Document_and_Entity_Informatio
Document and Entity Information (USD $) | 9 Months Ended | ||
Sep. 30, 2013 | Nov. 06, 2013 | Jun. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Echo Therapeutics, Inc. | ' | ' |
Entity Central Index Key | '0001031927 | ' | ' |
Document Type | 'S-1 | ' | ' |
Document Period End Date | 30-Sep-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $58,426,479 |
Entity Common Stock, Shares Outstanding | ' | 10,556,281 | ' |
Document Fiscal Period Focus | 'Q3 | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Current Assets: | ' | ' | ' |
Cash and cash equivalents | $6,068,469 | $3,747,210 | $8,995,571 |
Cash restricted pursuant to letters of credit | 657,463 | 407,463 | 250,000 |
Accounts receivable | ' | ' | 37,065 |
Stock subscriptions receivable | ' | ' | 6,667 |
Deferred financing costs, current portion | 968,004 | 968,004 | 100,458 |
Prepaid expenses and other current assets | 127,110 | 75,626 | 173,750 |
Total current assets | 7,821,046 | 5,198,303 | 9,563,511 |
Property and Equipment, at cost: | ' | ' | ' |
Computer equipment | 323,489 | 367,854 | 298,290 |
Office and laboratory equipment (including assets under capitalized leases) | 716,531 | 732,296 | 624,817 |
Furniture and fixtures | 755,444 | 728,269 | 186,837 |
Manufacturing equipment | 111,980 | 156,435 | 156,435 |
Leasehold improvements | 825,589 | 818,939 | 187,264 |
Property and equipment, at cost | 2,733,033 | 2,803,793 | 1,453,643 |
Less-Accumulated depreciation and amortization | -1,146,135 | -1,165,398 | -1,135,912 |
Net property and equipment (including assets under capitalized leases) | 1,586,898 | 1,638,395 | 317,731 |
Other Assets: | ' | ' | ' |
Restricted cash | ' | ' | 19,739 |
Intangible assets, net of accumulated amortization | 9,625,000 | 9,625,000 | 9,625,000 |
Deferred financing costs, net of current portion | 2,823,325 | 3,549,328 | ' |
Other assets | 12,066 | 10,566 | 826 |
Total other assets | 12,460,391 | 13,184,894 | 9,645,565 |
Total assets | 21,868,335 | 20,021,592 | 19,526,807 |
Current Liabilities: | ' | ' | ' |
Accounts payable | 1,551,092 | 2,319,219 | 365,298 |
Deferred revenue from licensing arrangements, current portion | 90,228 | 90,228 | 123,708 |
Capital lease obligation, current portion | 2,017 | 2,527 | 2,288 |
Derivative warrant liability | 979,155 | 5,585,141 | 1,035,337 |
Accrued expenses and other current liabilities | 1,595,920 | 1,581,448 | 965,832 |
Total current liabilities | 4,218,412 | 9,578,563 | 2,492,463 |
Capital lease obligation, net of current portion | ' | 1,361 | 3,888 |
Note payable, net of discount | ' | 120,834 | ' |
Deferred revenue from licensing arrangements, net of current portion | 22,557 | 90,228 | 61,867 |
Total liabilities | 4,240,969 | 9,790,986 | 2,558,218 |
Convertible Preferred Stock: | ' | ' | ' |
Series C, $0.01 par value, authorized 10,000 shares, issued and outstanding 9,974.185 shares at September 30, 2013, December 31, 2012, and December 31, 2011 | 100 | 100 | 100 |
Series D, $0.01 par value, authorized 3,600,000 shares, issued and outstanding 3,006,000 shares at September 30, 2013 and December 31, 2012 (preference in liquidation of $3,006,000) | 30,060 | 30,060 | 30,060 |
Common Stock, $0.01 par value, authorized 150,000,000 shares, issued and outstanding 10,699,990, 4,473,346, and 3,854,400 shares at September 30, 2013, December 31, 2012, and December 31, 2011, respectively | 107,003 | 44,374 | 38,554 |
Additional paid-in capital | 126,958,986 | 104,058,087 | 98,463,225 |
Common stock subscribed for but not paid for or issued, 33,333 shares at December 31, 2011 | ' | ' | 6,667 |
Accumulated deficit | -109,468,783 | -93,902,015 | -81,570,007 |
Total stockholders' equity | 17,627,366 | 10,230,606 | 16,968,589 |
Total liabilities and stockholders' equity | $21,868,335 | $20,021,592 | $19,526,807 |
Consolidated_Balance_Sheets_Un1
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Stockholders' Equity: | ' | ' | ' |
Convertible Preferred Stock: Series C, par value | 0.01 | 0.01 | 0.01 |
Convertible Preferred Stock:Series C, authorized | 10,000 | 10,000 | 10,000 |
Convertible Preferred Stock:Series C, outstanding | 9,974.18 | 9,974.18 | 9,974.19 |
Convertible Preferred Stock:Series C, Share Issued | 9,974.18 | 9,974.18 | 9,974.19 |
Convertible Preferred Stock:Series D, par value | $0.01 | $0.01 | $0.01 |
Convertible Preferred Stock:Series D, authorized | 3,600,000 | 3,600,000 | 3,600,000 |
Convertible Preferred Stock:Series D, outstanding | 3,006,000 | 3,006,000 | 3,006,000 |
Convertible Preferred Stock:Series D, Share Issued | 3,006,000 | 3,006,000 | 3,006,000 |
Convertible Preferred Stock:Series D,preference in liquidation | 3,006,000 | 3,006,000 | 3,006,000 |
Common stock, par value | $0.01 | $0.01 | $0.01 |
Common stock, authorized | 150,000,000 | 150,000,000 | 150,000,000 |
Common stock, outstanding | 10,699,990 | 4,437,346 | 3,854,400 |
Common stock, Share Issued | 10,699,990 | 4,437,346 | 3,854,400 |
Common stock, subscribed but not paid for or issued | ' | ' | 3,333 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Consolidated Statements Of Operations | ' | ' | ' | ' | ' | ' | ' |
Licensing revenue | $22,557 | $30,927 | $67,671 | $92,781 | $5,119 | $302,059 | $225,868 |
Other revenue | ' | ' | ' | ' | ' | 145,152 | 202,592 |
Total revenues | 22,557 | 30,927 | 67,671 | 92,781 | 5,119 | 447,211 | 428,460 |
Operating Expenses: | ' | ' | ' | ' | ' | ' | ' |
Research and development | 2,756,005 | 2,139,465 | 9,994,877 | 5,731,417 | 8,670,710 | 3,796,127 | 2,578,852 |
Selling, general and administrative | 2,192,412 | 1,508,069 | 6,590,206 | 4,702,325 | 6,374,429 | 4,905,757 | 2,760,062 |
Total operating expenses | 4,948,417 | 3,647,534 | 16,585,083 | 10,433,742 | 15,045,139 | 8,701,884 | 5,338,914 |
Loss from operations | -4,925,860 | -3,616,607 | -16,517,412 | -10,340,961 | -15,040,020 | -8,254,673 | -4,910,454 |
Other Income (Expense): | ' | ' | ' | ' | ' | ' | ' |
Interest income | 877 | 635 | 2,580 | 5,150 | 5,466 | 4,808 | 1,519 |
Interest expense | -242,062 | -89,123 | -3,657,921 | -89,407 | -504,858 | -13,926 | -37,549 |
Debt financing costs | ' | -160,000 | ' | -160,000 | -455,000 | ' | ' |
Qualified therapeutic research grant | ' | ' | ' | ' | ' | ' | 244,480 |
Gain (loss) on extinguishment of debt/payables | ' | ' | ' | ' | ' | -1,514 | 183,863 |
Loss on disposals of assets | ' | ' | ' | -21,272 | -21,272 | -1,348 | ' |
Gain (loss) on revaluation of derivative warrant liability | -70,000 | -400,000 | 4,605,986 | 201,281 | 3,683,676 | -1,762,938 | 371,345 |
Other income (expense), net | -311,185 | -648,488 | 950,645 | -64,248 | 2,708,012 | -1,774,918 | 763,658 |
Net loss | -5,237,045 | -4,265,095 | -15,566,767 | -10,405,209 | -12,332,008 | -10,029,591 | -4,146,796 |
Deemed dividend on beneficial conversion feature of Series D Convertible Preferred Stock | ' | ' | ' | ' | ' | -1,975,211 | ' |
Deemed dividend on repricing of warrants | ' | ' | ' | ' | ' | -4,559,761 | ' |
Accretion of dividends on Convertible Perpetual Redeemable Preferred Stock | ' | ' | ' | ' | ' | 157,733 | 131,659 |
Net loss applicable to common shareholders | ' | ' | ' | ' | ($12,332,008) | ($16,722,296) | ($4,278,455) |
Net loss per common share, basic and diluted | ($0.49) | ($1.07) | ($2.06) | ($2.65) | ($3.12) | ($4.89) | ($1.47) |
Basic and diluted weighted average common shares outstanding | 10,688,781 | 3,985,888 | 7,571,733 | 3,925,637 | 3,955,046 | 3,417,490 | 2,903,116 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Shareholders Equity (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Common Stock Subscribed | Accumulated Deficit | Total |
Beginning balance, Value at Dec. 31, 2009 | $51 | $27,046 | $74,399,129 | ' | ($67,393,620) | $7,032,606 |
Beginning balance, Shares at Dec. 31, 2009 | 5,059 | 2,704,580 | ' | ' | ' | ' |
Exercise of warrants, Value | ' | 35 | -35 | ' | ' | ' |
Exercise of warrants, Shares | ' | 3,571 | ' | ' | ' | ' |
Share-based payments - restricted stock, net of forfeitures, Value | ' | 363 | 392,886 | ' | ' | 393,249 |
Share-based payments - restricted stock, net of forfeitures, Shares | ' | 36,300 | ' | ' | ' | ' |
Share-based payments - options, net of forfeitures | ' | ' | 164,810 | ' | ' | 164,810 |
Fair value of warrants issued for services | ' | ' | 616,634 | ' | ' | 616,634 |
Fair value of options issued for services | ' | ' | 59,471 | ' | ' | 59,471 |
Common Stock issued to charitable organization, Value | ' | 60 | 113,340 | ' | ' | 113,400 |
Common Stock issued to charitable organization, Shares | ' | 6,000 | ' | ' | ' | ' |
Issuance of Common Stock, net of cash issuance costs of $188,333 and non-cash costs of $468,741, Value | ' | 3,357 | 3,514,696 | ' | ' | 3,518,053 |
Issuance of Common Stock, net of cash issuance costs of $188,333 and non-cash costs of $468,741, Shares | ' | 335,674 | ' | ' | ' | ' |
Fair value of fully vested Common Stock issued for services, Value | ' | 265 | 465,235 | ' | ' | 465,500 |
Fair value of fully vested Common Stock issued for services, Shares | ' | 26,500 | ' | ' | ' | ' |
Fair value of derivative warrant liabilities reclassified to additional paid-in capital | ' | ' | 200,357 | ' | ' | 200,357 |
Common Stock subscription, 285,000 shares | ' | ' | ' | 285,000 | ' | 285,000 |
Dividends on Series B Preferred Stock, Value | ' | ' | ' | ' | ' | ' |
Dividends on Series B Preferred Stock, Shares | 13 | ' | ' | ' | ' | ' |
Net Loss | ' | ' | ' | ' | -4,146,796 | -4,146,796 |
Ending balance, Value at Dec. 31, 2010 | 51 | 31,126 | 79,926,523 | 285,000 | -71,540,416 | 8,702,284 |
Ending balance, Shares at Dec. 31, 2010 | 5,072 | 3,112,625 | ' | ' | ' | ' |
Exercise of warrants, Value | 32 | 23,044 | 4,917,009 | ' | ' | 4,919,345 |
Exercise of warrants, Shares | 3,225 | 230,345 | ' | ' | ' | ' |
Share-based payments - restricted stock, net of forfeitures, Value | ' | 190 | -190 | ' | ' | ' |
Share-based payments - restricted stock, net of forfeitures, Shares | ' | 19,000 | ' | ' | ' | ' |
Share-based payments - options, net of forfeitures | ' | ' | 836,866 | ' | ' | 836,866 |
Fair value of fully vested Common Stock issued for services, Value | ' | 138 | 448,802 | ' | ' | 448,940 |
Fair value of fully vested Common Stock issued for services, Shares | ' | 13,800 | ' | ' | ' | ' |
Fair value of derivative warrant liabilities reclassified to additional paid-in capital | ' | ' | 2,272,597 | ' | ' | 2,272,597 |
Series B Preferred Stock redeemed for Series C Preferred Stock in warrant exercise, Value | 17 | ' | -17 | ' | ' | ' |
Series B Preferred Stock redeemed for Series C Preferred Stock in warrant exercise, Shares | 1,661 | ' | ' | ' | ' | ' |
Series B Preferred Stock dividend paid-in-kind, Value | ' | ' | ' | ' | ' | ' |
Series B Preferred Stock dividend paid-in-kind, Shares | 16 | ' | ' | ' | ' | ' |
Common Stock subscription, 33,333 shares | ' | ' | ' | 6,667 | ' | 6,667 |
Issuance of Common Stock and warrants, net of cash issuance costs of $109,636 and non-cash costs of $41,363, Value | ' | 3,550 | 6,435,939 | -285,000 | ' | 6,154,489 |
Issuance of Common Stock and warrants, net of cash issuance costs of $109,636 and non-cash costs of $41,363, Shares | ' | 355,045 | ' | ' | ' | ' |
Issuance of Series D Preferred Stock and warrants, net of cash issuance costs of $21,299, Value | 35,060 | ' | 3,449,642 | ' | ' | 3,484,702 |
Issuance of Series D Preferred Stock and warrants, net of cash issuance costs of $21,299, Shares | 3,506,000 | ' | ' | ' | ' | ' |
Common Stock issued in Series D Preferred Stock conversion, Value | -5,000 | 500 | 4,500 | ' | ' | ' |
Common Stock issued in Series D Preferred Stock conversion, Shares | -500,000 | 50,000 | ' | ' | ' | ' |
Common Stock and warrants issued to settle short-term note, Value | ' | 30 | 35,470 | ' | ' | 35,500 |
Common Stock and warrants issued to settle short-term note, Shares | ' | 3,000 | ' | ' | ' | ' |
Exercise of stock options, Value | ' | 706 | 136,084 | ' | ' | 136,790 |
Exercise of stock options, Shares | ' | 70,585 | ' | ' | ' | ' |
Net Loss | ' | ' | ' | ' | -10,029,591 | -10,029,591 |
Ending balance, Value at Dec. 31, 2011 | 30,160 | 68,544 | 98,463,225 | 6,667 | -81,570,007 | 16,968,589 |
Ending balance, Shares at Dec. 31, 2011 | 3,015,974 | 3,854,400 | ' | ' | ' | ' |
Exercise of warrants, Value | ' | 165 | 211,852 | ' | ' | 212,018 |
Exercise of warrants, Shares | ' | 16,545 | ' | ' | ' | ' |
Fair value of derivative warrant liabilities reclassified to additional paid-in capital | ' | ' | 61,520 | ' | ' | 61,520 |
Exercise of stock options, Value | ' | 225 | 195,034 | ' | ' | 195,259 |
Exercise of stock options, Shares | ' | 22,453 | ' | ' | ' | ' |
Proceeds from issuance of Common Stock, net, Value | ' | 4,080 | 3,268,122 | ' | ' | 3,272,202 |
Proceeds from issuance of Common Stock, net, Shares | ' | 408,000 | ' | ' | ' | ' |
Issuance of Common Stock subscribed | ' | ' | 6,667 | -6,667 | ' | ' |
Fair value of Common Stock and warrants issued for services, Value | ' | 95 | 153,369 | ' | ' | 153,464 |
Fair value of Common Stock and warrants issued for services, Shares | ' | 9,533 | ' | ' | ' | ' |
Share-based compensation, Value | ' | 1,264 | 1,698,298 | ' | ' | 1,699,562 |
Share-based compensation, Shares | ' | 126,415 | ' | ' | ' | ' |
Net Loss | ' | ' | ' | ' | -12,332,008 | -12,332,008 |
Ending balance, Value at Dec. 31, 2012 | $30,160 | $44,374 | $104,058,087 | ' | ($93,902,015) | $10,230,606 |
Ending balance, Shares at Dec. 31, 2012 | 3,015,974 | 4,437,346 | ' | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Cash Flows From Operating Activities: | ' | ' | ' | ' | ' |
Net loss | ($15,566,767) | ($10,405,209) | ($12,332,008) | ($10,029,591) | ($4,146,796) |
Depreciation and amortization | 288,883 | 75,772 | 145,155 | 47,916 | 109,413 |
Share-based compensation, net | 908,983 | 920,251 | 1,409,562 | 836,866 | 164,810 |
Fair value of common stock issued as charitable contribution | ' | ' | ' | ' | 113,400 |
Fair value of common stock and warrants issued for services | 89,970 | 118,465 | 153,464 | 448,940 | 935,144 |
Fair value of options issued for services | ' | ' | ' | ' | 59,471 |
Gain on revaluation of derivative warrant liability | -4,605,986 | -201,281 | -3,683,676 | 1,762,938 | -371,345 |
Non-cash (gain) loss on extinguishment of debt | ' | ' | ' | 1,514 | -183,863 |
Non-cash interest expense | ' | ' | ' | 12,159 | 35,190 |
Amortization of discount on note payable | 2,879,166 | 5,556 | 120,834 | ' | ' |
Amortization of non-cash deferred financing costs | 726,003 | 80,667 | 423,126 | ' | ' |
Non-cash loss on disposals of assets | ' | 21,272 | 21,272 | 5,688 | ' |
Non-cash debt financing costs | ' | 160,000 | 455,000 | ' | ' |
Cash received from lessor as a lease incentive | ' | ' | 236,974 | ' | ' |
Accounts receivable | ' | 37,065 | 37,065 | 104,423 | -11,452 |
Prepaid expenses and other current assets | -51,484 | 99,041 | 98,124 | -79,003 | 31,436 |
Other assets | -1,500 | 9,999 | 9,999 | -576 | 1,750 |
Accounts payable | -768,127 | 664,190 | 1,953,921 | -240,336 | -320,078 |
Deferred revenue from licensing arrangements | -67,671 | -92,781 | -5,119 | -302,059 | -225,868 |
Accrued expenses and other liabilities | 14,472 | 637,633 | 668,642 | 505,184 | 178,969 |
Net cash used in operating activities | -16,154,058 | -7,869,360 | -10,287,665 | -6,925,937 | -3,629,819 |
Cash Flows from Investing Activities: | ' | ' | ' | ' | ' |
Purchase of furniture, equipment and leasehold improvements | -237,387 | -985,158 | -1,487,091 | -323,301 | -14,415 |
Increase in restricted cash | -250,000 | -157,463 | -157,463 | 5,510 | -265,500 |
Net cash used in investing activities | -487,387 | -1,142,621 | -1,644,554 | -317,791 | -279,915 |
Cash Flows From Financing Activities: | ' | ' | ' | ' | ' |
Proceeds from issuance of common stock, net of expenses | 21,964,575 | 6,667 | 3,278,869 | 6,439,489 | 3,886,794 |
Proceeds from Platinum note payable | ' | 1,000,000 | 3,000,000 | ' | ' |
Repayment of Platinum note payable | -3,000,000 | ' | ' | ' | ' |
Principal payments for capital lease obligations | -1,871 | -1,694 | -2,288 | -2,071 | -1,874 |
Proceeds from exercise of warrants | ' | 212,017 | 212,018 | 4,919,346 | ' |
Proceeds from exercise of stock options | ' | 195,260 | 195,259 | 136,790 | ' |
Proceeds from issuance of Series D Convertible Preferred Stock and warrants, net of expenses | ' | ' | ' | 2,478,701 | ' |
Proceeds from bridge notes | ' | ' | ' | 1,000,000 | 250,000 |
Repayment of bridge notes | ' | ' | ' | -75,000 | -50,000 |
Net cash provided by financing activities | 18,962,704 | 1,412,250 | 6,683,858 | 14,897,255 | 4,084,920 |
Net increase (decrease) in cash and cash equivalents | 2,321,259 | -7,599,731 | -5,248,361 | 7,653,527 | 175,186 |
Cash and cash equivalents, beginning of period | 3,747,210 | 8,995,571 | 8,995,571 | 1,342,044 | 1,166,858 |
Cash and cash equivalents, end of period | 6,068,469 | 1,395,840 | 3,747,210 | 8,995,571 | 1,342,044 |
Supplemental Disclosure of Cash Flow Information and Non Cash Financing Transactions: | ' | ' | ' | ' | ' |
Cash paid for interest | 114,082 | 408 | 515 | 1,768 | 2,124 |
Reclassification of derivative warrant liability to additional paid-in capital | ' | 61,520 | 61,520 | 2,272,597 | 200,357 |
Fair value of common stock issued in connection with settlement agreement | ' | 208,000 | -82,000 | 290,000 | ' |
Fair value of Commitment Warrant issued in connection with debt financing | ' | 4,840,000 | 4,840,000 | ' | ' |
Fair value of Draw Warrant issued for note payable recorded as discount | ' | 1,000,000 | 3,000,000 | ' | ' |
Fair value of Draw Warrant issued for note payable recorded s debt financing costs | ' | 160,000 | 455,000 | ' | ' |
Accretion of dividend on Series B Perpetual Redeemable Preferred Stock | ' | ' | ' | 157,733 | 131,659 |
Deemed dividend on beneficial conversion of Series D Convertible Preferred Stock | ' | ' | ' | 1,975,211 | ' |
Issuance of common stock in settlement of short term note | ' | ' | ' | 35,500 | 100,000 |
Issuance of common stock in settlement of accounts payable | ' | ' | ' | ' | 23,000 |
Issuance of common stock in connection with issuance of promissory notes | ' | ' | ' | ' | 48,500 |
Conversion of notes payable and accrued interest into Series D Convertible Preferred Stock | ' | ' | ' | 1,006,000 | ' |
Conversion of Series D Convertible Preferred Stock into Common Stock | ' | ' | ' | 500,000 | ' |
Redemption of Series B Perpetual Redeemable Preferred Stock for Series C Preferred Stock in connection with October 27, 2011 warrant exercises | ' | ' | ' | 1,701,672 | ' |
Fair value of warrants included in stock issuance costs | ' | ' | ' | 41,363 | 468,741 |
Common stock subscription receivable | ' | ' | ' | 6,667 | 285,000 |
Cancellation of restricted common stock | ' | ' | ' | 5,250 | ' |
Deemed dividend on repricing of warrants | ' | ' | ' | $4,559,761 | ' |
ORGANIZATION_AND_BASIS_OF_PRES
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | ||
Notes to Financial Statements | ' | ' | |
Note 1. ORGANIZATION AND BASIS OF PRESENTATION | ' | ' | |
We are a medical device company with expertise in advanced skin permeation technology. We are developing our Symphony® CGM System (“Symphony”) as a non-invasive, wireless continuous glucose monitoring (“CGM”) system for use in hospital critical care units. The Prelude® SkinPrep System (“Prelude”), a component of our Symphony CGM System, allows for enhanced skin permeation that will enable extraction of analytes such as glucose. Prelude’s platform skin preparation technology also allows for needle-free, transdermal drug delivery. | Echo Therapeutics, Inc. (the “Company”) is a transdermal medical device company with significant expertise in advanced skin permeation technology that is primarily focused on continuous glucose monitoring and needle-free drug delivery. The Company is developing its Prelude® SkinPrep System (“Prelude”) as a platform technology to allow for significantly enhanced and painless skin permeation that will enable two important applications: | ||
The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Sontra Medical, Inc., a Delaware corporation. All significant intercompany balances and transactions have been eliminated in consolidation. These financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States consistent with those applied in, and should be read in conjunction with, the Company’s audited consolidated financial statements and related footnotes for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (“SEC”) on March 18, 2013. These financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of September 30, 2013 and its results of operations and cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. These interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading. Certain amounts in prior periods have been reclassified to conform to current presentation. | · | analyte extraction, with the Symphony® CGM System (“Symphony”) for needle-free, continuous glucose monitoring for use in hospital critical care units and for people with diabetes; and | |
· | enhanced needle-free drug delivery. | ||
On June 7, 2013, the Company effected a 1-for-10 reverse stock split of its common stock. All share and per share information has been retroactively restated to reflect this reverse stock split. | |||
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Sontra Medical, Inc., a Delaware corporation (and all significant intercompany balances have been eliminated by consolidation) and have been prepared on a basis assuming that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Certain amounts in prior periods have been reclassified to conform to current presentation. | |||
Liquidity and Management’s Plans | |||
Liquidity and Management’s Plans | |||
The accompanying consolidated financial statements have been prepared on a basis assuming that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2013, the Company had cash of approximately $6,068,000, working capital of approximately $3,603,000, and an accumulated deficit of approximately $109,469,000. The Company continues to incur recurring losses from operations. The Company will require additional capital to fund our product development, research, manufacturing and clinical programs in accordance with our current planned operations. Management intends to pursue additional financing to fund these operations and the Company has funded its operations in the past primarily through debt and equity issuances. Management believes that it will be successful in meeting the milestones required under their current financing arrangement, securing collaborative arrangements with strategic partners, and/or raising additional capital. No assurances can be given that additional capital will be available on terms acceptable to the Company. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. | |||
As of December 31, 2012, the Company had cash of approximately $3,747,000, a working capital deficit of approximately $4,380,000, and an accumulated deficit of approximately $93,902,000. The Company continues to incur recurring losses from operations. The Company will require additional capital to fund our product development, research, manufacturing and clinical programs in accordance with our current planned operations. The Company has funded its operations in the past primarily through debt and equity issuances. Management intends to utilize our current financing arrangements and pursue additional financing to fund its operations. Management believes that it will be successful in meeting the milestones required under their current financing arrangement or raising additional capital. No assurances can be given that additional capital will be available on terms acceptable to the Company. Subsequent to December 31, 2012, the Company received net proceeds from a Common Stock financing of approximately $10,666,000, of which $3,113,366 was used to fully repay the Notes we issued to Platinum-Montaur Life Sciences, LLC in connection with our $20 million non-revolving draw credit facility with Platinum-Montaur Life Sciences, LLC (see Note 9). | |||
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||
Dec. 31, 2012 | |||
Notes to Financial Statements | ' | ||
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||
The accompanying consolidated financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States. | |||
Use of Estimates | |||
The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. | |||
Cash and Cash Equivalents | |||
The Company considers all highly liquid investments with maturities of ninety days or less to be cash equivalents. Cash equivalents consisted of money market funds as of December 31, 2012 and 2011. The Company maintains its cash in bank deposit accounts which, at times, may exceed the federally insured limits. Restricted cash consists of a $250,000 letter of credit issued in favor of one of the Company’s key product development vendors for each of the years ended December 31, 2012 and 2011 and a $157,463 letter of credit in favor of a landlord for the year ended December 31, 2012. Non-current restricted cash as of December 31, 2012 and 2011 represents a security deposit on the Company’s leased offices. | |||
Accounts Receivable | |||
Accounts receivable represent amounts billed by the Company. An allowance for doubtful accounts is determined based on management’s best estimate of probable losses inherent in the accounts receivable balance. Amounts determined to be uncollectible are written off against the allowance. Management assesses the allowance based on information regarding nature of the receivables and historical experience. | |||
Intangible Assets and Other Long-Lived Assets | |||
The Company records intangible assets at the acquisition date fair value. In connection with the acquisition of Durham Pharmaceuticals Ltd., a North Carolina corporation doing business as Echo Therapeutics, Inc. (the “ETI Acquisition”), intangible assets related to contractual arrangements were amortized over the estimated useful life of three (3) years and ended in 2010. Intangible assets related to technology are expected to be amortized on a straight-line basis over the period ending in 2019 and will commence upon revenue generation. | |||
The Company reviews intangible assets annually to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life of any intangible asset. Conditions that would indicate impairment and trigger an impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, or an adverse action or assessment by a regulator. If the carrying value of an asset exceeds its undiscounted cash flows, the Company writes down the carrying value of the intangible asset to its fair value in the period identified. | |||
For other long-lived assets, the Company evaluates quarterly whether events or circumstances have occurred that indicate that the carrying value of these assets may be impaired. | |||
