##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    000-51481
 ELECTRO-OPTICAL SCIENCES,
    INC
 (Exact name of registrant as
    specified in its charter)
  Delaware

13-3986004(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   3 West Main Street, Suite 201
 Irvington, New York 10533
 (Address, including zip code, of
    registrants principal executive offices)
  (914) 591-3783
 Registrants telephone number, including area code:
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock, $0.001 par value

The NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller Reporting
    company o   Rule 12b-2 o þ
    DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K.




---



##### 





ELECTRO-OPTICAL
    SCIENCES, INC.
  2007
    FORM 10-K
    ANNUAL REPORT
 TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


1Item 2.


Properties


40Item 3.


Legal Proceedings


41Item 4.


Submission of Matters to a Vote of Security
    Holders


41PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


41Item 6.


Selected Financial Data


43Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


44Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


51Item 8.


Financial Statements and Supplementary Data


52Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


74Item 9A.


Controls and Procedures


74Item 9B.


Other Information


77PART IIIItem 10.


Directors, Executive Officers, and Corporate
    Governance


77Item 11.


Executive Compensation


77Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


77Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


77Item 14.


Principal Accountant Fees and Services


77PART IVItem 15.


Exhibits and Financial Statements Schedules


78EX-21.1: SUBSIDIARIES OF THE REGISTRANT


82EX-23.1: CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


83EX-31.1: CERTIFICATION


84EX-31.2: CERTIFICATION


85EX-32.1: CERTIFICATIONS


86EX-21.1: SUBSIDIARIESEX-23.1: CONSENT OF EISNER, LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION




---



##### Table of Contents



This Annual Report on
    Form 10-K,
    including the sections labeled Managements Discussion and
    Analysis of Financial Condition and Results of Operations,
    contains forward-looking statements that you should read in
    conjunction with the financial statements and notes to financial
    statements that we have included elsewhere in this report. These
    statements are based on our current expectations, assumptions,
    estimates and projections about our business and our industry,
    and involve known and unknown risks, uncertainties, and other
    factors that may cause our or our industrys results,
    levels of activity, performance or achievements to be materially
    different from any future results, levels of activity,
    performance or achievements expressed or implied in, or
    contemplated by, the forward-looking statements. We generally
    identify these statements by words or phrases such as
    believe, anticipate,
    assuming, expect, intend,
    plan, will, may,
    should, estimate, predict,
    potential, continue, or the negative of
    such terms or other similar expressions. Our actual results and
    the timing of events may differ significantly from the results
    discussed in the forward-looking statements, and you should not
    place undue reliance on these statements. Factors that might
    cause such a difference include those discussed below under the
    section Risk Factors, as well as those discussed
    elsewhere in this Annual Report on
    Form 10-K.
    We disclaim any intent or obligation to update any
    forward-looking statements as a result of developments occurring
    after the period covered by this report or otherwise.
  Item 1.
    Business  Overview
  ®
  ®
  
    a hand-held imaging device, which employs high precision
    optics and multi-spectral illumination (multiple colors of light
    including near infra-red);
    our proprietary databaseof pigmented skin lesions, which
    we believe to be the largest in the US; and
    our lesion classifiers, which are sophisticated
    mathematical algorithms that extract lesion feature information
    and classify lesions.  ® ® ® ® ®
  ®
   1




---



##### Table of Contents



and/or A B C D E
  ® ® sensitivity specificity ® ®
  ®
  ®
  ® ® ® ® ® ®
  The
    Market Opportunity
   2




---



##### Table of Contents



ages 20-30, ages 25-30, ages 30-35,
  Our
    Strategy
  ®
  
    Pursue the timely FDA approval of
    MelaFind®.  We
    have entered into a binding Protocol Agreement with the FDA for
    the conduct of the pivotal trial of
    MelaFind®.
    The study commenced in late January 2007 and was over two-thirds
    complete as of the end of 2007. On October 12, 2006, we
    announced that the FDA had informed us that when submitted, the
    MelaFind®
    premarket approval, or PMA, application would receive expedited
    review. Expedited review means that upon filing a PMA with the
    FDA, it is placed at the beginning of the FDAs queue and
    receives additional review resources. While the expedited review
    could shorten the
    MelaFind®
    FDA approval process, we can give no assurances that this will
    be the case. Upon obtaining premarket approval from the FDA, we
    plan to launch
    MelaFind®
    in the United States. If the pivotal trial and FDA approval
    process proceed as anticipated, management believes that PMA
    approval could come as early as the second half of 2008.
    Establish
    MelaFind®as the leading technology for assisting in the detection of
    melanoma.  We have invested considerable capital
    and expertise into developing our core technology platform,
    which is protected by eight US patents. We will continue to
    refine and optimize this technology to ensure that
    MelaFind®
    is the leading system for assisting in the detection of melanoma.
    Obtain third party payer reimbursement to support our
    recurring revenue pricing model.  We intend to
    offer
    MelaFind®
    on a per patient basis, creating a recurring revenue stream. To
    do so, we will seek to obtain third party reimbursement as well
    as private pay alternatives. We are working with experts to
    create an evidence-based medicine evaluation model consistent
    with those used to support positive coverage decisions by the
    federal Centers for Medicare and Medicaid Services (CMS) and
    private payers for similar products. The value drivers in the
    model include the cost savings associated with early detection
    and fewer biopsies. We believe that the use of
    MelaFind®
    could result in substantial savings to the US healthcare system.
    Commercialize
    MelaFind®using multiple sales and marketing
    strategies.  Our internal sales and marketing
    effort will focus initially on high volume/key opinion
    leader dermatologists with specialties in the diagnosis
    and treatment of melanoma. To enter the larger US markets of
    general dermatologists, plastic surgeons, and primary care
    physicians, and for international markets, we intend to
    establish partnerships with pharmaceutical
    and/or
    diagnostic device companies with an established presence in
    these markets. While we believe obtaining a positive national
    coverage decision from CMS may take 3




---



##### Table of Contents



an additional 18 to 36 months following PMA approval, and
    obtaining a positive coverage decision from private payers,
    managed care organizations and state Medicare administrative
    contractors may take at least 6 to 12 months following PMA
    approval, we intend to commence sales of
    MelaFind®
    immediately upon receiving PMA approval for physicians to offer
    MelaFind®
    to their patients on a self-pay basis and through negotiated
    payment arrangements with several third-party payers.    Limitations
    of Current Melanoma Diagnosis
  and/or ® ®
    MelaFind®
    Product Description
  ® ® ® ® ®
  A hand-held imaging device
  
    an illuminator that shines 10 different specific wavelengths of
    light, including near infra-red bands;
    a lens system composed of nine elements that creates images of
    the light reflected from the lesions;
    a photon (light) sensor; and
    an image processor employing proprietary algorithms to extract
    many discrete characteristics or features from the images.  Our proprietary database of pigmented skin lesions ®
  Our lesion classifiers, ® Lesion Classifier, Lesion
    Classifiers
 4




