrate the operation and
    effectiveness of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    Even if we gain access to potential customers, no assurance can
    be given that members of the dermatological, or later the
    general practice, medical community will perceive a need for or
    accept
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    In particular, given the potentially fatal consequences of
    failing to detect melanoma at the early, curable stages,
    practitioners may remain reluctant to rely upon
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    even after we receive approval from the FDA for marketing the
    product. Any of the foregoing factors, or other currently
    unforeseen factors, could limit or detract from market
    acceptance of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    Insufficient market acceptance of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    would have a material adverse effect on our business, financial
    condition and results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be unable to complete the development and commence
    commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    or other products without additional funding and we will not be
    able to achieve significant commercialization without additional
    funding.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of March&#160;31, 2009, we had $11.2&#160;million in cash and
    cash equivalents and $0.4&#160;million in marketable securities.
    Our operations have consumed substantial amounts of cash for
    each of the last eight years. We may require funds in addition
    to our CEFF with Kingsbridge to pursue regulatory approvals and
    to achieve significant commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    However, there can be no assurances that we will be able to
    raise additional capital in the future. Additional funds may not
    become available on acceptable terms, and there can be no
    assurance that any additional funding that we do obtain will be
    sufficient to meet our needs in the long term.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any additional equity financing may be dilutive to stockholders,
    or may require us to grant a lender a security interest in our
    assets. The amount of funding we will need will depend on many
    factors, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the schedule, costs, and results of clinical trials;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the success of our research and development efforts;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the costs and timing of regulatory approval;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reimbursement amounts for the use of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    that we are able to obtain from Medicare and third party payers,
    or the amount of direct payments we are able to obtain from
    patients
    <FONT style="white-space: nowrap">and/or</FONT>
    physicians utilizing
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>;

</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the cost of commercialization activities, including products,
    product marketing and building a domestic direct sales force;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the emergence of competing or complementary technological
    developments;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the costs of filing, prosecuting, defending and enforcing any
    patent claims and other rights, including litigation costs and
    the results of such litigation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the costs involved in defending any patent infringement actions
    brought against us by third parties;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to establish and maintain any collaborative,
    licensing or other arrangements, and the terms and timing of any
    such arrangements.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    12
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additional financing may not be available to us when we need it,
    or it may not be available on favorable terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If we are unable to obtain adequate financing on a timely basis,
    we may be required to significantly curtail or cease one or more
    of our development and marketing programs. We could be required
    to seek funds through arrangements with collaborators or others
    that may require us to relinquish rights to some of our
    technologies, product candidates or products that we would
    otherwise pursue on our own. We also may have to reduce
    marketing, customer support and other resources devoted to our
    products. If we raise additional funds by issuing equity
    securities, our then-existing stockholders will experience
    ownership dilution, could experience declines in our share price
    and the terms of any new equity securities may have preferences
    over our common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    are unable to establish sales, marketing and distribution
    capabilities or enter into and maintain arrangements with third
    parties to sell, market and distribute
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    our business may be harmed.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We do not have a sales organization, and have no experience as a
    company in the marketing and distribution of devices such as
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    To achieve commercial success for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    we must develop a sales and marketing force and enter into
    arrangements with others to market and sell our products.
    Following product approval, we currently plan to establish a
    small direct sales force to regionally market
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in the United States, focused on introducing it at high volume
    dermatologists&#146; offices and training their staff in its
    use, but we have not made any final determinations regarding the
    use of a particular marketing channel. We anticipate that we
    will need additional funds in order to fully implement this
    marketing plan. In addition to being expensive, developing such
    a sales force is time consuming and could delay or limit the
    success of any product launch. We may not be able to develop
    this capacity on a timely basis or at all. Qualified direct
    sales personnel with experience in the medical device market are
    in high demand, and there is no assurance that we will be able
    to hire or retain an effective direct sales team. Similarly,
    qualified, independent medical device representatives both
    within and outside the U.S.&#160;are in high demand, and we may
    not be able to build an effective network for the distribution
    of our product through such representatives. We have no
    assurance that we will be able to enter into contracts with
    representatives on terms acceptable or reasonable to us.
    Similarly, there is no assurance that we will be able to build
    an alternate distribution framework, should we attempt to do so.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will need to contract with third parties in order to sell and
    install our products in larger markets, including non-specialist
    dermatologists and primary care physicians. To the extent that
    we enter into arrangements with third parties to perform
    marketing and distribution services in the United States, our
    product revenue could be lower and our costs higher than if we
    directly marketed
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    Furthermore, to the extent that we enter into co-promotion or
    other marketing and sales arrangements with other companies, any
    revenue received will depend on the skills and efforts of
    others, and we do not know whether these efforts will be
    successful. If we are unable to establish and maintain adequate
    sales, marketing and distribution capabilities, independently or
    with others, we will not be able to generate product revenue,
    and may not become profitable.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have limited manufacturing capabilities and manufacturing
    personnel, and if our manufacturing capabilities are
    insufficient to produce an adequate supply of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    our growth could be limited and our business could be
    harmed.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have no experience in manufacturing
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    for commercial distribution. We currently have limited
    resources, facilities and experience to commercially manufacture
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    In order to produce
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in the quantities we anticipate to meet market demand, we will
    need to increase our third-party manufacturing capacity. There
    are technical challenges to increasing manufacturing capacity,
    including equipment design and automation, material procurement,
    problems with production yields, and quality control and
    assurance. Developing commercial-scale manufacturing facilities
    that meet FDA requirements would require the investment of
    substantial additional funds and the hiring and retaining of
    additional management and technical personnel who have the
    necessary manufacturing experience.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We currently outsource production to contract manufacturers. Any
    difficulties in the ability of third-party manufacturers to
    supply devices of the quality, at the times, and in the
    quantities we need, could have a material adverse effect on our
    business, financial condition, and results of operations.