The Company generally calculates fair value as the present value of estimated future cash flows it expects to generate from the asset using a risk-adjusted discount rate. If the estimate of an intangible asset’s remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. | |||
The Company performs a regular review of the underlying assumptions, circumstances, time projections and revenue and expense estimates to decide if there is a possible impairment. In reviewing the long-lived assets relating to the ETI Acquisition as of December 31, 2012, the Company concluded that there was no impairment of the carrying value of such long-lived assets. No impairment losses were recorded for the years ended December 31, 2012, 2011 and 2010. | |||
Depreciation and Amortization | |||
The Company provides for depreciation and amortization by charges to operations for the cost of assets using the straight-line method based on the estimated useful lives of the related assets, as follows: | |||
Asset Classification | Estimated Useful Life | ||
Computer equipment | 3 years | ||
Office and laboratory equipment | 3-5 years | ||
Furniture and fixtures | 7 years | ||
Manufacturing equipment | 5 years | ||
Leasehold improvements | Life of lease | ||
Share-Based Payments | |||
The Company recognizes compensation costs resulting from the issuance of stock-based awards to employees and directors as an expense in the statement of operations over the service period based on a measurement of fair value for each stock award. The Company’s policy is to grant employee and director stock options with an exercise price equal to or greater than the fair value of the Common Stock at the date of grant. | |||
The Company recognizes compensation costs resulting from the issuance of stock-based awards to non-employees as an expense in the statement of operations over the service period based on a measurement of fair value for each stock award. | |||
Fair Values of Assets and Liabilities | |||
The Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. | |||
Level 1: | Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. | ||
Level 2: | Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For example, Level 2 assets and liabilities may include debt securities with quoted prices that are traded less frequently than exchange-traded instruments. | ||
Level 3: | Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private equity investments and long-term derivative contracts. | ||
The Company's financial liabilities measured at fair value on December 31, 2012 and 2011 consists of a derivative warrant liability which is classified as Level 3 in fair value hierarchy (see Note 7). The Company uses a valuation method, the Black-Scholes option pricing model, and the requisite assumptions in estimating the fair value for the warrants considered to be derivative instruments. These assumptions include the fair value of the underlying stock, risk-free interest rates, volatility, expected life and dividend rates. The Company has no financial assets measured at fair value. | |||
The Company may also be required, from time to time, to measure certain other financial assets at fair value on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. There were no such adjustments in the years ended December 31, 2012, 2011 and 2010. | |||
Derivative Instruments | |||
The Company generally does not use derivative instruments to hedge exposures to cash-flow or market risks; however, certain warrants to purchase Common Stock that do not meet the requirements for classification as equity are classified as liabilities. In such instances, net-cash settlement is assumed for financial reporting purposes, even when the terms of the underlying contracts do not provide for a net-cash settlement. Such financial instruments are initially recorded at fair value with subsequent changes in fair value charged (credited) to operations in each reporting period. If these instruments subsequently meet the requirements for classification as equity, the Company reclassifies the fair value to equity. | |||
Concentration of Credit Risk | |||
The Company has no significant off-balance-sheet risk. Financial instruments, which subject the Company to credit risk, principally consist of cash and cash equivalents. The Company mitigates its risk by maintaining the majority of its cash and equivalents with high-quality financial institutions. | |||
Financial Instruments | |||
The estimated fair value of the Company’s financial instruments, which include cash and cash equivalents, restricted cash, accounts receivable, accounts payable and capital lease obligation, approximates their carrying value due to the short-term nature of these instruments and their market terms. The Company estimates the fair value of its notes payable to be its face value of $3,000,000, which exceeds the carrying value because the carrying value has been recorded net of debt discounts. | |||
Net Loss per Common Share | |||
Basic and diluted net loss per share of Common Stock has been computed by dividing the net loss applicable to common stockholders in each period by the weighted average number of shares of Common Stock outstanding during such period. For the periods presented, options, warrants and convertible securities were anti-dilutive and therefore excluded from diluted loss per share calculations. | |||
Segment Information | |||
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and manages its business as principally one operating segment, which is the development of transdermal skin permeation and diagnostics medical devices and, specialty pharmaceutical drugs. As of December 31, 2012 and 2011, all of the Company’s assets were located in the United States. | |||
Grant Income | |||
Grants received are recognized as income when the related work is performed and the qualifying research and development costs are incurred and are presented as Other Income on the Company’s consolidated statements of operations. The Company received a grant totaling approximately $244,500 under the Qualified Therapeutic Discovery Project Grants Program during 2010. The Qualified Therapeutic Discovery Project Grants Program was included in the healthcare reform legislation and established a one-time pool of $1 billion for grants to small biotechnology companies developing novel therapeutics which show potential to: (a) result in new therapies that either treat areas of unmet medical need, or prevent, detect, or treat chronic or acute diseases and conditions; (b) reduce long-term health care costs in the United States; or (c) significantly advance the goal of curing cancer within the next 30-year period. | |||
Research and Development Expenses | |||
The Company charges research and development expenses to operations as incurred. Research and development expenses primarily consist of salaries and related expenses for personnel and outside contractor and consulting services. Other research and development expenses include the costs of materials and supplies used in research and development, prototype manufacturing, clinical studies, related information technology and an allocation of facilities costs. | |||
Income Taxes | |||
The Company is primarily subject to U.S. federal, Massachusetts, Pennsylvania and New Jersey state income tax. Tax years subsequent to 2008 remain open to examination by U.S. federal and state tax authorities. | |||
For federal and state income taxes, deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and the tax basis of assets and liabilities. Deferred income taxes are based upon prescribed rates and enacted laws applicable to periods in which differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, since the Company cannot be assured of realizing the deferred tax asset, a full valuation allowance has been provided. | |||
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. There was no uncertain tax position liabilities recorded at December 31, 2012 and 2011. | |||
The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2012 and 2011, the Company had no accruals for interest or penalties related to income tax matters. | |||
Licensing and Other Revenue Recognition | |||
To date, the Company has generated revenue primarily from licensing agreements, including upfront, nonrefundable license fees, with collaborators and licensees. The Company recognizes revenue when the following criteria have been met: | |||
persuasive evidence of an arrangement exists; | |||
delivery has occurred and risk of loss has passed; | |||
the price to the buyer is fixed or determinable; and | |||
collectability is reasonably assured | |||
In addition, when evaluating multiple element arrangements, the Company considers whether the components of the arrangement represent separate units of accounting. Multiple elements are divided into separate units of accounting if specified criteria are met, including whether the delivered element has stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items. The consideration received is allocated among the separate units based on their respective fair values, and the applicable revenue recognition criteria are applied to each of the separate units. Otherwise, the applicable revenue recognition criteria are applied to combined elements as a single unit of accounting. | |||
The Company typically receives upfront, nonrefundable payments for the licensing of its intellectual property upon the signing of a license agreement. The Company believes that these payments generally are not separable from the payments it receives for providing research and development services because the license does not have stand-alone value from the research and development services it provides under its agreements. Accordingly, the Company accounts for these elements as one unit of accounting and recognizes upfront, nonrefundable payments as revenue on a straight-line basis over its contractual or estimated performance period. Revenue from the reimbursement of research and development efforts is recognized as the services are performed based on proportional performance adjusted from time to time for any delays or acceleration in the development of the product and is included in Other Revenue. The Company determines the basis of the estimated performance period based on the contractual requirements of its collaboration agreements. At each reporting period, the Company evaluates whether events warrant a change in the estimated performance period. | |||
Other Revenue includes amounts earned and billed under the license and collaboration agreements for reimbursement of research and development costs for contract engineering services. For the services rendered, principally third-party contract engineering services, the revenue recognized approximates the costs associated with the services. | |||
Recently Issued Accounting Pronouncements | |||
In July 2012, the FASB issued Accounting Standards Update ("ASU") No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which gives companies the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If a company determines that it is more likely than not that the fair value of such an asset exceeds its carrying amount, it would not need to calculate the fair value of the asset in that year. However, if a company concludes otherwise, it must calculate the fair value of the asset, compare that value with its carrying amount and record an impairment charge, if any. The amendments in the ASU are effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012, which is fiscal 2013 for the Company. Early adoption is permitted. The Company is currently assessing its adoption plans. | |||
In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities (Topic 210), that provides amendments for disclosures about offsetting assets and liabilities. The amendments require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. The amendments are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Disclosures required by the amendments should be provided retrospectively for all comparative periods presented. For the Company, the amendment is effective for fiscal year 2013. The Company is currently evaluating the impact these amendments may have on its disclosures. |
CASH
CASH | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' |
Note 2. CASH | ' | ' |
Cash and Cash Equivalents | As of December 31, 2012, the Company held approximately $3,747,000 in cash and cash equivalents. The Company’s cash equivalents consist solely of money market funds at a major banking institution. From time to time, the Company may have cash balances in excess of federal insurance limits. The Company has never experienced any previous losses related to these uninsured balances. | |
As of September 30, 2013, the Company held approximately $6,068,000 in cash and cash equivalents. The Company’s cash equivalents consist solely of bank money market funds. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has never experienced any losses related to these balances. | ||
Restricted Cash | ||
As of September 30, 2013, restricted cash consists of two $250,000 letters of credit issued in favor of one of the Company’s key product development vendors and a $157,463 letter of credit issued in favor of one of its landlords. As of December 31, 2012, restricted cash consisted of one $250,000 letter of credit issued in favor of one of the Company’s key product development vendors and a $157,463 letter of credit issued in favor of one of its landlords. |
INTANGIBLE_ASSETS
INTANGIBLE ASSETS | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||||||||||||||||||||
Note 3. INTANGIBLE ASSETS | ' | ' | ||||||||||||||||||||||||||||||||||
The Company’s intangible assets are related to the acquisition of certain assets related to AzoneTS-based technology from Durham Pharmaceuticals Ltd. in 2007. Following the acquisition in 2007, the Company has modestly advanced the development programs for DurhalieveTM for the treatment of corticosteroid-responsive dermatoses and for the early stage AzoneTS reformulation drug candidates. Among other things, the Company has monitored stability on new drug formulations, worked on a complete response on the Durhalieve New Drug Application, met with the FDA on development status, assembled a response for the methotrexate-AzoneTS ‘end of Phase 2’ meeting with the FDA, engaged consultants to review and recommend new product candidates and formulations, and conducted partnering activities around the technology. In addition, the Company has made applicable regulatory filings necessary to maintain the active status of the AzoneTS Drug Master File, the Durhalieve and MAZ Investigational New Drug applications and the MAZ Orphan Drug application with the FDA. | The Company’s intangible assets are related to the acquisition of assets from Durham Pharmaceuticals Ltd. in 2007. As of December 31, 2012 and 2011, intangible assets related to the ETI Acquisition are summarized as follows: | |||||||||||||||||||||||||||||||||||
As of September 30, 2013 and 2012, intangible assets related to this Acquisition are summarized as follows: | 2012 | 2011 | ||||||||||||||||||||||||||||||||||
Estimated | Accumulated | |||||||||||||||||||||||||||||||||||
2013 | 2012 | Life | Cost | Amortization | Net | Net | ||||||||||||||||||||||||||||||
Estimated | Accumulated | Contract related intangible asset: | ||||||||||||||||||||||||||||||||||
Life | Cost | Amortization | Net | Net | Cato Research discounted contract | 3 years | $ | 355,000 | $ | 355,000 | $ | — | $ | — | ||||||||||||||||||||||
Contract related intangible asset: | Technology related intangible assets: | |||||||||||||||||||||||||||||||||||
Cato Research discounted contract | 3 years | $ | 355,000 | $ | 355,000 | $ | — | $ | — | Patents for the AzoneTS-based product candidates and formulation | 6 years | 1,305,000 | — | 1,305,000 | 1,305,000 | |||||||||||||||||||||
Technology related intangible assets: | Drug Master Files containing formulation, clinical and safety documentation used by the FDA | 6 years | 1,500,000 | — | 1,500,000 | 1,500,000 | ||||||||||||||||||||||||||||||
Patents for the AzoneTS-based product candidates and formulation | 4.5 years | 1,305,000 | — | 1,305,000 | 1,305,000 | In-process pharmaceutical products for 2 indications | 6 years | 6,820,000 | — | 6,820,000 | 6,820,000 | |||||||||||||||||||||||||
Drug Master Files containing formulation, clinical and safety documentation used by the FDA | 4.5 years | 1,500,000 | — | 1,500,000 | 1,500,000 | Total technology related intangible assets | 9,625,000 | — | 9,625,000 | 9,625,000 | ||||||||||||||||||||||||||
In-process pharmaceutical products for 2 indications | 4.5 years | 6,820,000 | — | 6,820,000 | 6,820,000 | Total, net | $ | 9,980,000 | $ | 355,000 | $ | 9,625,000 | $ | 9,625,000 | ||||||||||||||||||||||
Total technology related intangible assets | 9,625,000 | — | 9,625,000 | 9,625,000 | ||||||||||||||||||||||||||||||||
Total, net | $ | 9,980,000 | $ | 355,000 | $ | 9,625,000 | $ | 9,625,000 | Intangible assets related to technology are expected to be amortized on a straight-line basis over the period ending 2019, when the underlying patents expire, and will commence upon revenue generation which the Company estimates may occur as early as the middle of 2014. The contract related to this intangible asset was amortized over a three year period, which ended in 2010. Amortization expense relating to the contract was approximately $84,000 for the year ended December 31, 2010 and is included in research and development in the Consolidated Statement of Operations. | |||||||||||||||||||||||||||
Intangible assets related to technology are expected to be amortized on a straight-line basis over the period ending 2019, when the underlying patents expire, and will commence upon revenue generation which the Company estimates could occur as early as the middle of 2015. The Cato Research contract included above was amortized over a three year period, which ended in 2010. | Estimated amortization expense for each of the next five years is as follows: | |||||||||||||||||||||||||||||||||||
Estimated amortization expense for each of the next five calendar years is as follows: | Estimated | |||||||||||||||||||||||||||||||||||
Amortization | ||||||||||||||||||||||||||||||||||||
Estimated | Year Ending December 31, 2012: | Expense | ||||||||||||||||||||||||||||||||||
Amortization | 2013 | $ | — | |||||||||||||||||||||||||||||||||
Expense | 2014 | 1,604,000 | ||||||||||||||||||||||||||||||||||
2013 | $ | — | 2015 | 1,604,000 | ||||||||||||||||||||||||||||||||
2014 | — | 2016 | 1,604,000 | |||||||||||||||||||||||||||||||||
2015 | 1,069,000 | 2017 | 1,604,000 | |||||||||||||||||||||||||||||||||
2016 | 2,139,000 | 2018 | 1,604,000 | |||||||||||||||||||||||||||||||||
2017 | 2,139,000 | |||||||||||||||||||||||||||||||||||
In periodically reviewing the carrying value of intangible assets, the Company considered if there have been events or circumstances that would indicate that the carrying amount of the intangible assets may not be recoverable. If such events or circumstances existed, the Company performed an impairment test in accordance with FASB ASC 360-10. Under that standard, the first step in the impairment analysis is to compare the undiscounted cash flows to the carrying value of the intangibles. The project’s undiscounted cash flows exceeded the carrying value at each of the Company’s assessment dates following acquisition, including December 31, 2012. As a result, it was not necessary for the Company to conduct further analysis or to make a determination of the fair value of the intangible assets and thereby the Company concluded that there was no impairment. It is the Company’s policy to evaluate intangible assets for impairment at least annually in connection with its year end financial statement preparation. |
OPERATING_LEASE_COMMITMENTS
OPERATING LEASE COMMITMENTS | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||||||||||
Note 4. OPERATING LEASE COMMITMENTS | ' | ' | ||||||||||||||||||||||||
The Company leases approximately 37,000 square feet of manufacturing, laboratory and office space in a single-story building located in Franklin, Massachusetts under a lease expiring October 31, 2017 and approximately 1,060 square feet of residential space as a corporate apartment in Franklin, Massachusetts under a lease expiring July 24, 2014. | The Company leases approximately 37,000 square feet of manufacturing, laboratory and office space in a single-story building located in Franklin, Massachusetts under a lease expiring October 31, 2017. | |||||||||||||||||||||||||
The Company also leases approximately 7,900 square feet of corporate office space in a multi-story building located in Philadelphia, Pennsylvania under a lease expiring May 31, 2017. | The Company also leases approximately 7,900 square feet of corporate office space in a multi-story building located in Philadelphia, Pennsylvania under a lease expiring May 31, 2017. | |||||||||||||||||||||||||
Future minimum lease payments for each of the next 5 years under these operating leases are as follows: | Future minimum lease payments for each of the next five years under these operating leases at December 31, 2012 are approximately as follows: | |||||||||||||||||||||||||
Franklin | Philadelphia | Total | Franklin | Philadelphia | Total | |||||||||||||||||||||
For the period ending September 30, | Year Ending December 31, 2012: | |||||||||||||||||||||||||
2013 | $ | 113,000 | $ | 46,000 | $ | 159,000 | 2013 | $ | 421,000 | $ | 185,000 | $ | 606,000 | |||||||||||||
2014 | 447,000 | 187,000 | 634,000 | 2014 | 431,000 | 189,000 | 620,000 | |||||||||||||||||||
2015 | 444,000 | 192,000 | 636,000 | 2015 | 441,000 | 194,000 | 635,000 | |||||||||||||||||||
2016 | 454,000 | 196,000 | 650,000 | 2016 | 451,000 | 198,000 | 649,000 | |||||||||||||||||||
2017 | 382,000 | 82,000 | 464,000 | 2017 | 383,000 | 83,000 | 466,000 | |||||||||||||||||||
Total | $ | 1,840,000 | $ | 703,000 | $ | 2,543,000 | Total | $ | 2,127,000 | $ | 849,000 | $ | 2,976,000 | |||||||||||||
The Company’s facilities lease expense, including accruals for lease incentives, was approximately $141,000 and $56,000 for the three months ended September 30, 2013 and 2012, respectively, and $530,000 and $207,000 for the nine months ended September 30, 2013 and 2012, respectively. | The Company’s facilities lease expense was approximately $339,000, $224,000 and $169,000 for the years ended December 31, 2012, 2011 and 2010, respectively. | |||||||||||||||||||||||||
CREDIT_FACILITY_WITH_PLATINUMM
CREDIT FACILITY WITH PLATINUM-MONTAUR LIFE SCIENCES, LLC | 12 Months Ended |
Dec. 31, 2012 | |
Notes to Financial Statements | ' |
Note 6. CREDIT FACILITY WITH PLATINUM-MONTAUR LIFE SCIENCES, LLC | ' |
On August 31, 2012, the Company and Platinum-Montaur Life Sciences, LLC (“Montaur”) entered into a Loan Agreement (the “Loan Agreement”) pursuant to which Montaur made a non-revolving draw credit facility (the “Credit Facility”) of up to $20,000,000 available to the Company, a substantial portion of which is subject to the successful achievement of certain clinical and regulatory milestones set forth in the Loan Agreement, with an initial available principal amount of $5,000,000 (the “Maximum Draw Amount”). The Company issued to Montaur a Promissory Note dated August 31, 2012 (the “Note”), with a maturity date of five years from the date of closing (the “Maturity Date”). The Company has used the proceeds from the Credit Facility to fund operations. | |
The principal balance of each draw will bear interest from the applicable draw date at a rate of 10% per annum, compounded monthly. The accrued interest expense for the year ended December 31, 2012 was approximately $61,000 and is included in interest expense. The Company is required to make interest payments on the principal amount due in connection with each draw on the first business day of each month until the Maturity Date. The Company is also required to make a mandatory prepayment on each interest payment date of an amount equal to one-third of its total revenue for the then prior fiscal quarter, up to the maximum amount outstanding under the Note at that time. The Company is not, however, required to make such interest payment or mandatory prepayment if doing so would reduce the Company’s cash and cash equivalents to less than $5,000,000. Any amounts not previously paid in full will be due and payable on the Maturity Date. The Company will have the right to permanently prepay any draw, in whole or in part, prior to the Maturity Date. | |
The Company’s subsidiary, Sontra Medical, Inc. (“Sontra”), agreed to guarantee the obligations of the Company under the Note pursuant to a guaranty agreement entered into on August 31, 2012 (the “Guaranty”). Additionally, the Note is secured by the Pledged Revenue (as defined in the Loan Agreement) of the Company and the Company’s subsidiaries pursuant to a Security Agreement dated as of August 31, 2012 by and among the Company, Sontra and Montaur. Upon the earlier of the Maturity Date of the Note or an event of default, as defined in the Loan Agreement, the Note shall be secured by substantially all of the assets of the Company and any of its subsidiaries, which security interest shall not be effective until such event of default or maturity, pursuant to a Default Security Agreement dated August 31, 2012 by and among the Company, Sontra and Montaur. The Company also has agreed to pay all costs associated with registering the shares underlying the Warrants (should it choose to register such shares) and to indemnify Montaur from liability resulting from the registration of such shares (subject to certain standard exceptions) in accordance with a Registration Indemnity Agreement between the Company and Montaur. | |
Pursuant to the Loan Agreement, the Company issued Montaur a warrant to purchase 4,000,000 shares of its Common Stock, with a term of five years and an exercise price of $2.00 per share (the “Commitment Warrant”). The fair value of the warrant was determined to be approximately $4,840,000 and was recorded as a deferred financing cost that will be amortized to interest expense over the term of the Note. Of this cost, $968,004 is reflected in Current Assets, representing the portion which will be amortized over the next twelve months. Amortization of the deferred financing cost for the year ended December 31, 2012 was $323,000 and is included in interest expense. | |