---



##### Table of Contents



Lesion Classifiers Lesion
    Classifier Lesion Classifiers ®
  ® sensitivity specificity ® Lesion Classifier ®
  ®
  MelaFind®
    Regulatory Status
  ®
  ® ® ®
    ® ® ®
  ®
 5




---



##### Table of Contents



scale-up ®
  ® ® ®
  Clinical
    Studies of
    MelaFind®
  Goals
    and Objectives
  ® in vivo ® ® Lesion Classifier ®
  ® Lesion Classifiers, Lesion Classifier ® Lesion Classifiers sensitivity specificity ® ® Lesion Classifiers Lesion Classifiers
  ®
  MelaFind®
    Development History  Hardware and
    Software
  ® ®
   6




---



##### Table of Contents



® Lesion Classifier ®
  ®
  ®
    Current
    Results of Training Studies and Blinded Tests
  ® ®
  Training
    Study and Blinded Test Results
  Training


Blinded testMelaFind®


MelaFind®


Study DermatologistsSensitivity


100
%


Missed 1 in situ Melanoma



Missed 1 invasive MelanomaSpecificity


50.7
%


45.1
%


20.0
%(p < 0.0001)Over-Biopsy Ratio


4.4:1



5:1



7.3:1   ® ® ®
   7




---



##### Table of Contents



® ® ®
  Would you Biopsy this Lesion toIs this a Melanoma?

Rule-Out Melanoma?Sensitivity / Specificity

Sensitivity/SpecificityExpert Dermatologists

38.78% / 82.32%

70.61% / 48.89%MelaFind®

Sensitivity - 98% / Specificity - 44%   ® ® ® ®
  ® ®
  Sales and
    Marketing
  ® and/or ®
  ® ® ®
  The
    MelaFind®
    Value Proposition for the Healthcare System
  ®
 8




---



##### Table of Contents



®
  Our
    Reimbursement Strategy
  ®
  ®
  ®
      ® ® ® ®
 9




---



##### Table of Contents



®
  ® ® ® ® ® ®
  ®
  ® ® ® ® ®
  Competition
  ®
   10




---



##### Table of Contents



® ®
      ®
 11




---



##### Table of Contents



®
  Manufacturing
  ®
  ® ® ® follow-up ® ® ®
  Research
    and Development Efforts
  ® Lesion Classifiers. ® Lesion Classifier
    ® tm ® tm tm tm ®
 12




---



##### Table of Contents



® ®
  Intellectual
    Property
  ® ® ®
  and/or
  ®
  ® ® ® ® ® ®
 13




---



##### Table of Contents



US
    Patents Relating to Melanoma Detection
  Patent #

Title

Issued

Expiration6,081,612

Systems and Methods for the Multispectral Imaging and
    Characterization of Skin Tissue

06/27/00

02/27/186,208,749

Systems and Methods for the Multispectral Imaging and
    Characterization of Skin Tissue

03/27/01

02/27/186,307,957

Multispectral Imaging and Characterization of Biological Tissue

10/23/01

02/27/206,626,558

Apparatus for Uniform Illumination of an Object

09/30/03

08/31/216,657,798

Method for Optimizing the Number of Good Assemblies
    Manufacturable From a Number of Parts

12/02/03

02/10/236,710,947

Method for Assembling Lens Elements

03/23/04

02/27/237,102,672

Integrated CMOS Imaging Array & Dark Current Monitor

09/05/06

01/10/247,127,094

Method of Controlling Data Gathered at Remote Locations

10/24/06

03/11/25   Filed
    US Patent Relating to Melanoma Detection
  Patent #

Title

Filedn/a

Reducing noise in Digital Images


08/9/06n/a

Quantitative Analysis of Skin Characteristics


03/2/07n/a

Regulating use of a device to perform a procedure on a subject


06/12/07n/a

Dermatology information


09/04/07n/a

Characterizing a texture of an image


12/14/07   ® ® ® ® ®
  ® ®
  ® ®
  ®
 14




---



##### Table of Contents



® ®
  ®
  and/or
  FDA
    Regulation
  ®
  pre-amendment ®
  ®
 15




---



##### Table of Contents



® ® ® ®
    
    MelaFind®
    may not be safe or effective to the FDAs satisfaction;
    the data from our pre-clinical studies and clinical trials may
    be insufficient to support approval;
    the manufacturing process or facilities we use may not meet
    applicable requirements; and
    changes in FDA approval policies or adoption of new regulations
    may require additional data.      ®
 16




---



##### Table of Contents



®
  
    the FDA, other regulatory authorities, or an IRB do not approve
    a clinical trial protocol or a clinical trial, or place a
    clinical trial on hold;
    patients do not enroll in clinical trials at the rate we expect;
    physicians do not comply with trial protocols;
    patient
    follow-up is
    not at the rate we expect;
    patients experience adverse events;
    IRBs and third-party clinical investigators may delay or reject
    our trial protocol;
    third-party clinical investigators decline to participate in a
    trial or do not perform a trial on our anticipated schedule or
    consistent with the clinical trial protocol, GCPs or other FDA
    requirements;
    third-party organizations do not perform data collection and
    analysis in a timely or accurate manner;
    regulatory inspections of our clinical trials or manufacturing
    facilities may, among other things, require us to undertake
    corrective action or suspend or terminate our clinical trials,
    or invalidate our clinical trials;
    changes in governmental regulations or administrative
    actions; and
    the interim or final results of the clinical trial are
    inconclusive or unfavorable as to safety or effectiveness.      
    establishment registration and device listing;
    QSR, which requires manufacturers to follow design, testing,
    control, documentation and other quality assurance procedures;
    labeling regulations, which prohibit the promotion of products
    for unapproved or off-label uses and impose other
    restrictions on labeling;
    medical device reporting regulations, which require that
    manufacturers report to the FDA if a device may have caused or
    contributed to a death or serious injury or malfunctioned in a
    way that would likely cause or contribute to a death or serious
    injury if it were to recur; and
    corrections and removal reporting regulations, which require
    that manufacturers report to the FDA field corrections and
    product recalls or removals if undertaken to reduce a risk to
    health posed by the device or to remedy a violation of the
    FD&C Act that may present a risk to health. 17




---



##### Table of Contents




    warning letters;
    fines and civil penalties;
    unanticipated expenditures;
    delays in approving or refusal to approve our applications,
    including supplements;
    withdrawal of FDA approval;
    product recall or seizure;
    interruption of production;
    operating restrictions;
    injunctions; and
    criminal prosecution.    Government
    Regulation
  ® ®
  
    the anti-kickback statute prohibits certain business practices
    and relationships that might affect the provision and cost of
    healthcare services reimbursable under Medicare, Medicaid and
    other federal 18




---



##### Table of Contents



healthcare programs, 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, which prohibits referrals by physicians of
    Medicare or Medicaid patients to providers of a broad range of
    designated healthcare services in which the physicians or their
    immediate family members have ownership interests or with which
    they have certain other financial arrangements;
    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 the US Department of
    Health and Human Services (HHS) to impose civil penalties
    administratively for fraudulent or abusive acts; and
    the Civil Monetary Penalties Law, which authorizes the US
    Department of Health and Human Services (HHS) to impose civil
    penalties administratively for fraudulent or abusive acts.      qui tam
  Environmental
    Regulation
   19