    Similarly, when we enter into contracts for the third-party
    manufacture of our devices, any revenue received will depend on
    the skills and efforts of others, and we do not know whether
    these efforts will be successful. Manufacturers often encounter
    difficulties in scaling up production of new products, including
    problems involving product yields, controlling and anticipating
    product costs, quality control and assurance, component supply,
    and shortages of qualified personnel. We cannot assure you that
    the third-party contract manufacturers with whom we have
    developed or are developing relationships will have or sustain
    the ability to produce the quantities of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    needed for development or commercial sales, or will be willing
    to do so at prices that allow
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    to compete successfully in the market.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Assuming that
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    receives regulatory approval, if we are unable to manufacture or
    obtain a sufficient supply of product, maintain control over
    expenses, or otherwise adapt to anticipated growth, or if we
    underestimate growth, we may not have the capability to satisfy
    market demand, and our business will suffer. Additionally, if
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    receives regulatory approval and we then need to make
    manufacturing changes, we may need to obtain additional approval
    for these changes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    is complex and may contain undetected design defects and errors
    when first introduced, or errors that may be introduced when
    enhancements are released. Such defects and errors may occur
    despite our testing, and may not be discovered until after our
    devices have been shipped to and used by our customers. The
    existence of these defects and errors could result in costly
    repairs, returns of devices, diversion of development resources
    and damage to our reputation in the marketplace. Any of these
    conditions could have a material adverse impact on our business,
    financial condition and results of operations. In addition, when
    we contract with third-party manufacturers for the production of
    our products, these manufacturers may inadvertently produce
    devices that vary from devices we have produced in unpredictable
    ways that cause adverse consequences.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    manufacturing operations are dependent upon third-party
    suppliers, making us vulnerable to supply problems and price
    fluctuations, which could harm our business. We anticipate
    contracting for final device assembly and integration, but no
    contract for such services on a commercial basis has yet been
    procured.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our manufacturing efforts currently rely on several vendors for
    critical materials: FillFactory, a subsidiary of Cypress
    Semiconductor Corp., to manufacture and supply the complementary
    metal oxide semiconductor sensor in
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>;

    Carl Zeiss Jena GmbH (&#147;Zeiss&#148;) for lens and lens
    objective assemblies; and CompServ, AAEON, AmeriCad, Applied
    Image, EpiGap, Lamothermic Precision, Richardson Electronics, SL
    Power Electronics to provide services or components of our
    devices. We are working with ASKION in Germany, which
    specializes in precision optics for the provision of the
    hand-held imaging devices. In addition, we are utilizing Nexcore
    Technology Inc., an FDA good manufacturing practices
    (&#147;GMP&#148;) compliant and certified ISO13485 and ISO9001
    original equipment manufacturer of medical devices in New
    Jersey, to provide the assembled
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    carts and tested
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    systems.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There can be no assurance that these third parties will meet
    their obligations. Each of these suppliers is a sole-source
    supplier. Our contract manufacturers also rely on sole-source
    suppliers to manufacture some of the components used in our
    products. Our manufacturers and suppliers may encounter problems
    during manufacturing due to a variety of reasons, including
    failure to procure their raw material on time, failure to follow
    specific protocols and procedures, failure to comply with
    applicable regulations, equipment malfunction and environmental
    factors, any of which could delay or impede their ability to
    meet our demand. Our reliance on these outside manufacturers and
    suppliers also subjects us to other risks that could harm our
    business, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    suppliers may make errors in manufacturing components that could
    negatively impact the effectiveness or safety of our products,
    or cause delays in shipment of our products;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may not be able to obtain adequate supply in a timely manner
    or on commercially reasonable terms;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may have difficulty locating and qualifying alternative
    suppliers for our sole-source suppliers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    switching components may require product redesign and submission
    to the FDA of a PMA supplement or possibly a separate PMA,
    either of which could significantly delay production;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our suppliers manufacture products for a range of customers, and
    fluctuations in demand for the products these suppliers
    manufacture for others may affect their ability to deliver
    components to us in a timely manner;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our suppliers may encounter financial hardships unrelated to our
    demand for components, which could inhibit their ability to
    fulfill our orders and meet our requirements.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any interruption or delay in the supply of components or
    materials, or our inability to obtain components or materials
    from alternate sources at acceptable prices in a timely manner,
    could impair our ability to meet the demand of our customers and
    cause them to cancel orders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have entered into a development agreement with ASKION to
    complete developmental engineering and testing of our hand-held
    imaging device, and have also entered into a production
    agreement with ASKION to assemble the components and produce
    initial quantities of our hand-held imaging devices. We intend
    to enter into a contract for commercial production of the
    hand-held imaging devices once commercial specifications for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    have been finalized, but we may not be able to enter such an
    agreement on mutually acceptable terms. Failure to enter into
    such an agreement with ASKION would require us to expand our own
    manufacturing facilities or obtain such services elsewhere.
    Similarly, we have entered into a confidentiality agreement and
    a development agreement with Zeiss for lenses and lens objective
    assemblies, and we have entered into a contract for the
    commercial production of lenses. The manufacturing agreement
    with ASKION will include integration of the Zeiss lenses in the
    hand-held imaging devices. Our planned reliance upon an outside
    provider for assembly and production services subjects us to the
    risk of adverse consequences from delays and defects caused by
    the failure of such outside supplier to meet its contractual
    obligations, including confidentiality obligations in the case
    of Zeiss, which is an affiliate of Carl Zeiss AG, a potential
    competitor. The failure by us or our supplier to produce a
    sufficient number of hand-held imaging devices that can operate
    according to our specifications could delay the commercial sale
    of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    and would adversely affect both our ability to successfully
    commercialize
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and our business, financial condition and results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    will not be able to sell
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    unless and until its design is verified and validated in
    accordance with current good manufacturing practices as set
    forth in the U.S. medical device Quality System
    Regulation.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are in the process, but have not yet successfully completed,
    all the steps necessary to verify and validate the design of the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    system that are required to be performed prior to
    commercialization. If we are delayed or unable to complete
    verification and validation successfully, we will not be able to
    sell
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    and we will not be able to meet our plans for the
    commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    Later discovery of previously unknown problems with
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    including manufacturing problems, or failure to comply with
    regulatory requirements such as the FDA QSR, may result in
    restrictions on
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    or its manufacturing processes, withdrawal of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    from the market, patient or physician notification, voluntary or
    mandatory recalls, fines, withdrawal of regulatory approvals,
    refusal to approve pending applications or supplements to
    approved applications, refusal to permit the import or export of
    our products, product seizures, injunctions or the imposition of
    civil or criminal penalties. Should any of these enforcement
    actions occur, our business, financial condition and results of
    operations could be materially and adversely affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Assuming
    that
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    is approved by regulatory authorities, if we or our suppliers
    fail to comply with ongoing regulatory requirements, or if we
    experience unanticipated problems with
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    it could be subject to restrictions or withdrawal from the
    market.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any product for which we obtain marketing approval, along with
    the manufacturing processes, post-approval clinical data and
    promotional activities for such product, will be subject to
    continuous review and
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    15
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    periodic inspections by the FDA and other regulatory bodies. In
    particular, we and our suppliers are required to comply with the
    QSR and other regulations which cover the methods and
    documentation of the design, testing, production, control,
    quality assurance, labeling, packaging, storage, promotion,
    distribution, and shipping of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    and with record keeping practices. We also will be subject to
    ongoing FDA requirements, including required submissions of
    safety and other post-market information and reports and
    registration and listing requirements. To the extent that we
    contract with third parties to manufacture some of our products,
    our manufacturers will be required to adhere to cGMP
    requirements enforced by the FDA as part of QSR, or similar
    regulations required by regulatory agencies in other countries.
    The manufacturing facilities of our contract manufacturers must
    be inspected or must have been inspected, and must be in full
    compliance with cGMP requirements before approval for marketing.
    The FDA enforces the QSR and other regulatory requirements
    through unannounced inspections. We have not yet been inspected
    by the FDA for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and will have to complete such an inspection successfully before
    we ship any commercial
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    devices.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our full-time director of quality assurance and regulatory
    affairs continues to address the inspectional findings,
    particularly as they relate to current
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    design development and ultimately
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    commercial manufacturing. If we are not successful in convincing
    the FDA that we are capable of addressing any concerns it might
    have relative to
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    or in our efforts to address any
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    deficiencies that might develop, we could be subject to
    additional FDA action of a type described below, which could
    negatively affect our ability to commercialize
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    There can be no assurance that the future interpretations of
    legal requirements made by the FDA or other regulatory bodies
    with possible retroactive effect, or the adoption of new
    requirements or policies, will not adversely affect us. We may
    be slow to adapt, or may not be able to adapt, to these changes
    or new requirements. Failure by us or one of our suppliers to
    comply with statutes and regulations administered by the FDA and
    other regulatory bodies, or failure to take adequate response to
    any observations, could result in, among other things, any of
    the following actions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    warning letters;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    fines and civil penalties;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    unanticipated expenditures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    delays in approving or refusal to approve
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>;

</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    withdrawal of approval by the FDA or other regulatory bodies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    product recall or seizure;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    interruption of production;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    operating restrictions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    injunctions;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    criminal prosecution.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If any of these actions were to occur, it would harm our
    reputation and cause our product sales and profitability to
    suffer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We are
    involved in a heavily regulated sector, and our ability to
    remain viable will depend on favorable government decisions at
    various points by various agencies.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    From time to time, legislation is introduced in the
    U.S.&#160;Congress that could significantly change the statutory
    provisions governing the approval, manufacture and marketing of
    a medical device. Additionally, healthcare is heavily regulated
    by the federal government, and by state and local governments.