In addition, for each $1,000,000 of funds borrowed pursuant to the Credit Facility, the Company will issue Montaur a warrant to purchase 1,000,000 shares of Common Stock, with a term of five years and an exercise price equal to 150% of the market price of the Common Stock at the time of the draw, but in no event less than $2.00 or more than $4.00 per share (together with the Commitment Warrant, the “Warrants”). All of the Warrants are immediately exercisable and will have a term of five years from the issue date. The exercise price of the Warrants is subject to adjustment for stock splits, combinations or similar events. An exercise under the Warrants may not result in the holder beneficially owning more than 4.99% or 9.99%, as applicable, of all of the Common Stock outstanding at the time; provided, however, that a holder may waive the 4.99% ownership limitation upon sixty-one (61) days’ advance written notice to the Company. | |
On September 14, 2012, the Company submitted a draw request to Montaur in the amount of $3,000,000 in the form required by the Loan Agreement (the “September Request”). The Company ultimately received the $3,000,000 of draws in the following increments. $1,000,000 on September 20, 2012, $500,000 on October 17, 2012, and $1,500,000 on November 6, 2012. These draws were recorded on the Consolidated Balance Sheet under note payable, net of the initial $3,000,000 in discounts recorded related to the warrants issued and described below. We have accrued interest of approximately $61,000 on the $3,000,000 note payable at a rate of 10% per annum, compounded monthly through the year ended December 31, 2012. | |
In accordance with the Loan Agreement and as a result of funding received from Montaur, the Company issued to Montaur separate warrants concurrent with the three draws above to purchase 100,000, 50,000 and 150,000 shares of Common Stock each with a term of five years, and exercise prices of $21.30, $22.70 and 21.10 per share, respectively. The fair value of the warrants issued of $3,000,000 was determined to be approximately $3,455,000, of which $3,000,000 was treated as a debt discount and is being accreted to interest expense over the term of the Note. Amortization of the debt discount for the year ended December 31, 2012 was approximately $121,000 and is included in interest expense in the Consolidated Statement of Operations. The excess of the fair value of the warrants over the amount drawn under the note payable of approximately $455,000 was expensed at issuance and recorded as debt financing costs in the Consolidated Statement of Operations for the year ended December 31, 2012. The carrying value of the note payable at December 31, 2012 was the accreted balance of $120,834. | |
Subsequent Event | |
On March 1, 2013, the Company elected to prepay all outstanding draws under the Montaur Credit Facility totaling $3,113,366, which includes interest accrued and unpaid to that date of $113,366. After such date, no principal amount is outstanding under the Credit Facility. Concurrent with this prepayment, the Company recorded non-cash interest expense of approximately $2,800,000 in 2013 relating to the unamortized debt discount on the outstanding draws paid off. |
DERIVATIVE_WARRANT_LIABILITY
DERIVATIVE WARRANT LIABILITY | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||
Note 5. DERIVATIVE WARRANT LIABILITY | ' | ' | ||||||||||||||||
At September 30, 2013 and December 31, 2012, the Company had outstanding warrants to purchase 1,050,454 and 1,254,004 shares of its Common Stock, respectively. Included in these outstanding warrants at September 30, 2013 and December 31, 2012 are warrants to purchase 700,000 and 736,015 shares, respectively, that are considered to be derivative financial instruments. The fair value of these derivative instruments at September 30, 2013 and December 31, 2012 was approximately $979,000 and $5,585,000, respectively, and is included in Derivative Warrant Liability, a current liability, in the Consolidated Balance Sheet. Changes in fair value of the derivative financial instruments are recognized in the Consolidated Statement of Operations as a gain or loss on revaluation of derivative warrant liability. The Loss on Revaluation of Derivative Warrant Liability for the three months ended September 30, 2013 was approximately $70,000. The Gain on Revaluation of Derivative Warrant Liability for the nine months ended September 31, 2013 was approximately $4,606,000. The Gain (Loss) on Revaluation of Derivative Warrant Liability for the three and nine months ended September 30, 2012 was approximately a loss of $400,000 and a gain of $201,281, respectively. | Derivative financial instruments are recognized as a liability on the consolidated balance sheet and measured at fair value. | |||||||||||||||||
The Derivative Warrant Liability represents the risk exposure pertaining to the warrants and is based on the fair value of the underlying common stock and the Gain (Loss) on Revaluation of Derivative Warrant Liability is a result of the change in that fair value. For the three months ended September 30, 2013, no derivative warrants were exercised and none expired. For the nine months ended September 30, 2013, no derivative warrants were exercised and 45,164 expired. For the nine months ended September 30, 2012, 16,545 derivative warrants were exercised, which resulted in a reclassification of approximately $61,000 from the Derivative Warrant Liability to Additional Paid-in Capital. | At December 31, 2012 and 2011, the Company had outstanding warrants to purchase 1,254,004 and 752,753 shares of its common stock, respectively. Included in these outstanding warrants at December 31, 2012 and 2011 are warrants to purchase 736,016 and 72,515 shares, respectively, that are considered to be derivative instruments since the agreements contain “down round” provisions whereby the number of shares covered by the warrants is subject to change in the event of certain dilutive stock issuances. The fair value of these derivative instruments at December 31, 2012 and 2011 was approximately $5,585,000 and $1,035,000, respectively, and is included in Derivative Warrant Liability, a current liability. Changes in fair value of the derivative financial instruments are recognized currently in the Statements of Operations as a Gain (Loss) on Revaluation of Derivative Warrant Liability. The changes in the fair value of the derivative warrant liability for the years ended December 31, 2012, 2011 and 2010 resulted in a gain (loss) of approximately $3,684,000, $(1,763,000) and $371,000, respectively. | |||||||||||||||||
The table below presents the changes in the Level 3 Derivative Warrant Liability measured for the nine months ended September 30, 2013 and 2012: | The primary underlying risk exposure pertaining to the warrants is the change in fair value of the underlying common stock for each reporting period. Of the total warrants exercised in 2012 and 2011, warrants to purchase 141,947 shares of Common Stock were exercised in 2011 pursuant to a cashless exercise provision. No warrants were exercised in 2012 pursuant to a cashless exercise provision. | |||||||||||||||||
2013 | 2012 | For the years ended December 31, 2012 and 2011, warrants with down round provisions to purchase 16,546 and 65,315 shares, respectively, were exercised and certain anti-dilution rights were waived (see Note 12) which resulted in a reclassification to additional paid-in capital in the amount of approximately $62,000 and $2,273,000, respectively. | ||||||||||||||||
Derivative Warrant Liability as of January 1 | $ | 5,585,141 | $ | 1,035,337 | ||||||||||||||
Warrants issued under Montaur credit facility | — | 6,000,000 | The table below presents the changes in the Level 3 derivative warrant liability measured at fair value on a recurring basis: | |||||||||||||||
Total unrealized losses included in net loss (1) | 1,061,682 | 500,000 | ||||||||||||||||
Total realized losses included in net loss(1) | — | 1,438 | 2012 | 2011 | ||||||||||||||
Total unrealized gains included in net loss (1) | (5,515,000 | ) | (595,038 | ) | Liabilities: | |||||||||||||
Total realized gains included in net loss (1) | (152,668 | ) | (107,681 | ) | Derivative warrant liability as of January 1 | $ | 1,035,337 | $ | 1,544,996 | |||||||||
Reclassification of derivative warrant liability to additional paid-in capital for derivative warrants exercised | — | (61,520 | ) | Warrants issued under Montaur credit facility | 8,295,000 | - | ||||||||||||
Derivative Warrant Liability as of September 30 | $ | 979,155 | $ | 6,772,536 | Total unrealized losses included in net loss (1) | 500,000 | 2,191,147 | |||||||||||
______________________ | Total realized losses included in net loss (1) | 1,438 | 978,678 | |||||||||||||||
(1) Included in Gain (Loss) on Revaluation of Derivative Warrant Liability in the Consolidated Statement of Operations. | Total unrealized gains included in net loss (1) | (4,077,433 | ) | (1,377,261 | ) | |||||||||||||
Total realized gains included in net loss (1) | (107,681 | ) | (29,626 | ) | ||||||||||||||
Reclassification of liability to additional paid-in capital | (61,520 | ) | (2,272,597 | ) | ||||||||||||||
for warrants | ||||||||||||||||||
Derivative warrant liability as of December 31 | $ | 5,585,141 | $ | 1,035,337 | ||||||||||||||
________________________ | ||||||||||||||||||
(1) Included in gain or loss on revaluation of derivative warrant liability in the Consolidated Statement of Operations. |
PREFERRED_STOCK
PREFERRED STOCK | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | ||
Notes to Financial Statements | ' | ' | |
Note 6. PREFERRED STOCK | ' | ' | |
The Company is authorized to issue up to 40,000,000 shares of preferred stock with such rights, preferences and privileges as are determined by the Board of Directors. | The Company is authorized to issue up to 40,000,000 shares of preferred stock with such rights, preferences and privileges as are determined by the Board of Directors. | ||
The Company has authorized 10,000 shares of Series C Preferred Stock (the “Series C Stock”), of which 9,974.185 shares were issued and outstanding as of September 30, 2013 and December 31, 2012. | Series B Perpetual Redeemable Preferred Stock and Warrant Financing | ||
Series D Convertible Preferred Stock | The Company had authorized 40,000 share of non-convertible Series B Perpetual Preferred Stock, $0.01 par value (“Series B Stock”). After giving effect to an exchange in October 2011 where certain warrants to purchase Common Stock were exercised and, in lieu of delivering to the Company the cash exercise price for such warrant exercises, the investor surrendered an aggregate of 170.1672 shares of Series B Stock with a redeemable vlaue of $1,701,672. As a part of the exchange, the Company issued an aggregate of 1830.895 shares of Series C Stock. After giving effect to the exchange, the Company has no authorized, issued or outstanding Series B stock. | ||
The Company has authorized 3,600,000 shares of Series D Convertible Preferred Stock (the “Series D Stock”), of which 3,006,000 shares were issued and outstanding as of September 30, 2013 and December 31, 2012. | Series C Convertible Preferred Stock | ||
The Company has authorized 10,000 shares of Series C Stock, of which 9,974.185 shares were issued and outstanding as of December 31, 2012 and 2011. The Series C Stock was created on June 30, 2009. | |||
Key terms of the Series C Stock are as follows: | |||
· | Pursuant to the terms of the Certificate of Designation, Preference and Rights of Series C Preferred Stock (the “Series C Certificate”), each share of Series C Stock is initially convertible into 1,000 shares of Common Stock, subject to adjustment for stock splits, combinations or similar events. | ||
· | Each holder who receives Series C Stock may convert its Series C Stock at any time following its issuance. | ||
· | In the event of any Liquidation Event (as defined in the Series C Certificate), the holders of Series C Stock will be entitled to receive (subject to the rights of any securities designated as senior to the Series C Stock) a per share liquidation preference equal to an amount calculated by taking the total amount available for distribution to holders of all the Company’s outstanding Common Stock before deduction of any preference payments for the Series C Stock, divided by the total of (x) all of the then outstanding shares of Common Stock, plus (y) all of the shares of Common Stock into which all of the outstanding shares of the Series C Stock can be converted, in each case prior to any distribution to the holders of Common Stock or any other securities designated as junior to the Series C Stock. | ||
Series D Convertible Preferred Stock | |||
The Company has authorized 3,600,000 shares of Series D Preferred Stock (the “Series D Stock”), of which 3,006,000 shares were issued and outstanding as of December 31, 2012 and December 31, 2011. | |||
Key terms of the Series D Stock are as follows: | |||
· | Pursuant to the terms of the Certificate of Designation, Preferences and Rights of the Series D Convertible Preferred Stock, the shares of Series D Stock are initially convertible into shares of Common Stock at a price per share equal to $10.00, subject to adjustment for stock splits, business combinations or similar events, and shall have a liquidation preference equal to their stated value. | ||
· | Each holder who receives Series D Stock may convert it at any time following its issuance. | ||
· | The Series D Stock does not pay a dividend and is not redeemable. | ||
On February 8, 2011 the Company entered into a Series D Convertible Preferred Stock Purchase Agreement (the “Series D Agreement”) with Montaur and certain other strategic accredited investors (each, a “Series D Investor” and collectively, the “Series D Investors”) in connection with the Company’s private placement (the “Series D Financing”) of Series D Convertible Preferred Stock (“Series D Stock”) at a price per share of $1.00. For every $100,000 face value of Series D Stock purchased in the Series D Financing, the Series D Investor was issued (i) Series 1 warrants to purchase 5,000 shares of Common Stock with an exercise price of $15.00 per share (the “Series D-1 Warrants”), and (ii) Series 2 warrants to purchase 50,000 shares of Common Stock with an exercise price of $25.00 per share (the “Series D-2 Warrants” and, together with the Series D-1 Warrants, the “Series D Warrants”). | |||
On February 8, 2011 there was a closing in connection with the Series D Agreement and the Company received cash proceeds of $2,500,000 for the purchase of 2,500,000 shares of Series D Stock. The Company issued 1,006,000 shares of Series D Stock in exchange for the extinguishment of an 8% Senior Promissory Note issued by the Company on January 5, 2011 in the principal amount of $1,000,000, plus interest accrued through February 1, 2011 in the amount of $6,000. | |||
The Company issued an aggregate of 1,753,000 Series D-1 Warrants and 1,753,000 Series D-2 Warrants to the Series D Investors pursuant to the Series D Agreement. The Series D Warrants are immediately exercisable and expire on February 7, 2013; however, if the Series D Warrants are not exercised in full by February 7, 2013 by virtue of the application of a beneficial ownership “blocker”, then the term of the Series D Warrants shall be extended for thirty (30) days past the date on which the beneficial ownership blocker is no longer applicable. An exercise under the Series D Warrants may not result in the holder beneficially owning more than 4.99% or 9.99%, as applicable, of all of the Common Stock outstanding at the time; provided, however, that a holder may waive the foregoing provision upon 61 days’ advance written notice to the Company. The exercise price of these warrants is subject to adjustment for stock splits, business combinations or similar events. | |||
In connection with issuance of Series D Stock, the conversion feature of Series D Stock was considered beneficial, or “in the money”, at issuance due to a conversion rate that allows the investor to obtain the Common Stock at below market price. The Company recorded a deemed dividend on the beneficial conversion feature equal to the incremental fair value resulting from the reduction in the conversion rate of $1,975,211. This deemed dividend is included in the 2011 Consolidated Statement of Operations in arriving at the Net Loss Applicable to Common Shareholders. | |||
In accordance with (i) the Certificate of Designation, Rights and Preferences of the Series B Stock (the “Series B Certificate”) and (ii) a letter agreement dated January 19, 2010 between the Company and the sole holder of the Series B Stock (the “Series B Holder”), the Company was obligated to use 25% of the gross proceeds from the Series D Financing to redeem the Series B Stock. On February 4, 2011, the Company entered into a letter agreement (the “Letter”) with the Series B Holder pursuant to which the Series B Holder waived the redemption of shares of the Series B Stock triggered by the Series D Financing. | |||
On October 19, 2011, an investor converted 500,000 shares of Series D Stock into 50,000 shares of Common Stock. |
COMMON_STOCK
COMMON STOCK | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' |
Note 7. COMMON STOCK | ' | ' |
The Company has authorized 150,000,000 shares of Common Stock, of which 10,699,990 and 4,437,346 shares were issued and outstanding as of September 30, 2013 and December 31, 2012, respectively. | The Company has authorized 150,000,000 shares of Common Stock, $0.01 par value per share, of which 4,437,346 and 3,854,400 shares were issued and outstanding as of December 31, 2012 and December 31, 2011, respectively. | |
January 2013 Financing | February 2010 Financing | |
On January 31, 2013 and February 1, 2013, the Company entered into underwriting agreements (collectively, the “Underwriting Agreements”) with Aegis Capital Corp. (“Aegis”), as a representative of several underwriters, with respect to the issuance and sale in an underwritten public offering by the Company of an aggregate of 1,567,833 shares of the Company’s Common Stock (including 204,500 shares sold pursuant to the over-allotment option), at a price to the public of $7.50 per share. The net proceeds to the Company, after deducting the underwriting discount and other offering expenses payable by the Company, from the sale of the shares in the offering were approximately $10,626,000. Subsequent to the offering, the Company used a portion of the net proceeds of the offering to pay off the Promissory Note issued to Platinum-Montaur Life Sciences, LLC (“Montaur”) in connection with the $20 million non-revolving draw credit facility with Montaur. The Note will mature on August 31, 2017. See Note 13. | On February 4, 2010, the Company entered into a Common Stock and Warrant Purchase Agreement (the “February Agreement”) with certain strategic institutional and accredited investors in connection with the Company’s private placement (the “February Financing”) of shares of its Common Stock, at a price of $15.00 per share (the “February Shares”). Under the terms of the February Agreement, each investor received warrants to purchase a number of shares of Common Stock with an exercise price of $22.50 per share equal to fifty percent (50%) of the number of February Shares purchased by such investor (the “February Warrants”). The Company issued 163,374 shares of Common Stock and received gross proceeds of approximately $2,455,000 in connection with the February Financing. Total cost to issue the shares was $361,111 which included non-cash costs of $217,141. | |
June 2013 Financing | Pursuant to the February Agreement, the Company issued an aggregate of 81,836 February Warrants to the investors and 12,890 warrants to the placement agent and its assignees. The February Warrants are immediately exercisable and expire no later than five (5) years from the date of issuance. The exercise price is subject to adjustment for stock splits, combinations or similar events. The February Warrants allow for cashless exercise. An exercise under the February Warrants may not result in the holder beneficially owning more than 4.99% or 9.99%, as applicable, of all of the Common Stock outstanding at the time; provided, however, that a holder may waive the foregoing provision upon sixty-one (61) days’ advance written notice to the Company. | |
On June 13, 2013, the Company entered into an underwriting agreement with Aegis, as a representative of several underwriters, with respect to the issuance and sale in an underwritten public offering by the Company of an aggregate of 4,628,750 shares of the Company’s Common Stock (including 603,750 shares sold pursuant to the over-allotment option), at a price to the public of $2.70 per share. The net proceeds to the Company, after deducting the underwriting discount and other offering expenses payable by the Company, from the sale of the shares in the offering were approximately $11,338,000. | November 2010 Financings | |
Stock Issued in Exchange for Services | In November 2010, the Company initiated a private placement (the “November 2010 Financing”) of up to 120 units (each, a “Unit” and together, the “Units”) or partial Units at a price per Unit of $25,000. Each Unit consists of (i) 2,500 shares of Common Stock, (ii) Series 1 warrants to purchase 1,250 shares of the Company’s Common Stock with an exercise price of $15.00 per share (the “Series 1 Warrants”), and (iii) Series 2 warrants to purchase 1,250 shares of Common Stock with an exercise price of $25.00 per share (the “Series 2 Warrants”). | |
During the nine months ended September 30, 2013 and 2012, the Company issued 7,450 and 7,033 shares, respectively, of Common Stock with a fair value of $89,970 and $118,465, respectively, to vendors in exchange for their services. Expenses associated with these transactions were included in Selling, General and Administrative Expenses in the Consolidated Statements of Operations. | Through December 31, 2010, the Company had entered into subscription agreements with certain strategic institutional and accredited investors in connection with the November 2010 Financing for a total of 68.8 units. The Company received gross proceeds from these subscriptions in the amount of $1,720,000. The Company received proceeds of $100,000 in the form of extinguishment of a Short-Term Note issued by the Company on September 28, 2010, which included principal and interest. Additionally, the Company had received a commitment for an additional 11.4 Units for which the expected proceeds of $285,000 had not been received as of December 31, 2010. This was treated as a stock subscription receivable as of December 31, 2010. The proceeds of $285,000 were received and stock issued in January and February 2011. | |
As of December 31, 2010, the Company issued an aggregate of 172,000 shares of Common Stock and under commitments for an additional 11.4 Units was obligated to issue an additional 28,500 shares and an aggregate of 100,250 Series 1 Warrants and 100,250 Series 2 Warrants to the investors. These warrants are immediately exercisable and expire three years after issuance. The exercise price is subject to adjustment for stock splits, combinations or similar events. An exercise under these warrants may not result in the holder beneficially owning more than 4.99% or 9.99%, as applicable, of all of the Common Stock outstanding at the time; provided, however, that a holder may waive the foregoing provision upon sixty-one (61) days’ advance written notice to the Company. | ||
In 2011, the Company entered into a subscription agreement with certain strategic institutional and accredited investors in connection with the November 2010 Financing for a total of 35.66 Units. The Company received proceeds from these subscriptions in the amount of $891,500, which included proceeds of $25,000 in the form of extinguishment of a 2010 Short Term Promissory Note issued by the Company on September 24, 2010. Pursuant to these November 2010 Financing closings that occurred in 2011, the Company issued an aggregate of 44,575 Series 1 Warrants and 44,575 Series 2 Warrants to the investors. | ||
Placement Agent Arrangements for 2010 Financings | ||
On June 30, 2009, the Company entered into an engagement letter with Burnham Hill Partners LLC (“Burnham”) pursuant to which Burnham provided placement agent services to the Company in connection with the Series B Financing. The Company agreed to pay Burnham (a) a cash fee of $200,000 (the “Series B Fee”) which was due and payable upon the earlier of (i) the Company having a net cash balance in excess of $2,000,000 or (ii) October 1, 2009; and (b) warrants to acquire 40,000 shares of Common Stock, with a term of five years, an exercise price per share equal to 105% of the closing bid price of our Common Stock on June 30, 2009. | ||
On September 30, 2009, the Company and Burnham entered into a letter agreement (the “Burnham Letter”) extending the due date of the Series B Fee. The Letter provides that the Fee is due and payable by the Company upon the earlier of (i) the Company having a cash balance in excess of $2,000,000 or (ii) March 31, 2010. | ||
On March 16, 2010, Burnham LLC agreed that the Company does not owe Burnham any fees that may have been payable pursuant to any and all previous agreements between Burnham and the Company. Accordingly, the Company recorded a gain on extinguishment of financing fee payable of $200,000 in 2010. | ||
On February 4, 2010, the Company entered into an engagement letter with Burnham pursuant to which Burnham provided placement agent services to the Company in connection with the February Financing. The Company agreed to pay Burnham for its services as follows: (a) a cash fee equal to seven percent (7%) of the gross cash proceeds received by the Company in connection with the February Financing from investors Burnham directly introduced to the February Financing; and (b) warrants to acquire a number of shares of Common Stock equal to 10% of the number of Shares issued to the investors directly introduced to the February Financing by Burnham at a per share exercise price equal to the exercise price of the Warrants and with such other terms and conditions as are equal or substantially similar to those included in the Warrants. The Company also agreed to pay Burnham’s reasonable out of pocket expenses incurred in connection with the February Financing in an amount not to exceed $5,000. Burnham received a cash placement fee of $29,925 and the Company issued to Burnham and/or its designees and assignees warrants to purchase 2,850 shares of Common Stock. The fair value of these warrant shares was determined to be approximately $48,000 as of February 3, 2010 which was recorded as both a debit and credit to additional paid-in capital as a stock issuance cost. | ||