---



##### Table of Contents



International
    Regulation
    country-by-country
  Product
    Liability and Insurance
  ® ® ® ® ®
  Employees
   20




---



##### Table of Contents



Discontinued
    Business
  ® ® ® ® ® ®
  Other
  www.eosciences.com Form 10-K, Forms 10-Q, Forms 8-K, www.eosciences.com
  Item 1A.
    Risk
    factors  You should carefully consider the following risk factors, as
    well as the other information contained in this report. If any
    of the following risks actually occur, our business, financial
    condition and results of operations would suffer. In that case,
    the trading price of our common stock would likely decline.
  Risks
    Relating to Our Business
  We
    currently do not have, and may never develop, any commercialized
    products.
  ® ®
  
    we may not be able to obtain regulatory approvals for
    MelaFind®,
    or the approved indication may be narrower than we seek;
    MelaFind®
    may not prove to be safe and effective in clinical trials;
    physicians may not receive any reimbursement from third-party
    payers, or the level of reimbursement may be insufficient to
    support widespread adoption of
    MelaFind®;
    we may experience delays in our development program;
    any products that are approved may not be accepted in the
    marketplace by physicians or patients;
    we may not have adequate financial or other resources to
    complete the development or to commence the commercialization of
    MelaFind®
    and we will not have adequate financial or other resources to
    achieve significant commercialization of
    MelaFind®;
    we may not be able to manufacture our products in commercial
    quantities or at an acceptable cost; and
    rapid technological change may make our technology and products
    obsolete.  ® ®
 21




---



##### Table of Contents



We
    have not received, and may never receive, FDA approval to market
    MelaFind®.
  ® ® ® ® ®
  
    MelaFind®
    may not be safe or effective to the FDAs satisfaction;
    the data from our pre-clinical studies and clinical trials may
    be insufficient to support approval;
    the manufacturing process or facilities we use may not meet
    applicable requirements; and
    changes in FDA approval policies or adoption of new regulations
    may require additional data.  ® ® ® ® ® ® ®
  If
    MelaFind®
    is approved by the FDA, it may be approved only for narrow
    indications.
  ® ®
 22




---



##### Table of Contents



® ® ® ® ®
  ® ® ® ®
  MelaFind®
    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®
    may also be limited by the indications for which its use may be
    reimbursed.
    ® ® ® ®
  ® ®
 23




---



##### Table of Contents



Any
    adverse results in our clinical trials, or difficulties in
    conducting our clinical trials, could have a material adverse
    effect on our business.
  ®
  Risk
    of delay in product development.
  ®
    ®
 24




---



##### Table of Contents



We
    have incurred losses for a number of years, and anticipate that
    we will incur continued losses for the foreseeable
    future.
  ® ® ®
  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.
  ® ®
  
    significantly greater name recognition;
    established relations with healthcare professionals, customers
    and third-party payers;
    established distribution networks;
    additional lines of products, and the ability to offer rebates,
    higher discounts or incentives to gain a competitive advantage;
    greater experience in conducting research and development,
    manufacturing, clinical trials, obtaining regulatory approval
    for products, and marketing approved products; and
    greater financial and human resources for product development,
    sales and marketing, and patent litigation.    Technological
    breakthroughs in the diagnosis or treatment of melanoma could
    render
    MelaFind®
    obsolete.
  ® ® 3-dimensional
 25




---



##### Table of Contents



® ® ® ® ®
  We
    depend on clinical investigators and clinical sites to enroll
    patients in our clinical trials 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.
  ® ®
    
    the FDA, an Institutional Review Board (IRB) or other regulatory
    authorities place our clinical trial on hold;
    patients do not enroll in clinical trials at the rate we expect;
    patient
    follow-up is
    not at the rate we expect;
    IRBs and third-party clinical investigators delay or reject our
    trial protocol;
    third-party organizations do not perform data collection and
    analysis in a timely or accurate manner;
    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;
    changes in governmental regulations or administrative
    actions; and
    the interim or final results of the clinical trial are
    inconclusive or unfavorable as to safety or effectiveness. 26




---



##### Table of Contents



If
    MelaFind®
    is approved for reimbursement, we anticipate experiencing
    significant pressures on pricing.
  ® ®
  ® ®
  MelaFind®
    may never achieve market acceptance even if we obtain regulatory
    approvals.
  ® ® ® ® ® ® ®
  
    perceived effectiveness of
    MelaFind®;
    convenience of use;
    cost of use of
    MelaFind®;
    availability and adequacy of third-party coverage or
    reimbursement;
    approved indications and product labeling;
    publicity concerning
    MelaFind®
    or competitive products;
    potential advantages over alternative diagnostic methodologies;
    introduction and acceptance of competing products or
    technologies; and
    extent and success of our sales, marketing and distribution
    efforts.  ® ®
 27




---



##### Table of Contents



® ® ® ® ® ® ® ® ®
  We may
    be unable to complete the development and commence
    commercialization of
    MelaFind®
    or other products without additional funding and we will not be
    able to achieve significant commercialization without additional
    funding.
  ® ® ® ®
  
    the schedule, costs, and results of our clinical trials;
    the success of our research and development efforts;
    the costs and timing of regulatory approval;
    reimbursement amounts for the use of
    MelaFind®
    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
    and/or
    physicians utilizing
    MelaFind®;
    the cost of commercialization activities, including product
    marketing and building a domestic direct sales force;
    the emergence of competing or complementary technological
    developments;
    the costs of filing, prosecuting, defending and enforcing any
    patent claims and other rights, including litigation costs and
    the results of such litigation;
    the costs involved in defending any patent infringement actions
    brought against us by third parties; and
    our ability to establish and maintain any collaborative,
    licensing or other arrangements, and the terms and timing of any
    such arrangements. 28




---



##### Table of Contents



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®,
    our business may be harmed.
  ® ® ®
  ®
  We
    have limited manufacturing capabilities and manufacturing
    personnel, and if our manufacturing capabilities are
    insufficient to produce an adequate supply of
    MelaFind®,
    our growth could be limited and our business could be
    harmed.
  ® ® ® ®
 29




---



##### Table of Contents



® ®
  ® ®
  ®
  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.
  ®
  
    suppliers may make errors in manufacturing components that could
    negatively affect the effectiveness or safety of our products,
    or cause delays in shipment of our products;
    we may not be able to obtain adequate supply in a timely manner
    or on commercially reasonable terms;
    we may have difficulty locating and qualifying alternative
    suppliers for our sole-source suppliers;
    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; 30




---



##### Table of Contents




    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; and
    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.    ® and/or ® ®
  We
    will not be able to sell
    MelaFind®
    unless and until its design is verified and validated in
    accordance with current good manufacturing practices as set
    forth in the US medical device Quality System
    Regulation.
  ® ® ® ® ® ® ®
  Assuming
    that
    MelaFind®
    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®,
    it could be subject to restrictions or withdrawal from the
    market.
   31