    The federal laws and regulations affecting healthcare change
    constantly, thereby increasing the uncertainty and risk
    associated with any healthcare related venture, including our
    business and
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    In addition, FDA regulations and guidance are often revised or
    reinterpreted by the agency in ways that may significantly
    affect our business and our products. It is impossible to
    predict whether legislative changes will be enacted or FDA
    regulations, guidance, or interpretations changed, and what the
    impact of such changes, if any, may be.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    16
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The federal government regulates healthcare through various
    agencies, including but not limited to the following:
    (i)&#160;the FDA, which administers the Food, Drug, and Cosmetic
    Act, as well as other relevant laws; (ii)&#160;CMS, which
    administers the Medicare and Medicaid programs; (iii)&#160;the
    Office of Inspector General (&#147;OIG&#148;) which enforces
    various laws aimed at curtailing fraudulent or abusive
    practices, including by way of example, the Anti-Kickback Law,
    the Anti-Physician Referral Law, commonly referred to as Stark,
    the Anti-Inducement Law, the Civil Money Penalty Law, and the
    laws that authorize the OIG to exclude healthcare providers and
    others from participating in federal healthcare programs; and
    (iv)&#160;the Office of Civil Rights, which administers the
    privacy aspects of the Health Insurance Portability and
    Accountability Act of 1996 (&#147;HIPAA&#148;). All of the
    aforementioned are agencies within HHS. Healthcare is also
    provided or regulated, as the case may be, by the Department of
    Defense through its TriCare program, the Public Health Service
    within HHS under the Public Health Service Act, the Department
    of Justice through the Federal False Claims Act and various
    criminal statutes, and state governments under Medicaid and
    other state sponsored or funded programs and their internal laws
    regulating all healthcare activities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to regulation by the FDA as a medical device
    manufacturer, we are subject to general healthcare industry
    regulations. The healthcare industry is subject to extensive
    federal, state and local laws and regulations relating to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    billing for services;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    quality of medical equipment and services;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    confidentiality, maintenance and security issues associated with
    medical records and individually identifiable health information;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    false claims;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    labeling products.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These laws and regulations are extremely complex and, in some
    cases, still evolving. In many instances, the industry does not
    have the benefit of significant regulatory or judicial
    interpretation of these laws and regulations. If our operations
    are found to be in violation of any of the federal, state or
    local laws and regulations that govern our activities, we may be
    subject to the applicable penalty associated with the violation,
    including civil and criminal penalties, damages, fines or
    curtailment of our operations. The risk of being found in
    violation of these laws and regulations is increased by the fact
    that many of them have not been fully interpreted by the
    regulatory authorities or the courts, and their provisions are
    open to a variety of interpretations. Any action against us for
    violation of these laws or regulations, even if we successfully
    defend against it, could cause us to incur significant legal
    expenses and divert our management&#146;s time and attention
    from the operation of our business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    must comply with complex statutes prohibiting fraud and abuse,
    and both we and physicians utilizing
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    could be subject to significant penalties for
    noncompliance.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There are extensive federal and state laws and regulations
    prohibiting fraud and abuse in the healthcare industry that can
    result in significant criminal and civil penalties. These
    federal laws include: the anti-kickback statute which prohibits
    certain business practices and relationships, including the
    payment or receipt of remuneration for the referral of patients
    whose care will be paid by Medicare or other federal healthcare
    programs; the physician self-referral prohibition, commonly
    referred to as the Stark Law; the anti-inducement law, which
    prohibits providers from offering anything to a Medicare or
    Medicaid beneficiary to induce that beneficiary to use items or
    services covered by either program; the Civil False Claims Act,
    which prohibits any person from knowingly presenting or causing
    to be presented false or fraudulent claims for payment by the
    federal government, including the Medicare and Medicaid
    programs; and the Civil Monetary Penalties Law, which authorizes
    HHS to impose civil penalties administratively for fraudulent or
    abusive acts. Sanctions for violating these federal laws include
    criminal and civil penalties that range from punitive sanctions,
    damage assessments, money penalties, imprisonment, denial of
    Medicare and Medicaid payments, or exclusion from the Medicare
    and Medicaid programs, or both. As federal and state budget
    pressures continue, federal and state administrative agencies
    may also continue to escalate investigation and enforcement
    efforts to root out
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    17
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    waste and to control fraud and abuse in governmental healthcare
    programs. Private enforcement of healthcare fraud has also
    increased, due in large part to amendments to the Civil False
    Claims Act in 1986 that were designed to encourage private
    persons to sue on behalf of the government. A violation of any
    of these federal and state fraud and abuse laws and regulations
    could have a material adverse effect on our liquidity and
    financial condition. An investigation into the use of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    by physicians may dissuade physicians from either purchasing or
    using
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and could have a material adverse effect on our ability to
    commercialize
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    application of the privacy provisions of HIPAA is
    uncertain.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    HIPAA, among other things, protects the privacy and security of
    individually identifiable health information by limiting its use
    and disclosure. HIPAA directly regulates &#147;covered
    entities&#148; (insurers, clearinghouses, and most healthcare
    providers) and indirectly regulates &#147;business
    associates&#148; with respect to the privacy of patients&#146;
    medical information. Certain entities that receive and process
    protected health information are required to adopt certain
    procedures to safeguard the security of that information.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It is uncertain whether we would be deemed to be a covered
    entity under HIPAA, and it is unlikely that based on our current
    business model, we would be a business associate. Nevertheless,
    we will likely be contractually required to physically safeguard
    the integrity and security of the patient information that we or
    our physician customers receive, store, create or transmit. If
    we fail to adhere to our contractual commitments, then our
    physician customers may be subject to civil monetary penalties,
    and this could adversely affect our ability to market
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    We also may be liable under state laws governing the privacy of
    health information.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    become subject to claims of infringement or misappropriation of
    the intellectual property rights of others, which could prohibit
    us from shipping affected products, require us to obtain
    licenses from third parties or to develop non-infringing
    alternatives, and subject us to substantial monetary damages and
    injunctive relief. Our patents may also be subject to challenge
    on validity grounds, and our patent applications may be
    rejected.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Third parties could, in the future, assert infringement or
    misappropriation claims against us with respect to our current
    or future products. Whether a product infringes a patent
    involves complex legal and factual issues, the determination of
    which is often uncertain. Therefore, we cannot be certain that
    we have not infringed the intellectual property rights of such
    third parties. Our potential competitors may assert that some
    aspect of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    infringes their patents. Because patent applications may take
    years to issue, there also may be applications now pending of
    which we are unaware that may later result in issued patents
    that
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    infringes. There also may be existing patents of which we are
    unaware that one or more components of our
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    system may inadvertently infringe.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any infringement or misappropriation claim could cause us to
    incur significant costs, could place significant strain on our
    financial resources, divert management&#146;s attention from our
    business and harm our reputation. If the relevant patents were
    upheld as valid and enforceable and we were found to infringe,
    we could be prohibited from selling our product that is found to
    infringe unless we could obtain licenses to use the technology
    covered by the patent or are able to design around the patent.
    We may be unable to obtain a license on terms acceptable to us,
    if at all, and we may not be able to redesign
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    to avoid infringement. A court could also order us to pay
    compensatory damages for such infringement, plus prejudgment
    interest and could, in addition, treble the compensatory damages
    and award attorney fees. These damages could be substantial and
    could harm our reputation, business, financial condition and
    operating results. A court also could enter orders that
    temporarily, preliminarily or permanently enjoin us and our
    customers from making, using, selling, offering to sell or
    importing
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    <FONT style="white-space: nowrap">and/or</FONT> could
    enter an order mandating that we undertake certain remedial
    activities. Depending on the nature of the relief ordered by the
    court, we could become liable for additional damages to third
    parties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also may rely on our patents, patent applications and other
    intellectual property rights to give us a competitive advantage.