On February 4, 2010, the Company entered into an engagement letter with Boenning & Scattergood, Inc. (“Boenning”) pursuant to which Boenning provided placement agent services to the Company in connection with the February Financing. The Company agreed to pay Boenning for its services as follows: (a) a cash fee equal to seven percent (7%) of the gross cash proceeds received by the Company in connection with the February Financing from investors Boenning directly introduced to the February Financing; and (b) warrants to acquire a number of shares of Common Stock equal to 10% of the number of shares of Common Stock issued to the investors directly introduced to the February Financing by Boenning at a per share exercise price equal to the exercise price of the Warrants and with such other terms and conditions as are equal or substantially similar to those included in the Warrants. The Company also agreed to pay Boenning’s reasonable out of pocket expenses incurred in connection with the February Financing in an amount not to exceed $5,000. Boenning received a cash placement fee of $110,410 and the Company issued to Boenning and/or its designees and assignees warrants to purchase 10,040 shares of Common Stock. The fair value of these warrant shares was determined to be approximately $169,000 as of February 3, 2010 which was recorded as both a debit and credit to additional paid-in capital as a stock issuance cost. | ||
On September 15, 2010, the Company retained LifeTech Capital, a division of Aurora Capital, LLC (“LifeTech”), as a placement agent. The Company agreed to pay LifeTech for its services as follows: (a) a cash fee equal to seven percent (7%) of the gross cash proceeds in excess of $150,000 received by the Company in connection with the November 2010 Financing from investors introduced to the November 2010 Financing by LifeTech; and (b) warrants to acquire a number of shares of Common Stock equal to 10% of the securities sold to investors introduced to the November 2010 Financing by LifeTech. The warrants are identical to those issued to the investors in the November 2010 Financing, except that they include a cashless exercise provision. LifeTech also received an up-front cash fee of $10,000 for financial advisory services. In connection with the November 2010 Financing, the Company paid cash fees of $8,750 and $7,875 in 2010 and 2011, respectively, and issued LifeTech warrants to purchase 1,375 shares of Common Stock at an exercise price of $15.00 per share and 1,375 shares of Common Stock at an exercise price of $25.00 per share with a combined fair value of approximately $25,000 which was recorded as non-cash stock issuance cost in 2010. The Company issued LifeTech warrants to purchase 563 shares of Common Stock at an exercise price of $15.00 per share and warrants to purchase 563 shares of Common Stock at an exercise price of $25.00 per share, for a combined fair value of approximately $11,000 which was recorded as a non-cash stock issuance cost in 2011. | ||
On December 29, 2010, the Company also retained Monarch Capital Group, LLC (“Monarch”) as a placement agent. The Company agreed to pay Monarch for its services as follows: (a) a cash fee equal to seven percent (7%) of the gross cash proceeds received by the Company in connection with the November 2010 Financing from investors introduced to the November 2010 Financing by Monarch; and (b) warrants to acquire a number of shares of Common Stock equal to 10% of the securities sold to investors introduced to the November 2010 Financing by Monarch. The warrants are identical to those issued to the investors in the November 2010 Financing. The Company paid cash fees to Monarch of $29,750 and $19,250 in 2010 and 2011, respectively. The Company has issued Monarch warrants to purchase 2,125 shares of Common Stock at an exercise price of $15.00 per share and 2,125 shares of Common Stock at an exercise price of $25.00 per share pursuant to this arrangement with a combined fair value of approximately $42,000 which was recorded as non-cash stock issuance cost in 2010. The Company issued Monarch warrants to purchase 1,375 shares of Common Stock at an exercise price of $15.00 per share and warrants to purchase 1,375 shares of Common Stock at an exercise price of $25.00 per share, for a combined fair value of approximately $30,000 which was recorded as a non-cash stock issuance cost in 2011. | ||
December 2011 Financing | ||
On December 5, 2011, the Company entered into purchase agreements with certain strategic investors relating to the issuance and sale of an aggregate of 239,895 shares of Common Stock, par value $0.01, and warrants to purchase an aggregate of 95,959 shares of Common Stock. The Common Stock and warrants to purchase Common Stock were sold in units, with each unit consisting of (i) one share of Common Stock and (ii) a warrant to purchase 0.4 of a share of Common Stock, at a public offering price of $22.50 per unit. The warrants will become exercisable six months after the date of issuance at an exercise price of $30.00 per share, and will expire three years from the date of issuance. The Company issued 239,895 shares on December 7, 2011, raising $5,397,625. | ||
December 2012 Financings | ||
On December 19, 2012, the Company entered into Stock Purchase Agreements with accredited investors pursuant to which the Company issued and sold an aggregate of 40,000 shares of the Company’s Common Stock at a purchase price of $8.00 per share, for aggregate consideration of $320,000 in cash. | ||
On December 20, 2012, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp. with respect to the issuance and sale of an underwritten public offering by the Company of 320,000 shares of the Company’s Common Stock, at a price to the public of $9.50 per share with a 45-day option to purchase up to an additional 48,000 shares. The Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended (the “Securities Act”), other obligations of the parties and termination provisions. | ||
The net proceeds to the Company, after deducting the underwriting discount and other offering expenses payable by the Company, from the sale of 368,000 shares (including 48,000 shares sold pursuant to the over-allotment option) in the offering were approximately $3,036,000. The Company expects to use the net proceeds of the offering for general corporate purposes, including manufacturing ‘get ready’ and key equipment purchases; planned clinical trial expenses; sales and marketing channel preparations; European operations planning; other research and development expenses and general and administrative expenses. | ||
January 2013 Financing (Subsequent Event) | ||
On January 31, 2013 and February 1, 2013, the Company entered into underwriting agreements (collectively, the “Underwriting Agreements”) with Aegis Capital Corp. as a representative of both underwriters (collectively, the “Underwriters”), with respect to the issuance and sale in an underwritten public offering by the Company of an aggregate 1,363,334 shares of the Company’s Common Stock, at a price to the public of $7.50 per share with a 45-day option to purchase up to an additional 204,500 shares. The Underwriting Agreements contain customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions. | ||
The net proceeds to the Company, after deducting the underwriting discount and other offering expenses payable by the Company, from the sale of 1,567,834 shares (including 204,500 shares sold pursuant to the over-allotment option) in the offering were approximately $10,666,000. At the time of the offering, the Company expected to use a portion of the net proceeds of the offering to pay off the Notes issued to Platinum-Montaur Life Sciences, LLC in connection with the $20 million non-revolving draw credit facility with Platinum-Montaur Life Sciences, LLC. The Notes were scheduled to mature on August 31, 2017. As of March 1, 2013, the entire balance under the Notes was $113,366, which included $3,000,000 of principal and $113,366 of accrued and unpaid interest. See Note 6 for the subsequent repayment of this debt on March 1, 2013. | ||
Stock Issued in Exchange for Services | ||
During the years ended December 31, 2012, 2011 and 2010, the Company issued 9,534, 13,800 and 26,500 shares of Common Stock, respectively, with a fair value of $153,464, $449,000 and $466,000, respectively, to vendors in exchange for their services. The Company recorded expense related to these issuances, which represents the fair value of the related stock at the time of issuance, to Selling, General and Administrative expense. |
EQUITY_COMPENSATION_PLANS
EQUITY COMPENSATION PLANS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Notes to Financial Statements | ' | |||||||||||||
Note 8. EQUITY COMPENSATION PLANS | ' | |||||||||||||
In March 2003, the Company’s shareholders approved its 2003 Stock Option and Incentive Plan (the “2003 Plan”). Pursuant to the 2003 Plan, the Company’s Board of Directors (or its committees and/or executive officers delegated by the Board of Directors) may grant incentive and nonqualified stock options, restricted stock, and other stock-based awards to the Company’s employees, officers, directors, consultants and advisors. As of September 30, 2013, there were 31,125 restricted shares of Common Stock issued and options to purchase an aggregate of 82,125 shares of Common Stock outstanding under the 2003 Plan and none are available for future grants due to the expiration of the 2003 Plan. | ||||||||||||||
In May 2008, the Company’s shareholders approved the 2008 Equity Compensation Plan (the “2008 Plan”). The 2008 Plan provides for grants of incentive stock options to employees and nonqualified stock options and restricted stock to employees, consultants and non-employee directors of the Company. In May 2013, the Company’s shareholders approved an amendment to the 2008 Plan to fix the maximum number of shares available under the 2008 Plan at 10,000,000 shares following shareholder approval of a 1-for-10 reverse stock split effective June 7, 2013. As of September 30, 2013, there were 155,761 restricted shares of Common Stock issued and options to purchase an aggregate of 394,011 shares of Common Stock outstanding under the 2008 Plan and 9,592,989 shares available for future grants. | ||||||||||||||
The following table shows the remaining shares available for future grants for each plan and outstanding shares: | ||||||||||||||
Equity Compensation Plans | ||||||||||||||
2003 Plan | 2008 Plan | |||||||||||||
Shares Available For Issuance | ||||||||||||||
Total reserved for stock options and restricted stock | 160,000 | 10,000,000 | ||||||||||||
Net restricted stock issued net of cancellations | (31,125 | ) | (320,978 | ) | ||||||||||
Stock options granted | (154,449 | ) | (326,750 | ) | ||||||||||
Add back options cancelled before exercise | 67,849 | 75,500 | ||||||||||||
Less shares no longer available due to Plan expiration | (42,275 | ) | — | |||||||||||
Remaining shares available for future grants at September 30, 2013 | — | 9,427,772 | ||||||||||||
Not Pursuant to a Plan | ||||||||||||||
Stock options granted | 154,449 | 326,750 | 310,000 | |||||||||||
Less: Stock options cancelled | (67,849 | ) | (75,500 | ) | (138,333 | ) | ||||||||
Stock options exercised | (35,600 | ) | (13,000 | ) | (66,667 | ) | ||||||||
Net shares outstanding before restricted stock | 51,000 | 238,250 | 105,000 | |||||||||||
Net restricted stock issued net of cancellations | 31,125 | 320,978 | 28,484 | |||||||||||
Outstanding shares at September 30, 2013 | 82,125 | 559,228 | 133,484 | |||||||||||
STOCK_OPTIONS
STOCK OPTIONS | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||||||||||||
Note 9. STOCK OPTIONS | ' | ' | ||||||||||||||||||||||||||
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model with certain assumptions noted below. Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the options. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the financial statements, to estimate option exercise and employee termination and forfeitures within the valuation model. The expected term of stock options granted under the Company’s stock plans is based on the average of the contractual term (generally 10 years) and the vesting period (generally 24 to 42 months). The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option. | In March 2003, the Company’s shareholders approved its 2003 Stock Option and Incentive Plan (the “2003 Plan”). Pursuant to the 2003 Plan, the Company’s Board of Directors (or its committees and/or executive officers delegated by the Board of Directors) may grant incentive and nonqualified stock options, restricted stock, and other stock-based awards to the Company’s employees, officers, directors, consultants and advisors. As of December 31, 2012, the maximum aggregate number of shares that may be authorized for issuance under the 2003 Plan for all periods is 160,000 shares. As of December 31, 2012, there were 31,125 restricted shares of Common Stock issued and options to purchase an aggregate of 82,125 shares of Common Stock outstanding under the 2003 Plan and 42,275 shares available for future grants. | |||||||||||||||||||||||||||
The assumptions used principally for stock options granted to employees and members of the Company’s Board of Directors in the nine months ended September 30, 2013 and 2012 were as follows: | In May 2008, the Company’s shareholders approved the 2008 Equity Compensation Plan (the “2008 Plan”). The 2008 Plan provides for grants of incentive stock options to employees and nonqualified stock options and restricted stock to employees, consultants and non-employee directors of the Company. In July 2010, the Company’s shareholders approved an amendment to the 2008 Plan to increase the maximum number of shares of Common Stock available under the Plan by 2,000,000 shares to 4,700,000 shares. In June 2012, the Company’s shareholders approved an amendment to the 2008 Plan to increase the maximum number of shares available under the Plan by 5,300,000 shares to 10,000,000 shares. As of December 31, 2012, there were restricted shares of Common Stock issued and options to purchase an aggregate of 444,224 shares of Common Stock outstanding under the 2008 Plan and 9,542,776 shares available for future grants. | |||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||
Risk-free interest rate | 0.13% - 1.89 | % | 0.94% - 2.05 | % | The tables below show the remaining shares available for future grants for each plan and the outstanding shares. | |||||||||||||||||||||||
Expected dividend yield | — | — | ||||||||||||||||||||||||||
Expected term | 1 - 6.5 years | 6.5 years | Stock Option Plans | |||||||||||||||||||||||||
Forfeiture rate (excluding fully vested stock options) | 15 | % | 15 | % | 2003 | 2008 | ||||||||||||||||||||||
Expected volatility | 129% - 141 | % | 129% - 137 | % | Shares Available For Issuance: | |||||||||||||||||||||||
Total reserved for stock options and restricted stock | 160,000 | 10,000,000 | ||||||||||||||||||||||||||
A summary of stock option activity as of and for the nine months ended September 30, 2013 is as follows: | Restricted stock issued net of cancellations | (31,125 | ) | (256,891 | ) | |||||||||||||||||||||||
Stock options granted | (154,449 | ) | (254,500 | ) | ||||||||||||||||||||||||
Weighted- | Weighted- | Add back options cancelled before exercise | 67,849 | 54,167 | ||||||||||||||||||||||||
Average | Average | Aggregate | Options cancelled by plan vote | - | - | |||||||||||||||||||||||
Exercise | Remaining | Intrinsic | Remaining shares available for future grants | 42,275 | 9,542,776 | |||||||||||||||||||||||
Shares | Price | Contractual | Value | Not Pursuant to a Plan | ||||||||||||||||||||||||
Stock Options | Term | Total granted | 154,449 | 254,500 | 310,000 | |||||||||||||||||||||||
Outstanding at January 1, 2013 | 343,334 | $ | 14.75 | Less: Options cancelled | (67,849 | ) | (54,167 | ) | (138,333 | ) | ||||||||||||||||||
Granted | 78,250 | 4.43 | Options exercised | (35,600 | ) | (13,000 | ) | (66,667 | ) | |||||||||||||||||||
Exercised | — | — | Shares outstanding, before restricted stock | 51,000 | 187,333 | 105,000 | ||||||||||||||||||||||
Forfeited or expired | (71,916 | ) | 13.38 | Restricted stock issued, net of cancellations | 31,125 | 256,891 | 28,484 | |||||||||||||||||||||
Outstanding at September 30, 2013 | 349,668 | $ | 12.45 | 5.80 years | $ | — | Outstanding shares at December 31, 2012 | 82,125 | 444,224 | 133,484 | ||||||||||||||||||
Exercisable at September 30, 2013 | 243,592 | $ | 11.34 | 4.86 years | $ | — | ||||||||||||||||||||||
Share-Based Compensation - Options | ||||||||||||||||||||||||||||
The weighted-average grant-date fair value of stock options granted during the nine months ended September 30, 2013 was $3.37 per share. Share-based compensation expense related to stock options recognized in the nine months ended September 30, 2013 and 2012 was approximately $554,000 and $720,000, respectively. As of September 30, 2013, there was approximately $1,149,000 of total unrecognized compensation expense related to non-vested share-based option compensation arrangements. With the exception of the unrecognized share-based compensation related to certain restricted stock grants to officers and employees that contain performance conditions related to United States Food and Drug Administration (“FDA”) approval for Symphony or the sale of substantially all of the stock or assets of the Company (see Note 10 on Restricted Stock below), unrecognized compensation is expected to be recognized over the next four years. | ||||||||||||||||||||||||||||
For options issued and outstanding during the years ended December 31, 2012, 2011 and 2010, the Company recorded additional paid-in capital and non-cash compensation expense of $938,537, $836,866 and $164,810, respectively, each net of estimated forfeitures. | ||||||||||||||||||||||||||||
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table. Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the options. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the consolidated financial statements, to estimate option exercise and employee termination within the valuation model. The expected term of options granted under the Company’s stock plans, all of which qualify as “plain vanilla,” is based on the average of the contractual term (generally 10 years) and the vesting period (generally 24 to 42 months) as permitted under SEC Staff Accounting Bulletin Nos. 107 and 110. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option. Restricted stock grants are valued based on the closing market price for the Company’s Common Stock on the grant date. | ||||||||||||||||||||||||||||
The assumptions used principally for options granted to employees in the years ended December 31, 2012 and 2011 were as follows: | ||||||||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||||||||
Risk-free interest rate | 0.92% - 2.05 | % | 1.80% - 3.47 | % | ||||||||||||||||||||||||
Expected dividend yield | — | — | ||||||||||||||||||||||||||
Expected term | 6.5 years | 6.5 years | ||||||||||||||||||||||||||
Forfeiture rate (excluding fully vested options) | 15 | % | 15 | % | ||||||||||||||||||||||||
Expected volatility | 131% - 142 | % | 137% - 142 | % | ||||||||||||||||||||||||
A summary of option activity under the Company’s stock plans and options granted to officers of the Company outside any plan as of December 31, 2012 and changes during the year then ended is presented below: | ||||||||||||||||||||||||||||
Weighted- | ||||||||||||||||||||||||||||
Weighted- | Average | |||||||||||||||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||||||||||||||||
Options: | Shares | Price | Term | Value | ||||||||||||||||||||||||
Outstanding at January 1, 2012 | 339,511 | $ | 16,80 | |||||||||||||||||||||||||
Granted | 70,000 | $ | 16.6 | |||||||||||||||||||||||||
Exercised | (23,767 | ) | $ | 9,40 | ||||||||||||||||||||||||
Forfeited or expired | (42,411 | ) | $ | 30,76 | ||||||||||||||||||||||||
Outstanding at December 31, 2012 | 343,333 | $ | 14,70 | 6.11 years | $ | 885,300 | ||||||||||||||||||||||
Exercisable at December 31, 2012 | 224,133 | $ | 10,60 | 5.48 years | $ | 885,300 | ||||||||||||||||||||||
The weighted-average grant-date fair value of options granted during the year ended December 31, 2012 was $16.60 per share. As of December 31, 2012, there was approximately $2,097,000 of total unrecognized compensation expense related to non-vested share-based option arrangements. With the exception of the unrecognized share-based compensation related to certain restricted stock grants to officers and employees that contain performance conditions related to United States Food and Drug Administration (FDA) approval for Symphony or the sale of the Company, unrecognized compensation is expected to be recognized over the next 12 months. |
RESTRICTED_STOCK
RESTRICTED STOCK | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||
Note 10. RESTRICTED STOCK | ' | ' | ||||||||||||||||
During the nine months ended September 30, 2013, the Company granted an aggregate of 64,088 restricted shares of Common Stock to certain officers, employees, directors and consultants of the Company. The grants were issued pursuant to the 2008 Plan. The grant date fair value of these restricted stock grants was approximately $313,000. Share-based compensation expense related to restricted stock recognized in the nine months ended September 30, 2013 and September 30, 2012 was approximately $355,000 and $200,000, respectively. | Share-Based Compensation – Restricted Stock | |||||||||||||||||
A summary of the Company’s non-vested restricted stock activity as of and for the nine months ended September 30, 2013, is as follows: | For restricted stock issued and outstanding during the years ended December 31, 2012, 2011 and 2010, the Company incurred non-cash compensation expense of $574,024, $323,463 and $393,249, respectively, each net of estimated forfeitures. | |||||||||||||||||
Restricted Stock | Weighted- | As of December 31, 2012, the Company had outstanding restricted stock grants of 316,042 shares with a weighted-average grant-date value of $16.60. A summary of the status of the Company’s non-vested restricted stock grants as of December 31, 2012, and changes during the year ended December 31, 2012 is presented below: | ||||||||||||||||
Average | ||||||||||||||||||
Shares | Grant-Date | Non-vested Shares: | Shares | Weighted- | ||||||||||||||
Fair Value | Average | |||||||||||||||||
Non-vested at January 1, 2013 | 316,044 | $ | 16.6 | Grant-Date | ||||||||||||||
Granted | 64,088 | 4.88 | Fair Value | |||||||||||||||
Vested | (33,042 | ) | 18.38 | Non-vested shares at January 1, 2012 | 181,960 | $ | 17.2 | |||||||||||
Forfeited | (24,500 | ) | 9.94 | Granted | 131,416 | $ | 17.2 | |||||||||||
Non-vested at September 30, 2013 | 157,373 | $ | 14.4 | Grants made in prior periods, now becoming restricted | 22,000 | $ | 9.2 | |||||||||||
Vested | (14,334 | ) | $ | 21.2 | ||||||||||||||
Among the 322,590 shares of non-vested restricted stock, the various vesting criteria include the following: | Forfeited | (5,000 | ) | $ | 18.4 | |||||||||||||
Non-vested shares at December 31, 2012 | 316,042 | $ | 16.6 | |||||||||||||||
· | 165,460 shares of restricted stock vest upon the FDA approval of Symphony or the sale of the Company or its assets; and | |||||||||||||||||
Of the 316,042 shares of non-vested restricted stock, vesting criteria are as follows: | ||||||||||||||||||
· | 157,130 shares of restricted stock vest over one to four years, at each of the anniversary dates of the grants. | |||||||||||||||||
· | 167,960 shares of restricted stock vest upon the FDA approval of Symphony or the sale of the Company; | |||||||||||||||||
As of September 30, 2013, there was approximately $863,000 of total unrecognized compensation expense related to non-vested share-based restricted stock arrangements granted pursuant to the Company’s equity compensation plans that vest over time in the foreseeable future. As of September 30, 2013, the Company cannot estimate the timing of completion of performance vesting requirements required by certain of these restricted stock grant arrangements. Compensation expense related to these restricted share grants will be recognized when the Company concludes that achievement of the performance vesting conditions is probable. | ||||||||||||||||||
· | 22,000 shares of restricted stock vest upon the sale of the Company; and | |||||||||||||||||
· | 126,082 shares of restricted stock vest over 4 years, at each of the anniversary dates of the grants. | |||||||||||||||||
As of December 31, 2012, there was approximately $1,861,000 of total unrecognized compensation expense related to non-vested share-based restricted stock arrangements granted under the Company’s equity compensation plans that vest over time in the foreseeable future. As of December 31, 2012, the Company cannot estimate the timing of completion of the performance vesting requirements required by certain of these restricted stock grant arrangements. Compensation expense related to these restricted share grants will be recognized when the Company concludes that achievement of the performance vesting conditions is probable. |
WARRANTS
WARRANTS | 9 Months Ended | 12 Months Ended | ||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||||
Note 11. WARRANTS | ' | ' | ||||||||||||||||||
At September 30, 2013, the Company had the following outstanding warrants: | The Company uses valuation methods and assumptions that consider among other factors the fair value of the underlying stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments. The following assumptions were utilized by the Company: | |||||||||||||||||||
Number of | Exercise Price | Date of Expiration | 2012 | 2011 | ||||||||||||||||
Shares | Risk-free interest rate | 0.70% - 2.23 | % | 3.36% - 3.75 | % | |||||||||||||||
Exercisable | Expected dividend yield | — | — | |||||||||||||||||
Outstanding warrants accounted for as derivative warrant liability: | Expected term (contractual term) | 0.06 - 5 years | 2 years | |||||||||||||||||
Granted to debt holder | 400,000 | $ | 20 | 8/31/17 | Forfeiture rate | — | — | |||||||||||||
Granted to debt holder | 100,000 | 21.3 | 9/20/17 | Expected volatility | 123% - 144 | % | 142 | % | ||||||||||||
Granted to debt holder | 50,000 | 22.7 | 10/17/17 | |||||||||||||||||
Granted to debt holder | 150,000 | 21.1 | 11/6/17 | Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the warrant. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the warrant. | ||||||||||||||||
Total outstanding warrants accounted for as derivative warrant liability | 700,000 | |||||||||||||||||||
Weighted average exercise price | $ | 20.61 | In the years ended December 31, 2012 and 2011, the Company issued warrants with a fair value of approximately $8,655,000 and $11,191,000, respectively. Included in this warrant fair value are warrants with a fair value of approximately $4,840,000 and $41,000 recorded as a debit to deferred financing costs and credit to additional paid-in capital for stock issuance costs related to the Montaur Credit Facility (see Note 6) and 2011 financings to deferred financing costs (see Note 9), respectively. The warrants issued in the years ended December 31, 2012 and 2011 generally have a term of 2 to 5 years, a non-redeemable feature, and a cashless exercise provision. Certain of these warrants have a standard weighted average anti-dilution protection and piggy back registration rights. | |||||||||||||||||