---



##### Table of Contents



® ® ® ® ® ® follow-up ®
  ® ® ® ® ®
  
    warning letters;
    fines and civil penalties;
    unanticipated expenditures;
    delays in approving or refusal to approve
    MelaFind®;
    withdrawal of approval by the FDA or other regulatory bodies;
    product recall or seizure;
    interruption of production;
    operating restrictions;
    injunctions; and
    criminal prosecution.   32




---



##### Table of Contents



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.
  ®
      
    billing for services;
    quality of medical equipment and services;
    confidentiality, maintenance and security issues associated with
    medical records and individually identifiable health information;
    false claims; and
    labeling products.    We
    must comply with complex statutes prohibiting fraud and abuse,
    and both we and physicians utilizing
    MelaFind®
    could be subject to significant penalties for
    noncompliance.
   33




---



##### Table of Contents



® ® ®
  The
    application of the privacy provisions of HIPAA is
    uncertain.
  ®
  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.
  ® ® ®
  ®
 34




---



##### Table of Contents



® and/or
  and/or
  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.
  ® ®
  We
    face the risk of product liability claims and may not be able to
    obtain or maintain adequate insurance.
  ® ® ® ® ® ®
 35




---



##### Table of Contents



® ®
    We may
    be adversely affected by a data center failure.
  ® ® back-up
  We may
    be adversely affected by breaches of online
    security.
  ®
  We are
    dependent upon telecommunications and the
    internet.
  ®
  We
    will be obligated to comply with Federal Communications
    Commission regulations for radio transmissions used by our
    products.
  ®
 36




---



##### Table of Contents



®
  All of
    our operations are conducted at a single location. Any
    disruption at our facility could increase our
    expenses.
    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.
    Failure
    to obtain and maintain regulatory approval in foreign
    jurisdictions will prevent us from marketing
    abroad.
  ® ®
  ®
 37




---



##### Table of Contents



Our
    success will depend on our ability to attract and retain our
    personnel.
    ®
    Our
    financial results for future periods will be affected by the
    attainment of milestones.
    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.
   38




---



##### Table of Contents



Risks
    Relating to our Common Stock
  An
    active trading market for our common stock may not be
    sustained.
    Our
    stock price may be volatile, meaning purchasers of our common
    stock could incur substantial losses.
    
    results of our research and development efforts and our clinical
    trials;
    the timing of regulatory approval for our products;
    failure of any of our products, if approved, to achieve
    commercial success;
    the announcement of new products or product enhancements by us
    or our competitors;
    regulatory developments in the US and foreign countries;
    ability to manufacture our products to commercial standards;
    developments concerning our clinical collaborators, suppliers or
    marketing partners;
    changes in financial estimates or recommendations by securities
    analysts;
    public concern over our products;
    developments or disputes concerning patents or other
    intellectual property rights;
    product liability claims and litigation against us or our
    competitors;
    the departure of key personnel;
    the strength of our balance sheet;
    variations in our financial results or those of companies that
    are perceived to be similar to us;
    changes in the structure of and third-party reimbursement in the
    US and other countries;
    changes in accounting principles or practices;
    general economic, industry and market conditions; and
    future sales of our common stock.   39




---



##### Table of Contents



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.
    Our
    charter documents and Delaware law may inhibit a takeover that
    stockholders consider favorable and could also limit the market
    price of our stock.
    
    set limitations on the removal of directors;
    limit who may call a special meeting of stockholders;
    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;
    do not permit cumulative voting in the election of our
    directors, which would otherwise permit less than a majority of
    stockholders to elect directors;
    prohibit stockholder action by written consent, thereby
    requiring all stockholder actions to be taken at a meeting of
    our stockholders; and
    provide our board of directors the ability to designate the
    terms of and issue a new series of preferred stock without
    stockholder approval.      Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties   40




---



##### Table of Contents



Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    High


LowYear Ended December 31, 2007October 1  December 31, 2007

$
5.96


$
4.05July 1  September 30, 2007

$
6.79


$
5.25April 1  June 30, 2007

$
7.46


$
4.29January 1, 2007  March 31, 2007

$
7.10


$
4.50Year Ended  December 31, 2006October 1  December 31, 2006

$
8.10


$
5.26July 1  September 30, 2006

$
7.34


$
4.74April 1  June 30, 2006

$
8.92


$
5.52January 1, 2006  March 31, 2006

$
6.20


$
5.20     Dividend
    Policy
     41




---



##### Table of Contents



Securities
    Authorized For Issuance Under Equity Compensation
    Plans
  Note 8-
  Use of
    Proceeds from the Sale of Registered Securities
  Form S-1, No. 333-125517),
      Use of
    Proceeds from the Sale of Unregistered Securities
      and/or
     42




---



##### Table of Contents



Form S-3 No. 333-139056 No. 333-145740)
      Item 6.
    Selected
    Financial Data  The following table sets forth selected financial data. The
    financial information for the years ended December 31,
    2005, 2006, and 2007 and as of December 31, 2006 and 2007
    has been derived from our audited financial statements and
    related notes appearing in Part II Item 8 of this
    report and should be read together with such financial
    statements and the Managements Discussion and
    Analysis of Financial Condition and Results of Operations
    section appearing in Part II Item 7 of this report.
    The financial information for the years ended December 31,
    2003 and 2004 and as of December 31, 2003, 2004, and 2005
    have been derived from our audited financial statements not
    included in this report. The historical results are not
    necessarily indicative of results of any future periods.
  Year Ended December 31,2003


2004


2005


2006


2007(In thousands, except share and per share data)Statements of Operations Data:Research and development expenses

$
828


$
1,892


$
3,822


$
7,574


$
7,678General and administrative expenses


1,034



1,234



2,636



4,526



5,400Operating loss from continuing operations


(1,862
)


(3,126
)


(6,458
)


(12,100
)


(13,078
)Interest expense/(income)


76



67



(174
)


(728
)


(1,054
)Other income


















(59
)Loss from continuing operations


(1,938
)


(3,193
)


(6,284
)


(11,372
)


(11,965
)(Loss) gain from discontinued operations


(12
)


(426
)


(442
)


781



28Net loss


(1,950
)


(3,619
)


(6,726
)


(10,591
)


(11,937
)Preferred stock deemed dividends


(322
)


(676
)


(1,199
)






Preferred stock accretion


(25
)


(258
)


(1,077
)






Stock distribution of preferred Series B shares


(102
)














Net loss attributable to common stockholders

$
(2,399
)

$
(4,553
)

$
(9,002
)

$
(10,591
)

$
(11,937
)Net loss per share, basic and diluted:Continuing operations

$
(1.48
)

$
(2.34
)

$
(2.44
)

$
(1.01
)

$
(0.84
)Discontinued operations


(0.01
)


(0.24
)


(0.13
)


.07



Basic and diluted net loss per common share

$
(1.49
)

$
(2.58
)

$
(2.57
)

$
(.94
)

$
(0.84
)Basic and diluted weighted average number of common shares
    outstanding


1,614,897



1,766,608



3,508,835



11,293,783



14,220,466  43




---



##### Table of Contents



As of December 31,2003


2004


2005


2006


2007(In thousands, except share and per share data)Balance Sheet Data:Total current assets