    Whether a patent is valid, or whether a patent application
    should be granted, is a
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    18
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    complex matter of science and law, and therefore we cannot be
    certain that, if challenged, our patents, patent applications
    <FONT style="white-space: nowrap">and/or</FONT> other
    intellectual property rights would be upheld. If one or more of
    those patents, patent applications and other intellectual
    property rights are invalidated, rejected or found
    unenforceable, that could reduce or eliminate any competitive
    advantage we might otherwise have had.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">New
    product development in the medical device industry is both
    costly and labor intensive with very low success rates for
    successful commercialization; if we cannot successfully develop
    or obtain future products, our growth would be
    delayed.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our long-term success is dependent, in large part, on the
    design, development and commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and other new products and services in the medical device
    industry. The product development process is time-consuming,
    unpredictable and costly. There can be no assurance that we will
    be able to develop or acquire new products, successfully
    complete clinical trials, obtain the necessary regulatory
    clearances or approvals required from the FDA on a timely basis,
    or at all, manufacture our potential products in compliance with
    regulatory requirements or in commercial volumes, or that
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    or other potential products will achieve market acceptance. In
    addition, changes in regulatory policy for product approval
    during the period of product development, and regulatory agency
    review of each submitted new application, may cause delays or
    rejections. It may be necessary for us to enter into licensing
    arrangements in order to market effectively any new products or
    new indications for existing products. There can be no assurance
    that we will be successful in entering into such licensing
    arrangements on terms favorable to us or at all. Failure to
    develop, obtain necessary regulatory clearances or approvals
    for, or successfully market potential new products could have a
    material adverse effect on our business, financial condition and
    results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    face the risk of product liability claims and may not be able to
    obtain or maintain adequate insurance.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our business exposes us to the risk of product liability claims
    that is inherent in the testing, manufacturing and marketing of
    medical devices, including those which may arise from the misuse
    or malfunction of, or design flaws in, our products. We may be
    subject to product liability claims if
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    causes, or merely appears to have caused, an injury or if a
    patient alleges that
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    failed to provide appropriate diagnostic information on a lesion
    where melanoma was subsequently found to be present. Claims may
    be made by patients, healthcare providers or others involved
    with
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    will require PMA approval prior to commercialization in the
    United States. The clinical studies of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    are considered by the FDA as &#147;Non-Significant Risk&#148;.
    Consequently, the trials are conducted under the auspices of an
    abbreviated Investigational Device Exemption. We therefore only
    maintain limited domestic clinical trial liability insurance, as
    required by certain clinical sites. We have obtained clinical
    trial liability insurance in certain European countries where
    required by statute or clinical site policy. Although we have
    general liability insurance that we believe is appropriate, and
    anticipate obtaining adequate product liability insurance before
    commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    this insurance is and will be subject to deductibles and
    coverage limitations. Our anticipated product liability
    insurance may not be available to us in amounts and on
    acceptable terms, if at all, and if available, the coverages may
    not be adequate to protect us against any future product
    liability claims. If we are unable to obtain insurance at an
    acceptable cost or on acceptable terms with adequate coverage,
    or otherwise protect against potential product liability claims,
    we will be exposed to significant liabilities, which may harm
    our business. A product liability claim, recall or other claim
    with respect to uninsured liabilities or for amounts in excess
    of insured liabilities could result in significant costs and
    significant harm to our business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may be subject to claims against us even if the apparent
    injury is due to the actions of others. For example, we rely on
    the expertise of physicians, nurses and other associated medical
    personnel to operate
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    If these medical personnel are not properly trained or are
    negligent, we may be subjected to liability. These liabilities
    could prevent or interfere with our product commercialization
    efforts. Defending a suit, regardless of merit, could be costly,
    could divert management attention and might result in adverse
    publicity, which could result in the withdrawal of, or inability
    to recruit, clinical trial volunteers, or result in reduced
    acceptance of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in the market.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    19
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Insurance and surety companies have reassessed many aspects of
    their business and, as a result, may take actions that could
    negatively affect our business. These actions could include
    increasing insurance premiums, requiring higher self-insured
    retentions and deductibles, reducing limits, restricting
    coverages, imposing exclusions, and refusing to underwrite
    certain risks and classes of business. Any of these actions may
    adversely affect our ability to obtain appropriate insurance
    coverage at reasonable costs, which could have a material
    adverse effect on our business, financial condition and results
    of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be adversely affected by a data center failure.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The success of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    is dependent upon our ability to protect our data center against
    damage from fire, power loss, telecommunications failure,
    natural disaster, sabotage or a similar catastrophic event.
    Substantially all of our computer equipment and data operations
    are located in a single facility. Our prospective failure to
    maintain off-site copies of information contained in our
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    database, or our inability to use alternative sites in the event
    we experience a natural disaster, hardware or software
    malfunction or other interruption of our data center could
    adversely impact our business, financial condition and results
    of operations. While the Company does provide off-site
    <FONT style="white-space: nowrap">back-up</FONT> for
    its critical data which we believe to be sufficient to meet our
    needs, there can be no assurance that the our current plan can
    anticipate every possible eventuality.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be adversely affected by breaches of online
    security.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    lesion database does not contain any information that allows us
    to identify specific patients. However, we must identify certain
    data as belonging to or as derived from specific patients for
    regulatory, quality assurance and billing purposes. To the
    extent that our activities involve the storage and transmission
    of confidential information, security breaches could damage our
    reputation and expose us to a risk of loss, or to litigation and
    possible liability. Our business may be materially adversely
    affected if our security measures do not prevent security
    breaches. In addition, such information may be subject to HIPAA
    privacy and security regulations, the potential violation of
    which may trigger concerns by healthcare providers, which may
    adversely impact our business, financial condition and results
    of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We are
    dependent upon telecommunications and the
    internet.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If there is a connection between the
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    hand-held imaging device and the central server in our offices,
    it will be dependent on the internet. We may use the internet as
    a medium to provide quality control calibration services to
    physicians. We also plan to use the internet to inform the
    public about the availability of our products and to market to
    and communicate with physicians who are potential or actual
    customers. Our success will therefore depend in part on the
    continued growth and use of the internet. If our ability to use
    the internet fails, it may materially adversely affect our
    business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    will be obligated to comply with Federal Communications
    Commission regulations for radio transmissions used by our
    products.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Versions of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    may rely on radio transmissions from the hand-held imaging
    device to a base station that may be connected to the internet.
    Applicable requirements will restrict us to a particular band of
    frequencies allocated to low power radio service for
    transmitting data in support of specific diagnostic or
    therapeutic functions. Failure to comply with all applicable
    restrictions on the use of such frequencies, or unforeseeable
    difficulties with the use of such frequencies, could impede our
    ability to commercialize
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">All of
    our operations are conducted at a single location. Any
    disruption at our facility could increase our
    expenses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All of our operations are conducted at two adjacent buildings in
    Irvington, New York. We take precautions to safeguard our
    facility, including insurance, health and safety protocols,
    contracted off-site engineering services, and storage of
    computer data. However, a natural disaster, such as a fire,
    flood or
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    20
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    earthquake, could cause substantial delays in our operations,
    damage or cause us to incur additional expenses. The insurance
    we maintain against fires, floods, earthquakes and other natural
    disasters may not be adequate to cover our losses in any
    particular case.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be liable for contamination or other harm caused by materials
    that we handle, and changes in environmental regulations could
    cause us to incur additional expense.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our manufacturing, research and development and clinical
    processes do not generally involve the handling of potentially
    harmful biological materials or hazardous materials, but they
    may occasionally do so. We are subject to federal, state and
    local laws and regulations governing the use, handling, storage
    and disposal of hazardous and biological materials. If
    violations of environmental, health and safety laws occur, we
    could be held liable for damages, penalties and costs of
    remedial actions. These expenses or this liability could have a
    significant negative impact on our business, financial condition
    and results of operations. We may violate environmental, health
    and safety laws in the future as a result of human error,
    equipment failure or other causes. Environmental laws could
    become more stringent over time, imposing greater compliance
    costs and increasing risks and penalties associated with
    violations. We may be subject to potentially conflicting and
    changing regulatory agendas of political, business and
    environmental groups. Changes to or restrictions on permitting
    requirements or processes, hazardous or biological material
    storage or handling might require an unplanned capital
    investment or relocation. Failure to comply with new or existing
    laws or regulations could harm our business, financial condition
    and results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Failure
    to obtain and maintain regulatory approval in foreign
    jurisdictions will prevent us from marketing
    abroad.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Following commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in the United States, we may market
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    internationally. Outside the U.S., we can market a product only
    if we receive a marketing authorization and, in some cases,
    pricing approval, from the appropriate regulatory authorities.
