Echo Therapeutics (ECTE) 10-K 30 Mar 16 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Mar. 21, 2016	Jun. 30, 2015
Document And Entity Information
Entity Registrant Name	Echo Therapeutics, Inc.
Entity Central Index Key	1,031,927
Document Type	10-K
Document Period End Date	Dec. 31, 2015
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	Smaller Reporting Company
Entity Public Float			$ 16,047,016
Entity Common Stock, Shares Outstanding		11,124,496
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,015

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 56,210	$ 1,278,941
Prepaid and other	244,534	490,824
Total current assets	300,744	1,769,765
Property and equipment, net	267,671	1,138,593
Other assets:
Intangible assets, net	0	9,625,000
Cash restricted pursuant to letters of credit	236,425	52,488
Other assets	250	9,990
Total other assets	236,675	9,687,478
Total assets	805,090	12,595,836
Current liabilities:
Accounts payable	2,176,083	1,801,469
Accrued and other	602,345	968,392
Bridge loans payable	330,000	0
Derivative warrant liability	127,000	208,155
Total current liabilities	3,235,428	2,978,016
Deferred revenue from licensing arrangements, net of current portion	95,535	95,535
Total liabilities	3,330,963	$ 3,073,551
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, 150,000,000 shares authorized; issued and outstanding 11,124,496 and 12,629,695 shares, respectively	111,243	$ 126,295
Additional paid-in capital	147,412,559	137,292,157
Accumulated deficit	(150,129,933)	(127,932,066)
Total stockholders' equity (deficit)	(2,525,873)	9,522,285
Total liabilities and stockholders' equity (deficit)	805,090	12,595,836
SeriesCPreferredStock [Member]
Stockholders' equity:
Preferred Stock, $0.01 par value; 40,000,000 shares authorized: C - 10,000 shares authorized; issued and outstanding 1,000 shares; D - 3,600,000 shares authorized; issued and outstanding 1,000,000 shares; E - 1,748,613 shares authorized, issued and outstanding; F - 6,000,000 shares authorized; issued and outstanding 5,276,180 and 840,336 shares, respectively	10	10
SeriesDPreferredStock [Member]
Stockholders' equity:
Preferred Stock, $0.01 par value; 40,000,000 shares authorized: C - 10,000 shares authorized; issued and outstanding 1,000 shares; D - 3,600,000 shares authorized; issued and outstanding 1,000,000 shares; E - 1,748,613 shares authorized, issued and outstanding; F - 6,000,000 shares authorized; issued and outstanding 5,276,180 and 840,336 shares, respectively	10,000	10,000
Series E Preferred Stock [Member]
Stockholders' equity:
Preferred Stock, $0.01 par value; 40,000,000 shares authorized: C - 10,000 shares authorized; issued and outstanding 1,000 shares; D - 3,600,000 shares authorized; issued and outstanding 1,000,000 shares; E - 1,748,613 shares authorized, issued and outstanding; F - 6,000,000 shares authorized; issued and outstanding 5,276,180 and 840,336 shares, respectively	17,486	17,486
Series F Preferred Stock [Member]
Stockholders' equity:
Preferred Stock, $0.01 par value; 40,000,000 shares authorized: C - 10,000 shares authorized; issued and outstanding 1,000 shares; D - 3,600,000 shares authorized; issued and outstanding 1,000,000 shares; E - 1,748,613 shares authorized, issued and outstanding; F - 6,000,000 shares authorized; issued and outstanding 5,276,180 and 840,336 shares, respectively	$ 52,762	$ 8,403

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
Stockholders' Equity:
Convertible Preferred Stock: par value	$ 0.01	$ 0.01
Convertible Preferred Stock: authorized	40,000,000	40,000,000
Common stock, par value	$ .01	$ .01
Common stock, authorized	150,000,000	150,000,000
Common stock, outstanding	11,124,496	12,629,695
Common stock, Share Issued	11,124,496	12,629,695
SeriesCPreferredStock [Member]
Stockholders' Equity:
Convertible Preferred Stock: authorized	10,000	10,000
Convertible Preferred Stock: outstanding	1,000	9,974.185
Convertible Preferred Stock: Shares Issued	1,000
SeriesDPreferredStock [Member]
Stockholders' Equity:
Convertible Preferred Stock: authorized	3,600,000	3,600,000
Convertible Preferred Stock: outstanding	1,000,000	3,006,000
Convertible Preferred Stock: Shares Issued	1,000,000
Series E Preferred Stock [Member]
Stockholders' Equity:
Convertible Preferred Stock: authorized	1,748,613
Series F Preferred Stock [Member]
Stockholders' Equity:
Convertible Preferred Stock: authorized	6,000,000
Convertible Preferred Stock: outstanding	5,276,180
Convertible Preferred Stock: Shares Issued	840,336

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Licensing revenues	$ 0	$ 57,321
Operating expenses:
Research and development	2,788,938	4,634,287
Selling, general and administrative	4,325,645	7,350,231
Impairment charge	9,625,000	0
Loss on disposal of property and equipment	278,816	1,114
Depreciation and amortization	521,860	392,727
Total operating expenses	17,540,259	12,378,359
Loss from operations	(17,540,259)	(12,321,038)
Other income (expense):
Financing loss	(4,720,000)	0
Amortization of deferred financing costs	0	(3,549,328)
Interest expense	(15,343)	(1,176)
Other income	0	1,888
Gain on revaluation of derivative warrant liability	81,155	911,000
Other income (expense), net	(4,654,188)	(2,637,616)
Net loss before taxes	(22,194,447)	(14,958,654)
State income taxes	3,420	4,000
Net loss	(22,197,867)	(14,962,654)
Deemed dividend on beneficial conversion feature convertible preferred stock	0	(350,000)
Net loss applicable to common shareholders	$ (22,197,867)	$ (15,312,654)
Net loss per common share, basic and diluted	$ (1.98)	$ (1.24)
Basic and diluted weighted average common shares outstanding	11,231,418	12,308,254

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - USD ($)	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance, Value at Dec. 31, 2013	$ 27,496	$ 117,764	$ 132,192,648	$ (112,969,412)	$ 19,368,496
Beginning balance, Shares at Dec. 31, 2013	2,749,613	11,776,578
Proceeds from issuance of Common Stock and warrants, net, Value		$ 8,727	2,341,273		2,350,000
Proceeds from issuance of Common Stock and warrants, net, Shares		872,728
Fair value of Common Stock issued for services, Value		$ 26	8,378		8,404
Fair value of Common Stock issued for services, Shares		2,636
Issuance of Series F Preferred Stock and warrants, net of cash issuance costs, Value	$ 8,403		934,993		943,396
Issuance of Series F Preferred Stock and warrants, net of cash issuance costs, Shares	840,336
Capital contribution			440,675		440,675
Share-based compensation, net of restricted stock cancellations, Value		$ (222)	1,374,190		1,373,968
Share-based compensation, net of restricted stock cancellations, Shares		(22,247)
Net Loss				(14,962,654)	(14,962,654)
Ending Balance at Dec. 31, 2014	$ 35,899	$ 126,295	137,292,157	(127,932,066)	9,522,285
Ending Balance, Shares at Dec. 31, 2014	3,589,949	12,629,695
Exchange Common Stock for Series F, Value	$ 15,000	$ (15,000)			0
Exchange Common Stock for Series F, Shares	1,500,000	(1,500,000)
Issuance of Series F Preferred Stock and warrants, net of cash issuance costs, Value	$ 23,877		7,353,623		7,377,500
Issuance of Series F Preferred Stock and warrants, net of cash issuance costs, Shares	2,387,667
Capital contribution			59,325		59,325
Issuance of Series F pursuant to Reimbursement Agreement, Value	$ 5,482		1,796,518		1,802,000
Issuance of Series F pursuant to Reimbursement Agreement, Shares	548,177
Share-based compensation, net of restricted stock cancellations, Value		$ (52)	910,936		910,884
Share-based compensation, net of restricted stock cancellations, Shares		(5,199)
Net Loss				(22,197,867)	(22,197,867)
Ending Balance at Dec. 31, 2015	$ 80,258	$ 111,243	$ 147,412,559	$ (150,129,933)	$ (2,525,873)
Ending Balance, Shares at Dec. 31, 2015	8,025,793	11,124,496

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net loss	$ (22,197,867)	$ (14,962,654)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	521,860	392,727
Amortization of deferred financing costs	0	(3,549,328)
Share-based compensation, net	910,884	1,373,968
Fair value of common stock issued for services	0	8,404
Gain on revaluation of derivative warrant liability	(81,155)	(911,000)
Warrant repricing charged to legal expense	328,000	0
Loss on disposals of assets	278,816	1,114
Impairment charge	9,625,000	0
Financing loss	4,720,000	0
Changes in assets and liabilities:
Prepaid expenses and other	(25,911)	(441,603)
Accounts payable	656,556	765,149
Deferred revenue from licensing arrangements	0	(57,321)
Accrued and other	183,953	(442,715)
Net cash used in operating activities	(5,079,864)	(10,724,603)
Cash Flows from Investing Activities:
Purchase of property and equipment	(55,836)	(36,627)
(Increase) decrease in restricted cash	(183,938)	250,000
Decrease in security deposit	0	2,076
Proceeds on disposal of property and equipment	126,082	0
Net cash provided by (used in) investing activities	(113,692)	215,449
Cash Flows From Financing Activities:
Proceeds from equity issuances	3,581,500	3,293,397
Proceeds from bridge loans	330,000	0
Principal payments on capital lease obligations	0	(1,362)
Capital contribution	59,325	440,675
Net cash provided by financing activities	3,970,825	3,732,710
Net decrease in cash and cash equivalents	(1,222,731)	(6,776,444)
Cash and cash equivalents, beginning of year	1,278,941	8,055,385
Cash and cash equivalents, end of year	56,210	1,278,941
Supplemental disclosure of cash flow information:
Cash paid for interest	15,522	2,154
Cash paid for income taxes	4,110	0
Supplemental disclosure of non-cash financing transactions:
Deemed dividend on beneficial conversion feature of convertible preferred stock	0	350,000
Director’s fees payable offset against prepaid insurance	272,200
Accrued legal fees settled with stock	550,000	0
Security deposit offset against accounts payable	9,740	0
Conversion of convertible preferred stock into Common Stock at par value	$ 15,000	$ 0

ORGANIZATION AND BASIS OF PRESE

ORGANIZATION AND BASIS OF PRESENTATION	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
ORGANIZATION AND BASIS OF PRESENTATION	Echo Therapeutics, Inc. (the "Company") is a medical device company with expertise in advanced skin permeation technology. The Company is developing its non-invasive, wireless continuous glucose monitoring (CGM) system with potential use in the wearable-health consumer market and the diabetes outpatient market. A significant longer-term opportunity may also exist in the hospital setting. Echo has also developed its needle-free skin preparation device as a platform technology that allows for enhanced skin permeation enabling extraction of analytes, such as glucose, enhanced delivery of topical pharmaceuticals and other applications. 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 and commitments in the normal course of business. 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 was retroactively restated to reflect this reverse stock split.