$
217


$
6,813


$
18,873


$
21,771


$
21,328Total assets


432



7,096



19,166



22,476



22,108Total liabilities


650



691



916



1,162



1,336Redeemable convertible preferred stock


4,067



9,955











Accumulated deficit


(10,288
)


(13,907
)


(20,633
)


(31,225
)


(43,162
)Total stockholders (deficiency)/equity


(4,285
)


(3,550
)


18,249



21,314



20,772   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion contains forward looking statements,
    which involve risks and uncertainties. Our actual results could
    differ from those anticipated in these forward-looking
    statements as a result of various factors, including those set
    forth above under the caption Business-Risk Factors.
    You should read the following discussion and analysis of our
    financial condition and results of operations together with our
    financial statements for the year ended December 31, 2007
    and the related notes appearing in Part II Item 8 of
    this report.
  Overview
  ® ® ® ® ® ® ® ®
    ®
  ® ®
   44




---



##### Table of Contents



®
    ® ®
  ® ®
    Critical
    Accounting Policies and Significant Judgments and
    Estimates
     45




---



##### Table of Contents



Revenue
    Recognition
  ® ®
  Stock-Based
    Compensation
  No. 96-18,
    Share-Based
    Payment Accounting for
    Stock-Based Compensation catch-up
      Accrued
    Expenses
   46




---



##### Table of Contents




    professional service fees;
    contract clinical service fees;
    fees paid to contract manufacturers in conjunction with the
    production of clinical components or materials; and
    fees paid to third party data collection organizations and
    investigators in conjunction with the clinical trials.    Results
    of Operations (in thousands)
  Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Research
    and Development Expense
    General
    and Administrative Expense
  ®
  Interest
    (Income)/Expense
  ®
  Other
    Income
   47




---



##### Table of Contents



Gain
    (Loss) from Discontinued Operations
    Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
  Research
    and Development Expense
  step-up ®
    General
    and Administrative Expense
      Interest
    (Income)/Expense
  ®
  Gain
    (Loss) from Discontinued Operations
  ® ®
  Liquidity
    and Capital Resources (in thousands)
   48




---



##### Table of Contents



®
  Cash
    Flows from Operating Activities
    Cash
    Flows from Investing Activities
  ® ®
  Cash
    Flows from Financing Activities
    Operating
    Capital and Capital Expenditure Requirements
  ® ® ® ® ®
 49




---



##### Table of Contents



®
  
    the schedule, costs, and results of our clinical trials;
    the success of our research and development efforts;
    the costs and timing of regulatory approval;
    reimbursement amounts for the use of
    MelaFind®
    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
    and/or
    physicians utilizing
    MelaFind®;
    the cost of commercialization activities, including product
    marketing and building a domestic direct sales force;
    the emergence of competing or complementary technological
    developments;
    the costs of filing, prosecuting, defending and enforcing any
    patent claims and other rights, including litigation costs and
    the results of such litigation;
    the costs involved in defending any patent infringement actions
    brought against us by third parties; and
    our ability to establish and maintain any collaborative,
    licensing or other arrangements, and the terms and timing of any
    such arrangements.  Contractual
    Obligations
    Payments
    Due by Period
  Less Than








More ThanContractual Obligations

Total


1 Year


1-3 Years


3-5 Years


5 Years(Dollars in thousands)Operating Leases

$
777


$
320


$
442


$
15



Total

$
777


$
320


$
442


$
15



     Related
    Party
    Transactions (see Note 9)
    Off-Balance
    Sheet Arrangements
   50




---



##### Table of Contents



Recent
    Accounting Developments
    earnings-per-share
      Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk   51




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  INDEX TO
    FINANCIAL STATEMENTS
  PageReport of Independent Registered Public
    Accounting Firm


53Balance Sheets as of December 31, 2006 and
    2007


54Statements of Operations for the years ended
    December 31, 2005, 2006 and 2007


55Statements of Stockholders Equity for the
    years ended December 31, 2005, 2006 and 2007


56Statements of Cash Flows for the years ended
    December 31, 2005, 2006 and 2007


57Notes to Financial Statements


58  52




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm  
            
    53




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
 BALANCE
    SHEETS  December 31,


December 31,2006


2007ASSETSCurrent Assets:Cash and cash equivalents (includes $12,000,000 in certificates
    of deposit as of December 31, 2006)

$
20,939,527


$
19,196,589Marketable securities






1,719,905Receivable from sale and licensing of discontinued operations,
    net


487,680



Prepaid expenses and other current assets


343,634



411,554Total Current Assets


21,770,841



21,328,048Property and equipment, net


564,471



616,110Patents and trademarks, net


100,630



118,138Other assets


39,758



45,876Total Assets

$
22,475,700


$
22,108,172LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable (includes related parties of $53,987 as of
    December 31, 2006)

$
641,036


$
567,987Accrued expenses (includes related parties of $34,257 and
    $10,000 as of December 31, 2006 and 2007, respectively)


504,670



674,711Deferred income






74,946Other current liabilities


16,077



18,804Total Current Liabilities


1,161,783



1,336,448COMMITMENTS AND CONTINGENCIES (Note 5)Stockholders Equity:Preferred stock  $0.10 par value; authorized
    10,000,000 shares:Issued and outstanding: none






Common stock  $0.001 par value; authorized
    30,000,000 shares:Issued and outstanding 13,296,448 and 15,401,882 shares at
    December 31, 2006 and 2007, respectively.


13,296



15,402Additional paid-in capital


52,525,408



63,930,689Other comprehensive loss






(12,136
)Accumulated deficit


(31,224,787
)


(43,162,231
)Total Stockholders Equity


21,313,917



20,771,724Total Liabilities and Stockholders Equity

$
22,475,700


$
22,108,172    54




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
 STATEMENTS
    OF OPERATIONS  Year EndedDecember 31,


December 31,


December 31,2005


2006


2007Operating expenses:Research and development

$
3,821,712


$
7,574,744


$
7,677,578General and administrative


2,636,064



4,525,789



5,400,371Operating loss from continuing operations


(6,457,776
)


(12,100,533
)


(13,077,949
)Interest income


(173,888
)


(728,053
)


(1,054,130
)Other income










(58,567
)(173,888
)


(728,053
)


(1,112,697
)Loss from continuing operations


(6,283,888
)


(11,372,480
)


(11,965,252
)Loss from discontinued operations


(442,459
)






Gain on sale and licensing of discontinued operations






781,003



27,808Net loss


(6,726,347
)


(10,591,477
)


(11,937,444
)Less:Preferred stock deemed dividends


1,198,439







Preferred stock accretion


1,077,492







Net Loss Attributable to Common Stockholders

$
(9,002,278
)

$
(10,591,477
)

$
(11,937,444
)Net income (loss) per common share, basic and diluted:Continuing operations

$
(2.44
)

$
(1.01
)

$
(0.84
)Discontinued operations


(0.13
)


.07



Basic and diluted net loss per common share

$
(2.57
)

$
(0.94
)