    The approval procedure varies among countries and can involve
    additional testing, and the time required to obtain approval may
    differ from that required to obtain FDA approval.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foreign regulatory approval process may include all of the
    risks associated with obtaining FDA approval, in addition to
    other risks. Foreign regulatory bodies have established varying
    regulations governing product standards, packaging requirements,
    labeling requirements, import restrictions, tariff regulations,
    duties and tax requirements. We may not obtain foreign
    regulatory approvals on a timely basis, if at all. Foreign
    regulatory agencies, as well as the FDA, periodically inspect
    manufacturing facilities both in the U.S.&#160;and abroad.
    Approval by the FDA does not ensure approval by regulatory
    authorities in other countries, and approval by one foreign
    regulatory authority does not ensure approval by regulatory
    authorities in other foreign countries or by the FDA. We have
    not taken any significant actions to obtain foreign regulatory
    approvals. We may not be able to file for regulatory approvals
    and may not receive necessary approvals to commercialize
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    in any market on a timely basis, or at all. Our inability or
    failure to comply with varying foreign regulation, or the
    imposition of new regulations, could restrict our sale of
    products internationally.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    success will depend on our ability to attract and retain our
    personnel.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are highly dependent on our senior management, especially
    Joseph V. Gulfo,&#160;M.D., our President and Chief Executive
    Officer and Dina Gutkowicz-Krusin,&#160;Ph.D., our Director of
    Clinical Research. Our success will depend on our ability to
    retain our current senior management and to attract and retain
    qualified personnel in the future, including scientists,
    clinicians, engineers and other highly skilled personnel.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Competition for senior management personnel, as well as
    scientists, clinicians, engineers, and experienced sales and
    marketing individuals, is intense, and we may not be able to
    retain our personnel. The loss of the services of members of our
    senior management, scientists, clinicians or engineers could
    prevent the implementation and completion of our objectives,
    including the development and introduction of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>.

    The loss of a member of our senior management or our
    professional staff would require the remaining executive
    officers
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    21
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    to divert immediate and substantial attention to seeking a
    replacement. Each of our officers may terminate their employment
    at any time without notice and without cause or good reason.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We expect to expand our operations and grow our research and
    development, product development and administrative operations.
    This expansion is expected to place a significant strain on our
    management, and will require hiring a significant number of
    qualified personnel. Accordingly, recruiting and retaining such
    personnel in the future will be critical to our success. There
    is competition from other companies and research and academic
    institutions for qualified personnel in the areas of our
    activities. If we fail to identify, attract, retain and motivate
    these highly skilled personnel, we may be unable to continue our
    development and commercialization activities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    financial results for future periods will be affected by the
    attainment of milestones.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have granted to certain employees stock options that vest
    with the attainment of various performance milestones. Upon the
    attainment of these milestones we will be required to recognize
    a stock based compensation expense in an amount based on the
    fair value of the options. We have also granted options that
    vest upon attainment of development milestones. Upon the
    attainment of each of the relevant development milestones which
    include submission of the PMA application for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and FDA approval of such PMA, there will be a significant
    compensation charge based on the then fair value of such options.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    fail to maintain the adequacy of our internal controls, our
    ability to provide accurate financial statements could be
    impaired and any failure to maintain our internal controls could
    have an adverse effect on our stock price.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Sarbanes-Oxley Act of 2002 (&#147;SOX&#148;), as well as
    rules subsequently implemented by the SEC, the Public Company
    Accounting Oversight Board and the Financial Industry Regulatory
    Authority, have required changes in the corporate governance
    practices of public companies. Monitoring compliance with the
    existing rules and implementing changes required by new rules
    may increase our legal and financial compliance costs, divert
    management attention from operations and strategic
    opportunities, and make legal, accounting and administrative
    activities more time-consuming and costly. On each of
    June&#160;30, 2007 and 2008, our market capitalization exceeded
    $75&#160;million. As a result we had our independent registered
    public accounting firm attest to our compliance with
    Section&#160;404 of SOX as of December&#160;31, 2007 and 2008.
    In both 2007 and 2008, we retained a consultant experienced in
    SOX that assisted us in the process of instituting changes to
    our internal procedures to satisfy the requirements of the SOX.
    We have evaluated our internal control systems in order to allow
    us to report on, and our independent registered public
    accounting firm to attest to, our internal controls, as required
    by Section&#160;404 of the SOX. As a small company with limited
    capital and human resources, going forward we may need to divert
    management&#146;s time and attention away from our business in
    order to ensure continued compliance with these regulatory
    requirements. We may require new information technologies
    systems, the auditing of our internal controls, and compliance
    training for our directors, officers and personnel. Such efforts
    may entail a significant expense. If we fail to maintain the
    adequacy of our internal controls as such standards are
    modified, supplemented or amended from time to time, we may not
    be able to ensure that we can conclude on an ongoing basis that
    we have effective internal control over financial reporting in
    accordance with Section&#160;404 of the SOX. Any failure to
    maintain the adequacy of our internal controls could have an
    adverse effect on timely and accurate financial reporting and
    the trading price of our common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    results could be impacted by the effects of, and changes in,
    world-wide economic and capital market conditions.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our business may be adversely affected by factors in the United
    States and other countries that are beyond our control, such as
    disruptions in the financial markets or downturns in economic
    activity. The current world-wide economic conditions could also
    have an adverse impact on the availability and cost of capital,
    interest rates, tax rates, or regulations.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    22
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Relating to Our Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">An
    active trading market for our common stock may not be
    sustained.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An active public market for our common stock may not be
    sustained. Further, we cannot be certain that the market price
    of our common stock will not decline below the amount required
    by NASDAQ to maintain a listing on its Capital Market. Should we
    fail to meet the minimum standards established by NASDAQ for its
    Capital Market, we could be de-listed, meaning shareholders
    might be subject to limited liquidity.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    stock price may be volatile, meaning purchasers of our common
    stock could incur substantial losses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our stock price is likely to be volatile. Between
    October&#160;28, 2005 (the date of our initial public offering)
    and March&#160;31, 2009, our stock price has ranged from $2.29
    to $9.99 per share. The stock market in general and the market
    for medical technology companies in particular have experienced
    extreme volatility that has often been unrelated to the
    operating performance of particular companies. The following
    factors, in addition to other risk factors described in this
    section and general market and economic conditions, may have a
    significant impact on the market price of our common stock:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    results of our research and development efforts and our clinical
    trials;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the timing of regulatory approval for our products;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    failure of any of our products, if approved, to achieve
    commercial success;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the announcement of new products or product enhancements by us
    or our competitors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    regulatory developments in the US and foreign countries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    ability to manufacture our products to commercial standards;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    developments concerning our clinical collaborators, suppliers or
    marketing partners;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in financial estimates or recommendations by securities
    analysts;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    public concern over our products;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    developments or disputes concerning patents or other
    intellectual property rights;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    product liability claims and litigation against us or our
    competitors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the departure of key personnel;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the strength of our balance sheet;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    variations in our financial results or those of companies that
    are perceived to be similar to us;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in the structure of and third-party reimbursement in the
    U.S.&#160;and other countries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in accounting principles or practices;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    general economic, industry and market conditions;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    future sales of our common stock.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A decline in the market price of our common stock could cause
    stockholders to lose some or all of their investment and may
    adversely impact our ability to attract and retain employees and
    raise capital. In addition, stockholders may initiate securities
    class action lawsuits if the market price of our stock drops
    significantly. Whether or not meritorious, litigation brought
    against us could result in substantial costs and could divert
    the time and attention of our management. Our insurance to cover
    claims of this sort may not be adequate.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    23
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If our
    directors, executive officers, and principal stockholders choose
    to act together, they may have the ability to influence all
    matters submitted to stockholders for approval.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of March&#160;31, 2009, our directors, executive officers,
    holders of more than 5% of our common stock, and their
    affiliates in the aggregate, beneficially owned approximately
    16% of our outstanding common stock. As a result, these
    stockholders, subject to any fiduciary duties owed to our other
    stockholders under Delaware law, could be able to exercise a
    controlling influence over matters requiring stockholder
    approval, including the election of directors and approval of
    significant corporate transactions, and will have significant
    control over our management and policies. Some of these persons
    or entities may have interests that are different from yours.