LIQUIDITY AND MANAGEMENTS' PLAN

LIQUIDITY AND MANAGEMENTS' PLANS	12 Months Ended
	Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
LIQUIDITY AND MANAGEMENTS' PLANS	As of December 31, 2015, the Company had cash of $56,210, working capital deficit of $2,934,684, and an accumulated deficit of $150,129,933. The Company continues to incur recurring losses from operations. Our losses have resulted principally from costs incurred in connection with our research and development activities and from general and administrative costs associated with our operations. We also expect to have negative cash flows for the foreseeable future as we fund our operating losses and capital expenditures. This will result in decreases in our working capital, total assets and stockholders’ equity, which may not be offset by future funding. The Company will need to obtain proceeds under its current financing arrangement and secure additional capital to fund its product development, research, manufacturing and clinical programs in accordance with its current planned operations. The Company has funded its operations in the past primarily through debt and equity issuances. Management intends to utilize its current financing arrangement once approved by stockholders on April 14, 2016, and will continue to pursue additional financing to fund its operations. Management believes that it will be successful in obtaining proceeds from their current financing arrangement and raising additional capital. No assurances can be given that additional capital will be available on terms acceptable to the Company. The accompanying financial statements do not include any adjustments that might result from the outcome of the uncertainty. Subsequent to December 31, 2015, the Company initially received cash proceeds of $832,000 from a $5,145,000 Secured Convertible Note financing it entered on January 29, 2016. See Note 8.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2015
Summary Of Significant Accounting Policies
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(TM)” (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 consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management's estimates are based on historical experience, facts and circumstances available at the time, and various other assumptions that are believed to be reasonable under the circumstances. Significant estimates include accounting for the valuation of intangible assets, derivatives, share based compensation and valuation allowances related to deferred income taxes. The Company periodically reviews these matters and reflects changes in estimates as appropriate. Actual results could materially differ 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 at a major banking institution as of December 31, 2015 and 2014. The Company maintains its cash in bank deposit accounts which, at times, may exceed the federally insured limits. The Company has never experienced any previous losses related to these uninsured balances. Restricted cash consists of letters of credit in favor of its two landlords as of December 31, 2015. Intangible Assets and Other Long-Lived Assets The Company records acquired intangible assets at the acquisition date fair value. Intangible assets related to technology are expected to be amortized over the period of expected benefit and will commence upon revenue generation. The Company reviews intangible assets at least annually and whenever events or circumstances change that indicated impairment may have occurred to determine if any adverse conditions exist 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. While the Company uses available information to prepare estimates and to perform impairment evaluations, actual results could differ significantly from these estimates or related projections, resulting in impairment related to recorded balances. 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. As a result, the Company reviewed its intangibles for impairment and recorded a $9.625 million impairment charge, or the full value of its intangibles, on the consolidated statement of operations in the second quarter of 2015. 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. 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. Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. The Company expenses normal maintenance and repair costs as incurred. Gain and loss on disposal of property and equipment is recognized in the period incurred. Leasehold improvements are amortized over the life of the lease or the related asset, whichever is shorter. Share-Based Payments The Company recognizes compensation costs, net of estimated forfeitures, 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. Forfeitures are initially estimated based on historical information and subsequently updated over the life of the awards to ultimately reflect actual forfeitures. As a result, changes in forfeiture activity can influence the amount of stock compensation cost recognized from period to period. 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. The fair value of options is calculated primarily using the Black-Scholes option pricing model. This option valuation model requires input of assumptions including, among others, the volatility of our stock price, the expected life of the option and the risk-free interest rate. We estimate the volatility of our stock price using historical prices. We estimate the expected life of our option using the average of the vesting period and the contractual term of the option. The estimated forfeiture rate is based on historical forfeiture information as well as subsequent events occurring prior to the issuance of the financial statements. Because our stock options have characteristics significantly different from those of traded options, and because changes in the input assumptions can materially affect the fair value estimate, the existing model may not necessarily provide a reliable single measure of fair value of our stock options. In calculating the compensation expense for certain more complex stock options granted, we utilize a binomial lattice-based valuation model. Lattice-based option valuation models incorporate ranges of assumptions for inputs and those ranges are disclosed in the preceding table. Expected volatilities are based on a combination of historical volatility of our stock and implied volatilities of call options on our stock. We use historical data to estimate option exercise and employee termination patterns within the valuation model. The expected life of options granted is derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant. 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, 2015 and 2014 consists solely 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. The Company wrote off its intangible asset in 2015; however this is the only such adjustment in the years ended December 31, 2015 and 2014. 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 payable and capital lease obligation, approximates their carrying value due to the short-term nature of these instruments and their market terms. 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 diagnostic medical devices. As of December 31, 2015 and 2014, all of the Company’s assets were located in the United States. 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 and New Jersey state income tax. Tax years subsequent to 2011 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 were no uncertain tax position liabilities recorded at December 31, 2015 and 2014. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2015 and 2014, 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. From time to time, the Company 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. Distinguishment of Liabilities from Equity The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity Initial Measurement The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received. For warrants that are recorded as equity, the Company uses a Black Scholes model. Subsequent Measurement The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income. The Company uses the Black Scholes pricing method, which is not materially different from a binomial lattice valuation methodology utilizing Level 3 inputs, to determine the fair value of derivative liabilities resulting from warrants that are recognized as liabilities. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. In July 2015, the Financial Accounting Standards Board (the "FASB") finalized a one year delay in the effective date of this standard, which will now be effective for us on January 1, 2018, however early adoption is permitted any time after the original effective date, which for us is January 1, 2017. We have not yet selected a transition method and are currently evaluating the impact of ASU 2014-09 on our condensed consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, which revises the guidance in ASC 740, Income Taxes, to simplify the presentation of deferred income taxes and require that deferred tax liabilities and assets be classified as non-current in the statement of financial position. The guidance is to be applied either prospectively or retrospectively, and is effective for reporting periods (interim and annual) beginning after December 15, 2016 for public companies. Early adoption is permitted. The implementation of this ASU is not expected to have a material impact on our consolidated financial position or results of operations. In January 2016, the FASB issued ASU 2016-01, which revises the guidance in ASC 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities, and provides guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2017, for public companies. We are currently assessing the potential impact of this ASU on our consolidated financial position and results of operations. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	12 Months Ended
	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT	The principal categories and estimated useful lives of property and equipment at December 31 were: 2015 2014 Estimated Useful Lives Computer equipment $ 332,764 $ 334,865 3 Office and laboratory equipment 628,726 740,177 3-5 Furniture and fixtures 228,099 755,444 7 Manufacturing equipment 61,998 111,980 5 Leasehold improvements 41,968 825,589 3-7 Total property and equipment 1,293,555 2,768,055 Less accumulated depreciation and amortization 1,025,884 1,629,462 Property and equipment, net $ 267,671 $ 1,138,593 The Company recorded a loss on disposal of $278,816, primarily in connection with its corporate office and research facility relocations to Iselin, New Jersey and to Littleton, Massachusetts, respectively. In connection with its relocation from its Franklin, Massachusetts to Littleton, Massachusetts research facility, the Company sold excess furniture to the incoming tenant. Additionally, each move required the Company to write-off its leasehold improvements. See Note 6.

IMPAIRMENT OF INTANGIBLES

IMPAIRMENT OF INTANGIBLES	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
IMPAIRMENT OF INTANGIBLES	In connection with the preparation of the financial statements in the second quarter of fiscal 2015, the Company concluded it had a triggering event requiring assessment of impairment for its intangibles in conjunction with an expected out-licensing strategy that new management had hoped to pursue. Extremely limited financial resources coupled with the remaining short patent lives, discussions with previous consultants regarding their progress with bringing value to the intangibles, a review of competitive formulations and discussions with new consultants to explore out-licensing strategies, led newly-hired corporate management to conclude it was best to abandon its initial hope to garner value from its intangibles. Accordingly, due to this change in strategy, no monies are now expected to be obtained relating to the Azone Drug Master File, the Durhalieve and MAZ Investigational New Drug applications and the MAZ Orphan Drug application (collectively, the AzoneTS-based technology acquired in 2007) intangibles. As a result, the Company reviewed the intangibles for impairment and recorded a $9.625 million impairment charge, or the full value of the intangibles, in the consolidated statement of operations in the second quarter of 2015.

OPERATING LEASE COMMITMENTS

OPERATING LEASE COMMITMENTS	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
OPERATING LEASE COMMITMENTS	The Company leased 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 terminated this lease early and moved to Iselin, New Jersey on January 15, 2015 where the Company has leased 2,800 square feet of office space for 38 months at a monthly effective base rental of approximately $7,300. The Company posted a $77,000 Letter of Credit to secure the lease which is reduced to $38,500 after nineteen months of occupancy, assuming no defaults, as defined. The Company leased 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. On July 17, 2015, the Company entered into a Lease Termination Agreement (the “Termination Agreement”), whereby the Company paid a fee of $150,000 to terminate this lease. The lease termination was effective as of May 31, 2015. On May 5, 2015, the Company signed a lease for approximately 10,000 square feet for a research and development facility in Littleton, Massachusetts. The lease is for 65 months. Effective base monthly rent over the lease term will be $11,470. The Company moved to the new facility from its Franklin, Massachusetts location on July 3, 2015. The Company agreed to post a $50,000 Letter of Credit until July 1, 2015 while the Littleton facility was being improved. Such amount was increased to $150,000 on July 1, 2015. The Letter of Credit is expected to be reduced to $50,000 after 24 months of timely lease payments. The Company leased a corporate apartment in Franklin, Massachusetts through September 2014 and a corporate apartment in Philadelphia, Pennsylvania on a month-to-month basis, also in 2014. Future minimum lease payments for each of the next five years under these operating leases at December 31, 2015 are approximately as follows: Amount Year Ending December 31, 2016 $ 208,531 2017 237,797 2018 204,515 2019 154,513 2020 143,959 Total $ 949,315 The Company’s facilities lease expense was approximately $293,000 and $514,000 for the years ended December 31, 2015 and 2014, respectively.