$
(0.84
)Basic and diluted weighted average number of common shares
    outstanding


3,508,835



11,293,783



14,220,466    55




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
 STATEMENTS
    OF STOCKHOLDERS EQUITY

Years Ended December 31, 2005, 2006 and 2007 Convertible























TotalPreferred Stock








Additional








Other





StockholdersSeries A


Common Stock


Paid-in


Notes


Deferred


Comprehensive


Accumulated


EquityShares


Amount


Shares


Amount


Capital


Receivable


Compensation


Loss


Deficit


(Deficiency)Balance at January 1, 2005


198,000


$
972,311



1,809,758


$
1,810


$
9,611,094


$
(69,000
)

$
(159,300
)





$
(13,906,963
)

$
(3,550,048
)Preferred stock accretion


















(1,077,492
)


















(1,077,492
)Value of employee options vesting on attainment of milestone


















479,000



















479,000Issuance of options to consultant


















138,000



















138,000Exercise of option by non-employee directors










27,500



28



15,322



















15,350Exercise of options by former employees










23,361



23



23,359



















23,382Restricted stock award to employee










11,488



12



62,598







(62,610
)Retirement of note receivable






















69,000















69,000Amortization of deferred compensation


























159,300











159,300Warrants exchanged for common stock










1,305,321



1,305



(1,305
)Conversion of preferred stock in connection with the Initial
    Public offering


(198,000
)


(972,311
)


3,398,105



3,398



12,001,578



















11,032,665Issuance of shares of common stock in connection with the
    Initial Public Offering (net of expenses)










4,262,300



4,262



17,682,266



















17,686,528Net loss


































(6,726,347
)


(6,726,347
)Balance at December 31, 2005










10,837,833


$
10,838


$
38,934,420






$
(62,610
)





$
(20,633,310
)

$
18,249,338Exercise of options










135,450



136



87,929



















88,065Exercise of warrants










10,781



10



26,418



















26,428Amortization of deferred compensation


























62,610











62,610Issuance of shares of common stock and warrants in connection
    with private placement (net of expenses)










2,312,384



2,312



12,503,075



















12,505,387Issuance of options to consultant


















161,934



















161,934Share-based compensation expense


















811,632



















811,632Net loss


































(10,591,477
)


(10,591,477
)Balance at December 31, 2006










13,296,448


$
13,296


$
52,525,408














$
(31,224,787
)

$
21,313,917Exercise of Options










105,256



106



114,421



















114,527Issuance of shares of common stock and warrants in connection
    with private placement (net of expenses)










2,000,178



2,000



10,713,847



















10,715,847Issuance of options to consultant


















139,703



















139,703Share-based compensation expense


















437,310



















437,310Other Comprehensive loss






























(12,136
)






(12,136
)Net loss


































(11,937,444
)


(11,937,444
)Comprehensive loss (sub-total)






































(11,949,580
)Balance at December 31, 2007










15,401,882


$
15,402


$
63,930,689











(12,136
)

$
(43,162,231
)

$
20,771,724    56




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
 STATEMENTS
    OF CASH FLOWS  Year EndedDecember 31,


December 31,


December 31,2005


2006


2007Cash flows from operating activities:Loss from continuing operations

$
(6,283,888
)

$
(11,372,480
)

$
(11,965,252
)Loss from discontinued operations


(442,459
)






Gain on sale and licensing of discontinued operations






781,003



27,808Net loss


(6,726,347
)


(10,591,477
)


(11,937,444
)Adjustments to reconcile net loss to net cash used in operating
    activities:Allowance for doubtful accounts


(1,000
)






Gain on sale of discontinued operations






(781,003
)


(27,808
)Depreciation and amortization


49,098



138,358



223,706Noncash compensation and amortization of deferred compensation


672,800



874,241



437,310Amortization of unearned interest income-discontinued operations










(12,320
)Common stock options and warrants issued for consulting fees


138,000



161,934



139,703Retirement of stock subscription receivable for consulting
    services


34,500







Amortization of discount on marketable securities


(33,502
)






(519
)Changes in operating assets and liabilities:Decrease in receivables


8,128







Increase in inventories


(16,122
)






Increase in prepaid expenses and other current assets


(181,507
)


(132,694
)


(67,920
)Increase in accounts payable and accrued expenses


332,110



196,193



124,800Decrease in deferred revenues


(106,335
)






(Decrease) increase in other current liabilities


(456
)


(751
)


2,727Increase in other assets






(6,146
)


(6,118
)Increase in deferred income










74,946Net cash used in operating activities


(5,830,633
)


(10,141,345
)


(11,048,937
)Cash flows from investing activities:Patent costs


(5,316
)


(35,491
)


(40,006
)Purchases of property and equipment


(121,239
)


(508,547
)


(252,847
)Sale (purchase) of marketable securities


6,628,253







(1,731,522
)Proceeds from sale and licensing of discontinued operations






500,000



500,000Net cash provided by (used in) investing activities


6,501,698



(44,038
)


(1,524,375
)Cash flows from financing activities:Proceeds from private placement financing






13,180,598



11,501,023Expenses related to private placement financing






(675,211
)


(785,176
)Proceeds from exercise of stock options






88,065



114,527Proceeds from exercise of stock warrants






26,428



Proceeds from Initial Public Offering


21,311,500







Expenses related to Initial Public Offering


(3,624,972
)






Proceeds from sale of common stock


38,732







Net cash provided by financing activities


17,725,260



12,619,880



10,830,374Net increase (decrease) in cash and cash equivalents


18,396,325



2,434,497



(1,742,938
)Cash and cash equivalents at beginning of year


108,705



18,505,030



20,939,527Cash and cash equivalents at end of year

$
18,505,030


$
20,939,527


$
19,196,589Supplemental Schedule of Noncash Investing and Financing
    Activities:Receivable from sale and licensing of discontinued operations





$
487,680



Preferred stock accretion

$
1,077,492







Reclassification of inventories and patents to assets held for
    sale

$
156,677







Unrealized loss on marketable securities









$
12,136    57




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes
    to Financial Statements
 (In thousands, except for share and per share data)
 (For the Years Ended December 31, 2007, 2006 and
    2005)
  1.
    Principal
    Business Activities and Summary of Significant Accounting
    Policies:  Organization
    and Business
  ® ® ® ®
  ® ® ® ® ® ®
  ® ®
  Business
    Segments
  Disclosures about Segments of an Enterprise and Related
    Information ®
  Cash
    and Cash Equivalents
   58




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
    Marketable
    Securities
  Accounting for Certain
    Investments in Debt and Equity Securities.
  Property
    and Equipment
    Patents
    Revenue
    Recognition
  ® ®
  Income
    Taxes
      Estimates
   59




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
  Long-lived
    Assets
    Research
    and Development
    Stock-Based
    Compensation
  Accounting for Stock-Based
    Compensation Accounting for Stock-Based Compensation, Transition and
    Disclosure
  Net loss attributable to common stockholders, as reported

$
(9,002
)Add: stock-based employee compensation included in reported net
    loss, net of income tax effect


638Deduct: stock-based employee compensation expense determined
    under fair-value-based method, net of related tax effect