Weighted average time to expiration in years | 3.98 years | |||||||||||||||||||
At December 31, 2012, the Company had the following outstanding warrants: | ||||||||||||||||||||
Outstanding warrants accounted for as equity: | ||||||||||||||||||||
Granted to investors in private placement of preferred stock | 3,228 | $ | 10 | 9/30/13 | Number of | |||||||||||||||
Granted to investors in private placement of preferred stock | 19,834 | 15 | 10/28/13 | Shares | Exercise | Date of | ||||||||||||||
Granted to investors in private placement of preferred stock | 39,000 | 7.5 | 2/28/14 | Exercisable | Price | Expiration | ||||||||||||||
Granted to vendor | 6,000 | 6 | 3/15/14 | Outstanding warrants in derivative warrant liability: | ||||||||||||||||
Granted to investors in private placement | 40,000 | 15.9 | 6/30/14 | Granted to financial investment advisor | 750 | $ | 12.6 | 2/11/13 | ||||||||||||
Granted to investors in private placement | 76,800 | 20 | 11/13/14 | Granted to investors in private placement | 15,499 | $ | 5 | 2/11/13 | ||||||||||||
Granted to placement agent in private placement | 25,695 | 15 | 11/13/14 | Granted to investors in private placement | 19,767 | $ | 14.4 | 3/24/13 | ||||||||||||
Granted to investors in private placement | 6,300 | 20 | 12/3/14 | Granted to debtor as a Commitment warrant | 400,000 | $ | 20 | 8/31/17 | ||||||||||||
Granted to investors in private placement | 34,146 | 22.5 | 2/9/15 | Granted to debtor as a Draw warrant | 100,000 | $ | 21.3 | 9/20/17 | ||||||||||||
Granted to placement agents in private placement | 2,853 | 22.5 | 2/9/15 | Granted to debtor as a Draw warrant | 50,000 | $ | 22.7 | 10/17/17 | ||||||||||||
Granted to investor in private placement | 638 | 22.5 | 3/18/15 | Granted to debtor as a Draw warrant | 150,000 | $ | 21.1 | 11/6/17 | ||||||||||||
Granted to investors in private placement | 95,960 | 30 | 12/7/14 | Total outstanding warrants accounted for as derivative warrant liability | 736,016 | |||||||||||||||
Total outstanding warrants accounted for as equity | 350,454 | Weighted average exercise price | $ | 20.1 | ||||||||||||||||
Weighted average exercise price | $ | 20.17 | Weighted average time to expiration in years | 4.50 years | ||||||||||||||||
Weighted average time to expiration in years | 0.96 years | Outstanding warrants in equity: | ||||||||||||||||||
Granted to investors in private placement of preferred stock | 3,225 | $ | 10 | 9/30/13 | ||||||||||||||||
Totals for all warrants outstanding: | Granted to investors in private placement of preferred stock | 19,833 | $ | 15 | 10/28/13 | |||||||||||||||
Total | 1,050,454 | Granted to investors in private placement of preferred stock | 39,000 | $ | 7.5 | 2/28/14 | ||||||||||||||
Weighted average exercise price | $ | 20.46 | Granted to vendor | 6,000 | $ | 6 | 3/15/14 | |||||||||||||
Weighted average time to expiration in years | 2.97 years | Granted to investors in private placement | 40,000 | $ | 15.9 | 6/30/14 | ||||||||||||||
Granted to investors in private placement | 76,800 | $ | 20 | 11/13/14 | ||||||||||||||||
A summary of warrant activity for the nine months ended September 30, 2013 is as follows: | Granted to placement agent in private placement | 25,690 | $ | 15 | 11/13/14 | |||||||||||||||
Granted to investors in private placement | 6,300 | $ | 20 | 12/3/14 | ||||||||||||||||
Weighted- | Granted to investors in private placement | 34,133 | $ | 22.5 | 2/9/15 | |||||||||||||||
Average | Granted to placement agents in private placement | 2,850 | $ | 22.5 | 2/9/15 | |||||||||||||||
Exercise | Granted to investor in private placement | 637 | $ | 22.5 | 3/18/15 | |||||||||||||||
Warrants | Shares | Price | Granted to financial investment advisor | 10,000 | $ | 15 | 2/10/13 | |||||||||||||
Outstanding at January 1, 2013 | 1,254,004 | $ | 20.08 | Granted to financial investment advisor | 1,037 | $ | 20 | 3/3/13 | ||||||||||||
Granted | 9,175 | 12.6 | Granted to investors in private placement | 24,575 | $ | 15 | 1/4/13 | |||||||||||||
Exercised | — | — | Granted to investors in private placement | 24,575 | $ | 25 | 1/4/13 | |||||||||||||
Forfeited or expired | (212,725 | ) | 17.69 | Granted to placement agent in private placement | 1,812 | $ | 15 | 1/4/13 | ||||||||||||
Outstanding at September 30, 2013 | 1,050,454 | $ | 20.46 | Granted to placement agent in private placement | 1,812 | $ | 25 | 1/4/13 | ||||||||||||
Granted to investors in private placement | 25,500 | $ | 15 | 2/3/13 | ||||||||||||||||
Exercise of Common Stock Warrants | Granted to investors in private placement | 28,000 | $ | 25 | 2/3/13 | |||||||||||||||
Granted to placement agent in private placement | 125 | $ | 15 | 2/3/13 | ||||||||||||||||
During the nine months ended September 30, 2013, the Company issued no shares of its Common Stock upon the exercise of warrants. | Granted to placement agent in private placement | 125 | $ | 25 | 2/3/13 | |||||||||||||||
Granted to investors in private placement | 25,000 | $ | 15 | 2/8/13 | ||||||||||||||||
Granted to investors in private placement | 25,000 | $ | 25 | 2/8/13 | ||||||||||||||||
Granted to investors in private placement | 95,958 | $ | 30 | 12/7/14 | ||||||||||||||||
Total outstanding warrants accounted for as equity | 517,988 | |||||||||||||||||||
Weighted average exercise price | $ | 20 | ||||||||||||||||||
Weighted average time to expiration in years | 1.18 years | |||||||||||||||||||
Totals for all warrants outstanding: | ||||||||||||||||||||
Total | 1,254,004 | |||||||||||||||||||
Weighted average exercise price | $ | 20.1 | ||||||||||||||||||
Weighted average time to expiration in years | 3.13 years | |||||||||||||||||||
A summary of warrant activity in the year ended December 31, 2012 is as follows: | ||||||||||||||||||||
Warrants: | Shares | Weighted- | ||||||||||||||||||
Average | ||||||||||||||||||||
Exercise | ||||||||||||||||||||
Price | ||||||||||||||||||||
Outstanding at January 1, 2012 | 752,753 | $ | 19.2 | |||||||||||||||||
Granted | 702,034 | $ | 14.4 | |||||||||||||||||
Exercised | (16,546 | ) | $ | 12.8 | ||||||||||||||||
Forfeited or expired | (184,237 | ) | $ | 19 | ||||||||||||||||
Outstanding at December 31, 2012 | 1,254,004 | $ | 20.1 | |||||||||||||||||
Exercise of Common Stock Warrants | ||||||||||||||||||||
During 2012, warrants to purchase 16,546 shares of Common Stock were voluntarily exercised, resulting in cash proceeds to the Company of approximately $212,000. | ||||||||||||||||||||
During 2011, warrants to purchase 141,947 shares of Common Stock were voluntarily exercised through cashless exercises provisions, resulting in the issuance of 74,425 shares of Common Stock. | ||||||||||||||||||||
During 2011, warrants to purchase 661,530 shares of Common Stock were voluntarily exercised, resulting in cash proceeds to the Company of approximately $6,628,000. No such warrant exercises in exchange for cash occurred in 2010. Also during 2011, the Company encouraged certain holders of its warrants to exercise their warrants by reducing the exercise prices provided they elected to simultaneously exercise for cash proceeds. Of the 661,530 warrant exercises, warrants to purchase an aggregate of 454,983 shares of Common Stock were exercised under this arrangement during the year ended December 31, 2011 and cash proceeds of $4,471,631 from these transactions were received. As a result of the reductions in exercise price, the Company recorded $4,559,761 in deemed dividends for the year ended December 31, 2011 in the Consolidated Statement of Operations. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2012 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
Note 13. INCOME TAXES | ' | ||||||||||||
No provision or benefit for federal or state income taxes has been recorded because the Company has incurred a net loss for all periods presented and has provided a valuation allowance against its deferred tax assets. | |||||||||||||
At December 31, 2012, the Company had gross federal net operating loss carryforwards of approximately $68,500,000, which begin expiring beginning in 2018. The Company had gross state net operating loss carryforwards of approximately $21,000,000, which begin expiring in 2013. The Company also had federal research and development tax credit carryforwards of approximately $1,486,000 which will begin to expire in 2018. The United States Tax Reform Act of 1986 contains provisions that may limit the Company’s net operating loss carryforwards available to be used in any given year in the event of significant changes in the ownership interests of significant stockholders, as defined. The effect of an ownership change would be the imposition of an annual limitation on the use of NOL carryforwards attributable to periods before the change. The amount of the annual limitation depends upon the value of the Company immediately before the change, changes to the Company’s capital during a specified period prior to the change, and the federal published interest rate. | |||||||||||||
Significant components of the Company’s net deferred tax asset are as follows: | |||||||||||||
December 31, | |||||||||||||
2012 | 2011 | ||||||||||||
Deferred Tax Assets/(Liabilities): | |||||||||||||
Net operating loss carryforwards | $ | 24,428,000 | $ | 19,913,000 | |||||||||
Research credit carryforward | 1,486,000 | 1,344,000 | |||||||||||
Acquired intangible assets, net | (3,724,000 | ) | (3,781,000 | ) | |||||||||
Restricted stock and warrants | 222,000 | — | |||||||||||
Other temporary differences | 219,000 | 156,000 | |||||||||||
Total deferred tax assets, net | 22,631,000 | 17,632,000 | |||||||||||
Valuation allowance | (22,631,000 | ) | (17,632,000 | ) | |||||||||
Net deferred tax asset | $ | — | $ | — | |||||||||
The Company has maintained a full valuation allowance against its deferred tax items in both 2012 and 2011. A valuation allowance is required to be recorded when it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Since the Company cannot be assured of realizing the net deferred tax asset, a full valuation allowance has been provided. | |||||||||||||
The Company has no uncertain tax positions as of December 31, 2012 and 2011 that would affect its effective tax rate. The Company does not anticipate a significant change in the amount of unrecognized tax benefits over the next twelve months. Because the Company is in a loss carryforward position, the Company is generally subject to US federal and state income tax examinations by tax authorities for all years for which a loss carryforward is available. If and when applicable, the Company will recognize interest and penalties as part of income tax expense. | |||||||||||||
Income taxes computed using the federal statutory income tax rate differs from the Company’s effective tax rate primarily due to the following: | |||||||||||||
Years Ended December 31, | |||||||||||||
2012 | 2011 | 2010 | |||||||||||
Income taxes benefit (expense) at statutory rate | 34 | % | 35 | % | 35 | % | |||||||
State income tax, net of federal benefit | (4.7 | )% | (2.2 | )% | (0.5 | )% | |||||||
Permanent Differences: | |||||||||||||
Gain/loss or revaluation of derivative warrant liability | 10.2 | % | (6.2 | )% | 3.1 | % | |||||||
Stock-based compensation expense | (2.6 | )% | (2.9 | )% | (1.4 | )% | |||||||
Stock issues for services | — | % | (1.6 | )% | (8.6 | )% | |||||||
Loss on extinguishment of debt | — | % | — | % | 1.6 | % | |||||||
Other | (2.2 | )% | — | % | (3.5 | )% | |||||||
R&D credits | — | % | (0.6 | )% | 2.5 | % | |||||||
Change in valuation allowance | (34.7 | )% | (21.5 | )% | (28.2 | )% | |||||||
— | % | — | % | — | % |
LICENSING_AND_OTHER_REVENUE
LICENSING AND OTHER REVENUE | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' |
Note 12. LICENSING AND OTHER REVENUE | ' | ' |
In 2009, the Company entered into a License Agreement with Handok Pharmaceuticals Co., Ltd. (“Handok”) pursuant to which the Company granted Handok a license to develop, use, market, sell and import Symphony for continuous glucose monitoring for use by medical facilities and/or individual consumers in South Korea (the “Handok License”). The Handok License has a minimum term of 10 years from the date of the first commercial sale of Symphony in South Korea. | Ferndale License of Prelude — On May 27, 2009, the Company entered into a License Agreement with Ferndale pursuant to which the Company granted Ferndale a license in North America and the United Kingdom to develop, assemble, use, market, sell and export Prelude for skin preparation prior to the application of a topical analgesic or anesthetic cream for local dermal anesthesia or analgesia prior to a needle insertion or IV procedure (the “Ferndale License”). The Ferndale License has a minimum term of 10 years from the date of the first commercial sale of Prelude product components in North America or the United Kingdom. | |
The Company received a licensing fee of approximately $500,000 upon execution of the Handok License and the right to receive future milestone payments and royalties. The Company recognizes these upfront, nonrefundable payments as revenue on a straight-line basis over the contractual or estimated performance period. During the three months ended September 30, 2013 and 2012, the Company recorded approximately $23,000 and $31,000, respectively, of nonrefundable license revenue. During the nine months ended September 30, 2013 and 2012, the Company recorded approximately $68,000 and $93,000, respectively, of nonrefundable license revenue. As of September 30, 2013, approximately $90,000 of deferred revenue remains unrecognized, which will be recognized over the next 12 months and is shown as Deferred Revenue From Licensing Arrangements among current liabilities on the Consolidated Balance Sheet. Approximately $23,000 of the remaining deferred revenue will be recognized over the period subsequent to the next 12 months and is shown as Deferred Revenue From Licensing Arrangements among non-current liabilities. | The Company received a licensing fee of $750,000 upon execution of the Ferndale License. In addition, the Company will receive a payment of $750,000 within ninety (90) days after receipt of the FDA’s 510(k) medical device clearance of Prelude. Ferndale will pay the Company an escalating royalty on net sales of Prelude product components. The Company will also receive milestone payments based on Ferndale’s achievement of certain net sales targets of the product components, as well as guaranteed minimum annual royalties. The Company recognizes the upfront, nonrefundable payments as revenue on a straight-line basis over the contractual or estimated performance period. Accordingly, the Company determined that approximately $241,000 and $105,000 of the non-refundable license revenue was recognizable in the years ended December 31, 2011 and 2010, respectively. As of December 31, 2011, the Company had recognized the entire $750,000 as license revenue. | |
Other Revenue — The Company has retained contract engineering services in connection with product development pursuant to the Ferndale License and the Company is reimbursed by Ferndale for the cost of those product development engineering services. Other Revenue of approximately $145,000 and $203,000 relates to product development costs incurred during the year ended December 31, 2011 and 2010, respectively, and reimbursed by Ferndale. The related expenses billed to the Company are included in Research and Development expenses on the Statements of Operations. There was no markup on those expenses. | ||
Handok License of Symphony — On June 15, 2009, the Company entered into a License Agreement with Handok pursuant to which the Company granted Handok a license to develop, use, market, sell and import Symphony for continuous glucose monitoring for use by medical facilities and/or individual consumers in South Korea (the “Handok License”). The Handok License has a minimum term of 10 years from the date of the first commercial sale of Symphony in South Korea. | ||
The Company received a licensing fee of approximately $500,000 upon execution of the Handok License. In addition, the Company will receive milestone payments upon receipt of the FDA’s clearance of Symphony and upon the first commercial sale of Symphony in South Korea. Handok will also pay the Company a royalty on net sales of Symphony. The Company also will receive milestone payments based on Handok’s achievement of certain other targets. | ||
The Company recognizes the upfront, nonrefundable payments as revenue on a straight-line basis over the contractual or estimated performance period. Accordingly, the Company determined that approximately $5,000, $61,000 and $121,000 of the non-refundable license revenue was recognizable in the years ended December 31, 2012, 2011 and 2010, respectively. Approximately $90,000 is recognizable over the next 12 months and is shown as current deferred revenue. The remaining $90,000 is recognizable as revenue beyond the 12 month period and is classified as non-current. | ||
CREDIT_FACILITY_WITH_PLATINUMM1
CREDIT FACILITY WITH PLATINUM-MONTAUR LIFE SCIENCES, LLC | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
NOTE 13. CREDIT FACILITY WITH PLATINUM-MONTAUR LIFE SCIENCES, LLC | ' |
On August 31, 2012, the Company and Montaur entered into a Loan Agreement (the “Loan Agreement”) pursuant to which Montaur made a non-revolving draw credit facility (the “Credit Facility”) of up to $20,000,000 available to the Company, a substantial portion of which is subject to the successful achievement of certain clinical and regulatory milestones set forth in the Loan Agreement, with an initial available principal amount of $5,000,000 (the “Maximum Draw Amount”). The Company issued to Montaur a Promissory Note dated August 31, 2012 (the “Note”), with a maturity date of five years from the date of closing (the “Maturity Date”). The Company has used the proceeds from the Credit Facility to fund operations. | |
The principal balance of each draw will bear interest from the applicable draw date at a rate of 10% per annum, compounded monthly. The Company is required to make interest payments on the principal amount due in connection with each draw on the first business day of each month until the Maturity Date. The Company is also required to make a mandatory prepayment on each interest payment date of an amount equal to one-third of its total revenue for the then prior fiscal quarter, up to the maximum amount outstanding under the Note at that time. The Company is not, however, required to make such interest payment or mandatory prepayment if doing so would reduce the Company’s cash and cash equivalents to less than $5,000,000. Any amounts not previously paid in full will be due and payable on the Maturity Date. The Company has the right to permanently prepay any draw, in whole or in part, prior to the Maturity Date. | |
The Company’s subsidiary, Sontra Medical, Inc. (“Sontra”), agreed to guarantee the obligations of the Company under the Note pursuant to a guaranty agreement entered into on August 31, 2012 (the “Guaranty”). Additionally, the Note is secured by the Pledged Revenue (as defined in the Loan Agreement) of the Company and the Company’s subsidiaries pursuant to a Security Agreement dated as of August 31, 2012 by and among the Company, Sontra and Montaur. Upon the earlier of the Maturity Date of the Note or an event of default, as defined in the Loan Agreement, the Note shall be secured by substantially all of the assets of the Company and any of its subsidiaries, which security interest shall not be effective until such event of default or maturity, pursuant to a Default Security Agreement dated August 31, 2012 by and among the Company, Sontra and Montaur. The Company also has agreed to pay all costs associated with registering the shares underlying the Warrants (should it choose to register such shares) and to indemnify Montaur from liability resulting from the registration of such shares (subject to certain standard exceptions) in accordance with a Registration Indemnity Agreement between the Company and Montaur. | |
Pursuant to the Loan Agreement, the Company issued Montaur a warrant to purchase 400,000 shares of its Common Stock, with a term of five years and an exercise price of $20.00 per share (the “Commitment Warrant”). The fair value of the warrant was determined to be approximately $4,840,000 and was recorded as a deferred financing cost that will be amortized to interest expense over the term of the Note. Of this cost, $968,004 is reflected in Current Assets, representing the portion which will be amortized over the next twelve months. Amortization of the deferred financing cost for the three and nine months ended September 30, 2013 was $242,000 and $726,000, respectively, and is included in interest expense. In addition, for each $1,000,000 of funds borrowed pursuant to the Credit Facility, the Company will issue Montaur a warrant to purchase 100,000 shares of Common Stock, with a term of five years and an exercise price equal to 150% of the market price of the Common Stock at the time of the draw, but in no event less than $20.00 or more than $40.00 per share (together with the Commitment Warrant, the “Warrants”). All of the Warrants are immediately exercisable and will have a term of five years from the issue date. The exercise price of the Warrants is subject to adjustment for stock splits, combinations or similar events. An exercise under the Warrants may not result in the holder beneficially owning more than 4.99% or 9.99%, as applicable, of all of the Common Stock outstanding at the time; provided, however, that a holder may waive the 4.99% ownership limitation upon sixty-one (61) days’ advance written notice to the Company. | |
On September 14, 2012, the Company submitted a draw request to Montaur in the amount of $3,000,000 in the form required by the Loan Agreement (the “September Request”). The Company ultimately received the $3,000,000 in the following increments: $1,000,000 on September 20, 2012, $500,000 on October 17, 2012, and $1,500,000 on November 6, 2012. These draws were recorded on the Consolidated Balance Sheet under note payable, net of the initial $3,000,000 in discounts recorded related to the warrants issued. In accordance with the Loan Agreement and as a result of funding received from Montaur, the Company issued to Montaur separate warrants concurrent with the three draws above to purchase 100,000, 50,000 and 150,000 shares of Common Stock, each with a term of five years, and having exercise prices of $21.30, $22.70 and $21.10 per share, respectively. The fair value of the warrants issued to purchase 300,000 shares of Common Stock was determined to be approximately $3,455,000, of which $3,000,000 was treated as a debt discount and was to be accreted to interest expense over the term of the Note, and the balance of approximately $455,000 was charged to interest expense in 2012. | |
On March 1, 2013, the Company elected to prepay all outstanding draws under the Credit Facility totaling $3,113,366, which includes interest accrued and unpaid to that date of $113,366. After such date, no principal amount is outstanding under the Credit Facility. Concurrent with this prepayment, the Company recorded non-cash interest expense of approximately $2,879,166 in March 2013 relating to the unamortized debt discount recorded at the original draws under the balance repaid. |
LITIGATION
LITIGATION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' |
NOTE 14. LITIGATION | ' | ' |
In August 2013, a shareholder derivative action was filed in the Court of Common Pleas of Philadelphia County naming as defendant the Company, its directors and certain of its officers. The complaint seeks unspecified amount of damages and principally alleges breaches of fiduciary duty and gross mismanagement related to the Loan Agreement and the Company’s prepayment of the outstanding balance under the Montaur Promissory Note. Based on a preliminary review and analysis of the complaints, the Company believes that this lawsuit is without merit and intends to defend it vigorously. The Company is not presently able to estimate the potential losses, if any, related to this lawsuit. | Harry G. Mitchell, the former Chief Operating Officer of the Company, resigned from that position in June 2011. On August 25, 2011, Mr. Mitchell filed a complaint in the Norfolk County Superior Court in Massachusetts against the Company and its Chief Executive Officer, Patrick T. Mooney, claiming, among other things, that he resigned for good reason (as defined under his employment agreement) and was therefore entitled to certain benefits and also to certain payments under state wage payment statutes. Mr. Mitchell sought compensatory damages, an award of attorneys’ fees and costs and other relief. The Company responded to the complaint by serving a partial motion to dismiss on September 28, 2011. The Company had accrued approximately $400,000 in settlement liability as of September 30, 2011 with respect to this matter, reflecting the Company’s best estimate then of probable loss exposure. | |
On December 20, 2011, the Company and Dr. Mooney entered into a Settlement and Release Agreement (the “Settlement Agreement”) with Mr. Mitchell in order to allow the Company’s senior management team to focus its full attention on product development and business operations. In accordance with the Settlement Agreement, the Company agreed to (i) pay Mr. Mitchell a settlement payment in the gross amount of $125,000, to be paid in installments over a three month period, (ii) pay Mr. Mitchell’s full monthly COBRA premium for six months, and (iii) fully vest 100,000 shares of restricted Common Stock (the “Shares”) held by Mr. Mitchell. The Shares were not fully vested until January 2012 when the Company received confirmation of Mr. Mitchell’s dismissal of his lawsuit, thereby leaving an outstanding settlement accrued liability of $369,840 at December 31, 2011, which includes $290,000 representing the fair value of the Common Stock to be issued, in the Company’s consolidated balance sheet as of December 31, 2011. This liability fully satisfied in January 2012 for Common Stock with a fair value of $208,000 resulting in a reduction to share-based compensation of $82,000 in 2012. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2012 | |
Notes to Financial Statements | ' |
SUBSEQUENT EVENTS | ' |
Management has evaluated events subsequent to December 31, 2012. Other than as discussed in Note 6 and Note 9, there are no subsequent events that require adjustment to or disclosure in the Financial Statements. |
ORGANIZATION_AND_BASIS_OF_PRES1