DERIVATIVE WARRANT LIABILITY

DERIVATIVE WARRANT LIABILITY	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
DERIVATIVE WARRANT LIABILITY	In August 2012, the Company and Platinum-Montaur Life Sciences, LLC (PM) entered into a Loan Agreement whereby PM agreed to provide a credit facility (CF) to the Company of up to $20,000,000 dependent on the 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 draws under the agreement bore interest at 10% per annum. In connection with the CF, the Company issued PM 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” or “CW”). The CW was valued at $4,840,000 and recorded as a deferred financing asset and a derivative warrant liability. The Loan Agreement called for each $1,000,000 of funds borrowed pursuant to the Credit Facility, the Company will would issue PM 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 were immediately exercisable and had a term of five years from the issue date. Obligations under the CF were guaranteed by the Company’s subsidiary, Sontra Medical, Inc. The deferred financing cost was then amortized over the life of the CF. Over a three month period beginning in September 2012, three separate draws totaling $3,000,000 were taken under the CF and five year warrants to purchase 300,000 shares of Common Stock were issued at prices ranging from $21.10 to $22.70. The warrants were valued at $3,455,000, and accreted to interest expense over the life of the draws. The CF was terminated on October 30, 2014. $3,549,325 was charged to interest expense in 2014. On February 12, 2015, the Company agreed to re-price the warrants to $7.50 per share in connection with the Reimbursement Agreement (see Note 8). The Company recorded a non-cash charge to legal expense for $328,000 representing the cost of re-pricing the Derivative Warrants. As a result of having warrants to purchase 700,000 shares of our Common Stock at $7.50 outstanding, issued in connection with a 2012 Credit Facility (which was terminated in October 2014), we are required to record the changes in the value of these derivative warrants through their expirations in November 2017. The table below presents the changes in the derivative warrant liability, which is measured at fair value on a recurring basis and classified as Level 3 in fair value hierarchy: 2015 2014 Derivative warrant liability as of January 1 $ 208,155 $ 1,119,155 Gain on revaluation (81,155 ) (911,000 ) Derivative warrant liability as of September 30 $ 127,000 $ 208,155 None of the derivative warrants were exercised in 2015 or 2014 pursuant to cashless exercise provisions.

FINANCINGS

FINANCINGS	12 Months Ended
	Dec. 31, 2015
Debt Disclosure [Abstract]
FINANCINGS	In December 2013, in connection with a licensing transaction, the Company entered into (i) a Securities Purchase Agreement with Platinum Partners Value Arbitrage Fund L.P. (PPVA) and Platinum Partners Liquid Opportunity Master Fund L.P. (PPLO, and together with PPVA, the “Platinum Partners”) (the “Platinum Securities Purchase Agreement”) and (ii) a Securities Purchase Agreement with Medical Technologies Innovation Asia, LTD. (“MTIA”) and Beijing Sino Tau Shang Pin Tech and Development Corp. (“MTIA Affiliate”, and together with MTIA, the “China Purchasers”) (the “MTIA Securities Purchase Agreement”, and together with the Platinum Securities Purchase Agreement, the “Securities Purchase Agreements” or “SPA”). Pursuant to the Platinum SPA and subject to certain conditions, the Company agreed to nominate and use its reasonable best efforts to cause to be elected and cause to remain as a director on the Company’s board of directors (the “Board”) until the Company’s 2014 annual meeting of stockholders, one individual designated by the Platinum Partners (“Platinum Partners Designee”). Additionally, subject to certain conditions, the Company agreed to nominate, and solicit for election by the stockholders, the Platinum Partners Designee at the Company’s 2014 annual meeting of stockholders. Under the terms of the MTIA Securities Purchase Agreement, as amended, upon the Company’s receipt of all of the proceeds from the China Purchasers, the Company will allow one individual designated by the China Purchasers to attend meetings of the Board as an observer until the date of the 2015 annual meeting of stockholders. So long as the Platinum Partners hold at least ten percent (10%) of the outstanding Common Stock, they have a right, subject to certain conditions, to purchase debt or equity securities of any kind that the Company may determine to issue in the future. The China Purchasers have the same right. This subscription right terminates upon a consolidation, merger, restructuring, reorganization, recapitalization or other form of acquisition of or by the Company that result in a change of control. The Platinum Partners and the China Purchasers are also entitled to certain piggy-back registration rights. Pursuant to the MTIA Securities Purchase Agreement in December 2013, the Company had intended to sell 1,818,182 shares of its Common Stock and issue Warrants to purchase 181,818 shares of its Common Stock to MTIA for an aggregate purchase price of $5,000,000. As of June 30, 2014, the Company had not received the full proceeds of the sale of the securities from MTIA with the parties having previously extended the due date for the receipt of all such proceeds to March 27, 2014, from the original closing date of December 12, 2013. MTIA failed to provide funds in a timely manner, resulting in its material breach of the MTIA Stock Purchase Agreement. Instead, the Company issued 872,728 shares of Common Stock and Warrants to purchase 87,274 shares of Common Stock in exchange for $2,400,000 in gross proceeds which were received between February and April 2014, of which the last installment was paid to the Company on April 15, 2014. The Company incurred issuance costs of $50,000. The relative fair value of Warrants issued to MTIA to purchase 87,274 shares of Common Stock was determined to be approximately $174,396 and was recorded as a debit and a credit to Additional Paid in Capital. On December 18, 2014, Platinum Partners Value Arbitrage Fund L.P. (PPVA) agreed to purchase together with two other entities, and one individual, 840,336 shares of Series F Convertible Preferred Stock (Series F) for an aggregate purchase price of $1,000,000, net of $56,604 of deferred financing costs. Five year Series F warrants to purchase the same number of shares of our common stock with an exercise price of $3.00 per share were issued to the investors. Pursuant to a Letter of Agreement, settling certain board related matters under dispute, the investors further agreed to fund an additional $3,000,000 in 2015. The investors determined that the purchase price of the Series F shall be equal to the dollar amount of each investment divided by the lesser of (i) the closing bid price of the Common Stock immediately preceding each Installment, as the case may be, or (ii) $1.50, provided that the Series F and the Series F Warrants will not be convertible to the extent the conversion would result in the holder beneficially owning more than 19.9% of the then outstanding shares of the Issuer, unless stockholder approval has been obtained for the issuance of the shares of Common Stock issuable upon conversion of the Series F Preferred Stock or Warrants in accordance with Nasdaq rules. The Series F also contains customary provisions as well as an additional restriction on conversion such that the Series F or Series F Warrants will not be convertible if the conversion would result in the holder beneficially owning more than 9.9% of the then outstanding shares of the Issuer. In connection with the issuance of this Series F, the conversion feature of Series F 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 of $350,000 at December 31, 2014. Capital Contribution Late in the third quarter of 2014 the research and development operations of the Company were suspended and key personnel were laid off. In October 2014, two of our directors received a non-recourse loan for $500,000 from PPVA. The purpose of the loan was to provide the directors monies to advance their plan for the Company and attempt to maintain its viability during the suspension of operations. $440,675 was expended in the fourth quarter of 2014 by these directors primarily for salaries of key employees and targeted technology efforts focused on the wearable technology sector. The Company considered this expenditure by two of its directors a capital contribution since the funds were spent on matters specifically related to the operations of the Company. In February 2015, the $440,675 capital contribution together with the balance monies received in 2015, equivalent to the original $500,000 the two directors had received, was repaid by the Company to PPVA through the issuance of Series F and five-year Series F Warrants to purchase 333,333 shares of Common Stock at $3 per share. In connection with this repayment, we recorded a $924,000 non-cash charge representing the excess market value of the preferred stock and warrants above the $500,000 capital contribution. Such amount is included in the financing loss reflected on the consolidated statement of operations. Stock Issued in Exchange for Services During the year ended December 31, 2014, the Company issued 2,636 shares of Common Stock, with a fair value $8,404, to vendors in exchange for their services. The Company recorded expense related to these issuances, which represents the fair value of the related stock. Exchange of Common Stock for Series F Preferred Stock On January 9, 2015 and again on March 31, 2015, Platinum Partners Value Arbitrage Fund, L.P. (PPVA) and Platinum Partners Liquid Opportunity Fund, L.P. exchanged 843,526 and 208,884 and 356,474 and 91,116, respectively of their common shares held for Series F Preferred Stock. Based on the terms of the Series F (e.g. conversion ratio of 1:1 and no liquidation preference) the Company determined that the value of the Series F is equivalent to the common shares. Settlement of Amounts Owed for Series F Preferred Stock and Warrants On September 23, 2014, the Company announced that, as it believed that its current liquidity was insufficient to fund its needs beyond September 30, 2014, it was suspending its product development, research, manufacturing and clinical programs and operations to conserve its liquidity and capital resources. The workforce reduction due to the suspension of operations comprised approximately 70% of Echo’s workforce, leaving only administrative personnel. Affected employees were notified on September 23, 2014. The employees whose employment was terminated as part of the workforce reduction were not offered severance pay. The Company indicated that they could possibly incur additional costs not currently contemplated due to events that may occur as a result of, or that were associated with, the workforce reduction. At the time of the workforce reduction announcement, Platinum Management (NY) LLC (“Platinum”), together with its affiliates, a significant stockholder of the Company, was in the process of engaging in a proxy contest with the Company pursuant to which it sought to ultimately remove three of the then-current directors of the Company. In conjunction therewith, Platinum provided $500,000 on a non-recourse basis to two of the Company’s directors whose removal Platinum was not seeking, namely Michael Goldberg and Shepard Goldberg, which was recorded as a capital contribution (“Contribution”) in 2014. Proceeds of the Contribution were utilized for retaining certain key employees and for research and technology initiatives, all for the benefit of the Company. A small portion of the monies was not disbursed, which was transferred to the Company. At the time of the Contribution, Shepard Goldberg and Michael Goldberg agreed that, should the Contribution ultimately benefit the Company, they would use their best efforts to cause the Company to issue equity to Platinum as consideration for making the Contribution. In December 2014, as part of a negotiated settlement agreement, the three directors, whom Platinum sought to remove, resigned as directors and Platinum agreed to make a direct investment in the Company. In connection with the proxy contest, Platinum expended $550,000 on legal representation and related expenses. In its proxy statement, Platinum advised stockholders that it would pay all the costs associated with the solicitation of proxies, but would seek reimbursement from the Company, and not submit such reimbursement to a vote of stockholders. On February 12, 2015, the Company agreed to reimburse Platinum for its Contribution and the Expenses it incurred in the proxy fight. In this regard, the Board of Directors of the Company determined that both the Contribution and Expenses together resulted in the Company being able to continue operations and put into place a strong management team. Pursuant to a Reimbursement Agreement, dated February 12, 2015 (the “Reimbursement Agreement”), Platinum received 548,177 shares of Series F Convertible Preferred Stock (consisting of 333,333 shares of Series F for the $500,000 capital contribution and 214,844 shares of Series F for the $550,000 of legal expenses they incurred, for a Series F share total of 548,177) and Warrants to purchase 333,333 shares of common stock of the Company. These Warrants expire in five years and have a $3.00 per share exercise price. Additionally, the Company agreed to re-price 700,000 warrants, originally disbursed to Platinum in connection with its August 31, 2012 Loan Agreement, and referred to as the Derivative Warrants, then priced in the $20.00 to $22.70 range per share, to $7.50 per share. The Company recorded a non-cash charge to legal expense for $328,000 representing the cost of re-pricing the Derivative Warrants. Additionally, the Company recorded a charge to financing expense of $924,000 representing the additional value given to the investors as a result of the closing market price of $2.56 being above the deal price of $1.50 used for the reimbursement of the $500,000 capital contribution. The shares issued for the legal expenses were done at the market close of the Company’s Common Stock on the date of the Reimbursement Agreement. During 2015, the Company received $3,581,500 , from its $4,000,000 December 2014 financing and follow-on subscriptions on similar terms of $581,500 in the aggregate, and issued 2,387,667 shares of Series F Preferred Stock and warrants to purchase the same number of shares of Common Stock at an exercise price of $3.00. The Company recorded financing expense of $3,796,000 with a corresponding credit to additional paid in capital since the average market price on the dates the financing was received was above the deal price of $1.50, representing excess value provided to the investors. In connection with the aforementioned follow-on subscription agreements, the Company provided the subscriber with the right for the period of one year, at the subscriber’s option, to convert all or any part of the shares of Series F Preferred Stock and warrants purchased into the securities issued in a future financing that yields gross proceeds to the Company of at least $2,000,000. This right will pertain to both the securities issued in those follow-on offerings aggregating $581,500 or for those obtained in the previous December 18, 2014, $4,000,000 aggregate offering, in which they participated. Additionally, for a period of two years, the subscriber will have the right to participate in all financings of the Company such that they maintain their current ownership percentage in the Company. During December 2015, we received bridge loans aggregating $330,000; $180,000 from Beijing Yi Tang Bio Science & Technology, Ltd. and $150,000 from Platinum Partners Value Arbitrage Fund L.P., which were later rolled with interest into our Secured Convertible Note Financing in January 2016. See Note 18. The notes earned interest at the prime rate.