    For example, these stockholders may support proposals and
    actions with which you may disagree or which are not in your
    interests. The concentration of ownership could delay or prevent
    a change in control of our company or otherwise discourage a
    potential acquirer from attempting to obtain control of our
    company, which in turn could reduce the price of our common
    stock. In addition, these stockholders, some of whom have
    representatives sitting on our Board of Directors, could use
    their voting influence to maintain our existing management and
    directors in office, delay or prevent changes of control of our
    company, or support or reject other management and board
    proposals that are subject to stockholder approval, such as
    amendments to our employee stock plans and approvals of
    significant financing transactions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    charter documents may inhibit a takeover that stockholders
    consider favorable and could also limit the market price of our
    stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Provisions of our restated certificate of incorporation and
    bylaws may make it more difficult for or prevent a third party
    from acquiring control of us without the approval of our board
    of directors. These provisions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    set limitations on the removal of directors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    limit who may call a special meeting of stockholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    establish advance notice requirements for nominations for
    election to our board of directors or for proposing matters that
    can be acted upon at stockholder meetings;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    do not permit cumulative voting in the election of our
    directors, which would otherwise permit less than a majority of
    stockholders to elect directors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    prohibit stockholder action by written consent, thereby
    requiring all stockholder actions to be taken at a meeting of
    our stockholders;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    provide our board of directors the ability to designate the
    terms of and issue a new series of preferred stock without
    stockholder approval.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These provisions may have the effect of entrenching our
    management team and may deprive you of the opportunity to sell
    your shares to potential acquirers at a premium over prevailing
    prices. This potential inability to obtain a control premium
    could reduce the price of our common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Relating to the Committed Equity Financing Facility with
    Kingsbridge</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    will not be able to make a draw under the Committed Equity
    Financing Facility that we entered into with Kingsbridge unless
    certain conditions are met.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Committed Equity Financing Facility, or CEFF, with
    Kingsbridge entitles us to sell and obligates Kingsbridge to
    purchase, from time to time over a period of three years, shares
    of our common stock for cash consideration, subject to certain
    conditions and restrictions. Kingsbridge will not be obligated
    to purchase shares under the CEFF unless certain conditions are
    met, which include a minimum price for our common stock of $2.00
    per share; the accuracy of representations and warranties made
    to Kingsbridge; compliance with laws; effectiveness of the
    registration statement of which this prospectus is a part; and
    the continued listing of our stock on the NASDAQ Capital Market.
    Therefore, if we are unable to satisfy these pre-conditions, we
    will not be able to require Kingsbridge to buy any shares of
    common stock and will not be able to raise any funds under the
    CEFF.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    24
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    Committed Equity Financing Facility that we entered into with
    Kingsbridge will not be available to us if Kingsbridge
    terminates the CEFF in accordance with its terms.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Kingsbridge is permitted to terminate the CEFF if it determines
    that a material and adverse event has occurred affecting our
    business, operations, properties or financial condition and if
    such condition continues for a period of 10 trading days from
    the date Kingsbridge provides us notice of such material and
    adverse event. If the CEFF is terminated by Kingsbridge, we may
    be unable to access capital on favorable terms or at all.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    CEFF that we entered into with Kingsbridge may require us to
    make additional &#147;blackout&#148; or other payments to
    Kingsbridge.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with our CEFF with Kingsbridge, we are entitled in
    certain circumstances to deliver a blackout notice to
    Kingsbridge to suspend the use of the registration statement of
    which this prospectus is a part and prohibit Kingsbridge from
    selling shares under this prospectus. If we deliver a blackout
    notice in the 20 trading days following the settlement of a draw
    down, or if the registration statement is not effective in
    circumstances not permitted by the agreement, then we must make
    a payment to Kingsbridge, or issue Kingsbridge additional shares
    in lieu of this payment, calculated on the basis of the number
    of shares held by Kingsbridge (exclusive of shares that
    Kingsbridge may hold pursuant to exercise of the Kingsbridge
    warrant) and the change in the market price of our common stock
    during the period in which the use of the registration statement
    is suspended. If the trading price of our common stock declines
    during a suspension of the registration statement, the blackout
    or other payment could be significant.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    CEFF that we entered into with Kingsbridge may result in
    dilution to our stockholders if we sell shares to Kingsbridge
    under the CEFF or issue shares in lieu of a blackout
    payment.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Should we sell shares to Kingsbridge under the CEFF, or issue
    shares in lieu of a blackout payment, it will have a dilutive
    effective on the holdings of our current stockholders, and may
    result in downward pressure on the price of our common stock. If
    we draw down under the CEFF, we will issue shares to Kingsbridge
    at a discount of up to 10&#160;percent from the volume weighted
    average price of our common stock. If we draw down amounts under
    the CEFF when our share price is decreasing, we will need to
    issue more shares to raise the same amount than if we were to
    issue shares when our stock price is higher. Such issuances will
    have a dilutive effect and may further decrease our stock price.
</DIV>
<A name='103'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SPECIAL
    NOTE&#160;REGARDING FORWARD-LOOKING STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The statements contained or incorporated by reference in this
    prospectus that are not historical facts are forward-looking.
    These statements are made pursuant to the safe harbor provisions
    of the Private Securities Litigation Reform Act of 1995. Such
    statements include, without limitation, our expectations
    regarding sales, earnings or other future financial performance
    and liquidity, conduct and completion of clinical trials,
    product introductions, entry into new geographic regions, and
    general optimism about future operations or operating results.
    Some of these statements can be identified by the use of
    forward-looking terminology such as &#147;prospects,&#148;
    &#147;outlook,&#148; &#147;believes,&#148;
    &#147;estimates,&#148; &#147;intends,&#148; &#147;may,&#148;
    &#147;will,&#148; &#147;should,&#148; &#147;anticipates,&#148;
    &#147;expects&#148; or &#147;plans,&#148; or the negative or
    other variation of these or similar words, or by discussion of
    trends and conditions, strategy or risks and uncertainties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These forward-looking expectations are based on current
    assumptions within the bounds of management&#146;s knowledge of
    our business and operations and which management believes are
    reasonable. These assumptions are subject to risks and
    uncertainties, and actual results could differ materially from
    expectations because of issues and uncertainties such as those
    listed under the caption &#147;Risk Factors&#148; and elsewhere
    in this prospectus and in documents incorporated into this
    prospectus which, among others, should be considered in
    evaluating our future financial performance. All subsequent
    written and oral forward-looking statements attributable to us
    or persons acting on our behalf are expressly qualified in their
    entirety by the cautionary statements in this prospectus.
    Readers are advised to consult any further disclosures we may
    make on related subjects in subsequent reports filed with the
    SEC.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    25
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additional information on factors that may affect our business
    and financial results can be found in our filings with the SEC.
    All forward-looking statements should be considered in light of
    these risks and uncertainties. We assume no responsibility to
    update forward-looking statements made in this prospectus.