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Organization And Basis Of Presentation Policies | ' |
ORGANIZATION AND BASIS OF PRESENTATION | ' |
We are a medical device company with expertise in advanced skin permeation technology. We are developing our Symphony® CGM System (“Symphony”) as a non-invasive, wireless continuous glucose monitoring (“CGM”) system for use in hospital critical care units. The Prelude® SkinPrep System (“Prelude”), a component of our Symphony CGM System, allows for enhanced skin permeation that will enable extraction of analytes such as glucose. Prelude’s platform skin preparation technology also allows for needle-free, transdermal drug delivery. | |
The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Sontra Medical, Inc., a Delaware corporation. All significant intercompany balances and transactions have been eliminated in consolidation. These financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States consistent with those applied in, and should be read in conjunction with, the Company’s audited consolidated financial statements and related footnotes for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (“SEC”) on March 18, 2013. These financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of September 30, 2013 and its results of operations and cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. These interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading. Certain amounts in prior periods have been reclassified to conform to current presentation. | |
On June 7, 2013, the Company effected a 1-for-10 reverse stock split of its common stock. All share and per share information has been retroactively restated to reflect this reverse stock split. | |
LIQUIDITY AND MANAGEMENT'S PLAN | ' |
Liquidity and Management’s Plans | |
The accompanying consolidated financial statements have been prepared on a basis assuming that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2013, the Company had cash of approximately $6,068,000, working capital of approximately $3,603,000, and an accumulated deficit of approximately $109,469,000. The Company continues to incur recurring losses from operations. The Company will require additional capital to fund our product development, research, manufacturing and clinical programs in accordance with our current planned operations. Management intends to pursue additional financing to fund these operations and the Company has funded its operations in the past primarily through debt and equity issuances. Management believes that it will be successful in meeting the milestones required under their current financing arrangement, securing collaborative arrangements with strategic partners, and/or raising additional capital. No assurances can be given that additional capital will be available on terms acceptable to the Company. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||
Dec. 31, 2012 | |||
Organization And Basis Of Presentation Policies | ' | ||
Use of Estimates | ' | ||
The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. | |||
Cash and Cash Equivalents | ' | ||
The Company considers all highly liquid investments with maturities of ninety days or less to be cash equivalents. Cash equivalents consisted of money market funds as of December 31, 2012 and 2011. The Company maintains its cash in bank deposit accounts which, at times, may exceed the federally insured limits. Restricted cash consists of a $250,000 letter of credit issued in favor of one of the Company’s key product development vendors for each of the years ended December 31, 2012 and 2011 and a $157,463 letter of credit in favor of a landlord for the year ended December 31, 2012. Non-current restricted cash as of December 31, 2012 and 2011 represents a security deposit on the Company’s leased offices. | |||
Accounts Receivable | ' | ||
Accounts receivable represent amounts billed by the Company. An allowance for doubtful accounts is determined based on management’s best estimate of probable losses inherent in the accounts receivable balance. Amounts determined to be uncollectible are written off against the allowance. Management assesses the allowance based on information regarding nature of the receivables and historical experience. | |||
Intangible Assets and Other Long-Lived Assets | ' | ||
The Company records intangible assets at the acquisition date fair value. In connection with the acquisition of Durham Pharmaceuticals Ltd., a North Carolina corporation doing business as Echo Therapeutics, Inc. (the “ETI Acquisition”), intangible assets related to contractual arrangements were amortized over the estimated useful life of three (3) years and ended in 2010. Intangible assets related to technology are expected to be amortized on a straight-line basis over the period ending 2018 and will commence upon revenue generation. | |||
The Company reviews intangible assets annually to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life of any intangible asset. Conditions that would indicate impairment and trigger an impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, or an adverse action or assessment by a regulator. If the carrying value of an asset exceeds its undiscounted cash flows, the Company writes down the carrying value of the intangible asset to its fair value in the period identified. | |||
For other long-lived assets, the Company evaluates quarterly whether events or circumstances have occurred that indicate that the carrying value of these assets may be impaired. | |||
The Company generally calculates fair value as the present value of estimated future cash flows it expects to generate from the asset using a risk-adjusted discount rate. If the estimate of an intangible asset’s remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. | |||
The Company performs a regular review of the underlying assumptions, circumstances, time projections and revenue and expense estimates to decide if there is a possible impairment. In reviewing the long-lived assets relating to the ETI Acquisition as of December 31, 2012, the Company concluded that there was no impairment of the carrying value of such long-lived assets. No impairment losses were recorded for the years ended December 31, 2011 and 2010. | |||
Depreciation and Amortization | ' | ||
The Company provides for depreciation and amortization by charges to operations for the cost of assets using the straight-line method based on the estimated useful lives of the related assets, as follows: | |||
Asset Classification | Estimated Useful Life | ||
Computer equipment | 3 years | ||
Office and laboratory equipment | 3-5 years | ||
Furniture and fixtures | 7 years | ||
Manufacturing equipment | 5 years | ||
Leasehold improvements | Life of lease | ||
Share-Based Payments | ' | ||
The Company recognizes compensation costs resulting from the issuance of stock-based awards to employees and directors as an expense in the statement of operations over the service period based on a measurement of fair value for each stock award. The Company’s policy is to grant employee and director stock options with an exercise price equal to or greater than the fair value of the Common Stock at the date of grant. | |||
The Company recognizes compensation costs resulting from the issuance of stock-based awards to non-employees as an expense in the statement of operations over the service period based on a measurement of fair value for each stock award. | |||
Fair Values of Assets and Liabilities | ' | ||
The Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. | |||
Level 1: | Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. | ||
Level 2: | Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. For example, Level 2 assets and liabilities may include debt securities with quoted prices that are traded less frequently than exchange-traded instruments. | ||
Level 3: | Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private equity investments and long-term derivative contracts. | ||
The Company's financial liabilities measured at fair value on December 31, 2012 and 2011 consists of a derivative warrant liability which is classified as Level 3 in fair value hierarchy (see Note 7). The Company uses a valuation method, the Black-Scholes option pricing model, and the requisite assumptions in estimating the fair value for the warrants considered to be derivative instruments. These assumptions include the fair value of the underlying stock, risk-free interest rates, volatility, expected life and dividend rates. The Company has no financial assets measured at fair value. | |||
The Company may also be required, from time to time, to measure certain other financial assets at fair value on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. There were no such adjustments in the years ended December 31, 2012, 2011 and 2010. | |||
Derivative Instruments | ' | ||
The Company generally does not use derivative instruments to hedge exposures to cash-flow or market risks; however, certain warrants to purchase Common Stock that do not meet the requirements for classification as equity are classified as liabilities. In such instances, net-cash settlement is assumed for financial reporting purposes, even when the terms of the underlying contracts do not provide for a net-cash settlement. Such financial instruments are initially recorded at fair value with subsequent changes in fair value charged (credited) to operations in each reporting period. If these instruments subsequently meet the requirements for classification as equity, the Company reclassifies the fair value to equity. | |||
Concentration of Credit Risk | ' | ||
The Company has no significant off-balance-sheet risk. Financial instruments, which subject the Company to credit risk, principally consist of cash and cash equivalents. The Company mitigates its risk by maintaining the majority of its cash and equivalents with high-quality financial institutions. | |||
Financial Instruments | ' | ||
The estimated fair value of the Company’s financial instruments, which include cash and cash equivalents, restricted cash, accounts receivable, accounts payable and capital lease obligation, approximates their carrying value due to the short-term nature of these instruments and their market terms. The Company estimates the fair value of its notes payable to be its face value of $3,000,000, which exceeds the carrying value because the carrying value has been recorded net of debt discounts. | |||
Net Loss per Common Share | ' | ||
Basic and diluted net loss per share of Common Stock has been computed by dividing the net loss applicable to common stockholders in each period by the weighted average number of shares of Common Stock outstanding during such period. For the periods presented, options, warrants and convertible securities were anti-dilutive and therefore excluded from diluted loss per share calculations. | |||
Segment Information | ' | ||
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and manages its business as principally one operating segment, which is the development of transdermal skin permeation and diagnostics medical devices and, specialty pharmaceutical drugs. As of December 31, 2012 and 2011, all of the Company’s assets were located in the United States. | |||
Grant Income | ' | ||
Grants received are recognized as income when the related work is performed and the qualifying research and development costs are incurred and are presented as Other Income on the Company’s consolidated statements of operations. The Company received a grant totaling approximately $244,500 under the Qualified Therapeutic Discovery Project Grants Program during 2010. The Qualified Therapeutic Discovery Project Grants Program was included in the healthcare reform legislation and established a one-time pool of $1 billion for grants to small biotechnology companies developing novel therapeutics which show potential to: (a) result in new therapies that either treat areas of unmet medical need, or prevent, detect, or treat chronic or acute diseases and conditions; (b) reduce long-term health care costs in the United States; or (c) significantly advance the goal of curing cancer within the next 30-year period. | |||
Research and Development Expenses | ' | ||
The Company charges research and development expenses to operations as incurred. Research and development expenses primarily consist of salaries and related expenses for personnel and outside contractor and consulting services. Other research and development expenses include the costs of materials and supplies used in research and development, prototype manufacturing, clinical studies, related information technology and an allocation of facilities costs. | |||
Income Taxes | ' | ||
The Company is primarily subject to U.S. federal, Massachusetts, Pennsylvania and New Jersey state income tax. Tax years subsequent to 2008 remain open to examination by U.S. federal and state tax authorities. | |||
For federal and state income taxes, deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and the tax basis of assets and liabilities. Deferred income taxes are based upon prescribed rates and enacted laws applicable to periods in which differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, since the Company cannot be assured of realizing the deferred tax asset, a full valuation allowance has been provided. | |||
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. There was no uncertain tax position liabilities recorded at December 31, 2012 and 2011. | |||
The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2012 and 2011, the Company had no accruals for interest or penalties related to income tax matters. | |||
Licensing and Other Revenue Recognition | ' | ||
To date, the Company has generated revenue primarily from licensing agreements, including upfront, nonrefundable license fees, with collaborators and licensees. The Company recognizes revenue when the following criteria have been met: | |||
persuasive evidence of an arrangement exists; | |||
delivery has occurred and risk of loss has passed; | |||
the price to the buyer is fixed or determinable; and | |||
collectability is reasonably assured. | |||
In addition, when evaluating multiple element arrangements, the Company considers whether the components of the arrangement represent separate units of accounting. Multiple elements are divided into separate units of accounting if specified criteria are met, including whether the delivered element has stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items. The consideration received is allocated among the separate units based on their respective fair values, and the applicable revenue recognition criteria are applied to each of the separate units. Otherwise, the applicable revenue recognition criteria are applied to combined elements as a single unit of accounting. | |||
The Company typically receives upfront, nonrefundable payments for the licensing of its intellectual property upon the signing of a license agreement. The Company believes that these payments generally are not separable from the payments it receives for providing research and development services because the license does not have stand-alone value from the research and development services it provides under its agreements. Accordingly, the Company accounts for these elements as one unit of accounting and recognizes upfront, nonrefundable payments as revenue on a straight-line basis over its contractual or estimated performance period. Revenue from the reimbursement of research and development efforts is recognized as the services are performed based on proportional performance adjusted from time to time for any delays or acceleration in the development of the product and is included in Other Revenue. The Company determines the basis of the estimated performance period based on the contractual requirements of its collaboration agreements. At each reporting period, the Company evaluates whether events warrant a change in the estimated performance period. | |||
Other Revenue includes amounts earned and billed under the license and collaboration agreements for reimbursement of research and development costs for contract engineering services. For the services rendered, principally third-party contract engineering services, the revenue recognized approximates the costs associated with the services. | |||
Recently Issued Accounting Pronouncements | ' | ||
In July 2012, the FASB issued Accounting Standards Update ("ASU") No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, which gives companies the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If a company determines that it is more likely than not that the fair value of such an asset exceeds its carrying amount, it would not need to calculate the fair value of the asset in that year. However, if a company concludes otherwise, it must calculate the fair value of the asset, compare that value with its carrying amount and record an impairment charge, if any. The amendments in the ASU are effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012, which is fiscal 2013 for the Company. Early adoption is permitted. The Company is currently assessing its adoption plans. | |||
In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities (Topic 210), that provides amendments for disclosures about offsetting assets and liabilities. The amendments require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. The amendments are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Disclosures required by the amendments should be provided retrospectively for all comparative periods presented. For the Company, the amendment is effective for fiscal year 2013. The Company is currently evaluating the impact these amendments may have on its disclosures. | |||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||
Dec. 31, 2012 | |||
Summary Of Significant Accounting Policies Tables | ' | ||
Depreciation and Amortization | ' | ||
The Company provides for depreciation and amortization by charges to operations for the cost of assets using the straight-line method based on the estimated useful lives of the related assets, as follows: | |||
Asset Classification | Estimated Useful Life | ||
Computer equipment | 3 years | ||
Office and laboratory equipment | 3-5 years | ||
Furniture and fixtures | 7 years | ||
Manufacturing equipment | 5 years | ||
Leasehold improvements | Life of lease |
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | ||||||||||||||||||||||||||||||||||||
Intangible Assets Tables | ' | ' | |||||||||||||||||||||||||||||||||||
Intangible assets | ' | ' | |||||||||||||||||||||||||||||||||||
As of September 30, 2013 and 2012, intangible assets related to this Acquisition are summarized as follows: | The Company’s intangible assets are related to the acquisition of assets from Durham Pharmaceuticals Ltd. in 2007. As of December 31, 2012, 2011and 2010, intangible assets related to the ETI Acquisition are summarized as follows: | ||||||||||||||||||||||||||||||||||||
2013 | 2012 | 2012 | 2011 | ||||||||||||||||||||||||||||||||||
Estimated | Accumulated | Estimated | Accumulated | ||||||||||||||||||||||||||||||||||
Life | Cost | Amortization | Net | Net | Life | Cost | Amortization | Net | Net | ||||||||||||||||||||||||||||
Contract related intangible asset: | Contract related intangible asset: | ||||||||||||||||||||||||||||||||||||
Cato Research discounted contract | 3 years | $ | 355,000 | $ | 355,000 | $ | — | $ | — | Cato Research discounted contract | 3 years | $ | 355,000 | $ | 355,000 | $ | — | $ | — | ||||||||||||||||||
Technology related intangible assets: | Technology related intangible assets: | ||||||||||||||||||||||||||||||||||||
Patents for the AzoneTS-based product candidates and formulation | 4.5 years | 1,305,000 | — | 1,305,000 | 1,305,000 | Patents for the AzoneTS-based product candidates and formulation | 6 years | 1,305,000 | — | 1,305,000 | 1,305,000 | ||||||||||||||||||||||||||
Drug Master Files containing formulation, clinical and safety documentation used by the FDA | 4.5 years | 1,500,000 | — | 1,500,000 | 1,500,000 | Drug Master Files containing formulation, clinical and safety documentation used by the FDA | 6 years | 1,500,000 | — | 1,500,000 | 1,500,000 | ||||||||||||||||||||||||||
In-process pharmaceutical products for 2 indications | 4.5 years | 6,820,000 | — | 6,820,000 | 6,820,000 | In-process pharmaceutical products for 2 indications | 6years | 6,820,000 | — | 6,820,000 | 6,820,000 | ||||||||||||||||||||||||||
Total technology related intangible assets | 9,625,000 | — | 9,625,000 | 9,625,000 | Total technology related intangible assets | 9,625,000 | — | 9,625,000 | 9,625,000 | ||||||||||||||||||||||||||||
Total, net | $ | 9,980,000 | $ | 355,000 | $ | 9,625,000 | $ | 9,625,000 | Total, net | $ | 9,980,000 | $ | 355,000 | $ | 9,625,000 | $ | 9,625,000 | ||||||||||||||||||||
Amortization expense | ' | ' | |||||||||||||||||||||||||||||||||||
Estimated amortization expense for each of the next five calendar years is as follows: | Estimated amortization expense for each of the next five years is as follows: | ||||||||||||||||||||||||||||||||||||
Estimated | Estimated | ||||||||||||||||||||||||||||||||||||
Amortization | Amortization | ||||||||||||||||||||||||||||||||||||
Expense | Year Ending December 31, 2012: | Expense | |||||||||||||||||||||||||||||||||||
2013 | $ | — | 2013 | $ — | |||||||||||||||||||||||||||||||||
2014 | — | 2014 | 1,604,000 | ||||||||||||||||||||||||||||||||||
2015 | 1,069,000 | 2015 | 1,604,000 | ||||||||||||||||||||||||||||||||||
2016 | 2,139,000 | 2016 | 1,604,000 | ||||||||||||||||||||||||||||||||||
2017 | 2,139,000 | 2017 | 1,604,000 | ||||||||||||||||||||||||||||||||||
2018 | 1,604,000 | ||||||||||||||||||||||||||||||||||||
2019 | 1,604,000 | ||||||||||||||||||||||||||||||||||||
OPERATING_LEASE_COMMITMENTS_Ta
OPERATING LEASE COMMITMENTS (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||
Operating Lease Commitments Tables | ' | ' | ||||||||||||||||||||||||
Future minimum lease payments | ' | ' | ||||||||||||||||||||||||
Future minimum lease payments for each of the next 5 years under these operating leases are as follows: | Future minimum lease payments for each of the next five years under these operating leases at December 31, 2012 are approximately as follows: | |||||||||||||||||||||||||
Franklin | Philadelphia | Total | Franklin | Philadelphia | Total | |||||||||||||||||||||
For the period ending September 30, | Year Ending December 31, 2012: | |||||||||||||||||||||||||
2013 | $ | 113,000 | $ | 46,000 | $ | 159,000 | 2013 | $ | 421,000 | $ | 185,000 | $ | 606,000 | |||||||||||||
2014 | 447,000 | 187,000 | 634,000 | 2014 | 431,000 | 189,000 | 620,000 | |||||||||||||||||||
2015 | 444,000 | 192,000 | 636,000 | 2015 | 441,000 | 194,000 | 635,000 | |||||||||||||||||||
2016 | 454,000 | 196,000 | 650,000 | 2016 | 451,000 | 198,000 | 649,000 | |||||||||||||||||||
2017 | 382,000 | 82,000 | 464,000 | 2017 | 383,000 | 83,000 | 466,000 | |||||||||||||||||||
Total | $ | 1,840,000 | $ | 703,000 | $ | 2,543,000 | Total | $ | 2,127,000 | $ | 849,000 | $ | 2,976,000 | |||||||||||||
DERIVATIVE_WARRANT_LIABILITY_T
DERIVATIVE WARRANT LIABILITY (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||
Derivative Warrant Liability Tables | ' | ' | ||||||||||||||||
Derivative warrant liability | ' | ' | ||||||||||||||||
2013 | 2012 | The table below presents the changes in Level 3 derivative warrant liability measured at fair value on a recurring basis. | ||||||||||||||||
Derivative Warrant Liability as of January 1 | $ | 5,585,141 | $ | 1,035,337 | ||||||||||||||
Warrants issued under Montaur credit facility | — | 6,000,000 | 2012 | 2011 | ||||||||||||||
Total unrealized losses included in net loss (1) | 1,061,682 | 500,000 | Liabilities: | |||||||||||||||
Total realized losses included in net loss(1) | — | 1,438 | Derivative warrant liability as of January 1 | $ | 1,035,337 | $ | 1,544,996 | |||||||||||
Total unrealized gains included in net loss (1) | (5,515,000 | ) | (595,038 | ) | Warrants issued under Montaur credit facility | 8,295,000 | - | |||||||||||
Total realized gains included in net loss (1) | (152,668 | ) | (107,681 | ) | Total unrealized losses included in net loss (1) | 500,000 | 2,191,147 | |||||||||||
Reclassification of derivative warrant liability to additional paid-in capital for derivative warrants exercised | — | (61,520 | ) | Total realized losses included in net loss (1) | 1,438 | 978,678 | ||||||||||||
Derivative Warrant Liability as of September 30 | $ | 979,155 | $ | 6,772,536 | Total unrealized gains included in net loss (1) | (4,077,433 | ) | (1,377,261 | ) | |||||||||
__________________ | Total realized gains included in net loss (1) | (107,681 | ) | (29,626 | ) | |||||||||||||
(1) Included in Gain (Loss) on Revaluation of Derivative Warrant Liability in the Consolidated Statement of Operations. | Reclassification of liability to additional paid-in capital | (61,520 | ) | (2,272,597 | ) | |||||||||||||
for warrants | ||||||||||||||||||
Derivative warrant liability as of December 31 | $ | 5,585,141 | $ | 1,035,337 |
EQUITY_COMPENSATION_PLANS_Tabl
EQUITY COMPENSATION PLANS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Notes to Financial Statements | ' | |||||||||||||
Share based compensation options | ' | |||||||||||||
The following table shows the remaining shares available for future grants for each plan and outstanding shares: | ||||||||||||||
Equity Compensation Plans | ||||||||||||||
2003 Plan | 2008 Plan | |||||||||||||
Shares Available For Issuance | ||||||||||||||
Total reserved for stock options and restricted stock | 160,000 | 10,000,000 | ||||||||||||
Net restricted stock issued net of cancellations | (31,125 | ) | (320,978 | ) | ||||||||||
Stock options granted | (154,449 | ) | (326,750 | ) | ||||||||||
Add back options cancelled before exercise | 67,849 | 75,500 | ||||||||||||
Less shares no longer available due to Plan expiration | (42,275 | ) | — | |||||||||||
Remaining shares available for future grants at September 30, 2013 | — | 9,427,772 | ||||||||||||
Not Pursuant to a Plan | ||||||||||||||
Stock options granted | 154,449 | 326,750 | 310,000 | |||||||||||
Less: Stock options cancelled | (67,849 | ) | (75,500 | ) | (138,333 | ) | ||||||||
Stock options exercised | (35,600 | ) | (13,000 | ) | (66,667 | ) | ||||||||
Net shares outstanding before restricted stock | 51,000 | 238,250 | 105,000 | |||||||||||
Net restricted stock issued net of cancellations | 31,125 | 320,978 | 28,484 | |||||||||||
Outstanding shares at September 30, 2013 | 82,125 | 559,228 | 133,484 | |||||||||||
STOCK_OPTIONS_Tables
STOCK OPTIONS (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||
Stock Options Tables | ' | ' | ||||||||||||||||||||||||||
Remaining shares available for future grants | ' | ' | ||||||||||||||||||||||||||
Stock Option Plans | ||||||||||||||||||||||||||||