CONVERTIBLE PREFERRED STOCK

CONVERTIBLE PREFERRED STOCK	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
CONVERTIBLE PREFERRED STOCK	Series C Each share of Series C is convertible into 100 shares of Common Stock, subject to adjustment for stock splits, combinations or similar events. Series C holders are entitled to dividends equivalent to those of common shareholders should a dividend be declared by the Board of Directors. Each holder who receives Series C may convert its Series C at any time following its issuance. The conversion of Preferred Stock into shares of Common Stock, however, is subject to a restriction, which prohibits the conversion of shares of Preferred Stock if the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, in excess of 9.99% beneficial ownership of all of the Company’s Common Stock outstanding at such time. In the event of any Liquidation Event (as defined in the Series C Certificate), the holders of Series C will be entitled to receive (subject to the rights of any securities designated as senior to the Series C) 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, 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 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. On December 23, 2013, an investor converted 8,974.185 shares of Series C into 897,419 shares of Common Stock. Series D Each share of Series D is convertible into 0.10 share of Common Stock subject to adjustments for stock splits, combinations, or similar events. The Series D does not pay a dividend and is not redeemable. Each holder who receives Series D may convert it at any time following its issuance. The conversion of Preferred Stock into shares of Common Stock, however, is subject to a restriction, which prohibits the conversion of shares of Preferred Stock if the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, would cause such holder to beneficially own in excess of 4.99% of all of the Company’s Common Stock outstanding at such time. The preference in liquidation is $1 per share, or $1,000,000 at December 31, 2014. On December 19, 2013, an investor converted 2,006,000 shares of Series D into 200,600 shares of Common Stock. Series E Each share of Series E is initially convertible into one share of Common Stock, subject to adjustment for stock splits, combinations or similar events. The Series E does not pay a dividend and is not redeemable. Each holder who receives Series E may convert its Series E at any time following its issuance. The conversion of Preferred Stock into shares of Common Stock, however, is subject to a restriction, which prohibits the conversion of shares of Preferred Stock if the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, would cause such holder to beneficially own in excess of 19.99% of all of the Company’s Common Stock outstanding at such time. There is no liquidation preference with respect to Series E shares. Series F On September 3, 2015, Echo Therapeutics, Inc. (the “Company”) filed a Certificate of Increase of Shares Designated as Series F Convertible Preferred Stock (“Certificate of Increase”) with the Secretary of State of the State of Delaware to increase the number of shares designated as its Series F Preferred Stock from 5,000,000 to 6,000,000 shares. Each share of Series F is initially convertible into one share of Common Stock, subject to adjustment for stock splits, combinations or similar events. The Series F does not pay a dividend and is not redeemable. Each holder who receives Series F may convert its Series F at any time following its issuance. The conversion of Preferred Stock into shares of Common Stock, however, is subject to a restriction, which prohibits the conversion of shares of Preferred Stock if the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, would cause such holder to beneficially own in excess of 9.99% of all of the Company’s Common Stock outstanding at such time. There is no liquidation preference with respect to Series F shares.

EQUITY COMPENSATION PLANS

EQUITY COMPENSATION PLANS	12 Months Ended
	Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]
EQUITY COMPENSATION PLAN	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, 2015, there were 5,000 restricted shares of Common Stock issued and options to purchase an aggregate of 26,500 shares of Common Stock outstanding under the 2003 Plan and no shares are available for future grants due to the 2003 Plan’s expiration. 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. As of December 31, 2015, there were 16,357 restricted shares of Common Stock issued and options to purchase an aggregate of 1,640,733 shares of Common Stock outstanding under the 2008 Plan and 8,329,910 shares available for future grants. The tables below show the remaining shares available for future grants for each plan and the 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 (5,000 ) (16,357 ) Stock options granted (154,449 ) (3,070,883 ) Add back options cancelled before exercise 92,349 1,417,150 Less shares no longer available due to Plan expiration (92,900 ) — Remaining shares available for future grants at December 31, 2015 — 8,329,910 Not Pursuant to a Plan Stock options granted 154,449 3,070,883 310,000 Less: Stock options cancelled (92,349 ) (1,417,150 ) (243,333 ) Stock options exercised (35,600 ) (13,000 ) (66,667 ) Net shares outstanding before restricted stock 26,500 1,640,733 — Net restricted stock issued net of cancellations 5,000 16,357 6,485 Outstanding shares at December 31, 2015 31,500 1,657,090 6,485

STOCK OPTIONS

STOCK OPTIONS	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
STOCK OPTIONS	For options issued and outstanding during the years ended December 31, 2015 and 2014, the Company recorded additional paid-in capital and non-cash compensation expense of $853,429 and $1,046,454, 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, 2015 and 2014 were as follows: 2015 2014 Risk-free interest rate % 1.46 - 1.90 1.45 - 1.90 Expected dividend yield — — Expected term in years 5 - 5.5 4.5 - 6.5 Forfeiture rate % (excluding fully vested options) 7.5 - 15 7.5 - 15 Expected volatility % 92 - 93 81 - 121 In December 2014, the Company issued stock options to purchase 475,000 shares of our Common Stock to its new CEO and CFO that contain certain stock price level attainment conditions that must be achieved before the stock options are permitted to vest. In calculating the compensation expense for these stock option grants, we utilize a binomial lattice-based valuation model. Assumptions utilized in the model, which are evaluated and revised, as necessary, to reflect market conditions and experience, were as follows: 2014 Interest rate % 2 Weighted average interest rate — Dividend yield — Expected volatility 1.05 Weighted Average volatility — Expected life in years 6.5 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, 2015 and changes during the year then ended is presented below: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January1, 2014 1,455,432 $ 4.40 — — Granted 662,950 1.94 — — Forfeited or expired (1,078,482 ) 4.92 — — Outstanding at December 31, 2014 1,039,900 $ 3.00 8.82 years — Granted 895,000 1.47 — — Forfeited or expired (267,667 ) 4.06 — — Outstanding at December 31, 2015 1,667,233 $ 2.01 8.74 years $ — Exercisable at December 31, 2015 900,750 $ 2.22 8.68 years $ — The weighted-average grant-date fair value of options granted during the years ended December 31, 2015 and 2014 was $1.03 and 1.42 per share, respectively. As of December 31, 2015, there was approximately $681,000 of total unrecognized compensation expense related to non-vested share-based option arrangements. During 2015, 300,000 of the options granted to two members of our board of directors contain certain stock price level attainment conditions that must be achieved before the stock options are permitted to vest. 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 our CGM system or the sale of the Company, unrecognized compensation is expected to be recognized over the next four years.