(539
)Pro forma net loss

$
(8,903
)Basic and diluted loss per share, as reported

$
(2.57
)Basic and diluted loss per share, pro forma

$
(2.54
)     Expected volatility


60
%Risk free interest rate


4.39
%Stock option life (in years)


5Expected dividend yield


0
%   Share-Based Payment
 60




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
  Accounting for Stock-Based Compensation catch-up
    No. 96-18, Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services. EITF 96-18.
  Financial
    Instruments
    Net
    Loss per Common Share
  Earnings Per
    Share
  Year Ended December 31,2005


2006


2007Common stock options


1,115,415



1,689,412



1,812,084Warrants


298,280



626,845



1,126,886Total


1,413,695



2,316,257



2,938,970  61




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
  Comprehensive
    loss
    Recent
    Accounting Developments
    earnings-per-share
     62




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
  2.
    Marketable
    Securities:    3.
    Property
    and Equipment:    December 31,Estimated2006


2007


Useful LifeLeasehold improvements

$
154


$
184



Lease TermLaboratory and research equipment


497



672



5 yearsOffice furniture and equipment


265



313



5 years916



1,169Accumulated depreciation and amortization


352



553$
564


$
616     4.
    Patents:  ® ® ®
  5.
    Commitments
    and Contingencies:    Year ended December 31,2008

$
3202009


2562010


1862011


15$
777    63




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
  ®
  ® ®
      6.
    Employee
    Benefit Plan:    7.
    Stockholders
    Equity       64




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
      AccretionTotal


Period in


Year EndedAmount


Months


December 31, 20052003 Series C financing costs

$
252



60


$
422004 Series C financing costs


448



44



102Value of Series C warrants


2,643



44



601Beneficial Conversion  Series C


1,465



44



333Total

$
4,808






$
1,078   Form S-1, No. 33-125517),
     65




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
    and/or
    Form S-3 No. 333-139056 No. 333-145740)
    8.  Stock-Based
    Compensation and Warrants:
  Stock
    Options
       66




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
      For The Year EndedDecember 31, 2006


December 31, 2007Expected life


5 years



5 yearsExpected volatility


60
%


60
%Risk-free interest rate


4.92 - 5.04
%


3.41 - 5.02
%Dividend yield


0



0         WeightedWeighted


AverageAverage


RemainingExercise


Contractual


AggregateNumber of


Price per


Term in


IntrinsicShares


Share


Years


ValueOutstanding at January 1, 2005


965,203



.66Granted


212,780



2.43






$
248Exercised


(50,881
)


.76Forfeited or expired


(11,687
)


4.85Outstanding at December 31, 2005


1,115,415



.95



4.4



4,935Granted


748,822



5.56



4.1



1,259Exercised


(135,450
)


.65



N/A



730Forfeited or expired


(39,375
)


6.76



N/A



11Outstanding at December 31, 2006


1,689,412



2.88



4.2



7,331Granted


277,407



3.11



3.9



456Exercised


(105,256
)


1.09



N/A



558Forfeited or expired


(49,479
)


5.24



N/A



8Outstanding at December 31,2007


1,812,084



2.96



3.5



4,167Exercisable at December 31, 2007


609,901



3.54



3.4



1,116    67




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
      Options OutstandingWeighted-





Options ExercisableAverage


Weighted-





Weighted-Remaining


Average





AverageNumber


Contractual


Exercise


Number


ExerciseRange of Exercise Prices

Outstanding


Life


Price


Exercisable


Price$.01-$.46


923,634



1.7 years


$
.46



171,753


$
.46$.47-$1.00


119,648



4.4 years



1.00



119,648



1.00$1.01-$7.75


768,802



3.8 years



6.26



318,500



6.15$.01-$7.75


1,812,084



3.5 years


$
2.96



609,901


$
3.54   ® ® ®
        ®
   68




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
            Warrants
  5-year 7-year
  5-year
    9.
    Related
    Party Consulting Agreements (see Note 5):    Consulting
    Agreement with Breaux Castleman
  ®
 69




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
    Consulting
    Agreement with Marek Elbaum, Ph.D.
    Consulting
    Agreement with Robert Friedman, M.D.
  ®
  Consulting
    Agreement with Gerald Wagner, Ph.D. (see also
    Note 8)
  ®
    10.
    Other
    Income (including gain on sale of discontinued
    operations):   70




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
    ® ® ® ®
  ®
    ®
  11.  Income
    Taxes:
      Year Ended December 31,2005


2006


2007Computed expected tax benefit

$
(2,136
)

$
(3,866
)

$
(4,068
)State tax benefit, net of federal effect


(377
)


(682
)


(718
)Valuation allowance


2,513



4,548



4,786Provision for income taxes

$



$



$
  71




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
    December 31,2006


2007Deferred tax assets:Net operating loss carryforwards

$
6,621


$
8,409Capitalized research and developmental costs


4,252



7,094Non-cash compensation


919



1,064Total deferred tax assets


11,792



16,567Less valuation allowance


(11,792
)


(16,567
)Net deferred tax assets

$



$
        72




---



##### Table of Contents



ELECTRO-OPTICAL
    SCIENCES, INC.
  Notes to
    Financial Statements  (Continued)
  12.
    Quarterly
    Operating Results (Unaudited)    Quarter EndedMarch 31,


June 30,


September 30,


December 31,2007Loss from continuing operations

$
(2,994
)

$
(3,096
)

$
(2,709
)

$
(3,166
)Gain on sale of discontinued operations













$
28Net Loss

$
(2,994
)

$
(3,096
)

$
(2,709
)

$
(3,138
)Net loss attributable to common stockholders

$
(2,994
)

$
(3,096
)

$
(2,709
)

$
(3,138
)Basic and diluted net loss per share of common stock

$
(0.22
)

$
(0.23
)

$
(0.18
)

$
(0.20
)2006Loss from continuing operations

$
(2,889
)

$
(2,928
)

$
(2,425
)

$
(3,130
)Gain on sale of discontinued operations













$
781Net Loss

$
(2,889
)

$
(2,928
)

$
(2,425
)

$
(2,349
)Net loss attributable to common stockholders

$
(2,889
)

$
(2,928
)

$
(2,425
)

$
(2,349
)Basic and diluted net loss per share of common stock

$
(0.27
)

$
(0.27
)

$
(0.22
)

$
(0.18
)  73




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures.  Evaluation
    of disclosure controls and procedures
  Rule 13a-15(e)
   74




---



##### Table of Contents



Report of
    Management on Internal Control Over Financial
    Reporting.
      Internal Control 
    Integrated Framework
   75




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
                     76




---



##### Table of Contents



Change
    in internal control over financial reporting
    Limitations
    on the effectiveness of controls
    Item 9B.
    Other
    Information.   PART III Item 10.
    Directors,
    Executive Officers, and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters,    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   77




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Exhibits and Financial Statement Schedules:
  Financial Statements
    Financial Statement Schedules
    Exhibits
  Regulation S-K
 78




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Exhibit Title3
.1

Fourth Amended and Restated Certificate of Incorporation of the
    Registrant.(1)3
.2