2003 | 2008 | |||||||||||||||||||||||||||
Shares Available For Issuance: | ||||||||||||||||||||||||||||
Total reserved for stock options and restricted stock | 160,000 | 10,000,000 | ||||||||||||||||||||||||||
Restricted stock issued net of cancellations | (31,125 | ) | (256,891 | ) | ||||||||||||||||||||||||
Stock options granted | (154,449 | ) | (254,500 | ) | ||||||||||||||||||||||||
Add back options cancelled before exercise | 67,849 | 54,167 | ||||||||||||||||||||||||||
Options cancelled by plan vote | - | - | ||||||||||||||||||||||||||
Remaining shares available for future grants | 42,275 | 9,542,776 | ||||||||||||||||||||||||||
Not Pursuant to a Plan | ||||||||||||||||||||||||||||
Total granted | 154,449 | 254,500 | 310,000 | |||||||||||||||||||||||||
Less: Options cancelled | (67,849 | ) | (54,167 | ) | (138,333 | ) | ||||||||||||||||||||||
Options exercised | (35,600 | ) | (13,000 | ) | (66,667 | ) | ||||||||||||||||||||||
Shares outstanding, before restricted stock | 51,000 | 187,333 | 105,000 | |||||||||||||||||||||||||
Restricted stock issued, net of cancellations | 31,125 | 256,891 | 28,484 | |||||||||||||||||||||||||
Outstanding shares at December 31, 2012 | 82,125 | 444,224 | 133,484 | |||||||||||||||||||||||||
Assumption used for stock option granted | ' | ' | ||||||||||||||||||||||||||
2013 | 2012 | The assumptions used principally for options granted to employees in the years ended December 31, 2012 and 2011 were as follows: | ||||||||||||||||||||||||||
Risk-free interest rate | 0.13% - 1.89 | % | 0.94% - 2.05 | % | ||||||||||||||||||||||||
Expected dividend yield | — | — | 2012 | 2011 | ||||||||||||||||||||||||
Expected term | 1 - 6.5 years | 6.5 years | Risk-free interest rate | 0.92% - 2.05 | % | 1.80% - 3.47 | % | |||||||||||||||||||||
Forfeiture rate (excluding fully vested stock options) | 15 | % | 15 | % | Expected dividend yield | — | — | |||||||||||||||||||||
Expected volatility | 129% - 141 | % | 129% - 137 | % | Expected term | 6.5 years | 6.5 years | |||||||||||||||||||||
Forfeiture rate (excluding fully vested options) | 15 | % | 15 | % | ||||||||||||||||||||||||
Expected volatility | 131% - 142 | % | 137% - 142 | % | ||||||||||||||||||||||||
Stock option activity | ' | ' | ||||||||||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||||||||||
Average | Average | Aggregate | Weighted- | Average | ||||||||||||||||||||||||
Exercise | Remaining | Intrinsic | Average | Remaining | Aggregate | |||||||||||||||||||||||
Shares | Price | Contractual | Value | Exercise | Contractual | Intrinsic | ||||||||||||||||||||||
Stock Options | Term | Options: | Shares | Price | Term | Value | ||||||||||||||||||||||
Outstanding at January 1, 2013 | 343,334 | $ | 14.75 | Outstanding at January 1, 2012 | 339,511 | $ | 16,80 | |||||||||||||||||||||
Granted | 78,250 | 4.43 | Granted | 70,000 | $ | 16.6 | ||||||||||||||||||||||
Exercised | — | — | Exercised | (23,767 | ) | $ | 9,40 | |||||||||||||||||||||
Forfeited or expired | (71,916 | ) | 13.38 | Forfeited or expired | (42,411 | ) | $ | 30,76 | ||||||||||||||||||||
Outstanding at September 30, 2013 | 349,668 | $ | 12.45 | 5.80 years | $ | — | Outstanding at December 31, 2012 | 343,333 | $ | 14,70 | 6.11 years | $ | 885,300 | |||||||||||||||
Exercisable at September 30, 2013 | 243,592 | $ | 11.34 | 4.86 years | $ | — | Exercisable at December 31, 2012 | 224,133 | $ | 10,60 | 5.48 years | $ | 885,300 | |||||||||||||||
RESTRICTED_STOCK_Tables
RESTRICTED STOCK (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||
Notes to Financial Statements | ' | ' | ||||||||||||||||
Nonvested restricted stock activity | ' | ' | ||||||||||||||||
A summary of the Company’s non-vested restricted stock activity as of and for the nine months ended September 30, 2013, is as follows: | Non-vested Shares: | Shares | Weighted- | |||||||||||||||
Average | ||||||||||||||||||
Restricted Stock | Weighted- | Grant-Date | ||||||||||||||||
Average | Fair Value | |||||||||||||||||
Shares | Grant-Date | Non-vested shares at January 1, 2012 | 181,960 | $ | 17.2 | |||||||||||||
Fair Value | Granted | 131,416 | $ | 17.2 | ||||||||||||||
Non-vested at January 1, 2013 | 316,044 | $ | 16.6 | Grants made in prior periods, now becoming restricted | 22,000 | $ | 9.2 | |||||||||||
Granted | 64,088 | 4.88 | Vested | (14,334 | ) | $ | 21.2 | |||||||||||
Vested | (33,042 | ) | 18.38 | Forfeited | (5,000 | ) | $ | 18.4 | ||||||||||
Forfeited | (24,500 | ) | 9.94 | Non-vested shares at December 31, 2012 | 316,042 | $ | 16.6 | |||||||||||
Non-vested at September 30, 2013 | 157,373 | $ | 14.4 |
WARRANTS_Tables
WARRANTS (Tables) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | |||||||||||||||||||
Warrants Tables | ' | ' | ||||||||||||||||||
Warrants assumptions utilized by the Company | ' | ' | ||||||||||||||||||
2012 | 2011 | |||||||||||||||||||
Risk-free interest rate | 0.70% - 2.23 | % | 3.36% - 3.75 | % | ||||||||||||||||
Expected dividend yield | — | — | ||||||||||||||||||
Expected term (contractual term) | 0.06 - 5 years | 2 years | ||||||||||||||||||
Forfeiture rate | — | — | ||||||||||||||||||
Expected volatility | 123% - 144 | % | 142 | % | ||||||||||||||||
Outstanding Warrants | ' | ' | ||||||||||||||||||
Number of | Exercise Price | Date of Expiration | Number of | |||||||||||||||||
Shares | Shares | Exercise | Date of | |||||||||||||||||
Exercisable | Exercisable | Price | Expiration | |||||||||||||||||
Outstanding warrants accounted for as derivative warrant liability: | Outstanding warrants in derivative warrant liability: | |||||||||||||||||||
Granted to debt holder | 400,000 | $ | 20 | 8/31/17 | Granted to financial investment advisor | 750 | $ | 12.6 | 2/11/13 | |||||||||||
Granted to debt holder | 100,000 | 21.3 | 9/20/17 | Granted to investors in private placement | 15,499 | $ | 5 | 2/11/13 | ||||||||||||
Granted to debt holder | 50,000 | 22.7 | 10/17/17 | Granted to investors in private placement | 19,767 | $ | 14.4 | 3/24/13 | ||||||||||||
Granted to debt holder | 150,000 | 21.1 | 11/6/17 | Granted to debtor as a Commitment warrant | 400,000 | $ | 20 | 8/31/17 | ||||||||||||
Total outstanding warrants accounted for as derivative warrant liability | 700,000 | Granted to debtor as a Draw warrant | 100,000 | $ | 21.3 | 9/20/17 | ||||||||||||||
Weighted average exercise price | $ | 20.61 | Granted to debtor as a Draw warrant | 50,000 | $ | 22.7 | 10/17/17 | |||||||||||||
Weighted average time to expiration in years | 3.98 years | Granted to debtor as a Draw warrant | 150,000 | $ | 21.1 | 11/6/17 | ||||||||||||||
Total outstanding warrants accounted for as derivative warrant liability | 736,016 | |||||||||||||||||||
Outstanding warrants accounted for as equity: | Weighted average exercise price | $ | 20.1 | |||||||||||||||||
Granted to investors in private placement of preferred stock | 3,228 | $ | 10 | 9/30/13 | Weighted average time to expiration in years | 4.50 years | ||||||||||||||
Granted to investors in private placement of preferred stock | 19,834 | 15 | 10/28/13 | Outstanding warrants in equity: | ||||||||||||||||
Granted to investors in private placement of preferred stock | 39,000 | 7.5 | 2/28/14 | Granted to investors in private placement of preferred stock | 3,225 | $ | 10 | 9/30/13 | ||||||||||||
Granted to vendor | 6,000 | 6 | 3/15/14 | Granted to investors in private placement of preferred stock | 19,833 | $ | 15 | 10/28/13 | ||||||||||||
Granted to investors in private placement | 40,000 | 15.9 | 6/30/14 | Granted to investors in private placement of preferred stock | 39,000 | $ | 7.5 | 2/28/14 | ||||||||||||
Granted to investors in private placement | 76,800 | 20 | 11/13/14 | Granted to vendor | 6,000 | $ | 6 | 3/15/14 | ||||||||||||
Granted to placement agent in private placement | 25,695 | 15 | 11/13/14 | Granted to investors in private placement | 40,000 | $ | 15.9 | 6/30/14 | ||||||||||||
Granted to investors in private placement | 6,300 | 20 | 12/3/14 | Granted to investors in private placement | 76,800 | $ | 20 | 11/13/14 | ||||||||||||
Granted to investors in private placement | 34,146 | 22.5 | 2/9/15 | Granted to placement agent in private placement | 25,690 | $ | 15 | 11/13/14 | ||||||||||||
Granted to placement agents in private placement | 2,853 | 22.5 | 2/9/15 | Granted to investors in private placement | 6,300 | $ | 20 | 12/3/14 | ||||||||||||
Granted to investor in private placement | 638 | 22.5 | 3/18/15 | Granted to investors in private placement | 34,133 | $ | 22.5 | 2/9/15 | ||||||||||||
Granted to investors in private placement | 95,960 | 30 | 12/7/14 | Granted to placement agents in private placement | 2,850 | $ | 22.5 | 2/9/15 | ||||||||||||
Total outstanding warrants accounted for as equity | 350,454 | Granted to investor in private placement | 637 | $ | 22.5 | 3/18/15 | ||||||||||||||
Weighted average exercise price | $ | 20.17 | Granted to financial investment advisor | 10,000 | $ | 15 | 2/10/13 | |||||||||||||
Weighted average time to expiration in years | 0.96 years | Granted to financial investment advisor | 1,037 | $ | 20 | 3/3/13 | ||||||||||||||
Granted to investors in private placement | 24,575 | $ | 15 | 1/4/13 | ||||||||||||||||
Totals for all warrants outstanding: | Granted to investors in private placement | 24,575 | $ | 25 | 1/4/13 | |||||||||||||||
Total | 1,050,454 | Granted to placement agent in private placement | 1,812 | $ | 15 | 1/4/13 | ||||||||||||||
Weighted average exercise price | $ | 20.46 | Granted to placement agent in private placement | 1,812 | $ | 25 | 1/4/13 | |||||||||||||
Weighted average time to expiration in years | 2.97 years | Granted to investors in private placement | 25,500 | $ | 15 | 2/3/13 | ||||||||||||||
Granted to investors in private placement | 28,000 | $ | 25 | 2/3/13 | ||||||||||||||||
Granted to placement agent in private placement | 125 | $ | 15 | 2/3/13 | ||||||||||||||||
Granted to placement agent in private placement | 125 | $ | 25 | 2/3/13 | ||||||||||||||||
Granted to investors in private placement | 25,000 | $ | 15 | 2/8/13 | ||||||||||||||||
Granted to investors in private placement | 25,000 | $ | 25 | 2/8/13 | ||||||||||||||||
Granted to investors in private placement | 95,958 | $ | 30 | 12/7/14 | ||||||||||||||||
Total outstanding warrants accounted for as equity | 517,988 | |||||||||||||||||||
Weighted average exercise price | $ | 20 | ||||||||||||||||||
Weighted average time to expiration in years | 1.18 years | |||||||||||||||||||
Totals for all warrants outstanding: | ||||||||||||||||||||
Total | 1,254,004 | |||||||||||||||||||
Weighted average exercise price | $ | 20.1 | ||||||||||||||||||
Weighted average time to expiration in years | 3.13 years | |||||||||||||||||||
Warrant Activity | ' | ' | ||||||||||||||||||
Weighted- | Warrants: | Shares | Weighted- | |||||||||||||||||
Average | Average | |||||||||||||||||||
Exercise | Exercise | |||||||||||||||||||
Warrants | Shares | Price | Price | |||||||||||||||||
Outstanding at January 1, 2013 | 1,254,004 | $ | 20.08 | Outstanding at January 1, 2012 | 752,753 | $ | 19.2 | |||||||||||||
Granted | 9,175 | 12.6 | Granted | 702,034 | $ | 14.4 | ||||||||||||||
Exercised | — | — | Exercised | (16,546 | ) | $ | 12.8 | |||||||||||||
Forfeited or expired | (212,725 | ) | 17.69 | Forfeited or expired | (184,237 | ) | $ | 19 | ||||||||||||
Outstanding at September 30, 2013 | 1,050,454 | $ | 20.46 | Outstanding at December 31, 2012 | 1,254,004 | $ | 20.1 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2012 | |||||||||||||
Income Taxes Tables | ' | ||||||||||||
Company's net deferred tax asset | ' | ||||||||||||
Significant components of the Company’s net deferred tax asset are as follows: | |||||||||||||
December 31, | |||||||||||||
2012 | 2011 | ||||||||||||
Deferred Tax Assets/(Liabilities): | |||||||||||||
Net operating loss carryforwards | $ | 24,428,000 | $ | 19,913,000 | |||||||||
Research credit carryforward | 1,486,000 | 1,344,000 | |||||||||||
Acquired intangible assets, net | (3,724,000 | ) | (3,781,000 | ) | |||||||||
Restricted stock and warrants | 222,000 | — | |||||||||||
Other temporary differences | 219,000 | 156,000 | |||||||||||
Total deferred tax assets, net | 22,631,000 | 17,632,000 | |||||||||||
Valuation allowance | (22,631,000 | ) | (17,632,000 | ) | |||||||||
Net deferred tax asset | $ | — | $ | — | |||||||||
Income taxes computed using the federal statutory income tax rate | ' | ||||||||||||
Income taxes computed using the federal statutory income tax rate differs from the Company’s effective tax rate primarily due to the following: | |||||||||||||
Years Ended December 31, | |||||||||||||
2012 | 2011 | 2010 | |||||||||||
Income taxes benefit (expense) at statutory rate | 34 | % | 35 | % | 35 | % | |||||||
State income tax, net of federal benefit | (4.7 | )% | (2.2 | )% | (0.5 | )% | |||||||
Permanent Differences: | |||||||||||||
Gain/loss or revaluation of derivative warrant liability | 10.2 | % | (6.2 | )% | 3.1 | % | |||||||
Stock-based compensation expense | (2.6 | )% | (2.9 | )% | (1.4 | )% | |||||||
Stock issues for services | — | % | (1.6 | )% | (8.6 | )% | |||||||
Loss on extinguishment of debt | — | % | — | % | 1.6 | % | |||||||
Other | (2.2 | )% | — | % | (3.5 | )% | |||||||
R&D credits | — | % | (0.6 | )% | 2.5 | % | |||||||
Change in valuation allowance | (34.7 | )% | (21.5 | )% | (28.2 | )% | |||||||
— | % | — | % | — | % |
ORGANIZATION_AND_BASIS_OF_PRES2
ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
Organization And Basis Of Presentation | ' | ' |
Reverse stock split ratio | '1-for-10 | ' |
Liquidity and Management's Plans | ' | ' |
Cash | $6,068,469 | $3,747,000 |
Working capital deficit | 3,603,000 | 4,380,000 |
Accumulated deficit | 109,469,000 | 93,902,000 |
Net proceeds | ' | 10,700,000 |
Note repayment | ' | 3,113,366 |
Credit facility | ' | $20,000,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2012 | |
Leasehold Improvements | 'Life of lease |
Computer equipment [Member] | ' |
Assets Useful Life | '3 years |
Office Equipment [Member] | Minimum [Member] | ' |
Assets Useful Life | '3 years |
Office Equipment [Member] | Maximum [Member] | ' |
Assets Useful Life | '5 years |
Furniture and fixtures [Member] | ' |
Assets Useful Life | '7 years |
Manufacturing equipment [Member] | ' |
Assets Useful Life | '5 years |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Fair value of notes payable | $3,000,000 | ' |
Uncertain tax position liabilities | 0 | ' |
Accruals for interest or penalties related to income tax matters | 0 | 0 |
Vendors [Member] | ' | ' |
Letter of credit issued | 250,000 | 250,000 |
Landlord [Member] | ' | ' |
Letter of credit issued | $157,463 | ' |
CASH_Details_Narrative
CASH (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 |
Cash And Cash Equivalents | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | $6,068,469 | $3,747,210 | $1,395,840 | $8,995,571 | $1,342,044 | $1,166,858 |
ProductDevelopment [Member] | ' | ' | ' | ' | ' | ' |
Cash And Cash Equivalents | ' | ' | ' | ' | ' | ' |
Letter of credit | 250,000 | 250,000 | ' | ' | ' | ' |
Product Development 2 [Member] | ' | ' | ' | ' | ' | ' |
Cash And Cash Equivalents | ' | ' | ' | ' | ' | ' |
Letter of credit | 250,000 | ' | ' | ' | ' | ' |
Landlord [Member] | ' | ' | ' | ' | ' | ' |
Cash And Cash Equivalents | ' | ' | ' | ' | ' | ' |
Letter of credit | $157,463 | $157,463 | ' | ' | ' | ' |
INTANGIBLE_ASSETS_Details
INTANGIBLE ASSETS (Details) (USD $) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2013 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
ResearchMember | PatentsMember | DrugMember | PharmaceuticalMember | PatentedTechnologyMember | IntangibleassetsMember | Cato Research discounted contract [Member] | Cato Research discounted contract [Member] | Cato Research discounted contract [Member] | Patents for the AzoneTS-based product candidates and formulation [Member] | Patents for the AzoneTS-based product candidates and formulation [Member] | Patents for the AzoneTS-based product candidates and formulation [Member] | Drug Master Files containing formulation, clinical and safety documentation used by the FDA [Member] | Drug Master Files containing formulation, clinical and safety documentation used by the FDA [Member] | Drug Master Files containing formulation, clinical and safety documentation used by the FDA [Member] | In-process pharmaceutical products for 2 indications [Member] | In-process pharmaceutical products for 2 indications [Member] | In-process pharmaceutical products for 2 indications [Member] | Technology related intangible assets [Member] | Technology related intangible assets [Member] | Technology related intangible assets [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated Life | ' | ' | ' | ' | '3 years | '4 years 6 months | '4 years 6 months | '4 years 6 months | ' | ' | '3 years | ' | ' | '6 years | ' | ' | '6 years | ' | ' | '6 years | ' | ' | ' | ' | ' |
Cost | $9,980,000 | ' | ' | ' | $355,000 | $1,305,000 | $1,500,000 | $6,820,000 | $9,625,000 | $9,980,000 | $355,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated Amortization | 355,000 | 355,000 | ' | ' | 355,000 | ' | ' | ' | ' | 355,000 | 355,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | 9,625,000 | 9,625,000 | 9,625,000 | 9,625,000 | ' | 1,305,000 | 1,500,000 | 6,820,000 | 9,625,000 | 9,625,000 | ' | ' | ' | 1,305,000 | 1,305,000 | 1,305,000 | 1,500,000 | 1,500,000 | 1,500,000 | 6,820,000 | 6,820,000 | 6,820,000 | 9,625,000 | 9,625,000 | 9,625,000 |
Estimated amortization expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2013 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2014 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2015 | 1,069,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2016 | 2,139,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2017 | $2,139,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
INTANGIBLE_ASSETS_Details_1
INTANGIBLE ASSETS (Details 1) (USD $) | Dec. 31, 2012 |
Intangible Assets Details 1 | ' |
2013 | ' |
2014 | 1,604,000 |
2015 | 1,604,000 |
2016 | 1,604,000 |
2017 | 1,604,000 |
2018 | $1,604,000 |
OPERATING_LEASE_COMMITMENTS_De
OPERATING LEASE COMMITMENTS (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
OPERATING LEASE COMMITMENTS | ' | ' |
Period Ending September 30, 2012 | $634,000 | $635,000 |
Period Ending September 30, 2013 | 159,000 | 620,000 |
Period Ending September 30, 2014 | 634,000 | 635,000 |
Period Ending September 30, 2015 | 636,000 | 649,000 |
Period Ending September 30, 2016 | 650,000 | 466,000 |
Period Ending September 30, 2017 | 464,000 | ' |
Total | 2,543,000 | 2,976,000 |
Franklin [Member] | ' | ' |
OPERATING LEASE COMMITMENTS | ' | ' |
Period Ending September 30, 2012 | ' | 441,000 |
Period Ending September 30, 2013 | ' | 431,000 |
Period Ending September 30, 2014 | ' | 441,000 |
Period Ending September 30, 2015 | ' | 451,000 |
Period Ending September 30, 2016 | ' | 383,000 |
Total | ' | 2,127,000 |
Philadelphia [Member] | ' | ' |
OPERATING LEASE COMMITMENTS | ' | ' |
Period Ending September 30, 2012 | ' | 194,000 |
Period Ending September 30, 2013 | ' | 189,000 |
Period Ending September 30, 2014 | ' | 194,000 |
Period Ending September 30, 2015 | ' | 198,000 |
Period Ending September 30, 2016 | ' | 83,000 |
Total | ' | 849,000 |
Franklin [Member] | ' | ' |
OPERATING LEASE COMMITMENTS | ' | ' |
Period Ending September 30, 2012 | 447,000 | ' |
Period Ending September 30, 2013 | 113,000 | ' |
Period Ending September 30, 2014 | 447,000 | ' |
Period Ending September 30, 2015 | 444,000 | ' |
Period Ending September 30, 2016 | 454,000 | ' |
Period Ending September 30, 2017 | 382,000 | ' |
Total | 1,840,000 | ' |
Philadelphia [Member] | ' | ' |
OPERATING LEASE COMMITMENTS | ' | ' |
Period Ending September 30, 2012 | 187,000 | ' |
Period Ending September 30, 2013 | 46,000 | ' |
Period Ending September 30, 2014 | 187,000 | ' |
Period Ending September 30, 2015 | 192,000 | ' |
Period Ending September 30, 2016 | 196,000 | ' |
Period Ending September 30, 2017 | 82,000 | ' |
Total | $703,000 | ' |
OPERATING_LEASE_COMMITMENTS_De1
OPERATING LEASE COMMITMENTS (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Operating Lease Commitments | ' | ' | ' | ' | ' | ' | ' |
Facilities lease expense | $141,000 | $56,000 | $530,000 | $207,000 | $339,000 | $224,000 | $169,000 |
Manfc Lab Office [Member] | ' | ' | ' | ' | ' | ' | ' |
Operating Lease Commitments | ' | ' | ' | ' | ' | ' | ' |
Leased space square footage | '37,000 | ' | '37,000 | ' | ' | ' | ' |
Office lease expiry date | 31-Oct-17 | ' | 31-Oct-17 | ' | ' | ' | ' |
Apartment [Member] | ' | ' | ' | ' | ' | ' | ' |
Operating Lease Commitments | ' | ' | ' | ' | ' | ' | ' |
Leased space square footage | '1,060 | ' | '1,060 | ' | ' | ' | ' |
Office lease expiry date | 24-Jul-14 | ' | 24-Jul-14 | ' | ' | ' | ' |
Philadelphia [Member] | ' | ' | ' | ' | ' | ' | ' |
Operating Lease Commitments | ' | ' | ' | ' | ' | ' | ' |
Leased space square footage | '7,900 | ' | '7,900 | ' | ' | ' | ' |
Office lease expiry date | 31-May-17 | ' | 31-May-17 | ' | ' | ' | ' |
DERIVATIVE_WARRANT_LIABILITY_D
DERIVATIVE WARRANT LIABILITY (Details) (USD $) | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |||||
DERIVATIVE WARRANT LIABILITY | ' | ' | ' | ' | ||||
Beginning balance | $5,585,141 | $1,035,337 | $1,035,337 | $1,544,996 | ||||
Warrants issued under Montaur credit facility | ' | 6,000,000 | 8,295,000 | ' | ||||
Total unrealized losses included in net loss | 1,061,682 | 500,000 | 500,000 | [1] | 2,191,147 | [1] | ||
Total realized losses included in net loss | ' | 1,438 | 1,438 | [1] | 978,678 | [1] | ||
Total unrealized gains included in net loss | -5,515,000 | [2] | -595,038 | [2] | -4,077,433 | [1] | -1,377,261 | [1] |
Total realized gains included in net loss | -152,668 | [2] | -107,681 | [2] | -107,681 | [1] | -29,626 | [1] |
Reclassification of derivative warrant liability to additional paid-in capital for derivative warrants exercised | ' | -61,520 | -61,520 | -2,272,597 | ||||
Ending balance | $979,155 | $6,772,536 | $5,585,141 | $1,035,337 | ||||
[1] | Included in gain or loss on revaluation of derivative warrant liability in the Consolidated Statement of Operations. | |||||||
[2] | Included in Gain (Loss) on Revaluation of Derivative Warrant Liability in the Consolidated Statement of Operations. |
DERIVATIVE_WARRANT_LIABILITY_D1
DERIVATIVE WARRANT LIABILITY (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Sep. 30, 2013 | |
Derivative Warrant Liability Details Narrative | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding warrants | ' | ' | $1,254,004 | $752,753 | $752,753 | ' | ' | $1,050,454 |
Derivative financial instruments | 700,000 | ' | 700,000 | ' | 736,015 | 72,515 | ' | ' |
Fair value of derivative instruments on recurring basis | 979,000 | ' | 979,000 | ' | 5,585,000 | 1,035,000 | ' | ' |
Loss on Revaluation of Derivative Warrant Liability | 70,000 | ' | ' | ' | ' | -1,763,000 | ' | ' |
Derivative Warrant Liability Gain | ' | 400,000 | 4,606,000 | ' | 3,684,000 | ' | 371,000 | ' |
Exercised warrants Shares | ' | ' | ' | $16,545 | $9.40 | $653,150 | ' | ' |
Derivative warrants expired | ' | ' | 45,164 | ' | ' | ' | ' | ' |
Increase in additional paid-in capital from reclassifaication | ' | 42,000 | ' | ' | ' | ' | ' | ' |
Reclassification from Derivative Warrant Liability to Additional Paid-in Capital | ' | ' | ' | $61,520 | $61,520 | $2,272,597 | $200,357 | ' |
Cashless warrants exercised | ' | ' | ' | ' | ' | 141,947 | ' | ' |
Warrants with down round provisions to purchase shares | ' | ' | ' | ' | 16,546 | 65,315 | ' | ' |
PREFERRED_STOCK_Details_Narrat
PREFERRED STOCK (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Class of Stock [Line Items] | ' | ' | ' |
Authorized Preferred Stock | 40,000,000 | ' | ' |
Series C Preferred Stock [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Authorized Preferred Stock | 10,000 | 10,000 | ' |
Issued and outstanding | 9,974.18 | 9,974.18 | 9,974.19 |
Shares Issued | ' | 9,974.19 | 9,974.19 |
Series D Preferred Stock [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Authorized Preferred Stock | 3,600,000 | 3,600,000 | ' |
Issued and outstanding | 3,006,000 | 3,006,000 | 3,006,000 |
Shares Issued | ' | 3,006,000 | 3,006,000 |
Series B Preferred Stock [Member] | ' | ' | ' |
Class of Stock [Line Items] | ' | ' | ' |
Authorized Preferred Stock | ' | 40,000 | ' |
Par Value | ' | 0.01 | ' |
Redeemable value | ' | 1,701,672 | ' |
COMMON_STOCK_Details_Narrative
COMMON STOCK (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Common stock, shares authorized | 150,000,000 | ' | 150,000,000 | 150,000,000 | ' |
Common stock, shares at par value | $0.01 | ' | $0.01 | $0.01 | ' |
Common stock, Shares issued | 10,699,990 | ' | 4,437,346 | 3,854,400 | 1,720,000 |
Common stock, Shares outstanding | 10,699,990 | ' | 4,437,346 | 3,854,400 | ' |
Common stock shares Issued in exchange of services | ' | ' | 95,332 | 138,000 | 265,000 |
Common stock shares value | ' | ' | $153,464 | ' | ' |
Selling, General and Administrative expense | 6,590,206 | 4,702,325 | 153,464 | 449,000 | 466,000 |
Stock issued in exchange for services | 7,450 | 7,033 | ' | ' | ' |
Fair value of stock issued in exchange for services | 89,970 | 118,465 | 153,464 | 448,940 | 935,144 |
January [Member] | ' | ' | ' | ' | ' |
Common Stock public offering | 1,567,833 | ' | ' | ' | ' |
Shares sold pursuant to over-allotment | 204,500 | ' | ' | ' | ' |
Share sale price | $7.50 | ' | ' | ' | ' |
Net proceeds from sale of shares in public offering | 10,626,000 | ' | ' | ' | ' |
June [Member] | ' | ' | ' | ' | ' |
Common Stock public offering | 4,628,750 | ' | ' | ' | ' |
Shares sold pursuant to over-allotment | 603,750 | ' | ' | ' | ' |
Share sale price | $2.70 | ' | ' | ' | ' |
Net proceeds from sale of shares in public offering | $11,338,000 | ' | ' | ' | ' |
EQUITY_COMPENSATION_PLANS_Deta
EQUITY COMPENSATION PLANS (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Shares Available For Issuance | ' | ' |
Total reserved for stock options and restricted stock | $313,000 | ' |
Add back options cancelled before exercise | -71,916 | -42,411 |
Outstanding Options and Restricted Stock | ' | ' |
Options exercised | ' | -23,767 |
Ending Balance | 133,484 | ' |
Plan2003Member | ' | ' |
Shares Available For Issuance | ' | ' |
Total reserved for stock options and restricted stock | 160,000 | 160,000 |
Net restricted stock issued net of cancellations | -31,125 | -31,125 |
Stock options granted | -154,449 | -154,449 |
Add back options cancelled before exercise | 67,849 | 67,849 |
Options cancelled by plan vote | -42,275 | ' |
Outstanding Options and Restricted Stock | ' | ' |
Total granted | 154,449 | 154,449 |
Options cancelled | -67,849 | -67,849 |
Options exercised | -35,600 | -35,600 |
Net shares outstanding before restricted stock | 51,000 | 51,000 |
Net restricted stock issued net of cancellations | 31,125 | 31,125 |
Ending Balance | 82,125 | 82,125 |