RESTRICTED STOCK

RESTRICTED STOCK	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
RESTRICTED STOCK	Share-Based Compensation – Restricted Stock For restricted stock issued and outstanding during the years ended December 31, 2015 and 2014, the Company incurred non-cash compensation expense of $57,455 and $335,918, respectively, each net of estimated forfeitures. As of December 31, 2015, the Company had outstanding restricted stock grants of 27,842 shares with a weighted-average grant-date value of $13.06. A summary of the status of the Company’s non-vested restricted stock grants as of December 31, 2015, and changes during the year ended December 31, 2015 is presented below: Shares Weighted- Average Grant-Date Fair Value Non-vested shares at January 1, 2015 47,958 $ 9.74 Vested (17,786 ) $ 5.02 Forfeited (2,330 ) $ 6.05 Non-vested shares at December 31, 2015 27,842 $ 13.06 Of the 27,842 shares of non-vested restricted stock, the vesting criteria are as follows: · 14,185 shares of restricted stock vest upon the FDA approval of our CGM system or the sale of the Company; · 13,657 shares of restricted stock vest over 4 years, at each of the anniversary dates of the grants; and As of December 31, 2015, there was approximately $334,234 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, 2015, 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	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
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: 2015 2014 Risk-free interest rate % 1.26 - 1.75 1.57 - 1.77 Expected dividend yield — — Expected term in years (contractual term) 5 5 Forfeiture rate % — — Expected volatility % 89 - 99 78 - 102 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. In the year ended December 31, 2015 and 2014, the Company issued warrants with a relative fair value of $3,386,895 and $350,000, respectively in connection with private placements of the Company’s Preferred Stock, as well as in connection with the Reimbursement Agreement more fully described in Note 8. The following table summarizes data about outstanding warrants at December 31, 2015: Type of Warrant/ Range of Exercise Prices Expirations Number Outstanding Weighted- Average Remaining Contractual Life (years) Weighted- Average Exercise Price Number Exercisable Derivative : $ 7.50 8/31/17 to 11/6/17 700,000 1.72 $ 7,70 700,000 Equity: $ 2.75 - $3.00 12/10/18 to 10/30/20 3,830,428 4.19 $ 2.98 3,830,428 Total outstanding 4,530,428 4,530,428 A summary of warrant activity in the year ended December 31, 2015 is as follows: Warrants Shares Weighted- Average Exercise Price Outstanding at December 31, 2013 1,209,211 $ 17.92 Granted 927,610 $ 2.98 Forfeited or expired (289,755 ) $ 20.33 Outstanding at December 31, 2014 1,847,066 $ 10.04 Granted 2,721,000 $ 3.00 Forfeited or expired (37,638 ) $ 22.50 Outstanding at December 31, 2015 4,530,428 $ 3.68 The derivative warrants to purchase 700,000 shares of our Common Stock, at exercise prices ranging from $20 to $22.70 and expiring in 2017, are included in the outstanding warrants at December 31, 2015 and 2014. On February 12, 2015, these warrants were re-priced to $7.50 to compensate PPVA in connection with the Reimbursement Agreement reached between the Company and PPVA. See Note 8. During 2015 and 2014, there were no warrants exercised.

INCOME TAXES

INCOME TAXES	12 Months Ended
	Dec. 31, 2015
Income Taxes
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. A provision for minimum state income taxes of $3,420 has been recorded for the year ended December 31, 2015. At December 31, 2015 and 2014, the Company had gross federal net operating loss carryforwards of approximately $105,024,000 and $98,462,000, respectively, which begin expiring in 2018. The Company had gross state net operating loss carryforwards of approximately $59,243,000 and $52,684,000, respectively which began to expire in 2015. The Company also had federal and state research and development tax credit carryforwards of approximately $3,122,000 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 in Internal Revenue Section 382. 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. The Company has not completed an evaluation of whether Section 382 would impact the gross NOLs. Significant components of the Company’s net deferred tax asset are as follows: December 31, 2015 2014 Deferred Tax Assets/(Liabilities): Net operating loss carryforwards $ 38,836,000 $ 34,500,000 Research credit carryforwards 3,122,000 3,048,000 Acquired intangible assets, net — (3,697,000 ) Restricted stock and warrants 479,000 731,000 Other temporary differences 92 ,000 50,000 Total deferred tax assets, net 42,529,000 34,632,000 Valuation allowance (42,529,000 ) (34,632,000 ) Net deferred tax asset $ — $ — The Company has maintained a full valuation allowance against its deferred tax items in both 2015 and 2014. 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. In the years ended December 31, 2015 and 2014, the valuation allowance increased by $7,897,000 and $2,773,000, respectively. The Company has no uncertain tax positions as of December 31, 2015 and 2014 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, 2015 2014 % % Income taxes benefit (expense) at statutory rate 34.00 34.00 State income tax, net of federal benefit (0.01 ) 2.76 Permanent Differences: Financing loss (7.23 ) — Non-cash interest expense warrant (0.50 ) (8.07 ) Gain/loss or revaluation of derivative warrant liability 0.12 2.07 Stock-based compensation expense (2.40 ) (0.88 ) Other (0.04 ) 0.01 R&D credits 0.49 1.21 Change in valuation allowance (24.45 ) (31.13 ) (0.02 ) (0.03 )

LITIGATION

LITIGATION	12 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
LITIGATION	In February 2014, Patrick T. Mooney, M.D., our former President and Chief Executive Officer, and his wife, Elizabeth Mooney, filed a complaint against the Company and certain of its directors and officers in the Court of Common Pleas in Philadelphia County. The complaint, which alleges (i) that Dr. Mooney’s termination was without cause so that he is entitled to certain severance benefits under his employment agreement and associated statutory remedies; (ii) that certain legally required disclosures by us and our General Counsel defamed Dr. Mooney; and (iii) that Dr. Mooney’s wife is entitled to damages under a theory of loss of consortium, seeks in excess of $20 million in damages. The Company has denied the allegations of the complaint and asserted counterclaims against Dr. Mooney based upon the same conduct which provided the cause for his termination. Thereafter, the Company restructured the counterclaims and affirmative defenses. In July 2014, Dr. and Mrs. Mooney filed another complaint in the Court of Common Pleas in Philadelphia County against the Company, certain of its directors and Officers and a former Director and officer alleging (i) wrongful use of civil proceedings and (ii) abuse of process in the original filing of the counterclaims withdrawn in the earlier action. Mrs. Mooney also asserted another claim for loss of consortium. This complaint sought in excess of $30 million in damages. In August 2014, Dr. Mooney filed a complaint in Delaware Chancery Court against the Company for advancement of defense costs related to his February 2014 complaint, many of which the Company had paid to date and the remainder of which were subject to a good faith dispute that counsel for the Company and Dr. Mooney had been attempting to amicably resolve. Dr. Mooney also demanded that the Company pay for his attorneys fees related to his July 2014 complaint against the Company, amongst other matters. On July 4, 2015, the Company resolved its legal disputes with Patrick Mooney, its former Chairman, President and Chief Executive Officer, on mutually-agreeable terms and all related litigation was dismissed with prejudice. On July 27, 2015, the Company made a settlement payment of $150,000 to Dr. Mooney and additional payments were made to Dr. Mooney from the Company’s insurers. Such amount was recorded to legal expense in the second quarter of 2015. From time to time, in addition to that which is identified above, we are subject to legal proceedings, claims, investigations, and proceedings in the ordinary course of business. In accordance with generally accepted accounting principles, we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. At December 31, 2015, no litigation loss is deemed probable or reasonably estimated.