</DIV>
<A name='104'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will not receive any of the proceeds from the sale of shares
    of our common stock by the selling stockholder pursuant to this
    prospectus. Any issuance of shares by us to Kingsbridge under
    the common stock purchase agreement or in connection with the
    exercise of the Kingsbridge warrant will be made pursuant to an
    exemption from the registration requirements of the Securities
    Act. To the extent we are able to sell shares under the CEFF to
    Kingsbridge, we may receive a maximum of $45&#160;million. To
    the extent the warrant held by the selling stockholder is
    exercised in full at its current exercise price, we would
    receive $2,270,000 in cash proceeds, unless such warrant is
    exercised on a cashless basis pursuant to its terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Unless otherwise provided in the applicable prospectus
    supplement, we intend to use the proceeds from our sales, if
    any, to Kingsbridge to finance the PMA application process, the
    commercialization of
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and for general corporate purposes, including capital
    expenditures and working capital. The amounts and timing of our
    actual expenditures will depend on numerous factors, including
    the progress in and costs of our PMA application for
    MelaFind<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,

    and the amount of cash used by our operations. We therefore
    cannot estimate the amount of proceeds to be used for all of the
    purposes described above. We may find it necessary or advisable
    to use the net proceeds for other purposes, and we will have
    broad discretion in the application of the proceeds. Pending the
    uses described above, we intend to invest the proceeds
    temporarily in short-term or marketable securities until we use
    them for their stated purpose.
</DIV>
<A name='105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SELLING
    STOCKHOLDER</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus relates to the possible resale by the selling
    stockholder, Kingsbridge, of shares of common stock that we may
    issue pursuant to the common stock purchase agreement we entered
    into with Kingsbridge on May&#160;7, 2009, or upon exercise of
    the warrant that we issued to Kingsbridge on May&#160;7, 2009.
    We are filing the registration statement, of which this
    prospectus is a part, pursuant to the provisions of the
    registration rights agreement we entered into with Kingsbridge
    on May&#160;7, 2009. The selling stockholder may from time to
    time offer and sell pursuant to this prospectus any or all of
    the shares that it acquires under the common stock purchase
    agreement or upon exercise of the warrant.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table presents information regarding Kingsbridge,
    as the selling stockholder, and the shares that it may offer and
    sell from time to time under this prospectus. This table is
    prepared based on information supplied to us by the selling
    stockholder, and reflects holdings as of May&#160;7, 2009. As
    used in this prospectus, the term &#147;selling
    stockholder&#148; includes Kingsbridge and any donees, pledges,
    transferees or other successors in interest selling shares
    received after the date of this prospectus from the selling
    stockholder as a gift, pledge, or other non-sale related
    transfer. The number of shares in the column &#147;Number of
    Shares&#160;Being Offered&#148; represents all of the shares
    that the selling stockholder may offer under this prospectus.
    The selling stockholder may sell some, all or none of its
    shares. We do not know how long the selling stockholder will
    hold the shares before selling them, and we currently have no
    agreements, arrangements or understandings with the selling
    stockholder regarding the sale of any of the shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Beneficial ownership is determined in accordance with
    <FONT style="white-space: nowrap">Rule&#160;13d-3(d)</FONT>
    promulgated by the SEC under the Securities Exchange Act of
    1934. The percentage of shares of common stock beneficially
    owned prior to the offering shown in the table below is based
    both on an aggregate of 17,639,498&#160;shares of our common
    stock outstanding on May&#160;7, 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="50%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="14%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares Beneficially<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares Beneficially<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Owned Prior to the<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Owned After<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Selling Stockholder</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Offering</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Being Offered</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>the Offering</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Kingsbridge Capital Limited(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,527,000(2
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,527,000
</TD>
<TD nowrap align="left" valign="bottom">
    (2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    26
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    The business address of Kingsbridge Capital Limited is
    P.O.&#160;Box&#160;1075, Elizabeth House, 9 Castle Street, St.
    Helier, Jersey, JE42QP, Channel Islands. Adam Gurney, Tony
    Gardner-Hillman and Maria O&#146;Donoghue have shared voting and
    investment control of the securities held by Kingsbridge.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Consists of 3,327,000&#160;shares of common stock, the maximum
    number of shares of common stock issuable under the common stock
    purchase agreement we entered into with Kingsbridge on
    May&#160;7, 2009, and 200,000&#160;shares of common stock
    issuable upon exercise of a warrant issued to Kingsbridge on
    May&#160;7, 2009. For the purposes hereof, we assume the
    issuance of all 3,527,000&#160;shares.</TD>
</TR>

</TABLE>
<A name='106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PLAN OF
    DISTRIBUTION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the extent that we issue shares to Kingsbridge under the CEFF
    or Kingsbridge acquires shares upon exercise of its warrant, the
    selling stockholder may offer such shares for resale under this
    prospectus. Except as described below, to our knowledge, the
    selling stockholder has not entered into any agreement,
    arrangement or understanding with any particular broker or
    market maker with respect to the shares of common stock offered
    hereby, nor, except as described below, do we know the identity
    of the brokers or market makers that will participate in the
    resale of the shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selling stockholder may decide not to sell any shares. The
    selling stockholder may from time to time offer some or all of
    the shares of common stock through brokers, dealers or agents
    who may receive compensation in the form of discounts,
    concessions or commissions from the selling stockholder
    <FONT style="white-space: nowrap">and/or</FONT> the
    purchasers of the shares of common stock for whom they may act
    as agent. In effecting sales, broker-dealers that are engaged by
    the selling stockholder may arrange for other broker-dealers to
    participate. Kingsbridge is an &#147;underwriter&#148; within
    the meaning of the Securities Act. Any brokers, dealers or
    agents who participate in the distribution of the shares of
    common stock by the selling stockholder may also be deemed to be
    &#147;underwriters,&#148; and any profits on the sale of the
    shares of common stock by them and any discounts, commissions or
    concessions received by any such brokers, dealers or agents may
    be deemed to be underwriting discounts and commissions under the
    Securities Act. To the extent the selling stockholder may be
    deemed to be an underwriter, the selling stockholder will be
    subject to the prospectus delivery requirements of the
    Securities Act and may be subject to certain statutory
    liabilities of, including but not limited to, Sections&#160;11,
    12 and 17 of the Securities Act and
    <FONT style="white-space: nowrap">Rule&#160;10b-5</FONT>
    under the Securities Exchange Act of 1934.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selling stockholder will act independently of us in making
    decisions with respect to the timing, manner and size of each
    sale by it. Such sales may be made on the NASDAQ Capital Market,
    on the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market, otherwise, or in a combination of such methods of sale,
    at then prevailing market prices, at prices related to
    prevailing market prices or at negotiated prices. The shares of
    common stock may be sold by the selling stockholder according to
    one or more of the following methods:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a block trade in which the broker or dealer so engaged will
    attempt to sell the shares of common stock as agent but may
    position and resell a portion of the block as principal to
    facilitate the transaction;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    purchases by a broker or dealer as principal and resale by such
    broker or dealer for its account pursuant to this prospectus;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    distribution in accordance with the rules of the NASDAQ Stock
    Market;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    ordinary brokerage transactions and transactions in which the
    broker solicits purchasers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    privately negotiated transactions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a combination of such methods of sale;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other method permitted pursuant to applicable law.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any shares covered by this prospectus which qualify for sale
    pursuant to Rule&#160;144 of the Securities Act may be sold
    under Rule&#160;144 rather than pursuant to this prospectus. In
    addition, the selling stockholder may transfer the shares by
    other means not described in this prospectus.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    27
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any broker-dealer participating in such transactions as agent
    may receive commissions from Kingsbridge (and, if they act as
    agent for the purchaser of such shares, from such purchaser).