Plan2008Member | ' | ' |
Shares Available For Issuance | ' | ' |
Total reserved for stock options and restricted stock | 10,000,000 | 10,000,000 |
Net restricted stock issued net of cancellations | -320,978 | -256,891 |
Stock options granted | -326,750 | -254,500 |
Add back options cancelled before exercise | 75,500 | 54,167 |
Options cancelled by plan vote | ' | ' |
Remaining shares available for future grants | 9,427,772 | ' |
Outstanding Options and Restricted Stock | ' | ' |
Total granted | 326,750 | 254,500 |
Options cancelled | -75,500 | -54,167 |
Options exercised | -13,000 | -13,000 |
Net shares outstanding before restricted stock | 238,250 | 187,333 |
Net restricted stock issued net of cancellations | 320,978 | 256,891 |
Ending Balance | 559,228 | 444,244 |
NotPursuanttoaPlanMember | ' | ' |
Outstanding Options and Restricted Stock | ' | ' |
Total granted | 310,000 | 310,000 |
Options cancelled | ($138,333) | -138,333 |
Options exercised | -66,667 | -66,667 |
Net shares outstanding before restricted stock | 105,000 | 105,000 |
Net restricted stock issued net of cancellations | 28,484 | 28,484 |
Ending Balance | ' | 133,484 |
EQUITY_COMPENSATION_PLANS_Deta1
EQUITY COMPENSATION PLANS (Details Narrative) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Stock Options And Restricted Stock | ' | ' | ' |
Maximum authorized shares | 150,000,000 | 150,000,000 | 150,000,000 |
EqPlan 2003 [Member] | ' | ' | ' |
Stock Options And Restricted Stock | ' | ' | ' |
Restricted shares of Common Stock issued | 31,125 | ' | ' |
Options to purchase an aggregate of shares | 82,125 | ' | ' |
EqPlan 2008 [Member] | ' | ' | ' |
Stock Options And Restricted Stock | ' | ' | ' |
Restricted shares of Common Stock issued | 155,761 | ' | ' |
Options to purchase an aggregate of shares | 394,011 | ' | ' |
Maximum authorized shares | 10,000,000 | ' | ' |
Shares Future grants | 9,592,989 | ' | ' |
STOCK_OPTIONS_Details
STOCK OPTIONS (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Shares Available For Issuance | ' | ' |
Total reserved for stock options and restricted stock | $313,000 | ' |
Add back options cancelled before exercise | -71,916 | -42,411 |
Outstanding Options and Restricted Stock | ' | ' |
Options exercised | ' | -23,767 |
Ending Balance | 133,484 | ' |
Plan2003Member | ' | ' |
Shares Available For Issuance | ' | ' |
Total reserved for stock options and restricted stock | 160,000 | 160,000 |
Net restricted stock issued net of cancellations | -31,125 | -31,125 |
Stock options granted | -154,449 | -154,449 |
Add back options cancelled before exercise | 67,849 | 67,849 |
Options cancelled by plan vote | -42,275 | ' |
Remaining shares available for future grants | ' | 42,275 |
Outstanding Options and Restricted Stock | ' | ' |
Total granted | 154,449 | 154,449 |
Options cancelled | -67,849 | -67,849 |
Options exercised | -35,600 | -35,600 |
Shares outstanding, before restricted stock | 51,000 | 51,000 |
Restricted stock issued, net of cancellations | 31,125 | 31,125 |
Ending Balance | 82,125 | 82,125 |
Plan2008Member | ' | ' |
Shares Available For Issuance | ' | ' |
Total reserved for stock options and restricted stock | 10,000,000 | 10,000,000 |
Net restricted stock issued net of cancellations | -320,978 | -256,891 |
Stock options granted | -326,750 | -254,500 |
Add back options cancelled before exercise | 75,500 | 54,167 |
Options cancelled by plan vote | ' | ' |
Remaining shares available for future grants | ' | 9,542,776 |
Outstanding Options and Restricted Stock | ' | ' |
Total granted | 326,750 | 254,500 |
Options cancelled | -75,500 | -54,167 |
Options exercised | -13,000 | -13,000 |
Shares outstanding, before restricted stock | 238,250 | 187,333 |
Restricted stock issued, net of cancellations | 320,978 | 256,891 |
Ending Balance | 559,228 | 444,244 |
NotPursuanttoaPlanMember | ' | ' |
Outstanding Options and Restricted Stock | ' | ' |
Total granted | 310,000 | 310,000 |
Options cancelled | ($138,333) | -138,333 |
Options exercised | -66,667 | -66,667 |
Shares outstanding, before restricted stock | 105,000 | 105,000 |
Restricted stock issued, net of cancellations | 28,484 | 28,484 |
Ending Balance | ' | 133,484 |
STOCK_OPTIONS_Details_1
STOCK OPTIONS (Details 1) (USD $) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
STOCK OPTIONS AND RESTRICTED STOCK | ' | ' | ' | ' |
Risk-free interest rate minimum | 0.13% | 0.94% | 0.92% | 1.80% |
Risk-free interest rate maximum | 1.89% | 2.05% | 2.05% | 3.47% |
Expected dividend yield | ' | ' | $0 | $0 |
Expected term, minimum | '1 year | ' | ' | ' |
Expected term, maximum | '6 years 6 months | '6 years 6 months | '6 years 6 months | '6 years 6 months |
Forfeiture rate (excluding fully vested stock options) minimum | 15.00% | 15.00% | ' | ' |
Forfeiture rate (excluding fully vested stock options) maximum | 15.00% | 15.00% | 0.15% | 0.15% |
Expected volatility | 129.00% | 131.00% | 1.31% | 1.37% |
Expected volatility | 141.00% | 137.00% | 1.42% | 1.42% |
STOCK_OPTIONS_Details_2
STOCK OPTIONS (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Shares | ' | ' | ' | ' | ' |
Beginning Balance | ' | 343,333 | 339,511 | 339,511 | ' |
Granted | ' | 78,250 | ' | 70,000 | ' |
Exercised | ' | ' | ' | -23,767 | ' |
Forfeited or expired | ' | -71,916 | ' | -42,411 | ' |
Ending Balance | 349,668 | 349,668 | ' | 343,333 | 339,511 |
Exercisable at June 30, 2013 | 243,592 | 243,592 | ' | 224,133 | ' |
Weighted-Average Exercise Price | ' | ' | ' | ' | ' |
Beginning Balance | ' | $14.75 | $16.80 | $16.80 | ' |
Granted | ' | $4.43 | ' | $16.60 | ' |
Exercised | ' | ' | $16,545 | $9.40 | $653,150 |
Forfeited or expired | ' | $13.38 | ' | $30.76 | ' |
Ending Balance | $12.45 | $12.45 | ' | $14.75 | $16.80 |
Exercisable at June 30, 2013 | $11.34 | $11.34 | ' | $10.60 | ' |
Weighted-Average Remaining Contractual Term | ' | ' | ' | ' | ' |
Beginning Balance | ' | '6 years 9 months | '6 years 1 month 10 days | '6 years 1 month 10 days | ' |
Ending Balance | '4 years 10 months 10 days | '4 years 10 months 10 days | ' | '6 years 9 months | '6 years 1 month 10 days |
Aggregate Intrinsic Value | ' | ' | ' | ' | ' |
Beginning Balance | ' | ' | $885,300 | $885,300 | ' |
Ending Balance | ' | ' | ' | $885,300 | ' |
STOCK_OPTIONS_Details_Narrativ
STOCK OPTIONS (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Stock Options And Restricted Stock | ' | ' | ' | ' | ' |
Weighted-average grant-date fair value of stock options granted | $3.37 | ' | $16.60 | ' | ' |
Share-based compensation expense | $554,000 | $720,000 | ' | ' | ' |
Total unrecognized compensation expense | 1,149,000 | ' | 2,097,000 | ' | ' |
Total reserved for stock options and restricted stock | 313,000 | ' | ' | ' | ' |
Additional paid-in capital and non-cash compensation expense | ' | ' | 938,537 | 836,866 | 164,810 |
Plan2003Member | ' | ' | ' | ' | ' |
Stock Options And Restricted Stock | ' | ' | ' | ' | ' |
Total reserved for stock options and restricted stock | 160,000 | ' | 160,000 | ' | ' |
Net restricted stock issued net of cancellations | -31,125 | ' | -31,125 | ' | ' |
Common Stock Outstanding | ' | ' | 821,125 | ' | ' |
Plan2008Member | ' | ' | ' | ' | ' |
Stock Options And Restricted Stock | ' | ' | ' | ' | ' |
Total reserved for stock options and restricted stock | 10,000,000 | ' | 10,000,000 | ' | ' |
Net restricted stock issued net of cancellations | ($320,978) | ' | ($256,891) | ' | ' |
Common Stock Outstanding | ' | ' | 444,224 | ' | ' |
RESTRICTED_STOCK_Details
RESTRICTED STOCK (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Shares | ' | ' |
Nonvested at January 1, 2013 | 316,042 | 181,960 |
Granted | 64,088 | 131,416 |
Grants made in prior periods, now becoming restricted | ' | 22,000 |
Vested | -33,042 | -14,334 |
Forfeited | -24,500 | -5,000 |
Nonvested at September 30, 2013 | 322,590 | 316,042 |
Weighted- Average Grant-DateFair Value | ' | ' |
Nonvested at January 1, 2013 | $16.60 | $17.20 |
Granted | $4.48 | $17.20 |
Grants made in prior periods, now becoming restricted | ' | $9.20 |
Vested | $18.38 | $21.20 |
Forfeited | $9.94 | $18.40 |
Nonvested at September 30, 2013 | $14.40 | $16.60 |
RESTRICTED_STOCK_Details_Narra
RESTRICTED STOCK (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Stock Options And Restricted Stock | ' | ' | ' | ' | ' |
Aggregate restricted shares of Common Stock pursuant to 2008 plan | 64,088 | ' | ' | ' | ' |
Fair Value of restricted stock | $313,000 | ' | ' | ' | ' |
Share-based compensation expense | 355,000 | 200,000 | ' | ' | ' |
Shares of non-vested restricted stock | 322,590 | ' | ' | ' | ' |
Restricted stock issued and outstanding | ' | ' | $574,024 | $323,463 | $393,249 |
outstanding restricted stock grants | ' | ' | 316,042 | ' | ' |
weighted-average grant-date value | $3.37 | ' | $16.60 | ' | ' |
Total unrecognized compensation expense | 863,000 | ' | 1,861,000 | ' | ' |
FDA Approval [Member] | ' | ' | ' | ' | ' |
Stock Options And Restricted Stock | ' | ' | ' | ' | ' |
Restricted stock to vest upon FDA approval | 165,460 | ' | ' | ' | ' |
Yearly [Member] | ' | ' | ' | ' | ' |
Stock Options And Restricted Stock | ' | ' | ' | ' | ' |
Restricted stock to vest upon FDA approval | 157,130 | ' | ' | ' | ' |
WARRANTS_Details
WARRANTS (Details) (USD $) | Sep. 30, 2013 |
Warrants | ' |
Total outstanding warrants accounted for as derivative warrant liability | 700,000 |
Weighted average exercise price | $20.61 |
Weighted average time to expiration in years | '3 years 11 months 23 days |
DebtHolderAcquisition1 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 400,000 |
Exercise Price | $20 |
Date of Expiration | 31-Aug-17 |
DebtHolderAcquisition2 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 100,000 |
Exercise Price | $21.30 |
Date of Expiration | 20-Sep-17 |
Investors1 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 50,000 |
Exercise Price | $22.70 |
Date of Expiration | 17-Oct-17 |
Investors2 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 150,000 |
Exercise Price | $21.10 |
Date of Expiration | 6-Nov-17 |
WARRANTS_Details1
WARRANTS (Details) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Expected dividend yield | 0.00% | 0.00% |
Expected term (contractual term) | ' | '2 years |
Forfeiture rate | 0.00% | 0.00% |
Expected volatility | ' | 142.00% |
Minimum | ' | ' |
Risk-free interest rate | 0.70% | 3.36% |
Expected term (contractual term) | '22 days | ' |
Expected volatility | 123.00% | ' |
Maximum | ' | ' |
Risk-free interest rate | 2.23% | 3.75% |
Expected term (contractual term) | '5 years | ' |
Expected volatility | 144.00% | ' |
WARRANTS_Details_1
WARRANTS (Details 1) (USD $) | Sep. 30, 2013 |
Warrants | ' |
Total Warrants Outstanding | 1,050,454 |
Total Weighted average exercise price | $20.46 |
Total Weighted average time to expiration in years | '2 years 11 months 19 days |
PreferredStock1 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 3,228 |
Exercise Price | $10 |
Date of Expiration | '2013-09-30 |
PreferredStock2 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 19,834 |
Exercise Price | $15 |
Date of Expiration | '2013-10-28 |
PreferredStock3 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 39,000 |
Exercise Price | $7.50 |
Date of Expiration | '2014-02-28 |
Vendor1 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 6,000 |
Exercise Price | $6 |
Date of Expiration | '2014-03-15 |
Investors1 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 40,000 |
Exercise Price | $15.90 |
Date of Expiration | '2014-06-30 |
Investors2 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 76,800 |
Exercise Price | $20 |
Date of Expiration | '2014-11-13 |
Investors3 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 25,695 |
Exercise Price | $15 |
Date of Expiration | '2014-11-13 |
Investors4 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 6,300 |
Exercise Price | $20 |
Date of Expiration | '2014-12-03 |
Investors5 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 34,146 |
Exercise Price | $22.50 |
Date of Expiration | '2015-02-09 |
PlacementAgents1 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 2,853 |
Exercise Price | $22.50 |
Date of Expiration | '2015-02-09 |
Investors6 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 638 |
Exercise Price | $22.50 |
Date of Expiration | '2015-03-18 |
Investors19 [Member] | ' |
Warrants | ' |
Number of Shares Exercisable | 95,960 |
Exercise Price | $30 |
Date of Expiration | '2014-12-07 |
TotaloutstandingwarrantsaccountedforasequityMember | ' |
Warrants | ' |
Number of Shares Exercisable | 350,454 |
WeightedaverageexercisepriceMember | ' |
Warrants | ' |
Exercise Price | $20.17 |
WeightedaveragetimetoexpirationinyearsMember | ' |
Warrants | ' |
Expiration period | '0 years 11 months 16 days |
WARRANTS_Details_2
WARRANTS (Details 2) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Warrants | ' | ' | ' |
Number of Shares Exercisable | 243,592 | 224,133 | ' |
Weighted average exercise price | $12.45 | $14.75 | $16.80 |
Granted to financial investment advisor | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 750 | ' |
Weighted average exercise price | ' | $12.60 | ' |
Date of Expiration | ' | 11-Feb-13 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 15,499 | ' |
Weighted average exercise price | ' | $5 | ' |
Date of Expiration | ' | 11-Feb-13 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 19,767 | ' |
Weighted average exercise price | ' | $14.40 | ' |
Date of Expiration | ' | 24-Mar-13 | ' |
Granted to debtor as a Commitment warrant | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 400,000 | ' |
Weighted average exercise price | ' | $20 | ' |
Date of Expiration | ' | 31-Aug-17 | ' |
Granted to debtor as a Draw warrant | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 100,000 | ' |
Weighted average exercise price | ' | $21.30 | ' |
Date of Expiration | ' | 20-Sep-17 | ' |
Granted to debtor as a Draw warrant | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 50,000 | ' |
Weighted average exercise price | ' | $22.70 | ' |
Date of Expiration | ' | 17-Oct-17 | ' |
Granted to debtor as a Draw warrant | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 150,000 | ' |
Weighted average exercise price | ' | $21.10 | ' |
Date of Expiration | ' | 6-Nov-17 | ' |
Derivative Warrant Liability | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 736,016 | ' |
Weighted average exercise price | ' | $20.10 | ' |
Weighted average time to expiration in years | ' | '4 years 6 months | ' |
Granted to investors in private placement of preferred stock | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 3,225 | ' |
Weighted average exercise price | ' | $10 | ' |
Date of Expiration | ' | 30-Sep-13 | ' |
Granted to investors in private placement of preferred stock | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 19,833 | ' |
Weighted average exercise price | ' | $15 | ' |
Date of Expiration | ' | 28-Oct-13 | ' |
Granted to investors in private placement of preferred stock | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 3,900 | ' |
Weighted average exercise price | ' | $7.50 | ' |
Date of Expiration | ' | 28-Feb-14 | ' |
Granted to vendor | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 6,000 | ' |
Weighted average exercise price | ' | $6 | ' |
Date of Expiration | ' | 15-Mar-14 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 40,000 | ' |
Weighted average exercise price | ' | $15.90 | ' |
Date of Expiration | ' | 30-Jun-14 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 76,800 | ' |
Weighted average exercise price | ' | $20 | ' |
Date of Expiration | ' | 13-Nov-14 | ' |
Granted to placement agent in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 25,691 | ' |
Weighted average exercise price | ' | $15 | ' |
Date of Expiration | ' | 13-Nov-14 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 6,300 | ' |
Weighted average exercise price | ' | $20 | ' |
Date of Expiration | ' | 3-Dec-14 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 34,133 | ' |
Weighted average exercise price | ' | $22.50 | ' |
Date of Expiration | ' | 9-Feb-15 | ' |
GrantedtoPlacementAgentInPrivatePlacementFiveMember | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 2,850 | ' |
Weighted average exercise price | ' | $22.50 | ' |
Date of Expiration | ' | 9-Feb-15 | ' |
Granted to investor in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 638 | ' |
Weighted average exercise price | ' | $22.50 | ' |
Date of Expiration | ' | 18-Mar-15 | ' |
Granted to financial investment advisor | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 10,000 | ' |
Weighted average exercise price | ' | $15 | ' |
Date of Expiration | ' | 10-Feb-13 | ' |
Granted to financial investment advisor | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 1,037 | ' |
Weighted average exercise price | ' | $20 | ' |
Date of Expiration | ' | 3-Mar-13 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 24,576 | ' |
Weighted average exercise price | ' | $15 | ' |
Date of Expiration | ' | 4-Jan-13 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 24,576 | ' |
Weighted average exercise price | ' | $25 | ' |
Date of Expiration | ' | 4-Jan-13 | ' |
Granted to placement agent in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 1,813 | ' |
Weighted average exercise price | ' | $15 | ' |
Date of Expiration | ' | 4-Jan-13 | ' |
Granted to placement agent in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 1,813 | ' |
Weighted average exercise price | ' | $25 | ' |
Date of Expiration | ' | 4-Jan-13 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 25,500 | ' |
Weighted average exercise price | ' | $15 | ' |
Date of Expiration | ' | 3-Feb-13 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 28,000 | ' |
Weighted average exercise price | ' | $25 | ' |
Date of Expiration | ' | 3-Feb-13 | ' |
Granted to placement agent in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 125 | ' |
Weighted average exercise price | ' | $15 | ' |
Date of Expiration | ' | 3-Feb-13 | ' |
Granted to placement agent in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 125 | ' |
Weighted average exercise price | ' | $25 | ' |
Date of Expiration | ' | 3-Feb-13 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 25,000 | ' |
Weighted average exercise price | ' | $15 | ' |
Date of Expiration | ' | 8-Feb-13 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 25,000 | ' |
Weighted average exercise price | ' | $25 | ' |
Date of Expiration | ' | 8-Feb-13 | ' |
Granted to investors in private placement | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 95,959 | ' |
Weighted average exercise price | ' | $30 | ' |
Date of Expiration | ' | 7-Dec-14 | ' |
Equity Warrant | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 517,989 | ' |
Weighted average exercise price | ' | $20 | ' |
Weighted average time to expiration in years | ' | '1 year 2 months 5 days | ' |
Warrants Outstanding | ' | ' | ' |
Warrants | ' | ' | ' |
Number of Shares Exercisable | ' | 124,004 | ' |
Weighted average exercise price | ' | $20.10 | ' |
Weighted average time to expiration in years | ' | '3 years 1 month 17 days | ' |
WARRANTS_Details_3
WARRANTS (Details 3) (USD $) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Shares | ' | ' | ' |
Beginning Balance | 1,254,004 | 795,753 | ' |
Granted | 9,175 | 702,034 | ' |
Exercised | ' | -16,546 | ' |
Forfeited or expired | -212,725 | -184,237 | ' |
Ending Balance | 1,050,454 | 1,254,004 | 7,527,529 |
Weighted-Average Exercise Price | ' | ' | ' |
Beginning Balance | $20.10 | $19.20 | ' |
Granted | 12.6 | 14.4 | ' |
Exercised | ' | 12.8 | ' |
Forfeited or expired | 17.69 | 19 | ' |
Ending Balance | $20.46 | $20.10 | ' |
WARRANTS_Details_Narrative
WARRANTS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Warrants | ' | ' |
Warrants issued | 8,655,000 | 11,191,000 |
Warrant fair value | $4,840,000 | $41,000 |
Warrants to purchase common stock | 16,546 | 661,530 |
Warrants to purchase common stock, cash proceeds | 212,000 | 6,628,000 |
Common stock exercised | ' | 141,947 |
Common stock issued | ' | 74,425 |
Deemed dividends | ' | 4,471,631 |
Warrant Holder | ' | ' |
Warrants | ' | ' |
Warrants to purchase common stock | ' | 454,983 |
Warrants to purchase common stock, cash proceeds | ' | $5,207,239 |
Minimum | ' | ' |
Warrants | ' | ' |
Warrants issued term | '2 years | '2 years |
Maximum | ' | ' |
Warrants | ' | ' |
Warrants issued term | '5 years | '5 years |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Income Taxes Details | ' | ' |
Net operating loss carryforwards | $24,428,000 | $19,913,000 |
Research credit carryforward | 1,486,000 | 1,344,000 |
Acquired intangible assets, net | -3,724,000 | -3,781,000 |
Restricted stock and warrants | 222,000 | ' |
Other temporary differences | 219,000 | 156,000 |
Total deferred tax assets, net | 22,631,000 | 17,632,000 |
Valuation allowance | -22,631,000 | -17,632,000 |
Net deferred tax asset | ' | ' |
INCOME_TAXES_Details_1
INCOME TAXES (Details 1) | 12 Months Ended | ||
Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Income Taxes Details 1 | ' | ' | ' |
Income taxes benefit (expense) at statutory rate | 34.00% | 35.00% | 35.00% |
State income tax, net of federal benefit | -4.70% | -2.20% | -0.50% |
Permanent Differences | ' | ' | ' |
Gain/loss or revaluation of derivative warrant liability | 10.20% | -6.20% | 3.10% |
Stock-based compensation expense | -2.60% | -6.20% | -1.40% |
Stock issues for services | 0.00% | -1.60% | -8.60% |
Loss on extinguishment of debt | 0.00% | 0.00% | 1.60% |
Other | -2.20% | 0.00% | -3.50% |
R&D credits | 0.00% | -0.60% | 2.50% |
Change in valuation allowance | -34.70% | -21.50% | -28.20% |
Income taxes rate differences | 0.00% | 0.00% | 0.00% |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narrative) (USD $) | Dec. 31, 2012 |
Income Taxes Details Narrative | ' |
Gross federal net operating loss carryforwards | $68,500,000 |
Gross state net operating loss carryforwards | 21,000,000 |
Federal research and development tax credit carryforwards | $1,340,000 |
LICENSING_AND_OTHER_REVENUE_De
LICENSING AND OTHER REVENUE (Details Narrative) (USD $) | 12 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Dec. 31, 2011 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Handok License | Handok License | Handok License | Handok [Member] | Handok [Member] | Handok [Member] | Handok [Member] | ||||
Licensing and Other Revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum licensing term | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | ' |
Initial licensing fee | ' | ' | ' | ' | ' | ' | $500,000 | ' | $500,000 | ' |
Nonrefundable license revenue | 241,000 | ' | ' | 5,000 | 61,000 | 121,000 | 23,000 | 31,000 | 68,000 | 93,000 |
Deferred revenue recognized over next twelve months | 123,708 | 90,228 | 90,228 | ' | ' | ' | 90,000 | ' | 90,000 | ' |
Deferred revenue to be recognized after next twelve months | 61,867 | 22,557 | 90,228 | ' | ' | ' | 23,000 | ' | 23,000 | ' |
Received a licensing fee | 750,000 | ' | ' | 500,000 | ' | ' | ' | ' | ' | ' |
Revenue relates to product development costs | $145,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
CREDIT_FACILITY_WITH_PLATINUMM2
CREDIT FACILITY WITH PLATINUM-MONTAUR LIFE SCIENCES, LLC (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Nov. 06, 2012 | Oct. 17, 2012 | Sep. 20, 2012 | Sep. 14, 2012 | Aug. 31, 2012 | |
Notes to Financial Statements | ' | ' | ' | ' | ' | ' | ' | ' |
Loan agreement initial credit facility | ' | ' | ' | ' | ' | ' | ' | $20,000,000 |
Loan agreement Maximum Draw Amount | ' | ' | ' | ' | ' | ' | ' | 5,000,000 |
Promissory note period | ' | ' | ' | ' | ' | ' | ' | '5 years |
Principal interest rate per annum | ' | ' | ' | ' | ' | ' | ' | 10.00% |
Accrued interest expenses | 3,000 | 3,000 | 61,000 | ' | ' | ' | ' | ' |
Cash and cash equivalent minimum requirements on credit facility | ' | ' | ' | ' | ' | ' | ' | 5,000,000 |
Commitment warrant value, shares | ' | ' | ' | ' | ' | ' | ' | 400,000 |
Fair value Commitment warrant, recorded as deferred financing costs | ' | ' | ' | ' | ' | ' | ' | 4,840,000 |
Commitment warrant period | ' | ' | ' | ' | ' | ' | ' | '5 years |
Commitment warrant exercise price | ' | ' | ' | ' | ' | ' | ' | $20 |
Fair value Commitment warrant, current portion | ' | ' | ' | ' | ' | ' | ' | 968,004 |
Fair value Commitment warrant, current portion period | ' | ' | ' | ' | ' | ' | ' | '1 year |
Amortization of fair value Commitment warrant | 242,000 | 726,000 | 323,000 | ' | ' | ' | ' | ' |
Funds borrowed pursuant to the Credit Facility | ' | ' | ' | ' | ' | ' | ' | 1,000,000 |
Purchase warrant value per 1,000,000 borrowed amount, shares | ' | ' | ' | ' | ' | ' | ' | 100,000 |
Purchase warrant value term | ' | ' | ' | ' | ' | ' | ' | '5 years |
Commitment Warrant exercise price maximimum | ' | ' | ' | ' | ' | ' | ' | $40 |
Commitment Warrant exercise price minimum | ' | ' | ' | ' | ' | ' | ' | $20 |
Commitment Warrant beneficial ownership maximum | ' | ' | ' | ' | ' | ' | ' | 49.90% |
Commitment Warrant beneficial ownership minimum | ' | ' | ' | ' | ' | ' | ' | 99.90% |
Loan agreement September Request | ' | ' | ' | ' | ' | ' | 3,000,000 | ' |
September Request amount received | ' | ' | ' | 1,500,000 | 500,000 | 1,000,000 | ' | ' |
September Request warrant issued | ' | ' | ' | 150,000 | 50,000 | 100,000 | ' | ' |
September Request warrant term | ' | ' | ' | '5 years | '5 years | '5 years | ' | ' |
Warrant exercise price September Request | ' | ' | ' | $21.10 | $22.70 | $21.30 | ' | ' |
Fair value September Request | ' | ' | ' | ' | ' | 3,455,000 | ' | ' |
Debt Discount | ' | ' | ' | ' | ' | 3,000,000 | ' | ' |
Interest Expense | ' | ' | ' | ' | ' | 455,000 | ' | ' |
Amortization September request | 5,556 | 5,556 | ' | ' | ' | ' | ' | ' |
Repayment of outstanding draws | 3,113,366 | ' | ' | ' | ' | ' | ' | ' |
Interest accrued | 113,366 | ' | 61,000 | ' | ' | ' | ' | ' |
Non-cash interest expense | 2,879,166 | ' | ' | ' | ' | ' | ' | ' |
Common Stock shares purchased | ' | ' | 4,000,000 | ' | ' | ' | ' | ' |
Common Stock shares exercise price | ' | ' | $2 | ' | ' | ' | ' | ' |
Fair value of the warrant | ' | ' | 4,840,000 | ' | ' | ' | ' | ' |
Amortization of the deferred financing cost | ' | ' | 323,000 | ' | ' | ' | ' | ' |
Fair value of note payable | ' | ' | 3,000,000 | ' | ' | ' | ' | ' |
Interest rate | ' | ' | 10.00% | ' | ' | ' | ' | ' |
Amortization of the debt discount | ' | ' | 121,000 | ' | ' | ' | ' | ' |
Excess of fair value of the warrants | ' | ' | 455,000 | ' | ' | ' | ' | ' |
Carrying value of the note payable | ' | ' | $120,834 | ' | ' | ' | ' | ' |
LITIGATION_Details_Narrative
LITIGATION (Details Narrative) (USD $) | Dec. 31, 2011 | Sep. 30, 2011 |
Litigation Details Narrative | ' | ' |
Accrued settlement liability | ' | $400,000 |
Outstanding settlement accrued liability | 290,000 | ' |
Settlement payment | $125,000 | ' |
Shares of restricted Common Stock | 100,000 | ' |