LICENSING AND OTHER REVENUE

LICENSING AND OTHER REVENUE	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
LICENSING AND OTHER REVENUE	Ferndale License of Skin preparation device The Company received a non-refundable licensing fee of $750,000 upon execution of the Ferndale License which was recognized as revenue through December 31, 2011. In addition, the Company will receive a payment of $750,000 within ninety (90) days after receipt of the FDA’s medical device clearance of its skin preparation device. Ferndale will pay the Company an escalating royalty on net sales of skin preparation product components. The Company is entitled to receive milestone payments based on Ferndale’s achievement of certain net sales targets of the product components, as well as guaranteed minimum annual royalties. Handok License of CGM The Company received a non-refundable 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 our CGM and upon the first commercial sale of our CGM in South Korea. Handok will also pay the Company a royalty on net sales of CGM. The Company is entitled to receive milestone payments based on Handok’s achievement of certain other targets. $0 and $57,321 of the non-refundable license revenue was recognized in the years ended December 31, 2015 and 2014, respectively, and $95,535 is currently included in deferred revenue. MTIA License, Development and Commercialization Agreement Upon the earlier of regulatory approval of our CGM by the China Food and Drug Administration or Echo’s termination of the agreement, Echo is required, subject to certain terms and conditions, to reimburse MTIA up to $1,500,000 for development costs incurred by MTIA. The reimbursement will be in the form of Common Stock, valued at $2.71 per share, which was the NASDAQ closing price on December 9, 2013, the date prior to the date the parties entered into the agreement. Additionally, the Company and MTIA will share future net sales of our CGM generated within the Territory. The Company has the option, at its sole discretion, to enter into negotiations with MTIA for supply of our CGM in territories that are not licensed to MTIA under the agreement. The agreement has a term of ten years, subject to earlier termination rights including, but not limited to, for breach of the agreement, change of control events, and certain performance obligations. On December 29, 2014 the MTIA agreement was amended to include an affiliate, Beijing Yi Tang Bio Technology, Ltd as a party to the Agreement. The Amendment also provides that MTIA may, without Echo’s consent: (i) sublicense any of the licenses and rights granted to MTIA under the Agreement to any of its Affiliates, and (ii) subcontract any of its obligations under the Agreement to any of its Affiliates.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	12 Months Ended
	Dec. 31, 2015
Subsequent Events
SUBSEQUENT EVENTS	NASDAQ Compliance On January 6, 2016, the Company received a letter from The Nasdaq Stock Market (“Nasdaq”) that, as a result of the Company’s failure to hold an annual meeting of stockholders no later than one year after the end of its fiscal year as required by Nasdaq Listing Rule 5620(a), and the Company’s failure to meet the minimum $2.5 million stockholders’ equity requirement set forth in Nasdaq Listing Rule 5550(b)(1), Nasdaq had determined to initiate procedures to delist the Company’s securities from The Nasdaq Stock Market. The Company was advised that, unless the Company requested an appeal of this determination, trading in the Company’s common stock would be suspended at the opening of business on January 15, 2016 and a Form 25-NSE would be filed with the Securities and Exchange Commission to remove the Company’s securities from listing and registration on Nasdaq. The Company appealed Nasdaq’s determination. The suspension of trading was stayed during the pendency of such appeal. On March 9, 2016, the Company was informed that the Nasdaq Listing Panel (“the Panel”) determined to grant our request to remain listed on the Nasdaq Stock Market, subject to the following conditions: · On or before May 31, 2016, the Company shall have its Annual Shareholder Meeting for fiscal year ended 2015. · On or before July 5, 2016, the Company shall publicly announce and inform the Panel that it has stockholders’ equity above $2.5 million. · The Company shall also, by that date, provide the Panel with updated projections demonstrating its ability to maintain its stockholders’ equity above $2.5 million through June 30, 2017. These projections shall detail the underlying assumptions, including any required capital raises or conversions of debt or preferred to common stock. The Panel will consider at that time whether a Panel Monitor is appropriate. The Company was advised that July 5, 2016 represents the full extent of the Panel’s discretion to grant continued listing while it is non-compliant. Should the Company fail to demonstrate compliance with that rule by that date, the Panel will issue a final delist determination and the Company will be suspended from trading on the Nasdaq Stock Market. In order to fully comply with the terms of this exception, the Company must be able to demonstrate compliance with all requirements for continued listing on The Nasdaq Stock Market. In the event the Company is unable to do so, its securities may be delisted from The Nasdaq Stock Market. It is a requirement during the exception period that the Company provide prompt notification of any significant events that occur during this time. This includes, but is not limited to, any event that may call into question the Company’s historical financial information or that may impact the Company’s ability to maintain compliance with any Nasdaq listing requirement or exception deadline. The Panel reserves the right to reconsider the terms of this exception based on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of the Company’s securities on The Nasdaq Stock Market inadvisable or unwarranted. In addition, any compliance document will be subject to review by the Panel, which may, in its discretion, request additional information before determining that the Company has complied with the terms of the exception. There can be no assurances whether the Company will be able to regain or maintain compliance with the Nasdaq listing rules. In the event of delisting, the Company expects that its stock would trade on the OTC Markets. Secured Convertible Note Financing On January 29, 2016, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and other accredited investors (the “Investors”) pursuant to which the Company agreed to issue up to $5,145,000 principal amount of 10% senior secured convertible notes of the Company (the “Notes”) and related common stock purchase warrants (the “Warrants”) in two tranches. The Notes are secured by substantially all of the assets of the Company pursuant to a Security Agreement, dated January 29, 2016 (the “Security Agreement”). The initial closing of $1,787,000 occurred on January 29, 2016. Bridge notes in the principal amount of $680,000 were surrendered to the Company as payment by certain Investors. Fees aggregating approximately $275,000 were paid out of the proceeds of the initial closing to the placement agent and others. Additional fees will be paid, primarily to the placement agent, for the second closing when funded. The second closing of $3,358,000 is subject to the Company obtaining shareholder approval at a Special Shareholders Meeting to be held on April 14, 2016. The Notes are initially convertible into 1,191,333 shares of common stock, par value $.01 per share, of the Company (the “Common Stock”), at $1.50 per share. The Company has the right to redeem the Notes under certain circumstances. Interest is payable quarterly or, subject to receipt of stockholder approval, at the Company’s option, in shares of Common Stock. In connection with the initial closing, the Company issued five-year Warrants to purchase 1,191,333 shares of Common Stock at an exercise price of $1.50 per share, which are not exercisable for six months. Upon receipt of shareholder approval to be obtained at special meeting of our shareholders to be held on April 14, 2016, the Company expects to issue Notes in an aggregate principal amount of $3,358,000 initially convertible into 2,238,667 shares of Common Stock at $1.50 per share and 1-1/2 year warrants to purchase 2,238,667 shares of Common Stock at $1.50 per share. The Notes and Warrants are subject to customary antidilution provisions. If stockholder approval is obtained, the conversion price for the Notes is subject to a reset to eighty percent (80%) of the average of the ten lowest closing prices of the Common Stock less than $1.50 (subject to equitable adjustment), if any, as reported by Bloomberg LP for the principal market on which the Common Stock then trades during the ninety (90) days following the first effective date of a registration statement filed pursuant to the Registration Rights Agreement, but in no event less than $.80, subject to equitable adjustment. The Purchase Agreement contains customary representations, warranties and affirmative and negative covenants. The Purchase Agreement also requires management and certain shareholders to lock-up certain of their shares for the earlier of six months after the effective date of a registration statement, the first anniversary of the initial closing (January 29, 2017), or the date, if applicable, such holder of securities is no longer an officer or directors of the Company, subject to certain exceptions. In addition, for up to one year following the effective date of a registration statement, the Investors have the right to participate, on a pro rata basis, in certain subsequent financings by the Company, subject to certain limitations. In connection with the transaction, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) that requires the Company to file one or more registration statements in respect of the shares of Common Stock underlying the Notes and Warrants. If the Company fails to make its filing deadlines or fails to maintain the registration statement for required periods of time, the Company will be subject to certain liquidated damages provisions. Newbridge Securities Corporation/Life Tech Capital (the “Placement Agent”) acted as the sole placement agent for the financing. The Placement Agent will receive five-year warrants to purchase approximately 120,000 shares of Common Stock at $1.50 per share upon the completion of the full offering. Bridge Note Financings On February 4, 2016, the Company issued a promissory note to Beijing Yi Tang Bio Science & Technology, Ltd. (BYT) in the aggregate principal amount of $300,000 in respect of a bridge loan made by such party. The promissory note, which bears interest at the prime rate, may, at BYT’s option, be exchanged for securities issued in a subsequent financing by the Company, including the second tranche financing described above. On February 11, 2016, the Company issued a promissory note to Platinum Partners Value Arbitrage Fund L.P. (PPVA) in the aggregate principal amount of $100,000 in respect of a bridge loan made by such party. The promissory note, which bears interest at the prime rate, may, at PPVA’s option, be exchanged for securities issued in a subsequent financing by the Company, including the second tranche financing described above. On March 21, 2016, the Company issued a promissory note to Platinum Partners Value Arbitrage Fund L.P. (PPVA) in the aggregate principal amount of $150,000 in respect of a bridge loan made by such party. The promissory note, which bears interest at the prime rate, may, at PPVA’s option, be exchanged for securities issued in a subsequent financing by the Company, including the second tranche financing described above. Issuance of Restricted Stock and Stock Options under the 2008 Incentive Stock Plan On February 16, 2016, management issued an annual grant of stock options pursuant to the 2008 Plan to employees aggregating 320,500 shares at an exercise price of $0.90. Such options will vest over a three year period. In addition they received a special grant of stock options on the same date and exercise price aggregating 56,834, for allowing the Company additional time to pay them. Such options vest over a period of one year. On March 3, 2016, the Compensation Committee of the Board of Directors approved an aggregate issuance of 280,000 shares of common stock: 150,000, 100,000, and 30,000 to each of our CEO, CFO, and VP of Operations and Product Development (VPOPD), respectively. Such shares shall vest over an eighteen month period. The grant was for deferring their pay over the last approximate six month period whilst the Company sought financing. The CEO and CFO are still owed a total of approximately $160,000. The CEO, CFO and VPOPD additionally received an annual grant of stock options to purchase common shares as follows: 175,000, 150,000, and 125,000 are exercisable at $1.12 to each of the CEO, CFO and VPOPD, respectively. Such options will vest over a two year period. On March 1 2016, the Compensation Committee of the Board of Directors issued to non-employee board members pursuant to the 2008 Plan an annual grant of stock options to purchase an aggregate 450,000 shares of common stock, or 150,000 to each of the three directors at an exercise price of $1.12 for the Company’s new director, and $2.00 for the remaining directors. 150,000 of such options will vest over a one year period for the Company’s new director and over a two year period for the remaining directors.

SUMMARY OF SIGNIFICANT ACCOUN24

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2015
Summary Of Significant Accounting Policies Policies
Use of Estimates	The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management's estimates are based on historical experience, facts and circumstances available at the time, and various other assumptions that are believed to be reasonable under the circumstances. Significant estimates include accounting for the valuation of intangible assets, derivatives, share based compensation and valuation allowances related to deferred income taxes. The Company periodically reviews these matters and reflects changes in estimates as appropriate. Actual results could materially differ 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 at a major banking institution as of December 31, 2015 and 2014. The Company maintains its cash in bank deposit accounts which, at times, may exceed the federally insured limits. The Company has never experienced any previous losses related to these uninsured balances. Restricted cash consists of letters of credit in favor of its two landlords as of December 31, 2015.
Intangible Assets and Other Long-Lived Assets	The Company records acquired intangible assets at the acquisition date fair value. Intangible assets related to technology are expected to be amortized over the period of expected benefit and will commence upon revenue generation. The Company reviews intangible assets at least annually and whenever events or circumstances change that indicated impairment may have occurred to determine if any adverse conditions exist 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. While the Company uses available information to prepare estimates and to perform impairment evaluations, actual results could differ significantly from these estimates or related projections, resulting in impairment related to recorded balances. 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. As a result, the Company reviewed its intangibles for impairment and recorded a $9.625 million impairment charge, or the full value of its intangibles, on the consolidated statement of operations in the second quarter of 2015. 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. 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.
Property and equipment	Property and equipment are stated at cost. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. The Company expenses normal maintenance and repair costs as incurred. Gain and loss on disposal of property and equipment is recognized in the period incurred. Leasehold improvements are amortized over the life of the lease or the related asset, whichever is shorter.
Share-Based Payments	The Company recognizes compensation costs, net of estimated forfeitures, 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. Forfeitures are initially estimated based on historical information and subsequently updated over the life of the awards to ultimately reflect actual forfeitures. As a result, changes in forfeiture activity can influence the amount of stock compensation cost recognized from period to period. 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. The fair value of options is calculated primarily using the Black-Scholes option pricing model. This option valuation model requires input of assumptions including, among others, the volatility of our stock price, the expected life of the option and the risk-free interest rate. We estimate the volatility of our stock price using historical prices. We estimate the expected life of our option using the average of the vesting period and the contractual term of the option. The estimated forfeiture rate is based on historical forfeiture information as well as subsequent events occurring prior to the issuance of the financial statements. Because our stock options have characteristics significantly different from those of traded options, and because changes in the input assumptions can materially affect the fair value estimate, the existing model may not necessarily provide a reliable single measure of fair value of our stock options. In calculating the compensation expense for certain more complex stock options granted, we utilize a binomial lattice-based valuation model. Lattice-based option valuation models incorporate ranges of assumptions for inputs and those ranges are disclosed in the preceding table. Expected volatilities are based on a combination of historical volatility of our stock and implied volatilities of call options on our stock. We use historical data to estimate option exercise and employee termination patterns within the valuation model. The expected life of options granted is derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.
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, 2015 and 2014 consists solely 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. The Company wrote off its intangible asset in 2015; however this is the only such adjustment in the years ended December 31, 2015 and 2014.
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 payable and capital lease obligation, approximates their carrying value due to the short-term nature of these instruments and their market terms.
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 diagnostic medical devices. As of December 31, 2015 and 2014, all of the Company’s assets were located in the United States.
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 and New Jersey state income tax. Tax years subsequent to 2011 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 were no uncertain tax position liabilities recorded at December 31, 2015 and 2014. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2015 and 2014, 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. From time to time, the Company 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.
Distinguishment of Liabilities from Equity	The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity Initial Measurement The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received. For warrants that are recorded as equity, the Company uses a Black Scholes model. Subsequent Measurement The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income. The Company uses the Black Scholes pricing method, which is not materially different from a binomial lattice valuation methodology utilizing Level 3 inputs, to determine the fair value of derivative liabilities resulting from warrants that are recognized as liabilities.
Recently Issued Accounting Pronouncements	In May 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. In July 2015, the Financial Accounting Standards Board (the "FASB") finalized a one year delay in the effective date of this standard, which will now be effective for us on January 1, 2018, however early adoption is permitted any time after the original effective date, which for us is January 1, 2017. We have not yet selected a transition method and are currently evaluating the impact of ASU 2014-09 on our condensed consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, which revises the guidance in ASC 740, Income Taxes, to simplify the presentation of deferred income taxes and require that deferred tax liabilities and assets be classified as non-current in the statement of financial position. The guidance is to be applied either prospectively or retrospectively, and is effective for reporting periods (interim and annual) beginning after December 15, 2016 for public companies. Early adoption is permitted. The implementation of this ASU is not expected to have a material impact on our consolidated financial position or results of operations. In January 2016, the FASB issued ASU 2016-01, which revises the guidance in ASC 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities, and provides guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2017, for public companies. We are currently assessing the potential impact of this ASU on our consolidated financial position and results of operations. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Property and equipment	2015 2014 Estimated Useful Lives Computer equipment $ 332,764 $ 334,865 3 Office and laboratory equipment 628,726 740,177 3-5 Furniture and fixtures 228,099 755,444 7 Manufacturing equipment 61,998 111,980 5 Leasehold improvements 41,968 825,589 3-7 Total property and equipment 1,293,555 2,768,055 Less accumulated depreciation and amortization 1,025,884 1,629,462 Property and equipment, net $ 267,671 $ 1,138,593