Third Amended and Restated Bylaws of the Registrant.(2)4
.1

Specimen Stock Certificate.(2)4
.2

Second Amended and Restated Investors Rights Agreement
    dated as of October 26, 2004 by and among the Registrant and the
    parties listed therein.(3)4
.3

Form of Warrant.(7)4
.4

Form of Warrant.(13)10
.1*

Form of Indemnification Agreement for directors and executive
    officers.(2)10
.2*

1996 Stock Option Plan.(3)10
.3*

2003 Stock Incentive Plan, as amended.(3)10
.4*

2005 Stock Incentive Plan.(2)10
.5*

Employment Agreement dated as of January 5, 2004 between the
    Registrant and Joseph V. Gulfo.(3)10
.6

Consulting Agreement dated as of May 31, 2005 between the
    Registrant and Marek Elbaum.(3)10
.7

Lease Agreement dated as of December 16, 1998, by and between
    the Registrant and Bridge Street Properties LLC, for office
    space located at One Bridge Street, Irvington, New York.(3)10
.8

First Amendment to the Lease Agreement dated as of May 17, 2001
    by and between the Registrant and Bridge Street Properties
    LLC.(3)10
.9

Second Amendment to the Lease Agreement dated as of June 19,
    2003 by and between the Registrant and Bridge Street Properties
    LLC.(3)10
.10

Lease Agreement dated as of November 23, 2004, by and between
    the Registrant and Bridge Street Properties LLC, for office
    space located at 3 West Main Street, Irvington, New York.(3)10
.11*

Consulting Agreement dated as of June 1, 2005 between the
    Registrant and Gerald Wagner Consulting, LLC.(1)10
.12*

Consulting Agreement dated as of June 20, 2003 between the
    Registrant and Breaux Castleman, as amended.(1)10
.13

Consulting Agreement dated as of June 1, 2005 between the
    Registrant and Robert Friedman, M.D.(1)10
.14

Task Order Agreement dated as of July 13, 2005 between the
    Registrant and Battelle Memorial Institute.(2)10
.15

Third Amendment dated as of June 6, 2005, by and between the
    Registrant and Bridge Street Properties LLC, for office space
    located at 1 Bridge Street, Irvington, New York.(1)10
.16

Production Agreement between the Registrant and ASKION GmbH
    dated as of January 25, 2006.(4)10
.17*

Amended and Restated Consulting Agreement effective as of April
    1, 2006 between the Registrant and Gerald Wagner Consulting
    LLC.(11)10
.18*

Resignation Agreement, dated April 24, 2006, between the
    Registrant and Karen Krumeich.(5)10
.19*

Employment Offer Letter, dated April 24, 2006, between the
    Registrant and Richard I. Steinhart.(5)10
.20*

Employment Offer Letter, dated May 30, 2006, between the
    Registrant and Christiano S. Butler.(6)10
.21

Securities Purchase Agreement among the Registrant and the
    purchasers identified on the signature pages thereto, dated as
    of October 31, 2006.(8)10
.22

Securities Purchase Agreement among the Registrant and the
    purchasers identified on the signature pages thereto, dated as
    of October 31, 2006.(8)10
.23

Registration Rights Agreement among the Registrant and the
    purchasers identified on the signature pages thereto, dated as
    of October 31, 2006.(8)10
.24

Placement Agency Agreement by and between the Registrant and
    Jefferies & Company, Inc., dated as of October 31, 2006.(7)10
.25

Licensing Agreement between the Registrant and KaVo Dental GmbH,
    dated as of December 5, 2006.(9) 79




---



##### Table of Contents



ExhibitNumber

Exhibit Title10
.26*

Amendment No. 1 to Amended and Restated Consulting Agreement
    dated as of January 30, 2007 by and among the Registrant, Gerald
    Wagner and Gerald Wagner Consulting LLC.(10)10
.27

Research and Feasibility Agreement between Registrant and
    LOreal S.A. dated as of March 26, 2007.(12)10
.28

Securities Purchase Agreement among the Registrant and the
    purchasers identified on the signature pages thereto, dated as
    of July 31, 2007.(13)10
.29

Registration Rights Agreement among the Registrant and the
    purchasers identified on the signature pages thereto, dated as
    of July 31, 2007.(13)10
.30

Fifth Amendment dated as of August 24, 2007, by and between the
    Registrant and Bridge Street Commercial, LLC, for office space
    located at 1 Bridge Street, Irvington, New York.(14)21
.1#

Subsidiaries of Registrant.23
.1#

Consent of Eisner LLP31
.1#

Certification of Chief Executive Officer Pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.31
.2#

Certification of Chief Financial Officer Pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.32
.1#

Certifications of Chief Executive Officer and Chief Financial
    Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Indicates management compensatory plan, contract or arrangement(1)
    
    Incorporated by reference to the Registrants Registration
    Statement on Form S-1, as amended (File No. 333-125517), as
    filed on July 15, 2005.(2)
    
    Incorporated by reference to the Registrants Registration
    Statement on Form S-1, as amended (File No. 333-125517), as
    filed on August 8, 2005.(3)
    
    Incorporated by reference to the Registrants Registration
    Statement on Form S-1, as amended (File No. 333-125517), as
    filed on June 3, 2005.(4)
    
    Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on January 31, 2006.(5)
    
    Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on April 27, 2006.(6)
    
    Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on June 2, 2006.(7)
    
    Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on November 1, 2006.(8)
    
    Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on November 8, 2006.(9)
    
    Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on December 11, 2006.(10)
    
    Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on January 31, 2007.(11)
    
    Incorporated by reference to the Registrants Annual Report
    on Form 10-K filed on March 29, 2006.(12)
    
    Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on March 28, 2007.(13)
    
    Incorporated by reference to the Registrants Current
    Report on Form 8-K filed on August 1, 2007.(14)
    
    Incorporated by reference to the Registrants Quarterly
    Report on Form 10-Q filed on November 8, 2007.#
    
    Filed herewith. 80




---



##### Table of Contents



SIGNATURES
    ELECTRO-OPTICAL SCIENCES, INC.
  By:
    /s/  Joseph
    V. Gulfo, M.D.         Signature

Title

Date/s/  Joseph
    V. Gulfo, M.D.Joseph
    V. Gulfo, M.D.

Director, President and
    Chief Executive Officer
    (Principal Executive Officer)

March 12, 2008/s/  Richard
    I. SteinhartRichard
    I. Steinhart

Vice President, Finance and
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

March 12, 2008/s/  Breaux
    CastlemanBreaux
    Castleman

Chairman of the Board of Directors

March 12, 2008/s/  Sidney
    BraginskySidney
    Braginsky

Director

March 12, 2008/s/  George
    C. ChryssisGeorge
    C. Chryssis

Director

March 12, 2008/s/  Martin
    D. ClearyMartin
    D. Cleary

Director

March 12, 2008/s/  Dan
    W. LufkinDan
    W. Lufkin

Director

March 12, 2008/s/  Gerald
    Wagner, PhD.Gerald
    Wagner, PhD.

Director

March 12, 2008  81