    Broker-dealers may agree with Kingsbridge to sell a specified
    number of shares at a stipulated price per share, and, to the
    extent such a broker-dealer is unable to do so acting as agent
    for Kingsbridge, to purchase as principal any unsold shares at
    the price required to fulfill the broker-dealer commitment to
    Kingsbridge. Broker-dealers who acquire shares as principal may
    thereafter resell such shares from time to time in transactions
    (which may involve crosses and block transactions and which may
    involve sales to and through other broker-dealers, including
    transactions of the nature described above) on the NASDAQ
    Capital Market, on the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market, in privately-negotiated transactions or otherwise at
    market prices prevailing at the time of sale or at negotiated
    prices, and in connection with such resales may pay to or
    receive from the purchasers of such shares commissions computed
    as described above. To the extent required under the Securities
    Act, an amendment to this prospectus or a supplemental
    prospectus will be filed, disclosing:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the name of any such broker-dealers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of shares involved;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the price at which such shares are to be sold;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the commission paid or discounts or concessions allowed to such
    broker-dealers, where applicable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    that such broker-dealers did not conduct any investigation to
    verify the information set out or incorporated by reference in
    this prospectus, as supplemented;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    other facts material to the transaction.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Underwriters and purchasers that are deemed underwriters under
    the Securities Act may engage in transactions that stabilize,
    maintain or otherwise affect the price of the securities,
    including the entry of stabilizing bids or syndicate covering
    transactions or the imposition of penalty bids. Kingsbridge and
    any other persons participating in the sale or distribution of
    the shares will be subject to the applicable provisions of the
    Exchange Act and the rules and regulations thereunder including,
    without limitation, Regulation&#160;M. These provisions may
    restrict certain activities of, and limit the timing of,
    purchases by the selling stockholder or other persons or
    entities. Under Regulation&#160;M, persons engaged in a
    distribution of securities are prohibited from simultaneously
    engaging in market making and certain other activities with
    respect to such securities for a specified period of time prior
    to the commencement of such distributions, subject to special
    exceptions or exemptions. Regulation&#160;M may restrict the
    ability of any person engaged in the distribution of the
    securities to engage in market-making and certain other
    activities with respect to those securities. The
    anti-manipulation rules under the Exchange Act may apply to
    sales of the securities in the market. All of these limitations
    may affect the marketability of the shares and the ability of
    any person to engage in market-making activities with respect to
    the securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have agreed to pay the expenses of registering the shares of
    common stock under the Securities Act, including registration
    and filing fees, printing expenses, administrative expenses and
    certain legal and accounting fees, as well as certain fees of
    counsel for the selling stockholder incurred in the preparation
    and negotiation of the CEFF agreements and the registration
    statement of which this prospectus forms a part. The selling
    stockholder will bear all discounts, commissions or other
    amounts payable to underwriters, dealers or agents, as well as
    transfer taxes and certain other expenses associated with its
    sale of securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms of the Kingsbridge common stock purchase
    agreement and the registration rights agreement, we have agreed
    to indemnify the selling stockholder and certain other persons
    against certain liabilities in connection with the offering of
    the shares of common stock offered hereby, including liabilities
    arising under the Securities Act or, if such indemnity is
    unavailable, to contribute toward amounts required to be paid in
    respect of such liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At any time a particular offer of the shares of common stock is
    made by the selling stockholder, a revised prospectus or
    prospectus supplement, if required, will be distributed. Such
    prospectus supplement or post-effective amendment will be filed
    with the SEC, to reflect the disclosure of required additional
    information with respect to the distribution of the shares of
    common stock. We may suspend the sale of shares by the
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    28
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    selling stockholder 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.
</DIV>
<A name='107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The validity of the shares of common stock offered hereby will
    be passed upon by Golenbock Eiseman Assor Bell&#160;&#038;
    Peskoe LLP, New York, New York.
</DIV>
<A name='108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The financial statements incorporated in this prospectus by
    reference from our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended December&#160;31, 2008 have been audited by
    Eisner LLP, an independent registered public accounting firm as
    stated in their reports incorporated herein by reference, which
    reports have been so incorporated in reliance upon the reports
    of such firm given upon their authority as experts in accounting
    and auditing.
</DIV>
<A name='109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">WHERE YOU
    CAN FIND MORE INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are a public company and file annual, quarterly and current
    reports, proxy statements and other information with the
    Securities and Exchange Commission. You may read and copy any
    document we file at the SEC&#146;s Public Reference Room at
    100&#160;F&#160;Street, N.E., Room&#160;1580,
    Washington,&#160;D.C. 20549. You can request copies of these
    documents by writing to the SEC and paying a fee for the copying
    cost. Please call the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330</FONT>
    for more information about the operation of the public reference
    room. Our SEC filings are also available to the public at the
    SEC&#146;s website at
    <FONT style="white-space: nowrap">http://www.sec.gov.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, we maintain a website that contains information
    regarding our company, including copies of reports, proxy
    statements and other information we file with the SEC. The
    address of our website is <U>www.eosciences.com</U>. Our
    website, and the information contained on that site, or
    connected to that site, are not intended to be part of this
    prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have filed a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    with the SEC for the common stock offered by the selling
    stockholder under this prospectus. This prospectus does not
    include all of the information contained in the registration
    statement. You should refer to the registration statement and
    its exhibits for additional information that is not contained in
    this prospectus. Whenever we make reference in this prospectus
    to any of our contracts, agreements or other documents, you
    should refer to the exhibits attached to the registration
    statement for copies of the actual contract, agreement or other
    document. You may:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    inspect a copy of this prospectus, including the exhibits and
    schedules, without charge at the public reference room;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtain a copy from the SEC upon payment of the fees prescribed
    by the SEC;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtain a copy from the SEC website.
</TD>
</TR>

</TABLE>
<A name='110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INCORPORATION
    OF CERTAIN DOCUMENTS BY REFERENCE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The SEC allows us to &#147;incorporate by reference&#148; into
    this prospectus the information contained in the documents we
    file with the SEC, 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, and later information that we file with the
    SEC will update and supersede this information. We are
    incorporating by reference the following documents into this
    prospectus:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended December&#160;31, 2008 (including information
    specifically incorporated by reference into our
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    from our Proxy Statement for our 2009 Annual Meeting of
    Stockholders);
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    29
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our Quarterly Report on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarter ended March&#160;31, 2009;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    filed on February&#160;13, 2009 and May&#160;8, 2009;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the description of our common stock contained in our
    registration statement on
    <FONT style="white-space: nowrap">Form&#160;8-A</FONT>
    and any amendments or reports filed for the purpose of updating
    such description.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are also incorporating by reference any future filings we
    make with the SEC under Sections&#160;13(a), 13(c), 14, or 15(d)
    of the Securities Exchange Act of 1934 after the date of this
    prospectus and prior to the termination of the offering of the
    securities to which this prospectus relates. In no event,
    however, will any of the information that we &#147;furnish&#148;
    to the SEC or is not deemed &#147;filed&#148; with the SEC in
    any Current Report on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    or any other report or filing be incorporated by reference into,
    or otherwise included in, this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You may access our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K,</FONT>
    Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q,</FONT>
    Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K,</FONT>
    Proxy Statement, and amendments, if any, to those documents
    filed or furnished pursuant to Sections&#160;13(a), 13(c), 14 or
    15(d) of the Exchange Act with the SEC free of charge at the
    SEC&#146;s website or our website as soon as reasonably
    practicable after such material is electronically filed with, or
    furnished to, the SEC. The information contained in, or that can
    be accessed through, our website is not part of this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You may request of copy of these filings, at no cost, by writing
    to Richard I. Steinhart, Chief Financial Officer,
    Electro-Optical Sciences, Inc., 3&#160;West Main Street,
    Suite&#160;201, Irvington, New York 10533 or by telephone at
    <FONT style="white-space: nowrap">(914)&#160;591-3783.</FONT>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    30
</DIV><!-- END PAGE WIDTH -->
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