OPERATING LEASE COMMITMENTS (Ta

OPERATING LEASE COMMITMENTS (Tables)	12 Months Ended
	Dec. 31, 2015
Operating Lease Commitments Tables
Future minimum lease payments	Amount Year Ending December 31, 2016 $ 208,531 2017 237,797 2018 204,515 2019 154,513 2020 143,959 Total $ 949,315

DERIVATIVE WARRANT LIABILITY (T

DERIVATIVE WARRANT LIABILITY (Tables)	12 Months Ended
	Dec. 31, 2015
Derivative Warrant Liability Tables
Derivative warrant liability	2015 2014 Derivative warrant liability as of January 1 $ 208,155 $ 1,119,155 Gain on revaluation (81,155 ) (911,000 ) Derivative warrant liability as of September 30 $ 127,000 $ 208,155

EQUITY COMPENSATION PLANS (Tabl

EQUITY COMPENSATION PLANS (Tables)	12 Months Ended
	Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]
Share based compensation options	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 (5,000 ) (16,357 ) Stock options granted (154,449 ) (3,070,883 ) Add back options cancelled before exercise 92,349 1,417,150 Less shares no longer available due to Plan expiration (92,900 ) — Remaining shares available for future grants at December 31, 2015 — 8,329,910 Not Pursuant to a Plan Stock options granted 154,449 3,070,883 310,000 Less: Stock options cancelled (92,349 ) (1,417,150 ) (243,333 ) Stock options exercised (35,600 ) (13,000 ) (66,667 ) Net shares outstanding before restricted stock 26,500 1,640,733 — Net restricted stock issued net of cancellations 5,000 16,357 6,485 Outstanding shares at December 31, 2015 31,500 1,657,090 6,485

STOCK OPTIONS (Tables)

STOCK OPTIONS (Tables)	12 Months Ended
	Dec. 31, 2015
Stock Options Tables
Assumption used for stock option granted	The assumptions used principally for options granted to employees in the years ended December 31, 2015 and 2014 were as follows: 2015 2014 Risk-free interest rate % 1.46 - 1.90 1.45 - 1.90 Expected dividend yield — — Expected term in years 5 - 5.5 4.5 - 6.5 Forfeiture rate % (excluding fully vested options) 7.5 - 15 7.5 - 15 Expected volatility % 92 - 93 81 - 121 In December 2014, the Company issued stock options to purchase 475,000 shares of our Common Stock to its new CEO and CFO that contain certain stock price level attainment conditions that must be achieved before the stock options are permitted to vest. In calculating the compensation expense for these stock option grants, we utilize a binomial lattice-based valuation model. Assumptions utilized in the model, which are evaluated and revised, as necessary, to reflect market conditions and experience, were as follows: 2014 Interest rate % 2 Weighted average interest rate — Dividend yield — Expected volatility 1.05 Weighted Average volatility — Expected life in years 6.5
Stock option activity	Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January1, 2014 1,455,432 $ 4.40 — — Granted 662,950 1.94 — — Forfeited or expired (1,078,482 ) 4.92 — — Outstanding at December 31, 2014 1,039,900 $ 3.00 8.82 years — Granted 895,000 1.47 — — Forfeited or expired (267,667 ) 4.06 — — Outstanding at December 31, 2015 1,667,233 $ 2.01 8.74 years $ — Exercisable at December 31, 2015 900,750 $ 2.22 8.68 years $ —

RESTRICTED STOCK (Tables)

RESTRICTED STOCK (Tables)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Nonvested restricted stock activity	Shares Weighted- Average Grant-Date Fair Value Non-vested shares at January 1, 2015 47,958 $ 9.74 Vested (17,786 ) $ 5.02 Forfeited (2,330 ) $ 6.05 Non-vested shares at December 31, 2015 27,842 $ 13.06

WARRANTS (Tables)

WARRANTS (Tables)	12 Months Ended
	Dec. 31, 2015
WarrantsTableTextBlockAbstract
Warrants assumptions utilized by the Company	2015 2014 Risk-free interest rate % 1.26 - 1.75 1.57 - 1.77 Expected dividend yield — — Expected term in years (contractual term) 5 5 Forfeiture rate % — — Expected volatility % 89 - 99 78 - 102
Outstanding Warrants	Type of Warrant/ Range of Exercise Prices Expirations Number Outstanding Weighted- Average Remaining Contractual Life (years) Weighted- Average Exercise Price Number Exercisable Derivative : $ 7.50 8/31/17 to 11/6/17 700,000 1.72 $ 7,70 700,000 Equity: $ 2.75 - $3.00 12/10/18 to 10/30/20 3,830,428 4.19 $ 2.98 3,830,428 Total outstanding 4,530,428 4,530,428
Warrant Activity	Warrants Shares Weighted- Average Exercise Price Outstanding at December 31, 2013 1,209,211 $ 17.92 Granted 927,610 $ 2.98 Forfeited or expired (289,755 ) $ 20.33 Outstanding at December 31, 2014 1,847,066 $ 10.04 Granted 2,721,000 $ 3.00 Forfeited or expired (37,638 ) $ 22.50 Outstanding at December 31, 2015 4,530,428 $ 3.68

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2015
Income Taxes Tables
Company's net deferred tax asset	December 31, 2015 2014 Deferred Tax Assets/(Liabilities): Net operating loss carryforwards $ 38,836,000 $ 34,500,000 Research credit carryforwards 3,122,000 3,048,000 Acquired intangible assets, net — (3,697,000 ) Restricted stock and warrants 479,000 731,000 Other temporary differences 92 ,000 50,000 Total deferred tax assets, net 42,529,000 34,632,000 Valuation allowance (42,529,000 ) (34,632,000 ) Net deferred tax asset $ — $ —
Income taxes computed using the federal statutory income tax rate	Years Ended December 31, 2015 2014 % % Income taxes benefit (expense) at statutory rate 34.00 34.00 State income tax, net of federal benefit (0.01 ) 2.76 Permanent Differences: Financing loss (7.23 ) — Non-cash interest expense warrant (0.50 ) (8.07 ) Gain/loss or revaluation of derivative warrant liability 0.12 2.07 Stock-based compensation expense (2.40 ) (0.88 ) Other (0.04 ) 0.01 R&D credits 0.49 1.21 Change in valuation allowance (24.45 ) (31.13 ) (0.02 ) (0.03 )

ORGANIZATION AND BASIS OF PRE33

ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative)	5 Months Ended
	Jun. 07, 2013
Organization And Basis Of Presentation
Reverse stock split ratio	1-for-10

LIQUIDITY AND MANAGEMENTS' PL34

LIQUIDITY AND MANAGEMENTS' PLANS (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended
	Jan. 29, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Liquidity and Management's Plans
Cash		$ 56,210	$ 1,278,941	$ 8,055,385
Working capital deficit		(2,934,684)	(2,934,684)
Accumulated deficit		(150,129,933)	$ (127,932,066)
Net cash proceeds from Secured Convertible Note	$ 832,000	$ 1,000,000
Total Secured Convertible Note investment	$ 5,145,000

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Property and equipment, gross	$ 1,293,555	$ 2,768,055
Less accumulated depreciation and amortization	1,025,884	1,629,462
Property and equipment, net	267,671	1,138,593
Computer Equipment [Member]
Property and equipment, gross	$ 332,764	334,865
Property and equipment, Useful Life	3 years
Office and Lab Equip [Member]
Property and equipment, gross	$ 628,726	740,177
Property and equipment, Useful Life	3 years
Furniture and Fixtures [Member]
Property and equipment, gross	$ 228,099	755,444
Property and equipment, Useful Life	7 years
Manufacturing Equipment [Member]
Property and equipment, gross	$ 61,998	111,980
Property and equipment, Useful Life	5 years
Leasehold Improvements [Member]
Property and equipment, gross	$ 41,968	$ 825,589
Property and equipment, Useful Life	3 years
Office and Lab Equip Max [Member]
Property and equipment, Useful Life	5 years
Leasehold Improvements Max [Member]
Property and equipment, Useful Life	7 years

OPERATING LEASE COMMITMENTS (De

OPERATING LEASE COMMITMENTS (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
OPERATING LEASE COMMITMENTS
Year ended December, 2016	$ 208,531	$ 635,000
Year ended December, 2017	237,797	651,000
Year ended December, 2018	204,515	$ 464,000
Year ended December, 2019	154,513
Year ended December, 2020	143,959
Total	$ 949,315

OPERATING LEASE COMMITMENTS (37

OPERATING LEASE COMMITMENTS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Operating Leased Assets [Line Items]
Facilities lease expense	$ 293,000	$ 514,000
IselinNJ [Member]
Operating Leased Assets [Line Items]
Facilities lease expense	7,300
Letter of credit issued	77,000
IselinNJ [Member] | Minimum [Member]
Operating Leased Assets [Line Items]
Letter of credit issued	$ 38,500

DERIVATIVE WARRANT LIABILITY (D

DERIVATIVE WARRANT LIABILITY (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
DERIVATIVE WARRANT LIABILITY
Derivative warrant liability	$ 208,155	$ 1,119,155
Gain on Revaluation	(81,155)	(911,000)
Derivative warrant liability	$ 127,000	$ 208,155

CONVERTIBLE PREFERRED STOCK (De

CONVERTIBLE PREFERRED STOCK (Details Narrative) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
Class of Stock [Line Items]
Authorized Preferred Stock	40,000,000	40,000,000
Par value	$ 0.01	$ 0.01
SeriesCPreferredStock [Member]
Class of Stock [Line Items]
Authorized Preferred Stock	10,000	10,000
Issued and outstanding	1,000	9,974.185
SeriesDPreferredStock [Member]
Class of Stock [Line Items]
Authorized Preferred Stock	3,600,000	3,600,000
Issued and outstanding	1,000,000	3,006,000
Series E Preferred Stock [Member]
Class of Stock [Line Items]
Authorized Preferred Stock	1,748,613

EQUITY COMPENSATION PLANS (Deta

EQUITY COMPENSATION PLANS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Shares Available For Issuance
Add back options cancelled before exercise	(267,667)	(1,078,482)
Outstanding Options and Restricted Stock
Ending Balance		6,485
Plan2003Member
Shares Available For Issuance
Total reserved for stock options and restricted stock	$ 160,000
Net restricted stock issued net of cancellations	$ (5,000)
Stock options granted	(154,449)
Add back options cancelled before exercise	92,349
Options cancelled by plan vote	(92,900)
Remaining shares available for future grants	0
Outstanding Options and Restricted Stock
Total granted	$ 154,449
Options cancelled	$ (92,349)
Options exercised	(35,600)
Net shares outstanding before restricted stock	26,500
Net restricted stock issued net of cancellations	5,000
Ending Balance	31,500
Plan2008Member
Shares Available For Issuance
Total reserved for stock options and restricted stock	$ 10,000,000
Net restricted stock issued net of cancellations	$ (16,357)
Stock options granted	(3,070,883)
Add back options cancelled before exercise	1,417,150
Options cancelled by plan vote	0
Remaining shares available for future grants	8,329,910
Outstanding Options and Restricted Stock
Total granted	$ 3,070,883
Options cancelled	$ (1,417,150)
Options exercised	(13,000)
Net shares outstanding before restricted stock	1,640,733
Net restricted stock issued net of cancellations	16,357
Ending Balance	1,657,090
NotPursuanttoaPlanMember
Outstanding Options and Restricted Stock
Total granted	$ 310,000
Options cancelled	$ (243,333)
Options exercised	(66,667)
Net shares outstanding before restricted stock	0
Net restricted stock issued net of cancellations	6,485

EQUITY COMPENSATION PLANS (De41

EQUITY COMPENSATION PLANS (Details Narrative)	Dec. 31, 2015shares
EqPlan 2003 [Member]
Stock Options And Restricted Stock
Restricted shares of Common Stock issued	5,000
Options to purchase an aggregate of shares	26,500
EqPlan 2008 [Member]
Stock Options And Restricted Stock
Restricted shares of Common Stock issued	16,357
Options to purchase an aggregate of shares	1,640,733
Shares Future grants	8,329,910

STOCK OPTIONS (Details 1)

STOCK OPTIONS (Details 1)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Employee
Risk-free interest rate, minimum	1.46%	1.45%
Risk-free interest rate, maximum	1.90%	1.90%
Dividend yield	0.00%	0.00%
Volatility, minimum	92.00%	81.00%
Volatility, maximum	93.00%	121.00%
Forfeiture rate, minimum	7.50%	7.50%
Forfeiture rate, maximum	15.00%	15.00%
Expected life in years, minimum	5 years	4 years 6 months
Expected life in years, maximum	5 years 6 months	6 years 6 months
CEO/CFO
Risk-free interest rate		2.00%
Dividend yield		0.00%
Volatility		1.05%
Expected life in years, minimum		6 years 6 months

STOCK OPTIONS (Details 2)

STOCK OPTIONS (Details 2) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Shares
Beginning Balance	1,039,900	1,455,432
Granted	895,000	662,950
Forfeited or expired	(267,667)	(1,078,482)
Ending Balance	1,667,233	1,039,900
Exercisable	900,750
Weighted-Average Exercise Price
Beginning Balance	$ 3	$ 4.40
Granted	1.47	1.94
Forfeited or expired	4.06	4.92
Ending Balance	2.01	$ 3
Exercisable	$ 2.22
Weighted-Average Remaining Contractual Term
Weighted-Average Remaining Contractual Term Outstanding	8 years 8 months 27 days	8 years 9 months 25 days
Weighted-Average Remaining Contractual Term Exercisable	8 years 8 months 5 days

STOCK OPTIONS (Details Narrativ

STOCK OPTIONS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Stock Options And Restricted Stock
Additional paid-in capital and non-cash compensation expense	$ 853,429	$ 1,046,454
Weighted-average grant-date fair value of stock options granted	$ 1.03	$ 1.42
Total unrecognized compensation expense		$ 681,000

RESTRICTED STOCK (Details)

RESTRICTED STOCK (Details)	12 Months Ended
	Dec. 31, 2015$ / sharesshares
Shares
Nonvested at beginning of period | shares	27,842
Vested | shares	(17,786)
Forfeited | shares	(2,330)
Nonvested at end of period | shares	27,842
Weighted- Average Grant-DateFair Value
Nonvested at beginning of period | $ / shares	$ 13.06
Vested | $ / shares	5.02
Forfeited | $ / shares	6.05
Nonvested at end of period | $ / shares	$ 13.06

RESTRICTED STOCK (Details Narra

RESTRICTED STOCK (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Stock Options And Restricted Stock
Non-cash compensation expense	$ 57,455	$ 335,918
Outstanding restricted stock grants		27,842
Weighted average grant date value		$ 13.06
Nonvested at end of period	27,842	27,842
Total unrecognized compensation expense		$ 334,234
FDA Approval [Member]
Stock Options And Restricted Stock
Restricted stock to vest upon FDA approval	14,185
Four Years [Member]
Stock Options And Restricted Stock
Restricted stock to vest upon FDA approval	13,657

WARRANTS (Details)

WARRANTS (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Warrants Details
Risk-free interest rate	1.26%	1.57%
Risk-free interest rate, maximum	1.75%	1.77%
Expected dividend yield	0.00%	0.00%
Expected term (contractual term)	5 years	5 years
Forfeiture rate	0.00%	0.00%
Expected volatility	89.00%	78.00%
Expected volatility, maximum	99.00%	102.00%

WARRANTS (Details 1)

WARRANTS (Details 1)	12 Months Ended
	Dec. 31, 2015$ / shares
Class of Warrant or Right [Line Items]
Warrants outstanding	4,530,428
Number exercisable	4,530,428
Derivative [Member]
Class of Warrant or Right [Line Items]
Date of Expiration	8/31/17 to 11/6/17
Warrants outstanding	700,000
Weighted-Average remaining contractual life	1 year 8 months 19 days
Weighted average exercise price	$ 7.70
Number exercisable	700,000
Derivative [Member] | Derivative [Member]
Class of Warrant or Right [Line Items]
Exercise Price	$ 7.50
Equity [Member]
Class of Warrant or Right [Line Items]
Date of Expiration	12/10/18 to 10/30/20
Warrants outstanding	3,830,428
Weighted-Average remaining contractual life	4 years 2 months 8 days
Weighted average exercise price	$ 2.98
Number exercisable	3,830,428
Equity [Member] | Derivative [Member]
Class of Warrant or Right [Line Items]
Exercise Price	$ 2.75
Equity [Member] | Maximum [Member]
Class of Warrant or Right [Line Items]
Exercise Price	$ 3

WARRANTS (Details 2)

WARRANTS (Details 2) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Shares
Beginning Balance	1,847,066	1,209,211
Granted	2,721,000	927,610
Forfeited or expired	(37,638)	(289,755)
Ending Balance	4,530,428	1,847,066
Weighted-Average Exercise Price
Beginning Balance	$ 10.04	$ 17.92
Granted	3	2.98
Forfeited or expired	22.50	20.33
Ending Balance	$ 3.68	$ 10.04

WARRANTS (Details Narrative)

WARRANTS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Warrants Details Narrative
Fair value warrants issued	$ 3,386,895	$ 350,000

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Income Taxes Details
Net operating loss carryforwards	$ 38,836,000	$ 38,836,000
Research credit carryforward	3,122,000	3,048,000
Acquired intangible assets, net	$ 0	$ (3,697,000)
Restricted stock and warrants	479,000	479,000
Other temporary differences	$ 9,200	$ 9,200
Total deferred tax assets, net	42,529,000	42,529,000
Valuation allowance	(42,529,000)	(42,529,000)
Net deferred tax asset	$ 0	$ 0

INCOME TAXES (Details 1)

INCOME TAXES (Details 1)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Taxes Details 1
Income taxes benefit (expense) at statutory rate	34.00%	34.00%
State income tax, net of federal benefit	(0.01%)	2.76%
Permanent Differences
Financing loss	(7.23%)	0.00%
Non-cash interest expense warrant	(0.50%)	(8.07%)
Gain/loss or revaluation of derivative warrant liability	0.12%	2.07%
Stock-based compensation expense	2.40%	(0.88%)
Other	(0.04%)	0.01%
R&D credits	0.49%	1.21%
Change in valuation allowance	(24.45%)	(31.13%)
Income taxes rate differences	(0.02%)	(0.03%)

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Taxes Details Narrative
Income tax provision, state, minimum	$ 3,420	$ 4,000
Gross federal net operating loss carryforwards		105,024,000
Gross state net operating loss carryforwards		59,243,000
Federal research and development tax credit carryforwards		3,122,000
Increase in valuation allowance	$ 7,897,000	$ 2,773,000

LITIGATION (Details Narrative)

LITIGATION (Details Narrative) - USD ($)	2 Months Ended	6 Months Ended	7 Months Ended
	Feb. 28, 2014	Jul. 04, 2015	Jul. 31, 2014
Litigation Details Narrative
Mooney damages seeked in Court	$ 20,000,000	$ 150,000	$ 30,000,000

LICENSING AND OTHER REVENUE (De

LICENSING AND OTHER REVENUE (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended
	Jan. 29, 2016	Dec. 31, 2015	Dec. 31, 2014
Licensing and Other Revenue
Net cash proceeds from MTIA Common Stock financing	$ 832,000	$ 1,000,000
Total MTIA investment	$ 5,145,000
Handok [Member]
Licensing and Other Revenue
Minimum licensing term		10 years
Initial licensing fee		$ 750,000
Nonrefundable license revenue, recognizable		0	$ 57,321
License revenue recognized		750,000
Licensing fee relating to Handok		500,000
Deferred revenue recognized over next twelve months		$ 95,535